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AmerisourceBergen Reports Record Operating Revenue and Diluted Earnings Per Share for the March Quarter

04/24/03
AmerisourceBergen Corporation (NYSE:ABC)

                 Operating Revenue Up 13 percent, and
                       Diluted EPS Up 23 percent

AmerisourceBergen Corporation (NYSE:ABC) today reported record results for its fiscal second quarter ended March 31, 2003.

The following results are presented in accordance with generally accepted accounting principles (GAAP).

    Fiscal Second Quarter Highlights

    -   Record diluted earnings per share of $1.03, including special
        charges of $0.02, up 23 percent.

    -   Record net income of $116.4 million, up 27 percent.

    -   Record operating revenue of $11.2 billion, up 13 percent.

    -   Return On Committed Capital (ROCC) of 26.2 percent.

    Fiscal First Six Months Highlights

    -   Record diluted earnings per share of $1.87, including special
        charges of $0.01, up 26 percent.

    -   Record net income of $209.2 million, up 31 percent.

    -   Record operating revenue of $22.3 billion, up 14 percent.

"AmerisourceBergen again delivered outstanding performance," said R. David Yost, AmerisourceBergen's Chief Executive Officer. "We had excellent results across all of our businesses. Strong operating revenues in combination with operating expense efficiency drove significant operating margin expansion. This performance combined with solid working capital management resulted in improved return on committed capital and excellent earnings per share."

Discussion of Results

Diluted earnings per share for the second quarter of fiscal 2003 were $1.03, a 23 percent increase over the $0.84 in the prior year's second quarter. Included in these results were special charges of $2.4 million, net of tax, in the second quarter of fiscal 2003 for facility consolidations and employee severance and a $2.9 million 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 $0.02 in the second quarter of fiscal 2003 and a decrease of $0.03 in the second quarter of fiscal 2002.

Also in the second quarter of fiscal 2003, the Company wrote down $5.5 million of its equity investment in a technology company, which is included in the "equity in losses of affiliates and other" line in the income statement.

AmerisourceBergen's operating revenue, which excludes bulk deliveries to customer warehouses, rose 13 percent to $11.2 billion in the second quarter of fiscal 2003 compared to $9.9 billion for the same period last year.

For the first six months of fiscal 2003, diluted earnings per share were $1.87, a 26 percent increase over the $1.48 in the same six-month period last year. Special items related to facility consolidations and employee severance in the first half of fiscal 2003 and merger costs in the first six months of fiscal 2002 resulted in a net decrease in earnings per share of $0.01 and $0.06, respectively.

Operating revenue in the first six months of fiscal 2003 increased 14 percent to $22.3 billion from $19.6 billion in the same period of the previous fiscal year.

"Our excellent operating performance in the quarter was driven primarily by continued strong merger integration cost savings, excellent growth in our specialty pharmaceuticals business, and contributions from recent acquisitions," said Kurt J. Hilzinger, AmerisourceBergen's President and Chief Operating Officer.

"Throughout the period, the building of our new pharmaceutical distribution network continued on time and on budget," he continued. "We consolidated two distribution centers, one in Lynchburg, Virginia, and one in Joplin, Missouri, into other facilities and remain on track to consolidate three more facilities before the end of this fiscal year. We have now consolidated ten distribution centers."

"In our PharMerica segment, strong, disciplined operating revenue growth of 10 percent reflects improved growth in both our long term care pharmacy and workers' compensation fulfillment businesses," said Hilzinger. "Continued focus on improved operating practices and customer mix drove operating expenses down and expanded operating margins in the quarter to record levels."

Segment Review

AmerisourceBergen operates in two segments: Pharmaceutical Distribution (which includes the AmerisourceBergen Drug Company and AmerisourceBergen Specialty Group operations) and PharMerica (which includes the long term care pharmacy and workers' compensation fulfillment businesses). Intersegment sales of $192.8 million in the second quarter of fiscal 2003 from AmerisourceBergen Drug Company to PharMerica, which are included in the Pharmaceutical Distribution segment operating revenue, are eliminated for consolidated reporting purposes.

