Filed by AmeriSource Health Corporation pursuant
to Rule 425 under the Securities Act of 1933 and
deemed filed pursuant to Rule 14a-12 of the
Securities Exchange Act of 1934
Subject Company: AmerisourceBergen Corporation
Commission File Number: 333-61440
Forward-Looking Statements
--------------------------
The following communications contain certain "forward-looking statements" within
the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the
Securities Exchange Act of 1934. These statements are based on management's
current expectations and are subject to uncertainty and changes in
circumstances. Actual results may vary materially from the expectations
contained in the forward-looking statements. The forward-looking statements
herein include statements addressing future financial and operating results of
AmeriSource and Bergen Brunswig and the timing, benefits and other aspects of
the proposed merger.
The following factors, among others, could cause actual results to differ
materially from those described in the forward-looking statements: inability to
obtain, or meet conditions imposed for, governmental approvals for the
transaction; failure of the stockholders of AmeriSource and Bergen Brunswig to
approve the merger; the risk that the businesses of AmeriSource and Bergen
Brunswig will not be integrated successfully; failure to obtain and retain
expected synergies; and other economic, business, competitive and/or regulatory
factors affecting the businesses of AmeriSource and Bergen Brunswig generally.
More detailed information about these factors is set forth in AmeriSource's and
Bergen Brunswig's filings with the Securities and Exchange Commission, including
each of their Annual Reports on Form 10-K for fiscal 2000 and their most recent
quarterly reports on Form 10-Q. AmeriSource and Bergen Brunswig are under no
obligation to (and expressly disclaim any such obligation to) update or alter
their forward-looking statements whether as a result of new information, future
events or otherwise.
Additional Information
----------------------
In connection with their proposed merger, AmerisourceBergen, together with
AmeriSource and Bergen Brunswig, filed a preliminary joint proxy
statement/prospectus with the Securities and Exchange Commission. INVESTORS AND
SECURITY HOLDERS ARE ADVISED TO READ THE DEFINITIVE JOINT PROXY
STATEMENT/PROSPECTUS WHEN IT BECOMES AVAILABLE, BECAUSE IT WILL CONTAIN
IMPORTANT INFORMATION. Investors and security holders may obtain a free copy of
the definitive joint proxy statement/prospectus (when available) and other
documents filed by AmerisourceBergen (as well as by AmeriSource and Bergen
Brunswig) at the SEC's web site at www.sec.gov. The definitive joint proxy
statement/prospectus and such other documents may also be obtained for free from
AmeriSource or from Bergen Brunswig by directing such request to AmeriSource
Health Corporation, General Counsel, 1300 Morris Drive, Suite 100, Chesterbrook,
Pennsylvania 19087-5594, telephone: (610) 727-7000; or to Bergen Brunswig
Corporation, Attention: Corporate Secretary, 4000 Metropolitan Drive, Orange,
California 92868-3510, Telephone: (714)385-4000.
Participants in Solicitation
----------------------------
AmeriSource and Bergen Brunswig and their respective directors, executive
officers and other members of their management and employees may be deemed to be
participants in the solicitation of proxies from their respective stockholders
in connection with the proposed merger. Information concerning AmeriSource's
participants in the solicitation is set forth in AmeriSource's Current Report on
Form 8-K filed with the Securities and Exchange Commission on March 19, 2001,
and information concerning Bergen Brunswig's participants in the solicitation is
set forth in Bergen Brunswig's Current Report on Form 8-K filed with the
Securities and Exchange Commission on March 19, 2001.
Contact: Michael N. Kilpatric
610-727-7118
mkilpatric@amerisource.com
AMERISOURCE REPORTS RECORD
REVENUES AND EARNINGS FOR FISCAL THIRD QUARTER
Operating Revenue Up Over 20 Percent, Net Income Up 25 Percent, EPS Hits $.57
VALLEY FORGE, PA, JULY 25, 2001 -- AmeriSource Health Corporation (NYSE:AAS)
today reported record results for its fiscal third quarter and nine months ended
June 30, 2001. Operating revenue increased more than 20 percent in the third
quarter to a record $3.5 billion compared to $2.9 billion for the same period
last year. Net income for the quarter was up 25 percent to $31.5 million, also a
third-quarter record. Net income for same quarter last year was $25.1 million,
which included the positive after tax impact of $0.7 million for the reversal of
restructuring reserves. Fiscal third quarter 2001 earnings per diluted share
were $.57 compared to $.48 per diluted share in the prior year. Without the
restructuring reversal last year, earnings per diluted share for the third
quarter of fiscal 2001 increased 21 percent over the previous year's $.47 per
diluted share.
