Exhibit 99.01
CARDINAL HEALTH, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF EARNINGS (UNAUDITED)
CONSOLIDATED STATEMENTS OF EARNINGS (UNAUDITED)
(in millions, except per Common Share amounts)
| FOURTH QUARTER | ||||||||||||
| June | June | |||||||||||
| 2005 | 2004 | % Change | ||||||||||
| Revenue | $ | 19,457.1 | $ | 16,922.7 | 15 | % | ||||||
| Cost of products sold | 18,090.4 | 15,698.7 | 15 | % | ||||||||
| Gross margin | 1,366.7 | 1,224.0 | 12 | % | ||||||||
| Selling, general and administrative expenses | 765.7 | 602.1 | 27 | % | ||||||||
| Impairment charges and other | 15.0 | (4.5 | ) | N.M. | ||||||||
| Special items | ||||||||||||
| Restructuring charges | 64.6 | 12.0 | N.M. | |||||||||
| Merger charges | 11.4 | 21.1 | N.M. | |||||||||
| Foundation contribution | — | 31.7 | N.M. | |||||||||
| Other | 9.9 | (25.4 | ) | N.M. | ||||||||
| Operating earnings | 500.1 | 587.0 | (15 | )% | ||||||||
| Interest expense and other | 38.4 | 28.3 | 36 | % | ||||||||
| Earnings before income taxes and discontinued operations | 461.7 | 558.7 | (17 | )% | ||||||||
| Provision for income taxes | 204.2 | 161.3 | 27 | % | ||||||||
| Earnings from continuing operations | 257.5 | 397.4 | (35 | )% | ||||||||
| Earnings/(loss) from discontinued operations (net of tax ($0.1) and $2.6 for the quarters ending June 30, 2005 and 2004, respectively) | 0.2 | (3.9 | ) | N.M. | ||||||||
| Net earnings | $ | 257.7 | $ | 393.5 | N.M. | |||||||
| Basic earnings per Common Share: | ||||||||||||
| Continuing operations | $ | 0.60 | $ | 0.92 | (35 | )% | ||||||
| Discontinued operations | — | (0.01 | ) | N.M. | ||||||||
| Net basic earnings per Common Share | $ | 0.60 | $ | 0.91 | N.M. | |||||||
| Diluted earnings per Common Share: | ||||||||||||
| Continuing operations | $ | 0.59 | $ | 0.91 | (35 | )% | ||||||
| Discontinued operations | — | (0.01 | ) | N.M. | ||||||||
| Net diluted earnings per Common Share | $ | 0.59 | $ | 0.90 | N.M. | |||||||
| Weighted average number of shares outstanding: | ||||||||||||
| Basic | 426.8 | 430.4 | ||||||||||
| Diluted | 432.4 | 436.7 | ||||||||||
The following table summarizes the impact of special items on net earnings and diluted earnings per Common Share in the quarters in which they were recorded:
| Current Year | Prior Year | |||||||||||||||
| Net | Diluted | Net | Diluted | |||||||||||||
| Earnings | EPS | Earnings | EPS | |||||||||||||
| Impact of special items | ||||||||||||||||
| Restructuring charges | $ | (54.7 | ) | $ | (0.12 | ) | $ | (7.9 | ) | $ | (0.02 | ) | ||||
| Merger charges | (6.9 | ) | (0.02 | ) | (13.2 | ) | (0.03 | ) | ||||||||
| Foundation contribution | — | — | (21.3 | ) | (0.05 | ) | ||||||||||
| Other | (15.1 | ) | (0.04 | ) | 17.1 | 0.04 | ||||||||||
| Impact of special items | $ | (76.7 | ) | $ | (0.18 | ) | $ | (25.3 | ) | $ | (0.06 | ) | ||||
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CARDINAL HEALTH, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF EARNINGS (UNAUDITED)
CONSOLIDATED STATEMENTS OF EARNINGS (UNAUDITED)
(in millions, except per Common Share amounts)
| YEAR - TO - DATE | ||||||||||||
| June | June | |||||||||||
| 2005 | 2004 | % Change | ||||||||||
| Revenue | $ | 74,910.7 | $ | 65,053.5 | 15 | % | ||||||
| Cost of products sold | 69,904.2 | 60,312.3 | 16 | % | ||||||||
| Gross margin | 5,006.5 | 4,741.2 | 6 | % | ||||||||
| Selling, general and administrative expenses | 2,861.5 | 2,346.5 | 22 | % | ||||||||
| Impairment charges and other | 118.0 | (11.5 | ) | N.M. | ||||||||
| Special items | ||||||||||||
| Restructuring charges | 203.0 | 37.1 | N.M. | |||||||||
| Merger charges | 48.9 | 44.7 | N.M. | |||||||||
| Foundation contribution | — | 31.7 | N.M. | |||||||||
| Other | 12.3 | (56.1 | ) | N.M. | ||||||||
| Operating earnings | 1,762.8 | 2,348.8 | (25 | )% | ||||||||
| Interest expense and other | 133.5 | 110.4 | 21 | % | ||||||||
| Earnings before income taxes, discontinued operations and cumulative effect of change in accounting | 1,629.3 | 2,238.4 | (27 | )% | ||||||||
| Provision for income taxes | 582.6 | 713.7 | (18 | )% | ||||||||
| Earnings from continuing operations before cumulative effect of change in accounting | 1,046.7 | 1,524.7 | (31 | )% | ||||||||
