ABC 10-Q Quarter ended June 30, 2010

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

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

FOR THE QUARTERLY PERIOD ENDED June 30, 2010

OR

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

FOR THE TRANSITION PERIOD FROM TO

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)

(610) 727-7000
(Registrant’s telephone number, including area 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, 2010 was 278,837,313.

AMERISOURCEBERGEN CORPORATION

TABLE OF CONTENTS

		Page No.
Part I. FINANCIAL INFORMATION
Item 1. Financial Statements (Unaudited)
Consolidated Balance Sheets, June 30, 2010 and September 30, 2009			2
Consolidated Statements of Operations for the three and nine months ended June 30, 2010 and 2009			3
Consolidated Statements of Cash Flows for the nine months ended June 30, 2010 and 2009			4
Notes to Consolidated Financial Statements			5
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations			23
Item 3. Quantitative and Qualitative Disclosures About Market Risk			34
Item 4. Controls and Procedures			34
Part II. OTHER INFORMATION
Item 1. Legal Proceedings			35
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds			35
Item 6. Exhibits			36
SIGNATURES			37
Exhibit 10.3
Exhibit 31.1
Exhibit 31.2
Exhibit 32.1
Exhibit 32.2
EX-101 INSTANCE DOCUMENT
EX-101 SCHEMA DOCUMENT
EX-101 CALCULATION LINKBASE DOCUMENT
EX-101 LABELS LINKBASE DOCUMENT
EX-101 PRESENTATION LINKBASE DOCUMENT
EX-101 DEFINITION LINKBASE DOCUMENT

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)		2010				2009
		(Unaudited)
ASSETS
Current assets:
Cash and cash equivalents		$	1,310,716			$	1,009,368
Accounts receivable, less allowances for returns and doubtful accounts:
$371,643 at June 30, 2010 and $370,303 at September 30, 2009			3,887,827				3,916,509
Merchandise inventories			5,096,601				4,972,820
Prepaid expenses and other			42,859				55,056
Total current assets			10,338,003				9,953,753
Property and equipment, at cost:
Land			36,044				35,665
Buildings and improvements			305,197				292,903
Machinery, equipment and other			800,994				694,555
Total property and equipment			1,142,235				1,023,123
Less accumulated depreciation			(454,051	)			(403,885	)
Property and equipment, net			688,184				619,238
Goodwill and other intangible assets			2,846,301				2,859,064
Other assets			131,297				140,685
TOTAL ASSETS		$	14,003,785			$	13,572,740
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable		$	8,452,112			$	8,517,162
Accrued expenses and other			331,067				315,657
Current portion of long-term debt			489				1,068
Deferred income taxes			703,019				645,723
Total current liabilities			9,486,687				9,479,610
Long-term debt, net of current portion			1,359,681				1,176,933
Other liabilities			226,226				199,728
Stockholders’ equity:
Common stock, $0.01 par value — authorized: 600,000,000 shares; issued and outstanding: 489,375,766 shares and 281,182,658 shares at June 30, 2010, respectively, and 482,941,212 shares and 287,922,263 shares at September 30, 2009, respectively			4,894				4,829
Additional paid-in capital			3,882,719				3,737,835
Retained earnings			3,346,975				2,919,760
Accumulated other comprehensive loss			(50,159	)			(46,096	)
			7,184,429				6,616,328
Treasury stock, at cost: 208,193,108 shares at June 30, 2010 and 195,018,949 shares at September 30, 2009			(4,253,238	)			(3,899,859	)
Total stockholders’ equity			2,931,191				2,716,469
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY		$	14,003,785			$	13,572,740

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)		2010				2009				2010				2009
Revenue		$	19,602,120			$	18,393,899			$	58,238,606			$	53,043,927
Cost of goods sold			19,013,750				17,874,676				56,474,798				51,482,385
Gross profit			588,370				519,223				1,763,808				1,561,542
Operating expenses:
Distribution, selling, and administrative			289,288				277,434				849,018				828,669
Depreciation			17,556				15,949				50,815				46,609
Amortization			4,069				3,740				12,294				11,423
Facility consolidations, employee severance and other			(4,397	)			213				(4,482	)			5,504
Intangible asset impairments			—				8,900				700				10,200
Operating income			281,854				212,987				855,463				659,137
Other loss			488				186				1,033				1,119
Interest expense, net			17,901				14,652				54,447				43,356
Income from continuing operations before income taxes			263,465				198,149				799,983				614,662
Income taxes			100,260				73,015				304,463				232,957
Income from continuing operations			163,205				125,134				495,520				381,705
Loss from discontinued operations, net of income taxes			—				(6,327	)			—				(8,455	)
Net income		$	163,205			$	118,807			$	495,520			$	373,250
Earnings per share:
Basic earnings per share:
Continuing operations		$	0.58			$	0.42			$	1.75			$	1.26
Discontinued operations			—				(0.02	)			—				(0.03	)
Total		$	0.58			$	0.40			$	1.75			$	1.23
Diluted earnings per share:
Continuing operations		$	0.57			$	0.42			$	1.72			$	1.25
Discontinued operations			—				(0.02	)			—				(0.03	)
Total		$	0.57			$	0.40			$	1.72			$	1.22
Weighted average common shares outstanding:
Basic			281,195				298,477				283,390				303,225
Diluted			286,693				300,592				288,412				305,171
Cash dividends declared per share of common stock		$	0.08			$	0.05			$	0.24			$	0.15