For the first nine months of fiscal 2001, operating revenue increased 20
percent to a record $10.3 billion compared to $8.6 billion in the prior year
period. In the nine-month period, net income increased 26 percent to $89.2
million from $71.0 million for the same period last year, and earnings per
diluted share were $1.64, 20 percent ahead of the $1.37 per diluted share earned
in the first nine months of the prior year. Excluding the restructuring reversal
in the third quarter of last year, net income and earnings per diluted share for
the fiscal 2001 nine-month period increased 27 percent and 21 percent,
respectively. The following discussions of the third quarter and nine months
results do not include the impact of the reversal of the restructuring reserve
in fiscal year 2000.
R. David Yost, AmeriSource Chairman and Chief Executive Officer, said,
"This was another terrific, record-setting quarter and year-to-date performance
for
AmeriSource, with superb revenue growth, notably lower expenses, outstanding
return on committed capital, and record earnings per share for a June quarter.
Each region and customer group contributed to revenue growth that was well ahead
of our 15 percent long-range goal, reflecting the dedication and strong efforts
of our associates at all levels. Total operating expenses as a percentage of
operating revenue were again below our 2.50 percent goal for the year, and ROCC
increased to 26.4 percent. Earnings per share continued to show strong year-
over-year growth in line with our long-term goal of 20 percent.
"Our continuing solid performance is anchored in our ability to grow our
current account base and capture new business, while achieving our profitability
goals. It also reflects the strength of the pharmaceuticals marketplace, where
the favorable demographics of an aging U.S. population continue to drive growth
more than general economic conditions. Overall pharmaceutical sales are
projected to increase at a compound annual growth rate of 13.8 percent over the
next five years, according to IMS Health, a leading healthcare data service.
"As we have mentioned before, our exceptional customer service, executed at
the distribution center level, is the key to our strong revenue growth. We also
continued to deliver on productivity improvement, both through the
implementation of cost reduction programs and by holding down costs while
growing revenue."
Commenting on specifics of the quarter, Kurt J. Hilzinger, AmeriSource
President and Chief Operating Officer, said, "Our Health Systems group, which
leads the acute-care market, continued to build revenue momentum this quarter,
as we experienced the full impact of the $500 million in annualized, incremental
business from Novation, a major hospital group purchasing organization. The
fast-growing Alternate Site group added new accounts, large and small, to our
growing base.
"Our Chain Drugstore and Independent Community Pharmacy customer groups
continued to contribute to our revenue growth for the quarter. The strong
performance of new accounts, such as the recently signed Familymeds Group, Inc.,
a multi-channel pharmacy retailer which will deliver more than $200 million in
annualized revenue, continues to expand our chain drugstore business. Our
independent community pharmacy
customers are driving same store growth at a double-digit rate, and continue to
be an integral part of our business.
"Our ongoing financial discipline and the centralization initiatives
completed last year continued to contribute to high levels of procurement
performance, expense control and capital productivity."
For the third quarter of fiscal 2001, the Company's gross margin as a
percentage of operating revenue was 4.12 percent versus 4.44 percent in the
prior year. This expected year-to-year decline in gross margin primarily
reflects a shift in customer mix and a competitive marketplace. The Company's
customer mix in the current quarter was 54 percent institutional, which
encompasses Health Systems and Alternate Site customer groups, and 46 percent
retail, including Independent Community Pharmacies and Chain Drugstores. In the
same period last year, the customer mix was 51 percent institutional and 49
percent retail.
Total operating expenses as a percentage of operating revenue declined 39
basis points to a record low 2.41 percent in the third quarter of fiscal 2001
from 2.80 percent a year ago. For the comparable nine-month periods, the ratio
declined 28 basis points to a record 2.47 percent in fiscal 2001 from 2.75
percent last year. This reduction, which was accomplished despite $0.9 million
in merger integration costs, was driven by the shift in customer mix,
efficiencies of scale, and cost reductions aided by the centralization efforts.
The Company's operating income advanced 26 percent to $60.2 million in the
third quarter of fiscal year 2001 from $47.8 million for the same quarter last
year. For the fiscal third quarter, operating margin as a percentage of
operating revenue, improved to 1.71 percent compared to 1.64 percent for the
prior year period.
