UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

þ		QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

FOR THE QUARTERLY PERIOD ENDED MARCH 31, 2009

o		TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

FOR THE TRANSITION PERIOD FROM                      TO                     

AMERISOURCEBERGEN CORPORATION

(Exact name of registrant as specified in its charter)

Delaware		23-3079390
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)
1300 Morris Drive, Chesterbrook, PA		19087-5594
(Address of principal executive offices)		(Zip Code)

(610) 727-7000

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes þ No o

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes o No o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company (as defined in Rule 12b-2 of the Exchange Act).

Large accelerated filer þ		Accelerated filer o		Non-accelerated filer o		Smaller reporting company o

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes o No þ

The number of shares of common stock of AmerisourceBergen Corporation outstanding as of April 30, 2009 was 150,993,156.

 

 

AMERISOURCEBERGEN CORPORATION

INDEX

		Page No.
Part I. FINANCIAL INFORMATION
Item 1. Financial Statements (Unaudited)
Consolidated Balance Sheets, March 31, 2009 and September 30, 2008			3
Consolidated Statements of Operations for the three and six months ended March 31, 2009 and 2008			4
Consolidated Statements of Cash Flows for the six months ended March 31, 2009 and 2008			5
Notes to Consolidated Financial Statements			6
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations			23
Item 3. Quantitative and Qualitative Disclosures About Market Risk			36
Item 4. Controls and Procedures			36
Part II. OTHER INFORMATION
Item 1. Legal Proceedings			36
Item 1A. Risk Factors			36
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds			37
Item 4. Submission of Matters to a Vote of Security Holders			38
Item 6. Exhibits			38
SIGNATURES			39
Exhibit 31.1
Exhibit 31.2
Exhibit 32.1
Exhibit 32.2

PART I. FINANCIAL INFORMATION

ITEM I. Financial Statements (Unaudited)

AMERISOURCEBERGEN CORPORATION AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

		March 31,				September 30,
(in thousands, except share and per share data)		2009				2008
		(Unaudited)
ASSETS
Current assets:
Cash and cash equivalents		$	655,329			$	878,114
Accounts receivable, less allowances for returns and doubtful accounts: $374,710 at March 31, 2009 and $393,714 at September 30, 2008			3,734,251				3,480,267
Merchandise inventories			4,578,950				4,211,775
Prepaid expenses and other			36,849				55,914
Assets held for sale			—				43,691
Total current assets			9,005,379				8,669,761
Property and equipment, at cost:
Land			35,517				35,258
Buildings and improvements			287,538				281,001
Machinery, equipment and other			648,053				616,942
Total property and equipment			971,108				933,201
Less accumulated depreciation			(394,463	)			(381,042	)
Property and equipment, net			576,645				552,159
Goodwill and other intangible assets			2,844,783				2,875,366
Other assets			122,909				120,500
TOTAL ASSETS		$	12,549,716			$	12,217,786
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable		$	7,651,455			$	7,326,580
Accrued expenses and other			251,591				270,823
Current portion of long-term debt			695				1,719
Deferred income taxes			574,365				550,708
Liabilities held for sale			—				17,759
Total current liabilities			8,478,106				8,167,589
Long-term debt, net of current portion			1,159,351				1,187,412
Other liabilities			153,563				152,740
Stockholders’ equity:
Common stock, $0.01 par value — authorized: 600,000,000 shares; issued and outstanding: 240,889,112 shares and 150,969,210 shares at March 31, 2009, respectively, and 240,577,082 shares and 156,215,460 shares at September 30, 2008, respectively			2,409				2,406
Additional paid-in capital			3,710,618				3,692,023
Retained earnings			2,702,724				2,479,078
Accumulated other comprehensive loss			(27,731	)			(16,490	)
Treasury stock, at cost: 89,919,902 shares at March 31, 2009 and 84,361,622 shares at September 30, 2008			(3,629,324	)			(3,446,972	)
Total stockholders’ equity			2,758,696				2,710,045
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY		$	12,549,716			$	12,217,786

See notes to consolidated financial statements.

AMERISOURCEBERGEN CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS

		Three months ended								Six months ended
		March 31,								March 31,
(in thousands, except per share data)		2009				2008				2009				2008
Operating revenue		$	16,932,790			$	17,203,619			$	33,813,868			$	33,349,514
Bulk deliveries to customer warehouses			378,861				552,219				836,160				1,685,707
Total revenue			17,311,651				17,755,838				34,650,028				35,035,221
Cost of goods sold			16,759,180				17,218,550				33,607,709				34,013,717
Gross profit			552,471				537,288				1,042,319				1,021,504
Operating expenses:
Distribution, selling, and administrative			280,509				279,536				552,535				550,306
Depreciation			15,607				16,889				30,660				32,958
Amortization			3,827				4,478				7,683				9,035
Facility consolidations, employee severance and other			4,262				1,384				5,291				1,561
Operating income			248,266				235,001				446,150				427,644
Other loss (income)			504				(992	)			933				(255	)
Interest expense, net			14,521				18,701				28,704				35,115
Income from continuing operations before income taxes			233,241				217,292				416,513				392,784
Income taxes			89,199				84,464				159,942				151,547
Income from continuing operations			144,042				132,828				256,571				241,237
(Loss) income from discontinued operations, net of income taxes			(655	)			1,024				(2,128	)			2,435
Net income		$	143,387			$	133,852			$	254,443			$	243,672
Earnings per share:
Basic earnings per share:
Continuing operations		$	0.95			$	0.82			$	1.68			$	1.48
Discontinued operations			—				0.01				(0.01	)			0.01
Total		$	0.95			$	0.83			$	1.67			$	1.49
Diluted earnings per share:
Continuing operations		$	0.95			$	0.81			$	1.67			$	1.46
Discontinued operations			—				0.01				(0.01	)			0.01
Rounding			(0.01	)			—				—				0.01
Total		$	0.94			$	0.82			$	1.66			$	1.48
Weighted average common shares outstanding:
Basic			151,223				161,218				152,793				163,073
Diluted			152,292				163,268				153,723				165,176
Cash dividends declared per share of common stock		$	0.10			$	0.075			$	0.20			$	0.15

See notes to consolidated financial statements.

