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AmerisourceBergen Reports March Quarterly Results, with Diluted Earnings Per Share from Continuing Operations of $0.91

04/21/05

VALLEY FORGE, Pa.--(BUSINESS WIRE)--April 21, 2005--AmerisourceBergen Corporation (NYSE:ABC) today reported results for its fiscal second quarter ended March 31, 2005. The following results are presented in accordance with U.S. generally accepted accounting principles (GAAP).


    Fiscal Second Quarter Highlights

    --  Diluted earnings per share from continuing operations of
        $0.91, including an $0.11 benefit from a change in an
        accounting method.

    --  Operating Revenue of $12.2 billion, down 1 percent.

    --  Cash flow from operations of $1.1 billion.

    --  Record low interest expense of $14.5 million, down 53 percent.

    --  Record low total debt to total capital ratio of 18.7 percent.

    Fiscal First Six Months Highlights

    --  Diluted earnings per share from continuing operations of
        $1.53, before the cumulative effect of the accounting change.

    --  Cash flow from operations of $1.2 billion.

    --  Operating Revenue of $24.4 billion, down 1 percent.

"Although we were disappointed in our financial performance for the quarter, we remain optimistic about improving our operating margin and are encouraged by our strong cash position," said R. David Yost, AmerisourceBergen's Chief Executive Officer. "Our transition to a fee-for-service model with our manufacturers has created a challenging year, but we are making solid progress and expect to have this transition largely complete by the end of calendar year 2005. The lower inventories in the new model and our disciplined working capital management produced excellent cash generation and the strongest balance sheet in our history. Operating revenue in pharmaceutical distribution was down less than 1 percent despite the loss of two large customers that accounted for 12 percent of operating revenue in the second quarter of fiscal 2004. We are enthusiastic about the future as we continue to grow our specialty business, complete our new distribution network, capture new generic opportunities, implement our margin enhancement activities and look to fully participate in the growth generated by the Medicare Modernization Act in 2006."

Discussion of Results

The results for the second quarter and the first six months of fiscal year 2005 were both impacted by a change in the way the Company accounts for cash discounts and other related manufacturer incentives. Previously, AmerisourceBergen recognized these cash discounts as a reduction in cost of goods sold when earned, which was typically at the time the Company paid for the inventory. The Company now records these cash discounts as a component of inventory cost and recognizes them as a reduction to cost of goods sold when the related products are sold. With AmerisourceBergen's move to a fee-for-service relationship with manufacturers, the new method provides a more objectively determinable method of recognizing cash discounts and a better matching of inventory cost to revenue, as inventory turnover rates are expected to continue to improve.

The impact of this change in accounting, effective at the beginning of fiscal 2005, is a one-time cumulative effect charge of $10.2 million, net of tax, or $0.09 per diluted share, which is reflected in the six-month results ended March 31, 2005. In addition to the cumulative effect, the new method resulted in an increase in income from continuing operations in the March quarter of $12.2 million, net of tax, or $0.11 per diluted share; and income from continuing operations in the December quarter of fiscal 2005 was revised to reflect a charge of $3.3 million, net of tax, or $0.03 per diluted share. See the attached table for further illustration.

In the March quarter of fiscal 2005, AmerisourceBergen's operating revenue was $12.2 billion compared to $12.3 billion for the same period last year. Bulk deliveries in the quarter decreased 7 percent to $0.9 billion.

Consolidated operating income in the March quarter declined 30 percent to $181.7 million primarily due to reduced buy-side profits in the pharmaceutical distribution segment.

Below the consolidated operating income line, "Other loss" of $4.9 million in the quarter is primarily due to the write down of certain technology related intangible assets.

Interest expense in the second quarter of fiscal 2005 was a record low $14.5 million compared to $30.9 million in the prior year's second quarter, a 53 percent decrease driven by debt reduction.

Diluted earnings per share from continuing operations were $0.91 in the second quarter of fiscal 2005, compared to $1.23 (also $1.23 on a pro forma basis for the accounting change) in the previous fiscal year's second quarter. Included in the results are a $1.1 million special charge, net of tax, in the second quarter of fiscal 2005 and a $1.4 million special charge, net of tax, in the same period of the previous fiscal year. Both the charges are for facility consolidations and employee severance and both decreased diluted earnings per share by $0.01.