Pharmaceutical Distribution Segment

Operating revenue in the second quarter of fiscal 2003 increased to $11.0 billion compared with $9.8 billion in the second quarter of fiscal year 2002, a 13 percent increase.

Pharmaceutical Distribution customer mix in the second quarter of fiscal 2003 was 55 percent institutional and 45 percent retail. Institutional customers, which include mail order facilities, hospitals and specialty pharmaceutical customers, continued to grow faster than retail customers.

Gross profit as a percentage of operating revenue was 4.11 percent in the second quarter of fiscal 2003, a 7 basis point improvement over the same period in the prior fiscal year. Higher gross margins were positively impacted by recent acquisitions, which offset the impacts of customer mix and the competitive environment.

Total operating expenses as a percentage of operating revenue in the second quarter of fiscal 2003 were 2.15 percent, an 8 basis point improvement over the same quarter last year, driven by merger integration cost savings, customer mix, and operating efficiencies, offset in part by higher expense ratios within recent acquisitions.

Operating income as a percentage of operating revenue in the second quarter of fiscal 2003 expanded 17 basis points to 1.97 percent compared to the second quarter of fiscal 2002.

AmerisourceBergen Specialty Group, with annualized revenue of more than $3 billion, continued its strong quarterly performance, building significant positions in oncology, blood plasma, and injectables distribution primarily to physicians, as well as growing its manufacturing services businesses.

PharMerica

PharMerica's operating revenue for the second quarter of fiscal 2003 increased 10 percent to $397.1 million from $359.8 million in the previous year's second quarter.

Gross profit as a percentage of operating revenue was 32.35 percent in the second quarter of fiscal 2003, a 117 basis point decline over the same period in the prior fiscal year due primarily to the more rapid growth of the lower gross margin workers' compensation business. The decline in gross margin was more than offset by a 181 basis point improvement in total operating expenses as a percentage of operating revenue due primarily to improved operating practices and the change in customer mix. Operating income as a percentage of operating revenue expanded 64 basis points in the quarter ended March 31, 2003 to 6.07 percent from 5.43 percent in the same period of the prior year.

Looking Ahead

"For the fiscal year ending September 30, 2003, we continue to expect to grow operating revenue approximately 13 percent, with the second half of the fiscal year growing between 11 percent and 12 percent. We continue to expect earnings per share growth of 20 percent for the remainder of fiscal year 2003, excluding the impact of special items and the cost of exercising the call option on the PharMerica bonds in April 2003," said Yost. "ROCC is expected to remain well above our 20 percent long-term target, and we continue to be confident in our ability to achieve annual merger integration cost savings of approximately $150 million by the end of fiscal year 2004, followed by additional cost savings as we complete the build out of our distribution network."

Conference Call

The Company will host a conference call to discuss the results at 11:00 a.m. Eastern Daylight Time on April 24, 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:  (866) 269-9612 from inside the U.S., no access code required
           or (612) 332-0802 from outside the U.S., 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
4:15 p.m. April 24, 2003 until 11:59 p.m. May 1, 2003.

To access the replay via telephone:

Dial in: (800) 475-6701 from within the U.S., access code: 673719
         (320) 365-3844 from outside the U.S., access code: 673719

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 systems/acute care market, physician's offices, alternate care and mail order facilities, independent community pharmacies, and regional chain pharmacies. The Company is also a leader in the long term care pharmacy and workers' compensation fulfillment marketplaces. With more than $40 billion in annualized operating revenue, AmerisourceBergen is headquartered in Valley Forge, PA, and employs more than 13,000 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
                     March 31,  Operating  March 31,  Operating  %
                       2003      Revenue     2002     Revenue  Change
                    ------------ -------- ----------- -------- ------
Revenue:
      Operating
       revenue      $11,213,959   100.00% $9,918,609   100.00%    13%
      Bulk
       deliveries to
       customer
       warehouses       948,582            1,025,658              -8%
                    ------------          -----------
Total revenue        12,162,541           10,944,267

Cost of goods sold   11,581,352           10,429,774              11%
                    ------------          -----------

