8-KRegulation FDOther EventsExhibits & Filings

Cencora, Inc. 8-K Report, Regulation FD Disclosure (May 19, 2014)

Filed May 19, 2014For Securities:COR

Summary

AmerisourceBergen Corporation (now Cencora, Inc.) announced on May 19, 2014, a significant move to counteract potential shareholder dilution. The company's board of directors authorized a special $650 million share repurchase program. This initiative is designed to offset the dilutive impact that could arise from the exercise of warrants previously issued to subsidiaries of Walgreen Co. and Alliance Boots GmbH in March 2013. The repurchases are intended to mitigate approximately 80% of this potential dilution when combined with existing warrant hedging strategies, including capped call option transactions. Investors should note that the company plans to exclude the impact of these special share repurchases from its adjusted diluted earnings per share (EPS) calculations, beginning in the fiscal quarter ending June 30, 2014, and continuing until the warrants are exercised or expire. This exclusion is consistent with how the company has been treating the accounting dilution from the warrants. Consequently, the company anticipates no change to its previously stated adjusted diluted EPS guidance for fiscal year 2014, which already includes an assumption for $500 million in regular share repurchases.

Key Highlights

  • 1AmerisourceBergen announced a special $650 million share repurchase program authorized by its board of directors.
  • 2The program's primary purpose is to mitigate the potential dilutive effect of warrants issued in March 2013 to subsidiaries of Walgreen Co. and Alliance Boots GmbH.
  • 3The company expects this special repurchase program, along with existing hedging strategies, to offset roughly 80% of the potential dilution from warrant exercises.
  • 4Share repurchases under this special program will be excluded from the calculation of adjusted diluted earnings per share (EPS) starting from Q2 fiscal year 2014.
  • 5This exclusion is consistent with the company's accounting treatment of the warrant dilution.
  • 6The company reiterates its fiscal year 2014 adjusted diluted EPS guidance, as the special repurchases are not expected to alter it.
  • 7The repurchases will occur over an extended period, subject to market conditions.

Frequently Asked Questions

The primary reason is to mitigate the potential dilutive effect on existing shareholders' ownership interests that could arise from the exercise of warrants previously issued in March 2013 to subsidiaries of Walgreen Co. and Alliance Boots GmbH. This program aims to offset the impact of newly issued shares upon warrant exercise.

The company intends to exclude the impact of these special share repurchases from its presentation of adjusted diluted earnings per share (EPS) from continuing operations. This exclusion will begin with the fiscal quarter ending June 30, 2014, and will continue until the warrants are exercised or expire. This is consistent with their treatment of the accounting dilution from the warrants.

No, the company stated that the special share repurchases will not impact its expectations for the range of its adjusted diluted EPS for fiscal year 2014. This guidance already includes an assumption for $500 million in regular share repurchases.

The company expects that the special repurchase program, combined with its existing warrant hedging strategy (including capped call options), will mitigate approximately 80% of the potentially dilutive effect from the exercise of the warrants.