Diluted average shares outstanding for the second quarter of fiscal year 2005 were 110.2 million. During the March quarter, AmerisourceBergen used the remaining $102 million under its $500 million share repurchase program authorized in August 2004 to purchase 1.7 million shares, and completed the purchase of all of the 5.7 million shares under its repurchase program established in February 2005.

Discontinued operations in the March quarter reflect an additional $0.6 million loss, net of tax, from the sale of the Company's Rita Ann cosmetics distribution business, announced in the December quarter.

Cash generated from operations in the second quarter of fiscal year 2005 was a record $1.1 billion, compared to $476 million in the prior year's second quarter, due primarily to lower working capital levels.

For the first six months of fiscal 2005, AmerisourceBergen's operating revenue was $24.4 billion compared to $24.6 billion for the same period last year. Bulk deliveries in the first half of the fiscal year increased 13 percent to $2.4 billion.

Consolidated operating income in the first six months of the fiscal year declined 33 percent to $313.3 million primarily due to reduced buy-side profits in the pharmaceutical distribution segment.

For the first six months of fiscal 2005 diluted earnings per share from continuing operations before the cumulative effect of the change in accounting were $1.53, compared to $2.18 ($2.14 on a pro forma basis for the accounting change) in the same six-month period last year.

"Significant initiatives are underway to improve our operating margins and better position us for the opportunities ahead," said Kurt J. Hilzinger, AmerisourceBergen's President and Chief Operating Officer. "In our transition to fee-for-service relationships, we continue to sign new manufacturer agreements which we expect to improve the stability and predictability of our earnings.

"During the March quarter, our Specialty Group continued to enjoy solid growth. Our market-leading oncology businesses had another strong quarter and our commercialization businesses continued to win new manufacturer contracts. The Packaging Group delivered solid results on its growing pipeline of contract packaging programs for manufacturers and further expanded its customized packaging solutions for healthcare providers.

"In the Drug Corporation, our Optimiz(TM) program, which is designed to lower our operating costs, continued on schedule and on budget. Our new Dallas, Texas, facility, the third of our six new distribution centers, opened this quarter and is fully operational. Coupled with our new warehouse management system, the new network will drive additional cost savings and improved customer service in the future. In the quarter we began implementation of our Transform program designed to improve profitability from our healthcare provider customers."

"In our PharMerica segment, we continue to face a difficult competitive environment, and in response are making significant progress in reducing the segment's operating expenses. Our new customer-facing technology continues to win new customers in our long-term care business, and our more than $30 million of technology investments in the segment are beginning to deliver results," said Hilzinger.

Segment Review

AmerisourceBergen operates in two segments: Pharmaceutical Distribution (which includes the operations of AmerisourceBergen Drug Corporation and AmerisourceBergen Specialty, Packaging, and Technology groups) and PharMerica (which includes the long-term care pharmacy and workers' compensation businesses). Intersegment sales of $218 million in the second quarter of fiscal 2005 from AmerisourceBergen Drug Corporation to PharMerica, which are included in the Pharmaceutical Distribution segment operating revenue, are eliminated for consolidated reporting purposes.

Pharmaceutical Distribution Segment

Operating revenue of $12.1 billion in the second quarter of fiscal 2005 was down 1 percent compared to the same quarter in the previous fiscal year.

Led by strong growth in the Specialty Group, the Company was able to largely offset the impact of the prior year's loss of the Department of Veterans Affairs (VA) and AdvancePCS contracts. The two contract losses accounted for 12 percent of segment operating revenue in the second quarter of fiscal 2004. Lower than anticipated buy-side contribution due to the ongoing transition to a new manufacturer compensation model based on fees and a competitive environment, including the VA impact, reduced gross profit and operating margins in the quarter.

Pharmaceutical Distribution customer mix in the second quarter of fiscal 2005 was 56 percent institutional and 44 percent retail.

AmerisourceBergen Specialty Group continued its excellent performance with annualized operating revenue of more than $6 billion. The Group continues to build on its leadership position in the distribution of products and services to physicians in numerous disease states, including its industry leading position in oncology. The Group also continues to grow its manufacturer services businesses, including third party logistics, reimbursement consulting and physician education.

