SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 ----------------------- FORM 11-K ANNUAL REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 (Mark One) [ X ] ANNUAL REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934. For the fiscal year ended DECEMBER 31, 1998 ------------------------------------ or [ ] TRANSITION REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934. For the transition period from ____________ to ___________ Commission File Number 33- (AmeriSource Health Corporation) --------------- A. Full title of the plan and the address of the plan, if different from that of the issuer named below: AMERISOURCE CORPORATION EMPLOYEE INVESTMENT PLAN 300 CHESTER FIELD PARKWAY MALVERN, PA 19355 B. Name of issuer of the securities held pursuant to the plan and the address of its principal executive office: AMERISOURCE HEALTH CORPORATION 300 CHESTER FIELD PARKWAY MALVERN, PA 19355 AmeriSource Corporation Employee Investment Plan Financial Statements and Supplemental Schedules Years ended December 31, 1998 and 1997 Contents Report of Independent Auditors............................................. 1 Audited Financial Statements Statement of Assets Available for Benefits, With Fund Information, December 31, 1998.................................. 2 Statement of Assets Available for Benefits, With Fund Information, December 31, 1997.................................. 3 Statement of Changes in Assets Available for Benefits, With Fund Information, Year ended December 31, 1998....................... 4 Statement of Changes in Assets Available for Benefits, With Fund Information, Year ended December 31, 1997....................... 5 Notes to Financial Statements.............................................. 6 Supplemental Schedules Line 27a--Schedule of Assets Held for Investment Purposes..................10 Line 27d--Schedule of Reportable Transactions..............................11 Signatures.................................................................12 Exhibit Index..............................................................13 Exhibits Consent of Independent Auditors............................................ 1 [LETTERHEAD OF ERNST & YOUNG LLP] Report of Independent Auditors Trustees of the AmeriSource Corporation Employee Investment Plan We have audited the accompanying statements of assets available for benefits of the AmeriSource Corporation Employee Investment Plan as of December 31, 1998 and 1997, and the related statements of changes in assets available for benefits for the years then ended. These financial statements are the responsibility of the Plan'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 financial statements referred to above present fairly, in all material respects, the assets available for benefits of the Plan at December 31, 1998 and 1997, and the changes in its assets available for benefits for the years then ended, in conformity with generally accepted accounting principles. Our audits were performed for the purpose of forming an opinion on the financial statements taken as a whole. The accompanying supplemental schedules of assets held for investment purposes as of December 31, 1998 and reportable transactions for the year then ended, are presented for purposes of additional analysis and are not a required part of the financial statements but are supplementary information required by the Department of Labor's Rules and Regulations for Reporting and Disclosure under the Employee Retirement Income Security Act of 1974. These supplemental schedules are the responsibility of the Plan's management. The fund information in the statements of assets available for benefits and the statements of changes in assets available for benefits is presented for purposes of additional analysis rather than to present the assets available for benefits and changes in assets available for benefits of each fund. The supplemental schedules and fund information have been subjected to the auditing procedures applied in our audits of the financial statements and, in our opinion, are fairly stated in all material respects in relation to the financial statements taken as a whole. /s/Ernst & Young LLP June 24, 1999 AmeriSource Corporation Employee Investment Plan Statement of Assets Available for Benefits, With Fund Information December 31, 1998 FIDELITY FIDELITY FIDELITY FIDELITY RETIREMENT FIDELITY EQUITY- INTERMEDIATE FIDELITY ASSET MANAGER MONEY MARKET MAGELLAN FUND INCOME FUND BOND FUND OTC PORTFOLIO FUND PORTFOLIO - ----------------------------------------------------------------------------------------------------------------------------------- ASSETS Investments: At fair value: Shares of registered investment companies $21,430,570 $9,082,813 $2,726,839 $2,145,492 $1,059,415 $6,801,071 