| Earnings/(loss) from discontinued operations (net of tax ($2.6) and $7.4 for the year-to-date periods ended June 30, 2005 and 2004, respectively) | 4.0 | (11.7 | ) | N.M. | ||||||||
| Cumulative effect of change in accounting | — | (38.5 | ) | N.M. | ||||||||
| Net earnings | $ | 1,050.7 | $ | 1,474.5 | N.M. | |||||||
| Basic earnings per Common Share: | ||||||||||||
| Continuing operations | $ | 2.43 | $ | 3.51 | (31 | )% | ||||||
| Discontinued operations | 0.01 | (0.03 | ) | N.M. | ||||||||
| Cumulative effect of change in accounting | — | (0.09 | ) | N.M. | ||||||||
| Net basic earnings per Common Share | $ | 2.44 | $ | 3.39 | N.M. | |||||||
| Diluted earnings per Common Share: | ||||||||||||
| Continuing operations | $ | 2.40 | $ | 3.47 | (31 | )% | ||||||
| Discontinued operations | 0.01 | (0.03 | ) | N.M. | ||||||||
| Cumulative effect of change in accounting | — | (0.09 | ) | N.M. | ||||||||
| Net diluted earnings per Common Share | $ | 2.41 | $ | 3.35 | N.M. | |||||||
| Weighted average number of shares outstanding: | ||||||||||||
| Basic | 430.5 | 434.4 | ||||||||||
| Diluted | 435.7 | 440.0 | ||||||||||
The following table summarizes the impact of special items on net earnings and diluted earnings per Common Share in the years in which they were recorded:
| Current Year | Prior Year | |||||||||||||||
| Net | Diluted | Net | Diluted | |||||||||||||
| Earnings | EPS | Earnings | EPS | |||||||||||||
| Impact of special items | ||||||||||||||||
| Restructuring charges | $ | (148.9 | ) | $ | (0.34 | ) | $ | (24.4 | ) | $ | (0.06 | ) | ||||
| Merger charges | (30.8 | ) | (0.07 | ) | (27.7 | ) | (0.06 | ) | ||||||||
| Foundation contribution | — | — | (21.3 | ) | (0.05 | ) | ||||||||||
| Other | (16.6 | ) | (0.04 | ) | 37.8 | 0.09 | ||||||||||
| Impact of special items | $ | (196.3 | ) | $ | (0.45 | ) | $ | (35.6 | ) | $ | (0.08 | ) | ||||
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CARDINAL HEALTH, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS (UNAUDITED)
CONSOLIDATED BALANCE SHEETS (UNAUDITED)
(in millions)
| June 30, | March 31, | June 30, | ||||||||||
| 2005 | 2005 | 2004 | ||||||||||
ASSETS | ||||||||||||
| Cash and equivalents | $ | 1,411.7 | $ | 1,549.5 | $ | 1,096.0 | ||||||
| Short-term investments | 99.8 | — | — | |||||||||
| Trade receivables, net | 3,451.0 | 3,293.0 | 3,432.7 | |||||||||
| Current portion of net investment in sales-type leases | 238.2 | 215.3 | 202.1 | |||||||||
| Inventories | 7,380.0 | 7,771.3 | 7,471.3 | |||||||||
| Prepaid expenses and other | 862.0 | 871.9 | 795.4 | |||||||||
| Assets held for sale from discontinued operations | — | 28.2 | 60.4 | |||||||||
| Total current assets | 13,442.7 | 13,729.2 | 13,057.9 | |||||||||
| Property and equipment, net | 2,484.0 | 2,372.0 | 2,364.0 | |||||||||
| Net investment in sales-type leases, less current portion | 693.8 | 640.9 | 546.0 | |||||||||
| Other assets | 5,438.7 | 5,396.4 | 5,401.2 | |||||||||
| TOTAL ASSETS | $ | 22,059.2 | $ | 22,138.5 | $ | 21,369.1 | ||||||
LIABILITIES AND SHAREHOLDERS’ EQUITY | ||||||||||||
| Notes payable and other short-term borrowings | $ | 307.9 | $ | 588.6 | $ | 860.6 | ||||||
| Accounts payable | 7,618.4 | 7,613.1 | 6,432.4 | |||||||||
| Other accrued liabilities | 2,178.7 | 1,802.7 | 2,021.3 | |||||||||
| Liabilities from discontinued operations | — | 44.6 | 55.1 | |||||||||
| Total current liabilities | 10,105.0 | 10,049.0 | 9,369.4 | |||||||||
| Long-term obligations, less current portion | 2,319.9 | 2,303.1 | 2,834.7 | |||||||||
| Deferred taxes and other liabilities | 1,041.3 | 1,112.2 | 1,188.7 | |||||||||
| Total shareholders’ equity | 8,593.0 | 8,674.2 | 7,976.3 | |||||||||
| TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY | $ | 22,059.2 | $ | 22,138.5 | $ | 21,369.1 | ||||||
In order to conform the current period presentation with prior periods, the Company recorded a balance sheet reclassification entry effecting current and long-term obligations, other accrued liabilities and accounts payable. In addition, as a result of the LIFO correction described in Item 2.02 of this Form 8-K/A, the Company recorded an entry to reflect the impact on current deferred tax assets (included in prepaid expenses and other) and federal income taxes payable (included in other accrued liabilities).
