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Business Services Industry

AmerisourceBergen Reports Diluted Earnings Per Share of $0.66 for the December Quarter and Raises Operating Revenue Growth Expectations for Fiscal Year 2008

Business Wire, Jan 24, 2008

Company Pursues Sale of PMSI, Its Workers' Compensation Business

VALLEY FORGE, Pa. -- AmerisourceBergen Corporation (NYSE:ABC) today reported that in its fiscal year 2008 first quarter, ended December 31, 2007, diluted earnings per share were $0.66, which was positively impacted by $0.04 from a $10 million litigation settlement and $1.4 million of net special items. Operating revenue in the quarter increased 3.5 percent to $16.2 billion.

AmerisourceBergen also announced that it is pursuing the sale of PMSI, its market-leading workers' compensation business, so that it can focus on its core pharmaceutical distribution and related services businesses. The Company, which is being assisted by Citi, has solicited buyers and is currently reviewing initial bids for the business.

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Fiscal First Quarter Highlights

* Operating revenue of $16.2 billion, up 3.5 percent.

* Diluted earnings per share of $0.66, a 5 percent increase.

* Net $0.04 per diluted share benefit from a $10 million litigation settlement and special items.

* Cash used in operations of $101 million.

* $311 million of share repurchases.

"In the December quarter, we delivered solid performance in our core businesses in a quarter that was a tough comparison with last year, and we look forward to stronger performance for the remainder of the 2008 fiscal year," said R. David Yost, AmerisourceBergen's President and Chief Executive Officer. "With a seasonally strong March quarter ahead, our increased sales momentum over the remainder of the fiscal year and the ongoing benefit from our share repurchase program, we continue to expect fiscal year 2008 diluted earnings per share to be 13 percent to 20 percent ahead of last year, excluding PharMerica Long-Term Care and special items in fiscal 2007. Our balance sheet continues to be strong and our financial flexibility remains significant."

Commenting on PMSI, Yost said, "Although PMSI's performance in the quarter was below our expectations, our investment in PMSI's technology and service delivery infrastructure as well as its aggressive profitability initiatives are expected to drive greater operational leverage and margin expansion. The result should be significant performance improvement by fall 2008. Nevertheless, we believe that for the appropriate value, this is the right time to sell the business as we focus on AmerisourceBergen's core pharmaceutical distribution and related services businesses to maximize shareholder value."

Consolidated Results

* Consolidated operating income in the fiscal 2008 first quarter decreased 7 percent to $195.0 million, due primarily to the inclusion of $9.1 million of operating income in the previous year's first quarter from PharMerica LTC, which was spun off to shareholders in July 2007, and the disappointing performance of PMSI in this first quarter. Operating income was positively impacted by a $10 million settlement of litigation with a major competitor related to sales activities involving an independent retail group purchasing organization, as well as by $1.4 million representing the net positive impact from pharmaceutical manufacturer antitrust litigation and facility consolidation, employee severance and other costs.

In the prior year's fiscal first quarter, $6.0 million of charges for facility consolidations, employee severance and other costs, and a $1.9 million gain from pharmaceutical manufacturer antitrust litigation cases, resulted in a net $4.1 million negative impact on consolidated operating income.

* The effective tax rate for the first quarter of fiscal 2008 was 38.2 percent, compared to 39.1 percent in the previous fiscal year's first quarter.

* Diluted earnings per share were up 5 percent to $0.66 in the first quarter of fiscal 2008 compared to $0.63 in the previous fiscal year's first quarter. In the fiscal 2008 first quarter, the net positive impact of the litigation settlement with a competitor and special items was $0.04 per diluted share.

* In the fiscal 2007 first quarter, the PharMerica Long-Term Care business, spun-off in July 2007, benefited the quarter by $0.03, and the net per-share impact of special items in the quarter was a negative $0.02.

* Diluted average shares outstanding for the first quarter of fiscal year 2008 were 167.1 million, down nearly 28 million from the previous fiscal year's first quarter due to share repurchases, net of option exercises.

AmerisourceBergen consists of the following two reportable segments: Pharmaceutical Distribution (which includes the operations of AmerisourceBergen Drug Corporation, Specialty Group, Packaging Group and Bellco Health) and Other (which includes PharMerica Long-Term Care through July 31, 2007 and PMSI). Intersegment sales of $15.1 million in the first quarter of fiscal 2008 from AmerisourceBergen Drug Corporation to PMSI, which are included in the Pharmaceutical Distribution Segment operating revenue, are eliminated for consolidated reporting purposes.

Business Services Industry

AmerisourceBergen Reports Diluted Earnings Per Share of $0.66 for the December Quarter and Raises Operating Revenue Growth Expectations for Fiscal Year 2008

Business Wire, Jan 24, 2008

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