================================================================================

                       SECURITIES AND EXCHANGE COMMISSION

                             Washington, D.C. 20549
                             ----------------------

                                    FORM 10-K



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

For the fiscal year ended  September 30, 1998
                          -------------------

                                       OR

[   ]  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                              (I.R.S. Employer
Incorporation or organization)                               Identification No.)

4000 Metropolitan Drive, Orange, California                       92868-3598
--------------------------------------------------------------------------------
 (Address of principal executive offices)                         (Zip Code)

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

Securities registered pursuant to Section 12(b) of the Act:

<TABLE>
<CAPTION>
                                               Name of each exchange on
    Title of each class                           which registered
----------------------------------           -------------------------------
<S>                                          <C>
Class A Common Stock                           New York Stock Exchange
Par Value $1.50 per share

6 7/8% Exchangeable Subordinated               New York Stock Exchange
Debentures due July 15, 2011

$150,000,000 7 3/8% Senior Notes               New York Stock Exchange
due 2003
</TABLE>

Securities registered pursuant to Section 12(g) of the Act:
7%  Convertible  Subordinated  Debentures  due  March  1,  2006 -  Durr-Fillauer
Medical, Inc.

================================================================================

                             (Cover page continued)

<PAGE>






Indicate by check mark if disclosure of delinquent  filers  pursuant to Item 405
of Regulation  S-K is not contained  herein,  and will not be contained,  to the
best of registrant's  knowledge,  in definitive proxy or information  statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. [  ]

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__

At  November  30,  1998,  103,269,500  shares  of  Class  A  Common  Stock  were
outstanding.  The  aggregate  market  value of the Class A Common  Stock held by
nonaffiliates of the registrant on November 30, 1998 was $3,053,887,205.



                       Documents Incorporated by Reference
                       -----------------------------------


List hereunder the following documents if incorporated by reference and the part
of the Form 10-K into which the document is incorporated:

Within 120 days after  September  30,  1998,  the  Company  will  either  file a
definitive proxy statement for its 1999 annual meeting of shareowners which will
be  incorporated  by reference in Part III of this Annual Report on Form 10-K or
will file an amendment to this Annual Report to provide the  information  called
for by such Part III.



<PAGE>



                                TABLE OF CONTENTS

                                     PART I
                                     ------

ITEM                                                                    PAGE
----                                                                    ----

       Forward-looking Statements                                      I - 1

1.     Business                                                        I - 1

2.     Properties                                                      I - 6

3.     Legal Proceedings                                               I - 7

4.     Submission of Matters to a Vote of Security Holders            I - 11

4A.    Executive Officers of the Registrant                           I - 11


                                     PART II

5.     Market for the Registrant's Common Equity and                  II - 1
              Related Stockholder Matters

6.     Selected Financial Data                                        II - 2

7.     Management's Discussion and Analysis of Financial              II - 3
              Condition and Results of Operations

7a.    Quantitative and Qualitative Disclosures About Market Risk    II - 14

8.     Financial Statements and Supplementary Data                   II - 15

9.     Changes in and Disagreements with Accountants                 II - 40
              on Accounting and Financial Disclosure


                                    PART III

10.    Directors of the Registrant                                   III - 1

11.    Executive Compensation                                        III - 1

12.    Security Ownership of Certain Beneficial Owners               III - 1
              and Management

13.    Certain Relationships and Related Transactions                III - 1


                                     PART IV

14.    Exhibits, Financial Statement Schedules and Reports           IV - 1
              on Form 8-K

       Signatures                                                    IV - 6


<PAGE>



Portions of this Annual Report on Form 10-K include "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 this Annual Report.


                                     PART I

ITEM 1.  BUSINESS

         A.   General Development of Business
              -------------------------------

              Bergen Brunswig  Corporation,  a New Jersey  corporation formed in
1956, and its subsidiaries (collectively,  the "Company") are a diversified drug
and health care distribution  organization.  The Company is the nation's largest
supplier of  pharmaceuticals  to the managed care market and the second  largest
wholesaler  to the retail  pharmacy  market.  The  Company is one of the leading
supply  channel  management   companies  to  provide  both  pharmaceuticals  and
medical-surgical supplies on a national basis.

              On November 25, 1998,  the Company  signed an agreement to acquire
100% of the capital stock of J.M. Blanco,  Inc. ("J.M.  Blanco"),  Puerto Rico's
largest  pharmaceutical  distributor.  Under  the  terms of the  agreement,  the
Company will pay approximately $24 million in cash and assume  approximately $27
million in debt.

              On November 19, 1998,  the Company  signed an agreement to acquire
substantially  all of the  business,  assets  and  property,  subject to certain
liabilities,   of  Medical   Initiatives,   Inc.   ("MII"),   a  pre-filler   of
pharmaceuticals  for oncology  centers.  Under the terms of the  agreement,  the
Company would issue approximately 227,000 shares of the Company's Class A Common
Stock ("Common Stock").

              On November  8, 1998,  the Company  signed a  definitive  purchase
agreement to acquire  Stadtlander  Drug Co.,  Inc.  ("Stadtlander"),  a national
leader in  disease-specific  pharmaceutical  care delivery for transplant,  HIV,
infertility  and  serious  mental  illness  patient  populations  and a  leading
provider of pharmaceutical care to the privatized  corrections market. Under the
terms of the agreement, the Company will pay approximately $178 million in cash,
issue   approximately   6,000,000   shares  of  its  Common   Stock  and  assume
approximately $100 million in debt.

              The J.M. Blanco,  MII and Stadtlander  transactions are more fully
described in Note 12 of Notes to Consolidated  Financial Statements appearing in
Part II of this Annual Report.


                                     I - 1
<PAGE>

              On September 30, 1998,  the Company  acquired  Ransdell  Surgical,
Inc. ("Ransdell"), a privately-held medical-surgical supply distributor, and its
affiliate,  Choice  Systems,  Inc.  ("Choice"),  a developer  of supply  channel
management   software  for  the   healthcare   industry.   The  Company   issued
approximately  716,000  shares of its Common  Stock to the  Ransdell  and Choice
shareowners.

              On August 31,  1998,  the Company  acquired  The Lash Group,  Inc.
("Lash"), a privately-held healthcare reimbursement consulting firm. The Company
issued approximately 980,000 shares of its Common Stock to the Lash shareowners.

              On May 12, 1998, the Company  completed the acquisition of Pacific
Criticare,   Inc.  ("Pacific  Criticare"),   a  privately-held   distributor  of
medical-surgical  products,  for  approximately  $4  million in cash,  excluding
acquisition costs.

              On January 2, 1998,  the  Company  completed  the  acquisition  of
substantially all of the net assets of Besse Medical Services,  Inc.("Besse"), a
privately-held  distributor of injectables  diagnostics and medical supplies for
approximately $22 million in cash, excluding acquisition costs.

              The  Ransdell,   Choice,   Lash,   Pacific   Criticare  and  Besse
transactions  are  more  fully  described  in Note 4 of  Notes  to  Consolidated
Financial Statements appearing in Part II of this Annual Report.

              During  fiscal  1998,  the  Company  recorded  a special  non-cash
pre-tax  charge  of $87.3  million  for  writedown  of Bergen  Brunswig  Medical
Corporation  ("BBMC")  goodwill  related to certain  acquisitions  made prior to
September  1995,  resulting from a realized  impairment to the carrying value of
BBMC's  long-lived  assets. In addition to the goodwill  writedown,  the Company
recorded a pre-tax charge of $3.0 million for BBMC restructuring  expenses which
represent  severance costs associated with streamlining and refocusing the sales
organization  and costs  associated with the  consolidation of four divisions to
improve  efficiency and customer service.  Other special charges recorded during
fiscal 1998 include a non-cash  pre-tax  charge of $5.3  million  related to the
abandonment of capitalized software as a result of technology improvements;  and
a pre-tax charge of $14.6 million  related  primarily to the  terminated  merger
with  Cardinal  Health,  Inc.  ("Cardinal").  See  Notes  10 and 13 of  Notes to
Consolidated Financial Statements appearing in Part II of this Annual Report.

              On September 24, 1998, the Company  declared a 2-for-1 stock split
on the Company's  Common Stock which was paid on December 1, 1998 to shareowners
of record on  November  2, 1998.  Share and per share  amounts  included  in the
accompanying  consolidated  financial  statements  and  notes  are  based on the
increased number of shares giving retroactive effect to the stock split.

              On  August  23,  1997,  the  Company  signed a  definitive  merger
agreement   with  Cardinal   Health,   Inc.   ("Cardinal"),   a  distributor  of


                                     I - 2
<PAGE>

pharmaceuticals  and provider of  value-added  pharmaceutical-related  services,
headquartered  in Dublin,  Ohio. The merger  agreement called for the Company to
become a wholly-owned  subsidiary of Cardinal and for shareowners of the Company
to receive  Cardinal  Common  Shares in exchange for  outstanding  shares of the
Company's  Common Stock.  On July 31, 1998, the United States District Court for
the District of Columbia granted the request of the Federal Trade Commission for
a preliminary  injunction to halt the proposed  merger.  On August 7, 1998,  the
Company and Cardinal jointly  terminated the merger agreement.  See Notes 10 and
13 of Notes to Consolidated  Financial  Statements  appearing in Part II of this
Annual Report.



         B.   Narrative Description of Business
              ---------------------------------

              Bergen  Brunswig Drug Company  ("BBDC"),  a  wholly-owned  and the
largest subsidiary of the Company,  is one of the largest national  distributors
of products sold or used by institutional (hospital) and retail pharmacies. BBDC
distributes  a full line of  products,  including  pharmaceuticals,  proprietary
medicines,  cosmetics,  toiletries, personal health products, sundries, and home
healthcare supplies and equipment from 31 locations in 23 states. These products
are sold to hospital  pharmacies,  managed care facilities,  health  maintenance
organizations   ("HMOs"),   independent  retail  pharmacies,   pharmacy  chains,
supermarkets, food-drug combination stores and other retailers located in all 50
states, the District of Columbia and Guam.

              BBDC has been an innovator in the  development  and utilization of
computer-based  retail order entry  systems and of electronic  data  interchange
("EDI") systems including  computer-to-computer ordering systems with suppliers.
During fiscal 1998,  substantially  all of BBDC's  customer orders were received
via electronic order entry systems. These systems, combined with daily delivery,
are  designed  to  improve  customers'  cash  and  inventory   management,   and
profitability, by freeing them from the burden of maintaining large inventories.
Although these systems  require capital  expenditures  by the Company,  benefits
from  these  systems  to BBDC are  expected  to be  realized  through  increased
productivity.  BBDC is expanding its electronic interface with its suppliers and
now  electronically  processes a  substantial  portion of its  purchase  orders,
invoices and  payments.  BBDC has opened  eight  regional  distribution  centers
("RDCs")  since  fiscal  1986,  replacing  20  older,  smaller,  less  efficient
facilities.  RDCs help improve  customer  service levels because a wider product
selection is more readily  available.  These  facilities  serviced 51% of BBDC's
sales volume in fiscal 1998.

              In June 1996,  BBDC  introduced  its  Generic  Purchasing  Program
("GPP").  Designed  to  reduce  customers'  generic  pharmaceutical  costs,  GPP
utilizes the products of a selected group of generic  manufacturers and combines
that  benefit  with  substantial  volume to  leverage  buying  power for  BBDC's
customers.


                                     I - 3
<PAGE>

              BBDC also  provides a wide  variety of  promotional,  advertising,
merchandising, and marketing assistance to independent community pharmacies. For
example,  the Good  Neighbor  Pharmacy(R)  program  utilizes  circular and media
advertising to strengthen the consumer image of the independent pharmacy without
sacrificing  its  local  individuality.   Other  programs  for  the  independent
community  pharmacy  include  in-store  merchandising  programs,  private  label
products,  shelf management  systems,  pharmacy computers and a fully-integrated
point-of-sale system marketed under BBDC's trademark of OmniPhaseTM.

              Hospital  and  other  institutional  accounts  are  offered a wide
variety of  inventory  management  and  information  services  by BBDC to better
manage inventory  investment and contain costs.  AccuLineTM,  introduced in June
1995, provides an on-line, real-time,  hospital inventory management system in a
WindowsTM (a trademark of  Microsoft(R)  Corporation)  environment  and features
local area network capability.

              BBMC, a  wholly-owned  subsidiary  of the Company,  distributes  a
variety of medical and surgical  products to individual  hospitals and alternate
site healthcare  providers through 32 distribution  centers located in 25 states
in every region of the United States except the northeast.

              BBMC serves hospital  customers and alternate site customers in 45
states and the District of Columbia. Alternate site customers include outpatient
clinics,  nursing  homes,  surgery  centers,   dialysis  and  oncology  centers,
emergency centers and laboratories.

              Bergen  Brunswig   Specialty  Company  ("BBSC"),   a  wholly-owned
subsidiary of the Company,  supplies  pharmaceuticals  and oncology  products to
physician and clinic accounts through four locations in four states. The Company
created BBSC during  fiscal 1994 to respond to the rapid growth in the alternate
site market  business.  As a major supplier to the alternate  site market,  BBSC
seeks  to give  its  customers  quick  access  to a broad  range  of  specialty,
value-added  products and services,  and commercial  outsourcing through its ASD
Specialty Healthcare and Integrated Commercialization Solutions divisions.

              In   September   1995,   the  Company   formed   IntePlexTM   Inc.
("IntePlex"),  a wholly-owned subsidiary of the Company, to focus exclusively on
the evolving  integrated  healthcare  marketplace.  The  foundation  of IntePlex
involves the development of an electronic  catalog for  one-stop-shopping  and a
centralized database for tracking customers' purchasing information.  IntePlex's
offerings include logistics management,  continuous replenishment,  just-in-time
delivery,   and  benefit   plan   compliance   for  both   pharmaceuticals   and
medical-surgical  supplies  combined  with  delivery to all points in a network:
hospitals, alternate sites, physician offices and retail stores.


                                     I - 4

<PAGE>


              1.   Competition
                   -----------

              The Company,  which is one of the largest national  pharmaceutical
and  medical-surgical  supplies  distributors  measured by sales,  faces intense
competition from other national  pharmaceutical  and  medical-surgical  supplies
distributors,   as  well  as  regional  and  local   full-line  and   short-line
distributors,  direct  selling  manufacturers  and specialty  distributors.  The
principal  competitive factors are service and price.  Competition  continues to
drive down the gross profit markup  percentage,  thereby lowering  distributors'
gross profit margins.


              2.   Employees
                   ---------

              As of November 30, 1998, the Company employed  approximately 5,400
people. The Company considers its relationship with its employees and the unions
representing certain of its employees to be satisfactory.


              3.   Other
                   -----

              While the Company's  operations may show  quarterly  fluctuations,
the Company does not consider its business to be seasonal in nature.

              Although the Company's computer service operations expend time and
effort on the development and marketing of computer  software used in support of
services  offered by the Company for its customers,  which are described in part
elsewhere  herein,  the Company  has not,  during the past three  fiscal  years,
expended any material  amounts on research and development of computer  software
for sale.

              The Company relies heavily on computer  technology  throughout its
businesses to effectively  carry out its day-to-day  operations.  The Company is
assessing  all of its  computer  systems  to ensure  that  they are "Year  2000"
compliant. For a detailed discussion of the Company's Year 2000 compliance,  see
Management's  Discussion  and  Analysis of  Financial  Condition  and Results of
Operations appearing in Part II of this Annual Report.






                                     I - 5


<PAGE>


ITEM 2.  PROPERTIES

         Because of the nature of the Company's business, office and warehousing
facilities are operated in widely dispersed locations in the United States. Some
of the facilities  are owned by the Company,  but most are leased on a long-term
basis.  The Company  considers  its operating  properties to be in  satisfactory
condition and well utilized with adequate capacity for growth.

         As of November 30, 1998, BBDC's operations were located in 37 owned and
leased  warehouse  and  office  facilities  in  Alabama,  Arizona,   California,
Colorado, Florida, Georgia, Hawaii, Indiana, Kentucky, Massachusetts,  Michigan,
Mississippi, Missouri, Nevada, New Jersey, New Mexico, North Carolina, Oklahoma,
Oregon, Tennessee, Texas, Utah, Virginia and Washington. Leased facilities range
in size from approximately 5,800 to 196,900 square feet and have a combined area
of approximately 1,602,600 square feet. The expiration dates of the leases range
from  fiscal  1999  to  fiscal  2008.   Owned  facilities  range  in  size  from
approximately 46,000 to 231,500 square feet.

         As of November 30, 1998, BBMC's operations were located in 43 owned and
leased warehouse and office facilities in Alabama, Alaska, Arizona,  California,
Colorado,   Florida,  Georgia,  Hawaii,  Idaho,  Illinois,   Indiana,  Kentucky,
Michigan,  Minnesota,  Missouri, Nevada, North Carolina, Ohio, Oklahoma, Oregon,
South  Carolina,   Tennessee,  Texas,  Utah,  Virginia  and  Washington.  Leased
facilities  range in size from  approximately  5,900 to 121,600  square feet and
have a combined area of  approximately  1,327,000  square feet.  The  expiration
dates of the leases  range from fiscal  1999 to fiscal  2005.  Owned  facilities
range in size from 30,800 to 188,000 square feet.

         As  of  November  30,  1998,  BBSC's  operations,  including  the  Lash
acquisition,  were located in nine leased  warehouse  and office  facilities  in
Alabama,  California,  Kentucky,  North  Carolina,  Ohio,  Texas,  Virginia  and
Washington,  D.C.,  ranging in size from 9,800 to 64,000  square feet and have a
combined area of approximately  157,000 square feet. The expiration dates of the
leases range from fiscal 1999 to fiscal 2001.

         The combined area of the Company's owned  facilities was  approximately
2,182,000 square feet as of November 30, 1998.

         The Company maintains  approximately 208,800 square feet of general and
executive  offices in Orange,  California  pursuant to certain  leases.  175,000
square feet are leased pursuant to a 15-year lease which expires in fiscal 2000,
at which time the Company has the option to  purchase  the  premises at the then
fair market value. Expiration dates range from fiscal 1999 to fiscal 2000.