PharMerica

PharMerica's operating revenue for the second quarter of fiscal 2005 was $391.1 million, essentially flat compared to the previous year's second quarter. Operating income for the second quarter of fiscal 2005 was $32.0 million, up 13 percent from $28.2 million for the same quarter last year reflecting a $4.0 million reduction in sales tax liability, supplier initiatives and expense control. The Company continues to expect revenues in the segment to be flat for the 2005 fiscal year. Operating margins are expected to be in the high end of the 6 percent to 7 percent range.

Looking Ahead

"Our expectations for fiscal 2005 remain unchanged from our March announcement," said Yost. "We continue to expect operating revenue growth in fiscal year 2005 to be flat at about $49 billion, and diluted earnings per share from continuing operations before the cumulative effect of the accounting change for fiscal 2005 of between $3.10 and $3.50 on a GAAP basis. Though we begin our detailed planning process for the next fiscal year during this quarter, we currently estimate earnings per share from continuing operations in fiscal 2006 to be between $3.60 and $4.40, also on a GAAP basis. The bottom of the range reflects pharmaceutical market growth in the high single digits and the full-year impact of fiscal 2005 capital deployment initiatives. The top of the range depends on our ability to improve our pharmaceutical distribution operating margin, expected to be in the 100 to 110 basis points range in fiscal 2005, by 30 basis points through margin enhancement activities including those mentioned above."

Conference Call

The Company will host a conference call to discuss its results at 11:00 a.m. Eastern Standard Time on April 21, 2005. Participating in the conference call will be: R. David Yost, Chief Executive Officer; Kurt J. Hilzinger, President and Chief Operating Officer; and Michael D. DiCandilo, Senior Vice President and Chief Financial Officer.


    To access the live conference call via telephone:

    Dial in: 612-326-1029, no access code required.

    To access the live webcast:

    Go to the Quarterly Webcasts section on the Investor Relations
page at http://www.amerisourcebergen.com.

    A replay of the telephone call and webcast will be available from
2:30 p.m. April 21, 2005 until 11:59 p.m. April 28, 2005. The Webcast
replay will be available for 30 days.

    To access the replay via telephone:

    Dial in: (800) 475-6701 from within the U.S., access code: 777705
             (320) 365-3844 from outside the U.S., access code: 777705

    To access the archived webcast:

    Go to the Quarterly Webcasts section on the Investor Relations
page at http://www.amerisourcebergen.com.

About AmerisourceBergen

AmerisourceBergen (NYSE:ABC) is one of the largest pharmaceutical services companies in the United States. Servicing both pharmaceutical manufacturers and healthcare providers in the pharmaceutical supply channel, the Company provides drug distribution and related services designed to reduce costs and improve patient outcomes. AmerisourceBergen's service solutions range from pharmacy automation, bedside medication safety systems, and pharmaceutical packaging to pharmacy services for skilled nursing and assisted living facilities, reimbursement and pharmaceutical consulting services, and physician education. With more than $48 billion in operating revenue, AmerisourceBergen is headquartered in Valley Forge, PA, and employs more than 14,000 people. AmerisourceBergen is ranked #23 on the Fortune 500 list. For more information, go to www.amerisourcebergen.com.

Forward-Looking Statements

This news release may contain certain "forward-looking statements" within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. These statements are based on management's current expectations and are subject to uncertainty and changes in circumstances. Actual results may vary materially from the expectations contained in the forward-looking statements. Forward-looking statements may include statements addressing AmerisourceBergen's future financial and operating results.

The following factors, among others, could cause actual results to differ materially from those described in any forward-looking statements: competitive pressures; the loss of one or more key customer relationships; customer insolvencies; changes in customer mix; changes in pharmaceutical manufacturers' pricing and distribution policies or practices; regulatory changes; changes in U.S. government policies (including changes in government policies pertaining to drug reimbursement); changes in market interest rates; and other economic, business, competitive, legal, regulatory and/or operational factors affecting the business of AmerisourceBergen generally.

More detailed information about these and other risk factors is set forth in AmerisourceBergen's filings with the Securities and Exchange Commission, including its Annual Report on Form 10-K for fiscal 2004.

AmerisourceBergen is under no obligation to (and expressly disclaims any such obligation to) update or alter any forward looking statements whether as a result of new information, future events or otherwise.