See notes to consolidated financial statements.

AMERISOURCEBERGEN CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)

		Nine months ended June 30,
(in thousands)		2010				2009
OPERATING ACTIVITIES
Net income		$	495,520			$	373,250
Loss from discontinued operations			—				8,455
Income from continuing operations			495,520				381,705
Adjustments to reconcile income from continuing operations to net cash provided by operating activities:
Depreciation, including amounts charged to cost of goods sold			60,358				54,847
Amortization, including amounts charged to interest expense			16,043				14,547
Provision for doubtful accounts			30,560				24,236
Provision for deferred income taxes			60,688				45,835
Share-based compensation			24,119				20,384
Loss on disposal of property and equipment			1,414				3,100
Other, including intangible asset impairments			1,537				7,320
Changes in operating assets and liabilities, excluding the effects of acquisitions and dispositions:
Accounts receivable			3,453				(292,773	)
Merchandise inventories			(127,927	)			(222,302	)
Prepaid expenses and other assets			19,582				(15,693	)
Accounts payable, accrued expenses, and income taxes			(25,511	)			415,960
Other liabilities			(445	)			526
Net cash provided by operating activities-continuing operations			559,391				437,692
Net cash used in operating activities-discontinued operations			—				(7,233	)
NET CASH PROVIDED BY OPERATING ACTIVITIES			559,391				430,459
INVESTING ACTIVITIES
Capital expenditures			(132,302	)			(102,221	)
Cost of acquired companies, net of cash acquired			—				(13,422	)
Proceeds from sale of PMSI			—				14,936
Other			143				32
Net cash used in investing activities-continuing operations			(132,159	)			(100,675	)
Net cash used in investing activities-discontinued operations			—				(1,138	)
NET CASH USED IN INVESTING ACTIVITIES			(132,159	)			(101,813	)
FINANCING ACTIVITIES
Long-term debt borrowings			396,696				—
Borrowings under revolving and securitization credit facilities			780,691				1,908,106
Repayments under revolving and securitization credit facilities			(997,411	)			(1,886,558	)
Purchases of common stock			(350,262	)			(273,824	)
Exercises of stock options, including excess tax benefits of $19,996 and $375 in fiscal 2010 and 2009, respectively			122,715				7,795
Cash dividends on common stock			(68,306	)			(45,924	)
Debt issuance costs and other			(10,007	)			(3,431	)
NET CASH USED IN FINANCING ACTIVITIES			(125,884	)			(293,836	)
INCREASE IN CASH AND CASH EQUIVALENTS			301,348				34,810
Cash and cash equivalents at beginning of period			1,009,368				878,114
CASH AND CASH EQUIVALENTS AT END OF PERIOD		$	1,310,716			$	912,924

See notes to consolidated financial statements.

AMERISOURCEBERGEN CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(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, 2010 and the results of operations and cash flows for the interim periods ended June 30, 2010 and 2009 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, 2009.

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.

The Company has three operating segments, which include the operations of AmerisourceBergen Drug Corporation (“ABDC”), AmerisourceBergen Specialty Group (“ABSG”), and AmerisourceBergen Packaging Group (“ABPG”). The Company has aggregated the operating results of ABDC, ABSG, and ABPG into one reportable segment, Pharmaceutical Distribution, which represents the consolidated operating results of the Company. The businesses of the Pharmaceutical Distribution operating segments are similar in that they service both healthcare providers and pharmaceutical manufacturers in the pharmaceutical supply channel. Prior to October 1, 2009, management considered gains on antitrust litigation settlements and costs related to facility consolidations, employee severance and other, to be reconciling items between the operating results of Pharmaceutical Distribution and the Company.

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

Recent Accounting Pronouncements

Effective October 1, 2009, the Company adopted the applicable sections of Accounting Standards Codification (“ASC”) 805, “Business Combinations,” which provides revised guidance for recognizing and measuring identifiable assets and goodwill acquired, liabilities assumed, and any non-controlling interest in the acquiree. Additionally, this ASC provides disclosure requirements to enable users of financial statements to evaluate the nature and financial effects of a business combination. The Company also adopted certain other applicable sections that address application issues raised on the initial recognition and measurement, subsequent measurement, and accounting and disclosure of assets and liabilities from contingencies from a business combination. The application of ASC 805 relating to a future acquisition or divestiture may have an impact to the Company’s financial position and/or results of operations.

