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

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

Commission file number 1-16671

AMERISOURCEBERGEN CORPORATION

(Exact name of registrant as specified in its charter)

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

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 þ 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 July 31, 2009 was 297,257,202.

 

 

AMERISOURCEBERGEN CORPORATION

INDEX

		Page No.
Part I. FINANCIAL INFORMATION
Item 1. Financial Statements (Unaudited)
Consolidated Balance Sheets, June 30, 2009 and September 30, 2008			3
Consolidated Statements of Operations for the three and nine months ended June 30, 2009 and 2008			4
Consolidated Statements of Cash Flows for the nine months ended June 30, 2009 and 2008			5
Notes to Consolidated Financial Statements			6
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations			24
Item 3. Quantitative and Qualitative Disclosures About Market Risk			37
Item 4. Controls and Procedures			37
Part II. OTHER INFORMATION
Item 1. Legal Proceedings			38
Item 1A. Risk Factors			38
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds			39
Item 6. Exhibits			39
SIGNATURES			40

PART I. FINANCIAL INFORMATION

ITEM I. Financial Statements (Unaudited)

AMERISOURCEBERGEN CORPORATION AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

		June 30,				September 30,
(in thousands, except share and per share data)		2009				2008
		(Unaudited)
ASSETS
Current assets:
Cash and cash equivalents		$	912,924			$	878,114
Accounts receivable, less allowances for returns and doubtful accounts: $374,672 at June 30, 2009 and $393,714 at September 30, 2008			3,746,643				3,480,267
Merchandise inventories			4,424,228				4,211,775
Prepaid expenses and other			54,585				55,914
Assets held for sale			—				43,691
Total current assets			9,138,380				8,669,761
Property and equipment, at cost:
Land			35,643				35,258
Buildings and improvements			290,093				281,001
Machinery, equipment and other			684,824				616,942
Total property and equipment			1,010,560				933,201
Less accumulated depreciation			(415,515	)			(381,042	)
Property and equipment, net			595,045				552,159
Goodwill and other intangible assets			2,855,763				2,875,366
Other assets			146,563				120,500
TOTAL ASSETS		$	12,735,751			$	12,217,786
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable		$	7,700,516			$	7,326,580
Accrued expenses and other			289,732				270,823
Current portion of long-term debt			710				1,719
Deferred income taxes			596,016				550,708
Liabilities held for sale			—				17,759
Total current liabilities			8,586,974				8,167,589
Long-term debt, net of current portion			1,190,225				1,187,412
Other liabilities			174,234				152,740
Stockholders’ equity:
Common stock, $0.01 par value — authorized: 600,000,000 shares; issued and outstanding: 482,051,245 shares and 297,068,151 shares at June 30, 2009, respectively, and 481,154,164 shares and 312,430,920 shares at September 30, 2008, respectively			4,821				4,812
Additional paid-in capital			3,717,371				3,689,617
Retained earnings			2,806,404				2,479,078
Accumulated other comprehensive loss			(20,983	)			(16,490	)
Treasury stock, at cost: 184,983,094 shares at June 30, 2009 and 168,723,244 shares at September 30, 2008			(3,723,295	)			(3,446,972	)
Total stockholders’ equity			2,784,318				2,710,045
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY		$	12,735,751			$	12,217,786

See notes to consolidated financial statements.

AMERISOURCEBERGEN CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)