Interest expense was down 12 percent to $7.4 million, reflecting the net
impact of higher average levels of debt, more than offset by lower borrowing
spreads and rates, as well as the effect of the Company's $300 million of fixed-
rate convertible notes issued in mid-December of last year.
Merger Update
AmeriSource continues to move forward under its agreement, announced March
19, 2001, to combine with Bergen Brunswig Corporation to create a new company,
called
AmerisourceBergen Corporation. It expects to complete the merger by the end of
August 2001, following shareholder votes and Federal Trade Commission review.
In connection with the Federal Trade Commission's review of the merger,
AmeriSource expects to certify compliance with the Commission's request for
additional information shortly. While the Company has filed all documents and
information for this "second request," it has delayed certification at the
request of the FTC staff. Certification starts the FTC's 30-day review period
under the Hart-Scott-Rodino Antitrust Improvements Act of 1976. After the
review, the merger may proceed if there is no objection from the Commission.
"We are continuing our integration planning activities, even as each
company remains focused on its business," said Mr. Yost. "This combination of
two strong, service-oriented companies boosts our confidence that we can achieve
a long-term earnings per share growth objective of 20 percent for our
shareholders."
About AmeriSource
AmeriSource Health Corporation, with approximately $14 billion in
annualized operating revenue, is a leading distributor of pharmaceutical and
related healthcare products and services, and the industry's largest provider of
pharmaceuticals to the acute care/health systems market. Headquartered in
Valley Forge, PA, the Company serves its base of about 15,000 customer accounts
through a national network of more than 22 strategically located distribution
facilities. For news and additional information about the company, visit its
web site at www.amerisource.com
-------------------
Certain information contained in this press release includes forward-
looking statements (as defined in Section 27A of the Securities Act and Section
21E of the Exchange Act) that reflect the Company's current views with respect
to future events and financial performance. Certain factors such as competitive
pressures, success of restructuring and system initiatives, market interest
rates, regulatory changes, continued industry consolidation, changes in customer
mix, changes in pharmaceutical manufacturers' pricing and distribution policies,
the loss of one or more key customer or supplier relationships and other matters
contained in the Company's 10-K for fiscal year 2000 and other public documents
could cause actual results to differ materially from those in the forward-
looking statements. The company assumes no obligation to update the matters
discussed in this press release.
Additional Information About The Merger
---------------------------------------
In connection with their proposed merger, AmerisourceBergen, together with
AmeriSource and Bergen Brunswig, filed a joint proxy statement/prospectus with
the Securities and Exchange Commission. INVESTORS AND SECURITY HOLDERS ARE
ADVISED TO READ THE JOINT PROXY STATEMENT/PROSPECTUS WHEN IT BECOMES AVAILABLE,
BECAUSE IT WILL CONTAIN IMPORTANT INFORMATION. Investors and security holders
may obtain a free copy of the joint proxy statement/prospectus (when available)
and other documents filed by AmerisourceBergen (as well as by AmeriSource and
Bergen Brunswig) at the SEC's web site at www.sec.gov. The joint proxy
statement/prospectus and such other documents may also be obtained for free from
AmeriSource or from Bergen Brunswig by directing such request to AmeriSource
Health Corporation, General Counsel, 1300 Morris Drive, Suite 100, Chesterbrook,
Pennsylvania 19087-5594, telephone: (610) 727-7000; or to Bergen Brunswig
Corporation, Attention: Corporate Secretary, 4000 Metropolitan Drive, Orange,
California 92868-3510, Telephone: (714) 385-4000. AmeriSource and Bergen
Brunswig and their respective directors, executive officers and other members of
their management and employees may be deemed to be participants in the
solicitation of proxies from their respective stockholders in connection with
the proposed merger. Information concerning AmeriSource's participants in the
solicitation is set forth in AmeriSource's Current Report on Form 8-K filed with
the Securities and Exchange Commission on March 19, 2001, and information
concerning Bergen Brunswig's participants in the solicitation is set forth in
Bergen Brunswig's Current Report on Form 8-K filed with the Securities and
Exchange Commission on March 19, 2001.