AMERISOURCEBERGEN CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)

Note 2. Discontinued Operations

In October 2008, the Company completed the divestiture of its workers’ compensation business, PMSI, for approximately $31 million, which was net of a final working capital adjustment and which includes a $19 million subordinated note due from PMSI on the fifth anniversary of the closing date, of which $4 million may be payable in October 2010 if PMSI achieves certain revenue targets with respect to its largest customer during the twelve months ending September 30, 2010. Interest on the note accrues at an annual rate of LIBOR plus 4% (not to exceed 8%).

PMSI’s revenue and loss before income taxes were $29.0 million and $1.1 million, respectively, for the nine months ended June 30, 2009. The Company classified PMSI’s October 2008 operating results and cash flows as discontinued in the consolidated financial statements. 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 3. Income Taxes

The Company files income tax returns in U.S. federal and state jurisdictions as well as various foreign jurisdictions. The U.S. Internal Revenue Service (“IRS”) completed its examination of the Company’s U.S. federal income tax returns for fiscal 2006 and 2007. In Canada, the Company is currently under examination for fiscal years 2007 and 2008.

As of June 30, 2010, the Company had 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, of $56.0 million ($38.7 million net of federal benefit, which, if recognized, would reduce income tax expense). Included in this amount is $18.5 million of interest and penalties, which the Company records in income tax expense. During the nine months ended June 30, 2010, unrecognized tax benefits increased by $1.6 million. 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 $1.2 million.

Note 4. 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, 2010 (in thousands):

Goodwill at September 30, 2009		$	2,542,352
Foreign currency translation			(1,756	)
Other			(707	)
Goodwill at June 30, 2010		$	2,539,889

AMERISOURCEBERGEN CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)

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

		June 30, 2010												September 30, 2009
		Gross								Net				Gross								Net
		Carrying				Accumulated				Carrying				Carrying				Accumulated				Carrying
		Amount				Amortization				Amount				Amount				Amortization				Amount
Indefinite-lived intangibles-trade names		$	240,575			$	—			$	240,575			$	241,554			$	—			$	241,554
Finite-lived intangibles:
Customer relationships			121,134				(65,699	)			55,435				121,419				(56,679	)			64,740
Other			36,190				(25,788	)			10,402				33,100				(22,682	)			10,418
Total other intangible assets		$	397,899			$	(91,487	)		$	306,412			$	396,073			$	(79,361	)		$	316,712

Amortization expense for other intangible assets was $12.3 million and $11.4 million in the nine months ended June 30, 2010 and 2009, respectively. Amortization expense for other intangible assets is estimated to be $16.3 million in fiscal 2010, $15.7 million in fiscal 2011, $13.4 million in fiscal 2012, $11.3 million in fiscal 2013, $8.2 million in fiscal 2014, and $13.2 million thereafter.

Note 5. Debt

Debt consisted of the following (in thousands):

		June 30,				September 30,
		2010				2009
Blanco revolving credit facility at 2.35% and 2.25%, respectively, due 2011		$	55,000			$	55,000
Receivables securitization facility due 2011			—				—
Multi-currency revolving credit facility at 2.50% and 0.92%, respectively, due 2011			9,888				224,026
$400,000, 5 5/8% senior notes due 2012			399,270				399,058
$500,000, 5 7/8% senior notes due 2015			498,507				498,339
$400,000, 4 7/8% senior notes due 2019			396,848				—
Other			657				1,578
Total debt			1,360,170				1,178,001
Less current portion			489				1,068
Total, net of current portion		$	1,359,681			$	1,176,933

AMERISOURCEBERGEN CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)

The Company has a $695 million multi-currency senior unsecured revolving credit facility, which expires in November 2011, (the “Multi-Currency Revolving Credit Facility”) with a syndicate of lenders. 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, 2010). 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, 2010). The Company may choose to repay or reduce its commitments under the Multi-Currency Revolving Credit Facility at any time. The Multi-Currency Revolving Credit Facility contains covenants, including compliance with a financial leverage ratio test as well as others that impose limitations on, among other things, indebtedness of excluded subsidiaries and asset sales.

The Company has a $700 million receivables securitization facility (“Receivables Securitization Facility”). In April 2010, the Company amended this facility, which now expires in April 2011. 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 or LIBOR plus a program fee. The Company pays a commitment fee to maintain the availability under the Receivables Securitization Facility. In connection with the April 2010 amendment, the program fee and the commitment fee were reduced to 125 basis points and 60 basis points, respectively. At June 30, 2010, there were no borrowings outstanding under the Receivables Securitization Facility. The Receivables Securitization Facility contains similar covenants to the Multi-Currency Revolving Credit Facility.