AMERISOURCEBERGEN CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

		Six months ended
		March 31,
(in thousands)		2009				2008
OPERATING ACTIVITIES
Net income		$	254,443			$	243,672
Loss (income) from discontinued operations			2,128				(2,435	)
Income from continuing operations			256,571				241,237
Adjustments to reconcile income from continuing operations to net cash provided by operating activities:
Depreciation, including amounts charged to cost of goods sold			36,131				37,779
Amortization, including amounts charged to interest expense			9,712				10,726
Provision for doubtful accounts			16,359				8,937
Provision for deferred income taxes			26,142				34,099
Share-based compensation			14,599				14,624
Other loss (income)			3,716				(113	)
Changes in operating assets and liabilities, excluding the effects of acquisitions and dispositions:
Accounts receivable			(290,245	)			(87,092	)
Merchandise inventories			(385,242	)			(316,309	)
Prepaid expenses and other assets			18,860				648
Accounts payable, accrued expenses and income taxes			322,296				142,024
Other			4,425				(1,829	)
Net cash provided by operating activities — continuing operations			33,324				84,731
Net cash (used in) provided by operating activities — discontinued operations			(906	)			7,552
NET CASH PROVIDED BY OPERATING ACTIVITIES			32,418				92,283
INVESTING ACTIVITIES
Capital expenditures			(68,587	)			(54,149	)
Cost of acquired company, net of cash acquired			—				(162,207	)
Proceeds from sales of property and equipment			—				148
Proceeds from the sale of PMSI			14,936				—
Purchases of investment securities available-for-sale			—				(909,105	)
Proceeds from sale of investment securities available-for-sale			—				1,376,524
Net cash (used in) provided by investing activities — continuing operations			(53,651	)			251,211
Net cash used in investing activities — discontinued operations			(1,138	)			(876	)
NET CASH (USED IN) PROVIDED BY INVESTING ACTIVITIES			(54,789	)			250,335
FINANCING ACTIVITIES
Borrowings under revolving and securitization credit facilities			1,604,658				4,258,424
Repayments under revolving and securitization credit facilities			(1,596,360	)			(4,251,347	)
Purchases of common stock			(179,879	)			(395,175	)
Exercise of stock options, including excess tax benefits of $617 and $5,758 in fiscal 2009 and 2008, respectively			4,415				22,196
Cash dividends on common stock			(30,798	)			(24,659	)
Other			(2,450	)			(739	)
Net cash used in financing activities — continuing operations			(200,414	)			(391,300	)
Net cash used in financing activities — discontinued operations			—				(162	)
NET CASH USED IN FINANCING ACTIVITIES			(200,414	)			(391,462	)
DECREASE IN CASH AND CASH EQUIVALENTS			(222,785	)			(48,844	)
Cash and cash equivalents at beginning of period			878,114				640,204
CASH AND CASH EQUIVALENTS AT END OF PERIOD		$	655,329			$	591,360

See notes to consolidated financial statements.

AMERISOURCEBERGEN CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Note 1. Summary of Significant Accounting Policies

Basis of Presentation

The accompanying financial statements present the consolidated financial position, results of operations and cash flows of AmerisourceBergen Corporation and its wholly owned subsidiaries (the “Company”) as of the dates and for the periods indicated. All intercompany accounts and transactions have been eliminated in consolidation.

The accompanying unaudited consolidated financial statements have been prepared in conformity with U.S. generally accepted accounting principles (“GAAP”) for interim financial information, the instructions to Form 10-Q and Rule 10-01 of Regulation S-X. In the opinion of management, all adjustments (consisting only of normal recurring accruals, except as otherwise disclosed herein) considered necessary to present fairly the financial position as of March 31, 2009 and the results of operations and cash flows for the interim periods ended March 31, 2009 and 2008 have been included. Certain information and footnote disclosures normally included in financial statements presented in accordance with U.S. GAAP, but which are not required for interim reporting purposes, have been omitted. The accompanying unaudited consolidated financial statements should be read in conjunction with the financial statements and notes thereto included in the Company’s Annual Report on Form 10-K for the fiscal year ended September 30, 2008.

The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect amounts reported in the financial statements and accompanying notes. Actual amounts could differ from these estimated amounts.

Recently Issued Financial Accounting Standards

In September 2006, the Financial Accounting Standards Board (“FASB”) issued Statement of Financial Accounting Standards (“SFAS”) No. 157, “Fair Value Measurements,” which defines fair value, establishes a framework for measuring fair value, and expands disclosures about fair value measurements. FASB Staff Position 157-2 delayed the effective date of the application of SFAS 157 for all nonfinancial assets and liabilities that are recognized or disclosed at fair value in the financial statements on a nonrecurring basis to the beginning of an entity’s fiscal year that begins after November 15, 2008, which will be the Company’s fiscal year beginning October 1, 2009. Nonrecurring nonfinancial assets and liabilities for which the Company has not applied the provisions of FAS 157 include those measured at fair value for impairment testing, such as goodwill and other intangible assets and property and equipment.

SFAS 157 defines fair value as the price that would be received from selling an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date (exit price). SFAS 157 establishes a fair value hierarchy, which prioritizes the inputs to valuation techniques used to measure fair value into three levels. Level 1 inputs are quoted prices in active markets for identical assets or liabilities. Level 2 inputs are observable other than quoted prices in active markets for identical assets and liabilities, quoted prices for identical or similar assets or liabilities in inactive markets, or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities. Level 3 inputs are generally unobservable and typically reflect management’s estimates of assumptions that market participants would use in pricing the asset or liability.

In the first quarter of fiscal 2009, the Company adopted SFAS 157 for all financial assets and liabilities and non-financial assets and liabilities that are recognized or disclosed at fair value in the financial statements on a recurring basis. The adoption of SFAS 157 did not have any impact on the Company’s financial position, results of operations or liquidity. At March 31, 2009, the Company had $524.0 million of investments in money market accounts, which were valued as level 1 investments. The adoption of this standard in fiscal 2010 as it relates to the Company’s nonfinancial assets and liabilities that are recognized or disclosed at fair value in the financial statements on a nonrecurring basis is not expected to have a material impact on the Company’s financial position, results of operations or liquidity.

