Bergen Brunswig Corporation - December 2000 Form 10-Q

10-Q 1 dec00q.htm BBC FORM 10-Q Bergen Brunswig Corporation - December 2000 Form 10-Q

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Washington, D. C. 20549

[ X ]		QUARTERLY REPORT PURSUANT TO SECTION 13 or 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

		For the fiscal quarter ended December 31, 2000

[	]	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 1-5110

BERGEN BRUNSWIG CORPORATION

(Exact name of registrant as specified in its charter)

New Jersey	22-1444512
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)

4000 Metropolitan Drive, Orange, California	92868-3510
(Address of principal executive offices)	(Zip Code)

Registrant's telephone number, including area code	(714) 385-4000

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 X No

Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practicable date:

Title of each class of
Common Stock

Number of Shares Outstanding
January 31, 2001

Class A Common Stock -

par value $1.50 per share

135,146,546

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BERGEN BRUNSWIG CORPORATION

INDEX

				Page No.

Part I.	Financial Information

	Item 1.	Financial Statements

		Consolidated Balance Sheets, December 31, 2000			3
			and September 30, 2000

		Statements of Consolidated Earnings for the three			5
			months ended December 31, 2000 and 1999

		Statements of Consolidated Cash Flows for the three			6
			months ended December 31, 2000 and 1999

		Notes to Consolidated Financial Statements			7

	Item 2.	Management's Discussion and Analysis of Financial			18
			Condition and Results of Operations

	Item 3.	Quantitative and Qualitative Disclosures			29
			About Market Risk

Part II.	Other Information

	Item 1.	Legal Proceedings			30

	Item 6.	Exhibits and Reports on Form 8-K			36

Signatures					37

Index to Exhibits					38

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PART I.     FINANCIAL INFORMATION

ITEM 1.   FINANCIAL STATEMENTS

BERGEN BRUNSWIG CORPORATION

CONSOLIDATED BALANCE SHEETS

DECEMBER 31, 2000 AND SEPTEMBER 30, 2000

(dollars in thousands)

(Unaudited)

December 31, September 30,

- - ASSETS - - 2000 2000

CURRENT ASSETS:

Cash and cash equivalents ..................................................... $ 44,458 $ 94,032

Accounts and notes receivable, less allowance

for doubtful receivables: $165,049 at December 31,

2000 and $183,373 at September 30, 2000 ............................ 1,016,237 1,232,300

Inventories ............................................................................ 2,519,607 2,067,335

Income taxes receivable ......................................................... 18,379 72,189

Deferred income taxes ........................................................... 16,972 29,887

Prepaid expenses ................................................................. 21,856 21,783

Total current assets .......................................................... 3,637,509 3,517,526

PROPERTY - at cost:

Land .................................................................................... 17,210 17,210

Buildings and leasehold improvements .................................... 116,375 115,644

Equipment and fixtures .......................................................... 226,034 225,745

Total property ................................................................... 359,619 358,599

Less accumulated depreciation and amortization ..................... 157,757 150,091

Property - net ................................................................... 201,862 208,508

OTHER ASSETS:

Goodwill - net ...................................................................... 654,011 658,640

Investments ......................................................................... 18,875 18,179

Noncurrent receivables ......................................................... 16,002 16,293

Deferred income taxes ......................................................... 23,298 25,153

Deferred charges and other assets ........................................ 123,571 127,125

Total other assets ........................................................... 835,757 845,390

TOTAL ASSETS ................................................................... $ 4,675,128 $ 4,571,424

See accompanying Notes to Consolidated Financial Statements.

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BERGEN BRUNSWIG CORPORATION

CONSOLIDATED BALANCE SHEETS

DECEMBER 31, 2000 AND SEPTEMBER 30, 2000

(dollars in thousands)

(Unaudited)

December 31, September 30,

- - LIABILITIES AND SHAREOWNERS' EQUITY - - 2000 2000

CURRENT LIABILITIES:

Accounts payable .................................................................. $ 2,165,511 $ 2,017,130

Accrued liabilities .................................................................. 232,916 249,712

Customer credit balances ...................................................... 113,378 161,420

Current portion of long-term debt ............................................. 32,302 22,364

Current portion of other long-term obligations ........................... 1,388 1,388

Total current liabilities ........................................................ 2,545,495 2,452,014

Long-term debt, net of current portion ........................................ 1,057,028 1,067,282

Other long-term obligations, net of current portion ....................... 26,913 28,879

Total long-term obligations ................................................. 1,083,941 1,096,161

COMPANY-OBLIGATED MANDATORILY REDEEMABLE

PREFERRED SECURITIES OF SUBSIDIARY TRUST

HOLDING SOLELY DEBT SECURITIES OF THE COMPANY...... 300,000 300,000

SHAREOWNERS' EQUITY:

Capital stock:

Preferred - authorized: 3,000,000 shares; issued: none ......... - -

Class A Common - authorized: 300,000,000 shares;

issued: 138,223,714 shares at December 31, 2000

and 137,899,552 shares at September 30, 2000 ................... 207,336 206,849

Paid-in capital ..................................................................... 823,306 821,354

Accumulated other comprehensive income ............................ 15 13

Accumulated deficit ............................................................. (259,752 ) (279,754 )

Total .............................................................................. 770,905 748,462

Treasury shares at cost: 3,110,673 shares at

December 31, 2000 and September 30, 2000 ...................... (25,213 ) (25,213 )

Total shareowners' equity ................................................. 745,692 723,249

TOTAL LIABILITIES AND SHAREOWNERS' EQUITY ............... $ 4,675,128 $ 4,571,424

See accompanying Notes to Consolidated Financial Statements.

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BERGEN BRUNSWIG CORPORATION

STATEMENTS OF CONSOLIDATED EARNINGS

FOR THE THREE MONTHS ENDED

DECEMBER 31, 2000 AND 1999

(in thousands except per share amounts)

(Unaudited)

2000 1999

Consolidated Earnings:

Net sales and other revenues:

Excluding bulk shipments to customers' warehouses $ 4,776,783 $ 4,510,098

Bulk shipments to customers' warehouses 1,075,171 1,115,258

Total net sales and other revenues 5,851,954 5,625,356

Cost of sales 5,547,139 5,325,846

Gross profit 304,815 299,510

Distribution, selling, general and administrative expenses 230,512 232,641

Operating earnings from continuing operations 74,303 66,869

Net interest expense 31,892 24,434

Earnings from continuing operations before taxes on income

and distributions on preferred securities of subsidiary trust 42,411 42,435

Taxes on income from continuing operations 17,520 18,025

Earnings from continuing operations before distributions on

preferred securities of subsidiary trust 24,891 24,410

Distributions on preferred securities of subsidiary trust,

net of income tax benefit of $2,311 (3,539 ) (3,539 )

Earnings from continuing operations 21,352 20,871

Loss from discontinued operations, net of income tax benefit - (6,220 )

Net earnings $ 21,352 $ 14,651

Basic and diluted earnings (loss) per share:

Continuing operations $ .16 $ .16

Loss from discontinued operations - (.05 )

Net earnings $ .16 $ .11

Weighted average number of shares outstanding:

Basic 134,934 134,247

Diluted 136,139 134,358

Cash dividends declared per share of

Class A Common Stock $ .010 $ .075

See accompanying Notes to Consolidated Financial Statements.

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BERGEN BRUNSWIG CORPORATION

STATEMENTS OF CONSOLIDATED CASH FLOWS

FOR THE THREE MONTHS ENDED

DECEMBER 31, 2000 AND 1999

(in thousands)

(Unaudited)

2000 1999

Operating Activities

Earnings from continuing operations $ 21,352 $ 20,871

Adjustments to reconcile earnings from continuing

operations to net cash flows from operating activities:

Provision for doubtful receivables 12,195 11,961

Depreciation and amortization of property 11,281 11,455

Loss on dispositions of property 813 112

Amortization of intangible assets 5,958 9,300

Amortization of debt financing costs 3,337 2,357

Deferred compensation 1,721 1,424

Deferred income taxes 14,769 5,728

Effects of changes on:

Receivables 22,161 (171,841 )

Inventories (452,272 ) (194,801 )

Income taxes receivable 53,810 15,070

Prepaid expenses and other assets (1,149 ) (3,855 )

Accounts payable 148,381 288,134

Accrued liabilities (5,096 ) (29,611 )

Customer credit balances (48,042 ) 15,038

Net cash flows from operating activities (210,781 ) (18,658 )

Investing Activities

Property acquisitions (5,595 ) (37,325 )

Net proceeds from sale of accounts receivable 181,998 200,000

Other (546 ) 472

Net cash flows from investing activities 175,857 163,147

Financing Activities

Net revolving unsecured bank loan activity - 544,783

Net commercial paper activity - (622,281 )

Reduction of other obligations (4,039 ) (7,762 )

Distributions paid on trust preferred securities (11,700 ) (5,850 )

Shareowners' equity transactions:

Exercise of stock options and issuance of restricted shares 2,143 817

Employee stock purchase plan 296 1,111

Cash dividends paid on Common Stock (1,350 ) (10,065 )

Net cash flows from financing activities (14,650 ) (99,247 )

Discontinued operations - (25,415 )

Net increase (decrease) in cash and cash equivalents (49,574 ) 19,827

Cash and cash equivalents at beginning of period 94,032 116,356

Cash and cash equivalents at end of period $ 44,458 $ 136,183

Supplemental Cash Flow Disclosures:

Cash paid (received) during the period for:

Interest $ 49,180 $ 39,961

Income taxes - net (refunds) payments (58,153 ) 857

See accompanying Notes to Consolidated Financial Statements.

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BERGEN BRUNSWIG CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)

Basis Of Presentation

Bergen Brunswig Corporation, a New Jersey corporation formed in 1956, and its subsidiaries (collectively, the "Company") is a diversified drug and healthcare distribution organization. The Company is one of the nation's largest wholesalers of pharmaceuticals and specialty healthcare products to the managed care and retail pharmacy markets, and also distributes pharmaceuticals to long-term care and workers' compensation patients. The Company provides product distribution, logistics, pharmacy management programs, consulting services, and Internet fulfillment services designed to reduce costs and improve patient outcomes.

The consolidated financial statements include the accounts of the Company, after elimination of the effect of intercompany transactions and balances.

The accompanying unaudited interim consolidated financial statements have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission ("SEC") for reporting on Form 10-Q and do not include all of the information and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States of America ("GAAP"). The accompanying unaudited interim consolidated financial statements should be read in conjunction with the audited Consolidated Financial Statements and Notes to Consolidated Financial Statements contained in the Company's Annual Report on Form 10-K for the fiscal year ended September 30, 2000. Certain reclassifications have been made in the 2000 consolidated financial statements and notes to conform to fiscal 2001 presentations.