In April 2010, 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 2011. Borrowings under the Blanco Credit Facility are guaranteed by the Company. Interest on borrowings under this facility continues to be 200 basis points over LIBOR. The Blanco Credit Facility is not classified in the current portion of long-term debt on the consolidated balance sheet at June 30, 2010 because the Company has both the ability and intent to refinance it on a long-term basis.

In November 2009, the Company issued $400 million of 4 7/8% senior notes due November 15, 2019 (the “2019 Notes”). The 2019 Notes were sold at 99.174% of the principal amount and have an effective yield of 4.98%. The interest on the 2019 Notes is payable semiannually. The 2019 Notes rank pari passu to the Multi-Currency Revolving Credit Facility, the 5 5/8% senior notes due 2012, and the 5 7/8% senior notes due 2015. The Company used the net proceeds of the 2019 Notes to repay substantially all amounts then outstanding under its Multi-Currency Revolving Credit Facility, and the remaining net proceeds were used for general corporate purposes. Costs incurred in connection with the issuance of the 2019 Notes were deferred and are being amortized over the 10-year term of the notes.

AMERISOURCEBERGEN CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)

Note 6. Stockholders’ Equity and Earnings per Share

The following table illustrates comprehensive income for the three and nine months ended June 30, 2010 and 2009 (in thousands):

		Three months ended								Nine months ended
		June 30,								June 30,
		2010				2009				2010				2009
Net income		$	163,205			$	118,807			$	495,520			$	373,250
Foreign currency translation adjustments and other			(11,866	)			6,748				(4,063	)			(4,493	)
Comprehensive income		$	151,339			$	125,555			$	491,457			$	368,757

In November 2008, the Company’s board of directors increased the quarterly dividend by 33% to $0.05 per common share. In May 2009, the Company’s board of directors increased the quarterly dividend by 20% to $0.06 per common share. In November 2009, the Company’s board of directors authorized another increase in the quarterly dividend by 33% to $0.08 per share.

In November 2008, the Company’s board of directors authorized a 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 and another 1.2 million shares for $18.1 million to complete its authorization under a prior share repurchase program.

In November 2009, 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, 2010, the Company purchased 2.8 million shares for $68.1 million to complete its authorization under the November 2008 program. During the nine months ended June 30, 2010, the Company purchased 10.3 million shares for $281.9 million under the new program.

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)		2010				2009				2010				2009
Weighted average common shares outstanding-basic			281,195				298,477				283,390				303,225
Effect of dilutive securities: stock options, restricted stock, and restricted stock units			5,498				2,115				5,022				1,946
Weighted average common shares outstanding-diluted			286,693				300,592				288,412				305,171

The potentially dilutive stock options that were antidilutive for the three months ended June 30, 2010 and 2009 were 3.6 million and 14.0 million, respectively. The potentially dilutive stock options that were antidilutive for the nine months ended June 30, 2010 and 2009 were 1.6 million and 12.3 million, respectively.

AMERISOURCEBERGEN CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)

Note 7. Facility Consolidations, Employee Severance and Other

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 reduced various operating costs and terminated certain positions. During the nine months ended June 30, 2009, the Company terminated 197 employees and incurred $3.2 million of employee severance costs. 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. In the quarter ended June 30, 2010, the Company reversed its liability related to the Bergen Brunswig Matter, as more fully described in Note 8, by $4.4 million. In the prior year nine months ended June 30, 2009, the Company had recorded $2.2 million of additional costs related to the Bergen Brunswig Matter.

The following table displays the activity in accrued expenses and other from September 30, 2009 to June 30, 2010 (in thousands):

		Employee				Lease Cancellation
		Severance				Costs and Other				Total
Balance as of September 30, 2009		$	7,876			$	3,549			$	11,425
Expense (income) recorded during the period			(4,482	)			—				(4,482	)
Payments made during the period			(2,151	)			(560	)			(2,711	)
Balance as of June 30, 2010		$	1,243			$	2,989			$	4,232

The lease cancellation costs and other balance set forth in the above table as of June 30, 2010 primarily consists of an accrual for information technology transition costs payable to IBM Global Services.

Note 8. Legal Matters and Contingencies

In the ordinary course of its business, the Company becomes involved in lawsuits, administrative proceedings, government subpoenas, and government investigations, including antitrust, commercial, environmental, product liability, intellectual property, regulatory, employment discrimination, and other matters. Significant damages or penalties may be sought from the Company in some matters, and some matters may require years for the Company to resolve. The Company establishes reserves based on its periodic assessment of estimates of probable losses. There can be no assurance that an adverse resolution of one or more matters during any subsequent reporting period will not have a material adverse effect on the Company’s results of operations for that period or on the Company’s financial condition.