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CARDINAL HEALTH, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
(in millions)
| Three Months Ended | For the Year Ended | |||||||||||||||
| June 30, | June 30, | |||||||||||||||
| 2005 | 2004 | 2005 | 2004 | |||||||||||||
Cash Flows From Operating Activities: | ||||||||||||||||
| Earnings from continuing operations before cumulative effect of change in accounting | $ | 257.5 | $ | 397.4 | $ | 1,046.7 | $ | 1,524.7 | ||||||||
| Adjustments to reconcile earnings from continuing operations before cumulative effect of change in accounting to net cash from operations: | ||||||||||||||||
| Depreciation and amortization | 108.8 | 78.8 | 409.7 | 299.2 | ||||||||||||
| Asset impairments | 51.0 | 0.2 | 223.9 | 5.7 | ||||||||||||
| Change in operating assets and liabilities, net of effects from acquisitions: | ||||||||||||||||
| Decrease/(increase) in trade receivables | (158.0 | ) | 156.7 | (6.1 | ) | (455.6 | ) | |||||||||
| Decrease in inventories | 391.3 | 1,153.1 | 90.1 | 209.3 | ||||||||||||
| Decrease/(increase) in net investment in sales-type leases | (75.8 | ) | 58.2 | (183.9 | ) | (7.2 | ) | |||||||||
| Increase/(decrease) in accounts payable | 5.3 | (597.3 | ) | 1,180.5 | 1,014.6 | |||||||||||
| Other accrued liabilities and operating items, net | 219.2 | 42.2 | 89.3 | 34.0 | ||||||||||||
| Net cash provided by operating activities | 799.3 | 1,289.3 | 2,850.2 | 2,624.7 | ||||||||||||
Cash Flows From Investing Activities: | ||||||||||||||||
| Acquisition of subsidiaries, net of cash acquired | — | (1,528.5 | ) | (273.2 | ) | (2,089.7 | ) | |||||||||
| Proceeds from sale of property, equipment, and other assets | 1.2 | 11.2 | 19.9 | 19.5 | ||||||||||||
| Additions to property and equipment | (283.4 | ) | (138.2 | ) | (571.7 | ) | (410.2 | ) | ||||||||
| Proceeds from sale of discontinued operations | 7.9 | 38.3 | 47.4 | 43.4 | ||||||||||||
| Purchase of investment securities available for sale | (99.8 | ) | — | (99.8 | ) | — | ||||||||||
| Net cash used in investing activities | (374.1 | ) | (1,617.2 | ) | (877.4 | ) | (2,437.0 | ) | ||||||||
Cash Flows From Financing Activities: | ||||||||||||||||
| Net change in commercial paper and short-term debt | (4.6 | ) | 647.1 | (562.7 | ) | 646.2 | ||||||||||
| Net change in long-term obligations | (297.1 | ) | 229.8 | (652.9 | ) | (126.3 | ) | |||||||||
| Proceeds from issuance of Common Shares | 23.3 | 72.4 | 110.5 | 216.7 | ||||||||||||
| Purchase of treasury shares | (271.8 | ) | (39.7 | ) | (500.3 | ) | (1,500.0 | ) | ||||||||
| Dividends on Common Shares | (12.8 | ) | (12.9 | ) | (51.7 | ) | (52.3 | ) | ||||||||
| Net cash provided by/(used in) financing activities | (563.0 | ) | 896.7 | (1,657.1 | ) | (815.7 | ) | |||||||||
Net Increase/(Decrease) in Cash and Equivalents | (137.8 | ) | 568.8 | 315.7 | (628.0 | ) | ||||||||||
Cash and Equivalents at Beginning of Period | 1,549.5 | 527.2 | 1,096.0 | 1,724.0 | ||||||||||||
Cash and Equivalents at End of Period | $ | 1,411.7 | $ | 1,096.0 | $ | 1,411.7 | $ | 1,096.0 | ||||||||
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CARDINAL HEALTH, INC. AND SUBSIDIARIES
FOURTH QUARTER FY 2005 BUSINESS ANALYSIS
FOURTH QUARTER FY 2005 BUSINESS ANALYSIS
($ millions)
PHARMACEUTICAL DISTRIBUTION AND PROVIDER SERVICES
| 2005 | 2004 | |||||||
REVENUE | ||||||||
| - Amount | $ | 15,776 | $ | 13,566 | ||||
| - Growth rate | 16 | % | 12 | % | ||||
| - Mix | 80 | % | 79 | % | ||||
OPERATING EARNINGS | ||||||||
| - Amount | $ | 319 | $ | 277 | ||||
| - Growth rate | 15 | % | (3 | )% | ||||
| - Mix | 48 | % | 41 | % | ||||
| - Ratio to revenue | 2.02 | % | 2.04 | % | ||||
MEDICAL PRODUCTS AND SERVICES (1)
| 2005 | 2004 | |||||||
REVENUE | ||||||||
| - Amount | $ | 2,532 | $ | 2,405 | ||||
| - Growth rate | 5 | % | 14 | % | ||||
| - Mix | 13 | % | 14 | % | ||||
OPERATING EARNINGS | ||||||||
| - Amount | $ | 178 | $ | 184 | ||||
| - Growth rate | (3 | )% | 14 | % | ||||
| - Mix | 26 | % | 27 | % | ||||
| - Ratio to revenue | 7.05 | % | 7.66 | % | ||||
PHARMACEUTICAL TECHNOLOGIES AND SERVICES
| 2005 | 2004 | |||||||
REVENUE | ||||||||
| - Amount | $ | 782 | $ | 740 | ||||
| - Growth rate | 6 | % | 4 | % | ||||
| - Mix | 4 | % | 5 | % | ||||
OPERATING EARNINGS | ||||||||
| - Amount | $ | 85 | $ | 132 | ||||
| - Growth rate | (36 | )% | 14 | % | ||||
| - Mix | 13 | % | 19 | % | ||||
| - Ratio to revenue | 10.86 | % | 17.81 | % | ||||
CLINICAL TECHNOLOGIES AND SERVICES (2)
| 2005 | 2004 | |||||||
REVENUE | ||||||||