		Three months ended								Nine months ended
		June 30,								June 30,
(in thousands, except per share data)		2009				2008				2009				2008
Operating revenue		$	17,964,847			$	17,507,497			$	51,778,715			$	50,857,011
Bulk deliveries to customer warehouses			429,052				489,169				1,265,212				2,174,876
Total revenue			18,393,899				17,996,666				53,043,927				53,031,887
Cost of goods sold			17,874,676				17,498,621				51,482,385				51,512,338
Gross profit			519,223				498,045				1,561,542				1,519,549
Operating expenses:
Distribution, selling, and administrative			277,434				271,098				828,669				821,404
Depreciation			15,949				17,440				46,609				50,398
Amortization			3,740				4,117				11,423				13,152
Facility consolidations, employee severance and other			213				7,865				5,504				9,426
Intangible asset impairments			8,900				—				10,200				—
Operating income			212,987				197,525				659,137				625,169
Other loss			186				768				1,119				513
Interest expense, net			14,652				15,966				43,356				51,081
Income from continuing operations before income taxes			198,149				180,791				614,662				573,575
Income taxes			73,015				68,026				232,957				219,573
Income from continuing operations			125,134				112,765				381,705				354,002
Loss from discontinued operations, net of income taxes			(6,327	)			(220,785	)			(8,455	)			(218,350	)
Net income (loss)		$	118,807			$	(108,020	)		$	373,250			$	135,652
Earnings per share:
Basic earnings (loss) per share:
Continuing operations		$	0.42			$	0.35			$	1.26			$	1.09
Discontinued operations			(0.02	)			(0.69	)			(0.03	)			(0.67	)
Total		$	0.40			$	(0.34	)		$	1.23			$	0.42
Diluted earnings (loss) per share:
Continuing operations		$	0.42			$	0.35			$	1.25			$	1.08
Discontinued operations			(0.02	)			(0.69	)			(0.03	)			(0.67	)
Total		$	0.40			$	(0.34	)		$	1.22			$	0.41
Weighted average common shares outstanding:
Basic			298,477				319,064				303,225				324,094
Diluted			300,592				322,234				305,171				327,954
Cash dividends declared per share of common stock		$	0.05			$	0.0375			$	0.15			$	0.1125

See notes to consolidated financial statements.

CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)

		Nine months ended June 30,
(in thousands)		2009				2008
OPERATING ACTIVITIES
Net income		$	373,250			$	135,652
Loss from discontinued operations			8,455				218,350
Income from continuing operations			381,705				354,002
Adjustments to reconcile income from continuing operations to net cash provided by operating activities:
Depreciation, including amounts charged to cost of goods sold			54,847				57,916
Amortization, including amounts charged to interest expense			14,547				15,698
Provision for doubtful accounts			24,236				12,668
Provision for deferred income taxes			45,835				33,533
Share-based compensation			20,384				19,383
Loss on disposal of property and equipment			3,100				847
Other, including intangible asset impairments			7,320				(2,632	)
Changes in operating assets and liabilities, excluding the effects of acquisitions and dispositions:
Accounts receivable			(292,773	)			(164,496	)
Merchandise inventories			(222,302	)			94,893
Prepaid expenses and other assets			(15,693	)			14,253
Accounts payable, accrued expenses and income taxes			415,960				(223,822	)
Other liabilities			526				2,330
Net cash provided by operating activities — continuing operations			437,692				214,573
Net cash (used in) provided by operating activities — discontinued operations			(7,233	)			8,382
NET CASH PROVIDED BY OPERATING ACTIVITIES			430,459				222,955
INVESTING ACTIVITIES
Capital expenditures			(102,221	)			(80,621	)
Cost of acquired companies, net of cash acquired			(13,422	)			(162,220	)
Proceeds from the sale of PMSI			14,936				—
Proceeds from sales of property and equipment			32				1,417
Proceeds from the sale of other assets			—				1,176
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			(100,675	)			227,171
Net cash used in investing activities — discontinued operations			(1,138	)			(1,273	)
NET CASH (USED IN) PROVIDED BY INVESTING ACTIVITIES			(101,813	)			225,898
FINANCING ACTIVITIES
Borrowings under revolving and securitization credit facilities			1,908,106				5,444,255
Repayments under revolving and securitization credit facilities			(1,886,558	)			(5,430,493	)
Purchases of common stock			(273,824	)			(553,675	)
Exercise of stock options, including excess tax benefits of $375 and $11,202 in fiscal 2009 and 2008, respectively			7,795				72,220
Cash dividends on common stock			(45,924	)			(36,748	)
Other			(3,431	)			(1,373	)
Net cash used in financing activities — continuing operations			(293,836	)			(505,814	)
Net cash used in financing activities — discontinued operations			—				(157	)
NET CASH USED IN FINANCING ACTIVITIES			(293,836	)			(505,971	)
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS			34,810				(57,118	)
Cash and cash equivalents at beginning of period			878,114				640,204
CASH AND CASH EQUIVALENTS AT END OF PERIOD		$	912,924			$	583,086