Gross profit            581,189     5.18%    514,493     5.19%    13%

Operating expenses:
     Distribution,
      selling and
      administrative    323,563     2.89%    304,576     3.07%     6%
     Depreciation
      and
      amortization       17,069     0.15%     14,402     0.15%    19%
     Facility
      consolidations
      and employee
      severance           4,005     0.04%          -     0.00%   N/A
     Merger costs             -     0.00%      4,741     0.05%   N/A
                    ------------          -----------

Operating income        236,552     2.11%    190,774     1.92%    24%

Equity in losses
 (income) of
 affiliates and
 other                    5,733     0.05%       (354)    0.00%   N/A

Interest expense         38,399     0.34%     38,752     0.39%    -1%
                    ------------          -----------

Income before taxes     192,420     1.72%    152,376     1.54%    26%

Income taxes             76,006     0.68%     60,502     0.61%    26%
                    ------------          -----------

Net income             $116,414     1.04%    $91,874     0.93%    27%
                    ============          ===========


Earnings per
 share:
   Basic                  $1.06                $0.88
   Diluted                $1.03                $0.84

Weighted average
 common shares
 outstanding:
   Basic                109,438              104,404
   Diluted              115,756              111,704





                    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  %
                      2003      Revenue     2002      Revenue  Change
                   ------------ -------- ------------ -------- ------

Revenue:
     Operating
      revenue      $22,320,864   100.00% $19,604,885   100.00%    14%
     Bulk
      deliveries to
      customer
      warehouses     2,276,210             2,408,162              -5%
                   ------------          ------------
Total revenue       24,597,074            22,013,047

Cost of goods
 sold               23,494,460            21,027,121              12%
                   ------------          ------------

Gross profit         1,102,614     4.94%     985,926     5.03%    12%

Operating
 expenses:
    Distribution,
     selling and
     administrative    641,245     2.87%     602,168     3.07%     6%
    Depreciation
     and
     amortization       34,338     0.15%      29,449     0.15%    17%
    Facility
     consolidations
     and employee
     severance           2,624     0.01%           -     0.00%   N/A
    Merger costs             -     0.00%      12,238     0.06%   N/A
                   ------------          ------------

Operating income       424,407     1.90%     342,071     1.74%    24%

Equity in losses of
 affiliates and
 other                   5,916     0.03%       1,377     0.01%   330%

Interest expense        72,784     0.33%      75,745     0.39%    -4%
                   ------------          ------------

Income before
 taxes                 345,707     1.55%     264,949     1.35%    30%

Income taxes           136,554     0.61%     105,192     0.54%    30%
                   ------------          ------------

Net income            $209,153     0.94%    $159,757     0.81%    31%
                   ============          ============


Earnings per
 share:
  Basic                  $1.93                 $1.54
  Diluted                $1.87                 $1.48

Weighted average
 common shares
 outstanding:
  Basic                108,101               104,070
  Diluted              114,566               111,443




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


                        ASSETS
                                   March       September        $
                                  31, 2003     30, 2002      Change
                                ------------ ------------ -----------
Current
 assets:
     Cash and cash
      equivalents                  $225,956     $663,340   ($437,384)
     Accounts
      receivable, net             2,163,665    2,222,156     (58,491)
     Merchandise
      inventories                 6,898,825    5,437,878   1,460,947
     Prepaid expenses and
      other                          16,211       26,263     (10,052)
                                ------------ ------------ -----------
             Total current
              assets              9,304,657    8,349,637     955,020

Long-term
 assets                           3,018,982    2,863,375     155,607
                                ------------ ------------ -----------

             Total assets       $12,323,639  $11,213,012  $1,110,627
                                ============ ============ ===========


    LIABILITIES AND STOCKHOLDERS' EQUITY

Current
 liabilities:
     Accounts payable            $5,782,858   $5,367,837    $415,021
     Current portion of long-
      term debt                      60,948       60,819         129
     Other current
      liabilities                   744,518      670,861      73,657
                                ------------ ------------ -----------
             Total  current
              liabilities         6,588,324    6,099,517     488,807

Long-term debt, less current
 portion                          2,000,790    1,756,494     244,296

Other
 liabilities                         42,571       40,663       1,908

Stockholders'
 equity                           3,691,954    3,316,338     375,616
                                ------------ ------------ -----------