         For additional  information  regarding the Company's lease obligations,
see Note 6 of Notes to  Consolidated  Financial  Statements  in Part II, Item 8,
"Financial Statements and Supplementary Data" of this Annual Report.



                                      I - 6

<PAGE>


ITEM 3.  LEGAL PROCEEDINGS

         Drug Barn,  Inc.  ("Drug Barn"),  a former retail pharmacy chain in the
San Francisco Bay Area, owed the Company approximately $6.2 million in principal
obligations of which approximately $1.2 million represents trade receivables and
$5.0 million  represents a note which matured on March 25, 1993 and has not been
paid to date. Drug Barn commenced a Chapter 11 case in U.S. Bankruptcy Court for
the  Northern  District  of  California,  Case No.  93-3-3437  TC,  by  filing a
voluntary  petition for relief under Chapter 11 of the United States  Bankruptcy
Code on July 29, 1993 and remained in possession  pursuant to 11 U.S.C.  Section
1107.

         In April 1996, the Company filed a plan of reorganization  (the "Plan")
with the Bankruptcy  Court to resolve all of its claims with Drug Barn. The Plan
was  confirmed  by  the  Bankruptcy   Court  on  June  14,  1996.  The  Plan  of
reorganization  provided  for,  among  other  things,  a sale of all Drug Barn's
assets,  a distribution of the asset sale proceeds to creditors and a settlement
of all  claims of any  nature  between  the  Company  and Drug Barn (but not its
guarantors, Milton and Barbara Sloban).  Approximately $3 million of Drug Barn's
debt to the Company is to be paid in  accordance  with the Plan by the purchaser
of Drug Barn's assets.

         On April 20, 1993,  the Company  filed a complaint in the Orange County
Superior  Court (State of  California),  Case No.  709136  against Drug Barn and
Milton Sloban and Barbara  Sloban,  as guarantors on the defaulted note and open
trade  receivables,  alleging  breach of contract and guaranty,  and  requesting
judicial  foreclosure of and the possession of collateral.  In April 1994,  this
matter  (excluding  the  bankruptcy  court  matter) was  transferred  to the San
Francisco County Superior Court with the California state actions  referenced in
the next paragraph.

         The  Company's  collection  suit  against  Milton  and  Barbara  Sloban
commenced trial on August 14, 1996 in San Francisco Superior Court. On September
24,  1996,  after a jury trial,  the Company was awarded a judgment  for damages
against Milton and Barbara  Sloban in the amount of $3,336,953  plus interest at
$809 per day from  August 20,  1996.  Thereafter,  the Court  added  $675,000 in
attorney's  fees and  costs to the  amount of the  judgment.  In  addition,  the
Company  prevailed on all claims brought against it by the Slobans.  The Slobans
filed post-trial  motions to vacate or modify the jury verdict which were denied
by the Court.  The  Slobans  then filed an appeal of the  judgment.  The Slobans
thereafter filed personal bankruptcy petitions, temporarily staying their appeal
and the Company's collection efforts. On September 26, 1997, the parties filed a
stipulation modifying the stay so that the Slobans' appeal could proceed.

         On January 29,  1998,  the Court of Appeal of the State of  California,
First Appellate District, Division Two filed an opinion reversing the portion of
the judgment holding Barbara Sloban liable. In all other respects,  the judgment
was affirmed.  Subsequently,  the Superior Court awarded  attorney's fees in the
amount of  $680,000  to Barbara  Sloban's  attorneys.  The  Company has filed an



                                     I - 7
<PAGE>

appeal  with  respect  to  $426,000  of the fees  awarded,  which  appeal is not
expected to be resolved until mid-1999.

         Milton Sloban's personal bankruptcy case is still pending.  The Company
is seeking to collect the  remaining  amounts due under the  guarantee  from Mr.
Sloban.  Mr.  Sloban has claimed  that he has no  non-exempt  assets,  which the
Company  disputes.  There  can  be no  assurance  as  to  the  Company's  likely
collection from Mr. Sloban.

         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  that  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 that 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.

         Between  August 12, 1993 and November  29,  1993,  the Company was also
named in 11 separate Federal antitrust actions. All 11 actions were consolidated
into one multidistrict action in the Northern District of Illinois entitled,  In
Re Brand-Name Prescription Drugs Antitrust Litigation,  No. 94 C. 897 (MDL 997).
On March 7, 1994,  plaintiffs in these 11 actions filed a  consolidated  amended
class action complaint  ("Federal  Complaint")  which amended and superseded all
previously filed Federal complaints  against the Company.  The Federal Complaint
names as  defendants  the Company and 30 other  pharmaceutical  industry-related
companies.  The Federal  Complaint  alleges,  on behalf of a nationwide class of
retail  pharmacies,  that the  Company  conspired  with  other  wholesalers  and
manufacturers  to  discriminatorily  fix prices in violation of Section 1 of the
Sherman Act. The Federal  Complaint seeks injunctive  relief and treble damages.
On November 15,  1994,  the Federal  court  certified  the class  defined in the
Federal  Complaint  for the time period  October 15, 1989 to the present.  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.



                                     I - 8
<PAGE>

         On May 2,  1994,  the  Company  and Durr  Drug  Company  were  named as
defendants, along with 25 other pharmaceutical  related-industry companies, in a
state  antitrust  class action in the Circuit  Court of Greene  County,  Alabama
entitled Durrett v. UpJohn Company,  et al., No. 94-029  ("Alabama  Complaint").
The Alabama  Complaint alleges on behalf of a class of Alabama retail pharmacies
and  a  class  of  Alabama   consumers   that  the   defendants   conspired   to
discriminatorily  fix prices to  plaintiffs  at  artificially  high levels.  The
Alabama  Complaint seeks injunctive  relief and treble damages.  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.

         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 $1.0  million;  (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 up to $9.0 million  total (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 the
Federal court litigation,  as well as the cases which have been filed in various
state courts.  In December  1994,  plaintiffs in the Federal action had moved to
set aside the agreement, but plaintiffs' motion was denied on April 25, 1995. In
1996, the class  plaintiffs  filed a motion for approval of a settlement with 12
of the  manufacturer  defendants,  which  would  result in  dismissal  of claims
against those  manufacturers and a reduction of the potential claims against the
remaining  defendants,  including  those against the Company.  The Court granted
approval for the  settlement.  In 1998, an additional  four of the  manufacturer
defendants  settled.  The effect of the settlements on the sharing  agreement is
that the Company's maximum  potential loss would be $1.0 million,  regardless of
the outcome of the lawsuits,  plus possible  legal fee expenses in excess of the
Company's  proportionate share of the $9.0 million reimbursement of such fees or
any additional amounts to be paid by the manufacturer defendants.

         In  September  1998,  a jury trial of this action  commenced in Federal
Court.  On November  30,  1998,  the Court  granted all  remaining  defendants a
directed  verdict,  dismissing  all class  claims  against the Company and other
defendants. It is unclear whether the ruling will be appealed.

         In addition to the above-mentioned Federal class action and state court
actions,  the  Company  and  other  wholesale  defendants  have  been  added  as
defendants  in a  series  of  related  antitrust  lawsuits  brought  by  certain
independent  pharmacies  who have  opted  out of the class  action  cases and by



                                     I - 9
<PAGE>

certain chain drug and grocery stores.  After a successful motion by the Company
and other  wholesalers,  the damage  period in these  cases has been  limited to
October  1993 to the  present.  These  lawsuits  are also covered by the sharing
agreement described above.

         In November  1995, in the U.S.  District  Court,  Northern  District of
Illinois, Abbott Laboratories filed a complaint seeking damages of approximately
$4.0 million  against the Company and various  affiliates for credits  allegedly
due in connection  with the purchase and subsequent  sale of Abbott  products by
the Company.  In October 1998, Abbott amended its complaint to allege spoliation
of  evidence  and to  request  punitive  damages in excess of $30  million.  The
Company has filed various  counterclaims  and has asked for damages according to
proof at trial. This matter is in the discovery stage.

         After discussions with counsel, management of the Company believes that
any  allegations of liability set forth in all of the lawsuits  described  above
are without  merit and that any  attendant  liability of the  Company,  although
unlikely, would not have a material adverse effect on the Company's consolidated
financial position, results of operations or cash flows.

         On October 19, 1998, the Company  received a general notice letter from
the U.S.  Environmental  Protection Agency ("EPA") informing the Company that it
is one of many  potential  responsible  parties in connection  with the Casmalia
Disposal Site in Santa  Barbara, California,  being  remediated  pursuant to the
Comprehensive Environmental Response,  Compensation and Liability Act ("CERCLA")
and the Resource  Conservation  and Recovery Act. The notice explains that under
such federal statutes,  "de minimis" waste generators such as the Company may be
offered a special  settlement  by the EPA to  resolve  the  potential  claim.  A
settlement would be in the form of an  Administrative  Order on Consent pursuant
to CERCLA.  Within the next several months, the EPA will send a settlement offer
to the Company.  The EPA estimates that the  settlement  offer will propose that
the Company pay between $75,000 to $750,000,  which would relieve the Company of
any further  liability for the site.  The Company is still  evaluating the facts
underlying this potential claim, but based on the  correspondence  from the EPA,
believes that any  potential  liability of the Company would not have a material
adverse  effect on the Company's  consolidated  financial  position,  results of
operations or cash flows.

         The  Company is  involved in various  additional  items of  litigation.
Although the amount of  liability  at  September  30, 1998 with respect to these
additional  items  of  litigation  cannot  be  ascertained,  in the  opinion  of
management,  any resulting  future  liability  will not have a material  adverse
effect on the Company's consolidated  financial position,  results of operations
or cash flows.





                                     I - 10
<PAGE>



ITEM 4.  SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

         The Annual  Meeting of Shareowners of the Company was held on September
24, 1998 in Orange,  California  and the following  matter,  as described in the
Proxy Statement dated August 21, 1998, was voted upon:

         (a) All of  management's  nominees for the Company's Board of Directors
         were  elected  (for a term  ending in the year so  indicated)  with the
         following vote:
<TABLE>
<CAPTION>
         Nominee                           For                    Withheld
         =======================================================================
         <S>                               <C>                    <C>
         Robert E. Martini (2001)          89,576,726             1,406,002

         Neil F. Dimick (2001)             90,256,088               726,640

         Donald R. Roden (2001)            90,249,594               733,134

<FN>
         Directors whose term of office continued after the Annual Meeting were:
         Jose E. Blanco, Sr., Rodney H. Brady, Charles C. Edwards, M.D., Charles
         J. Lee,  George R.  Liddle,  James R.  Mellor,  Francis G.  Rodgers and
         George E. Reinhardt, Jr.
</FN>
</TABLE>



ITEM 4A. EXECUTIVE OFFICERS OF THE REGISTRANT

         Identification of Executive Officers.

         The executive  officers of the Company are elected by, and serve at the
pleasure of, the Board of Directors.  Each executive  officer holds office until
the next election of officers  which is generally  held in December,  January or
February of each year. The current executive officers of the Company,  and their
respective principal occupations and employment during the last five years ended
September 30, 1998, are listed alphabetically as follows:

         Linda M. Burkett,  48,  Executive  Vice  President,  Chief  Information
Officer (since September 1996);  Executive Vice President and Chief  Information
Officer,  Bergen Brunswig Drug Company (since 1995); Vice President,  IR Support
Services (1992-1995).

         Charles J. Carpenter,  49, Executive Vice President,  Chief Procurement
Officer (since September 1996); Executive Vice President, Supplier Relations and
Operations (1995-1996),  Bergen Brunswig Drug Company; Executive Vice President,
Northeast Region (1994-1995); Vice President, Northeast Region (1989-1994).



                                     I - 11
<PAGE>

         Neil F. Dimick,  49, Executive Vice President,  Chief Financial Officer
(since 1992);  President,  Bergen Brunswig  Specialty  Company (since  September
1996). Mr. Dimick is also a member of the Board of Directors.

         William J. Elliott, 49, President,  Bergen Brunswig Medical Corporation
(since October 1996). Formerly Senior Vice President of Supply Chain Management,
VHA,  Inc.,  a  nationwide,  network  of leading  community  owned  health  care
organizations and physicians (1984-October 1996).

         Brent R. Martini,  39,  President,  Bergen Brunswig Drug Company (since
September 1996);  Executive Vice President,  Bergen Brunswig Drug Company,  West
Region  (1994-1996);  Vice  President,  Quality  Organizational  Development and
Training (1991-1994). Brent R. Martini is the son of Robert E. Martini.

         Robert E. Martini, 66, Chairman of the Board (since 1992); a consultant
to the Company (since  January  1997);  Chief  Executive  Officer  (1990-January
1997). Mr. Martini is also a member of the Board of Directors.

         Andrew P. McVay, 38, Vice President, Controller of Bergen Brunswig Drug
Company (since July 1997); Controller, West Region, Bergen Brunswig Drug Company
(1994-July 1997); Director, Financial Planning (1990-1994).

         Donald R. Roden, 52, President  (since 1995);  Chief Executive  Officer
(since January 1997); Chief Operating Officer  (1995-December  1996); formerly a
healthcare  industry consultant  (1993-1995).  Mr. Roden is also a member of the
Board of Directors.

         Milan A.  Sawdei,  52,  Secretary  (since  July 1992);  Executive  Vice
President (since April 1992); Chief Legal Officer (since 1989).

         Carol E. Scherman, 43, Executive Vice President, Human Resources (since
September 1996); Executive Vice President,  Human Resources (since 1994), Bergen
Brunswig Drug Company;  Vice President,  Human Resources and Associate Relations
(1993-1994).

         Eric J.  Schmitt,  48, Vice  President,  Finance and  Treasurer  (since
February 1994); Vice President, Financial Planning (1989-1994).





                                     I - 12
<PAGE>

                                    PART II


ITEM 5.  MARKET FOR THE REGISTRANT'S COMMON EQUITY AND RELATED
         STOCKHOLDER MATTERS

         For  certain  information  regarding  shares of the  Company's  Class A
Common Stock ("Common Stock"), including cash dividends per share, market prices
per share,  stock market  information and number of  shareowners,  see "Selected
Quarterly  Results  (unaudited)"  as set  forth in Part II,  Item 8,  "Financial
Statements and Supplementary Data," of this Annual Report.

         On February 9, 1994,  the Board adopted a Shareowner  Rights Plan which
provides for the issuance of one Preferred  Share  Purchase Right (the "Rights")
for each  outstanding  share of Common  Stock.  The  Rights  are  generally  not
exercisable  until 10 days after a person or group (an "Acquiror")  acquires 15%
of the Common  Stock or  announces a tender offer which could result in a person
or group owning 15% or more of the Common Stock (an "Acquisition").  Each Right,
should it become  exercisable,  will entitle the owner to buy 1/100th of a share
of a new series of the Company's  Series A Junior Preferred Stock at an exercise
price of $80.00.

         In the event of an Acquisition  without the approval of the Board, each
Right will  entitle  the owner,  other than an  Acquiror,  to buy at the Rights'
then-current  exercise  price a number of shares of Common  Stock  with a market
value equal to twice the exercise price. In addition,  if, after an Acquisition,
the Company were to be acquired by merger,  shareowners with unexercised  Rights
could  purchase  common stock of the Acquiror with a value of twice the exercise
price of the Rights.  The Board may redeem the Rights for $0.01 per Right at any
time prior to an Acquisition. Unless earlier redeemed, the Rights will expire on
February 18, 2004.

         During the year ended  September 30, 1998, the Company issued shares of
its Common Stock  without  registration  under the  Securities  Act of 1933 (the
"1933  Act") on two  occasions.  On August  31,  1998,  in  connection  with its
acquisition  of Lash,  the Company  issued  approximately  980,000 shares of its
Common  Stock to the former  shareowners  of Lash.  On September  30,  1998,  in
connection  with its  acquisitions  of Ransdell and Choice,  the Company  issued
approximately  716,000  shares of its Common Stock to the former  shareowners of
Ransdell and Choice.  Such issuances were exempt from registration under Section
4(2) of the 1933 Act. In each of these  instances,  the privately  issued shares
have been registered under the 1933 Act for resale by the former  shareowners of
the acquired businesses.






                                     II - 1

<PAGE>
<TABLE>
Item 6.   SELECTED FINANCIAL DATA (unaudited)

<CAPTION>
----------------------------------------------------------------------------------------------------------------------------------
Dollars in thousands, except for per share amounts
==================================================================================================================================
                                                                                       September 30,
                                                       ---------------------------------------------------------------------------
Years Ended:                                                1998            1997            1996          1995         1994
==================================================================================================================================
<S>                                                     <C>              <C>              <C>          <C>           <C>       
Net sales and other revenues (a):

  Excluding bulk shipments to customers' warehouses     $13,720,017      $11,659,127      $9,941,633   $ 8,442,254   $7,479,391
  Bulk shipments to customers' warehouses                 3,401,651        2,837,646       2,476,110     2,355,094    2,184,335
                                                       ---------------------------------------------------------------------------
      Total net sales and other revenues                 17,121,668       14,496,773      12,417,743    10,797,348    9,663,726

Net earnings                                                  3,102(c)        81,679(e)       73,533        63,942       56,120(f)

Earnings per share - diluted (b)                               0.03(c)          0.81(e)         0.73          0.64         0.58(f)

Cash dividends declared per share (b):
  Class A Common                                              0.315(d)         0.216           0.192         0.190        0.175
  Class B Common                                                  -                -               -             -        0.799


At Years Ended:
==================================================================================================================================
Total assets                                            $ 3,003,212       $2,707,123      $2,489,826    $2,405,530   $1,995,057

Long-term obligations                                       464,778          437,956         419,275       557,771      342,094

Shareowners' equity                                         629,064          644,861         578,966       519,349      461,851
==================================================================================================================================
<FN>
(a)  Reclassified  to  include  bulk  shipments  to  customers'  warehouses.  For  further  information  see Note 1 of Notes to
     Consolidated Financial Statements.
(b)  Gives effect to the 2-for-1 stock split  declared  September  24, 1998 and paid December 1, 1998.  EPS has been restated in
     accordance with Statement of Accounting Standards No. 128 "Earnings per Share."
(c)  Includes special charges for writedown of goodwill of $87.3 million, no income tax effect; merger expenses of $8.6 million,
     net of income tax benefit of $6.0 million;  abandonment of capitalized  software of $3.1 million, net of income tax benefit
     of $2.2 million;  and restructuring  expenses of $1.8 million,  net of income tax benefit of $1.2 million. Net earnings and
     diluted  earnings per share excluding the special charges were $103.9 million and $1.01,  respectively.  See Item 1 of this
     Annual Report.
(d)  Includes $0.075 per share declared September 24, 1998 and paid December 1, 1998.   See Management's Discussion and Analysis
     of Financial Condition and Results of Operations.
(e)  Includes  special charges for merger expenses of $3.4 million,  net of income tax benefit of $2.4 million,  relating to the
     termination of the proposed IVAX merger.  Net earnings and diluted  earnings per share  excluding the special  charges were
     $85.1 million and $.84, respectively. See Item I of this Annual Report.
(f)  Includes special credit for a gain recognized from sale of investment securities of $2.9 million, net of income tax of $2.2
     million, and provision for an earthquake-related charge of $0.8 million, net of income tax benefit of $0.6 million.