See notes to consolidated financial statements.

AMERISOURCEBERGEN CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(UNAUDITED)

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 June 30, 2009 and the results of operations and cash flows for the interim periods ended June 30, 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.

On June 15, 2009, the Company effected a two-for-one stock split of its outstanding shares of common stock in the form of a 100% stock dividend to stockholders of record at the close of business on May 29, 2009. All applicable share and per-share amounts in the consolidated financial statements and related disclosures have been retroactively adjusted to reflect this stock split.

Certain reclassifications have been made to prior-year amounts in order to conform to the current-year presentation.

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 No.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 SFAS No. 157 include those measured at fair value for impairment testing, such as goodwill and other intangible assets and property and equipment.

SFAS No. 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 No. 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 No. 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 No. 157 did not have any impact on the Company’s financial position, results of operations or liquidity. At June 30, 2009, the Company had $751.0 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.

AMERISOURCEBERGEN CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(UNAUDITED)

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.

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 in interim reporting periods 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. Prior to the issuance of FSP No. FAS 107-1 and APB 28-1, such disclosures were required only in annual reporting periods. As of June 30, 2009, the Company adopted FSP No. FAS 107-1 and APB 28-1, which was effective for interim periods ending after June 15, 2009.

The recorded amounts of the Company’s cash and cash equivalents, accounts receivable and accounts payable at June 30, 2009 approximate fair value. The fair values of the Company’s debt instruments are estimated based on market prices. The recorded amount of debt (see Note 6) and the corresponding fair value of the debt as of June 30, 2009 were $1,190.9 million and $1,189.4 million, respectively. FSP No. FAS 107-1 and APB 28-1 do not require disclosures at initial adoption for earlier interim periods presented for comparative purposes.

In May 2009, the FASB issued SFAS No. 165, “Subsequent Events,” which establishes general standards of accounting for and disclosure of events that occur after the balance sheet date but before financial statements are issued for interim and annual periods ending after June 15, 2009. The Company adopted this standard as of June 30, 2009 and considered the accounting and disclosure of events occurring after the balance sheet date through the date and time the Company’s financial statements were issued on August 6, 2009. The adoption of this standard did not have an impact on the Company’s financial position, results of operations, or liquidity.

In June 2009, the FASB issued SFAS No. 168, “The FASB Accounting Standards Codification and the Hierarchy of Generally Accepted Accounting Principles — a replacement of SFAS No. 162” to become the single source of authoritative nongovernmental U.S. GAAP; all existing accounting standards are superseded as described in SFAS No. 168. All other accounting literature not included in the Codification is non-authoritative. SFAS No. 168 is effective for financial statements issued for interim and annual periods ending after September 15, 2009. The adoption of this standard is not expected to have a material impact on the Company’s financial statements.

Note 2. Acquisition

On May 29, 2009, the Company acquired Innomar Strategies Inc. (“Innomar”) for a purchase price of $13.4 million, net of a working capital adjustment. Innomar is a Canadian specialty pharmaceutical services company that provides services within Canada to pharmaceutical and biotechnology companies, including: strategic consulting and access solutions, specialty logistics management, patient assistance and nursing services, and clinical research services. The purchase price was allocated to the underlying assets acquired and liabilities assumed based upon their fair values at the date of acquisition. The purchase price exceeded the fair value of the net tangible and intangible assets acquired by $7.6 million, which was allocated to goodwill. The fair value of the intangible assets acquired of $4.6 million primarily consist of a trade name of $1.6 million and customer relationships of $2.6 million. The Company will amortize the acquired customer relationships over their weighted average life of 10 years.