| - Amount | $ | 596 | $ | 424 | ||||
| - Growth rate | 40 | % | 11 | % | ||||
| - Mix | 3 | % | 2 | % | ||||
OPERATING EARNINGS | ||||||||
| - Amount | $ | 86 | $ | 87 | ||||
| - Growth rate | (1 | )% | (12 | )% | ||||
| - Mix | 13 | % | 13 | % | ||||
| - Ratio to revenue | 14.43 | % | 20.43 | % | ||||
| (1) | Certain expenses of Cardinal Health’s shared services center in Albuquerque, New Mexico have been classified within the Medical Products and Services segment. These expenses were $4.5 million and $4.6 million in fiscal 2005 and 2004, respectively. | |
| (2) | The fiscal 2004 results for the Clinical Technologies and Services segment have been adjusted to include Pyxis and Clinical Services and Consulting, but not Alaris, which was acquired by Cardinal Health in July 2004. |
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CARDINAL HEALTH, INC. AND SUBSIDIARIES
FOURTH QUARTER FY 2005 BUSINESS ANALYSIS
FOURTH QUARTER FY 2005 BUSINESS ANALYSIS
($ millions)
| TOTAL | EXCLUDING SPECIAL ITEMS | |||||||||||||||||
| 2005 | 2004 | 2005 | 2004 | |||||||||||||||
REVENUE | ||||||||||||||||||
| - Amount | $ | 19,457 | $ | 16,923 | ||||||||||||||
| - Growth rate | 15 | % | 11 | % | ||||||||||||||
OPERATING EARNINGS | ||||||||||||||||||
| - Amount | $ | 500 | $ | 587 | $ | 586 | $ | 626 | ||||||||||
| - Growth rate | (15 | )% | 7 | % | (6 | )% | 5 | % | ||||||||||
RATIO TO REVENUE | ||||||||||||||||||
| - Gross margin | 7.02 | % | 7.23 | % | ||||||||||||||
| - Expenses | 3.94 | % | 3.56 | % | ||||||||||||||
| - Impairment charges and other | 0.08 | % | (0.03 | )% | ||||||||||||||
| - Special items | 0.44 | % | 0.23 | % | ||||||||||||||
| - Operating earnings | 2.56 | % | 3.47 | % | 3.00 | % | 3.70 | % | ||||||||||
EARNINGS FROM CONTINUING OPERATIONS * | ||||||||||||||||||
| - Amount | $ | 258 | $ | 397 | $ | 334 | $ | 423 | ||||||||||
| - Growth rate | (35 | )% | 11 | % | (21 | )% | 8 | % | ||||||||||
| - Ratio to revenue | 1.33 | % | 2.35 | % | 1.72 | % | 2.50 | % | ||||||||||
PRODUCTIVITY | ||||||||||||||||||
| - Margin per expense dollar | $ | 1.78 | $ | 2.03 | ||||||||||||||
ASSET MANAGEMENT | ||||||||||||||||||
| - Operating cash flow | $ | 799 | $ | 1,289 | ||||||||||||||
| - Free cash flow | $ | 505 | $ | 1,149 | ||||||||||||||
| - Return on invested capital | 5.29 | % | 8.12 | % | 6.78 | % | 8.61 | % | ||||||||||
| * | The earnings from continuing operations section is presented before the cumulative effect of change in accounting. |
Margin per Expense Dollar = Ratio of Gross Margin to Expenses
See the GAAP / NON-GAAP RECONCILIATION schedule for the calculations and definitions supporting the balances excluding special items.
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CARDINAL HEALTH, INC. AND SUBSIDIARIES
FISCAL YEAR 2005 BUSINESS ANALYSIS
FISCAL YEAR 2005 BUSINESS ANALYSIS
($ millions)
PHARMACEUTICAL DISTRIBUTION AND PROVIDER SERVICES
| 2005 | 2004 | |||||||
REVENUE | ||||||||
| - Amount | $ | 60,844 | $ | 52,334 | ||||
| - Growth rate | 16 | % | 14 | % | ||||
| - Mix | 80 | % | 80 | % | ||||
OPERATING EARNINGS | ||||||||
| - Amount | $ | 1,040 | $ | 1,062 | ||||
| - Growth rate | (2 | )% | (2 | )% | ||||
| - Mix | 45 | % | 42 | % | ||||
| - Ratio to revenue | 1.71 | % | 2.03 | % | ||||
MEDICAL PRODUCTS AND SERVICES (1)
| 2005 | 2004 | |||||||
REVENUE | ||||||||
| - Amount | $ | 9,824 | $ | 9,143 | ||||
| - Growth rate | 7 | % | 14 | % | ||||
| - Mix | 13 | % | 14 | % | ||||
OPERATING EARNINGS | ||||||||
| - Amount | $ | 672 | $ | 695 | ||||
| - Growth rate | (3 | )% | 11 | % | ||||
| - Mix | 29 | % | 27 | % | ||||
| - Ratio to revenue | 6.85 | % | 7.60 | % | ||||
PHARMACEUTICAL TECHNOLOGIES AND SERVICES
| 2005 | 2004 | |||||||
REVENUE | ||||||||
| - Amount | $ | 2,976 | $ | 2,804 | ||||
| - Growth rate | 6 | % | 25 | % | ||||
| - Mix | 4 | % | 4 | % | ||||
OPERATING EARNINGS | ||||||||
| - Amount | $ | 337 | $ | 465 | ||||
| - Growth rate | (28 | )% | 26 | % | ||||
| - Mix | 14 | % | 18 | % | ||||
| - Ratio to revenue | 11.33 | % | 16.60 | % | ||||
CLINICAL TECHNOLOGIES AND SERVICES (2)
| 2005 | 2004 | |||||||
REVENUE | ||||||||
| - Amount | $ | 2,189 | $ | 1,551 | ||||
| - Growth rate | 41 | % | 10 | % | ||||
| - Mix | 3 | % | 2 | % | ||||
OPERATING EARNINGS | ||||||||
| - Amount | $ | 273 | $ | 337 | ||||
| - Growth rate | (19 | )% | 6 | % | ||||
| - Mix | 12 | % | 13 | % | ||||
| - Ratio to revenue | 12.48 | % | 21.71 | % | ||||