</FN>

                                                            II - 2
</TABLE>

<PAGE>


ITEM 7.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
         CONDITION AND RESULTS OF OPERATIONS


         RESULTS OF OPERATIONS
         ---------------------

         The Company has reported  significant  increases in revenue  during the
past three years.  However,  net  earnings  were  adversely  affected by special
charges in fiscal 1998 and 1997. Excluding the special charges,  earnings growth
has  approximated  or exceeded  revenue  growth.  Following  is a summary of key
revenue and earnings  trends  during the fiscal years ended  September 30, 1998,
1997 and 1996:

     *   Total net sales and other  revenues were $17,121.7  million,  $14,496.8
         million  and  $12,417.7   million  in  fiscal  1998,   1997  and  1996,
         respectively.  Such amounts  represented  increases over the respective
         prior years of 18%, 17% and 15%.

     *   After-tax  earnings before special  charges were $103.9 million,  $85.1
         million and $73.5 million in fiscal 1998, 1997 and 1996,  respectively.
         Such amounts  represented  increases over the respective prior years of
         22%, 16% and 15%.

     *   After-tax  special  charges  were $100.8  million  and $3.4  million in
         fiscal  1998 and 1997,  respectively.  The 1998  special  charges  were
         incurred in connection  with the writedown of goodwill  relating to the
         medical-surgical  business,  the restructuring of the  medical-surgical
         business,  the abandonment of capitalized software, and the expenses of
         certain  mergers.  The 1997 charges were incurred in connection  with a
         proposed  merger.  See the "Special  Charges" section below for further
         information.

     *   Net earnings  were $3.1  million,  $81.7  million and $73.5  million in
         fiscal  1998,  1997 and 1996,  respectively.  The  fiscal  1998  amount
         represented a decrease of 96% from the prior year while the fiscal 1997
         and 1996 amounts represented  increases over the prior years of 11% and
         15%, respectively.






                                     II - 3

<PAGE>


         The  following  table   summarizes  the  components  of  the  Company's
operating  income for the past three years and should be read in connection with
the discussion below.

<TABLE>
<CAPTION>
                                                            Years Ended September 30,               % Change
                                                     --------------------------------------       -------------
     Dollars in millions                                 1998         1997          1996          1998     1997
     ==========================================================================================================

     <S>                                               <C>          <C>           <C>             <C>      <C>
     Revenues excluding bulk shipments                 $13,720.0    $11,659.1     $9,941.6         18%      17%
     Bulk shipments                                      3,401.7      2,837.7      2,476.1         20       15
                                                     ---------------------------------------------------------

          Total net sales and other revenues            17,121.7     14,496.8     12,417.7         18       17
     Cost of sales                                      16,371.4     13,842.4     11,843.9         18       17
                                                     ---------------------------------------------------------

          Gross profit                                     750.3        654.4        573.8         15       14
     Distribution, selling, general &
          administrative expenses (DSG&A)                  534.2        479.4        418.4         11       15
                                                     ---------------------------------------------------------

          Operating earnings before
               special charges                             216.1        175.0        155.4         23       13
     Special charges                                       110.2          5.8          -            -        -
                                                     ---------------------------------------------------------

          Operating earnings                           $   105.9    $   169.2     $  155.4        (37)%      9%
                                                     ==========================================================


     Percentage of revenues excluding bulk shipments:
          Gross profit                                       5.47%        5.61%        5.77%
          DSG&A expenses                                     3.89%        4.11%        4.21%
          Operating earnings before
               special charges                               1.58%        1.50%        1.56%
           Operating earnings                                0.77%        1.45%        1.56%

</TABLE>


REVENUES

         Along with other  companies  in its  industry,  the  Company  has begun
reporting  bulk  shipments  of  pharmaceuticals  in revenues  and cost of sales.
Previously,  only the gross  profit  on such  bulk  shipments  was  reported  in
revenues.  All years presented herein have been reclassified to conform with the
new reporting  method.  Bulk shipment  transactions  are arranged by the Company
with its suppliers at the express direction of the customer,  and involve either
(a)  shipments  from the supplier  directly to the  customer's  warehouse or (b)
shipments from the supplier to Company  warehouses for immediate shipment to the
customer's warehouse.  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 an immaterial impact on the Company's pre-tax earnings.





                                     II - 4

<PAGE>
         Revenues excluding bulk shipments  increased 18% and 17% in fiscal 1998
and 1997,  respectively.  Substantially  all of such increases  reflect internal
growth within the Company's existing pharmaceutical, medical-surgical supply and
specialty  products   distribution   businesses,   with  only  a  minor  portion
attributable to acquired entities.  All three of the  aforementioned  businesses
contributed   to  the  revenue   growth  in  these  years.   Revenues  from  the
pharmaceutical  business grew 16% in 1998 and 15% in 1997, with increases across
all major  customer  categories  and  geographic  regions.  Such  increases were
volume-related, reflecting growth from higher shipments to existing customers as
well as from shipments to a significant  number of new customers.  Revenues from
the  medical-surgical  business  increased  less than 5% in 1998 following a 21%
growth  rate in 1997;  the slower  1998  growth was  principally  due to (a) the
inability of the business'  current sales and operating  infrastructure to bring
on and process  increased volume and (b) the  discontinuance  of certain product
lines.  The Company is  positioning  the  medical-surgical  business  for higher
future  growth  rates  by  increasing  capacity  in  its  distribution  centers,
integrating  its  operations  for  greater  efficiency,  and  developing  a  new
information  technology platform.  Revenues from the specialty products business
increased  106% and 169% in 1998 and 1997,  respectively,  primarily  reflecting
growth from existing and new customers.


GROSS MARGINS

         Gross  profit as a  percentage  of revenues  excluding  bulk  shipments
("gross  margin")  was  5.47%,  5.61% and 5.77% in fiscal  1998,  1997 and 1996,
respectively.   These   decreases   primarily   reflect  lower  margins  in  the
pharmaceutical and  medical-surgical  businesses,  as well as a relatively lower
sales  mix  from the  higher-margin  medical-surgical  business.  Pharmaceutical
margins  decreased  principally  due to lower  selling  margins  resulting  from
intense  price  competition  in the  industry,  partially  offset  by  increased
investment  buying  gains in  fiscal  1998.  Medical-surgical  margins  declined
primarily due to a higher sales mix of lower-margin  shipments to the acute care
market.   Specialty   product   margins   improved  due  to  investment   buying
opportunities and the addition of higher-margin products and services.

         In all  of  the  Company's  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 manufacturer 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 gross margins in
fiscal  1999  because  of  continued  price  competition   influenced  by  large
customers.  Management expects that these pressures may be offset to some extent
by an increased sales mix of more profitable products (such as generic drugs and
medical-surgical supplies) and services and continued reduction of distribution,
selling,  general and  administrative  expenses as a percentage of revenues,  as
described  below.



                                     II - 5

<PAGE>


DISTRIBUTION, SELLING, GENERAL & ADMINISTRATIVE EXPENSES ("DSG&A")

         DSG&A as a percentage of revenues  excluding  bulk shipments was 3.89%,
4.11% and 4.21% in fiscal 1998,  1997 and 1996,  respectively.  These  decreases
were  primarily   attributable  to  continued  operating  efficiencies  and  the
spreading of fixed costs over a larger  revenue  base.  Through such measures as
consolidation  of  distribution  centers,  installation  of automated  warehouse
equipment,   and   investments   in   information   technology,   the  Company's
infrastructure   has  been  able  to  process   increasing   volume   without  a
proportionate  increase in DSG&A.  Also  contributing  to the  decrease in DSG&A
percentage  in  fiscal  1998 was the  lower  sales  mix of the  medical-surgical
business, which incurs relatively higher DSG&A per revenue dollar.


SPECIAL CHARGES

         Following is a summary of the special  charges  incurred by the Company
in the last two fiscal years:

<TABLE>
<CAPTION>

                                                              Years Ended September 30,
                                                              -------------------------
         in millions except per share amounts                       1998       1997
         ------------------------------------------------------------------------------
         <S>                                                  <C>            <C>     
         Goodwill writedown                                     $   (87.3)   $      -
         Restructuring expenses                                      (3.0)          -
         Abandoned capitalized software                              (5.3)          -
         Merger-related expenses                                    (14.6)       (5.8)
                                                                ----------------------

              Total special charges                                (110.2)       (5.8)
         Tax effect of special charges                                9.4         2.4
                                                                ---------------------

              Effect on net earnings                            $  (100.8)   $   (3.4)
                                                                ======================

                    Effect on diluted earnings per share        $   (0.98)   $  (0.03)
                                                                ======================
</TABLE>


         During fiscal 1998,  the Company  recorded a special  non-cash  pre-tax
charge of $87.3 million for the writedown of Bergen Brunswig Medical Corporation
("BBMC") goodwill related to certain  acquisitions made prior to September 1995,
resulting from a realized  impairment to the carrying value of BBMC's long-lived
assets.  In addition to the goodwill  writedown,  the Company recorded a pre-tax
charge of $3.0 million for BBMC restructuring expenses which represent severance
costs  associated with  streamlining  and refocusing the sales  organization and
costs associated with the consolidation of four divisions to improve  efficiency
and customer service.  Other special charges recorded during fiscal 1998 include
a non-cash pre-tax charge of $5.3 million related to the



                                     II - 6

<PAGE>


abandonment of capitalized software as a result of technology improvements;  and
a pre-tax charge of $14.6 million related  primarily to the proposed merger with
Cardinal Health,  Inc.  ("Cardinal") which was terminated on August 7, 1998 (see
Note 13 of the accompanying Notes to Consolidated Financial Statements).

         During  fiscal  1997,  the  Company  recorded a pre-tax  charge of $5.8
million for expenses related to the proposed merger with IVAX Corporation  which
was terminated on March 20, 1997.


OTHER INCOME STATEMENT LINE ITEMS

         Net interest expense increased $9.2 million, or 30%, in fiscal 1998 and
$0.6  million,  or 2%, in fiscal 1997.  The fiscal 1998  increase  resulted from
increased borrowings under the Credit Agreement,  principally for funding higher
investments in inventory in order to (a) support the  significant  growth in the
Company's  revenues and (b) to take  advantage of  increased  investment  buying
opportunities.

         Taxes on income were approximately 95%, 41% and 41% of pre-tax earnings
in fiscal 1998,  1997 and 1996,  respectively.  The relatively  high fiscal 1998
rate reflects the nondeductible  writedown of goodwill  described under "Special
Charges" above. Excluding this writedown, the effective tax rate for fiscal 1998
was 41%.

         Earnings per share  fluctuations  primarily  result from changes in the
Company's net earnings.  Due primarily to the exercise of stock  options,  there
was a 1% increase in the weighted  average number of shares  outstanding for the
diluted earnings per share calculations in each of fiscal 1998 and 1997.






                                     II - 7

<PAGE>




         LIQUIDITY AND CAPITAL RESOURCES
         -------------------------------

         Following is a summary of the  Company's  capitalization  at the end of
each of the last three  fiscal  years.  Except that debt is net of cash  herein,
these  percentages  are calculated in accordance with the covenants set forth in
the Company's Credit  Agreement,  in which certain non-cash charges are excluded
from the calculation:
<TABLE>
<CAPTION>
                                                September 30,
                                      --------------------------------
                                      1998          1997          1996
         -----------------------------------------------------------------------
         <S>                          <C>           <C>           <C>
         Debt, net of cash             34%           36%           39%
         Equity                        66%           64%           61%
</TABLE>

         The  Company's  Credit  Agreement  with a group of domestic and foreign
banks is effective through March 2001 and provides for maximum  borrowings of up
to $400 million plus additional  borrowings under discretionary lines outside of
the Credit Agreement. Outstanding borrowings at September 30, 1998 and 1997 were
$170 and $140 million,  respectively.  See Note 2 of the  accompanying  Notes to
Consolidated Financial Statements for further information.

         The Company filed a shelf  registration  statement  with the Securities
and Exchange  Commission  ("SEC") which became  effective on March 27, 1996. The
registration  statement allows the Company to sell senior and subordinated  debt
or equity  securities to the public from time to time up to an aggregate maximum
principal  amount of $400 million.  The Company  intends to use the net proceeds
from the sale of any such securities for general corporate  purposes,  which may
include, without limitation, the repayment of indebtedness of the Company or any
of its subsidiaries,  possible  acquisitions,  capital  expenditures and working
capital  requirements.  See Note 2 of the  accompanying  Notes  to  Consolidated
Financial Statements for further information.  To date, the Company has not sold
any securities pursuant to this shelf registration statement.

         On September  24, 1998,  the Company  declared a 2-for-1 stock split on
the Company's Class A Common Stock ("Common Stock"),  which was paid on December
1, 1998 to  shareholders  of record on November 2, 1998.  All per share  amounts
presented herein have been restated to reflect the effect of this stock split.

         Dividends per share declared on Common Stock  amounted to $.315,  $.216
and $.192 per share in fiscal 1998, 1997 and 1996,  respectively.  However,  the
fiscal 1998 amount  includes the $.075 per share  quarterly  dividend  which was
declared  on  September  24,  1998  but  not  paid  until  December  1,  1998 to
shareholders of record on November 2, 1998. This $.075 constituted the Company's
fiscal 1999 first quarter dividend;  the declaration was made earlier than usual
in order to coincide with the announcement of the  aforementioned  2-for-1 stock
split.  Although the Company does not have a policy requiring the payment of any




                                     II - 8

<PAGE>


specified  levels  of  dividends,   the  Company's   dividends   (excluding  the
aforementioned  $.075) have averaged  approximately  25% of net earnings  before
special charges for the three-year period ended September 30, 1998.

         The Company's  cash flows during the past three years are summarized in
the following table:

<TABLE>
<CAPTION>

         (in millions)                              1998          1997       1996
         ---------------------------------------------------------------------------
         <S>                                       <C>          <C>          <C>    
         Net earnings after non-cash charges       $ 191.0      $ 146.8      $ 131.4
         Increases in non-cash
           assets and liabilities                   (120.8)       (72.4)        (3.2)
                                                 -----------------------------------

         Cash flows from operations                   70.2         74.4        128.2
         Capital expenditures                        (29.8)       (23.8)       (16.7)
         Acquisition of businesses                   (22.6)         -           (6.0)
         Net proceeds (repayments) of debt            27.5         16.0       (143.1)
         Cash dividends                              (24.2)       (21.7)       (19.2)
         Other - net                                   3.4        (11.8)        13.8
                                                 -----------------------------------

         Net increase (decrease) in cash           $  24.5      $  33.1      $ (43.0)
                                                 ===================================
</TABLE>

         During  the past  three  years,  cash  flow  from  operations  has been
adequate to fund  working  capital  increases,  capital  expenditures,  business
acquisitions    and   dividend    payments.    The   Company    believes    that
internally-generated  cash flow, funds available under the Credit Agreement, 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 materially from this forward-looking  statement as a result
of  unanticipated  capital  requirements  or an  inability to access the capital
markets on acceptable terms when, and, if necessary.

         Working capital  increased to $591.4 million at September 30, 1998 from
$531.2  million  at  September  30,  1997,  primarily  as  a  result  of  higher
receivables  and inventory  balances  supporting an 18% growth in revenues.  The
current  ratio  decreased  slightly to 1.31 at  September  30, 1998 from 1.33 at
September  30,  1997.  Trade  receivables  outstanding,  net of customer  credit
balances,  were 16 days during fiscal 1998 and 15 days during  fiscal 1997.  The
inventory  turnover rate on a first-in,  first-out  ("FIFO") basis was 7.2 times
during fiscal 1998 and 7.7 times during fiscal 1997.

         Capital  expenditures  for fiscal 1998 and 1997 related  principally to
additional  investments in existing  locations as well as purchases of automated
warehousing and data processing equipment.



                                     II - 9

<PAGE>


         BUSINESS ACQUISITIONS
         ---------------------

         During fiscal 1998, the Company  completed four business  acquisitions.
Besse Medical Services, Inc., an Ohio-based distributor of injectables and other
products,  was acquired for  approximately  $22 million in cash in January 1998.
Pacific  Criticare,   Inc.,  a  Hawaii-based   distributor  of  medical-surgical
supplies, was acquired for approximately $4 million in cash in May 1998. Both of
these  acquisitions were accounted for by the purchase method. The Lash Group, a
Washington,  D.C.-based healthcare  reimbursement  consulting firm, was acquired
for  approximately  980,000 shares of the Company's Common Stock in August 1998.
Ransdell Surgical,  a medical-surgical  supply  distributor,  and its affiliate,
Choice Systems,  Inc., a developer of healthcare  management  software,  both of
which are  headquartered in Kentucky,  were acquired for  approximately  716,000
shares of the Company's Common Stock in September 1998. These  acquisitions were
accounted for by the pooling of interests  method.  The aggregate  effect of all
four   acquisitions  did  not  have  a  significant   impact  on  the  Company's
consolidated  results of operations  and financial  position in fiscal 1998. See
Note 4 of the  accompanying  Notes  to  Consolidated  Financial  Statements  for
further information.