AMERISOURCEBERGEN CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(UNAUDITED)

Had the acquisition of Innomar been completed as of October 1, 2007, the Company’s total revenue, net income, and diluted earnings per share for the three and nine months ended June 30, 2009 and 2008 would not have been materially different from the amounts recorded for those periods.

Note 3. 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 loss before income taxes were as follows:

		Three months ended								Nine months ended
		June 30,								June 30,
		2009				2008				2009				2008
Revenue		$	—			$	97,584			$	28,993			$	311,576
Loss before income taxes		$	—			$	(196,281	)		$	(1,075	)		$	(192,248	)

The Company sold PMSI for approximately $31 million, net of an estimated working capital adjustment, 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.

The Company recorded a non-cash charge of $222.5 million as of June 30, 2008 to reduce the carrying value of PMSI. This charge, which is included in the loss from discontinued operations for the three and nine months ended June 30, 2008, was comprised of a $199.1 million write-off of PMSI’s goodwill and a $23.4 million charge to record the Company’s loss on the sale of PMSI. The tax benefit recorded in connection with the above charge was minimal, as the loss on the sale of PMSI will be treated as a capital loss for income tax purposes, and the Company does not have any significant capital gains to offset the capital loss.

AMERISOURCEBERGEN CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(UNAUDITED)

Loss from discontinued operations, net of income taxes, for the three and nine months ended June 30, 2009 included an estimated PMSI working capital adjustment of $2.8 million and a charge of $3.6 million and $4.3 million, respectively, related to a prior period business disposition.

Note 4. 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 2006 and subsequent years remain subject to examination by the U.S. Internal Revenue Service (“IRS”). The IRS is currently examining the Company’s tax returns for fiscal 2006 and 2007. In Canada, the Company is currently under examination for fiscal years 2005 through 2008.

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 nine months ended June 30, 2009, unrecognized tax benefits increased by $4.1 million, primarily due to an increase in federal and state tax positions. As of June 30, 2009, the Company had unrecognized tax benefits of $53.5 million ($38.7 million, net of federal benefit). Included in this amount is $16.1 million of interest and penalties, which the Company records in income tax expense.

If recognized, net of federal benefit, $36.8 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 audit resolutions and the expiration of statutes of limitations could result in a reduction of unrecognized tax benefits by approximately $12.4 million.

Note 5. Goodwill and Other Intangible Assets

Following is a summary of the changes in the carrying value of goodwill for the nine months ended June 30, 2009 (in thousands):

Goodwill at September 30, 2008		$	2,536,945
Goodwill recognized in connection with acquisition (see Note 2)			7,636
Foreign currency translation			(9,787	)
Goodwill at June 30, 2009		$	2,534,794

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

		June 30, 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		$	242,997			$	—			$	242,997			$	252,138			$	—			$	252,138
Finite-lived intangibles:
Customer relationships			120,334				(53,108	)			67,226				119,521				(44,664	)			74,857
Other			32,566				(21,820	)			10,746				31,306				(19,880	)			11,426
Total other intangible assets		$	395,897			$	(74,928	)		$	320,969			$	402,965			$	(64,544	)		$	338,421

AMERISOURCEBERGEN CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(UNAUDITED)

Due to the existence of impairment indicators at U.S. Bioservices, a specialty pharmacy company within the Company’s specialty group, the Company performed an impairment test on an intangible asset as of June 30, 2009, which resulted in an impairment charge of $8.9 million. This charge has been reflected in the Company’s results of operations for the three and nine months ended June 30, 2009.

