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AmerisourceBergen Reports Operating Margin Expansion and Record Diluted Earnings Per Share for the September Quarter and Fiscal Year 2003

11/05/03

VALLEY FORGE, Pa.--(BUSINESS WIRE)--Nov. 5, 2003--

Operating Revenue Grew 13 Percent in September Quarter and Fiscal Year 2003

AmerisourceBergen Corporation (NYSE:ABC) today reported record results for its fiscal fourth quarter and year ended September 30, 2003. The following results are presented in accordance with generally accepted accounting principles (GAAP).

    Fiscal Fourth Quarter Highlights

    --  Record diluted earnings per share of $1.04, including special
        charges of $0.01, up 21 percent.

    --  Record net income of $119.5 million, up 26 percent.

    --  Operating margin expansion of 9 basis points.

    --  Record operating revenue of $11.7 billion, up 13 percent.

    Fiscal Year 2003 Highlights

    --  Record diluted earnings per share of $3.89, including special
        charges of $0.07, up 23 percent.

    --  Record net income of $441.2 million, up 28 percent.

    --  Record operating revenue of $45.5 billion, up 13 percent.

    --  Operating margin expansion of 15 basis points.

"In our second full fiscal year as AmerisourceBergen, we built on last year's momentum to deliver exceptional performance," said R. David Yost, AmerisourceBergen's Chief Executive Officer. "We achieved solid results across all of our businesses as we continued to enhance our role in the pharmaceutical supply channel. Double-digit operating margin expansion for the fiscal year was driven by strong, disciplined growth in operating revenue combined with record operating expense efficiency and a solid contribution from our recent acquisitions. This performance resulted in record operating income and excellent earnings per share growth."

Discussion of Results

Diluted earnings per share for the fourth quarter of fiscal 2003 were $1.04, a 21 percent increase over the $0.86 in the prior year's fourth quarter. Included in these results were special charges, net of tax, in the fourth quarter of fiscal 2003 of $1.5 million for facility consolidations and employee severance and a $2.3 million special charge, net of tax, in the same period of the previous fiscal year for merger integration activities. The earnings per share impact of the special charges was a decrease of $0.01 in the fourth quarter of fiscal 2003 and a decrease of $0.02 in the fourth quarter of fiscal 2002.

AmerisourceBergen's operating revenue in the fourth quarter was $11.7 billion, a 13 percent increase over the $10.4 billion in the previous year's fourth quarter. Bulk deliveries in the quarter decreased to $0.9 billion from $1.2 billion in the prior fiscal year's fourth quarter, reflecting the conversion of bulk business into operating revenue earlier in fiscal 2003.

For fiscal year 2003, diluted earnings per share were $3.89, a 23 percent increase over the $3.16 reported last fiscal year. Special charges, net of tax, related to facility consolidations and employee severance and the retirement of debt in fiscal 2003 and merger costs in fiscal 2002 resulted in a net decrease in earnings per share of $0.07 and $0.13, respectively.

Operating revenue in fiscal 2003 increased 13 percent to $45.5 billion from $40.2 billion in the prior fiscal year. Bulk deliveries to customer warehouses decreased to $4.1 billion from $5.0 billion in the prior fiscal year, reflecting the impact of the conversion of bulk business to operating revenue in fiscal 2003.

"Our superior operating performance in fiscal 2003 resulted primarily from continued strong merger integration cost savings, excellent growth in our specialty pharmaceuticals business, contributions from recent acquisitions, and record operating performance in PharMerica," said Kurt J. Hilzinger, AmerisourceBergen's President and Chief Operating Officer.

"In pharmaceutical distribution, we continue to capture integration cost savings significantly ahead of schedule," he continued. "During fiscal 2003, we consolidated six distribution centers, including one that had more than $1 billion in revenue, for a total of 13 consolidations since the merger. We also began construction of three new distribution centers during the year, with the first one scheduled to open in the summer of 2004. In fiscal 2004, we expect to consolidate three more of the existing distribution centers and break ground on an additional three new distribution centers. We continue to be on plan and on budget for completing the new distribution system within the next four years."