In February 2007, the FASB issued SFAS No. 159, “The Fair Value Option for Financial Assets and Financial Liabilities, including an amendment of FASB Statement No. 115.” SFAS No. 159 permits the Company to elect fair value as the initial and subsequent measurement attribute for certain financial assets and liabilities that are not otherwise required to be measured at fair value, on an instrument-by-instrument basis. In the first quarter of fiscal 2009, the Company chose not to elect the fair value option for any items not already required to be measured at fair value in accordance with U.S. GAAP. As a result, the adoption of SFAS No. 159 did not have an impact on the Company’s financial position, results of operations or liquidity.

AMERISOURCEBERGEN CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

In December 2007, the FASB issued SFAS No. 141R, “Business Combinations,” which replaces SFAS No. 141. SFAS No. 141R establishes principles and requirements for how an acquirer recognizes and measures in its financial statements the identifiable assets acquired, the goodwill acquired, the liabilities assumed, and any non-controlling interest in the acquired business. SFAS No. 141R also establishes disclosure requirements, which will enable users to evaluate the nature and financial effects of the business combination. SFAS No. 141R is effective as of the beginning of an entity’s fiscal year that begins after December 15, 2008, which will be the Company’s fiscal year beginning October 1, 2009. In April 2009, the FASB issued Staff Position (“FSP”) No. FAS 141R-1, “Accounting for Assets Acquired and Liabilities Assumed in a Business Combination That Arise from Contingencies.” FSP No. FAS 141R-1 amends the provisions in Statement 141R for the initial recognition and measurement, subsequent measurement and accounting, and disclosures for assets and liabilities arising from contingencies in business combinations. The Company is currently evaluating the impact of adopting SFAS No. 141R and FSP No. FAS 141R-1.

In April 2009, the FASB issued FSP No. FAS 107-1 and APB 28-1, “Interim Disclosures about Fair Value of Financial Instruments.” FSP No. FAS 107-1 and APB 28-1 requires entities to provide disclosure of the fair value of all financial instruments for which it is practicable to estimate that value, whether recognized or not recognized at fair value in the balance sheet, in interim reporting periods. Prior to the issuance of FSP No. FAS 107-1 and APB 28-1, such disclosures were required only in annual reporting periods. FSP No. FAS 107-1 and APB 28-1 is effective for interim periods ending after June 15, 2009, with early adoption permitted for periods ending after March 15, 2009. FSP No. FAS 107-1 and APB 28-1 does not require disclosures for earlier periods presented for comparative purposes at initial adoption. The Company will provide the required disclosures beginning in its Quarterly Report on Form 10-Q for the period ending June 30, 2009.

Note 2. Discontinued Operations

In October 2008, the Company completed the divestiture of its former workers’ compensation business, PMSI. In accordance with SFAS No. 144, “Accounting for the Impairment or Disposal of Long-Lived Assets,” the Company classified PMSI’s assets and liabilities as held for sale in the consolidated balance sheet as of September 30, 2008 and classified PMSI’s operating results and cash flows as discontinued in the consolidated financial statements for all periods presented.

The following table summarizes the assets and liabilities of PMSI as of September 30, 2008 (in thousands):

Assets:
Accounts receivable		$	44,033
Other assets			(342	)
Liabilities:
Accounts payable			14,959
Other liabilities			2,800
Net assets		$	25,932

PMSI’s revenue and income (loss) before income taxes were as follows:

		Three months ended								Six months ended
		March 31,								March 31,
		2009				2008				2009				2008
Revenue		$	—			$	105,351			$	28,993			$	213,992
Income (loss) before income taxes			—				1,696				(1,075	)			4,033

The Company sold PMSI for approximately $34 million, which is subject to a final working capital adjustment, and which includes a $19 million subordinated note due from PMSI on the fifth anniversary of the closing date (the “maturity date”), of which $4 million may be payable in October 2010, if PMSI achieves certain revenue targets with respect to its largest customer. Interest, which accrues at an annual rate of LIBOR plus 4% (not to exceed 8%), will be payable in cash on a quarterly basis, if PMSI achieves a defined minimum fixed charge coverage ratio, or will be compounded semi-annually and paid at maturity. Additionally, if PMSI’s annual net revenue exceeds certain thresholds through December 2011, the Company may be entitled to additional payments of up to $10 million under the subordinated note due from PMSI on the maturity date of the note.

AMERISOURCEBERGEN CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Loss from discontinued operations, net of income taxes, for the three and six months ended March 31, 2009 also included a charge of $0.7 million related to a July 2005 business disposition.

Note 3. Income Taxes

The Company files income tax returns in U.S. federal and state jurisdictions as well as various foreign jurisdictions. The Company’s U.S. federal income tax returns for fiscal 2005 and subsequent years remain subject to examination by the U.S. Internal Revenue Service (“IRS”). The IRS is currently examining the Company’s tax return for fiscal 2006. In Canada, the Company is currently under examination for fiscal years 2005 and 2006.

The Company has unrecognized tax benefits, defined as the aggregate tax effect of differences between tax return positions and the benefits recognized in the Company’s financial statements. During the six months ended March 31, 2009, unrecognized tax benefits increased by $4.8 million, primarily due to an increase in state tax positions. As of March 31, 2009, the Company had unrecognized tax benefits of $54.2 million ($38.3 million, net of federal benefit). Included in this amount is $17.1 million of interest and penalties, which the Company records in income tax expense.

If recognized, net of federal benefit, $36.4 million of the Company’s unrecognized tax benefit would reduce income tax expense and the effective tax rate. Also, if recognized, net of federal benefit, $1.9 million of the Company’s unrecognized tax benefit would result in a reduction of goodwill. During the next 12 months, it is reasonably possible that state tax audit resolutions and the expiration of statutes of limitations could result in a reduction of unrecognized tax benefits by approximately $9.3 million.