The preparation of the Company's consolidated financial statements in conformity with GAAP necessarily requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the balance sheet dates and the reported amounts of revenue and expense during the reporting periods. Actual results could differ from these estimates and assumptions.

In the opinion of management of the Company, the accompanying unaudited interim consolidated financial statements reflect all adjustments necessary for a fair statement of the results of the Company and its subsidiaries for the periods shown and such adjustments are of a normal recurring nature. Results of operations for the first three months of fiscal 2001 are not necessarily indicative of results to be expected for the full fiscal year or any other fiscal period.

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Discontinued Operations

On June 26, 2000, the Company announced that it had entered into a definitive agreement to sell the stock of Bergen Brunswig Medical Corporation ("BBMC") to Allegiance Corporation, a subsidiary of Cardinal Health, Inc., for approximately $181 million in cash before retention of certain liabilities and subject to post-closing accounting adjustments which the Company does not believe will have a material effect on its Consolidated Financial Statements. The regulatory approvals and other closing conditions were satisfied during the fourth quarter of fiscal 2000, and the sale was consummated on August 16, 2000. During the fourth quarter of fiscal 2000, the net proceeds from this divestiture were used to pay down a portion of the $200 million Interim Term Loan maturing in October 2001 as required under the Senior Credit Agreement (See Note 8).

On July 5, 2000, the Company announced that it had entered into a definitive agreement to sell the specialty pharmacy assets of Stadtlander Operating Company, LLC ("Stadtlander") to ProCare Pharmacy, Inc., a subsidiary of CVS Corporation, for approximately $124 million in cash before retention of certain liabilities and subject to post-closing accounting adjustments, which the Company does not believe will have a material effect on its Consolidated Financial Statements. The transaction was structured as a sale of assets and was consummated on September 18, 2000. In addition, certain assets of the corrections division of Stadtlander, that portion of the business that provides pharmaceuticals to prison inmate populations, were sold to Secure Pharmacy Plus, Inc. for approximately $8 million in a cash transaction that was consummated on September 20, 2000. During the fourth quarter of fiscal 2000, the net proceeds from the divestitures of the two Stadtlander businesses were used to pay off the remaining portion of the $200 million Interim Term Loan and a portion of other debt as required under the Senior Credit Agreement. The Company expects to receive approximately $132 million of income tax refunds during fiscal 2001 and 2002 in connection with the losses recorded on the Stadtlander divestitures. Approximately $58 million of such refunds were received during the three months ended December 31, 2000.

The Company purchased Stadtlander from Counsel Corporation ("Counsel") on January 21, 1999, and is in disagreement with Counsel and Counsel's independent auditors regarding the valuation of the net assets of Stadtlander at that date. Notwithstanding the sale of the two Stadtlander businesses, the Company did not assign to the purchasers of the assets its claims against Counsel. Any amounts realized from Counsel would be recorded as an adjustment to the Company's purchase price. See Part II, Item 1, "Legal Proceedings" of this Quarterly Report.

The Company is in process of negotiating the final disposition price adjustments with the respective buyers of BBMC and Stadtlander and expects a resolution in the second or third quarter of fiscal 2001.

The Company recognized a loss on the dispositions of BBMC and Stadtlander of approximately $251 million, net of income tax benefits of approximately $132 million, in the quarter ended June 30, 2000. Substantially all of the loss is related to the non-cash write-off of goodwill. Also included in the loss on dispositions are the operating losses of BBMC and Stadtlander, including interest expense allocations, from July 1, 2000 through the transaction closing dates.

The Company has reclassified both BBMC (formerly the principal component of the Other Businesses segment) and the Stadtlander business segment as discontinued operations for the three months ended December 31, 1999 in the accompanying Statements of Consolidated Earnings.

The loss from discontinued operations for the three months ended December 31, 1999 includes interest expense allocated based on the expected cash proceeds from the sale of the two businesses and the average bank interest rates incurred during the period, and is detailed as follows:

In thousands

Three Months Ended December 31, 1999

Net sales and other revenues

$

303,605

Cost of sales

248,628

Gross profit

54,977

Distribution, selling, general and administrative expenses

60,207

Operating loss

(5,230

)

Net interest expense

4,909

Loss before income tax benefit

(10,139

)

Income tax benefit

(3,919

)

Loss from operations

$

(6,220

)

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Comprehensive Income

The Company has adopted Statement of Financial Accounting Standards No. 130, "Reporting Comprehensive Income", which establishes standards for the reporting and display of comprehensive income and its components in financial statements. This statement defines comprehensive income as all changes in equity during a period from non-owner sources. The Company has no material differences between net earnings and comprehensive income. Therefore, statements of comprehensive income have not been presented.

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Impairment of Goodwill and Other Long-Lived Assets

The Company assesses the recoverability of goodwill using a fair value approach, based on discounted future operating cash flows, considering sales and operating earnings trends and other operating factors. In the fourth quarter of fiscal 2000, the Company's PharMerica, Inc. subsidiary ("PharMerica") recorded a $505.3 million impairment charge to write down the amount of recorded goodwill to its fair value.

The Company assesses the impairment of long-lived assets used in operations when indicators of impairment are present and the undiscounted future cash flows are not sufficient to recover the assets' carrying amounts. An impairment loss is measured by comparing the asset's carrying amount to its fair value, generally using a discounted cash flow analysis.

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Revenue Recognition

The Company records revenues when product is shipped and title passes, or services are provided to its customers. Along with other companies in the drug distribution industry, the Company reports as revenues the gross dollar amount of bulk shipments to customers' warehouses and the related costs in cost of sales. Bulk shipment transactions are arranged by the Company with its suppliers at the express direction of the customer, and involve either shipments from the supplier directly to customers' warehouse sites or shipments from the supplier to Company warehouses for immediate shipment to customers' warehouse sites. Gross profit earned by the Company on bulk shipments was not material in any period presented.

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Accounting Pronouncements

Effective October 1, 2000, the Company adopted Statement of Financial Accounting Standards ("SFAS") No. 133, "Accounting for Derivative Instruments and Hedging Activities" ("SFAS 133") which establishes accounting and reporting standards for derivative instruments, including certain derivative instruments embedded in other contracts (collectively referred to as derivatives), and for hedging activities. SFAS 133 was later amended by SFAS No. 137 and SFAS No. 138. This standard requires that an entity recognize all derivatives as either assets or liabilities in the statement of financial position and measure those instruments at fair value. The adoption of this standard has not had a material effect on the Company's consolidated financial position, results of operations or cash flows.

In December 1999, the United States Securities and Exchange Commission issued Staff Accounting Bulletin No. 101 ("SAB 101"), "Revenue Recognition in Financial Statements." SAB 101 provides guidance on applying generally accepted accounting principles to revenue recognition issues in financial statements. The Company will be required to adopt SAB 101 in the fourth quarter of fiscal year 2001. The Company does not believe that the adoption of SAB 101 will have a material effect on its consolidated financial position, results of operations or cash flows.

In September 2000, the FASB issued SFAS No. 140, "Accounting for Transfers and Servicing of Financial Assets and Extinguishments of Liabilities" ("SFAS 140"), a replacement of SFAS No. 125 which has the same title. SFAS 140 revises the standards for securitizations and other transfers of financial assets and expands the disclosure requirements for such transactions, but it carries over most of SFAS No. 125's provisions without change. Under SFAS 140, consistent standards are provided for distinguishing financial asset transfers which are sales from financial asset transfers which are secured borrowings. The provisions of SFAS 140 are effective for transfers of financial assets and extinguishments of liabilities occurring after March 31, 2001, and are to be applied prospectively. Management does not believe that it will change the Company's treatment of financial asset transfers under its Receivables Securitization program, which are accounted for as sales, or have any material effect on the Company's consolidated financial position, results of operations, or cash flows. It is expected that any effect will generally be limited to the form and content of the related financial statement disclosures.

In September 2000, the FASB's Emerging Issues Task Force released its discussion on EITF Issue No. 00-10, "Accounting for Shipping and Handling Fees and Costs". EITF No. 00-10 sets forth guidance on how a seller of goods should classify in the income statement (a) amounts billed to a customer for shipping and handling and (b) costs incurred for shipping and handling. The consensus guidance must be adopted by the fourth quarter of the Company's fiscal year 2001. Management is in the process of evaluating this standard, but believes that any effect will generally be limited to the form and content of its financial statement disclosures.

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Accounts Receivable Securitization

On December 20, 2000, the Company replaced its Receivables Securitization program by entering into a new Receivables Securitization agreement with a financial institution. The new agreement, which has a five-year term, provides for a longer commitment by the financial institution than did the prior agreement, which had a one-year term. In addition, the new agreement is designed to give the Company additional availability, improved pricing and more flexibility in the timing of receivable sales. Availability is subject to specified percentages of eligible receivables, as defined in the agreement. The initial maximum availability under the program is $350 million, but the Company has the option to increase the maximum up to $450 million upon payment of an additional fee. If the Company increases the maximum availability above $358 million, the Company will make a corresponding reduction in maximum availability of bank borrowings pursuant to the terms of the Senior Credit Agreement (see Note 8).

Through the new Receivables Securitization program, Bergen Brunswig Drug Company ("BBDC") sells, on an ongoing basis, its accounts receivable to Blue Hill II ("Blue Hill"), a 100%-owned special purpose subsidiary. Blue Hill, in turn, sells an undivided percentage ownership interest in such receivables to various investors. The program qualifies for treatment as a sale of assets under SFAS No. 125, " Accounting for Transfers and Servicing of Financial Assets and Extinguishments of Liabilities". Sales are recorded at the estimated fair value of the receivables sold, reflecting discounts for the time value of money based on specified interest rates and estimated credit losses; the weighted average rate for the program was approximately 7.47% at December 31, 2000.

As of December 31, 2000 and September 30, 2000, the Company had outstanding net proceeds of $350.0 million and $168.0 million, respectively, from the sale of such receivables under the Receivables Securitization program, and accounts receivable has been reduced by these amounts in the accompanying Consolidated Balance Sheets. After the maximum limit of receivables sold has been reached and as sold receivables are collected, additional receivables may be sold up to the maximum amount available under the program. Aggregate discount and fees of approximately $5.2 million and $0.6 million on the sold receivables are included in net interest expense in the accompanying Statements of Consolidated Earnings for the three months ended December 31, 2000 and 1999, respectively.