                    AMERISOURCEBERGEN CORPORATION
                          FINANCIAL SUMMARY
                (In thousands, except per share data)
                             (unaudited)


                     Three                  Three
                  Months Ended   % of    Months Ended   % of
                   March 31,   Operating  March 31,   Operating   %
                     2005       Revenue     2004       Revenue  Change
                  ------------ --------- ------------ --------- ------

Revenue:
  Operating
   revenue        $12,243,148    100.00% $12,332,842    100.00%    -1%
  Bulk deliveries
   to customer
   warehouses         948,428              1,018,919               -7%
                  ------------           ------------
Total revenue      13,191,576             13,351,761               -1%

Cost of goods
 sold              12,689,461             12,771,318               -1%
                  ------------           ------------

Gross profit          502,115      4.10%     580,443      4.71%   -13%

Operating
 expenses:
  Distribution,
   selling and
   administrative     297,835      2.43%     300,463      2.44%    -1%
  Depreciation
   and
   amortization        20,761      0.17%      18,516      0.15%    12%
  Facility
   consolidations
   and employee
   severance            1,837      0.02%       2,216      0.02%   -17%
                  ------------           ------------

Operating income      181,682      1.48%     259,248      2.10%   -30%

Other loss
 (income)               4,876      0.04%      (3,663)    -0.03%   N/A

Interest expense       14,513      0.12%      30,871      0.25%   -53%
                  ------------           ------------

Income from
 continuing
 operations
 before taxes         162,293      1.33%     232,040      1.88%   -30%

Income taxes           62,321      0.51%      89,334      0.72%   -30%
                  ------------           ------------

Income from
 continuing
 operations            99,972      0.82%     142,706      1.16%   -30%

Loss from
 discontinued
 operations, net
 of tax benefit          (550)                  (554)
                  ------------           ------------

Net income        $    99,422      0.81% $   142,152      1.15%   -30%
                  ============           ============


Earnings per
 share:
  Basic
    Continuing
     operations   $      0.91            $      1.28              -29%
    Discontinued
     operations             -                  (0.01)
                  ------------           ------------
      Net income  $      0.91            $      1.27              -28%
                  ============           ============

  Diluted
    Continuing
     operations   $      0.91            $      1.23              -26%
    Discontinued
     operations         (0.01)                     -
                  ------------           ------------
      Net income  $      0.90            $      1.23              -27%
                  ============           ============

Weighted average
 common shares
 outstanding:
  Basic               109,645                111,847
  Diluted             110,234                117,946


                    AMERISOURCEBERGEN CORPORATION
                          FINANCIAL SUMMARY
                (In thousands, except per share data)
                             (unaudited)


                      Six                    Six
                  Months Ended   % of    Months Ended   % of
                   March 31,   Operating  March 31,   Operating   %
                     2005       Revenue     2004       Revenue  Change
                  ------------ --------- ------------ --------- ------

Revenue:
  Operating
   revenue        $24,447,463    100.00% $24,585,579    100.00%    -1%
  Bulk deliveries
   to customer
   warehouses       2,383,155              2,108,353               13%
                  ------------           ------------
Total revenue      26,830,618             26,693,932                1%

Cost of goods
 sold              25,873,012             25,588,439                1%
                  ------------           ------------

Gross profit          957,606      3.92%   1,105,493      4.50%   -13%

Operating
 expenses:
  Distribution,
   selling and
   administrative     595,386      2.44%     595,846      2.42%     0%
  Depreciation
   and
   amortization        41,915      0.17%      35,232      0.14%    19%
  Facility
   consolidations
   and employee
   severance            6,970      0.03%       3,769      0.02%    85%
                  ------------           ------------

Operating income      313,335      1.28%     470,646      1.91%   -33%

Other loss
 (income)               3,818      0.02%      (1,076)     0.00%   N/A

Interest expense       36,589      0.15%      62,378      0.25%   -41%
Loss on early
 retirement of
 debt                   1,015      0.00%           -
                  ------------           ------------

Income before
 taxes,
 discontinued
 operations, and
 cumulative
 effect of change
 in accounting        271,913      1.11%     409,344      1.66%   -34%

Income taxes          104,415      0.43%     157,597      0.64%   -34%
                  ------------           ------------