Amortization expense for other intangible assets was $11.4 million and $13.2 million in the nine months ended June 30, 2009 and 2008, respectively. Amortization expense for other intangible assets is estimated to be $15.4 million in fiscal 2009, $15.6 million in fiscal 2010, $14.7 million in fiscal 2011, $12.5 million in fiscal 2012, $10.8 million in fiscal 2013, and $20.4 million thereafter.

Note 6. Debt

Debt consisted of the following (in thousands):

		June 30,				September 30,
		2009				2008
Blanco revolving credit facility at 2.31% and 3.04%, respectively, due 2010		$	55,000			$	55,000
Receivables securitization facility due 2010			—				—
Multi-currency revolving credit facility at 1.15% and 3.76%, respectively, due 2011			237,217				235,130
$400,000, 5 5/8% senior notes due 2012			398,979				398,773
$500,000, 5 7/8% senior notes due 2015			498,272				498,112
Other			1,467				2,116
Total debt			1,190,935				1,189,131
Less current portion			710				1,719
Total, net of current portion		$	1,190,225			$	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 June 30, 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 June 30, 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.

In April 2009, the Company amended its receivables securitization facility (“Receivables Securitization Facility”), electing to reduce the amount available under the facility from $975 million to $700 million and extended 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 were 150 basis points and 75 basis points, respectively, at June 30, 2009.

AMERISOURCEBERGEN CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(UNAUDITED)

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 is required to pay quarterly facility fees of 50 basis points on any unused portion of the facility. The Blanco Credit Facility is not classified in the current portion of long-term debt on the accompanying balance sheet at June 30, 2009 because the Company has both the ability and intent to refinance it on a long-term basis.

Note 7. Stockholders’ Equity and Earnings Per Share

The following table illustrates comprehensive income for the three and nine months ended June 30, 2009 and 2008 (in thousands):

		Three months ended								Nine months ended
		June 30,								June 30,
		2009				2008				2009				2008
Net income (loss)		$	118,807			$	(108,020	)		$	373,250			$	135,652
Foreign currency translation adjustments and other			6,748				(7	)			(4,493	)			(2,824	)
Comprehensive income (loss)		$	125,555			$	(108,027	)		$	368,757			$	132,828

In November 2008, the Company’s board of directors increased the quarterly dividend by 33%. On May 19, 2009, the Company declared a two-for-one split of the Company’s outstanding shares of common stock. The stock split occurred in the form of a 100% stock dividend, whereby each stockholder received one additional share for each share owned. The shares were distributed on June 15, 2009 to stockholders of record at the close of business on May 29, 2009. On May 19, 2009, the Company also announced that the Company’s board of directors had authorized an increase in the quarterly dividend rate by 20% to $0.06 per common stock share on a post-split basis.

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 nine months ended June 30, 2009, the Company purchased 1.2 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 nine months ended June 30, 2009, the Company purchased 14.9 million shares under this program for $255.6 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								Nine months ended
		June 30,								June 30,
(in thousands)		2009				2008				2009				2008
Weighted average common shares outstanding — basic			298,477				319,064				303,225				324,094
Effect of dilutive securities — stock options, restricted stock, and restricted stock units			2,115				3,170				1,946				3,860
Weighted average common shares outstanding — diluted			300,592				322,234				305,171				327,954

AMERISOURCEBERGEN CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(UNAUDITED)

Note 8. 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 nine months ended June 30, 2009 and 2008 (in thousands):

		Three months ended								Nine months ended
		June 30,								June 30,
		2009				2008				2009				2008
Facility consolidations and employee severance		$	213			$	7,798			$	5,504			$	7,286
Costs related to business divestitures			—				67				—				2,140
Total facility consolidations, employee severance and other		$	213			$	7,865			$	5,504			$	9,426

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 nine months ended June 30, 2009, the Company terminated 197 employees and incurred $3.2 million of employee severance costs. Additionally, during the nine months ended June 30, 2009, the Company recorded $2.2 million of additional costs relating to the Bergen Brunswig Matter as described in Note 9. During the nine months ended June 30, 2008, the Company terminated 58 employees and incurred $7.6 million of employee severance costs. Additionally, during the nine months ended June 30, 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 nine months ended June 30, 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 June 30, 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			5,353				151				5,504
Payments made during the period			(13,507	)			(772	)			(14,279	)
Balance as of June 30, 2009		$	8,927			$	3,735			$	12,662

The lease cancellation costs and other balance set forth in the above table as of June 30, 2009 primarily consists of an accrual for information technology transition costs payable to IBM Global Services.