Note 4. Goodwill and Other Intangible Assets

Following is a summary of the changes in the carrying value of goodwill for the six months ended March 31, 2009 (in thousands):

Goodwill at September 30, 2008		$	2,536,945
Foreign currency translation			(19,182	)
Goodwill at March 31, 2009		$	2,517,763

Following is a summary of other intangible assets (in thousands):

		March 31, 2009												September 30, 2008
		Gross								Net				Gross								Net
		Carrying				Accumulated				Carrying				Carrying				Accumulated				Carrying
		Amount				Amortization				Amount				Amount				Amortization				Amount
Indefinite-lived intangibles - trade names		$	249,446			$	—			$	249,446			$	252,138			$	—			$	252,138
Finite-lived intangibles:
Customer relationships			116,248				(49,289	)			66,959				119,521				(44,664	)			74,857
Other			32,130				(21,515	)			10,615				31,306				(19,880	)			11,426
Total other intangible assets		$	397,824			$	(70,804	)		$	327,020			$	402,965			$	(64,544	)		$	338,421

AMERISOURCEBERGEN CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Amortization expense for other intangible assets was $7.7 million and $9.0 million in the six months ended March 31, 2009 and 2008, respectively. Amortization expense for other intangible assets is estimated to be $15.4 million in fiscal 2009, $15.0 million in fiscal 2010, $14.1 million in fiscal 2011, $11.9 million in fiscal 2012, $10.3 million in fiscal 2013, and $18.6 million thereafter.

Note 5. Debt

Debt consisted of the following (in thousands):

		March 31,				September 30,
		2009				2008
Blanco revolving credit facility at 1.10% and 3.04%, respectively, due 2010		$	55,000			$	55,000
Receivables securitization facility due 2010			—				—
Multi-currency revolving credit facility at 1.77% and 3.76%, respectively, due 2011			206,500				235,130
$400,000, 5 5/8% senior notes due 2012			398,909				398,773
$500,000, 5 7/8% senior notes due 2015			498,220				498,112
Other			1,417				2,116
Total debt			1,160,046				1,189,131
Less current portion			695				1,719
Total, net of current portion		$	1,159,351			$	1,187,412

The Company has a $695 million five-year multi-currency senior unsecured revolving credit facility (the “Multi-Currency Revolving Credit Facility”) with a syndicate of lenders. (This amount reflects the reduction of $55 million in availability under the facility as a result of the bankruptcy of Lehman Commercial Paper, Inc. in September 2008). Interest on borrowings under the Multi-Currency Revolving Credit Facility accrues at specified rates based on the Company’s debt rating and ranges from 19 basis points to 60 basis points over LIBOR/EURIBOR/Bankers Acceptance Stamping Fee, as applicable (40 basis points over LIBOR/EURIBOR/Bankers Acceptance Stamping Fee at March 31, 2009). Additionally, interest on borrowings denominated in Canadian dollars may accrue at the greater of the Canadian prime rate or the CDOR rate. The Company pays quarterly facility fees to maintain the availability under the Multi-Currency Revolving Credit Facility at specified rates based on the Company’s debt rating, ranging from 6 basis points to 15 basis points of the total commitment (10 basis points at March 31, 2009). The Company may choose to repay or reduce its commitments under the Multi-Currency Revolving Credit Facility at any time. The Multi-Currency Revolving Credit Facility contains covenants, including compliance with a financial leverage ratio test, as well as others that impose limitations on, among other things, indebtedness of excluded subsidiaries and asset sales.

The Company had a $975 million receivables securitization facility (“Receivables Securitization Facility”) at March 31, 2009, of which $181.2 million was due to expire in June 2009 and $793.8 million was due to expire in November 2009. In April 2009, the Company amended this facility, electing to reduce the amount available under the facility to $700 million and extending the expiration date to April 2010. The Company continues to have available to it an accordion feature whereby the commitment on the Receivables Securitization Facility may be increased by up to $250 million, subject to lender approval, for seasonal needs during the December and March quarters. Interest rates are based on prevailing market rates for short-term commercial paper plus a program fee. The Company pays a commitment fee to maintain the availability under the Receivables Securitization Facility. The program fee and the commitment fee, on average, were 53 basis points and 20 basis points, respectively, at March 31, 2009. In connection with the April 2009 amendment, the program fee and the commitment fee were raised to 150 basis points and 75 basis points, respectively.

In April 2009, the Company amended the $55 million Blanco revolving credit facility (the “Blanco Credit Facility”) to, among other things, extend the maturity date of the Blanco Credit Facility to April 2010. Borrowings under the Blanco Credit Facility are guaranteed by the Company. In connection with the April 2009 amendment, interest on borrowings under this facility increased from 55 basis points over LIBOR to 200 basis points over LIBOR. Additionally, the Company would be required to pay quarterly facility fees of 50 basis points on any unused portion of the facility.

AMERISOURCEBERGEN CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Note 6. Stockholders’ Equity and Earnings Per Share

The following table illustrates comprehensive income for the three and six months ended March 31, 2009 and 2008 (in thousands):

		Three months ended								Six months ended
		March 31,								March 31,
		2009				2008				2009				2008
Net income		$	143,387			$	133,852			$	254,443			$	243,672
Foreign currency translation adjustments and other			(1,175	)			(29	)			(11,241	)			(2,817	)
Comprehensive income		$	142,212			$	133,823			$	243,202			$	240,855

In November 2008, the Company’s board of directors increased the quarterly dividend by 33% to $0.10 per share.

In May 2007, the Company’s board of directors authorized a program allowing the Company to purchase up to $850 million of its outstanding shares of common stock, subject to market conditions. Subsequently, in November 2007, the Company’s board of directors authorized an increase to the $850 million repurchase program by $500 million. During the six months ended March 31, 2009, the Company purchased 0.6 million shares for $18.1 million to complete this program.

In November 2008, the Company’s board of directors authorized a new program allowing the Company to purchase up to $500 million of its outstanding shares of common stock, subject to market conditions. During the six months ended March 31, 2009, the Company purchased 4.9 million shares under this program for $161.7 million.