         Subsequent to September 30, 1998, the Company  entered into  agreements
for several business  combinations  which are expected to be consummated  during
the first half of fiscal 1999.

         On November 25, 1998,  the Company  signed an agreement to acquire 100%
of the capital stock of J.M.Blanco,  Inc. ("J.M. Blanco"), Puerto Rico's largest
pharma-ceutical  distributor,  headquartered in Guaynabo, Puerto Rico. Under the
terms of the agreement,  the Company would pay approximately $24 million in cash
and assume approximately $27 million in debt.

         On November  19,  1998,  the  Company  signed an  agreement  to acquire
substantially  all of the  business,  assets  and  property,  subject to certain
liabilities,   of  Medical   Initiatives,   Inc.   ("MII"),   a  pre-filler   of
pharmaceuticals for oncology centers, located in Tampa, Florida. Under the terms
of the agreement,  the Company would issue  approximately  227,000 shares of the
Company's Common Stock.

         On November 8, 1998, the Company signed a definitive purchase agreement
to  acquire  Stadtlander  Drug  Co.  Inc.   ("Stadtlander"),   headquartered  in
Pittsburgh,  Pennsylvania, a national leader in disease-specific  pharmaceutical
care  delivery for  transplant,  HIV,  infertility  and serious  mental  illness
patient  populations  and a  leading  provider  of  pharmaceutical  care  to the
privatized  corrections  market.  Under the terms of the agreement,  the Company
would pay  approximately  $178 million in cash,  issue  approximately  6,000,000
shares of its Common Stock and assume approximately $100 million in debt.

         Consummation of the J.M. Blanco, MII and Stadtlander  transactions,  to
be accounted for as purchases for financial reporting  purposes,  are subject to





                                    II - 10
<PAGE>


certain conditions,  including the receipt of regulatory approvals. The purchase
prices of these  acquisitions  are subject to  adjustments  after  completion of
acquisition audits. The MII acquisition is expected to be completed in the first
quarter of fiscal 1999,  while the J.M. Blanco and Stadtlander  acquisitions are
expected to be completed in the second quarter of fiscal 1999.  The J.M.  Blanco
acquisition and the cash portion of the Stadtlander acquisition will be financed
from borrowings under the Credit Agreement and other bank borrowings.


         TERMINATED MERGER
         -----------------

         On August 23, 1997,  the Company signed a definitive  merger  agreement
with Cardinal,  a distributor of  pharmaceuticals  and a provider of value-added
pharmaceutical-related  services,  headquartered  in  Dublin,  Ohio.  The merger
agreement called for the Company to become a wholly-owned subsidiary of Cardinal
and for shareowners of the Company to receive Cardinal Common Shares in exchange
for shares of the Company's  Common Stock.  On July 31, 1998,  the United States
District  Court  for  the  District  of  Columbia   granted  the  Federal  Trade
Commission's  request for a preliminary  injunction to halt the proposed merger.
On August 7, 1998,  the  Company  and  Cardinal  jointly  terminated  the merger
agreement.  As mentioned  under "Special  Charges" above,  the Company  recorded
approximately  $14 million in pre-tax  charges  during  fiscal 1998  relating to
legal fees and other expenses incurred in connection with the terminated merger,
net of a $7 million reimbursement received from Cardinal.


         YEAR 2000 READINESS DISCLOSURE
         ------------------------------

         The Year 2000 problem results from computer  programs and devices which
do not  differentiate  between the year 1900 and the year 2000 because they were
written  using  two  digits  rather  than four to define  the  applicable  year;
accordingly,  computer  systems that have  date-sensitive  calculations  may not
properly  recognize the year 2000.  This  situation may cause systems to process
critical financial and operational  information incorrectly or not at all, which
would result in significant disruptions of the Company's business activities.

         Since the Company relies heavily on computer technology  throughout its
businesses  to  effectively  carry out its  day-to-day  operations,  it has made
resolution  of the Year 2000 problem a major  corporate  initiative.  In October
1996, the Company  established a central office to direct its  companywide  Year
2000 efforts for all of its business,  including BBDC, BBMC and BBSC. A steering
committee  comprised of several executive officers provides top-level  oversight
for the  program.  Both  internal  and  external  resources  are  being  used to
identify, correct and test the Company's systems for Year 2000 compliance.






                                    II - 11
<PAGE>


         The Company's Year 2000 program  addresses both information  technology
("IT")  and  non-IT  systems.  The  Company's  business  applications  reside on
mainframe,   midrange   and  desktop   computer   systems.   The   Company's  IT
infrastructure  is  comprised of hardware,  internally-developed  software,  and
software  purchased from external vendors.  The Company's non-IT systems include
equipment  which  uses  date-sensitive  embedded  technology.  Principal  non-IT
systems include  telecommunications  equipment,  certain  facilities  functions,
automated  warehouse  equipment,  and  hand-held  order entry  devices which the
Company has provided to its customers.

         The  Company has  divided  its Year 2000  program by business  unit and
functional area into numerous  individual  projects in order to provide detailed
management for each at-risk  system.  The Company's  approach is to address each
Year 2000 project in the  following  phases:  inventory,  assessment,  planning,
renovation,  testing and  certification.  For BBDC,  renovation  of all critical
systems and the  majority of other  systems  will be  completed  by December 31,
1998.  Certain  systems  have  already  been tested and  certified  as Year 2000
compliant,  and the Company expects testing and  certification  of substantially
all  remaining  systems to be  completed  by June 30,  1999.  By that date,  the
Company also plans to complete a comprehensive  enterprise  integration  testing
program.  During the latter half of calendar 1999, the Company  expects there to
be a relatively limited amount of effort required to complete the renovation and
testing of certain non-IT systems.

         BBMC and BBSC are comprised of a number of entities acquired during the
last several years.  Although some of the computer systems within these entities
are Year 2000 complaint,  certain significant computer systems are not Year 2000
compliant. Certain of the non-compliant systems will be remediated for Year 2000
compliance  while the  remainder  will be  replaced  with  Year  2000  compliant
systems.  It is expected that all of BBMC's and BBSC's systems will be Year 2000
compliant by October 1999, including testing and certification.

         The Company also  recognizes that it would be at risk if its suppliers,
customers,  banks,  utilities,   transportation  companies  and  other  business
partners  fail to  properly  remediate  their Year 2000  systems  and  software.
Accordingly, during calendar 1998 the Company began the process of communicating
with such entities through questionnaires and other means in order to assess the
status of their  remediation  efforts.  During early  calendar 1999, the Company
will meet with major business  partners to discuss  progress and  contingencies,
conduct on-site assessments,  and test critical electronic interfaces.  Although
the Company is not aware of any significant Year 2000 problems with any of these
third parties, there can be no assurances that their systems or software will be
remediated in a timely  manner,  or that a remediation  failure would not have a
material  adverse  effect  on  the  Company's  financial  position,  results  of
operations, or cash flows.

         The Company is also subject to risk should government or private payors
and insurers fail to become Year 2000  compliant and therefore be unable to make
full or timely reimbursement to the Company's customers.  Such a situation could





                                    II - 12
<PAGE>


have a material  adverse  affect on the  Company's  cash flows by  reducing  the
ability of customers to pay for products purchased from the Company.

         The Company is charging the cost of its Year 2000 program to expense as
incurred,  except for purchases of computer hardware and other equipment,  which
are  capitalized  as property and  depreciated  over the  equipment's  estimated
useful  lives in  accordance  with the  Company's  normal  accounting  policies.
Through September 30, 1998, total Year 2000 costs have amounted to approximately
$6.5 million, of which $5.0 million was incurred in fiscal 1998 and $1.5 million
was  incurred  in  fiscal  1997.  Remaining  expenditures  are  expected  to  be
approximately  $13.5  million  (including  $5.5  million of  hardware  and other
equipment),  of which $12.0  million is planned for fiscal 1999 and $1.5 million
is  planned  for fiscal  2000.  The  aforementioned  amounts  exclude  the costs
associated with new BBMC and BBSC systems which are being installed primarily to
integrate   operations   and   achieve   additional    information    technology
functionality. The Year 2000 remediation effort has not had a material impact on
the Company's daily operations or the development of its information  technology
systems.  Although the aforementioned  cost estimates reflect  management's best
judgment using current  information  and  assumptions  about the future,  actual
costs  could  vary   significantly   from  the  Company's   estimates,   due  to
technological  difficulties,  the  noncompliance  of IT vendors  or other  third
parties, the Year 2000 readiness of companies acquired by the Company subsequent
to September 30, 1998 and by entities that communicate with such companies,  and
other factors.

         While the Company is not presently  aware of any  significant  exposure
that its systems and software will not be properly remediated on a timely basis,
there can be no  assurances  that all Year 2000  remediation  processes  will be
completed  and  tested  before  January  1, 2000 or that the  contingency  plans
described  below will  sufficiently  mitigate the risk of a Year 2000 compliance
problem.  If Year 2000  remediation  efforts by the Company or third parties are
unsuccessful,  there could be a significant disruption of the Company's business
operations,  which  could  have a  material  adverse  effect  on  the  Company's
financial position, results of operations, or cash flows.

         The  Company  is in the  process  of  identifying  the major  potential
failure  points  and the  related  adverse  consequences  associated  with them,
including "a reasonably worst-case  scenario".  Once these risks are identified,
the Company will develop contingency plans for conducting its business until the
problems  can be  corrected.  For example,  such plans will include  alternative
electronic  or manual  means of  receiving,  processing  and  shipping  customer
orders,  purchasing  inventory  from  suppliers,  and sending and receiving cash
payments.  It is  anticipated  that  contingency  plans  will  be  substantially
completed by May 1999,  although  there will be  continuing  follow-up  activity
later in calendar 1999 as January 1, 2000 approaches.

         The  foregoing  discussion  concerning  the Year 2000 problem  contains
forward-looking  statements  that involve risks and  uncertainties  (referred to
above and in  Exhibit  99(a) to this  Annual  Report)  that could  cause  actual





                                    II - 13
<PAGE>


results to differ materially from such statements. Although the Company believes
that  minimal  business  disruption  will occur as a result of Year 2000 issues,
there is no assurance that all Year 2000 problems will be remediated in a timely
manner by the Company or third  parties and that any such failures will not have
a  material  adverse  impact on the  Company's  financial  position,  results of
operations or cash flows.


         NEW ACCOUNTING PRONOUNCEMENTS
         -----------------------------

         In fiscal 1999 and fiscal 2000,  the Company plans to adopt several new
accounting pronouncements issued by The Financial Accounting Standards Board and
the  American  Institute  of  Certified  Public   Accountants.   None  of  these
pronouncements  are  expected  to have a  significant  impact  on the  Company's
reported  financial  position  or  results  of  operations.  See  Note  1 of the
accompanying Notes to Consolidated Financial Statements for further information.






ITEM 7a.  QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT
          MARKET RISK


         The Company's  major  "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 September  30, 1998,  the  Company's  debt
consisted  of  approximately  $278  million of  fixed-rate  debt with a weighted
average  interest  rate of 7.29% and $170 million of  variable-rate  debt with a
weighted  average  interest  rate of 6.02%.  The  amount of  variable-rate  debt
fluctuates  during the year based on the Company's  cash  requirements;  maximum
borrowings at any quarter end during fiscal 1998 were $368 million.  If interest
rates on such  variable  debt were to increase by 60 basis points  (one-tenth of
the rate at September  30,  1998),  the net impact on the  Company's  results of
operations and cash flows would be immaterial.













                                    II - 14
<PAGE>

<TABLE>
Item 8.     FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

          a.     Supplementary Data
<CAPTION>
SELECTED QUARTERLY RESULTS (unaudited)

Dollars in thousands, except for per share amounts
================================================================================================================================
                                                    First         Second           Third             Fourth            Fiscal
Year Ended September 30, 1998                      Quarter        Quarter          Quarter           Quarter            Year
================================================================================================================================
<S>                                        <C>                <C>            <C>             <C>                 <C>
Net sales and other revenues:
  Excluding bulk shipments to
     customers' warehouses                        $3,168,431   $ 3,372,236      $ 3,513,184       $ 3,666,166        $13,720,017
  Bulk shipments to customers' warehouses            727,744       748,947          946,420           978,540          3,401,651
                                                  ------------------------------------------------------------------------------
      Total net sales and other revenues           3,896,175     4,121,183        4,459,604         4,644,706         17,121,668

Gross margin                                         170,671       190,800          188,983           199,811            750,265
Net earnings (loss)                                   21,337        18,808(c)        27,180           (64,223)(d)          3,102

Earnings (loss) per share - diluted (a)(b)              0.21          0.18(c)          0.26             (0.63)(d)           0.03
Cash dividends declared per Class A
   Common share (a)                                    0.060         0.060            0.060             0.135 (e)          0.315

Market prices per Class A
   Common share (a)                        $23 1/16-18 13/16   $ 26 1/8-19      $25-20 1/16  $31 1/8-16 13/16    $31 1/8-16 13/16


Year Ended September 30, 1997
=================================================================================================================================
Net sales and other revenues:
  Excluding bulk shipments to
     customers' warehouses                        $2,821,946    $2,890,026      $ 2,927,473        $3,019,682        $11,659,127
  Bulk shipments to customers' warehouses            756,254       583,894          680,141           817,357          2,837,646
                                                  ------------------------------------------------------------------------------
      Total net sales and other revenues           3,578,200     3,473,920        3,607,614         3,837,039         14,496,773

Gross margin                                         153,976       169,664          158,981           171,810            654,431
Net earnings                                          18,178        20,505(f)        22,224            20,772             81,679

Earnings per share- diluted (a)(b)                      0.18          0.20(f)          0.22              0.20               0.81
Cash dividends declared per Class A
   Common share (a)                                    0.048         0.048            0.060             0.060              0.216

Market prices per Class A Common share (a)   $13 3/16-10 3/8   $13 5/16-11   $15 1/2-11 1/4   $22 7/8-14 1/16     $22 7/8-10 3/8

================================================================================================================================
<FN>
(a)  Gives effect to the 2-for-1 stock split declared September 24, 1998 and paid December 1, 1998.
(b)  Sum of quarterly EPS does not equal the EPS for the year. Fourth quarter 1998 computation is anti-dilutive.
(c)  Includes provision for merger expenses of $9.8 million, no income tax effect.
(d)  Includes  provisions for writedown of goodwill of $87.3 million,  no income tax effect;  merger expenses of $(1.2) million,
     net of income tax benefit of $6.0 million;  abandonment of capitalized  software of $3.1 million, net of income tax benefit
     of $2.2 million; and restructuring expenses of $1.8 million, net of income tax benefit of $1.2 million.
(e)  Includes $0.075 per share declared September 24, 1998 and paid December 1, 1998. See Management's  Discussion and Analysis
     of Financial Consolidation and Results of Operation.
(f)  Includes  provision  for merger  expenses  of $3.4  million,  net of income tax  benefit of $2.4  million,  relating to the
     termination of the proposed IVAX merger.

     Bergen Brunswig  Corporation Class A Common Stock is listed on the New York Stock Exchange.  There were approximately 2,100
     Class A Common Stock shareowners of record on September 30, 1998.
</FN>



                                                               II - 15
</TABLE>

<PAGE>
<TABLE>
          b.     Financial Statements

STATEMENTS OF CONSOLIDATED EARNINGS

<CAPTION>
Dollars in thousands, except for per share amounts
===================================================================================================
Years Ended September 30,                                 1998           1997              1996
===================================================================================================
<S>                                                       <C>            <C>            <C>        
Consolidated Earnings:

Net sales and other revenues:
 Excluding bulk shipments to customers' warehouses        $13,720,017    $11,659,127    $ 9,941,633
 Bulk shipments to customers' warehouses                    3,401,651      2,837,646      2,476,110
                                                        -------------------------------------------
    Total net sales and other revenues                     17,121,668     14,496,773     12,417,743
                                                        -------------------------------------------
Costs and expenses:
  Cost of sales                                            16,371,403     13,842,342     11,843,939
  Distribution, selling, general and
    administrative expenses                                   534,119        479,399        418,364
  Special charges                                             110,247          5,800              -
                                                        -------------------------------------------
    Total costs and expenses                               17,015,769     14,327,541     12,262,303
                                                        -------------------------------------------
Operating earnings                                            105,899        169,232        155,440
Net interest expense                                           39,996         30,793         30,170
                                                        -------------------------------------------
Earnings before taxes on income                                65,903        138,439        125,270
Taxes on income                                                62,801         56,760         51,737
                                                        -------------------------------------------
Net earnings                                              $     3,102    $    81,679    $    73,533
                                                        ===========================================

Earnings per share:
     Basic                                                $      0.03    $      0.81    $      0.74
                                                        ===========================================
     Diluted                                              $      0.03    $      0.81    $      0.73
                                                        ===========================================

Weighted average number of shares outstanding:
     Basic                                                    101,118        100,413         99,948
                                                        ===========================================
     Diluted                                                  102,620        101,429        100,648
                                                        ===========================================

===================================================================================================
<FN>
See accompanying Notes to Consolidated Financial Statements.
</FN>

                                          II - 16
</TABLE>

<PAGE>
<TABLE>
CONSOLIDATED BALANCE SHEETS

<CAPTION>
Dollars in thousands
====================================================================================================

September 30,                                                             1998              1997
====================================================================================================
<S>                                                                    <C>               <C>       
ASSETS
Current assets:
  Cash and cash equivalents                                            $    79,004       $    54,494
  Short-term investments                                                         -             2,786
  Accounts and notes receivable, less allowance for
    doubtful receivables: 1998, $30,363; 1997, $29,022                     920,247           772,342
  Inventories                                                            1,458,290         1,309,359
  Income taxes receivable                                                   38,371             6,628
  Prepaid expenses                                                           4,876             9,866
                                                                     -------------------------------
      Total current assets                                               2,500,788         2,155,475
                                                                     -------------------------------



Property - at cost:
  Land                                                                      12,427            12,602
  Buildings and leasehold improvements                                      88,055            83,829
  Equipment and fixtures                                                   186,077           173,875
                                                                     -------------------------------
    Total property                                                         286,559           270,306
  Less accumulated depreciation and amortization                           141,745           131,944
                                                                     -------------------------------
      Property - net                                                       144,814           138,362
                                                                     -------------------------------



