Bergen Brunswig Corp. reported record earnings and revenues for its fiscal year ended Aug. 31 despite a near $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, video cassettes and electronics products said that earnings from continuing operations rose to $24.2 million, from last fiscal year's $23.4 million.
In the fourth quarter, the company took a write-down of $951,000, completing its accounting of the aborted merger with National Intergroup Inc., the Pittsburgh-based parent of National Steel and First Nationwide Savings. Bergen called off the merger in April after steel prices deteriorated and National's profit projections were downgraded.
That latest write-down brought the final net income for the year to $23.3 million, up 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; FIFO is the first-in, first-out system of inventory accounting. If the company had maintained its 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 with 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.
Martini said the company's medical supply division posted revenues of $245 million for the fiscal year, up from $164 million the prior year. Commtron, the company's consumer electronics division, reported a 49% growth in revenue to $314 million from $210 million, Martini said.
With the addition of the recently acquired Cibcoa unit, a consumer electronics distributor, sales from this segment should approach $500 million for fiscal 1986, he said.
Martini said the company expects to "have another record year in both revenues and earnings in fiscal 1986."