Income from
 continuing
 operations
 before
 cumulative
 effect of change
 in accounting        167,498      0.69%     251,747      1.02%   -33%

Loss from
 discontinued
 operations, net
 of tax benefit        (6,958)                (1,121)
Cumulative effect
 of change in
 accounting, net
 of tax benefit       (10,172)                     -
                  ------------           ------------

Net income        $   150,368      0.62% $   250,626      1.02%   -40%
                  ============           ============


Earnings per
 share:
  Basic
    Continuing
     operations   $      1.56            $      2.25              -31%
    Discontinued
     operations         (0.06)                 (0.01)
    Cumulative
     effect of
     change in
     accounting         (0.10)                     -
                  ------------           ------------
      Net income  $      1.40            $      2.24              -38%
                  ============           ============

  Diluted
    Continuing
     operations   $      1.53            $      2.18              -30%
    Discontinued
     operations         (0.06)                 (0.01)
    Cumulative
     effect of
     change in
     accounting         (0.09)                     -
                  ------------           ------------
      Net income  $      1.38            $      2.17              -36%
                  ============           ============

Weighted average
 common shares
 outstanding:
  Basic               107,584                111,738
  Diluted             110,932                117,948


                     AMERISOURCEBERGEN CORPORATION
                 CONDENSED CONSOLIDATED BALANCE SHEETS
                            (in thousands)
                             (unaudited)


                ASSETS
                                          March 31,     September 30,
                                            2005            2004
                                       --------------- ---------------
Current assets:
  Cash and cash equivalents            $    1,153,432  $      871,343
  Accounts receivable, net                  2,450,124       2,260,973
  Merchandise inventories                   4,623,581       5,135,830
  Prepaid expenses and other                   18,764          27,243
                                       --------------- ---------------
    Total current assets                    8,245,901       8,295,389

Long-term assets                            3,386,911       3,358,614
                                       --------------- ---------------

    Total assets                       $   11,632,812  $   11,654,003
                                       =============== ===============


 LIABILITIES AND STOCKHOLDERS' EQUITY

Current liabilities:
  Accounts payable                     $    5,655,556  $    4,947,037
  Current portion of long-term debt           101,433         281,360
  Other current liabilities                   795,738         875,511
                                       --------------- ---------------
    Total current liabilities               6,552,727       6,103,908

Long-term debt, less current portion          856,371       1,157,111

Other liabilities                              61,721          53,939

Stockholders' equity                        4,161,993       4,339,045
                                       --------------- ---------------

    Total liabilities and
     stockholders' equity              $   11,632,812  $   11,654,003
                                       =============== ===============


                    AMERISOURCEBERGEN CORPORATION
           CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
                            (in thousands)
                             (unaudited)


                                             Six             Six
                                        Months Ended    Months Ended
                                          March 31,       March 31,
                                            2005            2004
                                       --------------- ---------------

Operating Activities:
  Net income                           $      150,368  $      250,626
  Non-cash items                               91,912          72,796
  Changes in operating assets and
   liabilities                                950,726        (301,404)
                                       --------------- ---------------
Net cash provided by operating
 activities                                 1,193,006          22,018
                                       --------------- ---------------

Investing Activities:
  Capital expenditures                       (123,246)        (85,335)
  Cost of acquired companies, net of
   cash acquired and other                       (588)        (45,710)
  Proceeds from sale-leaseback
   transactions                                20,732               -
  Proceeds from sale of discontinued
   operations                                   3,560               -
                                       --------------- ---------------
Net cash used in investing activities         (99,542)       (131,045)
                                       --------------- ---------------

Financing Activities:
  Long-term debt repayments                  (180,000)        (30,000)
  Exercise of stock options                    53,503           8,542
  Cash dividends on common stock               (5,381)         (5,607)
  Purchase of common stock                   (675,348)              -
  Deferred financing costs and other           (4,149)           (180)
                                       --------------- ---------------
Net cash used in financing activities        (811,375)        (27,245)
                                       --------------- ---------------

Increase (decrease) in cash and cash
 equivalents                                  282,089        (136,272)

Cash and cash equivalents at beginning
 of period                                    871,343         800,036
                                       --------------- ---------------

Cash and cash equivalents at end of
 period                                $    1,153,432  $      663,764
                                       =============== ===============