Note 9. 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)
(UNAUDITED)

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. In July 2009, the U.S. Bankruptcy Court for the Eastern District of New York granted the Company’s motion for relief from the automatic stay, which will allow the post-trial proceedings to re-commence.

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

AMERISOURCEBERGEN CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(UNAUDITED)

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 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. The executive also appealed 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 filed an appeal of the Order pursuant to OMH procedures in May 2009. In addition, on the same day that the Order was issued, OMH notified ABCC that it had filed a civil complaint with Health Canada (department of the Canadian government responsible for national public health) against ABCC for potential violations of the Canadian Food and Drug Act. Health Canada subsequently conducted an audit of ABCC, and ABCC has cooperated fully with Health Canada in the conduct of the audit. 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 10. 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 nine months ended June 30, 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 nine months ended June 30, 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.

AMERISOURCEBERGEN CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(UNAUDITED)

During the nine months ended June 30, 2008, the Company recognized a gain of $13.2 million as a reduction 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.

Note 11. 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 reportable segment performance based on total revenue including bulk deliveries to customer warehouses. Total revenue was $18.4 billion and $18.0 billion in the three months ended June 30, 2009 and 2008, respectively, and was $53.0 billion in the nine months ended June 30, 2009 and 2008. 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 nine months ended June 30, 2009 and 2008 (in thousands):

		Three months ended								Nine months ended
		June 30,								June 30,
		2009				2008				2009				2008
Pharmaceutical Distribution operating income		$	213,200			$	205,390			$	664,641			$	633,010
Facility consolidations, employee severance and other			(213	)			(7,865	)			(5,504	)			(9,426	)
Gain on antitrust litigation settlements			—				—				—				1,585
Total operating income			212,987				197,525				659,137				625,169
Other loss			186				768				1,119				513
Interest expense, net			14,652				15,966				43,356				51,081
Income from continuing operations before income taxes		$	198,149			$	180,791			$	614,662			$	573,575

Note 12. 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 June 30, 2009 and September 30, 2008, statements of operations for the three and nine months ended June 30, 2009 and 2008, and statements of cash flows for the nine months ended June 30, 2009 and 2008.

AMERISOURCEBERGEN CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(UNAUDITED)

In fiscal 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 receivable 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:

		June 30, 2009
						Guarantor				Non-Guarantor								Consolidated
(in thousands)		Parent				Subsidiaries				Subsidiaries				Eliminations				Total
Current assets:
Cash and cash equivalents		$	752,748			$	98,325			$	61,851			$	—			$	912,924
Accounts receivable, net			326				1,282,694				2,463,623				—				3,746,643
Merchandise inventories			—				4,308,610				115,618				—				4,424,228
Prepaid expenses and other			90				51,504				2,991				—				54,585
Total current assets			753,164				5,741,133				2,644,083				—				9,138,380
Property and equipment, net			—				565,776				29,269				—				595,045
Goodwill and other intangible assets			—				2,720,703				135,060				—				2,855,763
Other assets			10,309				134,748				1,506				—				146,563
Intercompany investments and advances			2,646,105				2,962,648				(40,763	)			(5,567,990	)			—
Total assets		$	3,409,578			$	12,125,008			$	2,769,155			$	(5,567,990	)		$	12,735,751
Current liabilities:
Accounts payable		$	—			$	7,551,002			$	149,514			$	—			$	7,700,516
Accrued expenses and other			(271,991	)			552,883				8,840				—				289,732
Current portion of long-term debt			—				346				364				—				710
Deferred income taxes			—				597,292				(1,276	)			—				596,016
Total current liabilities			(271,991	)			8,701,523				157,442				—				8,586,974
Long-term debt, net of current portion			897,251				480				292,494				—				1,190,225
Other liabilities			—				168,517				5,717				—				174,234
Total stockholders’ equity			2,784,318				3,254,488				2,313,502				(5,567,990	)			2,784,318
Total liabilities and stockholders’ equity		$	3,409,578			$	12,125,008			$	2,769,155			$	(5,567,990	)		$	12,735,751