"In our PharMerica segment, continued focus on cost controls and operating practices drove operating margins in the September quarter to over 7 percent for the first time," said Hilzinger. "Operating revenue in the fiscal fourth quarter of 2003 grew 6 percent over the same quarter in the prior fiscal year, as operating earnings growth continues to outpace revenue gains."

Segment Review

AmerisourceBergen operates in two segments: Pharmaceutical Distribution (which includes AmerisourceBergen Drug Corporation and AmerisourceBergen Specialty Group) and PharMerica (which includes the long term care pharmacy and workers' compensation businesses). Intersegment operating revenue of $211.2 million in the fourth quarter of fiscal 2003 from AmerisourceBergen Drug Corporation to PharMerica, which is included in the Pharmaceutical Distribution segment operating revenue, is eliminated for consolidated reporting purposes.

Pharmaceutical Distribution Segment

Operating revenue in the fourth quarter of fiscal 2003 increased to $11.5 billion compared with $10.2 billion in the fourth quarter of fiscal year 2002, a 13 percent increase.

Pharmaceutical Distribution customer mix in the fourth quarter of fiscal 2003 was 58 percent institutional and 42 percent retail. Operating revenue from institutional customers, which include mail order and alternate site facilities, hospitals and specialty pharmaceutical customers, continued to grow significantly faster than operating revenue from retail customers.

AmerisourceBergen Specialty Group, with annualized revenue of nearly $4 billion, continued its strong performance, building leadership positions in the distribution of products and services to physicians in numerous disease states, including oncology, as well as growing its manufacturer services businesses such as reimbursement consulting.

Gross profit as a percentage of operating revenue in the fourth quarter of fiscal 2003 was 3.86 percent, compared to 3.92 percent in the same period in the prior fiscal year. Gross margins were positively impacted by recent acquisitions, which offset in part the negative impacts of customer mix and the competitive environment.

Total operating expenses as a percentage of operating revenue in the fourth quarter of fiscal 2003 were 2.09 percent, an 11 basis point improvement over the same quarter last year, driven by customer mix, merger integration cost savings and operating efficiencies, offset in part by higher expense ratios within recent acquisitions.

Operating margins (operating income as a percentage of operating revenue) expanded 5 basis points in the fourth quarter of fiscal 2003 to 1.77 percent compared to 1.72 percent in the fourth quarter of in the previous fiscal year.

PharMerica

PharMerica's operating revenue for the fourth quarter of fiscal 2003 increased 6 percent to $408.4 million from $386.1 million in the previous year's fourth quarter.

Operating margin expanded to a record 7.08 percent in the September quarter due primarily to cost control and improved operating practices.

Looking Ahead

"AmerisourceBergen's long-term guidance is to grow operating revenue with the U.S. pharmaceutical market, which is currently expected to grow 10 percent to 13 percent through 2007, and grow annual earnings per share excluding special items at 15 percent or greater," said Yost. "For the fiscal year ending September 30, 2004, we expect to grow operating revenue in line with the U.S. pharmaceutical market, which is expected to be at the lower end of the four-year range. With our disciplined approach to revenue growth, we expect to grow diluted earnings per share, excluding special items, for fiscal year 2004 at approximately 15 percent, within a range of $4.50 per share to $4.60 per share."

Conference Call

The Company will host a conference call to discuss the results at 11:00 a.m. Eastern Standard Time on November 5, 2003. 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:    (888) 428-4478 from within the United States.
            No access code required or
            (651) 291-0344 from outside the United States.
            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 3:00 p.m. EST on November 5, 2003 to 11:59 p.m. EST on November 12, 2003.

