AmerisourceBergen Reports Second Quarter Fiscal Year 2014 Results

  AmerisourceBergen Reports Second Quarter Fiscal Year 2014 Results  Now Expects Fiscal 2014 Adjusted Diluted EPS from Continuing Operations to be                         in the range of $3.64 to $3.74  Business Wire  VALLEY FORGE, Pa. -- April 24, 2014  AmerisourceBergen Corporation (NYSE:ABC) today reported that in its fiscal year 2014 second quarter ended March 31, 2014, adjusted diluted earnings per share from continuing operations increased 19.1 percent to $1.06. Revenue increased 38.6 percent to $28.5 billion in the quarter. On the basis of U.S. generally accepted accounting principles (GAAP), diluted earnings per share from continuing operations were $0.76 for the March quarter of fiscal 2014. In the tables that follow, we present our GAAP results as well as a reconciliation of GAAP income from continuing operations to adjusted non-GAAP income from continuing operations.  “We delivered strong performance in our March quarter, as we continued to onboard substantial new business, and made significant progress against our strategic objectives,” said Steven H. Collis, AmerisourceBergen President and Chief Executive Officer. “With excellent operational performance and improving working capital trends that helped generate tremendous free cash flow in the quarter, we have good momentum heading into the second half of our fiscal year. In addition, we continued to make important investments in our business for the long-term, including signing a definitive agreement to acquire a minority stake in Profarma Distribuidora de Produtos Farmacêuticos S.A. of Brazil, and returned funds to shareholders through repurchasing over $250 million of our common stock.”  The comments below compare adjusted results from continuing operations, which exclude:    *Gains on antitrust litigation settlements;   *LIFO expense;   *Acquisition related intangibles amortization;   *Warrant expense; and   *Employee severance, litigation, and other expenses.  In addition, we calculate our adjusted earnings per share for each period using a diluted weighted average share count, which excludes the accounting dilution resulting from the impact of the unexercised equity warrants.  Summary of Adjusted Quarterly Results    *Revenue: In the second quarter of fiscal 2014, revenue was $28.5 billion,     up 38.6 percent compared to the same quarter in the previous fiscal year,     reflecting a 46 percent increase in AmerisourceBergen Drug Corporation     (ABDC) revenue, and a 10 percent increase in AmerisourceBergen Specialty     Group (ABSG) revenue.   *Gross Profit: Gross profit in the fiscal 2014 second quarter was $831.6     million, a 16.6 percent increase over the same period in the previous     year, driven by strong overall revenue growth and generic sales in ABDC.     Gross profit as a percentage of revenue decreased 56 basis points to 2.92     percent, primarily due to a substantial increase in lower margin brand     business.   *Operating Expenses: In the second quarter of fiscal 2014, operating     expenses were $415.0 million, up 16.1 percent over the same period in the     last fiscal year. The increase in operating expenses in the quarter was     due primarily to costs associated with onboarding the new Walgreen Co.     business. Operating expenses as a percentage of revenue in the fiscal 2014     second quarter were 1.46 percent compared with 1.74 percent for the same     period in the previous fiscal year.   *Operating Income: In the fiscal 2014 second quarter, operating income of     $416.6 million was up 17.0 percent versus the prior year, as the     percentage increase in gross profit was slightly higher than the     percentage increase in operating expenses. Operating income as a     percentage of revenue decreased 27 basis points to 1.46 percent in the     fiscal 2014 second quarter compared to the previous year’s second quarter.   *Tax Rate: The effective tax rate for the second quarter of fiscal 2014 was     38.2 percent, in line with the previous fiscal year’s second quarter.     Going forward, we expect our annualized effective tax rate to be in the     low 38 percent range.   *Earnings Per Share: Diluted earnings per share from continuing operations     were up 19.1 percent to $1.06 in the second quarter of fiscal year 2014     compared to $0.89 in the previous fiscal year’s second quarter, driven     primarily by the increase in operating income.   *Shares Outstanding: Diluted weighted average shares outstanding for the     second quarter of fiscal year 2014 were 234.3 million, a slight decrease     versus the prior year as share repurchases offset option exercises.  Segment Discussion  The Pharmaceutical Distribution segment includes both AmerisourceBergen Drug Corporation and AmerisourceBergen Specialty Group. Other includes AmerisourceBergen Consulting Services (ABCS) and World Courier.  Pharmaceutical Distribution Segment  In the second fiscal quarter of 2014, Pharmaceutical Distribution revenues were $27.9 billion, an increase of 39 percent compared to the same quarter in the prior year. ABDC revenues increased 46 percent, due primarily to the onboarding of all of the new Walgreens branded pharmaceuticals business and a portion of their generic pharmaceuticals business, and increased branded pharmaceutical sales to our other large customers. ABSG revenues increased 10 percent, which was driven by strong performance in our blood products, vaccine and physician office distribution businesses. Intrasegment revenues between ABDC and ABSG have been eliminated in the presentation of total Pharmaceutical Distribution revenue. Total intrasegment revenues were $976.3 million and $760.9 million in the quarters ended March 31, 2014 and 2013, respectively.  Operating income of $372.9 million in the March quarter of fiscal 2014 increased 16 percent compared to the same period in the previous year due to the new Walgreens branded and generic pharmaceuticals business in ABDC, strong contributions from generics overall, and solid performance in ABSG, as a flat performance in our community oncology business was offset by strong performance in our blood products and vaccine distribution businesses.  Other  Revenues in Other were $572.5 million in the second quarter of fiscal 2014, an increase of 11 percent over the same period in the prior year. Operating income increased 25 percent to $43.6 million in the second quarter of fiscal 2014, driven by strong performance in World Courier.  