| (1) | Certain expenses of Cardinal Health’s shared services center in Albuquerque, New Mexico have been classified within the Medical Products and Services segment. These expenses were $18.2 million and $18.5 million in fiscal 2005 and 2004, respectively. | |
| (2) | The fiscal 2004 results for the Clinical Technologies and Services segment have been adjusted to include Pyxis and Clinical Services and Consulting, but not Alaris, which was acquired by Cardinal Health in July 2004. |
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CARDINAL HEALTH, INC. AND SUBSIDIARIES
FISCAL YEAR 2005 BUSINESS ANALYSIS
FISCAL YEAR 2005 BUSINESS ANALYSIS
($ millions)
| TOTAL | EXCLUDING SPECIAL ITEMS | |||||||||||||||||
| 2005 | 2004 | 2005 | 2004 | |||||||||||||||
REVENUE | ||||||||||||||||||
| - Amount | $ | 74,911 | $ | 65,053 | ||||||||||||||
| - Growth rate | 15 | % | 15 | % | ||||||||||||||
OPERATING EARNINGS | ||||||||||||||||||
| - Amount | $ | 1,763 | $ | 2,349 | $ | 2,027 | $ | 2,406 | ||||||||||
| - Growth rate | (25 | )% | 7 | % | (16 | )% | 8 | % | ||||||||||
RATIO TO REVENUE | ||||||||||||||||||
| - Gross margin | 6.68 | % | 7.29 | % | ||||||||||||||
| - Expenses | 3.82 | % | 3.61 | % | ||||||||||||||
| - Impairment charges and other | 0.16 | % | (0.02 | )% | ||||||||||||||
| - Special items | 0.35 | % | 0.09 | % | ||||||||||||||
| - Operating earnings | 2.35 | % | 3.61 | % | 2.70 | % | 3.70 | % | ||||||||||
EARNINGS FROM CONTINUING OPERATIONS * | ||||||||||||||||||
| - Amount | $ | 1,047 | $ | 1,525 | $ | 1,243 | $ | 1,560 | ||||||||||
| - Growth rate | (31 | )% | 10 | % | (20 | )% | 10 | % | ||||||||||
| - Ratio to revenue | 1.40 | % | 2.34 | % | 1.66 | % | 2.40 | % | ||||||||||
PRODUCTIVITY | ||||||||||||||||||
| - Margin per expense dollar | $ | 1.75 | $ | 2.02 | ||||||||||||||
ASSET MANAGEMENT | ||||||||||||||||||
| - Operating cash flow | $ | 2,850 | $ | 2,625 | ||||||||||||||
| - Free cash flow | $ | 2,247 | $ | 2,182 | ||||||||||||||
| - Return on invested capital | 5.35 | % | 7.96 | % | 6.29 | % | 8.14 | % | ||||||||||
| * | The earnings from continuing operations section is presented before the cumulative effect of change in accounting. |
Margin per expense dollar = Ratio of Gross Margin to Expenses
See the GAAP / NON-GAAP RECONCILIATION schedule for the calculations and definitions supporting the balances excluding special items.
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CARDINAL HEALTH, INC. AND SUBSIDIARIES
QUARTERLY FY 2005 BUSINESS ANALYSIS
($ millions)
PHARMACEUTICAL DISTRIBUTION AND PROVIDER SERVICES
| Q1 | Q2 | Q3 | Q4 | TOTAL | ||||||||||||||||
REVENUE | ||||||||||||||||||||
| - Amount | $ | 14,402 | $ | 15,059 | $ | 15,608 | $ | 15,776 | $ | 60,844 | ||||||||||
| - Growth rate | 16 | % | 15 | % | 18 | % | 16 | % | 16 | % | ||||||||||
| - Mix | 80 | % | 80 | % | 80 | % | 80 | % | 80 | % | ||||||||||
OPERATING EARNINGS | ||||||||||||||||||||
| - Amount | $ | 163 | $ | 213 | $ | 344 | $ | 319 | $ | 1,040 | ||||||||||
| - Growth rate | (29 | )% | (9 | )% | 8 | % | 15 | % | (2 | )% | ||||||||||
| - Mix | 38 | % | 39 | % | 50 | % | 48 | % | 45 | % | ||||||||||
| - Ratio to revenue | 1.13 | % | 1.42 | % | 2.20 | % | 2.02 | % | 1.71 | % | ||||||||||
MEDICAL PRODUCTS AND SERVICES (1)
| Q1 | Q2 | Q3 | Q4 | TOTAL | ||||||||||||||||
REVENUE | ||||||||||||||||||||
| - Amount | $ | 2,393 | $ | 2,427 | $ | 2,473 | $ | 2,532 | $ | 9,824 | ||||||||||
| - Growth rate | 11 | % | 6 | % | 7 | % | 5 | % | 7 | % | ||||||||||
| - Mix | 13 | % | 13 | % | 13 | % | 13 | % | 13 | % | ||||||||||
OPERATING EARNINGS | ||||||||||||||||||||
| - Amount | $ | 134 | $ | 165 | $ | 195 | $ | 178 | $ | 672 | ||||||||||
| - Growth rate | (14 | )% | — | 3 | % | (3 | )% | (3 | )% | |||||||||||
| - Mix | 32 | % | 31 | % | 28 | % | 26 | % | 29 | % | ||||||||||
| - Ratio to revenue | 5.57 | % | 6.81 | % | 7.89 | % | 7.05 | % | 6.85 | % | ||||||||||
PHARMACEUTICAL TECHNOLOGIES AND SERVICES
| Q1 | Q2 | Q3 | Q4 | TOTAL | ||||||||||||||||
REVENUE | ||||||||||||||||||||
| - Amount | $ | 705 | $ | 760 | $ | 729 | $ | 782 | $ | 2,976 | ||||||||||
| - Growth rate | 9 | % | 7 | % | 3 | % | 6 | % | 6 | % | ||||||||||
| - Mix | 4 | % | 4 | % | 4 | % | 4 | % | 4 | % | ||||||||||
OPERATING EARNINGS | ||||||||||||||||||||
| - Amount | $ | 81 | $ | 89 | $ | 82 | $ | 85 | $ | 337 | ||||||||||
| - Growth rate | (24 | )% | (22 | )% | (28 | )% | (36 | )% | (28 | )% | ||||||||||
| - Mix | 19 | % | 16 | % | 12 | % | 13 | % | 14 | % | ||||||||||
| - Ratio to revenue | 11.46 | % | 11.68 | % | 11.31 | % | 10.86 | % | 11.33 | % | ||||||||||
CLINICAL TECHNOLOGIES AND SERVICES (2)