To access the replay via telephone:


Dial in:    (800) 475-6701 from within the U.S., access code: 701428
            (320) 365-3844 from outside the U.S., access code: 701428

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 the largest pharmaceutical services company in the United States dedicated solely to the pharmaceutical supply chain. It is the leading distributor of pharmaceutical products and services to the hospital market, physician's offices, alternate care and mail order facilities, and independent and chain pharmacies. The Company is also a leader in the long term care pharmacy marketplace, the workers' compensation fulfillment business and contract packaging for manufacturers. With more than $45 billion in annualized operating revenue, AmerisourceBergen is headquartered in Valley Forge, PA, and employs more than 14,000 people. AmerisourceBergen is ranked #24 on the Fortune 500 list and was ranked #6 in the 2003 Business Week 50, a list of the 50 best performing companies in the S & P 500. 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 future financial and operating results of AmerisourceBergen and the benefits and other aspects of the 2001 merger between AmeriSource Health Corporation and Bergen Brunswig Corporation.

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; regulatory changes; changes in U.S. government policies; failure to integrate the businesses of AmeriSource and Bergen Brunswig successfully; failure to obtain and retain expected synergies from the merger of AmeriSource and Bergen Brunswig; and other economic, business, competitive, regulatory and/or operational factors affecting the business of AmerisourceBergen generally.

More detailed information about these factors is set forth in AmerisourceBergen's filings with the Securities and Exchange Commission, including its Annual Report on Form 10-K for fiscal 2002.

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
                   Sept. 30,   Operating   Sept. 30,  Operating   %
                     2003        Revenue    2002       Revenue  Change
                  ------------ --------- ------------ --------- ------

Revenue:
   Operating
    revenue       $11,733,254    100.00% $10,357,502    100.00%    13%
   Bulk deliveries
    to customer
    warehouses        906,329              1,243,418              -27%
                  ------------           ------------
Total revenue      12,639,583             11,600,920

Cost of goods
 sold              12,055,417             11,072,301                9%
                  ------------           ------------

Gross profit          584,166      4.98%     528,619      5.10%    11%

Operating
 expenses:
   Distribution,
    selling and
    administrative    330,934      2.82%     314,184      3.03%     5%
   Depreciation
    and
    amortization       20,313      0.17%      16,962      0.16%    20%
   Facility
    consolidations
    and employee
    severance           2,426      0.02%           -      0.00%   N/A
   Merger costs             -      0.00%       3,859      0.04%   N/A
                  ------------           ------------

Operating income      230,493      1.96%     193,614      1.87%    19%

Equity in losses
 of affiliates and
 other                    457      0.00%       4,460      0.04%   N/A

Interest expense       34,726      0.30%      31,663      0.31%    10%
                  ------------           ------------

Income before
 taxes                195,310      1.66%     157,491      1.52%    24%

Income taxes           75,780      0.65%      62,531      0.60%    21%
                  ------------           ------------

Net income           $119,530      1.02%     $94,960      0.92%    26%
                  ============           ============


Earnings per
 share:
   Basic                $1.07                  $0.89
   Diluted              $1.04                  $0.86

Weighted average
 common shares
 outstanding:
   Basic              111,503                106,225
   Diluted            117,896                113,134








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


                     Fiscal                 Fiscal
                   Year Ended    % of     Year Ended    % of
                   Sept. 30,   Operating  Sept. 30,   Operating   %
                     2003       Revenue     2002       Revenue  Change
                  ------------ --------- ------------ --------- ------

Revenue:
   Operating
    revenue       $45,536,689    100.00% $40,240,714    100.00%    13%
   Bulk deliveries
    to customer
    warehouses      4,120,639              4,994,080              -17%
                  ------------           ------------
Total revenue      49,657,328             45,234,794

Cost of goods
 sold              47,410,169             43,210,320               10%
                  ------------           ------------

Gross profit        2,247,159      4.93%   2,024,474      5.03%    11%

Operating
 expenses:
   Distribution,
    selling and
    administrative  1,284,132      2.82%   1,220,651      3.03%     5%
   Depreciation
    and
    amortization       70,991      0.16%      61,151      0.15%    16%
   Facility
    consolidations
    and employee
    severance           8,930      0.02%           -      0.00%   N/A
   Merger costs             -      0.00%      24,244      0.06%   N/A
                  ------------           ------------

