Brunswig Reports Record Net, Revenue
Bergen Brunswig reported record net earnings and revenue for its fiscal year ended Aug. 31, despite a nearly $1-million write-down for an aborted merger and a change in accounting that further trimmed its net income.
The distributor of medical supplies, pharmaceuticals, videocassettes and electronics products said earnings from continuing operations rose to $24.2 million from $23.4 million in the prior fiscal year.
In the fourth quarter, the company took a write-down of $951,000, completing its accounting of the aborted merger with National Intergroup, the Pittsburgh-based parent of National Steel and First Nationwide Financial.
Bergen called off the merger in April after steel prices deteriorated and National’s profit projections were downgraded.
Ford Motor in August agreed to buy First Nationwide.
That latest write-down brought net income for the year to $23.3 million from $18.3 million a year earlier. Revenue rose 43% to $2.4 billion from $1.7 billion last year.
Bergen said the small earnings gain reflects its change to the LIFO method of accounting from the FIFO method. LIFO is the last-in, first-out system of inventory accounting that calculates the cost of goods sold according to the cost of the company’s most recent purchases from its suppliers; FIFO is the first-in, first-out system of inventory accounting in which inventory is assumed sold in the chronological order in which it is purchased. If the company had maintained the same accounting method, earnings from continuing operations would have jumped 35%. Bergen said it changed its inventory accounting method because of tax advantages provided by new legislation. The change allowed it to retain about $21 million in cash because of the deferral of income tax payments permitted under LIFO.
For the fourth quarter, net income using LIFO accounting rose 4% to $5.9 million, compared to FIFO earnings of $5.7 million for the similar quarter last year. Revenue for the quarter increased to $680 million, up 53% from $446 million for the similar period a year ago.
Emil Martini Jr., chairman and chief executive, said Bergen’s acquisitions during the year “had a major impact on sales growth.” In addition, results from existing operations exceeded internal growth targets, Martini said.