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 periods presented plus the dilutive effect of stock options, restricted stock, and restricted stock units.

		Three months ended								Six months ended
		March 31,								March 31,
(in thousands)		2009				2008				2009				2008
Weighted average common shares outstanding — basic			151,223				161,218				152,793				163,073
Effect of dilutive securities — stock options, restricted stock, and restricted stock units			1,069				2,050				930				2,103
Weighted average common shares outstanding — diluted			152,292				163,268				153,723				165,176

AMERISOURCEBERGEN CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Note 7. Facility Consolidations, Employee Severance and Other

The following table illustrates the charges incurred by the Company relating to facility consolidations, employee severance and other for the three and six months ended March 31, 2009 and 2008 (in thousands):

		Three months ended								Six months ended
		March 31,								March 31,
		2009				2008				2009				2008
Facility consolidations and employee severance		$	4,262			$	246			$	5,291			$	(512	)
Costs related to business divestitures			—				1,138				—				2,073
Total facility consolidations, employee severance and other		$	4,262			$	1,384			$	5,291			$	1,561

During fiscal 2008, the Company announced a more streamlined organizational structure and introduced an initiative (“cE2”) designed to drive increased customer efficiency and cost effectiveness. In connection with these efforts, the Company continues to reduce various operating costs and terminate certain positions. During the six months ended March 31, 2009, the Company terminated 183 employees and incurred $2.9 million of employee severance costs. Additionally, during the three months ended March 31, 2009, the Company recorded $2.2 million of additional costs relating to the Bergen Brunswig Matter as described in Note 8. During the six months ended March 31, 2008, the Company reversed $1.0 million of employee severance charges previously estimated and recorded relating to a prior integration plan. Employees receive their severance benefits over a period of time, generally not in excess of 12 months, or in the form of a lump-sum payment.

During the three and six months ended March 31, 2008, the Company incurred costs, primarily professional fees, related to the divestiture of its workers’ compensation business, PMSI.

The following table displays the activity in accrued expenses and other from September 30, 2008 to March 31, 2009 (in thousands):

		Employee				Lease Cancellation
		Severance				Costs and Other				Total
Balance as of September 30, 2008		$	17,081			$	4,356			$	21,437
Expense recorded during the period			5,140				151				5,291
Payments made during the period			(11,699	)			(576	)			(12,275	)
Balance as of March 31, 2009		$	10,522			$	3,931			$	14,453

The lease cancellation costs and other balance set forth in the above table as of March 31, 2009 primarily consists of an accrual for information technology transition costs payable to IBM Global Services.

Note 8. Legal Matters and Contingencies

In the ordinary course of its business, the Company becomes involved in lawsuits, administrative proceedings, government subpoenas, and government investigations, including antitrust, commercial, environmental, product liability, intellectual property, regulatory, employment discrimination, and other matters. Significant damages or penalties may be sought from the Company in some matters, and some matters may require years for the Company to resolve. The Company establishes reserves based on its periodic assessment of estimates of probable losses. There can be no assurance that an adverse resolution of one or more matters during any subsequent reporting period will not have a material adverse effect on the Company’s results of operations for that period. However, on the basis of information furnished by counsel and others and taking into consideration the reserves established for pending matters, the Company does not believe that the resolution of currently pending matters (including the matters specifically described below), individually or in the aggregate, will have a material adverse effect on the Company’s financial condition.

AMERISOURCEBERGEN CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

RxUSA Matter

In 2001, the Company sued one of its former customers, Rx USA International, Inc. and certain related companies (“RxUSA”), seeking over $300,000 for unpaid invoices. Thereafter, RxUSA filed counterclaims alleging breach of contract claiming that it was overbilled for products by over $400,000. RxUSA also alleged violations of the federal and New York antitrust laws, tortious interference with business relations and defamation. The Federal District Court granted summary judgment for the Company on the antitrust and defamation counterclaims, but denied the motion on the breach of contract and tortious interference counterclaims. In connection with its tortious interference counterclaim, RxUSA asserted compensatory damages of $61 million plus punitive damages. The trial of the Company’s claims and RxUSA’s remaining counterclaims commenced in the United States District Court for the Eastern District of New York on January 26, 2009 and concluded on February 6, 2009. The jury returned a verdict in the Company’s favor on all claims and counterclaims in the case: rejecting RxUSA’s claims for tortious interference and breach of contract in their entirety, while finding that RxUSA breached its contract with the Company and ordering RxUSA to satisfy the unpaid invoices in the full amount claimed by the Company. The case is now in post-trial proceedings, with several matters still pending, including the Company’s motion to sanction RxUSA. On May 1, 2009, RxUSA filed a voluntary petition in bankruptcy under Chapter 11 of the U.S. Bankruptcy Code and an automatic stay went into effect with respect to certain legal proceedings involving the debtor, including the proceedings in this matter.

New York Attorney General Subpoena

In April 2005, the Company received a subpoena from the Office of the Attorney General of the State of New York (the “NYAG”) requesting documents and responses to interrogatories concerning the manner and degree to which the Company purchased pharmaceuticals from other wholesalers, often referred to as the alternate source market, rather than directly from manufacturers. Similar subpoenas have been issued by the NYAG to other pharmaceutical distributors. After receiving the subpoena, the Company engaged in discussions with the NYAG, initially to clarify the scope of the subpoena and subsequently to provide background information requested by the NYAG. The Company has produced responsive information and documents and will continue to cooperate with the NYAG. Late in fiscal year 2007, the Company received a communication from the NYAG detailing potential theories of liability. In March 2008, the Company met with the NYAG to discuss this matter and has communicated the Company’s position on this matter to the NYAG. The Company believes that it has not engaged in any wrongdoing, but cannot predict the outcome of this matter.