Operating income      883,106      1.94%     718,428      1.79%    23%

Equity in losses
 of affiliates and
 other                  8,015      0.02%       5,647      0.01%    42%

Interest expense      144,744      0.32%     140,734      0.35%     3%

Loss on early
 retirement of
 debt                   4,220      0.01%           -      0.00%   N/A
                  ------------           ------------

Income before
 taxes                726,127      1.59%     572,047      1.42%    27%

Income taxes          284,898      0.63%     227,106      0.56%    25%
                  ------------           ------------

Net income           $441,229      0.97%    $344,941      0.86%    28%
                  ============           ============


Earnings per
 share:
   Basic                $4.03                  $3.29
   Diluted              $3.89                  $3.16

Weighted average
 common shares
 outstanding:
   Basic              109,513                104,935
   Diluted            115,954                112,228








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


            ASSETS
                                   Sept. 30,    Sept. 30,       $
                                     2003         2002       Change
                                  ------------ ------------ ---------
Current assets:
  Cash and cash equivalents          $800,036     $663,340  $136,696
  Accounts receivable, net          2,295,437    2,222,156    73,281
  Merchandise inventories           5,733,837    5,437,878   295,959
  Prepaid expenses and other           29,208       26,263     2,945
                                  ------------ ------------ ---------
          Total current assets      8,858,518    8,349,637   508,881

Long-term assets                    3,181,607    2,863,375   318,232
                                  ------------ ------------ ---------

          Total assets            $12,040,125  $11,213,012  $827,113
                                  ============ ============ =========


  LIABILITIES AND STOCKHOLDERS' EQUITY

Current liabilities:
  Accounts payable                 $5,393,769   $5,367,837   $25,932
  Current portion of long-term
   debt                                61,430       60,819       611
  Other current liabilities           800,903      670,861   130,042
                                  ------------ ------------ ---------
          Total  current
           liabilities              6,256,102    6,099,517   156,585

Long-term debt, less current
 portion                            1,722,724    1,756,494   (33,770)

Other liabilities                      55,982       40,663    15,319

Stockholders' equity                4,005,317    3,316,338   688,979
                                  ------------ ------------ ---------

          Total liabilities and
           stockholders' equity   $12,040,125  $11,213,012  $827,113
                                  ============ ============ =========





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

                                                    Fiscal    Fiscal
                                                     Year      Year
                                                     Ended     Ended
                                                   Sept. 30, Sept. 30,
                                                     2003      2002
                                                   --------- ---------

Operating Activities:
    Net income                                     $441,229  $344,941
    Non-cash items                                  271,192   190,033
    Changes in operating assets and liabilities    (357,606)      952
                                                   --------- ---------
Net cash provided by operating activities           354,815   535,926
                                                   --------- ---------

Investing Activities:
    Capital expenditures                            (90,554)  (64,159)
    Cost of acquired companies, net of cash
     acquired                                      (111,981) (136,223)
    Other                                               726    (2,432)
                                                   --------- ---------
Net cash used in investing activities              (201,809) (202,814)
                                                   --------- ---------

Financing Activities:
    Net repayments under revolving credit and
     receivables securitization facilities                -   (37,000)
    Net repayments of long-term debt                (38,989)  (23,119)
    Exercise of stock options                        42,564   101,509
    Cash dividends on common stock                  (10,995)  (10,500)
    Other                                            (8,890)    1,712
                                                   --------- ---------
Net cash (used in) provided by financing
 activities                                         (16,310)   32,602
                                                   --------- ---------

Increase in cash and cash equivalents               136,696   365,714

Cash and cash equivalents at beginning of year      663,340   297,626
                                                   --------- ---------

Cash and cash equivalents at end of year           $800,036  $663,340
                                                   ========= =========






