Exhibit 99.1
CARDINAL HEALTH, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF EARNINGS (UNAUDITED)
Fourth Quarter | |||||||||||
(in millions, except per Common Share amounts) | 2008 | 2007 | % Change | ||||||||
Revenue | $ | 22,925.6 | $ | 22,262.8 | 3 | % | |||||
Cost of products sold | 21,456.2 | 20,905.4 | 3 | % | |||||||
Gross margin | 1,469.4 | 1,357.4 | 8 | % | |||||||
Selling, general and administrative expenses | 901.3 | 819.3 | 10 | % | |||||||
Impairment charges and other | (10.0 | ) | (0.6 | ) | N.M. | ||||||
Special items: | |||||||||||
Restructuring charges | 10.9 | 11.7 | N.M. | ||||||||
Acquisition integration charges | 25.1 | 87.5 | N.M. | ||||||||
Litigation and other | 6.4 | 19.0 | N.M. | ||||||||
Operating earnings | 535.7 | 420.5 | 27 | % | |||||||
Interest expense and other | 47.4 | 19.1 | 148 | % | |||||||
Earnings before income taxes and discontinued operations | 488.3 | 401.4 | 22 | % | |||||||
Provision for income taxes | 166.7 | 163.7 | 2 | % | |||||||
Earnings from continuing operations | 321.6 | 237.7 | 35 | % | |||||||
Earnings / (loss) from discontinued operations (net of tax expense of $2.8 and $448.3 for the fourth quarter of fiscal 2008 and 2007, respectively) | (3.6 | ) | 664.5 | N.M. | |||||||
Net earnings | $ | 318.0 | $ | 902.2 | (65 | )% | |||||
Basic earnings / (loss) per Common Share: | |||||||||||
Continuing operations | $ | 0.90 | $ | 0.63 | 44 | % | |||||
Discontinued operations | (0.01 | ) | 1.76 | N.M. | |||||||
Net basic earnings per Common Share | $ | 0.89 | $ | 2.39 | (63 | )% | |||||
Diluted earnings / (loss) per Common Share: | |||||||||||
Continuing operations | $ | 0.89 | $ | 0.61 | 46 | % | |||||
Discontinued operations | (0.01 | ) | 1.72 | N.M. | |||||||
Net diluted earnings per Common Share | $ | 0.88 | $ | 2.33 | (62 | )% | |||||
Weighted average number of Common Shares outstanding: | |||||||||||
Basic | 355.5 | 378.2 | |||||||||
Diluted | 359.8 | 387.4 |
The results above reflect changes described in the Company’s August 13, 2008 Form 8-K.
- 1 -
CARDINAL HEALTH, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF EARNINGS (UNAUDITED)
Fiscal Year | % Change | |||||||||
(in millions, except per Common Share amounts) | 2008 | 2007 | ||||||||
Revenue | $ | 91,091.4 | $ | 86,852.0 | 5 | % | ||||
Cost of products sold | 85,457.3 | 81,606.7 | 5 | % | ||||||
Gross margin | 5,634.1 | 5,245.3 | 7 | % | ||||||
Selling, general and administrative expenses | 3,414.8 | 3,082.3 | 11 | % | ||||||
Impairment charges and other | (32.0 | ) | 17.3 | N.M. | ||||||
Special items: | ||||||||||
Restructuring charges | 65.7 | 40.1 | N.M. | |||||||
Acquisition integration charges | 44.9 | 101.5 | N.M. | |||||||
Litigation and other | 19.5 | 630.4 | N.M. | |||||||
Operating earnings | 2,121.2 | 1,373.7 | 54 | % | ||||||
Interest expense and other | 171.4 | 121.4 | 41 | % | ||||||
Earnings before income taxes and discontinued operations | 1,949.8 | 1,252.3 | 56 | % | ||||||
Provision for income taxes | 633.9 | 412.6 | 54 | % | ||||||
Earnings from continuing operations | 1,315.9 | 839.7 | 57 | % | ||||||
Earnings / (loss) from discontinued operations (net of tax expense of $31.9 and $20.4 for fiscal 2008 and 2007, respectively) | (15.3 | ) | 1,091.4 | N.M. | ||||||
Net earnings | $ | 1,300.6 | $ | 1,931.1 | (33 | )% | ||||
Basic earnings / (loss) per Common Share: | ||||||||||
Continuing operations | $ | 3.67 | $ | 2.13 | 73 | % | ||||
Discontinued operations | (0.04 | ) | 2.76 | N.M. | ||||||
Net basic earnings per Common Share | $ | 3.63 | $ | 4.89 | (26 | )% | ||||
Diluted earnings / (loss) per Common Share: | ||||||||||
Continuing operations | $ | 3.61 | $ | 2.07 | 74 | % | ||||
Discontinued operations | (0.04 | ) | 2.70 | N.M. | ||||||
Net diluted earnings per Common Share | $ | 3.57 | $ | 4.77 | (25 | )% | ||||
Weighted average number of Common Shares outstanding: | ||||||||||
Basic | 358.2 | 394.9 | ||||||||
Diluted | 364.0 | 404.7 |
The results above reflect changes described in the Company’s August 13, 2008 Form 8-K.