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Long-Term Debt

Long-term debt at December 31, 2000 and September 30, 2000 consisted of the following:

December 31,

September 30,

Dollars in thousands

2000

2000

7 3/8% senior notes due 2003

$

149,772

$

149,744

7 1/4% senior notes due 2005

99,846

99,837

8 3/8% senior subordinated notes due 2008

308,119

308,119

Revolving credit facilities averaging

7.26% and 7.12%, respectively

55,000

55,000

Term loan due 2005, at 9.20% and

9.21%, respectively

254,637

254,637

Term loan due 2006, at 10.20% and

10.03%, respectively

190,927

190,927

7% convertible subordinated

debentures due 2006

20,609

20,609

6 7/8% exchangeable subordinated

debentures due 2011

8,425

8,425

Other

1,995

2,348

Total

1,089,330

1,089,646

Less current portion (see below)

32,302

22,364

Total

$

1,057,028

$

1,067,282

The Company's $1.5 billion Senior Credit Agreement originally consisted of an $800 million revolving facility maturing in April 2003, a $200 million interim term loan maturing in October 2001 ("Interim Term Loan"), a $300 million term loan maturing in March 2005 ("Term A Loan") and a $200 million term loan maturing in March 2006 ("Term B Loan"). In August and September 2000, the Company used the proceeds of the BBMC and Stadtlander dispositions to fully repay the Interim Term Loan and to repay an aggregate $54 million of the Term A and Term B Loans. Borrowings under the Senior Credit Agreement are secured by substantially all of the Company's assets. The availability of revolving loans under the Senior Credit Agreement is tied to a borrowing base formula and certain covenants; the maximum amount of revolving loans outstanding may not exceed specified percentages of the Company's eligible accounts receivable and eligible inventory. There were no outstanding revolving loans at December 31, 2000 and September 30, 2000. Interest accrues at specified rates based on the Company's debt ratings; such rates range from 2.5% to 3.5% over LIBOR or 1.5% to 2.5% over prime, with a weighted average rate of approximately 9.6% at December 31, 2000. The Company pays monthly commitment fees to maintain the availability of revolving loans under the Senior Credit Agreement. The Senior Credit Agreement has loan covenants which require the Company to maintain certain financial statement ratios and places certain limitations on, among other things, acquisitions, investments, methods of operation, dividend payments and capital expenditures. Effective September 29, 2000, the Senior Credit Agreement was amended to exclude the effect of certain special items recorded by the Company in the fourth quarter of fiscal 2000 from the calculation of the required ratios and covenants.

One of the Company's subsidiaries has a $55 million bank revolving credit facility which expires on May 20, 2001. Borrowings under the facility bear interest at 0.5% above LIBOR and are secured by a standby letter of credit under the Senior Credit Agreement for which the Company incurs a fee of 2.75%.

Aggregate borrowings under the Senior Credit Agreement and other revolving credit facilities amounted to approximately $501 million at both December 31, 2000 and September 30, 2000. An aggregate of $31 million of such outstanding borrowings at December 31, 2000 has been classified in the current portion of long-term debt based on the scheduled future repayments within the next year as required under the Senior Credit Agreement.

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Preferred Securities of Trust

In May 1999, Bergen Capital I (the "Trust"), a wholly-owned subsidiary trust of the Company, issued 12,000,000 shares of 7.80% Trust Originated Preferred Securities (SM) (TOPrS(SM)) (the "Preferred Securities") at $25 per security. The proceeds of such issuances were invested by the Trust in $300 million aggregate principal amount of the Company's 7.80% Subordinated Deferrable Interest Notes due June 30, 2039 (the "Subordinated Notes"). The Subordinated Notes represent the sole assets of the Trust and bear interest at the annual rate of 7.80% per annum, payable quarterly, and are redeemable by the Company beginning in May 2004 at 100% of the principal amount thereof. The obligations of the Trust related to the Preferred Securities are fully and unconditionally guaranteed by the Company.

Holders of the Preferred Securities are entitled to cumulative cash distributions at an annual rate of 7.80% of the liquidation amount of $25 per security. The Preferred Securities will be redeemable upon any repayment of the Subordinated Notes at 100% of the liquidation amount beginning in May 2004.

The Subordinated Notes and the related Trust investment in the Subordinated Notes have been eliminated in consolidation and the Preferred Securities are reflected as outstanding in the accompanying Consolidated Financial Statements.

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10.

Earnings (Loss) Per Share

The following table sets forth the computation of basic and diluted Earnings Per Share ("EPS") for the three months ended December 31, 2000 and 1999, respectively.

In thousands, except EPS

2000

1999

Numerator for both basic and diluted EPS:

Earnings from continuing operations

$

21,352

$

20,871

Loss from discontinued operations

-

(6,220

)

Net earnings

$

21,352

$

14,651

Denominator:

Denominator for basic EPS - weighted average

shares of Class A Common Stock outstanding

134,934

134,247

Effects of dilutive employees' stock options

(dilutive potential common shares)

1,205

111

Denominator for diluted EPS - adjusted weighted

average shares and assumed conversions

136,139

134,358

Earnings (loss) per share:

Basic and diluted:

Continuing operations

$

.16

$

.16

Loss from discontinued operations

-

(.05

)

Net earnings

$

.16

$

.11

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11.

Dividends

On November 17, 2000, the Company declared a quarterly cash dividend of $0.01 per share on the Company's Class A Common Stock that was paid on December 6, 2000 to shareowners of record on November 28, 2000. During fiscal 2000 the Company paid dividends of $.075 per share in each of the first and second quarters and $0.01 per share in each of the third and fourth quarters.

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12.

Business Segment Information

The Company is organized based upon the products and services it provides to its customers. The Company's continuing operating segments have been aggregated into three reportable segments: Pharmaceutical Distribution, PharMerica and Other Businesses.

The Pharmaceutical Distribution segment includes Bergen Brunswig Drug Company ("BBDC"), ASD Specialty Healthcare ("ASD"), Integrated Commercialization Solutions ("ICS") and The Lash Group, Inc. ("Lash"). BBDC sells pharmaceuticals, over-the-counter medicines, health and beauty aids, and other health-related products to hospitals, managed care facilities, independent and chain retail pharmacies, and food/drug combination stores. ASD sells specialty pharmaceutical products to physicians, clinics and other providers in the nephrology, oncology, plasma and vaccines sectors. BBDC and ASD also provide promotional, inventory management and information services to their customers. ICS provides commercial outsourcing services to healthcare product manufacturers, while Lash provides healthcare reimbursement consulting services.

The PharMerica segment consists solely of the Company's PharMerica operations. PharMerica provides institutional pharmacy products and services to patients in long-term care and alternate site settings, including skilled nursing facilities, assisted living facilities, and residential living communities. It also provides mail order and on-line pharmacy services to injured workers who are receiving workers' compensation benefits, homebound catastrophically-ill patients, and other consumers.

The Other Businesses segment consists solely of Choice Systems Inc. ("Choice Systems"), which sells inventory management software to hospitals and other healthcare providers.

The segment structure described herein is different from that previously reported in the three months ended December 31, 1999 due to (a) the elimination of Stadtlander and BBMC, which are classified as discontinued operations, and (b) realignment of several of the Company's smaller subsidiaries. All fiscal 2000 data shown below has been restated to be consistent with the new organizational structure.

All of the Company's operations are located in the United States or the Commonwealth of Puerto Rico.

The following tables present segment information for the first three months of the past two fiscal years (dollars in thousands):

Net Sales and Other Revenues

Three Months Ended December 31,

2000

1999

Pharmaceutical Distribution

$

4,622,510

$

4,370,165

PharMerica

335,166

309,444

Other Businesses

180

266

Corporate

524

467

Intersegment Eliminations

(181,597

)

(170,244

)

Revenues excluding bulk shipments

4,776,783

4,510,098

Bulk shipments of pharmaceuticals to

customers' warehouses

1,075,171

1,115,258

Total net sales and other revenues

$

5,851,954

$

5,625,356

Management evaluates segment performance based on revenues excluding bulk shipments to customers' warehouses. For further information regarding the nature of bulk shipments, which only occur in the Pharmaceutical Distribution segment, see Note 5.

Intersegment Eliminations represent the elimination of the Pharmaceutical Distribution segment's sales to PharMerica (BBDC is the principal supplier of pharmaceuticals to PharMerica). The $11.4 million increase in the three months ended December 31, 2000 is primarily due to increased intersegment shipments in order to support PharMerica's growth.

Operating Earnings, LIFO Basis

Three Months Ended December 31,

2000

1999

Pharmaceutical Distribution

$

76,637

$

76,790

PharMerica

16,041

7,770

Other Businesses

(869

)

(869

)

Corporate

(17,506

)

(16,822

)

Total operating earnings

74,303

66,869

Net interest expense

(31,892

)

(24,434

)

Earnings before taxes on income and

distributions on preferred securities of

subsidiary trust

$

42,411

$

42,435

Segment operating profit is evaluated on both a FIFO and LIFO basis. The only operating unit which uses the LIFO inventory method is BBDC; accordingly, for all other operating units, LIFO earnings are the same as FIFO earnings. BBDC's LIFO charge was $1.3 million in each of the three months ended December 31, 2000 and 1999. Since the difference between FIFO and LIFO earnings was immaterial, only the LIFO basis is presented herein. Certain corporate office expenses of a direct operational nature are charged to the segments, but general corporate overhead is not allocated. Also, interest expense is not allocated to the segments.

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13.

Restructuring Charges

In the fourth quarter of fiscal 2000, the Company recorded a $10.7 million restructuring charge representing the estimated cost of (a) consolidating four BBDC distribution centers into larger existing facilities during fiscal 2001, (b) outsourcing certain BBDC delivery functions and (c) streamlining certain BBDC and other Pharmaceutical Distribution selling and administrative functions. The Albuquerque division was consolidated into the Phoenix facility in October 2000 and the Portland division was consolidated into the Seattle facility in December 2000. During the three months ended December 31, 2000, the Company recorded net charges of approximately $2.6 million against the restructuring liability. These charges consisted primarily of severance payments to terminated employees.

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ITEM 2.	Management's Discussion and Analysis of Financial Condition
	and Results of Operations

PORTIONS OF MANAGEMENT'S DISCUSSION AND ANALYSIS PRESENTED BELOW, CONSISTING OF THOSE STATEMENTS WHICH ARE NOT HISTORICAL IN NATURE (INCLUDING, WITHOUT LIMITATION, THE COMPANY'S EXPECTATIONS REGARDING MARGINS, SALES MIX, COST REDUCTION EFFORTS, NURSING HOME ADMISSIONS, CASH AND CAPITAL REQUIREMENTS), MAY CONSTITUTE " FORWARD-LOOKING STATEMENTS" WITHIN THE MEANING OF THE PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995. SUCH FORWARD-LOOKING STATEMENTS ARE SUBJECT TO RISKS, UNCERTAINTIES AND OTHER FACTORS WHICH COULD CAUSE ACTUAL RESULTS TO MATERIALLY DIFFER FROM THOSE PROJECTED OR IMPLIED. THE MOST SIGNIFICANT OF SUCH RISKS, UNCERTAINTIES AND OTHER FACTORS ARE DESCRIBED IN EXHIBIT 99(A) TO THE COMPANY'S ANNUAL REPORT ON FORM 10-K FOR THE FISCAL YEAR ENDED SEPTEMBER 30, 2000. IN MANY CASES, THE COMPANY CANNOT PREDICT WHAT FACTORS WOULD CAUSE ACTUAL RESULTS TO DIFFER MATERIALLY FROM THOSE INDICATED BY THE FORWARD-LOOKING STATEMENTS. THE COMPANY DISCLAIMS ANY OBLIGATION TO UPDATE ANY FORWARD-LOOKING STATEMENT.