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


                                      Three Months Ended Sept. 30,
                                   -----------------------------------
Operating Revenue                     2003         2002      % Change
---------------------------------- -----------------------------------

Pharmaceutical Distribution        $11,536,052  $10,172,674        13%
PharMerica                             408,380      386,061         6%
Intersegment Eliminations             (211,178)    (201,233)       -5%
                                   ------------ ------------

    Operating revenue              $11,733,254  $10,357,502        13%
                                   ============ ============




                                      Three Months Ended Sept. 30,
                                   -----------------------------------
Operating Income                      2003         2002      % Change
---------------------------------- -----------------------------------

Pharmaceutical Distribution           $204,025     $174,622        17%
PharMerica                              28,894       22,851        26%
Merger costs, facility
 consolidations and employee
 severance                              (2,426)      (3,859)       37%
                                   ------------ ------------

    Operating income                  $230,493     $193,614        19%
                                   ============ ============




Percentages of operating revenue:

Pharmaceutical Distribution
    Gross profit                          3.86%        3.92%
    Operating expenses                    2.09%        2.20%
    Operating income                      1.77%        1.72%

PharMerica
    Gross profit                         33.92%       33.71%
    Operating expenses                   26.84%       27.79%
    Operating income                      7.08%        5.92%

AmerisourceBergen Corporation
    Gross profit                          4.98%        5.10%
    Operating expenses                    3.01%        3.23%
    Operating income                      1.96%        1.87%






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


                                      Fiscal Year Ended Sept. 30,
                                  -----------------------------------
Operating Revenue                    2003         2002      % Change
--------------------------------- -----------------------------------

Pharmaceutical Distribution       $44,731,200  $39,539,858        13%
PharMerica                          1,608,203    1,475,028         9%
Intersegment Eliminations            (802,714)    (774,172)       -4%
                                  ------------ ------------

    Operating revenue             $45,536,689  $40,240,714        13%
                                  ============ ============




                                      Fiscal Year Ended Sept. 30,
                                  -----------------------------------
Operating Income                     2003         2002      % Change
--------------------------------- -----------------------------------

Pharmaceutical Distribution          $788,193     $659,208        20%
PharMerica                            103,843       83,464        24%
Merger costs, facility
 consolidations and employee
 severance                             (8,930)     (24,244)       63%
                                  ------------ ------------

    Operating income                 $883,106     $718,428        23%
                                  ============ ============




Percentages of operating revenue:

Pharmaceutical Distribution
    Gross profit                         3.85%        3.87%
    Operating expenses                   2.09%        2.20%
    Operating income                     1.76%        1.67%

PharMerica
    Gross profit                        32.69%       33.49%
    Operating expenses                  26.23%       27.83%
    Operating income                     6.46%        5.66%

AmerisourceBergen Corporation
    Gross profit                         4.93%        5.03%
    Operating expenses                   3.00%        3.25%
    Operating income                     1.94%        1.79%






                       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
     available to common stockholders.







                                Three months ended  Fiscal year ended
                                    Sept. 30,           Sept. 30,
                                  2003     2002      2003      2002
                                --------- -------- --------- ---------

Net income                      $119,530  $94,960  $441,229  $344,941
Interest expense - convertible
 subordinated notes, net of
 income taxes                      2,518    2,481     9,997     9,922
                                --------- -------- --------- ---------
Income available to common
 stockholders                   $122,048  $97,441  $451,226  $354,863
                                ========= ======== ========= =========


Weighted average common shares
 outstanding - basic             111,503  106,225   109,513   104,935
Effect of dilutive securities:
    Options to purchase common
     stock                           729    1,245       777     1,629
    Convertible subordinated
     notes                         5,664    5,664     5,664     5,664
                                --------- -------- --------- ---------

Weighted average common shares
 outstanding - diluted           117,896  113,134   115,954   112,228
                                ========= ======== ========= =========


Earnings per share:
    Basic                          $1.07    $0.89     $4.03     $3.29
    Diluted                        $1.04    $0.86     $3.89     $3.16

    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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