- 2 -
CARDINAL HEALTH, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS (UNAUDITED)
(in millions) | June 30, 2008 | June 30, 2007 | ||||
Assets | ||||||
Cash and equivalents | $ | 1,291.3 | $ | 1,308.8 | ||
Short-term investments available for sale | — | 132.0 | ||||
Trade receivables, net | 5,006.9 | 4,714.4 | ||||
Current portion of net investment in sales-type leases | 383.7 | 354.8 | ||||
Inventories | 6,768.8 | 7,383.2 | ||||
Prepaid expenses and other | 593.1 | 651.3 | ||||
Assets held for sale | 140.4 | — | ||||
Total current assets | 14,184.2 | 14,544.5 | ||||
Property and equipment, net | 1,737.2 | 1,647.0 | ||||
Net investment in sales-type leases, less current portion | 916.8 | 820.7 | ||||
Goodwill and other intangibles, net | 6,225.9 | 5,860.9 | ||||
Other assets | 384.1 | 280.7 | ||||
Total assets | $ | 23,448.2 | $ | 23,153.8 | ||
Liabilities and Shareholders’ Equity | ||||||
Current portion of long-term obligations and other short-term borrowings | $ | 159.0 | $ | 16.0 | ||
Accounts payable | 8,311.8 | 9,162.2 | ||||
Other accrued liabilities | 1,889.7 | 2,247.3 | ||||
Liabilities from businesses held for sale and discontinued operations | 15.4 | 34.2 | ||||
Total current liabilities | 10,375.9 | 11,459.7 | ||||
Long-term obligations, less current portion and other short-term borrowings | 3,687.4 | 3,457.3 | ||||
Deferred income taxes and other liabilities | 1,637.4 | 859.9 | ||||
Total shareholders’ equity | 7,747.5 | 7,376.9 | ||||
Total liabilities and shareholders’ equity | $ | 23,448.2 | $ | 23,153.8 | ||
The results above reflect changes described in the Company’s August 13, 2008 Form 8-K.
- 3 -
CARDINAL HEALTH, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
Fourth Quarter | Fiscal Year | |||||||||||||||
(in millions) | 2008 | 2007 | 2008 | 2007 | ||||||||||||
Cash Flows From Operating Activities: | ||||||||||||||||
Net earnings | $ | 318.0 | $ | 902.2 | $ | 1,300.6 | $ | 1,931.1 | ||||||||
(Earnings) / loss from discontinued operations | 3.6 | (664.5 | ) | 15.3 | (1,091.4 | ) | ||||||||||
Earnings from continuing operations | 321.6 | 237.7 | 1,315.9 | 839.7 | ||||||||||||
Adjustments to reconcile earnings from continuing operations to net cash provided by / (used in) operating activities: | ||||||||||||||||
Depreciation and amortization | 96.3 | 85.0 | 381.3 | 322.1 | ||||||||||||
Asset impairments and other | (10.6 | ) | 1.2 | (31.4 | ) | 19.2 | ||||||||||
Purchased in-process research and development | 18.0 | 84.5 | 18.0 | 84.5 | ||||||||||||
Equity compensation | 35.6 | 28.8 | 122.3 | 138.1 | ||||||||||||
Provision for deferred income taxes | 26.9 | 11.7 | 26.9 | 11.7 | ||||||||||||
Provision for bad debts | 3.8 | 7.0 | 26.1 | 24.0 | ||||||||||||
Change in operating assets and liabilities, net of effects from acquisitions: | ||||||||||||||||
(Increase) / decrease in trade receivables | (17.8 | ) | 36.6 | (312.7 | ) | (783.1 | ) | |||||||||
Decrease in inventories | 499.3 | 205.9 | 613.1 | 217.4 | ||||||||||||
Increase in net investment in sales-type leases | (41.1 | ) | (53.8 | ) | (124.9 | ) | (130.8 | ) | ||||||||
Increase / (decrease) in accounts payable | (595.9 | ) | (268.6 | ) | (813.1 | ) | 224.4 | |||||||||
Increase / (decrease) in other accrued liabilities and operating items, net | (89.4 | ) | (667.6 | ) | 337.6 | 35.8 | ||||||||||
Net cash provided by / (used in) operating activities - continuing operations | 246.7 | (291.6 | ) | 1,559.1 | 1,003.0 | |||||||||||
Net cash provided by / (used in) operating activities - discontinued operations | (4.4 | ) | 104.9 | (47.0 | ) | 220.1 | ||||||||||
Net cash provided by / (used in) operating activities | 242.3 | (186.7 | ) | 1,512.1 | 1,223.1 | |||||||||||