Bergen Brunswig Matter

A former Bergen Brunswig chief executive officer who was terminated in 1999 filed an action that year in the Superior Court of the State of California, County of Orange (the “Superior Court”) claiming that Bergen Brunswig (predecessor in interest to AmerisourceBergen Corporation) had breached its obligations to him under his employment agreement. Shortly after the filing of the lawsuit, Bergen Brunswig made a California Civil Procedure Code § 998 Offer of Judgment to the executive, which the executive accepted. The resulting judgment awarded the executive damages and the continuation of certain employment benefits. Since then, the Company and the executive have engaged in litigation as to what specific benefits were included in the scope of the Offer of Judgment and the value of those benefits. The Superior Court entered an Order in Implementation of Judgment on June 7, 2001, which identified the specific benefits encompassed by the Offer of Judgment. Following submission by the executive of a claim for benefits pursuant to the Bergen Brunswig Supplemental Executive Retirement Plan (the “Plan”), the Company followed the administrative procedure set forth in the Plan. This procedure involved separate reviews by two independent parties, the first by the Review Official appointed by the Plan Administrator and second by the Plan Trustee, and resulted in a determination that the executive was entitled to a $1.9 million supplemental retirement benefit and such amount was paid. The executive challenged this award and on July 7, 2006, the Superior Court entered a Second Order in Implementation of Judgment determining that the executive was entitled to a supplemental retirement benefit, net of the $1.9 million previously paid to him, in the amount of $19.4 million, which included interest at the rate of ten percent per annum from August 29, 2001. The Company recorded a charge of $13.9 million in June 2006 to establish the total liability of $19.4 million on its balance sheet. Both the executive and the Company appealed the ruling of the Superior Court. On October 12, 2007, the Court of Appeal for the State of California, Fourth Appellate District (the “Court of Appeal”) made certain rulings, and reversed certain portions of the July 2006 decision of the Superior Court in a manner that was favorable to the Company. As a result, in fiscal 2007, the Company reduced its total liability to the executive by $10.4 million. The parties then entered into a stipulation to remand the calculation of the executive’s supplemental retirement benefit to the Plan Administrator

AMERISOURCEBERGEN CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

in accordance with the Court of Appeal’s decision of October 12, 2007. On June 10, 2008, the Plan Administrator issued a decision that the executive was entitled to receive approximately $6.9 million in supplemental retirement benefits plus interest, less the $1.9 million already paid to the executive under the Plan. The executive appealed this determination and a hearing on his appeal was held in August 2008 before a Review Official appointed by the Plan Administrator. On October 31, 2008, the Review Official issued a decision affirming in most respects the Plan Administrator’s determination of the executive’s supplemental retirement benefit. On November 17, 2008, the executive filed a motion for a Third Order in Implementation of Judgment with the Superior Court asking the court to overturn the decision of the Review Official. On March 9, 2009, the Company paid the executive approximately $5.6 million, plus interest, for the executive’s supplemental retirement benefit, as determined by the Review Official. On April 9, 2009, the Superior Court affirmed most aspects of the Review Official’s determination of decision, but held that the Review Official had abused his discretion by discounting the executive’s supplemental retirement benefit to its present value. As a result, the Superior Court held that the executive was entitled to an additional supplemental retirement benefit of approximately $6.6 million, plus interest, beyond what has already been paid by the Company. During the quarter ended March 31, 2009, the Company accrued an additional $2.2 million related to this matter. The Company believes that the Superior Court’s holding is inconsistent with the 2007 Court of Appeal decision and on May 4, 2009, filed a Notice of Appeal appealing the Superior Court’s holding.

Ontario Ministry of Health and Long-Term Care Civil Rebate Payment Order and Civil Complaint

On April 27, 2009, the Ontario Ministry of Health and Long-Term Care (“OMH”) notified the Company’s Canadian subsidiary, AmerisourceBergen Canada Corporation (“ABCC”), that it had entered a Rebate Payment Order requiring ABCC to pay C$5.8 million to the Ontario Ministry of Finance. OMH maintains that it has reasonable grounds to believe that ABCC accepted rebates, directly or indirectly, in violation of the Ontario Drug Interchangeability and Dispensing Fee Act. OMH at the same time announced similar rebate payment orders against other wholesalers, generic manufacturers, pharmacies and individuals. ABCC was cooperating fully with OMH prior to the entry of the Order by responding fully to requests for information and/or documents and will continue to cooperate. ABCC is preparing to appeal the Order pursuant to OMH procedures. In addition, on the same day, OMH notified ABCC that it had filed a civil complaint with Health Canada against ABCC for potential violations of the Canadian Food and Drug Act. ABCC has not yet received a copy of such a complaint. Although ABCC believes that it has not violated the relevant statutes and regulations and has conducted its business consistent with widespread industry practices, it cannot predict the outcome of these matters.

Note 9. Litigation Settlements

Antitrust Settlements

During the last several years, numerous class action lawsuits have been filed against certain brand pharmaceutical manufacturers alleging that the manufacturer, by itself or in concert with others, took improper actions to delay or prevent generic drugs from entering the market. The Company has not been a named plaintiff in any of these class actions, but has been a member of the direct purchasers’ class (i.e., those purchasers who purchase directly from these pharmaceutical manufacturers). None of the class actions has gone to trial, but some have settled in the past with the Company receiving proceeds from the settlement funds. Currently, there are several such class actions pending in which the Company is a class member. During the six months ended March 31, 2008, the Company recognized a gain of $1.6 million relating to the above-mentioned class action lawsuits. The gain, which was net of attorney fees and estimated payments due to other parties, was recorded as a reduction to cost of goods sold in the Company’s consolidated statements of operations.

Other Settlements

During the three and six months ended March 31, 2009, the Company recognized a gain of $1.8 million as a reduction to cost of goods sold in the Company’s consolidated statement of operations resulting from a favorable litigation settlement with a former customer.

During the three and six months ended March 31, 2008, the Company recognized gains of $3.2 million and a $13.2 million, respectively, as reductions to cost of goods sold in the Company’s consolidated statement of operations resulting from favorable litigation settlements with a former customer (an independent retail group purchasing organization) and a major competitor.

AMERISOURCEBERGEN CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Note 10. Business Segment Information

The Company has three operating segments, which include the operations of AmerisourceBergen Drug Corporation (“ABDC”), the AmerisourceBergen Specialty Group (“ABSG”), and the AmerisourceBergen Packaging Group (“ABPG”). The Company has aggregated the operating results of ABDC, ABSG, and ABPG into one reportable segment, Pharmaceutical Distribution. The businesses of the Pharmaceutical Distribution operating segments are similar in that they service both healthcare providers and pharmaceutical manufacturers in the pharmaceutical supply chain.