Common stock funds - - - - - - - --------------------------------------------------------------------------------------------------------------------------------- Total investments 21,430,570 9,082,813 2,726,839 2,145,492 1,059,415 6,801,071 Receivables: Participants' contribution 92,905 55,162 19,082 21,326 13,536 33,184 Employer's contribution 501,857 262,346 98,443 101,809 62,355 185,700 Total receivables 594,762 317,508 117,525 123,135 75,891 218,884 Assets available for benefits $22,025,332 $9,400,321 $2,844,364 $2,268,627 $1,135,306 $7,019,955 ================================================================================================================================= FIDELITY AMERISOURCE IKON UNISOURCE FIDELITY SPARTAN U.S. FIDELITY CORPORATION CORPORATION CORPORATION OVERSEAS EQUITY INDEX FREEDOM STOCK FUND STOCK FUND STOCK FUND FUND FUND INCOME FUND - ----------------------------------------------------------------------------------------------------------------------------------- ASSETS Investments: At fair value: Shares of registered investment companies $ - $ - $ - $ 74,932 $ 505,682 $ 37,431 Common stock funds 2,075,496 746,736 299,962 - - - - ----------------------------------------------------------------------------------------------------------------------------------- Total investments 2,075,496 746,736 299,962 74,932 505,682 37,431 Receivables: Participants' contribution 27,281 - - 2,764 6,594 650 Employer's contribution 155,730 - - 12,289 28,943 2,397 Total receivables 183,011 - - 15,053 35,537 3,047 Assets available for benefits $ 2,258,507 $ 746,736 $ 299,962 $ 89,985 $ 541,219 $ 40,478 ================================================================================================================================== FIDELITY FIDELITY FIDELITY FIDELITY FREEDOM FREEDOM FREEDOM FREEDOM 2000 FUND 2010 FUND 2020 FUND 2030 FUND TOTAL - ----------------------------------------------------------------------------------------------------------------------------------- ASSETS Investments: At fair value: Shares of registered investment companies $ 123,537 $ 162,679 $ 25,289 $ 33,794 $44,209,544 Common stock funds - - - - 3,122,194 - ----------------------------------------------------------------------------------------------------------------------------------- Total investments 123,537 162,679 25,289 33,794 47,331,738 Receivables: Participants' contribution 2,173 2,096 1,639 1,993 280,385 Employer's contribution 4,357 8,631 6,684 9,993 1,441,534 Total receivables 6,530 10,727 8,323 11,986 1,721,919 Assets available for benefits $ 130,067 $173,406 $33,612 $45,780 $49,053,657 ================================================================================================================================== See accompanying notes. AmeriSource Corporation Employee Investment Plan Statement of Assets Available for Benefits, With Fund Information December 31, 1997 FIDELITY FIDELITY FIDELITY FIDELITY FIDELITY FIDELITY RETIREMENT MAGELIAN EQUITY- INTERMEDIATE OTC ASSET MONEY MARKET FUND INCOME FUND BOND FUND PORTFOLIO MANAGER FUND PORTFOLIO ----------------------------------------------------------------------------------------------------------------------------------- ASSETS Investments: At fair value: Shares of registered investment companies $16,311,626 $8,348,672 $2,403,257 $1,437,923 $907,900 $5,722,710 Common stock funds - - - - - - - ---------------------------------------------------------------------------------------------------------------------------------- Total investments 16,311,626 8,348,672 2,403,257 1,437,923 907,900 5,722,710 Receivables: Participants' contribution 101,363 65,220 18,712 25,770 17,005 38,783 Employer's contribution 493,868 258,329 93,017 89,527 60,906 413,201 Total receivables 595,231 323,549 111,729 115,297 77,911 451,984 Assets available for benefits $16,906,857 $8,672,221 $2,514,986 $1,553,220 $985,811 $6,174,694 ================================================================================================================================== FIDELITY AMERISOURCE IKON UNISOURCE FIDELITY SPARTAN U.S. CORPORATION CORPORATION CORPORATION OVERSEAS EQUITY INDEX STOCK FUND STOCK FUND STOCK FUND FUND FUND - ---------------------------------------------------------------------------------------------------------------------------------- ASSETS Investments: At fair value: Shares of registered investment companies $ - $ - $ - $ 24,545 $101,243 Common stock funds 2,953,537 2,949,720 727,914 - - - ---------------------------------------------------------------------------------------------------------------------------------- Total investments 2,953,537 2,949,720 727,914 24,545 101,243 Receivables: Participants' contribution 41,116 - - 1,879 3,352 Employer's contribution 137,750 - - 5,420 