Cash Flows From Investing Activities: | ||||||||||||||||
Acquisition of subsidiaries, net of divestitures and cash acquired | (475.9 | ) | (1,480.9 | ) | (514.9 | ) | (1,629.8 | ) | ||||||||
Proceeds from sale of property and equipment | 22.4 | 5.6 | 32.6 | 9.2 | ||||||||||||
Additions to property and equipment | (124.5 | ) | (114.3 | ) | (376.1 | ) | (357.4 | ) | ||||||||
Sale of investment securities available for sale, net | — | 168.0 | 132.0 | 366.5 | ||||||||||||
Net cash used in investing activities - continuing operations | (578.0 | ) | (1,421.6 | ) | (726.4 | ) | (1,611.5 | ) | ||||||||
Net cash provided by investing activities - discontinued operations | — | 3,228.9 | — | 3,148.7 | ||||||||||||
Net cash provided by / (used in) investing activities | (578.0 | ) | 1,807.3 | (726.4 | ) | 1,537.2 | ||||||||||
Cash Flows From Financing Activities: | ||||||||||||||||
Net change in commercial paper and short-term borrowings | (202.7 | ) | (293.3 | ) | (0.5 | ) | (38.9 | ) | ||||||||
Reduction of long-term obligations | (4.6 | ) | (51.1 | ) | (21.5 | ) | (784.0 | ) | ||||||||
Proceeds from long-term obligations, net of issuance costs | 302.5 | 601.7 | 303.5 | 1,453.4 | ||||||||||||
Proceeds from issuance of Common Shares | 18.6 | 233.7 | 227.9 | 552.6 | ||||||||||||
Tax benefits from exercises of stock options | 26.8 | 1.1 | 42.1 | 29.9 | ||||||||||||
Dividends on Common Shares | (42.6 | ) | (34.9 | ) | (173.1 | ) | (144.4 | ) | ||||||||
Purchase of Common Shares in treasury | — | (1,636.7 | ) | (1,181.6 | ) | (3,662.0 | ) | |||||||||
Net cash provided by / (used in) financing activities - continuing operations | 98.0 | (1,179.5 | ) | (803.2 | ) | (2,593.4 | ) | |||||||||
Net cash provided by / (used in) financing activities - discontinued operations | — | 1.2 | — | (45.4 | ) | |||||||||||
Net cash provided by / (used) in financing activities | 98.0 | (1,178.3 | ) | (803.2 | ) | (2,638.8 | ) | |||||||||
Net increase / (decrease) in cash and equivalents | (237.7 | ) | 442.3 | (17.5 | ) | 121.5 | ||||||||||
Cash and equivalents at beginning of period | 1,529.0 | 866.5 | 1,308.8 | 1,187.3 | ||||||||||||
Cash and equivalents at end of period | $ | 1,291.3 | $ | 1,308.8 | $ | 1,291.3 | $ | 1,308.8 | ||||||||
The results above reflect changes described in the Company’s August 13, 2008 Form 8-K.
- 4 -
CARDINAL HEALTH, INC. AND SUBSIDIARIES
BUSINESS ANALYSIS
TOTAL COMPANY
Fourth Quarter | Non-GAAP Fourth Quarter | |||||||||||||||
(in millions) | 2008 | 2007 | 2008 | 2007 | ||||||||||||
Revenue | ||||||||||||||||
Amount | $ | 22,926 | $ | 22,263 | ||||||||||||
Growth Rate | 3 | % | 5 | % | ||||||||||||
Operating Earnings | ||||||||||||||||
Amount | $ | 536 | $ | 421 | $ | 568 | $ | 538 | ||||||||
Growth Rate | 27 | % | (14 | )% | 6 | % | 3 | % | ||||||||
Earnings from Continuing Operations | ||||||||||||||||
Amount | $ | 322 | $ | 238 | $ | 348 | $ | 345 | ||||||||
Growth Rate | 35 | % | (22 | )% | 1 | % | 5 | % | ||||||||
Fiscal Year | Non-GAAP Fiscal Year | |||||||||||||||
(in millions) | 2008 | 2007 | 2008 | 2007 | ||||||||||||
Revenue | ||||||||||||||||
Amount | $ | 91,091 | $ | 86,852 | ||||||||||||
Growth Rate | 5 | % | 9 | % | ||||||||||||
Operating Earnings | ||||||||||||||||
Amount | $ | 2,121 | $ | 1,374 | $ | 2,219 | $ | 2,163 | ||||||||
Growth Rate | 54 | % | (26 | )% | 3 | % | 12 | % | ||||||||
Earnings from Continuing Operations | ||||||||||||||||
Amount | $ | 1,316 | $ | 840 | $ | 1,385 | $ | 1,384 | ||||||||
Growth Rate | 57 | % | (28 | )% | — | 13 | % |
The results above reflect changes described in the Company’s August 13, 2008 Form 8-K.