Fiscal Year 2014 Expectations  AmerisourceBergen now expects adjusted diluted earnings per share from continuing operations in fiscal year 2014 to be in the range of $3.64 to $3.74, a 13 percent to 17 percent increase over fiscal 2013. We continue to expect revenue growth in the range of 30 percent to 34 percent, and operating income growth in the 12 percent to 16 percent range. We continue to expect adjusted operating margin to decline in the 20 to 23 basis points range due to the onboarding of significant new lower margin business and growth in brand pharmaceutical business with our large customers. We continue to expect to generate free cash flow in the range of $500 to $700 million, with capital expenditures in the $300 million range, and to spend approximately $500 million in share repurchases, subject to market conditions.  Conference Call  The Company will host a conference call to discuss the results at 11:00 a.m. Eastern Time on April 24, 2014.  Participating in the conference call will be:  Steven H. Collis, President & Chief Executive Officer Tim G. Guttman, Senior Vice President & Chief Financial Officer  The dial-in number for the live call will be (651) 291-0618. No access code is required. The live call will also be webcast via the Company’s website at www.amerisourcebergen.com. Users are encouraged to log on to the webcast approximately 10 minutes in advance of the scheduled start time of the call.  Replays of the call will be made available via telephone and webcast. A replay of the webcast will be posted on www.amerisourcebergen.com approximately two hours after the completion of the call and will remain available for thirty days. The telephone replay will also be available approximately two hours after the completion of the call and will remain available for seven days. To access the telephone replay from within the US, dial (800) 475-6701. From outside the US, dial (320) 365-3844. The access code for the replay is 323936.  About AmerisourceBergen  AmerisourceBergen is one of the largest global pharmaceutical sourcing and distribution services companies, helping both healthcare providers and pharmaceutical and biotech manufacturers improve patient access to products and enhance patient care. With services ranging from drug distribution and niche premium logistics to reimbursement and pharmaceutical consulting services, AmerisourceBergen delivers innovative programs and solutions across the pharmaceutical supply channel. With over $100 billion in annualized revenue, AmerisourceBergen is headquartered in Valley Forge, PA, and employs approximately 13,000 people. AmerisourceBergen is ranked #32 on the Fortune 500 list. For more information, go to www.amerisourcebergen.com.  AmerisourceBergen's Cautionary Note Regarding Forward-Looking Statements  Certain of the statements contained in this news release are “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. Words such as “expect,” “likely,” “outlook,” “forecast,” “would,” “could,” “should,” “can,” “will,” “project," “intend,” “plan,” “continue,” “sustain,” “synergy,” “on track,” “believe,” “seek,” “estimate,” “anticipate,” “may,” “possible,” “assume,” variations of such words, and similar expressions are intended to identify such forward-looking statements. These statements are based on management’s current expectations and are subject to uncertainty and change in circumstances. These statements are not guarantees of future performance and are based on assumptions that could prove incorrect or could cause actual results to vary materially from those indicated. Among the factors that could cause actual results to differ materially from those projected, anticipated, or implied are the following: changes in pharmaceutical market growth rates; the loss of one or more key customer or supplier relationships; the retention of key customer or supplier relationships under less favorable economics; changes in customer mix; customer delinquencies, defaults or insolvencies; supplier defaults or insolvencies; changes in branded and/or generic pharmaceutical manufacturers’ pricing and distribution policies or practices; adverse resolution of any contract or other dispute with customers or suppliers; federal and state government enforcement initiatives to detect and prevent suspicious orders of controlled substances and the diversion of controlled substances, federal and state prosecution of alleged violations of related laws and regulations, and any related litigation, including shareholder derivative lawsuits or other disputes relating to our distribution of controlled substances; qui tam litigation for alleged violations of fraud and abuse laws and regulations and/or any other laws and regulations governing the marketing, sale, purchase and/or dispensing of pharmaceutical products or services and any related litigation, including shareholder derivative lawsuits; changes in federal and state legislation or regulatory action affecting pharmaceutical product pricing or reimbursement policies, including under Medicaid and Medicare, and the effect of such changes on our customers; changes in regulatory or clinical medical guidelines and/or labeling for the pharmaceutical products we distribute; price inflation in branded and generic pharmaceuticals and price deflation in generics; greater or less than anticipated benefit from launches of the generic versions of previously patented pharmaceutical products; significant breakdown or interruption of our information technology systems; our inability to realize the anticipated benefits of the implementation of an enterprise resource planning (ERP) system; interest rate and foreign currency exchange rate fluctuations; risks associated with international business operations, including non-compliance with the U.S. Foreign Corrupt Practices Act, anti-bribery laws and economic sanctions and import laws and regulations; economic, business, competitive and/or regulatory developments in countries where we do business and/or operate outside of the United States; risks associated with the strategic, long-term relationship among Walgreen Co., Alliance Boots GmbH, and AmerisourceBergen, the occurrence of any event, change or other circumstance that could give rise to the termination, cross-termination or modification of any of the transaction documents among the parties (including, among others, the distribution agreement or the generics agreement), an impact on our earnings per share resulting from the issuance of the Warrants, an inability to realize anticipated benefits (including benefits resulting from participation in the Walgreens Boots Alliance Development GmbH joint venture), the disruption of AmerisourceBergen’s cash flow and