Other assets:
  Goodwill - net                                                           253,568           329,100
  Other investments                                                          8,851             5,895
  Noncurrent receivables                                                    19,176            12,651
  Deferred income taxes                                                      7,352                 -
  Deferred charges and other assets                                         68,663            65,640
                                                                     -------------------------------
      Total other assets                                                   357,610           413,286
                                                                     -------------------------------
      Total assets                                                      $3,003,212        $2,707,123
                                                                     ===============================

====================================================================================================
<FN>
See accompanying Notes to Consolidated Financial Statements.
</FN>

                                              II - 17
</TABLE>

<PAGE>
<TABLE>
CONSOLIDATED BALANCE SHEETS

<CAPTION>
Dollars in thousands
====================================================================================================

September 30,                                                             1998              1997
====================================================================================================
<S>                                                                    <C>               <C>       
LIABILITIES AND SHAREOWNERS' EQUITY

Current liabilities:
  Accounts payable                                                     $1,579,332        $1,336,070
  Accrued liabilities                                                     113,331            82,070
  Customer credit balances                                                137,832           176,864
  Deferred income taxes                                                    72,846            28,281
  Current portion of long-term obligations                                  6,029             1,021
                                                                     -------------------------------
      Total current liabilities                                         1,909,370         1,624,306
                                                                     -------------------------------
Long-term obligations:
  7 3/8% senior notes                                                     149,522           149,411
  7 1/4% senior notes                                                      99,767            99,732
  Revolving bank loan payable                                             170,000           140,000
  7% convertible subordinated debentures                                   20,609            20,609
  6 7/8% exchangeable subordinated debentures                               8,425             8,425
  Deferred income taxes                                                         -             1,791
  Other                                                                    16,455            17,988
                                                                     -------------------------------
    Total long-term obligations                                           464,778           437,956
                                                                     -------------------------------
Shareowners' equity:
  Capital stock:
    Preferred - Authorized: 3,000,000 shares; issued: none                      -                 -
    Class A Common - Authorized: 200,000,000 shares;
      issued: 1998, 111,835,142 shares; 1997, 111,740,366 shares          167,753           167,611
  Paid-in capital                                                          80,231            72,555
  Net unrealized (loss) gain on investments, net of income taxes             (132)              409
  Retained earnings                                                       453,654           492,565
                                                                     -------------------------------
      Total                                                               701,506           733,140
  Treasury shares, at cost: 1998, 8,952,812 shares;
      1997, 10,909,966 shares                                             (72,442)          (88,279)
                                                                     -------------------------------
      Total shareowners' equity                                           629,064           644,861
                                                                     -------------------------------
      Total liabilities and shareowners' equity                        $3,003,212        $2,707,123
                                                                     ===============================

====================================================================================================
<FN>
See accompanying Notes to Consolidated Financial Statements.
</FN>

                                              II - 18
</TABLE>

<PAGE>
<TABLE>
STATEMENTS OF CONSOLIDATED SHAREOWNERS' EQUITY

<CAPTION>
====================================================================================================================================
                                              Class A Common                               Treasury Shares                 Total
                                           --------------------   Paid-in    Retained    --------------------           Shareowners'
Dollars And Shares In Thousands              Shares     Amount    Capital    Earnings     Shares      Amount     Other     Equity
====================================================================================================================================
<S>                                        <C>         <C>        <C>        <C>         <C>         <C>         <C>      <C>     
Balance, September 30, 1995
 as previously reported                       55,229   $ 82,843   $146,507   $ 378,229     (5,443)   $(87,911)   $(319)   $519,349
1998 2-for-1 Class A Common Stock split       55,229     82,843    (82,843)                (5,443)                               -
                                           ----------------------------------------------------------------------------------------
Balance, September 30, 1995 as adjusted      110,458    165,686     63,664     378,229    (10,886)    (87,911)    (319)    519,349
Net earnings                                       -          -          -      73,533          -           -        -      73,533
Exercise of stock options                        584        877      3,707           -          -           -        -       4,584
Cash dividends declared, $0.192 per share          -          -          -     (19,182)         -           -        -     (19,182)
Change in net unrealized loss on
 investments, net of income tax                    -          -          -           -          -           -      682         682
                                           ----------------------------------------------------------------------------------------
Balance, September 30, 1996                  111,042    166,563     67,371     432,580    (10,886)    (87,911)     363     578,966
Net earnings                                       -          -          -      81,679          -           -        -      81,679
Exercise of stock options                        688      1,032      5,086           -        (22)       (332)       -       5,786
Cash dividends declared, $0.216 per share          -          -          -     (21,694)         -           -        -     (21,694)
Change in net unrealized gain on
 investments, net of income tax                    -          -          -           -          -           -       46          46
Acquisition of Treasury shares                     -          -          -           -          -         (36)       -         (36)
Other                                             10         16         98           -         (2)          -        -         114
                                           ----------------------------------------------------------------------------------------
Balance, September 30, 1997                  111,740    167,611     72,555     492,565    (10,910)    (88,279)     409     644,861
Net earnings                                       -          -          -       3,102          -           -        -       3,102
Exercise of stock options                         95        142      2,087                    261       2,110                4,339
Cash dividends declared, $0.315 per share          -          -          -     (31,939)         -           -        -     (31,939)
Change in net unrealized gain on
 investments, net of income tax                    -          -          -           -          -           -     (541)       (541)
Acquisition of businesses                          -          -      5,589     (10,074)     1,696      13,727        -       9,242
                                           ----------------------------------------------------------------------------------------
Balance, September 30, 1998                  111,835   $167,753   $ 80,231   $ 453,654     (8,953)   $(72,442)   $(132)   $629,064
                                           =========================================================================================

====================================================================================================================================
<FN>
See accompanying Notes to Consolidated Financial Statements.
</FN>

                                                                            II - 19
</TABLE>

<PAGE>
<TABLE>
STATEMENTS OF CONSOLIDATED CASH FLOWS

<CAPTION>
Dollars in thousands
===========================================================================================================

Years Ended September 30,                                             1998          1997         1996
===========================================================================================================
<S>                                                                  <C>         <C>           <C>        
OPERATING ACTIVITIES
Net earnings                                                         $    3,102  $    81,679   $    73,533
Adjustments to reconcile net earnings to net cash flows
  from operating activities:
    Provision for doubtful receivables                                   11,934       11,899         8,213
    Depreciation and amortization of property                            23,995       26,919        25,183
    Loss (gain) on dispositions of property                               1,214         (382)           12
    Amortization of  intangible assets                                   13,470       13,837        13,203
    Writedown of goodwill                                                87,271            -             -
    Abandonment of capitalized software                                   5,307            -             -
    Deferred compensation                                                 2,809        2,266         2,242
    Deferred income taxes                                                41,955       10,577         9,070
    Effects of changes, net of acquisitions:
      Receivables                                                      (153,505)    (103,814)      (76,926)
      Inventories                                                      (139,209)     (88,384)      (60,699)
      Income taxes receivable                                           (31,663)       7,287        (9,114)
      Prepaid expenses and other assets                                 (11,886)      (8,043)       (5,985)
      Accounts payable                                                  231,282       86,903       108,701
      Accrued liabilities                                                23,207       (9,935)        2,252
      Customer credit balances                                          (39,050)      43,582        38,516
                                                                 ------------------------------------------
        Net cash flows from operating activities                         70,233       74,391       128,201
                                                                 ------------------------------------------
Investing Activities
Property acquisitions                                                   (29,783)     (23,806)      (16,696)
Proceeds from dispositions of property                                       79        1,634         1,833
Purchases of other investments                                           (1,055)      (3,447)         (327)
Acquisition of businesses, less cash acquired                           (22,578)           -        (5,999)
Repurchase (proceeds from sale) of notes receivable
  with recourse                                                               -      (15,884)        7,712
                                                                 ------------------------------------------
        Net cash flows from investing activities                        (53,337)     (41,503)      (13,477)
                                                                 ------------------------------------------
FINANCING ACTIVITIES
Net revolving bank loan activity                                         30,000       20,000       (39,000)
Repayment of senior notes                                                     -            -      (100,000)
Repayment of other obligations                                           (2,502)      (3,972)       (5,020)
Increase in other obligations                                                 -            -           902
Shareowners' equity transactions:
  Exercise of stock options                                               4,339        5,786         4,584
  Cash dividends paid on Common Stock                                   (24,223)     (21,694)      (19,182)
  Other                                                                       -           78             -
                                                                 ------------------------------------------
        Net cash flows from financing activities                          7,614          198      (157,716)
                                                                 ------------------------------------------
Net increase (decrease) in cash and cash equivalents                     24,510       33,086       (42,992)
Cash and cash equivalents at beginning of year                           54,494       21,408        64,400
                                                                 ------------------------------------------
Cash and cash equivalents at end of year                            $    79,004  $    54,494   $    21,408
                                                                 ==========================================


SUPPLEMENTAL CASH FLOW DISCLOSURES
Cash paid for:
  Interest                                                          $    37,823  $    32,061   $    31,317
  Income taxes, net of refunds                                           61,731       50,715        51,077
===========================================================================================================
<FN>
See accompanying Notes to Consolidated Financial Statements.
</FN>


                                                 II - 20
</TABLE>
<PAGE>


NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
------------------------------------------
For the Years Ended  September 30, 1998, 1997, and 1996


1.       Summary of Significant Accounting Policies

         Basis of Presentation

         The consolidated  financial  statements  include the accounts of Bergen
Brunswig Corporation and its subsidiaries (the "Company"),  after elimination of
the effect of intercompany transactions and balances.  Certain reclassifications
have been made in the consolidated  financial statements and notes to conform to
1998 presentations.

         The preparation of the Company's  consolidated  financial statements in
conformity with generally accepted accounting  principles  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.

         Cash Equivalents and Investments

         The Company considers all highly-liquid debt instruments purchased with
an original maturity of three months or less to be cash equivalents.  Short-term
investments  include debt  instruments,  principally  variable rate demand notes
having  maturities  of more than  three  months  but less  than one year.  Other
investments  consist  of equity  securities  and are  classified  as  noncurrent
assets.

         The  Company  has  classified  its   investments  in  debt  and  equity
securities as "available for sale"  securities and has reported such investments
at fair value,  with  unrealized  gains and losses  excluded from earnings,  and
reported as a separate  component of  shareowners'  equity.  Realized  gains and
losses on investments are determined by the specific  identification  method and
are included in net earnings. Such realized gains and losses for the years ended
September 30, 1998, 1997 and 1996 were not material.

         Inventories

         Inventories  are valued at the lower of cost or market,  determined  on
the last-in,  first-out  (LIFO)  method.  If the Company had used the  first-in,
first-out  (FIFO)  method of inventory  valuation,  which  approximates  current
replacement  cost,  inventories  would have been higher than  reported by $132.3
million and $136.4 million at September 30, 1998 and 1997, respectively.




                                    II - 21
<PAGE>


         Property

         Depreciation and amortization of property are computed principally on a
straight-line basis over estimated useful lives. Generally, the estimated useful
lives are 15 to 40 years for buildings and leasehold  improvements,  and 3 to 10
years for equipment and fixtures.

         Intangible Assets

         Goodwill,  defined as the  excess of cost over net  assets of  acquired
companies  (net of  accumulated  amortization  of $67.2 million at September 30,
1998 and $57.3 million at September 30, 1997),  is amortized on a  straight-line
basis  principally over 40 years.  Customer lists,  included in deferred charges
and other  assets  ($5.2  million at  September  30,  1998,  net of  accumulated
amortization  of $21.0  million;  $7.1  million at September  30,  1997,  net of
accumulated  amortization  of $19.1  million),  are amortized on a straight-line
basis  over 15 years.  In fiscal  1998,  the  Company  changed  its  method  for
assessing the  recoverability  of goodwill from an  undiscounted  operating cash
flow analysis to a fair value  approach,  based on discounted  future  operating
cash flows.  Management of the Company believes a fair value approach,  based on
discounted  cash flows,  is  preferable  for  assessing  the  recoverability  of
goodwill.  At least annually,  management reviews intangible assets for possible
impairment  based on several  criteria,  including,  but not limited  to,  sales
trends, discounted operating cash flows and other operating factors. See Note 10
for a charge the  Company  recorded  in fiscal  1998  related to  impairment  of
intangible assets.

         Noncurrent Receivables

         Noncurrent  receivables  include notes  receivable  from  employees and
officers due at the Company's  discretion in the amount of $4.8 million and $4.9
million at September 30, 1998 and 1997, respectively.

         Impairment of Long-Lived Assets

         The Company assesses the impairment of long-lived  assets in accordance
with the Financial  Accounting  Standards Board ("FASB")  Statement of Financial
Accounting  Standards  ("SFAS")  No.  121,  "Accounting  for the  Impairment  of
Long-Lived  Assets and for Long-Lived Assets to be Disposed Of" ("SFAS No. 121")
which requires  impairment losses to be recognized for 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 fair  value of an asset to its
carrying amount.

         Revenue Recognition

         The Company  records  revenues  when product is shipped or services are
provided to its customers.





                                    II - 22
<PAGE>


         Along with other  companies  in its  industry,  the  Company  has begun
reporting 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. All years presented have been
reclassified to reflect the new  presentation  (previously only the gross profit
related to these bulk shipments was reported in revenues;  this gross profit was
not  material  in any year  presented).  During  each of the fiscal  years ended
September  30,  1998,  1997 and 1996,  the Company  made bulk  shipments  to one
customer's  warehouses  which  comprised  approximately  14%  of  the  Company's
consolidated total net sales and other revenues in those years.

         Accounting Pronouncements

         In June 1998, the FASB issued 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.  It 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.

         In February 1998, the FASB issued SFAS No. 132, "Employers' Disclosures
about Pension and Other Postretirement Benefits" ("SFAS 132") which standardizes
the  disclosure  requirements  for  pensions and other  postretirement  benefits
plans.  This new statement  does not change the  measurement  or  recognition of
those plans.

         In June 1997, the FASB issued SFAS No. 131, "Disclosures about Segments
of Enterprise and Related  Information" ("SFAS 131") which requires companies to
define  and  report  financial  and  descriptive  information  on an annual  and
quarterly  basis  about  their  operating  segments.  This  new  statement  also
establishes  standards  for related  disclosures  about  products and  services,
geographic areas and major customers.

         In June 1997,  the FASB issued SFAS No. 130,  "Reporting  Comprehensive
Income" ("SFAS 130") which  establishes  standards for the reporting and display
of  comprehensive  income and its components in financial  statements.  This new
statement  defines  comprehensive  income as "all  changes  in  equity  during a
period, with the exception of stock issuances and dividends."

         SFAS 133 will be adopted in the  Company's  2000 fiscal year,  and SFAS
132, 131 and 130 will be adopted in the Company's  1999 fiscal year as required.
Management  believes  the adoption of these  standards  will not have a material
effect on the Company's consolidated  financial position,  results of operations
or cash flows,  and any effect will generally be limited to the form and content
of its disclosures.





                                    II - 23
<PAGE>


         In March 1998, the American  Institute of Certified Public  Accountants
("AICPA")  issued  Statement  of  Position  98-1,  "Accounting  for the Costs of
Computer  Software  Developed or Obtained for Internal Use" ("SOP 98-1"),  which
the Company plans to adopt in fiscal 1999. This statement  provides guidance for
the  capitalization  and  amortization  of costs  incurred  in  connection  with
software to be used  internally by the Company.  Although the guidance set forth
in SOP 98-1 differs from the  Company's  current  accounting  methods in certain
respects,  management does not expect that adoption of the statement will have a
significant impact on the Company's financial position, results of operations or
cash flows.


2.       Borrowing Arrangements

         The Company's credit agreement (the "Credit Agreement") with a group of
domestic and foreign banks allows for maximum  borrowing up to $400  million,  a
maturity date of March 15, 2001, and borrowing under discretionary  credit lines
("Discretionary Lines") outside of the Credit Agreement.  Borrowings outstanding
under the Credit  Agreement  were $170 million and $140 million at September 30,
1998 and 1997,  respectively.  Weighted  average  interest  rates were 6.02% and
6.60% for borrowings  outstanding at September 30, 1998 and 1997,  respectively.
The maximum outstanding borrowings at any quarter end under the Credit Agreement
including  Discretionary  Lines for the years ended  September 30, 1998 and 1997
were $368 million and $228 million,  respectively. The Credit Agreement has loan
covenants  which  require the Company to maintain  certain  financial  statement
ratios.  The Company was in compliance with all required ratios at September 30,
1998.

         On May 23,  1995,  the Company sold $100  million  aggregate  principal
amount of 7 1/4% Senior Notes due June 1, 2005 (the "7 1/4% Notes").  On January
14, 1993,  the Company sold $150 million  aggregate  principal  amount of 7 3/8%
Senior Notes due January 15, 2003 (the "7 3/8%  Notes").  The 7 1/4% Notes and 7
3/8% Notes are not  redeemable  prior to  maturity  and are not  entitled to any
sinking fund.  Interest on the 7 1/4% Notes is payable  semi-annually  on June 1
and  December  1 of  each  year.  Interest  on  the  7  3/8%  Notes  is  payable
semi-annually  on January 15 and July 15 of each year. The carrying value of the
7 1/4% Notes and 7 3/8% Notes represents gross proceeds plus amortization of the
original issue discount ratably over the life of each issue.

         The Company filed a shelf  registration  statement  with the Securities
and  Exchange  Commission,  which  became  effective  on  March  27,  1996.  The
registration  statement allows the Company to sell senior and subordinated  debt
or equity securities to the public from time to time, up to an aggregate maximum
principal  amount of $400 million.  The Company  intends to use the net proceeds
from the sale of any such securities for general corporate  purposes,  which may
include, without limitation,  the repayment of indebtedness of the Company or of
any of its subsidiaries, possible acquisitions, capital expenditures and working
capital  requirements.  Pending  such  application,  the  net  proceeds  may  be
temporarily  invested in short-term  securities.  No offering has occurred since
the  effective  date  of  the  registration  statement.  Any  offering  of  such
securities shall be made only by means of a prospectus.