Refer to the GAAP / Non-GAAP Reconciliation for definitions and calculations supporting the non-GAAP balances.
- 5 -
CARDINAL HEALTH, INC. AND SUBSIDIARIES
SEGMENT BUSINESS ANALYSIS
HEALTHCARE SUPPLY CHAIN SERVICES
Fourth Quarter | ||||||||
(in millions) | 2008 | 2007 | ||||||
PHARMACEUTICAL | ||||||||
Revenue | ||||||||
Amount | $ | 19,819 | $ | 19,556 | ||||
Growth Rate | 1 | % | 4 | % | ||||
Mix | 85 | % | 86 | % | ||||
Segment Profit | ||||||||
Amount | $ | 258 | $ | 303 | ||||
Growth Rate | (15 | )% | (3 | )% | ||||
Mix | 44 | % | 52 | % | ||||
Segment Profit Margin | 1.30 | % | 1.55 | % | ||||
MEDICAL | ||||||||
Revenue | ||||||||
Amount | $ | 2,082 | $ | 1,929 | ||||
Growth Rate | 8 | % | 5 | % | ||||
Mix | 9 | % | 9 | % | ||||
Segment Profit | ||||||||
Amount | $ | 81 | $ | 83 | ||||
Growth Rate | (3 | )% | (2 | )% | ||||
Mix | 14 | % | 14 | % | ||||
Segment Profit Margin | 3.89 | % | 4.32 | % | ||||
CLINICAL AND MEDICAL PRODUCTS | ||||||||
Fourth Quarter | ||||||||
(in millions) | 2008 | 2007 | ||||||
CLINICAL TECHNOLOGIES AND SERVICES | ||||||||
Revenue | ||||||||
Amount | $ | 780 | $ | 756 | ||||
Growth Rate | 3 | % | 17 | % | ||||
Mix | 3 | % | 3 | % | ||||
Segment Profit | ||||||||
Amount | $ | 156 | $ | 144 | ||||
Growth Rate | 8 | % | 50 | % | ||||
Mix | 26 | % | 24 | % | ||||
Segment Profit Margin | 20.01 | % | 19.06 | % | ||||
MEDICAL PRODUCTS AND TECHNOLOGIES | ||||||||
Revenue | ||||||||
Amount | $ | 727 | $ | 500 | ||||
Growth Rate | 46 | % | 14 | % | ||||
Mix | 3 | % | 2 | % | ||||
Segment Profit | ||||||||
Amount | $ | 95 | $ | 58 | ||||
Growth Rate | 63 | % | 27 | % | ||||
Mix | 16 | % | 10 | % | ||||
Segment Profit Margin | 13.01 | % | 11.60 | % |
Refer to definitions for an explanation of calculations.
- 6 -
CARDINAL HEALTH, INC. AND SUBSIDIARIES
SEGMENT BUSINESS ANALYSIS
HEALTHCARE SUPPLY CHAIN SERVICES
Fiscal Year | ||||||||
(in millions) | 2008 | 2007 | ||||||
PHARMACEUTICAL | ||||||||
Revenue | ||||||||
Amount | $ | 79,284 | $ | 76,573 | ||||
Growth Rate | 4 | % | 9 | % | ||||
Mix | 85 | % | 86 | % | ||||
Segment Profit | ||||||||
Amount | $ | 1,122 | $ | 1,300 | ||||
Growth Rate | (14 | )% | 14 | % | ||||
Mix | 50 | % | 59 | % | ||||
Segment Profit Margin | 1.41 | % | 1.70 | % | ||||
MEDICAL | ||||||||
Revenue | ||||||||
Amount | $ | 8,084 | $ | 7,514 | ||||
Growth Rate | 8 | % | 4 | % | ||||
Mix | 9 | % | 9 | % | ||||
Segment Profit | ||||||||
Amount | $ | 303 | $ | 318 | ||||
Growth Rate | (5 | )% | 1 | % | ||||
Mix | 14 | % | 14 | % | ||||
Segment Profit Margin | 3.75 | % | 4.23 | % | ||||
CLINICAL AND MEDICAL PRODUCTS | ||||||||
Fiscal Year | ||||||||
(in millions) | 2008 | 2007 | ||||||
CLINICAL TECHNOLOGIES AND SERVICES | ||||||||
Revenue | ||||||||
Amount | $ | 2,890 | $ | 2,687 | ||||
Growth Rate | 8 | % | 11 | % | ||||
Mix | 3 | % | 3 | % | ||||
Segment Profit | ||||||||
Amount | $ | 497 | $ | 386 | ||||
Growth Rate | 29 | % | 20 | % | ||||
Mix | 22 | % | 18 | % | ||||
Segment Profit Margin | 17.18 | % | 14.35 | % | ||||
MEDICAL PRODUCTS AND TECHNOLOGIES | ||||||||
Revenue | ||||||||
Amount | $ | 2,696 | $ | 1,836 | ||||
Growth Rate | 47 | % | 12 | % | ||||
Mix | 3 | % | 2 | % | ||||
Segment Profit | ||||||||
Amount | $ | 300 | $ | 198 | ||||
Growth Rate | 52 | % | 20 | % | ||||
Mix | 14 | % | 9 | % | ||||
Segment Profit Margin | 11.14 | % | 10.76 | % |
Refer to the definitions for an explanation of how the Company calculates segment profit.