AMERISOURCEBERGEN CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)

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 Section 998 Offer of Judgment to the executive, which the executive accepted. The resulting judgment awarded the executive damages and the continuation of certain employment benefits. Since then, the Company and the executive have engaged in litigation as to what specific benefits were included in the scope of the Offer of Judgment and the value of those benefits. The Superior Court entered an Order in Implementation of Judgment on June 7, 2001, which identified the specific benefits encompassed by the Offer of Judgment. Following submission by the executive of a claim for benefits pursuant to the Bergen Brunswig Supplemental Executive Retirement Plan (the “Plan”), the Company followed the administrative procedure set forth in the Plan. This procedure involved separate reviews by two independent parties, the first by the Review Official appointed by the Plan Administrator and second by the Plan Trustee, and resulted in a determination that the executive was entitled to a $1.9 million supplemental retirement benefit and such amount was paid. The executive challenged this award and on July 7, 2006, the Superior Court entered a Second Order in Implementation of Judgment determining that the executive was entitled to a supplemental retirement benefit, net of the $1.9 million previously paid to him, in the amount of $19.4 million, which included interest at the rate of ten percent per annum from August 29, 2001. 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. 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 fiscal year ended September 30, 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. The Court of Appeal held argument on the appeal on May 17, 2010. On July 8, 2010, the Court of Appeal ruled in a manner that was favorable to the Company, holding that the Review Official’s decision regarding the amount of supplemental retirement benefits due to the executive should be upheld, and that post-judgment interest, if any, on that award would run from April 9, 2009 forward. Because the Company already tendered payment to the executive on March 9, 2009 in the full amount of the award, no further payments are due to the executive. As a result, in the quarter ended June 30, 2010, the Company reversed its total remaining $4.4 million reserve for liability to the executive. On July 19, 2010, the executive filed a petition for rehearing with the Court of Appeal and the Company has filed a response in opposition to the petition for rehearing.

AMERISOURCEBERGEN CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)

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. The Company has met several times with representatives of OMH to present its position on the Rebate Payment Order. Although the Company believes that ABCC has not violated the relevant statutes and regulations and has conducted its business consistent with widespread industry practices, the Company cannot predict the outcome of these matters.

Qui Tam Matter and Related Shareholder Derivative Action

On October 30, 2009, 14 states (including New York and Florida) and the District of Columbia filed a complaint (the “Intervention Complaint”) in the United States District Court for the District of Massachusetts (the “Federal District Court”) naming Amgen Inc. as well as two business units of AmerisourceBergen Specialty Group, AmerisourceBergen Specialty Group, and AmerisourceBergen Corporation as defendants. The Intervention Complaint was filed to intervene in a pending civil case against the defendants filed under the qui tam provisions of the federal and various state civil False Claims Acts (the “Original Qui Tam Complaint”). The qui tam provisions permit a private person, known as a “relator” (i.e. whistleblower), to file civil actions under these statutes on behalf of the federal and state governments. The relator in the Original Complaint is a former Amgen employee. The Office of the New York Attorney General is leading the intervention on behalf of the state governments.

The Original Qui Tam Complaint was initially filed under seal. On January 21, 2009, the Company learned that the United States Attorney for the Eastern District of New York (the “DOJ”) was investigating allegations in a sealed civil complaint filed in the Federal District Court under the qui tam provisions of the federal civil False Claims Act. In February 2009, the Company received a redacted copy of the then current version of the Original Qui Tam Complaint, pursuant to a court order. However, the Company was never served with the Original Qui Tam Complaint. Relator initially filed the action on or about June 5, 2006 and a first amendment thereto on or about July 2, 2007. On May 18, 2009, the Federal District Court extended the time period for federal and state government authorities to conduct their respective investigations and to decide whether to intervene in the civil action. On September 1, 2009, 14 states and the District of Columbia filed notices of their intent to intervene. The 14 states and the District of Columbia were given leave by the Federal District Court to file a complaint within 60 days, or by October 30, 2009. The DOJ filed a notice that it was not intervening as of September 1, 2009, but stated that its investigation is continuing. The Company has received subpoenas for records issued by the DOJ in connection with its investigation. The Company has been cooperating with the DOJ and is producing records in response to the subpoenas.