                                    II - 24
<PAGE>


         In July 1986, the Company  issued $43.0 million of 6 7/8%  Exchangeable
Subordinated Debentures due July 2011 (the "6 7/8% Debentures") and during March
1990,  $32.1 million  principal amount of the 6 7/8% Debentures was tendered and
purchased  pursuant to an offer from the Company.  Since March 1990, the Company
has redeemed an additional $2.5 million aggregate  principal amount plus accrued
interest. The remaining unredeemed 6 7/8% Debentures receive interest on January
15 and July 15 of each year.

         In connection  with the acquisition of  Durr-Fillauer  Medical Inc. and
subsidiaries  ("Durr") in September  1992, the Company  assumed $69.0 million of
Durr's  7%  Convertible  Subordinated  Debentures  due  March 1,  2006  (the "7%
Debentures").  Since  September  1992,  the Company has redeemed  $48.4  million
aggregate  principal amount plus accrued interest.  The remaining  unredeemed 7%
Debentures receive interest on March 1 and September 1 of each year.

         Scheduled future principal payments of long-term obligations, excluding
deferred  income taxes,  are $6.0 million in fiscal 1999, $1.4 million in fiscal
2000, $171.3 million in fiscal 2001, $1.1 million in fiscal 2002, $150.5 million
in fiscal 2003, and $140.5 million thereafter.


3.       Capital Stock, Paid-in Capital and Stock Options

         The  authorized  capital stock of the Company  consists of  200,000,000
shares of Class A Common Stock,  par value $1.50 per share (the "Common Stock");
and  3,000,000  shares of  Preferred  Stock  without  nominal  or par value (the
"Preferred Stock").

         The Board of  Directors  (the  "Board")  is  authorized  to divide  the
Preferred  Stock into one or more series and to determine  the relative  rights,
preferences and limitations of the shares of any such series.  In addition,  the
Board may give the Preferred Stock (or any series) special, limited, multiple or
no voting rights.

         Subject to the preferences and other rights of the Preferred Stock, the
Common  Stock may receive  stock or cash  dividends as declared by the Board and
each share of Common Stock is entitled to one vote per share at every meeting of
shareowners.  In the event of any liquidation,  dissolution or winding up of the
affairs of the Company,  the holders of the Preferred Stock may be entitled to a
liquidation  preference  as  compared  with the  rights of owners of the  Common
Stock.

         On February 9, 1994,  the Board adopted a Shareowner  Rights Plan which
provides for the issuance of one Preferred  Share  Purchase Right (the "Rights")
for each  outstanding  share of Common  Stock.  The  Rights  are  generally  not
exercisable until 10 days after a person or group  ("Acquiror")  acquires 15% of




                                    II - 25
<PAGE>


the Common  Stock or  announces a tender offer which could result in a person or
group  owning 15% or more of the Common  Stock (an  "Acquisition").  Each Right,
should it become  exercisable,  will entitle the owner to buy 1/100th of a share
of a new series of the Company's  Series A Junior Preferred Stock at an exercise
price of $80.00.

         In the event of an Acquisition  without the approval of the Board, each
Right will  entitle  the owner,  other than an  Acquiror,  to buy at the Rights'
then-current  exercise  price a number of shares of Common  Stock  with a market
value equal to twice the exercise price. In addition,  if, after an Acquisition,
the Company were to be acquired by merger,  shareowners with unexercised  Rights
could  purchase  common stock of the Acquiror with a value of twice the exercise
price of the Rights.  The Board may redeem the Rights for $0.01 per Right at any
time prior to an Acquisition. Unless earlier redeemed, the Rights will expire on
February 18, 2004.

         On September  24, 1998,  the Company  declared a 2-for-1 stock split on
the Company's  Common Stock which was paid on December 1, 1998 to shareowners of
record  on  November  2,  1998.  Share  and per share  amounts  included  in the
accompanying  consolidated  financial  statements  and  notes  are  based on the
increased number of shares giving retroactive effect to the stock split.

         At  September  30,  1998,  there were  outstanding  options to purchase
43,885  shares of Common  Stock,  under a 1983 stock option plan,  at prices per
share not less than the fair market value on the dates the options were granted.
No additional options may be granted under this plan.

         The Company has an amended and restated 1989 stock incentive plan which
authorizes  the granting of stock  options to officers,  key employees and other
recipients to purchase shares of Common Stock within a ten-year period from date
of  grant  at  such   price   per   share  as  may  be  set  by  the   Company's
Compensation/Stock  Option  Committee.  The number of shares available for grant
under the plan is  formula-based,  providing that, upon certain  conditions,  no
more than 1% of the number of issued shares at the immediately  preceding fiscal
year-end may be added to the shares  available  for the grant pool in any fiscal
year to this class of  optionees.  Stock  option  grants are also  available  to
nonemployee directors and only at a price per share equal to the market value on
the grant date. At September 30, 1998,  there were 327,488 shares  available for
grant under the plan, with 182,260 shares specifically  reserved for nonemployee
directors.

         Stock  appreciation  rights  may  be  offered  to  some  or  all of the
employees,  but not nonemployee  directors,  who hold or receive options granted
under the stock option plans. No stock  appreciation  rights were outstanding as
of September 30, 1998, 1997, or 1996.

         The Company has adopted the disclosure-only provisions of SFAS No. 123,
"Accounting for Stock-Based Compensation" ("SFAS 123"). No compensation cost has
been recognized for the Company's stock option plans. Had compensation  cost for
the





                                    II - 26
<PAGE>


Company's 1989 stock incentive plan been  determined  based on the fair value at
the grant  date for grants in fiscal  1998,  1997 and 1996  consistent  with the
provisions  of SFAS 123, the  Company's  net  earnings and diluted  earnings per
share would have been reduced to the pro forma amounts indicated below:

<TABLE>
<CAPTION>

                                                      1998          1997          1996
         ----------------------------------------------------------------------------------
                                               (in thousands, except for per share amounts)
         <S>                                         <C>          <C>          <C>    
         Net earnings - as reported                  $ 3,102      $81,679      $73,533
         Net earnings - pro forma                    $   576      $80,474      $73,000
         Diluted earnings per share - as reported    $  0.03      $  0.81      $  0.73
         Diluted earnings per share - pro forma      $  0.01      $  0.79      $  0.73

</TABLE>

         The fair value of options  granted under the 1989 stock  incentive plan
during  fiscal  1998,  1997 and 1996  were used to  calculate  the pro forma net
earnings and diluted earnings per share above, on the various grant dates, using
a binomial option-pricing model with the following weighted average assumptions:

<TABLE>
<CAPTION>
                                                      1998          1997         1996
         --------------------------------------------------------------------------------
         <S>                                        <C>           <C>          <C>    
         Dividend yield                               2.0%          2.0%         2.0%
         Expected volatility                         46.9%         36.6%        31.7%
         Risk-free interest rate                      4.9%          5.9%         5.8%
         Expected life                              4 years       4 years      4 years
         Fair value of grants                        $8.65         $4.14        $2.90
</TABLE>
















                                    II - 27
<PAGE>


         Changes  in the number of shares  represented  by  outstanding  options
during the years ended  September  30,  1998,  1997 and 1996 are  summarized  as
follows:
<TABLE>
<CAPTION>

                                                         1998                  1997                  1996
                                                ---------------------  -------------------   ------------------
                                                            Weighted              Weighted             Weighted
                                                             Average               Average              Average
                                                            Exercise              Exercise             Exercise
                                                  Actual      Price     Actual      Price     Actual      Price
         ------------------------------------------------------------------------------------------------------
         <S>                                     <C>          <C>      <C>          <C>     <C>           <C>  
         Outstanding at beginning of year        4,467,584    $9.13    4,723,566    $8.01   3,522,736     $6.58
         Options granted ($8.63 to
           $24.91 per share)                     3,105,716    23.06      787,506    12.86   1,887,500     10.12
         Options exercised ($2.97 to
           $12.30 per share)                      (355,546)    7.97     (688,342)    6.34    (584,664)     6.32
         Options canceled ($2.97 to
           $21.00 per share)                      (152,294)   13.65     (355,146)    8.50    (102,006)     7.50
                                                ---------------------------------------------------------------
         Outstanding at end of year
           (1998, $4.97 to $24.91 per share)     7,065,460   $15.21    4,467,584    $9.13   4,723,566     $8.01
                                                 ==============================================================

         Exercisable at end of year              2,772,161             2,581,592            1,666,830
                                                 =========            ==========            =========

         Available for grant at end of year        327,488               427,006              886,406
                                                   =======               =======              =======
</TABLE>


         The following table summarizes  information  concerning outstanding and
exercisable options at September 30, 1998:

<TABLE>
<CAPTION>
                                                   Options Outstanding                    Options Exercisable
                                            -------------------------------------      -----------------------
                                                            Weighted
                                                             Average     Weighted                     Weighted
                                                            Remaining     Average                      Average
                                              Number       Contractual   Exercise         Number      Exercise
         Range of exercise prices           Outstanding       Life         Price        Exercisable     Price
         ------------------------------------------------------------------------------------------------------------------
         <S>                               <C>             <C>          <C>            <C>           <C>  
            $4.97  -   $5.93                  396,172         5.03         $5.90          396,172       $5.90
            $6.00  -   $6.76                  624,006         5.67         $6.30          624,006       $6.30
            $7.24  -   $8.48                  746,270         3.16         $7.82          746,270       $7.82
            $8.52  -   $8.90                  202,330         6.41         $8.67          125,424       $8.68
            $9.77                             863,466         7.11         $9.77          431,733       $9.77
           $10.40  -  $11.55                  512,622         7.89        $11.37          248,186      $11.36
           $12.30  -  $14.57                  778,978         8.15        $13.09          194,745      $13.09
           $21.00  -  $21.11                1,065,100         8.90        $21.06            5,625      $21.00
           $24.91                           1,876,516         9.99        $24.91                -      $    -
                                          -------------------------------------------------------------------

                                            7,065,460         6.30        $15.21        2,772,161      $ 8.26
                                          ===================================================================
</TABLE>





                                    II - 28


<PAGE>

         At  September  30, 1998,  an  aggregate of 9,244,766  shares of Class A
Common Stock was  reserved  for the  exercise of stock  options and for issuance
under the elective retirement savings plan (see Note 8).

4.       Acquisitions

         On September 30, 1998, the Company  acquired  Ransdell  Surgical,  Inc.
("Ransdell"),  a privately-held  medical-surgical  supply  distributor,  and its
affiliate,  Choice  Systems,  Inc.  ("Choice"),  a developer  of supply  channel
management  software for the healthcare  industry,  headquartered in Louisville,
Kentucky.  These  acquisitions  were  accounted for as poolings of interests for
financial reporting purposes. The Company issued approximately 716,000 shares of
its Common Stock to the Ransdell and Choice shareowners.

         On August 31, 1998, the Company acquired The Lash Group, Inc. ("Lash"),
a  privately-held  healthcare  reimbursement  consulting firm  headquartered  in
Washington,  D.C. This  acquisition  was accounted for as a pooling of interests
for financial  reporting purposes and the Company issued  approximately  980,000
shares of its Common Stock to the Lash shareowners.

         The  impact  of  the  Ransdell,  Choice  and  Lash  acquisitions,  on a
historical  basis,  is not  significant.  Accordingly,  prior period  historical
financial  statements have not been restated for these  acquisitions.  The above
acquired  entities'  financial  results have been  included in the  consolidated
financial results of the Company since the date of their respective  acquisition
dates. The aggregate merger expenses incurred related to these acquisitions were
not material.

         On May 12,  1998,  the Company  completed  the  acquisition  of Pacific
Criticare,   Inc.  ("Pacific  Criticare"),   a  privately-held   distributor  of
medical-surgical  products located in Waipahu,  Hawaii for a cash purchase price
of $4.0 million. The Company acquired assets at fair value of approximately $2.1
million, assumed liabilities of approximately $1.7 million and incurred costs of
$.3 million.  The Company recorded goodwill of approximately $3.9 million in the
transaction.

         On  January  2,  1998,  the  Company   completed  the   acquisition  of
substantially all of the net assets of Besse Medical Services ("Besse"), Inc., a
privately-held  distributor of  injectables,  diagnostics  and medical  supplies
located in Cincinnati,  Ohio,  for a cash purchase  price of $22.2 million.  The
Company  acquired assets at fair value of approximately  $11.5 million,  assumed
liabilities of approximately $6.7 million and incurred costs of $.4 million. The
Company recorded goodwill of approximately $17.8 million in the transaction.

         On August 7, 1996, the Company completed the acquisition of certain net
assets of Oncology Supply Company ("Oncology"), a privately-held oncology supply
distributor  located  in  Dothan,  Alabama  for a cash  purchase  price  of $5.8
million.  The  Company  acquired  assets  at fair  value of  approximately  $6.5
million, assumed liabilities of approximately $5.4 million and incurred costs of
$.2 million.  The Company recorded goodwill of approximately $4.9 million in the
transaction.




                                    II - 29


<PAGE>


         Had the  acquisitions  of Pacific  Criticare and Besse  occurred at the
beginning of fiscal 1997,  the pro-forma  inclusion of their  operating  results
would not have had a significant  effect on the reported  consolidated net sales
and other  revenues  and net  earnings in either  fiscal  1997 or 1998.  Had the
acquisition of Oncology  occurred at the beginning of fiscal 1996, the pro-forma
inclusion of its operating  results  would not have had a significant  effect on
the  reported  consolidated  net sales and other  revenues  and net  earnings in
fiscal 1996.



5.       Earnings per Share

         During the fiscal year 1998,  the Company  adopted  SFAS No. 128 ("SFAS
128"),  "Earnings  Per Share  (EPS),"  which  replaced the  previously  reported
primary and fully  diluted EPS with basic and diluted EPS.  Unlike  primary EPS,
basic EPS  excludes  any dilutive  effect of options,  warrants and  convertible
securities. Diluted EPS is similar to the previously reported fully diluted EPS.
All EPS amounts for all fiscal years have been presented  and, where  necessary,
restated to conform to the requirements of SFAS 128.


         The following table sets forth the computation of basic and diluted EPS
for the fiscal years ended September 30, 1998, 1997 and 1996, respectively.

<TABLE>
<CAPTION>
         In thousands, except EPS                           1998         1997       1996
         ----------------------------------------------------------------------------------
         <S>                                             <C>          <C>         <C>     
         Numerator for both basic and
            diluted EPS - net earnings                   $   3,102    $ 81,679    $ 73,533
                                                         =================================

         Denominator:
            Denominator for basic EPS - weighted
               average shares of Class A Common
               Stock outstanding                           101,118     100,413      99,948
            Effect of dilutive employees' stock
               options (dilutive potential common
               shares)                                       1,502       1,016         700
                                                         ---------------------------------
            Denominator for diluted EPS - adjusted
               weighted average shares and
               assumed conversions                         102,620     101,429     100,648
                                                         =================================

         Earnings per share:
               Basic                                     $    0.03    $   0.81    $   0.74
                                                         =================================

               Diluted                                   $    0.03    $   0.81    $   0.73
                                                         =================================

</TABLE>




                                    II - 30


<PAGE>

6.       Leases

         The Company  conducts most of its operations from leased  warehouse and
office  facilities and uses certain data processing,  transportation,  and other
equipment under lease agreements  expiring at various dates through fiscal 2008,
excluding  renewal options.  Future minimum rental  commitments at September 30,
1998, under operating leases having  noncancelable  lease terms in excess of one
year,  aggregated $64.8 million, with rental payments during the five succeeding
fiscal years of $23.1 million,  $15.3 million,  $10.9 million,  $6.3 million and
$3.2  million,  respectively.  Future  minimum  rentals  to  be  received  under
noncancelable  subleases at  September  30, 1998 were not  material.  Net rental
expense  for the years ended  September  30,  1998,  1997,  and 1996,  was $26.2
million, $22.3 million and $17.9 million, respectively.  Sublease income was not
material in any of these years.


7.       Taxes on Income

         The  Company  uses the asset and  liability  method of  accounting  for
income  taxes.  Under this  method,  deferred  tax assets  and  liabilities  are
established for temporary  differences between the financial reporting bases and
the tax bases of the Company's  assets and  liabilities at tax rates expected to
be in effect when such assets or liabilities are realized or settled.

         Total  Federal and state taxes on income for the years ended  September
30, 1998, 1997, and 1996 are summarized as follows:


<TABLE>
<CAPTION>
         Dollars in thousands                  1998        1997       1996
         ------------------------------------------------------------------
         <S>                                  <C>        <C>        <C>
         Currently payable
           Federal                            $15,714    $38,964    $35,985
           State                                5,132      7,219      6,682
         Deferred (principally Federal)        41,955     10,577      9,070
                                           --------------------------------

                  Total                       $62,801    $56,760    $51,737
                                           ================================
</TABLE>






                                    II - 31

<PAGE>


         Taxes on income vary from the statutory Federal income tax rate applied
to earnings before taxes on income as the result of the following:

<TABLE>
<CAPTION>

         Dollars in thousands                   1998        1997      1996
         ---------------------------------------------------------------------
         <S>                                    <C>        <C>        <C>    
         Statutory Federal income tax
            rate applied to earnings before
            taxes on income                     $23,066    $48,454    $43,844
         Increase (decrease) in taxes
            resulting from:
            Amortization of goodwill              3,319      3,262      2,447
            State income taxes - net of
               Federal benefits                   6,385      5,578      4,992
            Governmental investment income          (45)      (184)      (157)
            Goodwill writedown                   30,545          -          -
            Other                                  (469)      (350)       611
                                                -----------------------------

         Total taxes on income                  $62,801    $56,760    $51,737
                                                =============================

</TABLE>

         The tax effects of  significant  items  comprising  the  Company's  net
deferred tax liability as of September 30, 1998 and 1997 are as follows:

<TABLE>
<CAPTION>

         Dollars in thousands                                    1998             1997
         --------------------------------------------------------------------------------
         <S>                                                   <C>                <C>    
         Deferred tax liabilities:
           Inventory basis difference due to LIFO
               method and uniform capitalization               $114,552           $49,142
           Accelerated depreciation                               7,368             8,223
           Employee benefits                                      2,481             4,048
           Mark to market receivables                             7,535                 -
           Other                                                  2,868             3,074
                                                               --------------------------
                  Total                                         134,804            64,487
                                                               --------------------------
         Deferred tax assets:
           Reserves for doubtful receivables                     17,695            15,639
           Restructuring expenses not currently deductible        2,736             1,264
           Vacation pay not currently deductible                  3,018             1,933
           Accrued liabilities not currently deductible          17,188            15,579
           AMT credit carryforward                               22,400                 -
           Net operating loss carryforwards                      15,050                 -
                                                               --------------------------

                  Total                                          78,077            34,415
         Valuation allowance for deferred income tax assets      (8,777)                -
                                                               --------------------------
         Deferred income tax assets                              69,310            34,415
                                                               --------------------------

         Net deferred tax liability                             $65,494           $30,072
                                                               ==========================

</TABLE>




                                    II - 32

<PAGE>

         Deferred taxes result from temporary  differences in the recognition of
revenues and expenses for tax and financial reporting purposes.