10,683 Total receivables 178,866 - - 7,299 14,035 Assets available for benefits $ 3,132,403 $2,949,720 $ 727,914 $ 31,844 $115,278 ================================================================================================================================== FIDELITY FIDELITY FIDELITY FIDELITY FIDELITY FREEDOM FREEDOM FREEDOM FREEDOM FREEDOM INCOME FUND 2000 FUND 2010 FUND 2020 FUND 2030 FUND TOTAL - ---------------------------------------------------------------------------------------------------------------------------------- ASSETS Investments: At fair value: Shares of registered investment companies $ 1,541 $2,052 $ 1,539 $ 1,183 $ 2,072 $35,266,263 Common stock funds - - - - - 6,631,171 - ---------------------------------------------------------------------------------------------------------------------------------- Total investments 1,541 2,052 1,539 1,183 2,072 41,897,434 Receivables: Participants' contribution 299 292 488 319 1,035 315,633 Employer's contribution 727 605 570 2,842 3,405 1,570,850 Total receivables 1,026 897 1,058 3,161 4,440 1,886,483 Assets available for benefits $ 2,567 $2,949 $ 2,597 $ 4,344 $ 6,512 $43,783,917 ================================================================================================================================== See accompanying notes. AmeriSource Corporation Employee Investment Plan Statements of Changes in Assets Available for Benefits, With Fund Information Year ended December 31, 1998 FIDELITY FIDELITY RETIREMENT FIDELITY FIDELITY FIDELITY FIDELITY ASSET MONEY AMERISOURCE IKON MAGELLAN EQUITY- INTERMEDIATE OTC MANAGER MARKET CORPORATION CORPORATION FUND INCOME FUND BOND FUND PORTFOLIO FUND PORTFOLIO STOCK FUND STOCK FUND ------------------------------------------------------------------------------------------------ Additions: Investment income: Net appreciation (depreciation) in fair value of investments $ 4,330,245 $ 468,158 $ 22,340 $ 480,188 $ (43,265) $ - $ 268,738 $(1,900,230) Interest and dividends 1,030,695 523,004 159,378 115,232 193,508 348,373 3,747 - ------------------------------------------------------------------------------------------------ 5,360,940 991,162 181,718 595,420 150,243 348,373 272,485 (1,900,230) Contributions: Participants 1,158,658 720,772 220,400 274,516 173,343 427,692 369,622 - Employer 501,508 262,346 98,444 101,809 62,355 186,057 155,726 - ------------------------------------------------------------------------------------------------ 1,660,166 983,118 318,844 376,325 235,698 613,749 525,348 - ------------------------------------------------------------------------------------------------ Total additions (deductions) 7,021,106 1,974,280 500,562 971,745 385,941 962,122 797,833 (1,900,230) Deductions: Benefits paid to participants 1,830,351 1,278,340 261,054 313,427 98,629 1,082,274 256,362 217,245 ------------------------------------------------------------------------------------------------ Net increase (decrease) prior to interfund transfers 5,190,755 695,940 239,508 658,318 287,312 (120,152) 541,471 (2,117,475) Interfund transfers (net) (72,280) 32,160 89,870 57,089 (137,817) 965,413 (1,415,367) (85,509) ------------------------------------------------------------------------------------------------ Net increase (decrease) 5,118,475 728,100 329,378 715,407 149,495 845,261 (873,896) (2,202,984) Assets available for benefits: Beginning of year 16,906,857 8,672,221 2,514,986 1,553,220 985,811 6,174,694 3,132,403 2,949,720 ------------------------------------------------------------------------------------------------ End of year $22,025,332 $9,400,321 $2,844,364 $2,268,627$1,135,306 $7,019,955 $ 2,258,507 $ 746,736 ================================================================================================ FIDELITY UNISOURCE FIDELITY SPARTAN U.S. FIDELITY FIDELITY FIDELITY FIDELITY CORPORATION OVERSEAS EQUITY INDEX FREEDOM FREEDOM FREEDOM FREEDOM STOCK FUND FUND FUND INCOME FUND 2000 FUND 2010 FUND 2020 FUND ------------------------------------------------------------------------------------- Additions: Investment income: Net appreciation (depreciation) in fair value of investments $(326,740) $ 475 $ 65,418 $ 988 $ 2,692 $ 4,760 $ 1,581 Interest and dividends - 1,688 6,521 729 5,547 7,023 994 ------------------------------------------------------------------------------------- (326,740) 2,163 71,939 1,717 8,239 11,783 2,575 Contributions: Participants - 28,343 61,514 5,380 11,057 18,695 14,367 Employer - 12,286 28,942 2,396 4,357 8,631 6,684 ------------------------------------------------------------------------------------- - 40,629 90,456 7,776 15,414 27,326 21,051 ------------------------------------------------------------------------------------- Total additions (deductions) (326,740) 42,792 162,395 9,493 23,653 