| Q1 | Q2 | Q3 | Q4 | TOTAL | ||||||||||||||||
REVENUE | ||||||||||||||||||||
| - Amount | $ | 524 | $ | 547 | $ | 522 | $ | 596 | $ | 2,189 | ||||||||||
| - Growth rate | 57 | % | 38 | % | 32 | % | 40 | % | 41 | % | ||||||||||
| - Mix | 3 | % | 3 | % | 3 | % | 3 | % | 3 | % | ||||||||||
OPERATING EARNINGS | ||||||||||||||||||||
| - Amount | $ | 46 | $ | 76 | $ | 65 | $ | 86 | $ | 273 | ||||||||||
| - Growth rate | (32 | )% | (21 | )% | (25 | )% | (1 | )% | (19 | )% | ||||||||||
| - Mix | 11 | % | 14 | % | 10 | % | 13 | % | 12 | % | ||||||||||
| - Ratio to revenue | 8.76 | % | 13.89 | % | 12.50 | % | 14.43 | % | 12.48 | % | ||||||||||
| (1) | Certain expenses of Cardinal Health’s shared services center in Albuquerque, New Mexico have been classified within the Medical Products and Services segment. These expenses were $4.7 million, $4.6 million, $4.4 million and $4.5 million in fiscal 2005, respectively, and were $4.6 million, $4.7 million, $4.6 million and $4.6 million in fiscal 2004, respectively. | |
| (2) | The fiscal 2004 results for the Clinical Technologies and Services segment have been adjusted to include Pyxis and Clinical Services and Consulting, but not Alaris, which was acquired by Cardinal Health in July 2004. |
The sum of the quarters may not equal year-to-date due to rounding
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CARDINAL HEALTH, INC. AND SUBSIDIARIES
QUARTERLY FY 2005 BUSINESS ANALYSIS
(EXCLUDING SPECIAL ITEMS)
($ millions)
| Q1 | Q2 | Q3 | Q4 | TOTAL | ||||||||||||||||
REVENUE | ||||||||||||||||||||
| - Amount | $ | 17,796 | $ | 18,555 | $ | 19,103 | $ | 19,457 | $ | 74,911 | ||||||||||
| - Growth rate | 16 | % | 13 | % | 17 | % | 15 | % | 15 | % | ||||||||||
OPERATING EARNINGS | ||||||||||||||||||||
| - Amount | $ | 390 | $ | 424 | $ | 628 | $ | 586 | $ | 2,027 | ||||||||||
| - Growth rate | (26 | )% | (27 | )% | (7 | )% | (6 | )% | (16 | )% | ||||||||||
RATIO TO REVENUE | ||||||||||||||||||||
| - Gross margin | 6.10 | % | 6.50 | % | 7.05 | % | 7.02 | % | 6.68 | % | ||||||||||
| - Expenses | 3.89 | % | 3.77 | % | 3.68 | % | 3.94 | % | 3.82 | % | ||||||||||
| - Impairment charges and other | 0.02 | % | 0.45 | % | 0.08 | % | 0.08 | % | 0.16 | % | ||||||||||
| - Operating earnings | 2.19 | % | 2.28 | % | 3.29 | % | 3.00 | % | 2.70 | % | ||||||||||
EARNINGS FROM CONTINUING OPERATIONS * | ||||||||||||||||||||
| - Amount | $ | 238 | $ | 275 | $ | 396 | $ | 334 | $ | 1,243 | ||||||||||
| - Growth rate | (28 | )% | (26 | )% | (9 | )% | (21 | )% | (20 | )% | ||||||||||
| - Ratio to revenue | 1.34 | % | 1.48 | % | 2.07 | % | 1.72 | % | 1.66 | % | ||||||||||
PRODUCTIVITY | ||||||||||||||||||||
| - Margin per expense dollar | $ | 1.57 | $ | 1.72 | $ | 1.92 | $ | 1.78 | $ | 1.75 | ||||||||||
ASSET MANAGEMENT | ||||||||||||||||||||
| - Operating cash flow | $ | 893 | $ | 626 | $ | 532 | $ | 799 | $ | 2,850 | ||||||||||
| - Free cash flow | $ | 777 | $ | 506 | $ | 460 | $ | 505 | $ | 2,247 | ||||||||||
| - Return on invested capital | 4.95 | % | 5.42 | % | 8.01 | % | 6.78 | % | 6.29 | % | ||||||||||
| * | The earnings from continuing operations section is presented before the cumulative effect of change in accounting. |
Margin Per Expense Dollar = Ratio of Gross Margin to Expenses
The sum of the quarters may not equal year-to-date due to rounding
See the GAAP / NON-GAAP RECONCILIATION schedule for the calculations and definitions supporting the balances excluding special items.
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CARDINAL HEALTH, INC. AND SUBSIDIARIES
FISCAL 2005 AND 2004 ASSET MANAGEMENT ANALYSIS
($ millions)
| 2005 | ||||||||||||||||||||
| Q1 | Q2 | Q3 | Q4 | YTD | ||||||||||||||||
RECEIVABLE DAYS | 16.4 | 13.3 | 14.8 | 16.0 | ||||||||||||||||
DAYS INVENTORY ON HAND | 39 | 38 | 35 | 33 | ||||||||||||||||
CASH AND EQUIVALENTS | $ | 1,152 | $ | 1,274 | $ | 1,550 | $ | 1,412 | ||||||||||||
DEBT | $ | 3,255 | $ | 2,820 | $ | 2,892 | $ | 2,628 | ||||||||||||
EQUITY | $ | 8,219 | $ | 8,559 | $ | 8,674 | $ | 8,593 | ||||||||||||
NET DEBT / TOTAL CAPITAL * | 20 | % | 15 | % | 13 | % | 11 | % | ||||||||||||
TANGIBLE NET WORTH * * | $ | 3,200 | $ | 3,519 | $ | 3,676 | $ | 3,496 | ||||||||||||
RETURN ON EQUITY | 10.8 | % | 9.7 | % | 17.1 | % | 11.9 | % | 12.5 | % | ||||||||||
RETURN ON EQUITY — EXCLUDING SPECIAL ITEMS | 11.7 | % | 13.0 | % | 18.3 | % | 15.4 | % | 14.7 | % | ||||||||||
TAX RATE FROM CONTINUING OPERATIONS | 32.0 | % | 32.9 | % | 32.3 | % | 44.2 | % | 35.8 | % | ||||||||||