- 7 -
CARDINAL HEALTH, INC. AND SUBSIDIARIES
ASSET MANAGEMENT ANALYSIS
Fourth Quarter | Fiscal Year | |||||||||||
2008 | 2007 | 2008 | 2007 | |||||||||
Receivable Days | 20.9 | 20.5 | ||||||||||
Days Inventory on Hand | 25 | 28 | ||||||||||
Debt to Total Capital | 33 | % | 32 | % | ||||||||
Net Debt to Capital | 25 | % | 22 | % | ||||||||
Return on Equity | 16.8 | % | 47.3 | % | 17.7 | % | 23.5 | % | ||||
Non-GAAP Return on Equity | 18.4 | % | 17.3 | % | 19.0 | % | 16.9 | % | ||||
Return on Invested Capital | 6.72 | % | 18.43 | % | 6.97 | % | 9.38 | % | ||||
Non-GAAP Return on Invested Capital | 8.00 | % | 7.00 | % | 8.06 | % | 7.14 | % | ||||
Effective Tax Rate from Continuing Operations | 34.1 | % | 40.8 | % | 32.5 | % | 33.0 | % | ||||
Non-GAAP Effective Tax Rate from Continuing Operations | 33.7 | % | 33.5 | % | 32.6 | % | 32.4 | % |
The results above reflect changes described in the Company’s August 13, 2008 Form 8-K.
Refer to the GAAP / Non-GAAP Reconciliation for non-GAAP calculations.
- 8 -
CARDINAL HEALTH, INC. AND SUBSIDIARIES
SCHEDULE OF NOTABLE ITEMS
Fourth Quarter | Fiscal Year | |||||||||||||||
(in millions, except per Common Share amounts) | 2008 | 2007 | 2008 | 2007 | ||||||||||||
Special Items | ||||||||||||||||
Restructuring charges | $ | (10.9 | ) | $ | (11.7 | ) | $ | (65.7 | ) | $ | (40.1 | ) | ||||
Acquisition integration charges | (25.1 | ) | (87.5 | ) | (44.9 | ) | (101.5 | ) | ||||||||
Litigation and other | (6.4 | ) | (19.0 | ) | (19.5 | ) | (630.4 | ) | ||||||||
Total special items | (42.4 | ) | (118.2 | ) | (130.1 | ) | (772.0 | ) | ||||||||
Tax benefit | 12.0 | 10.4 | 43.8 | 243.1 | ||||||||||||
Special items, net of tax | $ | (30.4 | ) | $ | (107.8 | ) | $ | (86.3 | ) | $ | (528.9 | ) | ||||
Decrease to diluted EPS from continuing operations | $ | (0.09 | ) | $ | (0.28 | ) | $ | (0.24 | ) | $ | (1.31 | ) | ||||
Impairment Charges and Other | ||||||||||||||||
Impairment charges and other | $ | 10.0 | $ | 0.6 | $ | 32.0 | $ | (17.3 | ) | |||||||
Tax benefit / (expense) | (6.0 | ) | (0.2 | ) | (14.4 | ) | 1.6 | |||||||||
Impairment charges and other, net of tax | $ | 4.0 | $ | 0.4 | $ | 17.6 | $ | (15.7 | ) | |||||||
Increase / (decrease) to diluted EPS from continuing operations | $ | 0.01 | $ | — | $ | 0.05 | $ | (0.04 | ) | |||||||
Weighted Average Number of Diluted Shares Outstanding | 359.8 | 387.4 | 364.0 | 404.7 |
The results above reflect changes described in the Company’s August 13, 2008 Form 8-K.
