SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported): July 7, 1999
BERGEN BRUNSWIG CORPORATION
(Exact Name of Registrant as Specified in Charter)
New Jersey 1-5110 22-1444512
(State or Other (Commission (IRS Employer
Jurisdiction of File Number) Identification No.)
Incorporation)
4000 Metropolitan Drive, Orange, California 92868
(Address of Principal Executive Offices) (Zip Code)
Registrant's telephone number, including area code (714) 385-4000
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Item 5. Other Events.
On July 7, 1999, Bergen Brunswig Corporation issued the press release
attached to this Current Report on Form 8-K as Exhibit 99.1.
Item 7. Financial Statements and Exhibits.
(c) Exhibits
99.1 Press release dated July 7, 1999.
<PAGE>
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
BERGEN BRUNSWIG CORPORATION
By: /s/ Milan A. Sawdei
_____________________________
Milan A. Sawdei
Executive Vice President
Date: July 13, 1999
Exhibit 99.1
BERGEN BRUNSWIG REPORTS PRELIMINARY
THIRD QUARTER RESULTS
Orange, CA - July 7, 1999 -- Bergen Brunswig Corporation (NYSE: BBC)
today announced that based upon a review of its recent operating results the
Company expects to report earnings per diluted share of $.25 to $.27 for the
third quarter ended June 30, 1999 and $1.10 to $1.15 per diluted share for the
fiscal year ended September 30, 1999. These estimates compare with First Call
consensus analysts' estimates of $.31 for the quarter and $1.24 for the year.
Final results for the quarter will be reported on July 28, 1999. The full year
estimates are based upon the information the Company has to date and could be
subject to adjustment if the results for the fourth quarter are different than
the Company's current expectations.
The unanticipated earnings weakness is believed to be primarily a
result of negative industry trends being experienced at the Company's specialty
long-term care subsidiary (PharMerica). The industry trends impacting earnings
are the direct result of Medicare's revised reimbursement under the Prospective
Payment System (PPS) and include among other things: (1) Lower than anticipated
occupancy by Medicare-funded patients at the skilled nursing facilities
PharMerica serves; (2) A significantly diminished acuity level among residents
of these facilities, which is impacting overall utilization of drugs; and (3)
Pricing pressure which has affected gross profit and had a greater than expected
effect on bed loss resulting from the financial difficulty of nursing home
customers.
"When we completed the acquisition of PharMerica, this business had
performed on target with our expectations for the March quarter and exceeded
consensus estimates for the December 1998 quarter," explained Donald R. Roden,
president and CEO of Bergen Brunswig Corporation. "We considered the impact of
PPS in our evaluation of PharMerica and made what we thought were very
significant downward revisions to revenue and profit growth in our internal
models to account for these concerns. The impact of PPS has been greater than we
or the industry had expected. While we expected fewer high-acuity Medicare
patients to be treated by our nursing home customers, we did not anticipate that
a dramatically lower percentage of Medicare residents would only be receiving
oral medications.
"Although the impact of PPS is significant in the short term and while
we are hopeful it will soon be addressed through the legislative process, we are
not waiting for this cure.
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"We have developed, for immediate implementation, an aggressive plan
for improving earnings at PharMerica by reducing costs by more than $20
million," Roden continued. "First, we will utilize the Generic Purchasing
Program (GPP) for PharMerica that has been so successful in our drug company and
roll out our purchasing alliance efficiencies attainable through our agreement
announced earlier this year with NCS Healthcare (Nasdaq: NCSS) and Tenet
Healthcare (NYSE: THC). Both of these initiatives are expected to commence by
July 30. Secondly, we intend to reduce operating expenses through the
commencement of a centralized packaging operation, billing center
consolidations, and the completion of an already initiated AS400 conversion
project. Third, we will convert to a perpetual inventory and pricing system for
half of our pharmacies by end of calendar 1999, with the rest completed by the
end of calendar 2000. Longer term, we will be making maximum use of our highly
efficient 32 drug distribution centers to streamline the delivery of product to
our long term care customers while expanding our reach through our retail
networks.
"As we have publicly observed in recent months, the impact of PPS and
other regulatory initiatives, as well as the difficulties inherent in the
integration of newly acquired businesses, present challenges for our Company. We
remain optimistic in our ability to meet these challenges as we strive to meet
our goals of reducing costs and improving services within the healthcare
industry and providing value to our shareowners."
"In short," Roden concluded, "I am disappointed in the timing of these
events, but I have confidence in the positive demographic trends for both our
core business and in the long term care sector. The American population will
continue to age, cost-conscious payers will increasingly turn to alternate sites
for care, and pharmaceuticals will play an ever more significant role as the
most viable and cost-effective means of treating the elderly. We believe the
institutional pharmacy business will grow and that we can continue to leverage
our core competencies in order to capture the opportunities inherent in this
market sector."
The results also reflect a reduction in anticipated earnings from
Stadtlander Drug Company. Bergen is in disagreement with the seller and its
independent auditors regarding the valuation of the net assets of Stadtlander.
Additional reserve requirements that Bergen deems necessary will be recognized
as a result of the post-closing audit by Bergen's independent auditors. If
Bergen is unable to settle this matter with the seller, it will be arbitrated by
an independent party.
Bergen Brunswig Corporation, a Fortune 200 Company with annualized
revenues of $17 billion (excludes bulk shipments to customers' warehouses), is
one of the nation's leading supply channel management companies, providing
pharmaceuticals, medical-surgical and specialty products as well as information
management solutions and outsourcing services designed to improve
cost-effectiveness and increase value for customers, patients and manufacturers
across the entire healthcare spectrum. Additionally, through its wholly owned
subsidiary, PharMerica, Bergen serves approximately 500,000 patients in
long-term care and alternate site settings. Bergen also develops
disease-specific treatment protocols and pharmacoeconomic initiatives to assist
in the reduction of overall healthcare costs while improving disease management
and outcomes.
Certain of the information set forth in this press release (such as
estimates of earnings for future periods; the reduction in operating expenses
and the future operating results of PharMerica; the strategy for future periods;
potential regulatory and legislative developments; the potential impact of PPS;
industry, business and demographic trends; the ability of the Company to
leverage its core competencies; and the savings to be achieved through the
Company's plans) may constitute "forward-looking statements" within the meaning
of the Private Securities Litigation Reform Act of 1995 and are subject to
risks, uncertainties and other factors which could cause actual results to
differ materially from those projected or implied. Such statements may be
identified by the use of forward-looking language such as "may," "will,"
"should," "expect," "anticipate," "estimate" or "continue" or the negatives or
other variations thereof or other similar terminology. Such risks and
uncertainties include uncertainties relating to general economic conditions, the
unanticipated loss of customer or supplier relationships, difficulties
associated with the integration of the Company's newly acquired businesses, the
impact of government regulation, competition and the other risks described in
exhibit 99 to the Company's Quarterly Report on Form 10Q for the quarter ended
March 31, 1999 and in other reports and exhibits filed with the Securities and
Exchange Commission.