TAX RATE FROM CONTINUING OPERATIONS — EXCLUDING SPECIAL ITEMS | 32.5 | % | 32.5 | % | 32.5 | % | 39.0 | % | 34.4 | % | ||||||||||
| 2004 | ||||||||||||||||||||
| Q1 | Q2 | Q3 | Q4 | YTD | ||||||||||||||||
RECEIVABLE DAYS | 17.5 | 17.4 | 17.5 | 17.7 | ||||||||||||||||
DAYS INVENTORY ON HAND | 45 | 44 | 45 | 38 | ||||||||||||||||
CASH AND EQUIVALENTS | $ | 992 | $ | 544 | $ | 527 | $ | 1,096 | ||||||||||||
DEBT | $ | 2,724 | $ | 2,726 | $ | 2,532 | $ | 3,695 | ||||||||||||
EQUITY | $ | 6,993 | $ | 7,456 | $ | 7,522 | $ | 7,976 | ||||||||||||
NET DEBT / TOTAL CAPITAL * | 20 | % | 23 | % | 21 | % | 25 | % | ||||||||||||
TANGIBLE NET WORTH * * | $ | 4,653 | $ | 4,558 | $ | 4,520 | $ | 3,038 | ||||||||||||
RETURN ON EQUITY | 17.6 | % | 20.7 | % | 23.0 | % | 20.5 | % | 20.3 | % | ||||||||||
RETURN ON EQUITY — EXCLUDING SPECIAL ITEMS | 18.1 | % | 20.5 | % | 23.2 | % | 21.8 | % | 20.7 | % | ||||||||||
TAX RATE FROM CONTINUING OPERATIONS | 33.2 | % | 32.9 | % | 32.7 | % | 28.9 | % | 31.9 | % | ||||||||||
TAX RATE FROM CONTINUING OPERATIONS — EXCLUDING SPECIAL ITEMS | 33.2 | % | 33.1 | % | 32.8 | % | 29.3 | % | 32.0 | % | ||||||||||
| * | Net debt to total capital= net debt / (net debt + shareholders’ equity) Net debt= long-term obligations + short-term obligations + notes payable banks – cash and equivalents – short-term investments | |
| ** | Tangible net worth= shareholders’ equity – goodwill and other intangibles |
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CARDINAL HEALTH, INC. AND SUBSIDIARIES
GAAP / NON-GAAP RECONCILIATION
($ millions)
FOURTH QUARTER FISCAL 2005
| GAAP* | Excluding | |||||||||||
| Basis | Special Items | Special Items | ||||||||||
REVENUE | ||||||||||||
| - Amount | $ | 19,457 | — | $ | 19,457 | |||||||
SPECIAL ITEMS | ||||||||||||
| - Restructuring charges | $ | 65 | $ | 65 | — | |||||||
| - Merger charges | 11 | 11 | — | |||||||||
| - Foundation contribution | — | — | — | |||||||||
| - Other | $ | 10 | $ | 10 | — | |||||||
OPERATING EARNINGS | ||||||||||||
| - Amount | $ | 500 | $ | 86 | $ | 586 | ||||||
| - Growth rate | (15 | )% | (6 | )% | ||||||||
| - Ratio to revenue (return on sales) | 2.56 | % | 3.00 | % | ||||||||
EARNINGS BEFORE INCOME TAXES | ||||||||||||
| - Amount | $ | 462 | $ | 86 | $ | 548 | ||||||
INCOME TAX PROVISION | ||||||||||||
| - Amount | $ | 204 | $ | 9 | $ | 213 | ||||||
EARNINGS FROM CONTINUING OPERATIONS | ||||||||||||
| - Amount | $ | 258 | $ | 76 | $ | 334 | ||||||
| - Growth rate | (35 | )% | (21 | )% | ||||||||
| - Ratio to revenue | 1.33 | % | 1.72 | % | ||||||||
| - Diluted EPS | $ | 0.59 | $ | 0.18 | $ | 0.77 | ||||||
FISCAL 2005
| GAAP* | Excluding | |||||||||||
| Basis | Special Items | Special Items | ||||||||||
REVENUE | ||||||||||||
| - Amount | $ | 74,911 | — | $ | 74,911 | |||||||
SPECIAL ITEMS | ||||||||||||
| - Restructuring charges | $ | 203 | $ | 203 | — | |||||||
| - Merger charges | 49 | 49 | — | |||||||||
| - Foundation contribution | — | — | — | |||||||||
| - Other | $ | 12 | $ | 12 | — | |||||||
OPERATING EARNINGS | ||||||||||||
| - Amount | $ | 1,763 | $ | 264 | $ | 2,027 | ||||||
| - Growth rate | (25 | )% | (16 | )% | ||||||||
| - Ratio to revenue (return on sales) | 2.35 | % | 2.70 | % | ||||||||
EARNINGS BEFORE INCOME TAXES | ||||||||||||
| - Amount | $ | 1,629 | $ | 264 | $ | 1,893 | ||||||
INCOME TAX PROVISION | ||||||||||||
| - Amount | $ | 582 | $ | 68 | $ | 650 | ||||||
EARNINGS FROM CONTINUING OPERATIONS | ||||||||||||
| - Amount | $ | 1,047 | $ | 196 | $ | 1,243 | ||||||
| - Growth rate | (31 | )% | (20 | )% | ||||||||
| - Ratio to revenue | 1.40 | % | 1.66 | % | ||||||||
| - Diluted EPS | $ | 2.40 | $ | 0.45 | $ | 2.85 | ||||||
FOURTH QUARTER FISCAL 2004
| GAAP* | Excluding | |||||||||||
| Basis | Special Items | Special Items | ||||||||||
REVENUE | ||||||||||||
| - Amount | $ | 16,923 | — | $ | 16,923 | |||||||
SPECIAL ITEMS | ||||||||||||
| - Restructuring Charges | $ | 12 | $ | 12 | — | |||||||
| - Merger Charges | 21 | 21 | — | |||||||||
| - Foundation Contribution | 31 | 31 | — | |||||||||
| - Other | ($25 | ) | ($25 | ) | — | |||||||
OPERATING EARNINGS | ||||||||||||
| - Amount | $ | 587 | $ | 39 | $ | 626 | ||||||
| - Growth Rate | 7 | % | 5 | % | ||||||||
| - Ratio to Revenue (Return on Sales) | 3.47 | % | 3.70 | % | ||||||||
EARNINGS BEFORE INCOME TAXES | ||||||||||||
| - Amount | $ | 559 | $ | 39 | $ | 598 | ||||||
INCOME TAX PROVISION | ||||||||||||
| - Amount | $ | 161 | $ | 13 | $ | 174 | ||||||
EARNINGS FROM CONTINUING OPERATIONS | ||||||||||||