- 9 -
CARDINAL HEALTH, INC. AND SUBSIDIARIES
GAAP / NON-GAAP RECONCILIATION
Fourth Quarter 2008 | Fiscal Year 2008 | |||||||||||||||||||||||||||||
(in millions, except per Common Share amounts) | GAAP | Special Items | Impairment Charges and Other | Non-GAAP | GAAP | Special Items | Impairment Charges and Other | Non-GAAP | ||||||||||||||||||||||
Operating Earnings | ||||||||||||||||||||||||||||||
Amount | $ | 536 | $ | 42 | $ | (10 | ) | $ | 568 | $ | 2,121 | $ | 130 | $ | (32 | ) | $ | 2,219 | ||||||||||||
Growth Rate | 27 | % | 6 | % | 54 | % | 3 | % | ||||||||||||||||||||||
Provision for Income Taxes | $ | 167 | $ | 12 | $ | (6 | ) | $ | 173 | $ | 634 | $ | 44 | $ | (14 | ) | $ | 663 | ||||||||||||
Earnings from Continuing Operations | ||||||||||||||||||||||||||||||
Amount | $ | 322 | $ | 30 | $ | (4 | ) | $ | 348 | $ | 1,316 | $ | 86 | $ | (18 | ) | $ | 1,385 | ||||||||||||
Growth Rate | 35 | % | 1 | % | 57 | % | — | |||||||||||||||||||||||
Diluted EPS from Continuing Operations | ||||||||||||||||||||||||||||||
Amount | $ | 0.89 | $ | 0.09 | $ | (0.01 | ) | $ | 0.97 | $ | 3.61 | $ | 0.24 | $ | (0.05 | ) | $ | 3.80 | ||||||||||||
Growth Rate | 46 | % | 9 | % | 74 | % | 11 | % | ||||||||||||||||||||||
Fourth Quarter 2007 | Fiscal Year 2007 | |||||||||||||||||||||||||||||
GAAP | Special Items | Impairment Charges and Other | Non-GAAP | GAAP | Special Items | Impairment Charges and Other | Non-GAAP | |||||||||||||||||||||||
Operating Earnings | ||||||||||||||||||||||||||||||
Amount | $ | 421 | $ | 118 | $ | (1 | ) | $ | 538 | $ | 1,374 | $ | 772 | $ | 17 | $ | 2,163 | |||||||||||||
Growth Rate | (14 | )% | 3 | % | (26 | )% | 12 | % | ||||||||||||||||||||||
Provision for Income Taxes | $ | 164 | $ | 10 | — | $ | 174 | $ | 413 | $ | 243 | $ | 2 | $ | 657 | |||||||||||||||
Earnings from Continuing Operations | ||||||||||||||||||||||||||||||
Amount | $ | 238 | $ | 108 | — | $ | 345 | $ | 840 | $ | 529 | $ | 16 | $ | 1,384 | |||||||||||||||
Growth Rate | (22 | )% | 5 | % | (28 | )% | 13 | % | ||||||||||||||||||||||
Diluted EPS from Continuing Operations | ||||||||||||||||||||||||||||||
Amount | $ | 0.61 | $ | 0.28 | — | $ | 0.89 | $ | 2.07 | $ | 1.31 | $ | 0.04 | $ | 3.42 | |||||||||||||||
Growth Rate | (15 | )% | 14 | % | (24 | )% | 20 | % |
The results above reflect changes described in the Company’s August 13, 2008 Form 8-K.
The sum of the components may not equal the total due to rounding
- 10 -
CARDINAL HEALTH, INC. AND SUBSIDIARIES
GAAP / NON-GAAP RECONCILIATION
Fourth Quarter | Fiscal Year | |||||||||||||||
(in millions) | 2008 | 2007 | 2008 | 2007 | ||||||||||||
GAAP Return on Equity | 16.8 | % | 47.3 | % | 17.7 | % | 23.5 | % | ||||||||
Non-GAAP Return on Equity | ||||||||||||||||
Net earnings | $ | 318.0 | $ | 902.2 | $ | 1,300.6 | $ | 1,931.1 | ||||||||
Special items, net of tax, in continuing operations | 30.4 | 107.8 | 86.3 | 528.9 | ||||||||||||
Special items, net of tax, in discontinued operations | — | — | — | 4.4 | ||||||||||||
(Gain)/loss on sale of PTS, net of tax, in discontinued operations | — | (679.5 | ) | 7.6 | (1,072.4 | ) | ||||||||||
Adjusted net earnings | $ | 348.4 | $ | 330.5 | $ | 1,394.5 | $ | 1,392.0 | ||||||||
Annualized | $ | 1,393.6 | $ | 1,322.0 | $ | 1,394.5 | $ | 1,392.0 | ||||||||
Divided by average shareholders’ equity1 | $ | 7570.4 | $ | 7,623.2 | $ | 7,338.8 | $ | 8,213.2 | ||||||||
Non-GAAP return on equity | 18.4 | % | 17.3 | % | 19.0 | % | 16.9 | % | ||||||||
Fourth Quarter | Fiscal Year | |||||||||||||||
(in millions) | 2008 | 2007 | 2008 | 2007 | ||||||||||||
GAAP Return on Invested Capital | 6.72 | % | 18.43 | % | 6.97 | % | 9.38 | % | ||||||||
Non-GAAP Return on Invested Capital | ||||||||||||||||
Net earnings | $ | 318.0 | $ | 902.2 | $ | 1,300.6 | $ | 1,931.1 | ||||||||
Special items, net of tax, in continuing operations | 30.4 | 107.8 | 86.3 | 528.9 | ||||||||||||
Special items, net of tax, in discontinued operations | — | �� | — | 4.4 | ||||||||||||
Interest expense and other, net of tax | 30.4 | 12.2 | 109.7 | 77.7 | ||||||||||||
(Gain)/loss on sale of PTS, net of tax, in discontinued operations | — | (679.5 | ) | 7.6 | (1,072.4 | ) | ||||||||||
Adjusted net earnings | $ | 378.8 | $ | 342.7 | $ | 1,504.2 | $ | 1,469.7 | ||||||||
Annualized | $ | 1,515.2 | $ | 1,370.8 | $ | 1,504.2 | $ | 1,469.7 | ||||||||
Divided by average total invested capital2 | $ | 18,935.7 | $ | 19,583.8 | $ | 18,664.2 | $ | 20,580.7 | ||||||||
Non-GAAP return on invested capital | 8.00 | % | 7.00 | % | 8.06 | % | 7.14 | % |
The results above reflect changes described in the Company’s August 13, 2008 Form 8-K.