###
AMERISOURCE HEALTH CORPORATION
FINANCIAL SUMMARY
(In thousands, except per share data)
(Unaudited)
Three Three
Months Ended % of Months Ended % of
June 30 Operating June 30 Operating %
2001 Revenue 2000 Revenue Change
------------ ------------ ------------- ----------- ------------
Revenue:
Operating revenue $3,518,852 100.00% $2,921,424 100.00% 20%
Bulk deliveries to customer warehouses 77 10,282
------------ ------------
Total revenue 3,518,929 2,931,706
Cost of goods sold:
Operating cost of goods sold 3,373,913 95.88% 2,791,794 95.56% 21%
Cost of goods sold - bulk deliveries 77 10,282
------------ ------------
Total cost of goods sold 3,373,990 2,802,076
------------ ------------
Gross profit 144,939 4.12% 129,630 4.44% 12%
Operating expenses:
Selling and administrative 79,638 2.26% 77,944 2.67% 2%
Depreciation and amortization 4,205 0.12% 3,910 0.13% 8%
Facility consolidations and employee severance 0 0.00% (1,123) -0.04% -100%
Merger costs 903 0.03% 0 0.00% N/A
------------ ------------
Operating income 60,193 1.71% 48,899 1.67% 23%
Equity in net loss of unconsolidated affiliate 2,006 0.06% 0 0.00% N/A
Interest expense 7,361 0.21% 8,383 0.29% -12%
------------ ------------
Income before taxes 50,826 1.44% 40,516 1.39% 25%
Taxes on income 19,320 0.55% 15,396 0.53% 25%
------------ ------------
Net income $ 31,506 0.90% $ 25,120 0.86% 25%
============ ============
Earnings per share:
Basic $ 0.60 $ 0.49
Assuming dilution $ 0.57 $ 0.48
Weighted average common shares outstanding:
Basic 52,912 51,583
Assuming dilution 59,578 52,086
(a) Note - earnings per share assuming dilution before the special item was
$0.47 for the three months ended June 30, 2000.
AMERISOURCE HEALTH CORPORATION
FINANCIAL SUMMARY
(In thousands, except per share data)
(Unaudited)
Nine Nine
Months Ended % of Months Ended % of
June 30 Operating June 30 Operating %
2001 Revenue 2000 Revenue Change
------------ ------------ ------------ ---------- --------
Revenue:
Operating revenue $10,306,288 100.00% $8,582,219 100.00% 20%
Bulk deliveries to customer warehouses 834 31,072
------------ ------------
Total revenue 10,307,122 8,613,291
Cost of goods sold:
Operating cost of goods sold 9,872,747 95.79% 8,201,256 95.56% 20%
Cost of goods sold - bulk deliveries 834 31,072
------------ ------------
Total cost of goods sold 9,873,581 8,232,328
------------ ------------
Gross profit 433,541 4.21% 380,963 4.44% 14%
Operating expenses:
Selling and administrative 241,745 2.35% 224,512 2.62% 8%
Depreciation and amortization 12,380 0.12% 11,826 0.14% 5%
Facility consolidations and employee severance 0 0.00% (1,123) -0.01% -100%
Merger costs 903 0.01% 0 0.00% N/A
------------ ------------
Operating income 178,513 1.73% 145,748 1.70% 22%
Equity in net loss of unconsolidated affiliate 4,581 0.04% 0 0.00% N/A
Interest expense 30,030 0.29% 31,203 0.36% -4%
------------ ------------
Income before taxes 143,902 1.40% 114,545 1.33% 26%
Taxes on income 54,689 0.53% 43,527 0.51% 26%
------------ ------------
Net income $ 89,213 0.87% $ 71,018 0.83% 26%
============ ============
Earnings per share:
Basic $ 1.69 $ 1.38
Assuming dilution $ 1.64 $ 1.37
Weighted average common shares outstanding:
Basic 52,656 51,414
Assuming dilution 57,819 51,770
(a) Note - earnings per share assuming dilution before the special item was
$1.36 for the nine months ended June 30, 2000.