RESULTS OF OPERATIONS

The Company's revenues excluding bulk shipments and earnings from continuing operations increased 6% and 2%, respectively, during the fiscal quarter ended December 31, 2000 (the first quarter of fiscal year 2001) compared to the corresponding period in the prior year. However, net earnings increased 46%, primarily because the prior year's results included a $6.2 million loss from discontinued operations. The following table summarizes key line items from the Company's Consolidated Statements of Earnings for these two quarters:

Three Months Ended

December 31,

%

Dollars in millions, except for per share amounts

2000

1999

Change

Revenues excluding bulk shipments

$

4,776.8

$

4,510.1

6

%

Earnings from continuing operations

$

21.4

$

20.9

2

%

Discontinued operations

-

(6.2

)

Net earnings

$

21.4

$

14.7

46

%

Diluted earnings per share:

Earnings from continuing operations

$

0.16

$

0.16

-

%

Discontinued operations

-

(0.05

)

Net earnings

$

0.16

$

0.11

45

%

The loss from discontinued operations represents losses incurred during the first quarter of the prior year by BBMC and Stadtlander, which were sold by the Company in August and September 2000, respectively. Such losses included an allocation of interest expense based on the consolidated average bank borrowing rate and the expected proceeds from the dispositions, which approximated the amount of debt retired. For further discussion, see the "Discontinued Operations" section herein.

Fluctuations in the Company's operating results between the current and prior year quarters were not affected by acquisitions. The Company's most recent acquisition occurred in April 1999.

CONTINUING OPERATIONS

The 2% increase in earnings from continuing operations was principally due to an increase in operating earnings and a lower effective income tax rate, largely offset by higher net interest expense. The following table provides a summarized statement of continuing operations on a consolidated basis, including key line item percentage changes and ratios:

Three Months Ended

December 31,

%

Dollars in millions

2000

1999

Change

Revenues excluding bulk shipments

$

4,776.8

$

4,510.1

6

%

Bulk shipments

1,075.2

1,115.3

(4

)

%

Net sales and other revenues

$

5,852.0

$

5,625.4

4

%

Gross profit, LIFO basis

$

304.8

$

299.5

2

%

Operating expenses

230.5

232.6

(1

)

%

Operating earnings

74.3

66.9

11

%

Net interest expense

31.9

24.5

31

%

Earnings from continuing operations

before income taxes and distributions

42.4

42.4

-

%

Income taxes

17.5

18.0

(3

)

%

Distributions on trust preferred securities

3.5

3.5

-

%

Earnings from continuing operations

$

21.4

$

20.9

2

%

Percentage of revenues excluding

bulk shipments:

Gross profit, LIFO basis

6.38

%

6.64

%

Operating expenses

4.82

%

5.16

%

Operating earnings

1.56

%

1.48

%

Revenues excluding bulk shipments increased 6% in the first quarter of fiscal 2001 due to growth in both the Pharmaceutical Distribution and PharMerica segments, as described in the "Segment Information" section below.

Along with other companies in its industry, the Company reports bulk shipments of pharmaceuticals in revenues and cost of sales. Bulk shipment transactions are arranged by the Company with its suppliers at the express direction of the customer, and involve either shipments from the supplier directly to customers' warehouse sites or shipments from the supplier to Company warehouses for immediate shipment to customers' warehouse sites. Bulk sales of pharmaceuticals do not impact the Company's inventory since the Company simply processes the orders that it receives from its suppliers directly to the customers' warehouses. The Company serves as an intermediary by paying the supplier and billing the customer for the goods. Due to the insignificant margins generated through bulk shipments, fluctuations in such revenues have only an immaterial impact on the Company's operating earnings.

Gross profit as a percentage of revenues excluding bulk shipments ("gross margin") was 6.38% and 6.64% in the first quarters of fiscal 2001 and 2000, respectively. The 26 basis-point decrease was primarily attributable to lower selling margins and sales mix changes in the Pharmaceutical Distribution and PharMerica segments, as described in the "Segment Information" section below.

Operating expenses consist of distribution, selling, general and administrative expenses ("DSG&A"). Operating expenses as a percentage of revenues excluding bulk shipments were 4.82% and 5.16% in the first quarters of fiscal 2001 and 2000, respectively. The 34 basis-point decrease was principally due to the Pharmaceutical Distribution and PharMerica operating efficiencies described in the "Segment Information" section below.

Operating expenses include the amortization of goodwill, only a portion of which is tax-deductible. Goodwill amortization decreased by approximately $3.3 million during the first quarter of fiscal 2001, substantially all of which resulted from lower amortization of PharMerica goodwill following the $505.3 million goodwill impairment charge recorded in September 2000. The table below provides a summary of goodwill amortization from continuing operations by segment and its effect on net earnings and diluted earnings per share.

Three Months Ended

December 31,

Dollars in millions

2000

1999

Pharmaceutical Distribution

$

1.9

$

1.9

PharMerica

2.7

6.0

Total goodwill amortization

4.6

7.9

Tax benefit of deductible portion

(1.0

)

(1.0

)

Reduction of net earnings

$

3.6

$

6.9

Reduction of diluted earnings per share

$

0.03

$

0.05

Segment Information

Following is a summary of revenues and operating earnings for the Company's business segments:

Dollars in millions

Revenues Excluding

Bulk Shipments

%

Three Months Ended December 31,

2000

1999

Change

Pharmaceutical Distribution

$

4,622.5

$

4,370.2

6

%

PharMerica

335.2

309.4

8

%

Other Businesses

0.2

0.3

Corporate

0.5

0.5

Intersegment Eliminations

(181.6

)

(170.3

)

Total

$

4,776.8

$

4,510.1

6

%

Operating Earnings (Loss),

LIFO Basis

%

Three Months Ended December 31,

2000

1999

Change

Pharmaceutical Distribution

$

76.6

$

76.8

-

%

PharMerica

16.0

7.8

106

%

Other Businesses

(0.8

)

(0.8

)

-

%

Corporate

(17.5

)

(16.9

)

(4

)

%

Total

$

74.3

$

66.9

11

%

Percentages of revenues excluding

bulk shipments:

Pharmaceutical Distribution:

Gross profit

3.98

%

4.23

%

Operating expenses

2.32

%

2.47

%

Operating earnings

1.66

%

1.76

%

PharMerica:

Gross profit

35.85

%

36.83

%

Operating expenses

31.06

%

34.32

%

Operating earnings

4.79

%

2.51

%

Pharmaceutical Distribution:

Revenues increased 6% in the first quarter of fiscal 2001, representing growth by both BBDC and ASD. BBDC's revenues increased 5%, reflecting strong growth in the retail category principally due to the addition or expansion of business with several large regional drug store chains and mail order pharmacies. Health systems revenues, however, declined due to the loss of business from some of the healthcare providers that are members of Novation, a large group purchasing organization that had previously recognized BBDC as an authorized distributor. In addition, the overall BBDC year-over-year revenue growth comparison was impacted because revenues in the first quarter of fiscal 2000 included non-recurring incremental customer purchases related to Y2K concerns. ASD's revenues increased 23%, primarily representing growth in its oncology business. The BBDC and ASD increases were comprised of a larger volume of shipments to existing customers as well as to a significant number of new customers. National industry economic conditions were also favorable, with increases in prescription drug usage and higher pharmaceutical prices contributing to this segment's revenue growth.

Operating earnings in the first quarter of fiscal 2001 were virtually unchanged from the prior-year quarter. As a percentage of revenues, operating earnings on a LIFO basis were 1.66% and 1.76% of revenues in the first quarters of fiscal 2001 and 2000, respectively. The 10 basis point decrease represents the net effect of a 25 basis-point reduction in gross margin, partially offset by a 15 basis-point reduction in operating expenses.

Gross margin on a LIFO basis was 3.98% and 4.23% in the first quarters of fiscal 2001 and 2000, respectively. The 25 basis-point reduction reflects a lower gross margin at BBDC, partially offset by a higher gross margin at ASD. BBDC's margins declined mainly due to intense price competition within the industry, as well as to a change in BBDC's sales mix, with a greater proportion of revenues coming from high-volume, low-margin drug store chain customers. ASD's gross margin improved principally due to increased buyside opportunities in the oncology market and to stabilization of the plasma market.

In the Company's wholesale distribution businesses, it is customary to pass on manufacturers' price increases to customers. Investment buying enables distributors such as the Company to benefit by purchasing goods in advance of anticipated manufacturers' price increases. Consequently, the rate or frequency of future price increases by manufacturers, or the lack thereof, influences the profitability of the Company.

Management anticipates further downward pressure on sell-side gross margins in the pharmaceutical distribution businesses during the remainder of fiscal 2001 because of continued selling price competition influenced by high-volume customers. Management expects that these pressures may be offset to some extent by an increased sales mix of more profitable products and services and continued reduction of operating expenses as a percentage of revenues. However, no assurance can be given that such improved sales mix or expense reduction can be achieved since many of the factors that impact such results (e.g. the effect of group purchasing agreements, competitive inroads, market conditions, etc.) are outside of the Company's control.

Operating expenses as a percentage of revenues excluding bulk shipments were 2.32% and 2.47% in the first quarters of fiscal 2001 and 2000, respectively. The 15 basis-point reduction was primarily attributable to continued operating efficiencies and the spreading of fixed costs over a larger revenue base. This segment's distribution infrastructure has been able to process increasing volume without a proportionate increase in operating expenses. Contributing to this efficiency in fiscal 2001 was the consolidation of two distribution centers, the outsourcing of deliveries, and the streamlining of administrative functions pursuant to BBDC's restructuring plan announced in the fourth quarter of fiscal 2000 (see Note 13 of the accompanying Notes to Consolidated Financial Statements). Also, the aforementioned shift in the distribution businesses' mix towards high-volume customers reduced the operating expense ratio because these customers are less costly to serve due to economics of scale in transportation and certain other functions.

PharMerica:

PharMerica's revenues increased 8% in the first quarter of fiscal 2001, mainly due to a 33% growth in revenues from the workers' compensation services business. Long-term care revenues were 4% higher than in the prior-year quarter, as the customer base continues to stabilize following the implementation of PPS (see below). In addition, PharMerica's long-term care business has tightened its credit and pricing policies during the past year, which has slowed its growth rate.