1 | The average shareholders’ equity shown above is calculated using the average of the prior and current quarters except for fiscal year which is calculated as the average of shareholders’ equity at the end of the prior years’ fourth quarter plus each of the current year quarters. |
2 | Total invested capital is calculated as the sum of the current portion of long-term obligations and other short-term borrowings, long-term obligations, current portion of long-term obligations and other short-term borrowings in discontinued operations, long-term obligations in discontinued operations, total shareholders’ equity and unrecorded goodwill. The average total invested capital is calculated using the average of total invested capital at the end of the prior and current quarters except for year-to-date which is calculated as the average of the prior years’ fourth quarter plus each of the current year quarters. Unrecorded goodwill is $7.5 billion for all periods presented. Current portion of long-term obligations and other short-term borrowings in discontinued operations, and long-term obligations in discontinued operations were $59.2 million, $46.6 million, $41.3 million and $12.3 million at June 30, 2006, September 30, 2006, December 31, 2006 and March 31, 2007, respectively. |
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CARDINAL HEALTH, INC. AND SUBSIDIARIES
GAAP / NON-GAAP RECONCILIATION
Fiscal Year | ||||||||
(in millions) | 2008 | 2007 | ||||||
Revenue | ||||||||
Clinical Technologies and Services | $ | 2,890 | $ | 2,687 | ||||
Medical Products and Technologies | 2,696 | 1,836 | ||||||
Combined Revenue | $ | 5,586 | $ | 4,523 | ||||
Combined Growth Rate | 24 | % | ||||||
Segment Profit | ||||||||
Clinical Technologies and Services | $ | 497 | $ | 386 | ||||
Medical Products and Technologies | 300 | 198 | ||||||
Combined Profit | $ | 797 | $ | 584 | ||||
Combined Growth Rate | 36 | % | ||||||
Fourth Quarter | ||||||||
(in millions) | 2008 | 2007 | ||||||
Clinical Technologies and Services revenue growth | 3 | % | ||||||
Clinical Technologies and Services revenue | $ | 779.8 | $ | 755.8 | ||||
Less: Pharmacy Services business unit revenue | (194.8 | ) | (218.7 | ) | ||||
Clinical Technologies and Services revenue excluding Pharmacy Services business unit revenue | $ | 585.0 | $ | 537.1 | ||||
Clinical Technologies and Services revenue growth excluding Pharmacy Services business unit revenue | 9 | % |
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CARDINAL HEALTH, INC. AND SUBSIDIARIES
GAAP / NON-GAAP RECONCILIATION
Fourth Quarter | Fiscal Year | |||||||||||||||
(in millions) | 2008 | 2007 | 2008 | 2007 | ||||||||||||
GAAP Effective Tax Rate from Continuing Operations | 34.1 | % | 40.8 | % | 32.5 | % | 33.0 | % | ||||||||
Non-GAAP Effective Tax Rate from Continuing Operations | ||||||||||||||||
Earnings before income taxes and discontinued operations | $ | 488.3 | $ | 401.4 | $ | 1949.8 | $ | 1,252.3 | ||||||||
Special items | 42.4 | 118.2 | 130.1 | 772.0 | ||||||||||||
Adjusted earnings before income taxes and discontinued operations | $ | 530.7 | $ | 519.6 | $ | 2,079.9 | $ | 2,024.3 | ||||||||
Provision for income taxes | $ | 166.7 | $ | 163.7 | $ | 633.9 | $ | 412.6 | ||||||||
Special items tax benefit | 12.0 | 10.4 | 43.8 | 243.1 | ||||||||||||
Adjusted provision for income taxes | $ | 178.7 | $ | 174.1 | $ | 677.7 | $ | 655.7 | ||||||||
Non-GAAP effective tax rate from continuing operations | 33.7 | % | 33.5 | % | 32.6 | % | 32.4 | % | ||||||||
Fourth Quarter | ||||||||||||||||
2008 | 2007 | |||||||||||||||
Debt to Total Capital | 33 | % | 32 | % | ||||||||||||
Net Debt to Capital | ||||||||||||||||
Current portion of long-term obligations and other short-term borrowings | $ | 159.0 | $ | 16.0 | ||||||||||||
Long-term obligations, less current portion and other short-term borrowings | 3,687.4 | 3,457.3 | ||||||||||||||
Debt | $ | 3,846.4 | $ | 3,473.3 | ||||||||||||
Cash and equivalents | (1,291.3 | ) | (1,308.8 | ) | ||||||||||||
Short-term investments available for sale | — | (132.0 | ) | |||||||||||||
Net debt | $ | 2,555.1 | $ | 2,032.5 | ||||||||||||
Total shareholders’ equity | $ | 7747.5 | $ | 7,376.9 | ||||||||||||
Capital | $ | 10,302.6 | $ | 9,409.4 | ||||||||||||
Net debt to capital | 25 | % | 22 | % |
The results above reflect changes described in the Company’s August 13, 2008 Form 8-K.