                    AMERISOURCEBERGEN CORPORATION
                     SUMMARY SEGMENT INFORMATION
                        (dollars in thousands)
                             (unaudited)


                                      Three Months Ended March 31,
                                  ------------------------------------
Operating Revenue                     2005         2004      % Change
--------------------------------- ------------------------------------

Pharmaceutical Distribution       $ 12,070,185  $12,151,538        -1%
PharMerica                             391,090      392,078         0%
Intersegment eliminations             (218,127)    (210,774)       -3%
                                  ------------- ------------

  Operating revenue               $ 12,243,148  $12,332,842        -1%
                                  ============= ============


                                      Three Months Ended March 31,
                                  ------------------------------------
Operating Income                      2005         2004      % Change
--------------------------------- ------------------------------------

Pharmaceutical Distribution       $    151,548  $   233,283       -35%
PharMerica                              31,971       28,181        13%
Facility consolidations and
 employee severance                     (1,837)      (2,216)       17%
                                  ------------- ------------

  Operating income                $    181,682  $   259,248       -30%
                                  ============= ============


Percentages of operating revenue:

Pharmaceutical Distribution
  Gross profit                            3.21%        3.79%
  Operating expenses                      1.96%        1.87%
  Operating income                        1.26%        1.92%

PharMerica
  Gross profit                           29.25%       30.58%
  Operating expenses                     21.07%       23.40%
  Operating income                        8.18%        7.19%

AmerisourceBergen Corporation
  Gross profit                            4.10%        4.71%
  Operating expenses                      2.62%        2.60%
  Operating income                        1.48%        2.10%


                    AMERISOURCEBERGEN CORPORATION
                     SUMMARY SEGMENT INFORMATION
                        (dollars in thousands)
                             (unaudited)


                                       Six Months Ended March 31,
                                  ------------------------------------
Operating Revenue                     2005         2004      % Change
--------------------------------- ------------------------------------

Pharmaceutical Distribution       $ 24,114,159  $24,229,120         0%
PharMerica                             776,711      794,518        -2%
Intersegment eliminations             (443,407)    (438,059)       -1%
                                  ------------- ------------

  Operating revenue               $ 24,447,463  $24,585,579        -1%
                                  ============= ============


                                       Six Months Ended March 31,
                                  ------------------------------------
Operating Income                      2005         2004      % Change
--------------------------------- ------------------------------------

Pharmaceutical Distribution       $    245,987  $   417,741       -41%
PharMerica                              55,493       56,674        -2%
Facility consolidations and
 employee severance                     (6,970)      (3,769)      -85%
Gain on litigation settlement           18,825            -       N/A
                                  ------------- ------------

  Operating income                $    313,335  $   470,646       -33%
                                  ============= ============


Percentages of operating revenue:

Pharmaceutical Distribution
  Gross profit                            2.98%        3.55%
  Operating expenses                      1.96%        1.83%
  Operating income                        1.02%        1.72%

PharMerica
  Gross profit                           28.47%       30.77%
  Operating expenses                     21.33%       23.64%
  Operating income                        7.14%        7.13%

AmerisourceBergen Corporation
  Gross profit                            3.92%        4.50%
  Operating expenses                      2.64%        2.58%
  Operating income                        1.28%        1.91%


                     AMERISOURCEBERGEN CORPORATION
                          EARNINGS PER SHARE
                (In thousands, except per share data)
                             (unaudited)


Basic earnings per share is computed on the basis of the weighted
average number of shares of common stock outstanding during the
periods presented. Diluted earnings per share is computed on the basis
of the weighted average number of shares of common stock outstanding
during the period plus the dilutive effect of stock options.
Additionally, the diluted earnings per share calculation considers the
convertible subordinated notes as if converted and, therefore, the
effect of interest expense related to those notes is added back to net
income in determining income from continuing operations available to
common stockholders.


