And here is Dave Yost, AmerisourceBergen's President and CEO, to begin our remarks.R. Yost Good morning, and thank you for joining us. As you probably know from our press release this morning, ABC delivered a very strong third fiscal quarter that ended in June in a series of strong quarters. We are well on our way to delivering an outstanding year that ends September 30, and this is on top of our last year fiscal 17% EPS increase and ahead of the 16% compound annual growth rate we delivered over the last eight years. There's lots to like about this quarter and our long-term performance. Mike will drill down on the details, but here are the highlights. Revenues were a record $19.6 billion, increasing well over $1 billion from the June quarter last year and up 6.6%. Gross profit again increased in double digits. Total operating expenses were down 10 basis points as a percent to revenue versus last year, equal to the historic low of the first two fiscal quarters' operating expense ratio. Operating margin was up an outstanding 28 basis points this quarter. Diluted EPS were $0.57 on a GAAP basis, up a robust 36% over last year and up 24%, excluding special items. That's on top of the 20% increase we reported last June, big increases on top of big increases. We did a good job of controlling our receivables and inventory and had over $1 billion in cash on June 30. The quarter reflected the theme of consistent growth that continues to be characteristic of ABC. Though we usually do not mention external recognition, I'm going to make an exception this quarter due to the extraordinary nature of three noteworthy items. First, our largest customer recognized us with their VIP award for value, innovation and performance at their first-ever supplier award banquet. At ABC, customer recognition is the most important, and recognition from our largest customer is very meaningful. Second, Bloomberg Businessweek, in the June 21 issue, included ABC in their annual list of the 50 Best Performing Companies in the S&P 500 based on total shareholder return for the last five years. Bloomberg Businessweek reported ABC's five-year return as 115%. And Fortune Magazine, in their May 5 issue, ranked ABC as number 22 in total shareholder return for the period of 1999 to 2009, with an annual rate of return of 22% over that 10-year period. Our associates and I take great pride in the fact that only 21 companies on the Fortune 500 outperformed ABC for the last 10 years.
Before I address some company specifics, a few words on the industry. First, pharmaceutical industry revenue growth. The IMS forecast of 3% to 5% for calendar 2010 seems to be in the right zip code to us. Second, manufacturer pricing environment. Fee-for-service, of course, mitigates much of the impact to wholesalers from brand-name manufacturer price increases. We currently expect brand-name price increases to be similar to the 8% to 9% range we experienced last year.It is important to note two milestones regarding fee-for-service. One, we signed a fee-for-service agreement with Glaxo this quarter. So now essentially all of our brand-name Pharmaceutical business is operating under some type of fee-for-service. And two, we renewed our fee-for-service contracts with the three brand-name manufacturers that recently completed mega-mergers. Both these events demonstrate the value that the national wholesalers bring to our manufacturer partners under our prime vendor relationships with our dispensing customers. Not only do we make a wide array of product available to our dispensing customers on a daily, just-in-time basis, providing inventory control to both manufacturer and dispensing customers, capturing valuable realtime data in the process, but among other things, we provide pharmaceutical supply channel security, and we manage the credit and receivable function for the manufacturer for literally tens of thousands of customers. We think these recent fee-for-service agreements lay to rest any question about the value the national wholesalers bring to manufacturers. Third, competitive pricing environment within our industry. I would continue to describe the environment as competitive but stable, with few billion-dollar pieces of business in play in the next 12 months or so and a few billion-dollar pieces of business changing hands historically. Read the rest of this transcript for free on seekingalpha.com