ability to return value to its stockholders in accordance with its past practices, disruption of or changes in vendor, payer and customer relationships and terms, and the reduction of AmerisourceBergen’s operational, strategic or financial flexibility; the acquisition of businesses that do not perform as we expect or that are difficult for us to integrate or control; our inability to successfully complete any other transaction that we may wish to pursue from time to time; changes in tax laws or legislative initiatives that could adversely affect our tax positions and/or our tax liabilities or adverse resolution of challenges to our tax positions; increased costs of maintaining, or reductions in our ability to maintain, adequate liquidity and financing sources; volatility and deterioration of the capital and credit markets; natural disasters or other unexpected events that affect our operations; and other economic, business, competitive, legal, tax, regulatory and/or operational factors affecting our business generally. Certain additional factors that management believes could cause actual outcomes and results to differ materially from those described in forward-looking statements are set forth (i) in Item 1A (Risk Factors) and Item 1 (Business) in the Company’s Annual Report on Form 10-K for the fiscal year ended September 30, 2013 and elsewhere in that report and (ii) in other reports.                                                                       AMERISOURCEBERGEN CORPORATION FINANCIAL SUMMARY (In thousands, except per share data) (unaudited)                                                                                                                                                                        Three                      Three                    Months Ended               Months Ended                    March 31,       % of       March 31,       % of       %                    2014            Revenue    2013            Revenue    Change                                                                           Revenue            $ 28,455,903    100.00 %   $ 20,523,668    100.00 %   38.6  %                                                                           Cost of goods       27,726,310               19,806,679              40.0  % sold                                                                           Gross profit         729,593       2.56   %     716,989       3.49   %   1.8   % ^(1)                                                                           Operating expenses:   Distribution,   selling and        376,341       1.32   %     323,536       1.58   %   16.3  %   administrative   Depreciation   and                44,494        0.16   %     39,868        0.19   %   11.6  %   amortization   Warrants           5,663         0.02   %     3,761         0.02   %   Employee   severance,        1,967        0.01   %    (299       )  -      %   litigation and   other Total operating      428,465       1.51   %     366,866       1.79   %   16.8  % expenses                                                                           Operating            301,128       1.06   %     350,123       1.71   %   -14.0 % income                                                                           Other (income)       (3,783     )  -0.01  %     749           -      % loss                                                                           Interest            19,474       0.07   %    18,510       0.09   %   5.2   % expense, net                                                                           Income before        285,437       1.00   %     330,864       1.61   %   -13.7 % income taxes                                                                           Income taxes        105,360      0.37   %    126,721      0.62   %   -16.9 %                                                                           Income from continuing           180,077       0.63   %     204,143       0.99   %   -11.8 % operations                                                                           Loss from discontinued        -                        (158,509   ) operations, net of income taxes                                                                           Net income         $ 180,077      0.63   %   $ 45,634       0.22   %                                                                                                                                                     Basic earnings per share:   Continuing       $ 0.78                     $ 0.89                     -12.4 %   operations   Discontinued      -                        (0.69      )   operations   Total           $ 0.78                    $ 0.20                                                                                  Diluted earnings per share:   Continuing       $ 0.76                     $ 0.87                     -12.6 %   operations   Discontinued      -                        (0.68      )   operations   Total           $ 0.76                    $ 0.19                                                                                  Weighted average common shares outstanding:   Basic              229,409                    230,422   Diluted            236,268                    234,587                  0.7   %   ^(2)                                                                                  ^(1) Includes a $0.8 million gain from antitrust litigation settlements and   a $102.8 million LIFO expense in the three months ended March 31, 2014.   Includes a $3.5 million gain from antitrust litigation settlements and a   $0.2 million LIFO credit in the three months ended March 31, 2013.   ^(2) Includes the dilutive effect of stock options, restricted stock,   restricted stock units and the Warrants issued to Walgreens and Alliance   Boots.                                                                          