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 June 30, 2009
						Guarantor				Non-Guarantor								Consolidated
(in thousands)		Parent				Subsidiaries				Subsidiaries				Eliminations				Total
Operating revenue		$	—			$	17,596,385			$	368,462			$	—			$	17,964,847
Bulk deliveries to customer warehouses			—				429,052				—				—				429,052
Total revenue			—				18,025,437				368,462				—				18,393,899
Cost of goods sold			—				17,522,690				351,986				—				17,874,676
Gross profit			—				502,747				16,476				—				519,223
Operating expenses:
Distribution, selling and administrative			—				286,656				(9,222	)			—				277,434
Depreciation			—				15,235				714				—				15,949
Amortization			—				2,993				747				—				3,740
Facility consolidations, employee severance and other			—				213				—				—				213
Intangible asset impairment			—				8,900				—				—				8,900
Operating income			—				188,750				24,237				—				212,987
Other loss			—				124				62				—				186
Interest (income) expense, net			(216	)			11,773				3,095				—				14,652
Income from continuing operations before income taxes and equity in earnings of subsidiaries			216				176,853				21,080				—				198,149
Income taxes			76				65,455				7,484				—				73,015
Equity in earnings of subsidiaries			118,667				—				—				(118,667	)			—
Income from continuing operations			118,807				111,398				13,596				(118,667	)			125,134
Loss from discontinued operations			—				(6,327	)			—				—				(6,327	)
Net income		$	118,807			$	105,071			$	13,596			$	(118,667	)		$	118,807

AMERISOURCEBERGEN CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(UNAUDITED)

CONDENSED CONSOLIDATING STATEMENTS OF OPERATIONS:

		Three months ended June 30, 2008
						Guarantor				Non-Guarantor								Consolidated
(in thousands)		Parent				Subsidiaries				Subsidiaries				Eliminations				Total
Operating revenue		$	—			$	17,051,022			$	456,475			$	—			$	17,507,497
Bulk deliveries to customer warehouses			—				489,169				—				—				489,169
Total revenue			—				17,540,191				456,475				—				17,996,666
Cost of goods sold			—				17,064,956				433,665				—				17,498,621
Gross profit			—				475,235				22,810				—				498,045
Operating expenses:
Distribution, selling and administrative			—				283,730				(12,632	)			—				271,098
Depreciation			—				16,799				641				—				17,440
Amortization			—				3,254				863				—				4,117
Facility consolidations, employee severance and other			—				7,865				—				—				7,865
Operating income			—				163,587				33,938				—				197,525
Other loss			—				768				—				—				768
Interest (income) expense, net			(163	)			11,500				4,629				—				15,966
Income from continuing operations before income taxes and equity in earnings of subsidiaries			163				151,319				29,309				—				180,791
Income taxes			57				57,559				10,410				—				68,026
Equity in earnings of subsidiaries			(108,126	)			—				—				108,126				—
(Loss) income from continuing operations			(108,020	)			93,760				18,899				108,126				112,765
Loss from discontinued operations			—				(220,785	)			—				—				(220,785	)
Net (loss) income		$	(108,020	)		$	(127,025	)		$	18,899			$	108,126			$	(108,020	)