Bergen Brunswig Reports First Loss in Firm’s History

Pinched by the high cost of financing rapid growth, Bergen Brunswig Corp. on Monday reported a sharp decrease in net earnings for its 1986 fiscal year ended Aug. 31 and said it posted its first-ever net operating loss during the fiscal fourth quarter.

The Orange distributor of pharmaceuticals, medical supplies and videocassettes said its fiscal 1986 net earnings fell 11% to $20.7 million from $23.3 million. However, without the $9.4-million gain from the offering in July of stock in Bergen Brunswig’s Commtron Corp. subsidiary, net earnings actually fell 51% to $11.3 million.

Revenues for the year increased 26% to $3.06 billion up 26% from $2.43 billion.

For the fiscal fourth quarter, Bergen Brunswig posted a net operating loss of $3.6 million--the first quarterly operating loss since the company’s founding in the late 1940s. The loss, however, was offset by the $9.4-million gain from the Commtron offering, resulting in net earnings for the quarter of $5.8 million--down slightly from $5.9 million.

Revenues during the fourth quarter rose 17% to $794 million from $680 million.

Bergen Brunswig, which last month said it would have an earnings decline for its fiscal year, attributed the shortfall to an aggressive expansion program it carried into 1986. During the fiscal year that just ended, Bergen Brunswig acquired three drug distributors and one consumer electronics wholesaler for an aggregate of more than $105 million, said George E. Reinhardt, chief financial officer.

As a consequence of the rapid expansion, all of which Reinhardt said has been paid for in cash, debt increased 62% to $238 million from $147 million. Interest payments during 1986 swelled 150% to $18.8 million from $7.5 million.

Reinhardt said Bergen Brunswig has left the acquisition trail and now is in a “consolidation mode.”

Although 1986 marked a reversal of the 25% annual growth rate the company has maintained for the last several years, Reinhardt said Bergen Brunswig expects to regain profitability during the current quarter and stay that way for all of 1987.