39,109 23,626 Deductions: Benefits paid to participants 61,026 2,884 20,375 24 - 1,709 19,794 ------------------------------------------------------------------------------------- Net increase (decrease) prior to interfund transfers (387,766) 39,908 142,020 9,469 23,653 37,400 3,832 Interfund transfers (net) (40,186) 18,233 283,921 28,442 103,465 133,409 25,436 ------------------------------------------------------------------------------------- Net increase (decrease) (427,952) 58,141 425,941 37,911 127,118 170,809 29,268 Assets available for benefits: Beginning of year 727,914 31,844 115,278 2,567 2,949 2,597 4,344 ------------------------------------------------------------------------------------- End of year $ 299,962 $89,985 $541,219 $40,478 $130,067 $173,406 $33,612 ===================================================================================== FIDELITY FREEDOM 2030 FUND TOTAL --------------------------------- Additions: Investment income: Net appreciation (depreciation) in fair value of investments $ 482 $ 3,375,830 Interest and dividends 1,261 2,397,700 --------------------------------- 1,743 5,773,530 Contributions: Participants 31,377 3,515,736 Employer 9,993 1,441,534 --------------------------------- 41,370 4,957,270 --------------------------------- Total additions (deductions) 43,113 10,730,800 Deductions: Benefits paid to participants 17,566 5,461,060 --------------------------------- Net increase (decrease) prior to interfund transfers 25,547 5,269,740 Interfund transfers (net) 13,721 - --------------------------------- Net increase (decrease) 39,268 5,269,740 Assets available for benefits: Beginning of year 6,512 43,783,917 --------------------------------- End of year $45,780 $49,053,657 ====================================================================== SEE ACCOMPANYING NOTES. AmeriSource Corporation Employee Investment Plan Statements of Changes in Assets Available for Benefits, With Fund Information Year ended December 31, 1997 FIDELITY FIDELITY RETIREMENT FIDELITY FIDELITY FIDELITY FIDELITY ASSET MONEY MAGELIAN EQUITY- INTERMEDIATE OTC MANAGER MARKET FUND INCOME FUND BOND FUND PORTFOLIO FUND PORTFOLIO - ------------------------------------------------------------------------------------------------------------------------------------ Additions: Investment income: Net appreciation (depreciation) in fair value of investments $ 2,368,409 $ 1,395,721 $ 22,159 $ 28,223 $ 76,487 $ - Interest and dividends 1,076,826 458,693 151,852 99,891 79,391 304,666 - -------------------------------------------------------------------------------------------------------------------------------- 3,445,235 1,854,414 174,011 128,114 155,878 304,666 Contributions: Participants 1,065,379 705,104 207,072 227,387 174,841 614,904 Employer 493,441 258,632 93,017 85,857 61,146 416,755 Transfer of assets from 199,744 294,232 25,588 67,378 146,586 281,702 merged plan (Note 5) - -------------------------------------------------------------------------------------------------------------------------------- 1,758,564 1,257,968 325,677 380,622 382,573 1,313,361 - -------------------------------------------------------------------------------------------------------------------------------- Total additions (deductions) 5,203,799 3,112,382 499,688 508,736 538,451 1,618,027 Deductions: Benefits paid to participants 1,338,270 537,280 149,970 90,819 144,277 583,326 - -------------------------------------------------------------------------------------------------------------------------------- Net increase (decrease) prior to interfund transfers 3,865,529 2,575,102 349,718 417,917 394,174 1,034,701 Interfund transfers (net) (698,686) 131,495 (121,542) 24,260 (23,744) (84,364) - -------------------------------------------------------------------------------------------------------------------------------- Net increase (decrease) 3,166,843 2,706,597 228,176 442,177 370,430 950,337 Assets available for benefits: Beginning of year 13,740,014 5,965,624 2,286,810 1,111,043 615,381 5,224,357 - -------------------------------------------------------------------------------------------------------------------------------- End of year $16,906,857 $8,672,221 $2,514,986 $ 1,553,220 $985,811 $ 6,174,694 ================================================================================================================================ FIDELITY AMERISOURCE IKON UNISOURCE FIDELITY SPARTAN U.S. FIDELITY CORPORATION CORPORATION CORPORATION OVERSEAS EQUITY INDEX FREEDOM STOCK FUND STOCK FUND STOCK FUND FUND FUND INCOME FUND - ---------------------------------------------------------------------------------------------------------------------------------- Additions: Investment income: Net appreciation (depreciation) in fair value of investments $ 