PharMerica's operating earnings, as a percentage of revenues, were 4.79% and 2.51% in the first quarters of fiscal 2001 and fiscal 2000, respectively. The significant improvement resulted from a 326 basis-point reduction in operating expenses, partially offset by a 98 basis-point reduction in gross margin. Approximately one-third of the operating expense basis-point reduction is attributable to the aforementioned $3.3 million decrease in goodwill amortization. The remaining operating expense reduction is mainly due to lower employee costs and other efficiencies resulting from the consolidation of several pharmacies, the outsourcing of deliveries, the conversion of a majority of disparate pharmacy computer systems to a common AS400 platform, and other programs which have been implemented to streamline operations. Also, the bad debt provision was slightly lower in the current quarter, partially due to the benefits derived from the new credit policies and guidelines implemented in late fiscal 2000. The reduction in gross margin reflects continued selling price pressures, partially offset by the benefits of increased participation in Bergen's purchasing programs. In addition, the aforementioned ratios were impacted by a change in the sales mix, with a greater proportion of revenues coming from the workers' compensation business, which has lower gross margins and lower operating expenses than the long-term care business.

Over the past two years, PharMerica's revenues and gross margin have been adversely affected by negative industry trends resulting from dramatically lower reimbursement to nursing homes for Medicare patients under the Prospective Payment System ("PPS"). While the Company did see stabilization of these trends in fiscal 2000 and early fiscal 2001, management expects that they will continue to affect PharMerica in the remaining quarters of fiscal 2001. In addition, lower Medicaid reimbursement levels resulting from the previously-disclosed reductions in Average Wholesale Prices ("AWP") and Federal Upper Limit ("FUL") prices will continue to adversely affect PharMerica's gross margins in fiscal 2001.

Other Businesses:

Revenues decreased by $0.1 million in the first quarter of fiscal 2001, while operating losses were unchanged from the prior-year first quarter. Choice Systems continues to operate at an unprofitable level during its transition to a new line of software products.

Corporate:

Corporate expenses, net of minor revenue, increased $0.6 million, or approximately 4%, in the first quarter of fiscal 2001. As a percentage of consolidated revenues, net Corporate expenses were .37% in each of the first quarters of fiscal 2001 and 2000.

Intersegment Eliminations:

These amounts represent the elimination of the Pharmaceutical Distribution segment's sales to PharMerica (BBDC is the principal supplier of pharmaceuticals to PharMerica). The 7% increase in the first quarter of fiscal 2001 is attributable to the higher volume of intersegment shipments necessary to support PharMerica's growth.

Interest Expense and Distributions on Preferred Securities

The Company's financing expenses for its continuing operations are comprised of two line items on the Statements of Consolidated Earnings:

Three Months Ended

December 31,

%

Dollars in millions

2000

1999

Change

Net interest expense (pre-tax)

$

31.9

$

24.5

31

%

Distributions on preferred securities of subsidiary

trust (before income tax benefit of $2.3)

5.8

5.8

-

%

Total financing expenses for continuing operations

$

37.7

$

30.3

25

%

Total financing expenses increased $7.4 million in the first quarter of fiscal 2001 over the respective prior-year quarter. This increase was primarily due to higher interest expense incurred on the Company's bank borrowings and Receivables Securitization program due to both (a) higher interest rates and fees associated with the Senior Credit Agreement as compared to the previous credit facilities and (b) increases in market lending rates.

Taxes on Income

Taxes on income, excluding the tax benefit on distributions on the Company's Preferred Securities, were 41.3% and 42.5% of pre-tax earnings in the first quarters of fiscal 2001 and 2000, respectively. The 1.2% reduction in the effective tax rate is primarily attributable to the aforementioned decrease in nondeductible PharMerica goodwill amortization.

DISCONTINUED OPERATIONS

On June 26, 2000, the Company announced that it had entered into a definitive agreement to sell the stock of BBMC to Allegiance Corporation, a subsidiary of Cardinal Health, Inc., for approximately $181 million in cash before retention of certain liabilities and subject to post-closing accounting adjustments. The regulatory approvals and other closing conditions were satisfied during the fourth quarter, and the sale was consummated on August 16, 2000. The net proceeds from this divestiture were used to pay down the $200 million Interim Term Loan maturing in October 2001.

On July 5, 2000, the Company announced that it had entered into a definitive agreement to sell the specialty pharmacy assets of Stadtlander to ProCare Pharmacy, Inc., a subsidiary of CVS Corporation, for approximately $124 million in cash before retention of certain liabilities and subject to post-closing accounting adjustments. The transaction was structured as a sale of assets and was consummated on September 18, 2000. In addition, certain assets of the corrections division of Stadtlander, that portion of the business that provides pharmaceuticals to prison inmate populations, were sold to Secure Pharmacy Plus, Inc. for approximately $8 million in a cash transaction which was consummated on September 20, 2000. The net proceeds from the divestitures of the two Stadtlander businesses were used to pay off the remaining portion of the $200 million Interim Term Loan and a portion of other debt.

The Company has reclassified both BBMC and Stadtlander as discontinued operations in the accompanying Consolidated Financial Statements. The $6.2 million loss from discontinued operations in the first quarter of fiscal 2000 principally reflects losses at Stadtlander, which experienced unprofitable operations due to low gross margins, high bad debt provisions, and costs associated with its restructuring. BBMC reported a small loss in that quarter.

For further information on Discontinued Operations, see Note 2 of the accompanying Notes to Consolidated Financial Statements.

LIQUIDITY AND CAPITAL RESOURCES

Following is a summary of the Company's capitalization at the end of the most recent quarter and fiscal year:

December 31,
2000

September 30,
2000

Debt, net of cash

50%

49%

Equity, including the Preferred Securities

50%

51%

The increase in the debt percentage is mainly due to a decrease in cash and cash equivalents to $44 million at December 31, 2000 from $94 million at September 30, 2000, partially offset by a smaller increase in equity due to the Company's net earnings for the three months ended December 31, 2000.

Through the new Receivables Securitization program, BBDC sells, on an ongoing basis, its accounts receivable to Blue Hill, a 100%-owned special purpose subsidiary. Blue Hill, in turn, sells an undivided percentage ownership interest in such receivables to various investors. The program qualifies for treatment as a sale of assets under SFAS No. 125, "Accounting for Transfers and Servicing of Financial Assets and Extinguishments of Liabilities". As of December 31, 2000, the Company had outstanding net proceeds of $350 million from the sale of such receivables under the new Receivables Securitization program, and accounts receivable has been reduced by this amount in the accompanying Consolidated Balance Sheet.

On May 26, 1999, the Company's Trust issued 12,000,000 shares of its Preferred Securities at $25 per security. The proceeds of such issuances were invested by the Trust in $300 million aggregate principal amount of the Company's Subordinated Notes due June 30, 2039. The Subordinated Notes represent the sole assets of the Trust and bear interest at the rate of 7.80% per annum, payable quarterly, and are redeemable at the option of the Company beginning in May 2004 at 100% of the principal amount thereof. The obligations of the Trust related to the Preferred Securities are guaranteed by the Company.

See Notes 7, 8 and 9 of the accompanying Notes to Consolidated Financial Statements for further information regarding the Receivables Securitization program, the Senior Credit Agreement and the Preferred Securities.

On November 17, 2000, the Company declared a quarterly cash dividend of $0.01 per share on the Company's Common Stock that was paid on December 6, 2000 to shareowners of record on November 28, 2000. During fiscal 2000 the Company paid dividends of $.075 per share in each of the first and second quarters and $.010 per share in each of the third and fourth quarters.

The Company's cash flows during the first three months of fiscal 2001 and 2000 are summarized in the following table:

Three Months Ended

December 31,

Dollars in millions

2000

1999

Earnings from continuing operations, excluding

non-cash charges

$

58.1

$

63.2

Increases in operating assets and liabilities

(268.9

)

(81.9

)

Net cash flows from operating activities

(210.8

)

(18.7

)

Property acquisitions

(5.6

)

(37.3

)

Net proceeds from sale of accounts receivable

182.0

200.0

Net repayment of debt and other obligations

(4.0

)

(85.3

)

Cash dividends on Common Stock

(1.3

)

(10.1

)

Distributions on Preferred Securities

(11.7

)

(5.8

)

Discontinued operations

-

(25.4

)

Other - net

1.8

2.4

Net increase (decrease) in cash and cash equivalents

$

(49.6

)

$

19.8

For the three months ended December 31, 2000, the Company generated $210.8 million of negative cash flows from operations, compared with $18.7 million of negative cash flows from operations in the comparable period in fiscal 2000. The larger negative cash flows in fiscal 2001 were primarily attributable to BBDC's increased inventory levels due to a higher participation in seasonal investment buying activity. In the prior year, BBDC did not fully participate in seasonal buying activity during the winter months primarily due to the limited availability of funds preceding the refinancing of the Company's revolving credit facility.

The Company believes that internally generated cash flows, funding available under the Senior Credit Agreement, the Receivables Securitization program, trade credit extended by suppliers in the ordinary course of business, and funds potentially available in the private and public capital markets will be sufficient to meet anticipated cash and capital requirements. However, actual results could differ from this forward-looking statement as a result of, among other things, unanticipated capital requirements, changes in supplier trade credit terms, or an inability to access the capital markets on acceptable terms when, and if, necessary. The Company's debt ratings are an important factor in its ability to access capital on acceptable terms.

Property acquisitions relate principally to the purchase of warehouse, pharmacy and data processing equipment and included the purchase of the Company's previously-leased Corporate headquarters building in October 1999.

NEW ACCOUNTING PRONOUNCEMENTS

Effective October 1, 2000, the Company adopted Statement of Financial Accounting Standards ("SFAS") No. 133, "Accounting for Derivative Instruments and Hedging Activities" ("SFAS 133") which establishes accounting and reporting standards for derivative instruments, including certain derivative instruments embedded in other contracts (collectively referred to as derivatives), and for hedging activities. During the remaining nine months of fiscal 2001, the Company plans to adopt several additional new pronouncements issued by the FASB and the SEC. SFAS 133 and the new pronouncements have not had or are not expected to have a significant impact on the Company's reported consolidated financial position, results of operations or cash flows. See Note 6 of the accompanying Notes to Consolidated Financial Statements for further information.

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ITEM 3.

Quantitative and Qualitative Disclosures About Market Risk

The Company's most significant "market risk" exposure is the effect of changing interest rates. The Company manages its interest expense by using a combination of fixed and variable-rate debt. At December 31, 2000, the Company's debt consisted of approximately $588.8 million of fixed-rate debt with a weighted average interest rate of 7.86% and $500.5 million of variable-rate debt (consisting principally of bank borrowings under the Senior Credit Agreement) with a weighted average interest rate of 9.37%. The amount of the variable-rate debt fluctuates during the year based on the Company's cash requirements. If interest rates on the Senior Credit Agreement were to increase by 94 basis points (one-tenth of the rate at December 31, 2000), the impact on the pre-tax earnings from continuing operations during the three months ended December 31, 2000 would be an increase of approximately $1.2 million.