AMERISOURCEBERGEN CORPORATION FINANCIAL SUMMARY (In thousands, except per share data) (unaudited)                                                                                                                                                                          Six                         Six                    Months Ended                Months Ended                    March 31,        % of       March 31,       % of       %                    2014             Revenue    2013            Revenue    Change                                                                            Revenue            $ 57,632,265     100.00 %   $ 41,583,479    100.00 %   38.6  %                                                                            Cost of goods       56,214,447                40,205,662              39.8  % sold                                                                            Gross profit         1,417,818      2.46   %     1,377,817     3.31   %   2.9   % ^(1)                                                                            Operating expenses:   Distribution,   selling and        740,401        1.28   %     644,236       1.55   %   14.9  %   administrative   Depreciation   and                88,444         0.15   %     78,552        0.19   %   12.6  %   amortization   Warrants           121,960        0.21   %     3,761         0.01   %   Employee   severance,        6,269         0.01   %    1,705        -      %   litigation and   other Total operating      957,074        1.66   %     728,254       1.75   %   31.4  % expenses                                                                            Operating            460,744        0.80   %     649,563       1.56   %   -29.1 % income                                                                            Other (income)       (4,380     )   -0.01  %     726           -      % loss                                                                            Interest            38,306        0.07   %    37,035       0.09   %   3.4   % expense, net                                                                            Income before        426,818        0.74   %     611,802       1.47   %   -30.2 % income taxes                                                                            Income taxes        197,810       0.34   %    233,038      0.56   %   -15.1 %                                                                            Income from continuing           229,008        0.40   %     378,764       0.91   %   -39.5 % operations                                                                            Loss from discontinued        (7,546     )               (164,519   ) operations, net of income taxes                                                                            Net income         $ 221,462       0.38   %   $ 214,245      0.52   %                                                                                                                                                       Basic earnings per share:   Continuing       $ 1.00                      $ 1.64                     -39.0 %   operations   Discontinued       (0.03      )                (0.71      )   operations   Rounding          (0.01      )               -             Total            $ 0.96                     $ 0.93                                                                                   Diluted earnings per share:   Continuing       $ 0.97                      $ 1.61                     -39.8 %   operations   Discontinued      (0.03      )               (0.70      )   operations   Total            $ 0.94                     $ 0.91                                                                                   Weighted average common shares outstanding:   Basic              229,852                     231,409   Diluted            236,650                     235,307                  0.6   %   ^(2)                                                                                    ^(1) Includes a $21.9 million gain from antitrust litigation settlements and   a $160.4 million LIFO expense in the six months ended March 31, 2014.   Includes a $15.8 million gain from antitrust litigation settlements and a   $1.0 million LIFO expense in the six months ended March 31, 2013.   ^(2) Includes the dilutive effect of stock options, restricted stock,   restricted stock units and the Warrants issued to Walgreens and Alliance   Boots.     AMERISOURCEBERGEN CORPORATION   RECONCILIATION OF CONTINUING OPERATIONS (GAAP) TO ADJUSTED CONTINUING OPERATIONS (NON-GAAP)   (dollars in thousands, except per share data)   (unaudited)                                                                                                                                Three Months Ended March 31, 2014                                  Dilution of   Gain on                      Acquisition                  Employee                 GAAP             Unexercised   Antitrust     LIFO Expense   Related        Warrant       Severance,    Adjusted                                  Warrants      Litigation                   Intangibles    Expense       Litigation    Non-GAAP                                                Settlements                  Amortization                 and Other                                                                                                                                             Revenue       $ 28,455,903                   $ -           $ -            $  -           $ -           $ -           $ 28,455,903   Cost of        27,726,310                  849         (102,828 )     -           -           -           27,624,331    goods sold   Gross           729,593                        (849    )     102,828         -             -             -             831,572   profit   Operating      428,465                     -           -             (5,825  )    (5,663  )    (1,967  )    415,010       expenses   Operating       301,128                        (849    )     102,828         5,825         5,663         1,967         416,562   income   Other           (3,783     )                   -             -               -             -             -             (3,783     )   income   Interest   expense,       19,474                      -           -             -           -           -           19,474        net   Income   before          285,437                        (849    )     102,828         5,825         5,663         1,967         400,871   income   taxes   Income         105,360                     (361    )    38,862        2,207       6,315       750         153,133       taxes ^(1)   Income from   continuing    $ 180,077                    $ (488    )   $ 63,966      $  3,618      $ (652    )   $ 1,217      $ 247,738       operations                                                                                                                                             Diluted   earnings   per share   from          $ 0.76           $  0.01       $ -           $ 0.27         $  0.02        $ -           $ 0.01        $ 1.06       ^(3)   continuing   operations   ^(2)                                                                                                                                             Diluted   weighted   average   