542,013 $(2,786,397) $ (331,911) $ (1,828) $ 2,087 $ (13) Interest and dividends 7,383 - - 1,184 822 28 - ----------------------------------------------------------------------------------------------------------------------------------- 549,396 (2,786,397) (331,911) (644) 2,909 15 Contributions: Participants 370,411 - - 5,199 9,880 1,201 Employer 137,750 - - 5,420 10,683 727 Transfer of assets from 195,624 - - - - - merged plan (Note 5) - ----------------------------------------------------------------------------------------------------------------------------------- 703,785 - - 10,619 20,563 1,928 - ----------------------------------------------------------------------------------------------------------------------------------- Total additions (deductions) 1,253,181 (2,786,397) (331,911) 9,975 23,472 1,943 Deductions: Benefits paid to participants 197,671 352,374 100,542 - 661 - - ----------------------------------------------------------------------------------------------------------------------------------- Net increase (decrease) prior to interfund transfers 1,055,510 (3,138,771) (432,453) 9,975 22,811 1,943 Interfund transfers (net) 823,536 (107,805) (62,389) 21,869 92,467 624 - ----------------------------------------------------------------------------------------------------------------------------------- Net increase (decrease) 1,879,046 (3,246,576) (494,842) 31,844 115,278 2,567 Assets available for benefits: Beginning of year 1,253,357 6,196,296 1,222,756 - - - - ----------------------------------------------------------------------------------------------------------------------------------- End of year $3,132,403 $ 2,949,720 $ 727,914 $31,844 $115,278 $2,567 =================================================================================================================================== FIDELITY FIDELITY FIDELITY FIDELITY FREEDOM FREEDOM FREEDOM FREEDOM 2000 FUND 2010 FUND 2020 FUND 2030 TOTAL - ----------------------------------------------------------------------------------------------------------------------------------- Additions: Investment income: Net appreciation (depreciation) in fair value of investments $ (54) $ (43) $ (40) $ (4,519) $ 1,310,294 Interest and dividends 67 52 40 1,914 2,182,809 - ----------------------------------------------------------------------------------------------------------------------------------- 13 9 - (2,605) 3,493,103 Contributions: Participants 1,182 1,518 747 3,837 3,388,662 Employer 605 570 2,842 3,405 1,570,850 Transfer of assets from - - - - 1,210,854 merged plan (Note 5) - ----------------------------------------------------------------------------------------------------------------------------------- 1,787 2,088 3,589 7,242 6,170,366 - ----------------------------------------------------------------------------------------------------------------------------------- Total additions (deductions) 1,800 2,097 3,589 4,637 9,663,469 Deductions: Benefits paid to participants - - - - 3,495,190 - ----------------------------------------------------------------------------------------------------------------------------------- Net increase (decrease) prior to interfund transfers 1,800 2,097 3,589 4,637 6,168,279 Interfund transfers (net) 1,149 500 755 1,875 - - ----------------------------------------------------------------------------------------------------------------------------------- Net increase (decrease) 2,949 2,597 4,344 6,512 6,168,279 Assets available for benefits: Beginning of year - - - - 37,615,638 - ----------------------------------------------------------------------------------------------------------------------------------- End of year $2,949 $2,597 $4,344 $ 6,512 $43,783,917 =================================================================================================================================== See accompanying notes. AmeriSource Corporation Employee Investment Plan Notes to Financial Statements Years ended December 31, 1998 and 1997 1. Description of Plan The following description of the AmeriSource Corporation Employee Investment Plan (Plan) provides only general information. Participants should refer to the Plan agreement for a more complete description of the Plan's provisions. General The Plan is a defined contribution plan. Participation is limited to salaried office or sales employees and certain hourly personnel of the Company who have at least one year of service and are age twenty-one or older. Effective October 1, 1997, the Plan was amended to allow participation after the later of six months of continuous employment or 1,000 hours of service during twelve consecutive months beginning with the first hour of service. The Plan is subject to the provisions of the Employee Retirement Income Security Act of 1974 (ERISA). Contributions