The Company is evaluating various financial instruments which could mitigate a portion of its exposure to variable interest rates. However, there are no assurances that such instruments will be available on terms acceptable to the Company.

The Company also believes that its interest rate exposure could be somewhat mitigated due to the favorable effect which inflation may have on the Company, specifically, manufacturers' price inflation which may accelerate concurrently with a general increase in interest rates, to the extent that the Company can take advantage of such inflation in purchasing and selling inventory. The Company's ability to take advantage of such inflation is contingent upon various factors, including, but not limited to, the availability of inventory and capital on terms acceptable to the Company.

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BERGEN BRUNSWIG CORPORATION

PART II. OTHER INFORMATION

ITEM 1.

LEGAL PROCEEDINGS

There have been no new material matters in the legal proceedings as previously reported in Part I, Item 3 of the Company's Annual Report on Form 10-K for the fiscal year ended September 30, 2000 filed with the Securities and Exchange Commission on December 29, 2000 except as otherwise might be set forth below.

Section 1.

1.1 State Antitrust Actions

1.1.1 As previously reported, between August 3, 1993 and February 14, 1994, the Company, along with various other pharmaceutical industry-related companies, was named as a defendant in eight separate state antitrust actions in three courts in California. These lawsuits are more fully detailed in "Item 1 - Legal Proceedings" of Part II of the Company's Quarterly Report on Form 10-Q for the quarter ended June 30, 1994 as filed with the Securities and Exchange Commission and is incorporated herein by reference. In April 1994, these California state actions were all coordinated as Pharmaceutical Cases I, II and III, and assigned to a single judge in San Francisco Superior Court. On August 22, 1994, a Consolidated Amended Complaint ("California Complaint"), which supersedes and amends the eight prior complaints, was filed in these actions. The California Complaint alleges the Company and 35 other pharmaceutical industry-related companies violated California's Cartwright Act, Unfair Practices Act, and the Business and Professions Code unfair competition statute. The California Complaint alleges the defendants jointly and separately engaged in secret rebating, price fixing and price discrimination between plaintiffs and plaintiffs' alleged competitors who sell pharmaceuticals to patients or retail customers. Plaintiffs seek, on behalf of themselves and a class of similarly situated California pharmacies, injunctive relief and treble damages in an amount to be determined at trial. The judge struck the class allegations from the Unfair Practices Act claims, and on June 26, 1995, granted plaintiffs' motion for class certification of the consolidated actions. On September 8, 1995, the court entered an order staying all proceedings in the consolidated actions pending resolution of the federal action. To date, the action is still stayed. In addition, on November 13, 2000, the Company was sued in Santa Clara Superior Court in the State of California, along with 24 pharmaceutical manufacturers and 2 other wholesalers, in an antitrust suit under California state law entitled Paradise Drugs, Inc. et al. v. Abbott Laboratories, et al., No. CV 793852. The complaint alleges essentially the same claims as those raised in the above-described California Complaint on behalf of a group of retail pharmacies that opted out of both the federal and state class actions. By agreement of the parties, no response thereto is required until March 30, 2001. Similar actions were also filed against the Company and other wholesalers and manufacturers in Mississippi, Montgomery Drug v. UpJohn, et. al., No. 97-0103, and in Tennessee, Graves v. Abbott, et. al., No. 25,109-II. The various state actions have not yet been set for trial.

1.2 Federal Opt Out Antitrust Actions

1.2.1 In addition to the above-mentioned state court actions in Sections 1.1, the Company and other wholesale defendants have been added as defendants in a series of related federal antitrust lawsuits brought by certain independent pharmacies who have opted out of the class action cases. After a successful motion by the Company and other wholesalers, the damage period in these cases was limited to October 1993 to the present. On July 17, 2000, the wholesaler defendants filed a motion for summary judgment. On November 6, 2000, the court granted the motion, dismissing all claims against the wholesalers. An Arkansas group of opt out plaintiffs filed a motion for reconsideration, requesting that their Arkansas state law claims not be dismissed. That motion was granted on January 9, 2001. The plaintiffs in these opt out actions have filed a notice of appeal of the entry of judgment on behalf of the wholesaler defendants on the Sherman Act claims. No briefing in the Seventh Circuit has yet commenced.

1.2.2 On October 21, 1994, the Company entered into a sharing agreement with five other wholesalers and 26 pharmaceutical manufacturers. Among other things, the agreement provides that: (a) if a judgment is entered against both the manufacturer and wholesaler defendants, the total exposure for joint and several liability of the Company is limited to the lesser amount of either 1% of each shared judgment or an aggregate amount of $1 million on all shared judgments in all actions; (b) if a settlement is entered into by, between, and among the manufacturer and wholesaler defendants, the Company has no monetary exposure for such settlement amount; (c) the six wholesaler defendants will be reimbursed by the 26 pharmaceutical defendants for related legal fees and expenses in an amount agreed to by the manufacturers (of which the Company will receive a proportionate share); and (d) the Company is to release certain claims which it might have had against the manufacturer defendants for the claims presented by the plaintiffs in these cases. The agreement covers all antitrust actions raising the issues described above and which allege joint and several liability with at least one manufacturer, including the cases described in this Section.

1.3 Proposition 65 - Gottesfeld

1.3.1 As previously reported, in February 1999, Perry Gottesfeld, an individual, filed a lawsuit against the Company and approximately sixteen other defendants in the case entitled, Perry Gottesfeld v. Alva-Amco, et. al., alleging that manufacturers and distributors of over the counter dandruff shampoos containing coal tar expose consumers to coal tar, a Proposition 65-listed carcinogen, without providing a warning. Shortly after Gottesfeld filed suit, the California Attorney General filed a separate action covering the same products. Under Proposition 65 and California's Business and Professions Code Section 17200 (Unfair Trade Practices), both Gottesfeld and the State are seeking substantial civil penalties, restitution, injunctive relief, attorney's fees and costs from the defendants. Both cases have been consolidated and are pending in San Francisco County Superior Court. The Company has filed an answer to both plaintiffs' claims and responded to discovery requests. Settlement discussions were ongoing until August 2000, but ceased when the plaintiffs demanded that defendants reformulate their products to below minimum levels set under the federal Food and Drug Administration ("FDA") Coal Tar Monograph, which defendants believe conflict irreconcilably with FFDCA requirements.

1.3.2 On March 14, 2000, Gottesfeld filed a citizen's petition with the FDA requesting FDA to restrict the sale of pharmaceuticals containing coal tar to prescription only and to require additional warnings for cancer. The basis for the Gottesfeld Petition is an unvalidated scientific study concerning exposure to coal tar oil in mice, which is the same scientific evidence that both Gottesfeld and the Attorney General assert as the basis of their Proposition 65 claim.

1.3.3 On September 22, 2000, the Court granted the Company's request for a stay of the action pending the FDA review of the Gottesfeld Petition, which was due by the end of January 2001. As of November 7, 2000, the court ordered a continuance of the Stay until January 31, 2001, at which time the parties were to file a further status report. On January 31, 2001, the parties filed status reports, but to date, the stay remains in effect and no trial date has been set.

1.3.4 On January 22, 2001, the FDA notified Gottesfeld and other interested parties, including the Company, that it had completed its action on the Gottesfeld petition, and that a formal response was being prepared and would be released shortly.

1.4 EPA Butterworth Landfill Site

1.4.1 As previously reported, on or about March 5, 1999, the Company was notified that it was a potentially responsible party ("PRP") in connection with the Butterworth Landfill Site ("Butterworth Site") located in Grand Rapids, Michigan and that the U.S. EPA had entered into a Court-ordered consent decree ("Decree") with five principal PRP's to spend approximately $9.6 million on immediate responsive activities at the Butterworth Site, including remedial investigation and feasibility studies. In addition and pursuant to Section 107 of the CERCLA, the U.S. Department of the Interior has asserted a claim for damages caused to natural resources ("NRD Liability"). The present value of the expected remedial action at the Butterworth Site over the next thirty years is in excess of $20 million.

1.4.2 The Company has tendered $53,000 in exchange for statutory contribution protection and a covenant not to sue in the Decree. The Decree was expected to be entered in the Fourth Quarter of 1999, but as of January 2001, still has not been entered. Upon entering the Decree, all EPA claims and NRD Liability against the Company will be released and any future contribution or cost recovery actions by other PRP's against the Company will be barred.

1.4.3 The lengthy delay in filing to enter the Decree has been caused by an opposition to the same by a group of approximately 18 non-settling parties, known as the Varnum Group (the "Group"). The members of the Group are allegedly liable as generators of hazardous materials. The Group maintains that the settlement is unfair to them primarily because it does not include them, thereby leaving them exposed to an order from EPA to perform a portion of the work at the Butterworth Site and, potentially, to claims in contribution from the settling parties.

1.4.4 In May 1999, the U.S. filed a Memorandum in Support of the Decree, which the Group opposed. In August 2000, the U.S. District Court Judge for the Western District of Michigan granted the United States' Motion for Entry of the Decree. However, in October 2000, the Company received service of the Group's notice to appeal. As of November 2000, the Group filed a motion to stay the appeal for seven weeks, pending ongoing settlement negotiations. As of late January 2001, a proposed settlement has been submitted for review by the Department of Justice. Accordingly, the parties have requested that the appeal process be held in abeyance for at least an additional 30 days.

1.5 Li Li Ha Pharmacy/Hawaii

1.5.1 As previously reported, PharMerica had been informed by the State of Hawaii Medicaid Fraud Division that it had initiated an investigation into possible violations of Medicaid regulations by a pharmacy operated by PharMerica in Honolulu, Hawaii. Upon receipt of the alleged violations, PharMerica cooperated fully with the State of Hawaii in performing a joint investigation of the pharmacy operations, and on January 8, 2001 agreed to a settlement agreement with the State. The required payments under the settlement agreement with the State were immaterial to the Company's overall financial condition. The Company is not aware of any investigations or pending investigations by any other state or federal agency in connection with this matter.

Although the amount of liability at December 31, 2000 with respect to the referenced proceedings in Section 1 above cannot be ascertained, with the exception of the Li Li Ha Pharmacy/Hawaii matter, in the opinion of management, based upon information currently available to management, any resulting liability is not likely to have a material adverse effect on the Company's consolidated financial position, results of operations or cash flows. This statement represents a forward-looking statement under the Private Securities Litigation Reform Act of 1995. Actual results could differ materially from management's opinion based on a variety of factors, including the uncertainties involved in the proof of legal and factual matters in complex legal proceedings.

Section 2.