Both the Intervention Complaint and the Original Qui Tam Complaint, as amended on October 30, 2009, allege that from 2002 through 2009, Amgen offered remuneration to medical providers in violation of federal and state health laws to increase purchases and prescriptions of Amgen’s anemia drug, Aranesp. Specifically with regard to the Company’s business units, the complaints allege that ASD Specialty Healthcare, Inc., which is a distributor of pharmaceuticals to physician practices (“ASD”), and International Nephrology Network, which was a business name for one of the Company’s subsidiaries and a group purchasing organization for nephrologists and nephrology practices (“INN”), conspired with Amgen to promote Aranesp in violation of federal and state health laws. The complaints further allege that the defendants caused medical providers to submit to state Medicaid programs false certifications and false claims for payment for Aranesp. According to the complaints, the latter conduct allegedly violated state civil False Claims Acts and constituted fraud and unjust enrichment. The Original Qui Tam Complaint, as amended, also alleges that the defendants caused medical providers to submit to other federal health programs, including Medicare, false certifications and false claims for payment for Aranesp.

AMERISOURCEBERGEN CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)

On December 17, 2009, the states and the relator both filed amended complaints. The State of Texas, which was not one of the original 14 states intervening in the action, joined in the amended complaint. Between January 20, 2010 and February 23, 2010, the States of Florida, Texas, New Hampshire, Louisiana, Nevada and Delaware filed notices to voluntarily dismiss the Intervention Complaint, leaving 9 states and the District of Columbia as intervenors. On February 1, 2010, the Company filed a motion to dismiss the complaints. Amgen, Inc. filed a motion to dismiss as well. On April 23, 2010, the Federal District Court issued a written opinion and order dismissing the Original Qui Tam Complaint, as amended, and the Intervention Complaint. Five states — California, Illinois, Indiana, Massachusetts, and New York — filed notices of appeal to the U.S. Court of Appeals for the First Circuit (the “First Circuit”) and the relator filed a notice of appeal to the First Circuit on behalf of Georgia and New Mexico. On July 15, 2010, the First Circuit issued an order requiring the Federal District Court to provide a written statement explaining why a final judgment was entered with respect to the states in order for the First Circuit to determine whether to allow the appeals to proceed, and the Federal District Court complied with the order. The First Circuit is currently considering whether to allow the appeals to proceed. The relator also sought and received permission from the Federal District Court to file a further amended complaint (the “Fourth Amended Complaint”). On May 27, 2010, the realtor filed a Fourth Amended Complaint with the Federal District Court, which names ASD and INN, along with Amgen, as defendants. The Fourth Amended Complaint contains many of the same allegations contained in the relator’s prior complaints, but adds a count based on allegations that conduct by ASD, INN, and Amgen caused healthcare providers to submit false claims because it is alleged that the healthcare providers billed the government for amounts of Aranesp that were either not administered or administered, but medically unnecessary. On June 28, 2010, the Company and Amgen filed motions to dismiss the Fourth Amended Complaint. The motions to dismiss were denied following a hearing on July 21, 2010.

The Company has learned that there are prior filings in another federal district, which are under seal, that contain allegations similar to those in the Federal District Court action, including allegations against the same and/or additional subsidiaries or businesses of the Company that are defendants in the Federal District Court action. The DOJ investigation of the allegations contained in the Original Qui Tam Complaint appears to include investigation of allegations contained in the prior filings.

The Company intends to continue to defend itself vigorously against the allegations contained in the Original Qui Tam Complaint, as amended (including the Fourth Amended Complaint), and the Intervention Complaint and against any appeals. The Company cannot predict the outcome of either the Federal District Court action (or any appeals thereof) or the DOJ investigation or the potential outcome of any other action involving similar allegations in which any AmerisourceBergen entity is or may become a defendant.

The Company was named as a nominal defendant in an alleged shareholder derivative action that was filed on March 26, 2010 in the U.S. District Court for the Eastern District of Pennsylvania. Also named as defendants in the action were all of the individuals who were serving as directors of the Company immediately prior to the date of filing of the action and certain current and former officers and directors of the Company. The derivative action alleges breach of fiduciary duty against all the individual defendants arising from the allegations contained in the complaints filed in the Qui Tam Matter described above. The derivative action seeks compensatory damages in favor of the Company, attorneys’ fees and costs, and further relief as may be determined by the court. On May 20, 2010, the Company filed a motion to dismiss the derivative complaint. A hearing on the Company’s motion to dismiss has been scheduled for August 23, 2010. The Company has also filed a motion pursuant to Rule 11 of the Federal Rules of Civil Procedure for sanctions against the party who filed the shareholder derivative action. Although the Company and the other defendants believe that the derivative action is wholly without merit and intend to defend themselves vigorously against the claims raised in this action, the Company cannot predict the outcome of this matter.