Prior to October 1, 1997, participants could contribute between 2% and 6% of pretax annual compensation, as defined in the Plan. Effective October 1, 1997, the Plan was amended to increase allowable deferral percentage to between 2% and 18% of pretax annual compensation, as defined by the Plan. The Company contributed an amount equal to 60% of the participants' contributions up to 6% to the Plan for 1998 and 1997. Additional amounts may be contributed at the option of the Company's Board of Directors. Upon enrollment, a participant may direct employee and employer contributions in 5% increments to any of the Plan's fund options. Participants may change their investment options at anytime. AmeriSource Corporation Employee Investment Plan Notes to Financial Statements (continued) 1. Description of Plan (continued) Participant Accounts Each participant's account is credited with the participant's contributions and allocations of (a) the Company's contributions and (b) Plan earnings. Allocations are based on participant earnings or account balances, as defined. Forfeited balances of terminated participants' nonvested accounts are used to reduce future company contributions. The balance of forfeited nonvested accounts was not material as of December 31, 1998 or 1997. The benefit to which a participant is entitled is the benefit that can be provided from the participant's account. Vesting Participants are immediately vested in their contributions plus actual earnings thereon. Vesting in the Company contribution portion of their accounts plus actual earnings thereon is based on years of continuous service. Participants vest 25% per year after two years of credited service in the Company's contribution until they are 100 percent vested after five years of credited service. Payment of Benefits On termination of service if the participant's account is less than $5,000 ($3,500 prior to January 1, 1998), a participant will receive a lump-sum amount equal to the vested value of his or her account. The participant will have the option to leave his or her account in the Plan if their balance is greater than $5,000 ($3,500 prior to January 1, 1998). Plan Termination Although it has not expressed any intent to do so, the Company has the right under the Plan to discontinue its contributions at any time and to terminate the Plan subject to the provisions of ERISA. In the event of Plan termination, participants will become 100 percent vested in their accounts. Administrative Expenses Administrative expenses of the Plan are paid by the Company. AmeriSource Corporation Employee Investment Plan Notes to Financial Statements (continued) 2. Summary of Accounting Policies Investment Valuation and Income Recognition The Plan's investments are stated at fair value. The shares of registered investment companies are valued at quoted market prices which represent the net asset values of shares held by the Plan at year end. The common stock is valued at the closing value of the last day of the Plan year. Purchases and sales of securities are recorded on a trade-date basis. Interest income is recorded on the accrual basis. Dividends are recorded on the ex- dividend date. Use of Estimates The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates that affect the amounts reported in the financial statements and accompanying notes. Actual results could differ from those estimates. 3. Investments The Plan's investments are held by Fidelity Investments. Investments that represent 5 percent or more of the Plan's net assets are separately identified. 4. Acquired Company Plan Merger Effective April 1, 1997, the Gulf Distribution Inc. Employees' Savings Plan was merged into the AmeriSource Corporation Employee Investment Plan. The merger increased Plan assets by approximately $1.2 million. 5. Income Tax Status The Plan has received a determination letter from the Internal Revenue Service dated February 16, 1995, stating that the Plan is qualified under Section 401(a) of the Internal Revenue Code ("the Code") and, therefore, the related trust is exempt from taxation. Once qualified, the Plan is required to operate in conformity with the Code to maintain its qualification. The Plan Administrator believes the Plan is being operated in compliance with the applicable requirements of the Code and, therefore, believes that the Plan is qualified and the related trust is tax exempt. AmeriSource Corporation Employee Investment Plan Notes to Financial Statements (continued) 6. Year 2000 Issue (Unaudited) The Plan Sponsor has determined that it will be necessary to take certain steps in order to ensure that the Plan's information systems are prepared to handle year 2000 dates. The Plan Sponsor is taking a two-phase approach. The first phase addresses internal