common          236,268           234,272      234,272       234,272         234,272       234,272       234,272       234,272   shares   outstanding   ^(2)                                                                                                                                             Percentages   of revenue:                                                                                                                                             Gross           2.56       %                                                                                           2.92       %   profit   Operating       1.51       %                                                                                           1.46       %   expenses   Operating       1.06       %                                                                                           1.46       %   income                                                                                                                                            ^(1) The amount of Warrant expense deductible for tax purposes is based on the initial valuation of the Warrants. Therefore, the income tax rate on Warrant expense will vary by quarter depending upon the quarterly changes in the fair value of the Warrants.  ^(2) For the reconciling items and for the non-GAAP presentation, diluted earnings per share and diluted weighted average common shares outstanding have been adjusted to exclude the impact of the accounting dilution from the unexercised Warrants.                                          ^(3) The sum of the components may not equal the total due to rounding.                                          Note: Management considers GAAP financial measures as well as the presented non-GAAP financial measures in evaluating the company's operating performance. Therefore, we believe that our presentation of non-GAAP financial measures provides useful supplementary information to, and facilitates additional analysis by, investors.                  AMERISOURCEBERGEN CORPORATION RECONCILIATION OF CONTINUING OPERATIONS (GAAP) TO ADJUSTED CONTINUING OPERATIONS (NON-GAAP) (dollars in thousands, except per share data) (unaudited)                                                                                                                 Three Months Ended March 31, 2013                                  Gain on                     Acquisition                  Employee                 GAAP             Antitrust     LIFO Credit   Related        Warrant       Severance,    Adjusted                                  Litigation                  Intangibles    Expense       Litigation    Non-GAAP                                  Settlements                 Amortization                 and Other                                                                                                            Revenue       $ 20,523,668     $ -           $ -           $  -           $ -           $ -           $ 20,523,668   Cost of        19,806,679     3,456       215          -           -           -           19,810,350    goods sold   Gross           716,989          (3,456  )     (215    )      -             -             -             713,318   profit   Operating      366,866        -           -            (6,098  )    (3,761  )    299         357,306       expenses   Operating       350,123          (3,456  )     (215    )      6,098         3,761         (299    )     356,012   income   Other loss      749              -             -              -             -             -             749   Interest   expense,       18,510         -           -            -           -           -           18,510        net   Income   before          330,864          (3,456  )     (215    )      6,098         3,761         (299    )     336,753   income   taxes   Income         126,721        (1,320  )    (82     )     2,330       1,130       (114    )    128,665       taxes   Income from   continuing    $ 204,143       $ (2,136  )   $ (133    )   $  3,768      $ 2,631      $ (185    )   $ 208,088       operations                                                                                                            Diluted   earnings   per share     $ 0.87           $ (0.01   )   $ -           $  0.02        $ 0.01        $ -           $ 0.89       ^(1)   from   continuing   operations                                                                                                            Diluted   weighted   average         234,587          234,587       234,587        234,587       234,587       234,587       234,587   common   shares   outstanding                                                                                                            Percentages   of revenue:                                                                                                            Gross           3.49       %                                                                            3.48       %   profit   Operating       1.79       %                                                                            1.74       %   expenses   Operating       1.71       %                                                                            1.73       %   income                                                                                                                        ^(1) The sum of the components may not equal the total due to rounding.  Note: Management considers GAAP financial measures as well as the presented non-GAAP financial measures in evaluating the company's operating performance. Therefore, we believe that our presentation of non-GAAP financial measures provides useful supplementary information to, and facilitates additional analysis by, investors.    