         The Company  has  approximately  $43.0  million of net  operating  loss
carryforwards  related  to an  acquisition  that  can be used to  reduce  future
taxable income.  These net operating losses can only be used to offset income of
the acquired entity,  and, if not utilized,  will begin expiring in fiscal 2002.
The Company has provided a valuation  allowance on a portion of the deferred tax
asset related to the  pre-acquisition net operating losses at September 30, 1998
due to the uncertainly regarding realization.


8.       Retirement and Savings Plans

         The  Company  provides  for  retirement  benefits  through an  elective
retirement savings plan and supplemental retirement plans.

         The Company has an elective retirement savings plan generally available
to all  employees  with 30 days of  service.  Under the  terms of the plan,  the
Company  guarantees  a  contribution  of $0.50 for each  $1.00  invested  by the
participant up to the participant's  investment of 6% of salary, subject to plan
and regulatory  limitations.  The Company may also make additional cash or stock
contributions  to the plan at its discretion.  The Company's  contributions  are
vested to participants  over five years. The Company made  contributions of $4.5
million,  $3.8 million,  and $3.4 million to the plan in fiscal 1998,  1997, and
1996, respectively.

         The supplemental retirement plans provide benefits for certain officers
and key employees.  The Company has a  Supplemental  Executive  Retirement  Plan
("SERP") for officers and key employees.  SERP is a "target"  benefit plan, with
the annual  lifetime  benefit based upon a percentage of salary during the final
five years of pay at age 62, offset by several other sources of income including
benefits payable under a prior supplemental retirement plan.

         The  components  of net  periodic  pension  cost  for the  supplemental
retirement plans for fiscal 1998, 1997, and 1996 are as follows:

<TABLE>
<CAPTION>
         Dollars in thousands                       1998       1997      1996
         -----------------------------------------------------------------------
         <S>                                        <C>       <C>       <C>   
         Service cost                               $  916    $  598    $  294
         Interest cost                               1,843     1,596     1,519
         Amortization of prior service cost            251       378       378
         Amortization of initial unrecognized
           net obligation                              264       264       264
                                                    ---------------------------
                    Total                           $3,274    $2,836    $2,455
                                                    ===========================
</TABLE>





                                    II - 33

<PAGE>



         Assumptions   used  to  develop  the  net  periodic  pension  cost  for
supplemental retirement plans were:

<TABLE>
<CAPTION>
                                               1998        1997          1996
         -----------------------------------------------------------------------
         <S>                                   <C>      <C>           <C>       
         Discount rate                         6.75%    7.00-8.00%    7.00-8.00%
         Rate of increase in salary levels     5.50%       5.50%         5.50%

</TABLE>

         The funded status of the supplemental retirement plans at September 30,
1998 and 1997 is as follows:

<TABLE>
<CAPTION>
         Dollars in thousands                                                 1998       1997
         ---------------------------------------------------------------------------------------
         <S>                                                                <C>        <C>    
         Actuarial present value of benefit obligations:
           Vested benefits                                                  $16,979    $15,961
           Nonvested benefits                                                   186          -
                                                                            ------------------
           Accumulated benefit obligation                                    17,165     15,961
           Effect of assumed increase in future compensation levels           5,522      5,522
                                                                            ------------------
         Projected benefit obligation                                        22,687     21,483
         Assets of plans at fair value                                       (2,919)    (2,865)
                                                                            -------------------
         Excess of projected benefit obligation over assets                  19,768     18,618
         Unrecognized prior service cost                                     (1,882)    (2,132)
         Unrecognized net loss                                               (8,885)    (7,882)
         Unrecognized net obligation remaining from date of adoption         (3,049)    (3,314)
                                                                            -------------------

         Pension liability recognized in the consolidated balance sheets    $ 5,952    $ 5,290
                                                                            ==================

</TABLE>

         At September 30, 1998 and 1997, the Company owned life insurance in the
aggregate  amounts of $48.8 million and $46.5  million,  respectively,  covering
substantially all of the participants in the supplemental  retirement plans. The
Company  intends to keep this life  insurance  in force  until the demise of the
participants.

         Contributions  are also made to  multi-employer  defined  benefit plans
administered  by labor unions for certain union  employees.  Approximately  $0.4
million was charged to pension expense and contributed to these plans in each of
the years ended September 30, 1998, 1997, and 1996.


9.       Contingencies

         The  Company  has  been  named  as  a  defendant,  along  with  several
pharmaceutical industry-related companies, in several state antitrust actions in
California  and  Alabama  and a  Federal  multidistrict  antitrust  action.  The
California  State  action  purports  to  be a  coordinated  class  action  under




                                    II - 34

<PAGE>


California's  Cartwright Act, Unfair  Practices Act and Business and Professions
Code.  The Alabama State  complaint  purports to be a class action under Alabama
antitrust law. The Federal class action  complaint  alleges that the Company and
numerous  manufacturers  and other  wholesalers  violated  the  Sherman  Act. In
November  1994,  the Federal  court  certified  the class defined in the Federal
class action  complaint  from October 15, 1989 to the present.  Plaintiffs  seek
injunctive relief and treble damages in an amount to be determined at trial.

                  In October 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 into against
both the  manufacturer and wholesaler  defendants,  the total exposure for joint
and  several  liability  of the  Company is limited  to $1.0  million;  (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 up to $9.0 million
total (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 the Federal court  litigation,  as well as the cases
which have been filed in various state courts.  In December 1994,  plaintiffs in
the Federal action had moved to set aside the agreement,  but plaintiffs' motion
was denied on April 25, 1995. In 1996, the class  plaintiffs  filed a motion for
approval of a settlement  with 12 of the  manufacturer  defendants,  which would
result in dismissal of claims against those manufacturers and a reduction of the
potential claims against the remaining  defendants,  including those against the
Company.  The Court granted approval for the settlement.  In 1998, an additional
four of the manufacturer  defendants  settled.  The effect of the settlements on
the sharing agreement is that the Company's maximum potential loss would be $1.0
million,  regardless  of the outcome of the lawsuits,  plus  possible  legal fee
expenses  in excess of the  Company's  proportionate  share of the $9.0  million
reimbursement  of  such  fees  or  any  additional  amounts  to be  paid  by the
manufacturer defendants.

         In  September  1998,  a jury trial of this action  commenced in Federal
Court.  On November  30,  1998,  the Court  granted all  remaining  defendants a
directed  verdict,  dismissing  all class  claims  against the Company and other
defendants. It is unclear whether the ruling will be appealed.

         In addition to the above-mentioned Federal class action and state court
actions,  the  Company  and  other  wholesale  defendants  have  been  added  as
defendants  in a  series  of  related  antitrust  lawsuits  brought  by  certain
independent  pharmacies  who have  opted  out of the class  action  cases and by
certain chain drug and grocery stores.  After a successful motion by the Company
and other  wholesalers,  the damage  period in these  cases has been  limited to
October  1993 to the  present.  These  lawsuits  are also covered by the sharing
agreement described above.





                                    II - 35

<PAGE>


         The Company  believes  that the  allegations  of liability set forth in
these  lawsuits are without merit as to the  wholesaler  defendants and that any
attendant liability of the Company, although unlikely, would not have a material
effect on the Company's consolidated financial condition,  results of operations
or cash flows.

         The  Company is  involved in various  additional  items of  litigation.
Although the amount of  liability  at  September  30, 1998 with respect to these
additional  items  of  litigation  cannot  be  ascertained,  in the  opinion  of
management,  any resulting  future  liability  will not have a material  adverse
effect on the Company's consolidated  financial position,  results of operations
or cash flows.


10.      Special Charges

         During fiscal 1998,  the Company  recorded a special  non-cash  pre-tax
charge of $87.3 million for  writedown of Bergen  Brunswig  Medical  Corporation
("BBMC") goodwill related to certain  acquisitions made prior to September 1995,
resulting from a realized  impairment to the carrying value of BBMC's long-lived
assets.  In addition to the goodwill  writedown,  the Company recorded a pre-tax
charge of $3.0 million for BBMC restructuring expenses which represent severance
costs  associated with  streamlining  and refocusing the sales  organization and
costs associated with the consolidation of four divisions to improve  efficiency
and customer service.  Other special charges recorded during fiscal 1998 include
a  non-cash  pre-tax  charge  of $5.3  million  related  to the  abandonment  of
capitalized  software  as a result  of  technology  improvements;  and a pre-tax
charge of $14.6 million related primarily to the terminated merger with Cardinal
Health, Inc. ("Cardinal") (see Note 13).

         During  fiscal  1997,  the  Company  recorded a pre-tax  charge of $5.8
million for expenses related to the proposed merger with IVAX Corporation  which
was terminated on March 20, 1997.


















                                    II - 36

<PAGE>


         Following is a summary of the special  charges  incurred by the Company
in the last two fiscal years:

<TABLE>
<CAPTION>
                                                Years Ended September 30,
                                                -------------------------
         In thousands                               1998        1997
         ----------------------------------------------------------------
         <S>                                     <C>           <C>    
         Goodwill writedown                      $ (87,271)    $     -
         Restructuring expenses                     (3,034)          -
         Abandoned capitalized software             (5,307)          -
         Merger-related expenses                   (14,635)     (5,800)
                                              -------------------------

              Total special charges               (110,247)     (5,800)
         Tax effect of special charges               9,421       2,378
                                              ------------------------

              Effect on net earnings             $(100,826)    $(3,422)
                                              =========================
</TABLE>


11.      Disclosures About Fair Value of Financial Instruments

         The  recorded  amounts  of the  Company's  cash and  cash  equivalents,
short-term  investments,  accounts  and  notes  receivable,  other  investments,
noncurrent  receivables,  accounts  payable and the revolving bank loan payable,
the 6 7/8%  Debentures  and the 7% Debentures at September 30, 1998  approximate
fair value.  The fair values of the  Company's 7 3/8% Notes and 7 1/4% Notes are
estimated  as follows,  based on the market  prices of these  instruments  as of
September 30, 1998:

<TABLE>
<CAPTION>
                                         Recorded
         Dollars in thousands              Amount          Fair Value
         --------------------------------------------------------------
         <S>                             <C>              <C>     
            7 3/8%  Notes                 $149,522         $156,715
            7 1/4%  Notes                   99,767          104,720
</TABLE>


12.      Pending Business Combinations

         On November 25, 1998,  the Company  signed an agreement to acquire 100%
of the capital stock of J.M. Blanco, Inc. ("J.M. Blanco"), Puerto Rico's largest
pharmaceutical  distributor,  headquartered in Guaynabo,  Puerto Rico. Under the
terms of the agreement,  the Company would pay approximately $24 million in cash
and assume approximately $27 million in debt.

         On November  19,  1998,  the  Company  signed an  agreement  to acquire
substantially  all of the  business,  assets  and  property,  subject to certain





                                    II - 37

<PAGE>


liabilities,   of  Medical   Initiatives,   Inc.   ("MII"),   a  pre-filler   of
pharmaceuticals for oncology centers, located in Tampa, Florida. Under the terms
of the agreement,  the Company would issue  approximately  227,000 shares of the
Company's Common Stock.

         On November 8, 1998, the Company signed a definitive purchase agreement
to acquire  Stadtlander  Drug Co.  Inc.  ("Stadtlander"),  a national  leader in
disease-specific  pharmaceutical care delivery for transplant,  HIV, infertility
and  serious  mental  illness  patient  populations  and a leading  provider  of
pharmaceutical  care to the  privatized  corrections  market,  headquartered  in
Pittsburgh,  Pennsylvania.  Under the terms of the agreement,  the Company would
pay approximately $178 million in cash and issue approximately  6,000,000 shares
of its Common Stock, and assume approximately $100 million in debt.

         Consummations of the J.M. Blanco, MII and Stadtlander transactions,  to
be accounted for as purchases for financial reporting  purposes,  are subject to
certain conditions,  including the receipt of regulatory approvals. The purchase
prices of these  acquisitions  are subject to  adjustments  after  completion of
acquisition audits. The MII acquisition is expected to be completed in the first
quarter of fiscal 1999,  while the J.M. Blanco and Stadtlander  acquisitions are
expected to be completed in the second quarter of fiscal 1999.  The J.M.  Blanco
acquisition and the cash portion of the Stadtlander acquisition will be financed
from borrowings under the Credit Agreement and other bank borrowings.


13.      Terminated Merger Agreement

         On August 23, 1997,  the Company signed a definitive  merger  agreement
with  Cardinal,  a distributor  of  pharmaceuticals  and provider of value-added
pharmaceutical-related  services,  headquartered  in  Dublin,  Ohio.  The merger
agreement called for the Company to become a wholly-owned subsidiary of Cardinal
and for shareowners of the Company to receive Cardinal Common Shares in exchange
for  outstanding  shares of the Company's  Common Stock.  On July 31, 1998,  the
United States District Court for the District of Columbia granted the request of
the Federal Trade  Commission for a preliminary  injunction to halt the proposed
merger.  On August 7, 1998,  the Company and  Cardinal  jointly  terminated  the
merger agreement.

         During  fiscal  1998,  the Company  recorded a pre-tax  charge of $14.0
million for  expenses  related to the  Cardinal  merger,  net of a $7.0  million
pre-tax  reimbursement  from Cardinal upon termination of the merger  agreement.
Additionally,  the termination of the Cardinal  merger  agreement will cause the
expenses  incurred by the Company (that would not have been  deductible  had the
proposed  merger  been  consummated)  to  become  deductible,   resulting  in  a
tax-benefit of $5.8 million (see Note 10).








                                    II - 38

<PAGE>






INDEPENDENT AUDITORS' REPORT






To the Directors and Shareowners of
  Bergen Brunswig Corporation:


         We have audited the accompanying  consolidated balance sheets of Bergen
Brunswig  Corporation and subsidiaries as of September 30, 1998 and 1997 and the
related statements of consolidated earnings,  shareowners' equity and cash flows
for each of the three  years in the  period  ended  September  30,  1998.  These
consolidated  financial  statements  are  the  responsibility  of the  Company's
management.  Our  responsibility  is to express  an  opinion on these  financial
statements based on our audits.

         We conducted our audits in accordance with generally  accepted auditing
standards.  Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement.  An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements.  An audit also includes
assessing the  accounting  principles  used and  significant  estimates  made by
management,  as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.

         In our opinion, the consolidated financial statements referred to above
present  fairly,  in all material  respects,  the  financial  position of Bergen
Brunswig  Corporation  and  subsidiaries at September 30, 1998 and 1997, and the
results of their operations, and their cash flows for each of the three years in
the period ended  September  30, 1998,  in conformity  with  generally  accepted
accounting principles.

         As  discussed  in  Note  1  of  Notes  to  the  Consolidated  Financial
Statements,  the Company  changed its method of accounting for the assessment of
the recoverability of goodwill from an undiscounted operating cash flow analysis
to a fair value approach based on discounted future operating cash flows.


/s/ Deloitte & Touche LLP
Costa Mesa, California
October 30, 1998 (except for
Note 12 as to which the date
is November 25, 1998)







                                    II - 39

<PAGE>








ITEM 9.  CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
         FINANCIAL DISCLOSURE


                  None.












































                                    II - 40

<PAGE>


                                    PART III


ITEM 10. DIRECTORS OF THE REGISTRANT

         The registrant  incorporates by reference herein  information to be set
forth  in its  definitive  proxy  statement  for  its  1999  annual  meeting  of
shareowners that is responsive to the information  required with respect to this
Item. If such proxy  statement is not mailed to  shareowners  and filed with the
Securities  and  Exchange  Commission  within  120  days  after  the  end of the
registrant's  most recently  completed  fiscal year, the registrant will provide
such information by means of an amendment to this Annual Report on Form 10-K.


ITEM 11. EXECUTIVE COMPENSATION

         The registrant  incorporates by reference herein  information to be set
forth  in its  definitive  proxy  statement  for  its  1999  annual  meeting  of
shareowners that is responsive to the information  required with respect to this
Item. If such proxy  statement is not mailed to  shareowners  and filed with the
Securities  and  Exchange  Commission  within  120  days  after  the  end of the
registrant's  most recently  completed  fiscal year, the registrant will provide
such information by means of an amendment to this Annual Report on Form 10-K.


ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

         The registrant  incorporates by reference herein  information to be set
forth  in its  definitive  proxy  statement  for  its  1999  annual  meeting  of
shareowners that is responsive to the information  required with respect to this
Item. If such proxy  statement is not mailed to  shareowners  and filed with the
Securities  and  Exchange  Commission  within  120  days  after  the  end of the
registrant's  most recently  completed  fiscal year, the registrant will provide
such information by means of an amendment to this Annual Report on Form 10-K.


ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

         The registrant  incorporates by reference herein  information to be set
forth  in its  definitive  proxy  statement  for  its  1999  annual  meeting  of
shareowners that is responsive to the information  required with respect to this
Item. If such proxy  statement is not mailed to  shareowners  and filed with the
Securities  and  Exchange  Commission  within  120  days  after  the  end of the
registrant's  most recently  completed  fiscal year, the registrant will provide
such information by means of an amendment to this Annual Report on Form 10-K.