2.1 Bergen Securities, Trust and Derivative Actions

2.1.1 As previously reported, following the Company's October 14, 1999 announcement that it would not meet analysts' consensus earnings estimates for its fourth quarter and fiscal year ended September 30, 1999, due to, in part, lower than expected results at Stadtlander and PharMerica, and following the Company's disclosures, in its complaint against the Counsel defendants, reported by the press on October 15, 1999, regarding the accounting irregularities involved in the Stadtlander acquisition, 10 purported shareholder class action lawsuits were commenced against the Company and certain of its officers and directors in federal court in California. By order of the Court, pursuant to the parties' stipulation, the 10 cases have been consolidated into a single action in the Southern Division of the United States District Court for the Central District of California (the "Bergen securities action").

2.1.2 The Bergen securities action is purportedly brought on behalf of a class of the Company's shareholders who purchased or otherwise acquired the Company's common stock from March 16, 1999 through October 14, 1999, and were allegedly damaged thereby. The Bergen securities action asserts, among other things, various similar claims under sections 11, 12 and 15 of the Securities Act 1933, and under sections 10(b) and 20(a) of the Securities Exchange Act of 1934, and Rule 10b-5 thereunder. In general, the Bergen securities action alleges that the Company and certain of its officers and directors made material omissions and misrepresentations in their PharMerica Proxy Statement/Prospectus, and in other public statements prior to October 14, 1999, by failing to disclose sooner certain accounting irregularities the Company uncovered at Stadtlander after its acquisition, and by allegedly failing to disclose sooner that the reserves for uncollectible accounts receivable at PharMerica were allegedly understated by approximately $35 million.

2.1.3 On or about April 25, 2000, plaintiffs filed and served a consolidated amended complaint in the Bergen securities action. On June 23, 2000, the Company filed and served a motion to dismiss plaintiffs' consolidated amended complaint in the Bergen securities action. Plaintiffs have responded to the Company's motion, and the Company has filed and served its reply. The hearing currently was scheduled to take place on January 28, 2001.

2.1.4 In addition to the Bergen securities action, two separate lawsuits alleging violations of certain federal securities laws were commenced in federal court in California, and another lawsuit was commenced in federal court in Delaware, that name as defendants, along with the Company and certain of its officers and directors, Bergen Capital Trust I (the "Trust"), a wholly-owned subsidiary of the Company, as well as various investment banks.

2.1.5 By order of the Court, pursuant to the parties' stipulation, the Trust securities cases also have been consolidated into a single action in the Southern Division of the United States District Court for the Central District of California (the "Trust securities action"), and have been coordinated with the Bergen securities action as related cases for pre-trial purposes. The Trust securities action purportedly is brought on behalf of a class of persons who purchased shares of the Trust's Preferred Securities pursuant to the May 26, 1999 offering of such securities, including, in two of the cases, persons who thereafter acquired any such Preferred Securities on the open market prior to October 14, 1999.

2.1.6 The Trust securities action asserts claims under sections 11, 12 and 15 of the Securities Act of 1933, as well as claims under sections 10(b) and 20(a) of the Securities Exchange Act of 1934, and Rule 10b-5 thereunder. In general, the Trust securities action contends the Trust and the Company failed to fulfill a purported duty to disclose in the Company's 1999 Registration Statement, and in related offering materials with respect to the issuance of the Trust's Preferred Securities, and that the financial data provided by the Company was supposedly unreliable because Stadtlander was suffering from accounting irregularities as a result of the fraud of the Counsel defendants. The complaint in the Trust securities action also alleges that the Company should have disclosed PharMerica's problems arising from uncollectible accounts receivable sooner than it did.

2.1.7 On or about June 8, 2000, Plaintiffs filed and served a consolidated amended complaint in the Trust securities action. On August 1, 2000, the Company filed and served a motion to dismiss the consolidated amended complaint in the Trust securities action. Plaintiffs have responded to the Company's motion, and the hearing currently was scheduled to take place on January 28, 2001.

2.1.8 The Plaintiffs in the Bergen securities action and the Trust securities action seek damages in an unspecified amount, and/or rescission, as well as pre-judgment and post-judgment interest, costs and attorneys' fees. Pursuant to court order, "lead plaintiffs" and "lead counsel" have been appointed in the Bergen securities action and the Trust securities action under the Private Securities Litigation Reform Act of 1995 (the "PSLRA"). Except as set forth above, no motions are currently pending in any of the actions. No discovery has been commenced by any party to date in any of the actions, except for two third-party subpoenas issued to preserve evidence pending resolution of the pleadings. No trial dates have been set in any of the actions.

2.1.9 On March 15, 2000, the Company accepted service of a purported shareholder derivative action pending in the Orange County Superior Court (the "Bergen derivative action"). The Bergen derivative action asserts several purported state law causes of action against the directors and certain senior officers of the Company (the "individual defendants"), and also against the Company (as a nominal defendant), alleging, in general terms, various alleged fiduciary breaches and related claims arising from the alleged failure of the individual defendants to conduct adequate due diligence before proceeding with the Stadtlander acquisition and causing the Company to allegedly violate federal securities laws, as alleged in the Bergen securities action and Trust securities action.

2.1.10 On Thursday, April 13, 2000, the Company and the individual defendants removed the Bergen derivative action to federal court, on the ground that the purported state law causes of action asserted in the complaint all derive from, and depend upon the resolution of, substantial questions of federal securities law. The plaintiff filed and served a motion to remand the Bergen derivative action to the Orange County Superior Court. The Company opposed plaintiff's motion to remand, to which the plaintiff replied. The Court issued an Order dated August 2, 2000, denying the plaintiff's motion to remand.

2.1.11 The Company and the individual defendants requested the derivative complaint be consolidated and/or coordinated with the Bergen securities action and the Trust securities action. To that end, the Bergen derivative action has been assigned to the same Court in which the Bergen securities action and the Trust securities action are pending.

2.1.12 The Company filed and served a motion to dismiss the complaint in the Bergen derivative action. The plaintiff filed an opposition to that motion, to which the Company replied. On November 28, 2000, the Court issued an order granting the Company's motion to dismiss the derivative action, pursuant to which it dismissed the derivative complaint without leave to amend. On December 7, 2000, the plaintiff in the Bergen derivative action filed and served a motion for reconsideration of the Court's order dismissing the action. The hearing on plaintiff's motion for reconsideration is set for hearing on February 26, 2001. The Company intends to oppose the motion.

2.1.13 The Company has reached a tentative settlement agreement with plaintiffs' counsel in the various actions, together with its directors' and officers' liability insurance carriers. The parties have negotiated a draft Memorandum of Understanding regarding the settlement of the various actions, which should be executed shortly. The Company believes it is likely the cases will be settled in accordance with the parties' mediated settlement proposal, as modified by the Company's subsequent discussions with its insurance carriers, and as reflected in the Memorandum of Understanding. However, if the pending settlement is not approved by the Court, the Company will continue to vigorously defend against the claims asserted in the various purported shareholder class action lawsuits and the Bergen derivative action. In that regard, due to the incipient stage of the litigation, its ongoing status, and the necessary uncertainties involved in all litigation, the Company does not believe it is currently feasible to predict or determine the outcome or resolution of this proceeding, or to estimate the amounts of, or potential range of, loss, if any, with respect to this proceeding.

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BERGEN BRUNSWIG CORPORATION

PART II. OTHER INFORMATION

ITEM 6.

EXHIBITS AND REPORTS ON FORM 8-K

(a)	EXHIBITS

	10	Receivables Purchase and Servicing Agreement dated as of December 20, 2000 among Blue Hill II, Inc., Redwood Receivables Corporation, Bergen Brunswig Drug Company and General Electric Capital Corporation.

*	99	Statement Regarding Forward-Looking Information is set forth as Exhibit 99(a) to the Company's Annual Report on Form 10-K for the fiscal year ended September 30, 2000.


	*	Document has heretofore been filed with the Securities and Exchange Commission and is incorporated herein by reference and made a part hereof.

(b)	REPORTS ON FORM 8-K:

	There were no reports filed on Form 8-K during the three months ended December 31, 2000.

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

BERGEN BRUNSWIG CORPORATION

By

/s/ Robert E. Martini

Robert E. Martini
Chairman of the Board and
Chief Executive Officer

By

/s/ Neil F. Dimick

Neil F. Dimick
Executive Vice President,
Chief Financial Officer
(Principal Financial Officer and
Principal Accounting Officer)

February 12, 2001

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BERGEN BRUNSWIG CORPORATION

INDEX TO EXHIBITS

EXHIBIT
NUMBER

PAGE
NUMBER

10

Receivables Purchase and Servicing Agreement dated as of December 20, 2000 among Blue Hill II, Inc., Redwood Receivables Corporation, Bergen Brunswig Drug Company and General Electric Capital Corporation.

39

99*

Statement Regarding Forward-Looking Information is set forth as Exhibit 99(a) to the Company's Annual Report on Form 10-K for the fiscal year ended September 30, 2000.

*

Document has heretofore been filed with the Securities and Exchange Commission and is incorporated herein by reference and made a part hereof.

Title of each class of Common Stock		Number of Shares Outstanding January 31, 2001

Class A Common Stock -
par value $1.50 per share		135,146,546

PART I. FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

BERGEN BRUNSWIG CORPORATION

CONSOLIDATED BALANCE SHEETS
DECEMBER 31, 2000 AND SEPTEMBER 30, 2000
(dollars in thousands)
(Unaudited)


				December 31,		September 30,
- - ASSETS - -				2000		2000


CURRENT ASSETS:
	Cash and cash equivalents .....................................................			$	44,458	$	94,032
	Accounts and notes receivable, less allowance
		for doubtful receivables: $165,049 at December 31,
		2000 and $183,373 at September 30, 2000 ............................			1,016,237		1,232,300
	Inventories ............................................................................				2,519,607		2,067,335
	Income taxes receivable .........................................................				18,379		72,189
	Deferred income taxes ...........................................................				16,972		29,887
	Prepaid expenses .................................................................				21,856		21,783

			Total current assets ..........................................................		3,637,509		3,517,526


PROPERTY - at cost:
	Land ....................................................................................				17,210		17,210
	Buildings and leasehold improvements ....................................				116,375		115,644
	Equipment and fixtures ..........................................................				226,034		225,745

			Total property ...................................................................		359,619		358,599
	Less accumulated depreciation and amortization .....................				157,757		150,091

			Property - net ...................................................................		201,862		208,508


OTHER ASSETS:
	Goodwill - net ......................................................................				654,011		658,640
	Investments .........................................................................				18,875		18,179
	Noncurrent receivables .........................................................				16,002		16,293
	Deferred income taxes .........................................................				23,298		25,153
	Deferred charges and other assets ........................................				123,571		127,125

			Total other assets ...........................................................		835,757		845,390

TOTAL ASSETS ...................................................................				$	4,675,128	$	4,571,424



See accompanying Notes to Consolidated Financial Statements.