AMERISOURCEBERGEN CORPORATION RECONCILIATION OF CONTINUING OPERATIONS (GAAP) TO ADJUSTED CONTINUING OPERATIONS (NON-GAAP) (dollars in thousands, except per share data) (unaudited)                                                                                                                                Six Months Ended March 31, 2014                                  Dilution of   Gain on                      Acquisition                   Employee                 GAAP             Unexercised   Antitrust     LIFO Expense   Related        Warrant        Severance,    Adjusted                                  Warrants      Litigation                   Intangibles    Expense        Litigation    Non-GAAP                                                Settlements                  Amortization                  and Other                                                                                                                            Revenue       $ 57,632,265                   $ -           $ -            $  -           $ -            $ -           $ 57,632,265   Cost of        56,214,447                  21,872      (160,410 )     -           -            -           56,075,909    goods sold   Gross           1,417,818                      (21,872 )     160,410         -             -              -             1,556,356   profit   Operating      957,074                     -           -             (11,783 )    (121,960 )    (6,269  )    817,062       expenses   Operating       460,744                        (21,872 )     160,410         11,783        121,960        6,269         739,294   income   Other           (4,380     )                   -             -               -             -              -             (4,380     )   income   Interest   expense,       38,306                      -           -             -           -            -           38,306        net   Income   before          426,818                        (21,872 )     160,410         11,783        121,960        6,269         705,368   income   taxes   Income         197,810                     (8,243  )    60,450        4,441       12,630       2,363       269,451       taxes ^(1)   Income from   continuing    $ 229,008                    $ (13,629 )   $ 99,960      $  7,342      $ 109,330     $ 3,906      $ 435,917       operations                                                                                                                            Diluted   earnings   per share   from          $ 0.97           $  0.01       $ (0.06   )   $ 0.43         $  0.03        $ 0.47         $ 0.02        $ 1.86       ^(3)   continuing   operations   ^(2)                                                                                                                            Diluted   weighted   average   common          236,650           234,838      234,838       234,838         234,838       234,838        234,838       234,838   shares   outstanding   ^(2)                                                                                                                            Percentages   of revenue:                                                                                                                            Gross           2.46       %                                                                                            2.70       %   profit   Operating       1.66       %                                                                                            1.42       %   expenses   Operating       0.80       %                                                                                            1.28       %   income                                                                                                                                        ^(1) The amount of Warrant expense deductible for tax purposes is based on the initial valuation of the Warrants. Therefore, the income tax rate on Warrant expense will vary by quarter depending upon the quarterly changes in the fair value of the Warrants.  ^(2) For the reconciling items and for the non-GAAP presentation, diluted earnings per share and diluted weighted average common shares outstanding have been adjusted to exclude the impact of the accounting dilution from the unexercised Warrants.                                          ^(3) The sum of the components may not equal the total due to rounding.                                          Note: Management considers GAAP financial measures as well as the presented non-GAAP financial measures in evaluating the company's operating performance. Therefore, we believe that our presentation of non-GAAP financial measures provides useful supplementary information to, and facilitates additional analysis by, investors.   AMERISOURCEBERGEN CORPORATION   RECONCILIATION OF CONTINUING OPERATIONS (GAAP) TO ADJUSTED CONTINUING OPERATIONS (NON-GAAP)   (dollars in thousands, except per share data)   (unaudited)                                                                                                                  Six Months Ended March 31, 2013                                  Gain on                     Acquisition                  Employee                 GAAP             Antitrust     LIFO          Related        Warrant       Severance,    Adjusted                                  Litigation    Expense       Intangibles    Expense       Litigation    Non-GAAP                                  Settlements                 Amortization                 and Other                                                                                                            Revenue       $ 41,583,479     $ -           $ -           $  -           $ -           $ -           $ 41,583,479   Cost of        40,205,662     15,764      (952    )     -           -           -           40,220,474    goods sold   Gross           1,377,817        (15,764 )     952            -             -             -             1,363,005   profit   Operating      728,254        -           -            (12,197 )    (3,761  )    (1,705  )    710,591       expenses   Operating       649,563          (15,764 )     952            12,197        3,761         1,705         652,414   income   Other loss      726              -             -              -             -             -             726   Interest   expense,       37,035         -           -            -           -           -           37,035        net   Income   before          611,802          (15,764 )     952            12,197        3,761         1,705         614,653   income   taxes   Income         233,038        (5,978  )    362          4,638       1,130       644         233,834       taxes   Income from   continuing    $ 378,764       $ (9,786  )   $ 590        $  7,559      $ 2,631      $ 1,061      $ 380,819       operations                                                                                                            Diluted   earnings   per share     $ 1.61           $ (0.04   )   $ -           $  0.03        $ 0.01        $ -           $ 1.62       ^(1)   from   continuing   operations                                                                                                            Diluted   weighted   average         235,307          235,307       235,307        235,307       235,307       235,307       235,307   common   shares   outstanding                                                                                                            Percentages   of revenue:                                                                                                            Gross           3.31       %                                                                            3.28       %   profit   Operating       1.75       %                                                                            1.71       %   expenses   Operating       1.56       %                                                                            1.57       %   income   ^(1) The sum of the components may not equal the total due to rounding.      