AMERISOURCE HEALTH CORPORATION
CONSOLIDATED BALANCE SHEETS
(dollars in thousands)
ASSETS (unaudited)
June 30 September 30, Increase
2001 2000 (Decrease)
-------------- ------------ ----------
Current assets:
Cash and cash equivalents $94,298 $120,818 ($26,520)
Accounts receivable, less allowance for doubtful accounts 677,180 623,961 53,219
Merchandise inventories 1,955,385 1,570,504 384,881
Prepaid expenses and other 4,266 5,336 (1,070)
-------------- ------------ ----------
Total current assets 2,731,129 2,320,619 410,510
Property and equipment, net 71,009 64,962 6,047
Other assets, less accumulated amortization 85,806 72,986 12,820
-------------- ------------ ----------
Total assets $2,887,944 $2,458,567 $429,377
============== ============ ==========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $1,639,876 $1,584,133 $55,743
Accrued expenses and other 56,704 49,398 7,306
Accrued income taxes 20,163 12,284 7,879
Deferred income taxes 117,092 105,654 11,438
-------------- ------------ ----------
Total current liabilities 1,833,835 1,751,469 82,366
Long-term debt:
Revolving credit facility 80,890 20,000 60,890
Receivables securitization financing 260,000 385,000 (125,000)
Convertible subordinated notes 300,000 0 300,000
Other debt 44 8,217 (8,173)
Other liabilities 10,250 11,587 (1,337)
Stockholders' equity:
Common stock and capital in excess of par value 315,550 284,132 31,418
Retained earnings 93,595 4,382 89,213
Cost of common stock in treasury (6,220) (6,220) 0
-------------- ------------ ----------
Total stockholders' equity 402,925 282,294 120,631
-------------- ------------ ----------
Total liabilities and stockholders' equity $2,887,944 $2,458,567 $429,377
============== ============ ==========
AMERISOURCE HEALTH CORPORATION
CONSOLIDATED BALANCE SHEETS
(dollars in thousands)
ASSETS (unaudited)
June 30, September 30, Increase
1999 1998 (Decrease)
----------- -------------- -------------------
Current assets:
Cash and cash equivalents $0 $48,461 $0
Restricted cash 0 37,044 (37,044)
Accounts receivable, less allowance for doubtful accounts 0 458,238 0
Merchandise inventories 0 870,223 0
Prepaid expenses and other 0 4,356 0
----------- -------------- -------------------
Total current assets 0 1,418,322 0
Property and equipment, net 0 60,789 0
Other assets, less accumulated amortization 0 73,171 0
----------- -------------- -------------------
Total assets $0 $1,552,282 $0
=========== ============== ===================
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $0 $ 873,181 $0
Accrued expenses and other 0 48,532 0
Accrued income taxes 0 78 0
Deferred income taxes 0 93,385 0
----------- -------------- -------------------
Total current liabilities 0 1,015,176 0
Long-term debt:
Revolving credit facility 0 145,000 0
Receivables securitization financing 0 299,948 0
Other debt 0 8,813 0
Other liabilities 0 8,036 0
Stockholders' equity:
Common stock and capital in excess of par value 0 244,938 0
Retained earnings (deficit) 0 (163,409) 0
Cost of common stock in treasury 0 (6,220) 0
----------- -------------- -------------------
Total stockholders' equity 0 75,309 0
----------- -------------- -------------------
Total liabilities and stockholders' equity $0 $1,552,282 $0
=========== ============== ===================
AMERISOURCE HEALTH CORPORATION
EARNINGS PER SHARE
(In thousands, except per share data)
(unaudited)
Earnings per share is computed on the basis of the weighted average number of
shares of common stock outstanding during the periods presented. Earnings per
share-assuming dilution is computed on the basis of the weighted average number
of shares of common stock outstanding during the period plus the dilutive effect
of stock options. Additionally, the fiscal 2001 calculations consider the
convertible subordinated notes as if converted and, therefore, the effect of
interest expense related to those notes is added back to net income in
determining income available to common stockholders.
Three months ended Nine months ended
June 30, June 30,
-------------------------------- --------------------------
2001 2000 2001 2000
-------------- ------------- -------------- ----------
Net income $31,506 $25,120 $89,213 $71,018
Interest expense - convertible subordinated notes, net of
income taxes 2,513 - 5,599 -
-------------- ------------- -------------- ----------
Income available to common stockholders $34,019 $25,120 $94,812 $71,018
============== ============= ============== ==========
Weighted average number of shares of common stock outstanding 52,912 51,583 52,656 51,414
Effect of dilutive securities:
Stock options 1,002 503 993 356
Convertible subordinated notes 5,664 - 4,170 -
-------------- ------------- -------------- ----------
Weighted average number of shares of common stock and
dilutive potential common stock 59,578 52,086 57,819 51,770
============== ============= ============== ==========
Earnings per share
Basic $ 0.60 $ 0.49 $ 1.69 $ 1.38
Assuming dilution (a) $ 0.57 $ 0.48 $ 1.64 $ 1.37
(a) Note - earnings per share assuming dilution before the special item was
$0.47 and $1.36 for the three and nine months ended June 30, 2000.