Management evaluates segment performance based on total revenue including bulk deliveries to customer warehouses. Total revenue was $17.3 billion and $17.8 billion in the three months ended March 31, 2009 and 2008, respectively, and was $34.7 billion and $35.0 billion in the six months ended March 31, 2009 and 2008, respectively. Pharmaceutical Distribution operating income is evaluated before facility consolidations, employee severance and other; and gain on antitrust litigation settlements. All corporate office expenses are allocated to the Pharmaceutical Distribution segment.

The following table reconciles Pharmaceutical Distribution operating income to income from continuing operations before income taxes for the three and six months ended March 31, 2009 and 2008 (in thousands):

		Three months ended								Six months ended
		March 31,								March 31,
		2009				2008				2009				2008
Pharmaceutical Distribution operating income		$	252,528			$	236,385			$	451,441			$	427,620
Facility consolidations, employee severance and other			(4,262	)			(1,384	)			(5,291	)			(1,561	)
Gain on antitrust litigation settlements			—				—				—				1,585
Total operating income			248,266				235,001				446,150				427,644
Other loss (income)			504				(992	)			933				(255	)
Interest expense, net			14,521				18,701				28,704				35,115
Income from continuing operations before income taxes		$	233,241			$	217,292			$	416,513			$	392,784

Note 11. Selected Consolidating Financial Statements of Parent, Guarantors and Non-Guarantors

The Company’s 5 5/8% senior notes due September 15, 2012 (the “2012 Notes”) and the 5 7/8% senior notes due September 15, 2015 (the “2015 Notes” and, together with the 2012 Notes, the “Notes”) each are fully and unconditionally guaranteed on a joint and several basis by certain of the Company’s subsidiaries (the subsidiaries of the Company that are guarantors of the Notes being referred to collectively as the “Guarantor Subsidiaries”). The total assets, stockholders’ equity, revenue, earnings, and cash flows from operating activities of the Guarantor Subsidiaries exceeded a majority of the consolidated total of such items as of or for the periods reported. The only consolidated subsidiaries of the Company that are not guarantors of the Notes (the “Non-Guarantor Subsidiaries”) are: (a) the receivables securitization special purpose entity, (b) the foreign operating subsidiaries, and (c) certain smaller operating subsidiaries. The following tables present condensed consolidating financial statements including AmerisourceBergen Corporation (the “Parent”), the Guarantor Subsidiaries, and the Non-Guarantor Subsidiaries. Such financial statements include balance sheets as of March 31, 2009 and September 30, 2008, statements of operations for the three and six months ended March 31, 2009 and 2008, and statements of cash flows for the six months ended March 31, 2009 and 2008.

AMERISOURCEBERGEN CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

During the three months ended March 31, 2009, the Company reclassified the initial contribution of accounts receivable made by ABDC (a guarantor subsidiary), to the receivables special purpose entity (a non-guarantor subsidiary), from a note payable to capital on the books of the receivables special purpose entity. Additionally, the Company revised its fiscal 2008 intercompany interest charge from the Parent to one of the Guarantor Subsidiaries. As a result of the above, the Company has revised intercompany interest amounts and balances for all prior periods reported herein. These intercompany reclassifications had no impact on the Company’s consolidated financial statements.

SUMMARY CONSOLIDATING BALANCE SHEETS:

		March 31, 2009
						Guarantor				Non-Guarantor								Consolidated
(in thousands)		Parent				Subsidiaries				Subsidiaries				Eliminations				Total
Current assets:
Cash and cash equivalents		$	524,816			$	80,372			$	50,141			$	—			$	655,329
Accounts receivable, net			241				1,279,818				2,454,192				—				3,734,251
Merchandise inventories			—				4,462,771				116,179				—				4,578,950
Prepaid expenses and other			158				35,267				1,424				—				36,849
Total current assets			525,215				5,858,228				2,621,936				—				9,005,379
Property and equipment, net			—				550,972				25,673				—				576,645
Goodwill and other intangible assets			—				2,732,225				112,558				—				2,844,783
Other assets			10,974				111,350				585				—				122,909
Intercompany investments and advances			2,847,614				2,696,168				(101,106	)			(5,442,676	)			—
Total assets		$	3,383,803			$	11,948,943			$	2,659,646			$	(5,442,676	)		$	12,549,716
Current liabilities:
Accounts payable		$	—			$	7,556,112			$	95,343			$	—			$	7,651,455
Accrued expenses and other			(272,022	)			510,445				13,168				—				251,591
Current portion of long-term debt			—				346				349				—				695
Deferred income taxes			—				575,641				(1,276	)			—				574,365
Total current liabilities			(272,022	)			8,642,544				107,584				—				8,478,106
Long-term debt, net of current portion			897,129				569				261,653				—				1,159,351
Other liabilities			—				149,503				4,060				—				153,563
Total stockholders’ equity			2,758,696				3,156,327				2,286,349				(5,442,676	)			2,758,696
Total liabilities and stockholders’ equity		$	3,383,803			$	11,948,943			$	2,659,646			$	(5,442,676	)		$	12,549,716

AMERISOURCEBERGEN CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(UNAUDITED)

SUMMARY CONSOLIDATING BALANCE SHEETS:

		September 30, 2008
						Guarantor				Non-Guarantor								Consolidated
(in thousands)		Parent				Subsidiaries				Subsidiaries				Eliminations				Total
Current assets:
Cash and cash equivalents		$	719,570			$	100,623			$	57,921			$	—			$	878,114
Accounts receivable, net			1,276				1,280,346				2,198,645				—				3,480,267
Merchandise inventories			—				4,076,697				135,078				—				4,211,775
Prepaid expenses and other			47				53,418				2,449				—				55,914
Assets held for sale			—				43,691				—				—				43,691
Total current assets			720,893				5,554,775				2,394,093				—				8,669,761
Property and equipment, net			—				525,444				26,715				—				552,159
Goodwill and other intangible assets			—				2,738,998				136,368				—				2,875,366
Other assets			12,302				106,627				1,571				—				120,500
Intercompany investments and advances			2,540,391				3,077,109				403,388				(6,020,888	)			—
Total assets		$	3,273,586			$	12,002,953			$	2,962,135			$	(6,020,888	)		$	12,217,786
Current liabilities:
Accounts payable		$	—			$	7,164,839			$	161,741			$	—			$	7,326,580
Accrued expenses and other			(333,344	)			593,403				10,764				—				270,823
Current portion of long-term debt			—				—				1,719				—				1,719
Deferred income taxes			—				551,984				(1,276	)			—				550,708
Liabilities held for sale			—				17,759				—				—				17,759
Total current liabilities			(333,344	)			8,327,985				172,948				—				8,167,589
Long-term debt, net of current portion			896,885				—				290,527				—				1,187,412
Other liabilities			—				147,052				5,688				—				152,740
Total stockholders’ equity			2,710,045				3,527,916				2,492,972				(6,020,888	)			2,710,045
Total liabilities and stockholders’ equity		$	3,273,586			$	12,002,953			$	2,962,135			$	(6,020,888	)		$	12,217,786

AMERISOURCEBERGEN CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(UNAUDITED)

CONDENSED CONSOLIDATING STATEMENTS OF OPERATIONS:

		Three months ended March 31, 2009
						Guarantor				Non-Guarantor								Consolidated
(in thousands)		Parent				Subsidiaries				Subsidiaries				Eliminations				Total
Operating revenue		$	—			$	16,595,634			$	337,156			$	—			$	16,932,790
Bulk deliveries to customer warehouses			—				378,861				—				—				378,861
Total revenue			—				16,974,495				337,156				—				17,311,651
Cost of goods sold			—				16,437,775				321,405				—				16,759,180
Gross profit			—				536,720				15,751				—				552,471
Operating expenses:
Distribution, selling and administrative			—				294,587				(14,078	)			—				280,509
Depreciation			—				14,922				685				—				15,607
Amortization			—				3,149				678				—				3,827
Facility consolidations, employee severance and other			—				4,262				—				—				4,262
Operating income			—				219,800				28,466				—				248,266
Other loss			—				503				1				—				504
Interest (income) expense, net			(890	)			12,389				3,022				—				14,521
Income from continuing operations before income taxes and equity in earnings of subsidiaries			890				206,908				25,443				—				233,241
Income taxes			311				80,172				8,716				—				89,199
Income from continuing operations			579				126,736				16,727				—				144,042
Loss from discontinued operations			—				(655	)			—				—				(655	)
Equity in earnings of subsidiaries			142,808				—				—				(142,808	)			—
Net income		$	143,387			$	126,081			$	16,727			$	(142,808	)		$	143,387

AMERISOURCEBERGEN CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(UNAUDITED)

CONDENSED CONSOLIDATING STATEMENTS OF OPERATIONS:

		Three months ended March 31, 2008
						Guarantor				Non-Guarantor								Consolidated
(in thousands)		Parent				Subsidiaries				Subsidiaries				Eliminations				Total
Operating revenue		$	—			$	16,755,497			$	448,122			$	—			$	17,203,619
Bulk deliveries to customer warehouses			—				552,216				3				—				552,219
Total revenue			—				17,307,713				448,125				—				17,755,838
Cost of goods sold			—				16,792,441				426,109				—				17,218,550
Gross profit			—				515,272				22,016				—				537,288
Operating expenses:
Distribution, selling and administrative			—				293,055				(13,519	)			—				279,536
Depreciation			—				16,211				678				—				16,889
Amortization			—				3,608				870				—				4,478
Facility consolidations, employee severance and other			—				1,384				—				—				1,384
Operating income			—				201,014				33,987				—				235,001
Other (income) loss			—				(999	)			7				—				(992	)
Interest (income) expense, net			(4,288	)			16,194				6,795				—				18,701
Income from continuing operations before income taxes and equity in earnings of subsidiaries			4,288				185,819				27,185				—				217,292
Income taxes			1,501				72,752				10,211				—				84,464
Income from continuing operations			2,787				113,067				16,974				—				132,828
Income from discontinued operations			—				1,024				—								1,024
Equity in earnings of subsidiaries			131,065				—				—				(131,065	)			—
Net income		$	133,852			$	114,091			$	16,974			$	(131,065	)		$	133,852

AMERISOURCEBERGEN CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(UNAUDITED)

CONDENSED CONSOLIDATING STATEMENTS OF OPERATIONS:

		Six months ended March 31, 2009
						Guarantor				Non-Guarantor								Consolidated
(in thousands)		Parent				Subsidiaries				Subsidiaries				Eliminations				Total
Operating revenue		$	—			$	33,112,932			$	700,936			$	—			$	33,813,868
Bulk deliveries to customer warehouses			—				836,160				—				—				836,160
Total revenue			—				33,949,092				700,936				—				34,650,028
Cost of goods sold			—				32,940,994				666,715				—				33,607,709
Gross profit			—				1,008,098				34,221				—				1,042,319
Operating expenses:
Distribution, selling and administrative			—				579,433				(26,898	)			—				552,535
Depreciation			—				29,271				1,389				—				30,660
Amortization			—				6,295				1,388				—				7,683
Facility consolidations, employee severance and other			—				5,291				—				—				5,291
Operating income			—				387,808				58,342				—				446,150
Other loss			—				932				1				—				933
Interest (income) expense, net			(3,061	)			24,843				6,922				—				28,704
Income from continuing operations before income taxes and equity in earnings of subsidiaries			3,061				362,033				51,419				—				416,513
Income taxes			1,071				140,873				17,998				—				159,942
Income from continuing operations			1,990				221,160				33,421				—				256,571
Loss from discontinued operations			—				(2,128	)			—				—				(2,128	)
Equity in earnings of subsidiaries			252,453				—				—				(252,453	)			—
Net income		$	254,443			$	219,032			$	33,421			$	(252,453	)		$	254,443