Forward-Looking Non-GAAP Financial Measures
The Company presents non-GAAP earnings from continuing operations and non-GAAP effective tax rate from continuing operations (and presentations derived from these financial measures) on a forward-looking basis. The most directly comparable forward-looking GAAP measures are earnings from continuing operations and effective tax rate from continuing operations. The Company is unable to provide a quantitative reconciliation of these forward-looking non-GAAP measures to the most comparable forward-looking GAAP measures because the Company cannot reliably forecast special items and impairment charges and other, which are difficult to predict and estimate and are primarily dependent on future events. Please note that the unavailable reconciling items could significantly impact the Company’s future financial results.
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CARDINAL HEALTH, INC. AND SUBSIDIARIES
DEFINITIONS
GAAP
Debt: long-term obligations plus short-term borrowings
Debt to Total Capital: debt divided by (debt plus total shareholders’ equity)
Diluted EPS from Continuing Operations: earnings from continuing operations divided by diluted weighted average shares outstanding
Effective Tax Rate from Continuing Operations: provision for income taxes divided by earnings before income taxes and discontinued operations
Operating Cash Flow: net cash provided by / (used in) operating activities from continuing operations
Segment Profit: segment revenue minus (segment cost of products sold and segment selling, general and administrative expenses)
Segment Profit Margin: segment profit divided by segment revenue
Segment Profit Mix: segment profit divided by total segment profit for all segments
Return on Equity:annualized net earnings divided by average shareholders’ equity
Return on Invested Capital: annualized net earnings divided by (average total shareholders’ equity plus debt plus unrecorded goodwill)
Revenue Mix:segment revenue divided by total segment revenue for all segments
NON-GAAP
Net Debt to Capital: net debt divided by (net debt plus total shareholders’ equity)
Net Debt:debt minus (cash and equivalents and short-term investments available for sale)
Non-GAAP Diluted EPS from Continuing Operations: non-GAAP earnings from continuing operations divided by diluted weighted average shares outstanding
Non-GAAP Diluted EPS from Continuing Operations Growth Rate: (current period non-GAAP diluted EPS from continuing operations minus prior period non-GAAP diluted EPS from continuing operations) divided by prior period non-GAAP diluted EPS from continuing operations
Non-GAAP Earnings from Continuing Operations:earnings from continuing operations excluding special items and impairment charges and other, both net of tax
Non-GAAP Earnings from Continuing Operations Growth Rate: (current period non-GAAP earnings from continuing operations minus prior period non-GAAP earnings from continuing operations) divided by prior period non-GAAP earnings from continuing operations
Non-GAAP Effective Tax Rate from Continuing Operations: (provision for income taxes adjusted for special items) divided by (earnings before income taxes and discontinued operations adjusted for special items)
Non-GAAP Operating Earnings: operating earnings excluding special items and impairment charges and other
Non-GAAP Operating Earnings Growth Rate:(current period non-GAAP operating earnings minus prior period non-GAAP operating earnings) divided by prior period non-GAAP operating earnings
Non-GAAP Return on Equity:(annualized current period net earnings plus special items minus special items tax benefit) divided by average shareholders’ equity1
Non-GAAP Return on Invested Capital: (annualized net earnings plus special items minus special items tax benefit plus interest expense and other) divided by (average total shareholders’ equity plus debt plus unrecorded goodwill)1
1 | For the three months ended June 30, 2007, the numerator in calculating this non-GAAP financial measure also excludes the $679.5 million gain, net of tax, on the sale of PTS recorded in discontinued operations in the fourth quarter of fiscal 2007. For the fiscal year ended June 30, 2008 and 2007 the numerator in calculating this non-GAAP financial measure also excludes the respective $7.6 million and $(1,072.4) million (gain) / loss, net of tax, on the sale of PTS recorded in discontinued operations. |
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