Note: Management considers GAAP financial measures as well as the presented   non-GAAP financial measures in evaluating the company's operating   performance. Therefore, we believe that our presentation of non-GAAP   financial measures provides useful supplementary information to, and   facilitates additional analysis by, investors.                                                             AMERISOURCEBERGEN CORPORATION CONDENSED CONSOLIDATED BALANCE SHEETS (in thousands) (unaudited)                                                                                                                               ASSETS                                                March 31,      September 30,                                                2014           2013 Current assets:   Cash and cash equivalents                    $ 696,730      $  1,231,006   Accounts receivable, net                       6,506,412       6,051,920   Merchandise inventories                        8,493,269       6,981,494   Prepaid expenses and other                    63,616         129,231   Total current assets                           15,760,027      14,393,651                                                                Property and equipment, net                      850,847         803,561 Other long-term assets                          3,750,373      3,721,426                                                                  Total assets                                 $ 20,361,247   $  18,918,638                                                                                                                               LIABILITIES AND STOCKHOLDERS' EQUITY                                                                Current liabilities:   Accounts payable                             $ 14,909,626   $  13,335,792   Other current liabilities                     1,590,305      1,534,843   Total current liabilities                      16,499,931      14,870,635                                                                Long-term debt                                   1,396,948       1,396,606                                                                Other long-term liabilities                      318,853         331,652                                                                Stockholders' equity                            2,145,515      2,319,745                                                                  Total liabilities and stockholders' equity   $ 20,361,247   $  18,918,638                                                                    AMERISOURCEBERGEN CORPORATION SUMMARY SEGMENT INFORMATION (dollars in thousands) (unaudited)                                                                                                                                                                               Three Months Ended March 31, Revenue                             2014             2013             % Change                                                                        Pharmaceutical Distribution         $ 27,932,495     $ 20,054,159     39    % Other                                 572,503          514,942        11    % Intersegment eliminations            (49,095    )    (45,433    )   8     %                                                                        Revenue                             $ 28,455,903    $ 20,523,668    39    %                                                                                                                                                                                                                                                                                                                                 Three Months Ended March 31, Operating Income                    2014             2013             % Change                                                                        Pharmaceutical Distribution         $ 372,929        $ 321,077        16    % Other                                 43,633           34,935         25    % Gain on antitrust litigation          849              3,456 settlements LIFO (expense) credit                 (102,828   )     215 Acquisition related intangibles       (5,825     )     (6,098     ) amortization Warrant expense                       (5,663     )     (3,761     ) Employee severance, litigation       (1,967     )    299         and other                                                                        Operating income                    $ 301,128       $ 350,123       -14   %                                                                                                                                                                                                                      Percentages of revenue:                                                                        Pharmaceutical Distribution Gross profit                          2.49       %     2.93       % Operating expenses                    1.15       %     1.33       % Operating income                      1.34       %     1.60       %                                                                        Other Gross profit                          23.82      %     24.40      % Operating expenses                    16.20      %     17.61      % Operating income                      7.62       %     6.78       %                                                                        AmerisourceBergen Corporation (GAAP) Gross profit                          2.56       %     3.49       % Operating expenses                    1.51       %     1.79       % Operating income                      1.06       %     1.71       %                                                                        AmerisourceBergen Corporation (Non-GAAP) Gross profit                          2.92       %     3.48       % Operating expenses                    1.46       %     1.74       % Operating