                               Three Months Ended   Six Months Ended
                                    March 31,           March 31,
                                 2005      2004      2005      2004
                               --------- --------- --------- ---------

Income from continuing
 operations, before cumulative
 effect of change in
 accounting                    $ 99,972  $142,706  $167,498  $251,747
Interest expense - convertible
 subordinated notes, net of
 income taxes                        28     2,530     2,539     5,060
                               --------- --------- --------- ---------
Income from continuing
 operations available to
 common stockholders           $100,000  $145,236  $170,037  $256,807
                               ========= ========= ========= =========

Weighted average common shares
 outstanding - basic            109,645   111,847   107,584   111,738
Effect of dilutive securities:
  Options to purchase common
   stock                            477       435       450       546
  Convertible subordinated
   notes                            112     5,664     2,898     5,664
                               --------- --------- --------- ---------

Weighted average common shares
 outstanding - diluted          110,234   117,946   110,932   117,948
                               ========= ========= ========= =========


Earnings per share:
  Basic
    Continuing operations      $   0.91  $   1.28  $   1.56  $   2.25
    Discontinued operations           -     (0.01)    (0.06)    (0.01)
    Cumulative effect of
     change in accounting             -         -     (0.10)        -
                               --------- --------- --------- ---------
      Net income               $   0.91  $   1.27  $   1.40  $   2.24
                               ========= ========= ========= =========

  Diluted
    Continuing operations      $   0.91  $   1.23  $   1.53  $   2.18
    Discontinued operations       (0.01)        -     (0.06)    (0.01)
    Cumulative effect of
     change in accounting             -         -     (0.09)        -
                               --------- --------- --------- ---------
      Net income               $   0.90  $   1.23  $   1.38  $   2.17
                               ========= ========= ========= =========


                    AMERISOURCEBERGEN CORPORATION
                         CHANGE IN ACCOUNTING
                             (UNAUDITED)


Effective as of the begining of fiscal 2005, the Company changed
its method of recognizing cash discounts and other related
manufacturer incentives. The Company previously recognized cash
discounts as a reduction of cost of goods sold when earned, primarily
upon payment of vendor invoices. As a result of the change, the
Company now records cash discounts as a component of inventory cost
and recognizes such discounts as a reduction to cost of goods sold
upon the sale of the inventory. With the change to a fee-for-service
model, the Company believes the change in accounting method provides a
more objectively determinable method of recognizing cash discounts and
a better matching of inventory cost to revenue, as inventory turnover
rates are expected to continue to improve.

The Company recorded a $10.2 million (net of tax of $6.3 million)
cumulative effect of change in accounting in the consolidated
statement of operations. This $10.2 million cumulative effect
adjustment reduced diluted earnings per share by $0.09 for the six
months ended March 31, 2005. The Company also adjusted its previously
reported consolidated statement of operations for the three months
ended December 31, 2004 for this accounting change. The change
decreased earnings from continuing operations for the December quarter
by approximately $3.3 million, net of tax, or $0.03 per diluted share
from continuing operations. The accounting change is incorporated in
the Company's results for the three months ended March 31, 2005, and
the change improved earnings from continuing operations in the March
quarter by approximately $12.2 million, net of tax, or $0.11 per
diluted share from continuing operations.

The pro forma effect of this accounting change on prior periods is as
follows:


                                        Three Months     Six Months
                                            Ended           Ended
(in thousands, except per share data)  March 31, 2004  March 31, 2004
-------------------------------------- --------------- ---------------

Income from continuing operations
 before cumulative effect of change in
 accounting
    As Reported                        $      142,706  $      251,747
    Pro Forma                          $      142,381  $      247,270
Net income
    As Reported                        $      142,152  $      250,626
    Pro Forma                          $      141,827  $      246,149

Basic earnings per share from
 continuing operations
    As Reported                        $         1.28  $         2.25
    Pro Forma                          $         1.27  $         2.21

Diluted earnings per share from
 continuing operations
    As Reported                        $         1.23  $         2.18
    Pro Forma                          $         1.23  $         2.14

    CONTACT: AmerisourceBergen Corporation, Valley Forge
             Michael N. Kilpatric, 610-727-7118
             mkilpatric@amerisourcebergen.com

    SOURCE: AmerisourceBergen Corporation

Corporate Overview

AmerisourceBergen is one of the largest global pharmaceutical sourcing and distribution services companies, helping both healthcare providers and pharmaceutical and biotech manufacturers improve patient access to products and enhance patient care. With services ranging from drug distribution and niche premium logistics to reimbursement and pharmaceutical consulting services, AmerisourceBergen delivers innovative programs and solutions across the pharmaceutical supply channel..

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