AMERISOURCEBERGEN CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)

Note 9. Litigation Settlements

Antitrust Settlements

During the last several years, numerous class action lawsuits have been filed against certain brand pharmaceutical manufacturers alleging that the manufacturer, by itself or in concert with others, took improper actions to delay or prevent generic drugs from entering the market. The Company has not been a named plaintiff in any of these class actions, but has been a member of the direct purchasers’ class (i.e., those purchasers who purchase directly from these pharmaceutical manufacturers). None of the class actions has gone to trial, but some have settled in the past with the Company receiving proceeds from the settlement funds. In the quarter and nine months ended June 30, 2010, the Company recognized a gain of $19.1 million and $20.7 million, respectively, relating to the above-mentioned class action lawsuits. The gains, which were net of attorney fees and estimated payments due to other parties, were recorded as a reduction to cost of goods sold in the Company’s consolidated statements of operations.

Note 10. Financial Instruments

The carrying amounts of the Company’s cash and cash equivalents, accounts receivable and accounts payable at June 30, 2010 and September 30, 2009 approximated their fair values due to the short-term nature of these financial instruments. Included in cash and cash equivalents at June 30, 2010 and September 30, 2009 are money market fund investments of $1,221.0 million and $928.3 million, respectively, which are reported at fair value. The fair value of these investments was determined by using quoted prices for identical investments in active markets, which are considered Level 1 inputs under ASC 820-10, “Fair Value Measurements and Disclosures.”

The carrying amounts and fair values of the Company’s debt were $1,360.2 million and $1,474.9 million at June 30, 2010 and $1,178.0 million and $1,246.4 million at September 30, 2009. The fair value of the Company’s debt was determined using quoted market prices that were derived from available market information.

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

The Company’s 5 5/8% senior notes due September 15, 2012 (the “2012 Notes”), 5 7/8% senior notes due September 15, 2015 (the “2015 Notes”), and 4 7/8% senior notes due November 15, 2019 (the “2019 Notes” and, together with the 2012 Notes and 2015 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 any 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 reflect the 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 any 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, 2010 and September 30, 2009, statements of operations for the three and nine months ended June 30, 2010 and 2009, and statements of cash flows for the nine months ended June 30, 2010 and 2009.

AMERISOURCEBERGEN CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)

SUMMARY CONSOLIDATING BALANCE SHEETS:

		June 30, 2010
						Guarantor				Non-Guarantor								Consolidated
(in thousands)		Parent				Subsidiaries				Subsidiaries				Eliminations				Total
Current assets:
Cash and cash equivalents		$	1,224,289			$	52,979			$	33,448			$	—			$	1,310,716
Accounts receivable, net			227				1,281,192				2,606,408				—				3,887,827
Merchandise inventories			—				4,979,861				116,740				—				5,096,601
Prepaid expenses and other			105				40,029				2,725				—				42,859
Total current assets			1,224,621				6,354,061				2,759,321				—				10,338,003
Property and equipment, net			—				660,788				27,396				—				688,184
Goodwill and other intangible assets			—				2,714,193				132,108				—				2,846,301
Other assets			11,088				117,817				2,392				—				131,297
Intercompany investments and advances			2,715,355				2,028,250				(59,805	)			(4,683,800	)			—
Total assets		$	3,951,064			$	11,875,109			$	2,861,412			$	(4,683,800	)		$	14,003,785
Current liabilities:
Accounts payable		$	—			$	8,279,221			$	172,891			$	—			$	8,452,112
Accrued expenses and other			(274,752	)			597,005				8,814				—				331,067
Current portion of long-term debt			—				346				143				—				489
Deferred income taxes			—				703,019				—				—				703,019
Total current liabilities			(274,752	)			9,579,591				181,848				—				9,486,687
Long-term debt, net of current portion			1,294,625				168				64,888				—				1,359,681
Other liabilities			—				223,692				2,534				—				226,226
Total stockholders’ equity			2,931,191				2,071,658				2,612,142				(4,683,800	)			2,931,191
Total liabilities and stockholders’ equity		$	3,951,064			$	11,875,109			$	2,861,412			$	(4,683,800	)		$	14,003,785

AMERISOURCEBERGEN CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)

SUMMARY CONSOLIDATING BALANCE SHEETS:

		September 30, 2009
						Guarantor				Non-Guarantor								Consolidated
(in thousands)		Parent				Subsidiaries				Subsidiaries				Eliminations				Total
Current assets:
Cash and cash equivalents		$	927,049			$	58,900			$	23,419			$	—			$	1,009,368
Accounts receivable, net			66				1,292,822				2,623,621				—				3,916,509
Merchandise inventories			—				4,856,637				116,183				—				4,972,820
Prepaid expenses and other			67				52,816				2,173				—				55,056
Total current assets			927,182				6,261,175				2,765,396				—				9,953,753
Property and equipment, net			—				589,838				29,400				—				619,238
Goodwill and other intangible assets			—				2,719,324				139,740				—				2,859,064
Other assets			9,645				129,817				1,223				—				140,685
Intercompany investments and advances			2,405,087				1,938,742				(152,302	)			(4,191,527	)			—
Total assets		$	3,341,914			$	11,638,896			$	2,783,457			$	(4,191,527	)		$	13,572,740
Current liabilities:
Accounts payable		$	—			$	8,360,776			$	156,386			$	—			$	8,517,162
Accrued expenses and other			(271,952	)			581,354				6,255				—				315,657
Current portion of long-term debt			—				346				722				—				1,068
Deferred income taxes			—				645,723				—				—				645,723
Total current liabilities			(271,952	)			9,588,199				163,363				—				9,479,610
Long-term debt, net of current portion			897,397				412				279,124				—				1,176,933
Other liabilities			—				197,496				2,232				—				199,728
Total stockholders’ equity			2,716,469				1,852,789				2,338,738				(4,191,527	)			2,716,469
Total liabilities and stockholders’ equity		$	3,341,914			$	11,638,896			$	2,783,457			$	(4,191,527	)		$	13,572,740

AMERISOURCEBERGEN CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)

CONDENSED CONSOLIDATING STATEMENTS OF OPERATIONS:

		Three months ended June 30, 2010
						Guarantor				Non-Guarantor								Consolidated
(in thousands)		Parent				Subsidiaries				Subsidiaries				Eliminations				Total
Revenue		$	—			$	19,157,657			$	476,078			$	(31,615	)		$	19,602,120
Cost of goods sold			—				18,590,407				423,343				—				19,013,750
Gross profit			—				567,250				52,735				(31,615	)			588,370
Operating expenses:
Distribution, selling, and administrative			—				300,954				19,949				(31,615	)			289,288
Depreciation			—				16,667				889				—				17,556
Amortization			—				3,297				772				—				4,069
Facility consolidations, employee severance and other			—				(4,397	)			—				—				(4,397	)
Operating income			—				250,729				31,125				—				281,854
Other loss (income)			—				489				(1	)			—				488
Interest expense, net			234				15,154				2,513				—				17,901
(Loss) income before income taxes and equity in earnings of subsidiaries			(234	)			235,086				28,613				—				263,465
Income taxes			(82	)			90,520				9,822				—				100,260
Equity in earnings of subsidiaries			163,357				—				—				(163,357	)			—
Net income		$	163,205			$	144,566			$	18,791			$	(163,357	)		$	163,205

AMERISOURCEBERGEN CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)

CONDENSED CONSOLIDATING STATEMENTS OF OPERATIONS:

		Three months ended June 30, 2009
						Guarantor				Non-Guarantor								Consolidated
(in thousands)		Parent				Subsidiaries				Subsidiaries				Eliminations				Total
Revenue		$	—			$	18,025,437			$	397,788			$	(29,326	)		$	18,393,899
Cost of goods sold			—				17,522,690				351,986				—				17,874,676
Gross profit			—				502,747				45,802				(29,326	)			519,223
Operating expenses:
Distribution, selling, and administrative			—				286,656				20,104				(29,326	)			277,434
Depreciation			—				15,235				714				—				15,949
Amortization			—				2,993				747				—				3,740
Facility consolidations, employee severance and other			—				213				—				—				213
Intangible asset impairments			—				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
(UNAUDITED)

CONDENSED CONSOLIDATING STATEMENTS OF OPERATIONS:

		Nine months ended June 30, 2010
						Guarantor				Non-Guarantor								Consolidated
(in thousands)		Parent				Subsidiaries				Subsidiaries				Eliminations				Total
Revenue		$	—			$	56,949,476			$	1,382,854			$	(93,724	)		$	58,238,606
Cost of goods sold			—				55,245,895				1,228,903				—				56,474,798
Gross profit			—				1,703,581				153,951				(93,724	)			1,763,808
Operating expenses:
Distribution, selling, and administrative			—				895,414				47,328				(93,724	)			849,018
Depreciation			—				48,244				2,571				—				50,815
Amortization			—				9,798				2,496				—				12,294
Facility consolidations, employee severance and other			—				(4,482	)			—				—				(4,482	)
Intangible asset impairments			—				700				—				—				700
Operating income			—				753,907				101,556				—				855,463
Other loss (income)			—				1,039				(6	)			—				1,033
Interest expense, net			1,459				44,554				8,434				—				54,447
(Loss) income before income taxes and equity in earnings of subsidiaries			(1,459	)			708,314				93,128				—				799,983
Income taxes			(511	)			272,160				32,814				—				304,463
Equity in earnings of subsidiaries			496,468				—				—				(496,468	)			—
Net income		$	495,520			$	436,154			$	60,314			$	(496,468	)		$	495,520