income                      1.46       %     1.73       %   AMERISOURCEBERGEN CORPORATION SUMMARY SEGMENT INFORMATION (dollars in thousands) (unaudited)                                                                                                                                                                               Six Months Ended March 31, Revenue                             2014             2013             % Change                                                                        Pharmaceutical Distribution         $ 56,555,086     $ 40,653,207     39    % Other                                 1,176,635        1,019,992      15    % Intersegment eliminations            (99,456    )    (89,720    )   11    %                                                                        Revenue                             $ 57,632,265    $ 41,583,479    39    %                                                                                                                                                                                                                                                                                                                                 Six Months Ended March 31, Operating Income                    2014             2013             % Change                                                                        Pharmaceutical Distribution         $ 659,711        $ 587,754        12    % Other                                 79,583           64,660         23    % Gain on antitrust litigation          21,872           15,764 settlements LIFO expense                          (160,410   )     (952       ) Acquisition related intangibles       (11,783    )     (12,197    ) amortization Warrant expense                       (121,960   )     (3,761     ) Employee severance, litigation       (6,269     )    (1,705     ) and other                                                                        Operating income                    $ 460,744       $ 649,563       -29   %                                                                                                                                                                                                                      Percentages of revenue:                                                                        Pharmaceutical Distribution Gross profit                          2.28       %     2.74       % Operating expenses                    1.11       %     1.30       % Operating income                      1.17       %     1.45       %                                                                        Other Gross profit                          22.69      %     24.23      % Operating expenses                    15.92      %     17.89      % Operating income                      6.76       %     6.34       %                                                                        AmerisourceBergen Corporation (GAAP) Gross profit                          2.46       %     3.31       % Operating expenses                    1.66       %     1.75       % Operating income                      0.80       %     1.56       %                                                                        AmerisourceBergen Corporation (Non-GAAP) Gross profit                          2.70       %     3.28       % Operating expenses                    1.42       %     1.71       % Operating income                      1.28       %     1.57       %   AMERISOURCEBERGEN CORPORATION CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (in thousands) (unaudited)                                                                                                                 Six             Six                                                  Months Ended    Months Ended                                                  March 31,       March 31,                                                  2014            2013                                                                   Operating Activities: Net income                                       $ 221,462       $ 214,245 Loss from discontinued operations                 7,546         164,519    Income from continuing operations                  229,008         378,764 Adjustments to reconcile income from continuing operations to net cash provided by operating activities                   231,572         141,401 Changes in operating assets and liabilities       (340,381  )    178,059    Net cash provided by operating activities -        120,199         698,224 continuing operations Net cash (used in) provided by operating          (7,546    )    45,431     activities - discontinued operations Net cash provided by operating activities         112,653       743,655                                                                      Investing Activities: Capital expenditures                               (125,392  )     (88,377   ) Other                                             (2,743    )    81         Net cash used in investing activities -            (128,135  )     (88,296   ) continuing operations Net cash used in investing activities -           -             (9,643    ) discontinued operations Net cash used in investing activities             (128,135  )    (97,939   )                                                                   Financing Activities: Purchases of common stock                          (251,961  )     (284,691  ) Exercises of stock options                         59,675          65,850 Cash dividends on common stock                     (108,397  )     (98,203   ) Purchases of capped call options                   (211,397  )     - Other                                             (6,714    )    (6,086    ) Net cash used in financing activities -            (518,794  )     (323,130  ) continuing operations Net cash used in financing activities -           -             (41,897   ) discontinued operations Net cash used in financing activities             (518,794  )    (365,027  )                                                                   (Decrease) increase in cash and cash               (534,276  )     280,689 equivalents                                                                   Cash and cash equivalents at beginning of         1,231,006     1,066,608  period                                                                   Cash and cash equivalents at end of period       $ 696,730      $ 1,347,297   Contact:  AmerisourceBergen Corporation Barbara Brungess Vice President, Corporate & Investor Relations 610-727-7199 bbrungess@amerisourcebergen.com