systems that must be modified or replaced to function properly. Both internal and external resources are being utilized to replace or modify existing software applications, and test the software and equipment for the year 2000 modifications. The Plan Sponsor anticipates substantially completing this phase of the project by June 1999. Costs associated with modifying software and equipment are not estimated to be significant and will be paid by the Plan Sponsor. For the second phase of the project, Plan management established formal communications with its third-party service providers to determine that they have developed plans to address their own year 2000 problems as they relate to the Plan's operations. All third-party service providers have indicated that they will be year 2000 compliant by early 1999. If modifications of data processing systems of either the Plan, the Plan Sponsor, or its service providers are not completed timely, the year 2000 problem could have a material impact on the operations of the Plan. Plan management has not developed a contingency plan, because it is confident that all systems will be year 2000 ready. AmeriSource Corporation Employee Investment Plan Line 27a - Schedule of Assets Held for Investment Purposes December 31, 1998 Description of Investment, Including Identity of Issue, Maturity Date, Rate of Borrower, Lessor, or Interest, Par or Maturity Current Similar Party Value Cost Value - ------------------------------------------------------------------------------------------- *Fidelity Investments Magellan Fund 177,376 shares $14,022,850 $21,430,570 Equity-Income Fund 163,507 shares 6,621,060 9,082,813 Intermediate Bond Fund 265,515 shares 2,701,817 2,726,839 OTC Portfolio Fund 49,174 shares 1,613,317 2,145,492 Asset Manager Fund 60,920 shares 1,057,606 1,059,415 Retirement Money Market Portfolio 6,799,541 shares 6,801,071 6,801,071 Overseas Fund 2,083 shares 74,953 74,932 Spartan U.S. Equity Index Fund 11,503 shares 440,888 505,682 Freedom Income Fund 3,348 shares 36,458 37,431 Freedom 2000 Fund 10,012 shares 120,900 123,537 Freedom 2010 Fund 12,232 shares 158,013 162,679 Freedom 2020 Fund 1,813 shares 23,572 25,289 Freedom 2030 Fund 2,433 shares 31,404 33,794 ---------------------------------- 33,703,909 44,209,544 AmeriSource Corporation Employee Investment Plan Line 27a - Schedule of Assets Held for Investment Purposes (continued) December 31, 1998 Description of Investment, Including Identity of Issue, Maturity Date, Rate of Borrower, Lessor, or Interest, Par or Maturity Current Similar Party Value Cost Value - ------------------------------------------------------------------------------------------ *AmeriSource Corporation Stock Fund 31,931 shares of common stock $ 1,485,615 $ 2,075,496 IKON Corporation Stock 87,205 shares of common Fund stock 321,873 746,736 Unisource Corporation 41,374 shares of common Stock Fund stock 304,053 299,962 _________________________________ 2,111,541 3,122,194 _________________________________ $35,815,450 $47,331,738 ================================= * Indicates party-in-interest to the Plan. AmeriSource Corporation Employee Investment Plan Line 27d - Schedule of Reportable Transactions Year ended December 31, 1998 CURRENT VALUE OF ASSET ON IDENTITY OF PURCHASE SELLING COST OF TRANSACTION PARTY INVOLVED DESCRIPTION OF ASSET PRICE PRICE ASSET DATE NET GAIN - --------------------------------------------------------------------------------------------------------------------------- Category (iii) - Series of transactions in excess of 5% of plan assets - ---------------------------------------------------------------------- Fidelity Investments Magellan Fund $3,568,553 $ - $3,568,553 $3,568,553 $ - - 2,779,854 2,212,259 2,779,854 567,595 Equity-Income Fund 2,282,965 - 2,282,965 2,282,965 - - 2,016,982 1,492,763 2,016,982 524,219 Retirement Money Market Portfolio 3,008,191 - 3,008,191 3,088,191 - - 1,929,830 1,929,830 1,929,830 - AmeriSource Corporation AmeriSource Corporation Stock Fund 830,741 - 830,741 830,741 - - 1,977,524 1,626,095 1,977,524 351,429 There were no category (i), (ii), or (iv) reportable transactions during 1998. "Lease Rental" and "Expenses Incurred with Transaction" are not applicable. SIGNATURES ---------- Pursuant to the requirements of the Securities Exchange Act of 1934, the trustees (or other persons who administer the employee benefit plan) have duly caused this annual report to be signed on its behalf by the undersigned thereunto duly authorized. AMERISOURCE CORPORATION EMPLOYEE INVESTMENT PLAN (Name of Plan) By: /s/ John A. Aberant ------------------------------ John A. Aberant Benefits Committee Dated: June 29, 1999 Exhibit Index ------------- Exhibit Page - ------- ---- 23 Consent of Ernst & Young LLP. . . . . . . . . . . 1