BERGEN BRUNSWIG CORPORATION

STATEMENTS OF CONSOLIDATED EARNINGS
FOR THE THREE MONTHS ENDED
DECEMBER 31, 2000 AND 1999
(in thousands except per share amounts)
(Unaudited)


			2000			1999

*Consolidated Earnings:*
Net sales and other revenues:
	Excluding bulk shipments to customers' warehouses		$	4,776,783		$	4,510,098
	Bulk shipments to customers' warehouses			1,075,171			1,115,258

		Total net sales and other revenues		5,851,954			5,625,356
Cost of sales				5,547,139			5,325,846

Gross profit				304,815			299,510
Distribution, selling, general and administrative expenses				230,512			232,641

Operating earnings from continuing operations				74,303			66,869
Net interest expense				31,892			24,434

Earnings from continuing operations before taxes on income
	and distributions on preferred securities of subsidiary trust			42,411			42,435
Taxes on income from continuing operations				17,520			18,025

Earnings from continuing operations before distributions on
	preferred securities of subsidiary trust			24,891			24,410
Distributions on preferred securities of subsidiary trust,
	net of income tax benefit of $2,311			(3,539	)		(3,539	)

Earnings from continuing operations				21,352			20,871
Loss from discontinued operations, net of income tax benefit				-			(6,220	)

Net earnings			$	21,352		$	14,651


*Basic and diluted earnings (loss) per share:*
	Continuing operations		$	.16		$	.16
	Loss from discontinued operations			-			(.05	)

		Net earnings	$	.16		$	.11


*Weighted average number of shares outstanding:*
	Basic			134,934			134,247

	Diluted			136,139			134,358


*Cash dividends declared per share of*
	*Class A Common Stock*		$	.010		$	.075



See accompanying Notes to Consolidated Financial Statements.

BERGEN BRUNSWIG CORPORATION

STATEMENTS OF CONSOLIDATED CASH FLOWS
FOR THE THREE MONTHS ENDED
DECEMBER 31, 2000 AND 1999
(in thousands)
(Unaudited)



					2000			1999


*Operating Activities*
	Earnings from continuing operations				$	21,352		$	20,871
	Adjustments to reconcile earnings from continuing
		operations to net cash flows from operating activities:
			Provision for doubtful receivables			12,195			11,961
			Depreciation and amortization of property			11,281			11,455
			Loss on dispositions of property			813			112
			Amortization of intangible assets			5,958			9,300
			Amortization of debt financing costs			3,337			2,357
			Deferred compensation			1,721			1,424
			Deferred income taxes			14,769			5,728
	Effects of changes on:
			Receivables			22,161			(171,841	)
			Inventories			(452,272	)		(194,801	)
			Income taxes receivable			53,810			15,070
			Prepaid expenses and other assets			(1,149	)		(3,855	)
			Accounts payable			148,381			288,134
			Accrued liabilities			(5,096	)		(29,611	)
			Customer credit balances			(48,042	)		15,038

				Net cash flows from operating activities		(210,781	)		(18,658	)


*Investing Activities*
	Property acquisitions					(5,595	)		(37,325	)
	Net proceeds from sale of accounts receivable					181,998			200,000
	Other					(546	)		472

				Net cash flows from investing activities		175,857			163,147


*Financing Activities*
	Net revolving unsecured bank loan activity					-			544,783
	Net commercial paper activity					-			(622,281	)
	Reduction of other obligations					(4,039	)		(7,762	)
	Distributions paid on trust preferred securities					(11,700	)		(5,850	)
	Shareowners' equity transactions:
			Exercise of stock options and issuance of restricted shares			2,143			817
			Employee stock purchase plan			296			1,111
			Cash dividends paid on Common Stock			(1,350	)		(10,065	)

				Net cash flows from financing activities		(14,650	)		(99,247	)

Discontinued operations						-			(25,415	)

Net increase (decrease) in cash and cash equivalents						(49,574	)		19,827
Cash and cash equivalents at beginning of period						94,032			116,356

Cash and cash equivalents at end of period					$	44,458		$	136,183


*Supplemental Cash Flow Disclosures:*
	Cash paid (received) during the period for:
			Interest		$	49,180		$	39,961
			Income taxes - net (refunds) payments			(58,153	)		857


See accompanying Notes to Consolidated Financial Statements.

In thousands	Three Months Ended December 31, 1999

Net sales and other revenues	$	303,605
Cost of sales		248,628

Gross profit		54,977
Distribution, selling, general and administrative expenses		60,207

Operating loss		(5,230	)
Net interest expense		4,909

Loss before income tax benefit		(10,139	)
Income tax benefit		(3,919	)

Loss from operations	$	(6,220	)

		December 31,			September 30,
Dollars in thousands			2000			2000

7 3/8% senior notes due 2003			$	149,772		$	149,744
7 1/4% senior notes due 2005				99,846			99,837
8 3/8% senior subordinated notes due 2008				308,119			308,119
Revolving credit facilities averaging
	7.26% and 7.12%, respectively			55,000			55,000
Term loan due 2005, at 9.20% and
	9.21%, respectively			254,637			254,637
Term loan due 2006, at 10.20% and
	10.03%, respectively			190,927			190,927
7% convertible subordinated
	debentures due 2006			20,609			20,609
6 7/8% exchangeable subordinated
	debentures due 2011			8,425			8,425
Other				1,995			2,348

	Total			1,089,330			1,089,646

Less current portion (see below)				32,302			22,364

	Total		$	1,057,028		$	1,067,282

In thousands, except EPS					2000		1999

Numerator for both basic and diluted EPS:
	Earnings from continuing operations			$	21,352	$	20,871
	Loss from discontinued operations				-		(6,220	)

			Net earnings	$	21,352	$	14,651

Denominator:
	Denominator for basic EPS - weighted average
		shares of Class A Common Stock outstanding			134,934		134,247
	Effects of dilutive employees' stock options
		(dilutive potential common shares)			1,205		111

	Denominator for diluted EPS - adjusted weighted
		average shares and assumed conversions			136,139		134,358

Earnings (loss) per share:
	Basic and diluted:
		Continuing operations		$	.16	$	.16
		Loss from discontinued operations			-		(.05	)

			Net earnings	$	.16	$	.11

		Net Sales and Other Revenues

Three Months Ended December 31,			2000			1999

Pharmaceutical Distribution		$	4,622,510		$	4,370,165
PharMerica			335,166			309,444
Other Businesses			180			266
Corporate			524			467
Intersegment Eliminations			(181,597	)		(170,244	)

	Revenues excluding bulk shipments		4,776,783			4,510,098

Bulk shipments of pharmaceuticals to
	customers' warehouses		1,075,171			1,115,258

Total net sales and other revenues		$	5,851,954		$	5,625,356

		Operating Earnings, LIFO Basis

Three Months Ended December 31,			2000			1999

Pharmaceutical Distribution		$	76,637		$	76,790
PharMerica			16,041			7,770
Other Businesses			(869	)		(869	)
Corporate			(17,506	)		(16,822	)

	Total operating earnings		74,303			66,869
Net interest expense			(31,892	)		(24,434	)

Earnings before taxes on income and
	distributions on preferred securities of
	subsidiary trust	$	42,411		$	42,435

		Three Months Ended
		December 31,					%

Dollars in millions, except for per share amounts		2000		1999			Change

Revenues excluding bulk shipments		$	4,776.8	$	4,510.1		6	%


Earnings from continuing operations		$	21.4	$	20.9		2	%
Discontinued operations			-		(6.2	)

	Net earnings	$	21.4	$	14.7		46	%


Diluted earnings per share:
Earnings from continuing operations		$	0.16	$	0.16		-	%
Discontinued operations			-		(0.05	)

	Net earnings	$	0.16	$	0.11		45	%

		Three Months Ended
		December 31,						%

Dollars in millions		2000			1999			Change

Revenues excluding bulk shipments		$	4,776.8		$	4,510.1		6		%
Bulk shipments			1,075.2			1,115.3		(4	)	%

	Net sales and other revenues	$	5,852.0		$	5,625.4		4		%


Gross profit, LIFO basis		$	304.8		$	299.5		2		%
Operating expenses			230.5			232.6		(1	)	%

	Operating earnings		74.3			66.9		11		%
Net interest expense			31.9			24.5		31		%

Earnings from continuing operations
	before income taxes and distributions		42.4			42.4		-		%
Income taxes			17.5			18.0		(3	)	%
Distributions on trust preferred securities			3.5			3.5		-		%


Earnings from continuing operations		$	21.4		$	20.9		2		%


Percentage of revenues excluding
	bulk shipments:
	Gross profit, LIFO basis		6.38	%		6.64	%
	Operating expenses		4.82	%		5.16	%
	Operating earnings		1.56	%		1.48	%

Dollars in millions

		Revenues Excluding
		Bulk Shipments
								%
Three Months Ended December 31,		2000			1999			Change

Pharmaceutical Distribution		$	4,622.5		$	4,370.2		6		%
PharMerica			335.2			309.4		8		%
Other Businesses			0.2			0.3
Corporate			0.5			0.5
Intersegment Eliminations			(181.6	)		(170.3	)

	Total	$	4,776.8		$	4,510.1		6		%


		Operating Earnings (Loss),
		LIFO Basis
								%
Three Months Ended December 31,		2000			1999			Change

Pharmaceutical Distribution		$	76.6		$	76.8		-		%
PharMerica			16.0			7.8		106		%
Other Businesses			(0.8	)		(0.8	)	-		%
Corporate			(17.5	)		(16.9	)	(4	)	%

	Total	$	74.3		$	66.9		11		%


Percentages of revenues excluding
	bulk shipments:

Pharmaceutical Distribution:
	Gross profit		3.98	%		4.23	%
	Operating expenses		2.32	%		2.47	%
	Operating earnings		1.66	%		1.76	%

PharMerica:
	Gross profit		35.85	%		36.83	%
	Operating expenses		31.06	%		34.32	%
	Operating earnings		4.79	%		2.51	%

	December 31, 2000	September 30, 2000

Debt, net of cash	50%	49%
Equity, including the Preferred Securities	50%	51%

	BERGEN BRUNSWIG CORPORATION




	By	/s/ Robert E. Martini

		Robert E. Martini Chairman of the Board and Chief Executive Officer



	By	/s/ Neil F. Dimick

		Neil F. Dimick Executive Vice President, Chief Financial Officer (Principal Financial Officer and Principal Accounting Officer)

EXHIBIT NUMBER		PAGE NUMBER

10	Receivables Purchase and Servicing Agreement dated as of December 20, 2000 among Blue Hill II, Inc., Redwood Receivables Corporation, Bergen Brunswig Drug Company and General Electric Capital Corporation.	39

99*	Statement Regarding Forward-Looking Information is set forth as Exhibit 99(a) to the Company's Annual Report on Form 10-K for the fiscal year ended September 30, 2000.



*	Document has heretofore been filed with the Securities and Exchange Commission and is incorporated herein by reference and made a part hereof.