             Total liabilities
              and stockholders'
              equity            $12,323,639  $11,213,012  $1,110,627
                                ============ ============ ===========




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


                                        Three Months Ended March 31,
                                       -------------------------------
Operating Revenue                         2003         2002   % Change
-------------------------------------- -------------------------------

Pharmaceutical Distribution            $11,009,646  $9,750,903     13%
PharMerica                                 397,095     359,761     10%
Intersegment Eliminations                 (192,782)   (192,055)     0%
                                       ------------ -----------

Operating revenue                      $11,213,959  $9,918,609     13%
                                       ============ ===========




                                        Three Months Ended March 31,
                                       -------------------------------
Operating Income                          2003         2002   % Change
-------------------------------------- -------------------------------

Pharmaceutical Distribution               $216,456    $175,968     23%
PharMerica                                  24,101      19,547     23%
Merger costs, facility consolidations
 and employee severance                     (4,005)     (4,741)    16%
                                       ------------ -----------

Operating income                          $236,552    $190,774     24%
                                       ============ ===========




Percentages of operating revenue:

Pharmaceutical Distribution
Gross profit                                  4.11%       4.04%
Operating expenses                            2.15%       2.23%
Operating income                              1.97%       1.80%

PharMerica
Gross profit                                 32.35%      33.52%
Operating expenses                           26.28%      28.09%
Operating income                              6.07%       5.43%

AmerisourceBergen Corporation
Gross profit                                  5.18%       5.19%
Operating expenses                            3.07%       3.26%
Operating income                              2.11%       1.92%




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


                                      Six Months Ended March 31,
                                  -----------------------------------
Operating Revenue                    2003         2002      % Change
--------------------------------- -----------------------------------

Pharmaceutical Distribution       $21,909,216  $19,272,979        14%
PharMerica                            799,937      715,176        12%
Intersegment Eliminations            (388,289)    (383,270)       -1%
                                  ------------ ------------

Operating revenue                 $22,320,864  $19,604,885        14%
                                  ============ ============




                                      Six Months Ended March 31,
                                  -----------------------------------
Operating Income                     2003         2002      % Change
--------------------------------- -----------------------------------

Pharmaceutical Distribution          $379,391     $315,452        20%
PharMerica                             47,640       38,857        23%
Merger costs, facility
 consolidations and employee
 severance                             (2,624)     (12,238)       79%
                                  ------------ ------------

Operating income                     $424,407     $342,071        24%
                                  ============ ============




Percentages of operating revenue:

Pharmaceutical Distribution
Gross profit                             3.85%        3.87%
Operating expenses                       2.12%        2.23%
Operating income                         1.73%        1.64%

PharMerica
Gross profit                            32.26%       33.57%
Operating expenses                      26.31%       28.14%
Operating income                         5.96%        5.43%

AmerisourceBergen Corporation
Gross profit                             4.94%        5.03%
Operating expenses                       3.04%        3.28%
Operating income                         1.90%        1.74%





                     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  Six months ended
                                    March 31,           March 31,
                                  2003     2002      2003      2002
                                --------- -------- --------- ---------

Net income                      $116,414  $91,874  $209,153  $159,757
Interest expense - convertible
 subordinated notes, net of
 income taxes                      2,489    2,481     4,978     4,961
                                --------- -------- --------- ---------
Income available to common
 stockholders                   $118,903  $94,355  $214,131  $164,718
                                ========= ======== ========= =========


Weighted average common shares
 outstanding - basic             109,438  104,404   108,101   104,070
Effect of dilutive securities:
      Options to purchase common
       stock                         654    1,636       801     1,709
      Convertible subordinated
       notes                       5,664    5,664     5,664     5,664
                                --------- -------- --------- ---------

Weighted average common shares
 outstanding - diluted           115,756  111,704   114,566   111,443
                                ========= ======== ========= =========


Earnings per share:
      Basic                        $1.06    $0.88     $1.93     $1.54
      Diluted                      $1.03    $0.84     $1.87     $1.48
AmerisourceBergen Corporation, Valley Forge
Michael N. Kilpatric, 610/727-7118
mkilpatric@amerisourcebergen.com

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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