                                    III - 1

<PAGE>

                                     PART IV


ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K

(a)      Documents filed as part of this report:

         1.       Financial Statements

                           The following  Consolidated  Financial  Statements of
                  Bergen Brunswig  Corporation and  Subsidiaries are included in
                  Part II, Item 8:

                           Statements of Consolidated  Earnings for the Years
                                Ended September 30, 1998, 1997 and 1996
                           Consolidated Balance Sheets, September 30, 1998
                                and 1997
                           Statements of Consolidated Shareowners' Equity for
                                the Years Ended September 30, 1998, 1997
                                and 1996
                           Statements of Consolidated Cash Flows for the Years
                                Ended September 30, 1998, 1997 and 1996
                           Notes to Consolidated Financial Statements
                           Independent Auditors' Report



         Financial  statements  and schedules not listed are omitted  because of
         the absence of the conditions  under which they are required or because
         all  material  information  is included in the  consolidated  financial
         statements or notes thereto.












                                     IV - 1


<PAGE>


ITEM 14.  EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON
          FORM 8-K (Continued)


     3.   Exhibits
          --------

             *3(a)  The Restated Certificate of Incorporation dated November 13,
                    1998.

             *3(b)  The  By-Laws as amended and  restated,  dated  November  13,
                    1998.

                    Exhibits  3(a) and 3(b) above are set forth as Exhibits  4.1
                    and 4.2 in the Company's Post  Effective  Amendment No. 2 to
                    Form S-3 dated December 17, 1998 (file no. 333-63441).

             *4(a)  The Senior  Indenture for  $400,000,000  of Debt  Securities
                    dated  as of  December  1,  1992  between  the  Company  and
                    Chemical Trust Company of California as Trustee is set forth
                    as Exhibit 4.1 to the  Company's  Registration  Statement on
                    Form S-3 dated December 1, 1992 (file no. 33-55136).

                    The Company agrees to furnish to the Securities and Exchange
                    Commission,  upon request,  a copy of each  instrument  with
                    respect to other  issues of  long-term  debt of the Company,
                    the authorized principal amount of which does not exceed 10%
                    of the total assets of the Company on a consolidated basis.

             *4(b)  Rights  Agreement,  dated as of  February  8, 1994,  between
                    Bergen  Brunswig  Corporation  and Chemical Trust Company of
                    California, as Rights Agent, including all exhibits thereto,
                    is  incorporated  herein by  reference  to  Exhibit 1 to the
                    Company's  Registration Statement on Form 8-A dated February
                    14, 1994.

           **10(a)  Bergen Brunswig Corporation Deferred Compensation Plan.

           **10(b)  Director Indemnification Agreement and Amendment to Director
                    Indemnification Agreement.

            *10(c)  Bergen Brunswig  Corporation Bonus Plan as adopted September
                    1, 1977 and amended October 19, 1990.

            *10(d)  Amended and  Restated  1989 Stock  Incentive  Plan of Bergen
                    Brunswig Corporation and Subsidiary Companies.

            *10(e)  Retired Officers' Medical Plan.


                                     IV - 2
<PAGE>


ITEM 14.  EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON
          FORM 8-K (Continued)

     3.   Exhibits
          --------
                    Exhibits  10(c),  10(d) and 10(e) are set forth as  Exhibits
                    10(e),  10(g) and 10(o) in the  Company's  Annual  Report on
                    Form 10-K for the fiscal year ended September 30, 1997.

           **10(f)  Bergen Brunswig  Corporation Stock Option Plans,  other than
                    the Amended and Restated 1989 Stock Incentive Plan.

            *10(g)  Form of Amended and Restated  Capital  Accumulation  Plan is
                    set  forth as  Exhibit  10.2 in the  Company's  Registration
                    Statement on Form S-3 and Amendment No.1 thereto relating to
                    a  shelf  offering  of  $400  million  in  securities  filed
                    February 1, 1996 and March 19, 1996,  respectively (file no.
                    333-631).

             10(h)  Amended and Restated Supplemental  Executive Retirement Plan
                    dated September 24, 1998.

            *10(i)  Amendment   No.1  to  the  Amended  and   Restated   Capital
                    Accumulation  Plan is set  forth  as  Exhibit  10(m)  in the
                    Company's  Annual  Report on Form 10-K for the  fiscal  year
                    ended September 30, 1996.

            *10(j)  Amended and Restated  Executive  Loan Program dated March 3,
                    1995 is set forth as Exhibit 10(g) in the  Company's  Annual
                    Report on Form 10-K for the fiscal year ended  September 30,
                    1995.

            *10(k)  Employment Agreement and Schedule.

            *10(l)  Severance Agreement and Schedule.

                    Exhibits  10(k)  and 10(l)  above  are set forth as  Exhibit
                    10(q) and 10(r) in the Company's  Annual Report on Form 10-K
                    for the fiscal year ended September 30, 1994.

            *10(m)  Stock Purchase  Agreement,  dated as of November 8, 1998, by
                    and among Stadtlander Drug Co., Inc.,  Counsel  Corporation,
                    Stadt  Holdings Inc. and the Company is set forth as Exhibit
                    2.1 to the Company's  Report on Schedule 13D, dated November
                    18, 1998, filed with respect to PharMerica, Inc.


                                     IV - 3
<PAGE>


ITEM 14.  EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON
          FORM 8-K (Continued)

     3.   Exhibits
          --------
            21      List of subsidiaries of Bergen Brunswig Corporation.

            23      Independent Auditors' Consent.

            24      Power of  Attorney  is set forth on the  Signature  pages in
                    Part IV of this Annual Report.

            27      Financial  Data  Schedule for the year ended  September  30,
                    1998.

            99(a)   Statement Regarding Forward-Looking Information.

           *99(b)   Split Dollar Life  Insurance  Plan with Robert E. Martini is
                    set forth as Exhibit 99(b) in the Company's Annual Report on
                    Form 10-K for the fiscal year ended September 30, 1997.

           *99(c)   Amended and Restated Credit  Agreement dated as of September
                    30, 1994 among Bergen Brunswig Drug Company, Bergen Brunswig
                    Corporation  and Bank of America  National Trust and Savings
                    Association  is set forth as Exhibit  99(h) in the Company's
                    Annual  Report  on Form  10-K  for  the  fiscal  year  ended
                    September 30, 1994.

           *99(d)   First and Second  Amendments to Amended and Restated  Credit
                    Agreement  dated as of February 27, 1995 and March 16, 1996,
                    respectively,  are set forth as  Exhibits  99(a) and  99(b),
                    respectively, in the Company's Quarterly Report on Form 10-Q
                    for the quarter ended March 31, 1996.

            99(e)   Waiver Letter to Amended and Restated Credit Agreement dated
                    as of October 23, 1998.

           *99(f)   Item 1 -  Legal  Proceedings  of  Part  II of the  Company's
                    Quarterly Report on Form 10-Q for the quarter ended June 30,
                    1994, are incorporated herein by reference in Part I, Item 3
                    of this Annual Report.

            99(g)   Independent Auditors' Preferability Letter.



                                     IV - 4
<PAGE>



ITEM 14.  EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON
          FORM 8-K (Continued)

     3.   Exhibits
          --------

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

**       Incorporated  herein by reference to the exhibits  filed as part of the
         Company's Registration Statement on Form S-3 (Registration No. 33-5530)
         and  Amendment  Nos.  1 and  2  thereto  relating  to  an  offering  of
         $43,000,000  principal  amount  of  6  7/8%  Exchangeable  Subordinated
         Debentures due 2011, filed with the Securities and Exchange  Commission
         on May 8, July 1, and July 8, 1986, respectively.



(b)      Reports on Form 8-K:

         On November 12, 1998, a Current  Report on Form 8-K,  dated November 9,
         1998, was filed,  reporting under Item 5, that the Company entered into
         a Stock Purchase  Agreement with  Stadtlander  Drug Co., Inc.  ("SDC"),
         Counsel  Corporation  and Stadt Holdings,  Inc.,  pursuant to which the
         Company has agreed to acquire 100% of the outstanding stock of SDC.

         On August 12, 1998, a Current Report on Form 8-K, dated August 7, 1998,
         was filed,  reporting  under Item 5, that the Company and  Cardinal had
         jointly terminated the Agreement and Plan of Merger, dated as of August
         23, 1997, as amended as of March 16, 1998 by and among Cardinal,  Bruin
         Merger Corp. and the Company.











                                     IV - 5
<PAGE>


                                   SIGNATURES

Pursuant to the  requirements of Section 13 or 15(d) 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


December 28, 1998                       By /s/  Donald R. Roden
                                           ------------------------------------
                                                Donald R. Roden
                                                President and
                                                Chief Executive Officer


                                POWER OF ATTORNEY

         KNOW ALL MEN BY THESE PRESENTS that each person whose signature appears
below,  hereby  constitutes and appoints Robert E. Martini,  Donald R. Roden and
Milan A. Sawdei and each of them  singly,  his true and lawful  attorney-in-fact
and agent,  with full power of substitution and  resubstitution,  for him and in
his  name,  place  and  stead,  in any and all  capacities,  to sign  any or all
amendments (including pre-effective amendments and post-effective amendments) to
this Annual Report on Form 10-K, and to file the same with all exhibits  thereto
and other  documents in connection  therewith,  with the Securities and Exchange
Commission,  granting  unto  said  attorney-in-fact  and  agent  full  power and
authority to do and perform each and every act and thing requisite and necessary
to be done in and about the premises, as fully to all intents and purposes as he
might or could do in  person,  hereby  ratifying  and  confirming  all that said
attorney-in-fact and agent may lawfully do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Exchange Act of 1934, this report
has been signed below by the following  persons on behalf of the  Registrant and
in the capacities and on the dates indicated.

SIGNATURE                        TITLE                         DATE
---------                        -----                         ----

/s/   Robert E. Martini          Chairman of the Board         December 28, 1998
-----------------------          and Director
      Robert E. Martini


/s/   Donald R. Roden            President and Chief           December 28, 1998
---------------------            Executive Officer
      Donald R. Roden            and Director (Principal
                                 Executive Officer)




                                     IV - 6

<PAGE>


SIGNATURE                        TITLE                         DATE
---------                        -----                         ----


/s/   Neil F. Dimick             Executive Vice President,     December 28, 1998
--------------------             Chief Financial Officer
      Neil F. Dimick             and Director
                                 (Principal Financial
                                 Officer and Principal
                                 Accounting Officer)

/s/   John Calasibetta           Senior Vice President         December 28, 1998
----------------------           and Director
      John Calasibetta

/s/   Jose E. Blanco, Sr.        Director                      December 28, 1998
-------------------------
      Jose E. Blanco, Sr.

/s/   Rodney H. Brady            Director                      December 28, 1998
---------------------
      Rodney H. Brady

/s/   Charles C. Edwards, M.D.   Director                      December 28, 1998
------------------------------
      Charles C. Edwards, M.D.

/s/   Charles J. Lee             Director                      December 28, 1998
--------------------
      Charles J. Lee

/s/   George R. Liddle           Director                      December 28, 1998
----------------------
      George R. Liddle

/s/   James R. Mellor            Director                      December 28, 1998
---------------------
      James R. Mellor

/s/   George E. Reinhardt, Jr.   Director                      December 28, 1998
------------------------------
      George E. Reinhardt, Jr.

/s/   Francis G. Rodgers         Director                      December 28, 1998
------------------------
      Francis G. Rodgers













                                     IV - 7

<PAGE>

                                INDEX TO EXHIBITS
                                -----------------

EXHIBIT NO.                                                           PAGE NO.
-----------                                                           --------

  *3(a)     The Restated Certificate of Incorporation dated November
            13, 1998.

  *3(b)     The By-Laws as amended and restated,  dated November 13,
            1998.

            Exhibits  3(a) and 3(b)  above are set forth as  Exhibit
            4.1 and 4.2 in the Company's  Post  Effective  Amendment
            No. 2 to Form S-3  dated  December  17,  1998  (file no.
            333-63441).

  *4(a)     The Senior Indenture for $400,000,000 of Debt Securities
            dated as of  December  1, 1992  between  the Company and
            Chemical  Trust  Company of California as Trustee is set
            forth  as  Exhibit  4.1  to the  Company's  Registration
            Statement  on Form S-3 dated  December 1, 1992 (file no.
            33-55136).

            The  Company  agrees to  furnish to the  Securities  and
            Exchange  Commission,  upon  request,  a  copy  of  each
            instrument  with  respect to other  issues of  long-term
            debt of the Company,  the authorized principal amount of
            which  does not  exceed  10% of the total  assets of the
            Company on a consolidated basis.

  *4(b)     Rights Agreement,  dated as of February 8, 1994, between
            Bergen  Brunswig  Corporation and Chemical Trust Company
            of California,  as Rights Agent,  including all exhibits
            thereto,  is incorporated herein by reference to Exhibit
            1 to the  Company's  Registration  Statement on Form 8-A
            dated February 14, 1994.

**10(a)     Bergen Brunswig Corporation Deferred Compensation Plan.

**10(b)     Director  Indemnification  Agreement  and  Amendment  to
            Director Indemnification Agreement.

 *10(c)     Bergen  Brunswig   Corporation  Bonus  Plan  as  adopted
            September 1, 1977 and amended October 19, 1990.

 *10(d)     Amended and Restated 1989 Stock Incentive Plan of Bergen
            Brunswig Corporation and Subsidiary Companies.

 *10(e)     Retired Officers' Medical Plan.


<PAGE>


                          INDEX TO EXHIBITS (CONTINUED)
                          -----------------------------


EXHIBIT NO.                                                           PAGE NO.
-----------                                                           --------

            Exhibits  10(c),  10(d)  and  10(e)  are  set  forth  as
            Exhibits 10(e),  10(g) and 10(o) in the Company's Annual
            Report on Form 10-K for the fiscal year ended  September
            30, 1997.

**10(f)     Bergen Brunswig  Corporation  Stock Option Plans,  other
            than the Amended and Restated 1989 Stock Incentive Plan.

 *10(g)     Form of Amended and Restated Capital  Accumulation  Plan
            is  set  forth  as   Exhibit   10.2  in  the   Company's
            Registration  Statement on Form S-3 and  Amendment  No.1
            thereto  relating to a shelf offering of $400 million in
            securities  filed  February 1, 1996 and March 19,  1996,
            respectively (file no. 333-631).

  10(h)     Amended and Restated  Supplemental  Executive Retirement
            Plan dated September 24, 1998.                               68

 *10(i)     Amendment  No.1  to the  Amended  and  Restated  Capital
            Accumulation  Plan is set forth as Exhibit  10(m) in the
            Company's Annual Report on Form 10-K for the fiscal year
            ended September 30, 1996.

 *10(j)     Amended and Restated  Executive Loan Program dated March
            3, 1995 is set forth as Exhibit  10(g) in the  Company's
            Annual  Report on Form 10-K for the  fiscal  year  ended
            September 30, 1995.

 *10(k)     Employment Agreement and Schedule.

 *10(l)     Severance Agreement and Schedule.

            Exhibits  10(k) and 10(l) above are set forth as Exhibit
            10(q) and 10(r) in the  Company's  Annual Report on Form
            10-K for the fiscal year ended September 30, 1994.

 *10(m)     Stock Purchase Agreement,  dated as of November 8, 1998,
            by  and  among  Stadtlander  Drug  Co.,  Inc.,   Counsel
            Corporation,  Stadt Holdings Inc. and the Company is set
            forth as Exhibit 2.1 to the Company's Report on Schedule
            13D,  dated  November  18,  1998,  filed with respect to
            PharMerica, Inc.



<PAGE>


                          INDEX TO EXHIBITS (CONTINUED)
                          -----------------------------


EXHIBIT NO.                                                           PAGE NO.
-----------                                                           --------

    21      List of subsidiaries of Bergen Brunswig Corporation.         130

    23      Independent Auditors' Consent.                               131

    24      Power of Attorney is set forth on the Signature pages in
            Part IV of this Annual Report.

    27      Financial Data Schedule for the year ended September 30,
            1998.                                                        132

    99(a)   Statement Regarding Forward-Looking Information.             133

   *99(b)   Split Dollar Life  Insurance Plan with Robert E. Martini
            is set forth as Exhibit  99(b) in the  Company's  Annual
            Report on Form 10-K for the fiscal year ended  September
            30, 1997.

   *99(c)   Amended  and  Restated  Credit  Agreement  dated  as  of
            September  30, 1994 among Bergen  Brunswig Drug Company,
            Bergen Brunswig Corporation and Bank of America National
            Trust and  Savings  Association  is set forth as Exhibit
            99(h) in the  Company's  Annual  Report on Form 10-K for
            the fiscal year ended September 30, 1994.

   *99(d)   First and  Second  Amendments  to Amended  and  Restated
            Credit Agreement dated as of February 27, 1995 and March
            16, 1996, respectively,  are set forth as Exhibits 99(a)
            and  99(b),  respectively,  in the  Company's  Quarterly
            Report  on Form  10-Q for the  quarter  ended  March 31,
            1996.

    99(e)   Waiver Letter to Amended and Restated  Credit  Agreement
            dated as of October 23, 1998.                                134

   *99(f)   Item 1 - Legal  Proceedings  of Part II of the Company's
            Quarterly Report on Form 10-Q for the quarter ended June
            30, 1994, are  incorporated  herein by reference in Part
            I, Item 3 of this Annual Report.

    99(g)   Independent Auditors' Preferability Letter.                  139



<PAGE>


                          INDEX TO EXHIBITS (CONTINUED)
                          -----------------------------


EXHIBIT NO.                                                           PAGE NO.
-----------                                                           --------


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

**       Incorporated  herein by reference to the exhibits  filed as part of the
         Company's Registration Statement on Form S-3 (Registration No. 33-5530)
         and  Amendment  Nos.  1 and  2  thereto  relating  to  an  offering  of
         $43,000,000  principal  amount  of  6  7/8%  Exchangeable  Subordinated
         Debentures due 2011, filed with the Securities and Exchange  Commission
         on May 8, July 1, and July 8, 1986, respectively.