| - Amount | $ | 397 | $ | 26 | $ | 423 | ||||||
| - Growth Rate | 11 | % | 8 | % | ||||||||
| - Ratio to Revenue | 2.35 | % | 2.50 | % | ||||||||
| - Diluted EPS | $ | 0.91 | $ | 0.06 | $ | 0.97 | ||||||
FISCAL 2004
| GAAP* | Excluding | |||||||||||
| Basis | Special Items | Special Items | ||||||||||
REVENUE | ||||||||||||
| - Amount | $ | 65,054 | — | $ | 65,054 | |||||||
SPECIAL ITEMS | ||||||||||||
| - Restructuring charges | $ | 37 | $ | 37 | — | |||||||
| - Merger charges | 45 | 45 | — | |||||||||
| - Foundation contribution | 31 | 31 | — | |||||||||
| - Other | ($56 | ) | ($56 | ) | — | |||||||
OPERATING EARNINGS | ||||||||||||
| - Amount | $ | 2,349 | $ | 57 | $ | 2,406 | ||||||
| - Growth rate | 7 | % | 8 | % | ||||||||
| - Ratio to revenue (return on sales) | 3.61 | % | 3.70 | % | ||||||||
EARNINGS BEFORE INCOME TAXES | ||||||||||||
| - Amount | $ | 2,238 | $ | 57 | $ | 2,295 | ||||||
INCOME TAX PROVISION | ||||||||||||
| - Amount | $ | 714 | $ | 22 | $ | 736 | ||||||
EARNINGS FROM CONTINUING OPERATIONS | ||||||||||||
| - Amount | $ | 1,525 | $ | 35 | $ | 1,560 | ||||||
| - Growth rate | 10 | % | 10 | % | ||||||||
| - Ratio to revenue | 2.34 | % | 2.40 | % | ||||||||
| - Diluted EPS | $ | 3.47 | $ | 0.08 | $ | 3.55 | ||||||
FREE CASH FLOW
($ millions)
($ millions)
| Q4 FY05 | Q4 FY04 | Fiscal 2005 | Fiscal 2004 | |||||||||||||
| Net cash provided by operating activities | $ | 799 | $ | 1,289 | $ | 2,850 | $ | 2,625 | ||||||||
| ADD: | ||||||||||||||||
| - Proceeds from sale of property and equipment | 2 | 11 | 20 | 19 | ||||||||||||
| LESS: | ||||||||||||||||
| - Additions to property and equipment | (283 | ) | (138 | ) | (572 | ) | (410 | ) | ||||||||
| - Dividends on Common Shares | (13 | ) | (13 | ) | (51 | ) | (52 | ) | ||||||||
Free Cash Flow | $ | 505 | $ | 1,149 | $ | 2,247 | $ | 2,182 | ||||||||
DEFINITIONS:
| * | GAAP — Amounts that conform with generally accepted accounting principles. |
Return on equity (excluding special items) =(Earnings from continuing operations + special items after tax) /average shareholders’ equity
Note: Average shareholders’ equity used in the return on equity calculation was $8.7 billion and $7.8 billion in the fourth quarter of fiscal 2005 and 2004, respectively, and $8.4 billion and $7.5 billion for year to date of fiscal 2005 and 2004, respectively.
Effective tax rate (excluding special items) =(Income tax provision + tax effect of special items) / (earnings before income taxes + special items)
Growth rate (excluding special items)= (Current quarter earnings excluding special items — prior year quarter earnings excluding special items)/ prior year quarter earnings excluding special items
Ratio to revenue (excluding special items) =Current quarter earnings excluding special items / revenue
Return on invested capital (excluding special items) =[Operating earnings excluding special items annualized x (1-effective tax rate, excluding special items)] / average (equity +debt + unrecorded goodwill)
Note: Average unrecorded goodwill used in return on invested capital calculation was $9.7 billion in fiscal 2005 and fiscal 2004.
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CARDINAL HEALTH, INC. AND SUBSIDIARIES
RECONCILIATION OF NON-RECURRING CHARGES
RECONCILIATION OF NON-RECURRING CHARGES
($ millions)
| Q4 FY05 | YTD FY05 | |||||||
| Impairment charges and other | $ | (15.0 | ) | $ | (118.0 | ) | ||
| Less: minority interest and realized currency translation adjustment | — | 19.4 | ||||||
| Net impairment charges | (15.0 | ) | (98.6 | ) | ||||
| Alaris inventory adjustment | — | (23.6 | ) | |||||
| Latex litigation | (11.8 | ) | (28.2 | ) | ||||
| Inventory adjustment — SKU rationalization | (0.6 | ) | (7.8 | ) | ||||
| Non-recurring charges before tax impact and HIA repatriation | (27.4 | ) | (158.2 | ) | ||||
| Tax impact | 9.4 | 52.1 | ||||||
| Sub total | (18.0 | ) | (106.1 | ) | ||||
| HIA repatriation tax provision | (26.3 | ) | (26.3 | ) | ||||
| Impact on net earnings | $ | (44.3 | ) | $ | (132.4 | ) | ||
| Weighted average diluted number of shares outstanding | 432.4 | 435.7 | ||||||
| Impact on EPS | $ | (0.11 | ) | $ | (0.31 | ) | ||
| Q4 FY04 | YTD FY04 | |||||||
| Impairment charges and other | $ | 4.5 | $ | 11.5 | ||||
| Tax impact | (1.3 | ) | (3.7 | ) | ||||
| Impact on net earnings | $ | 3.2 | $ | 7.8 | ||||
| Weighted average diluted number of shares outstanding | 436.7 | 440.0 | ||||||
| Impact on EPS | $ | 0.01 | $ | 0.02 | ||||
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