Exhibit 99.01
[CARDINAL HEALTH LOGO]
7000 Cardinal Place
Dublin, OH 43017
www.cardinal.com
FOR IMMEDIATE RELEASE
CONTACTS:
David Verbraska - Media
(614) 757-3690
Steve Fischbach - Investors
(614) 757-7067
CARDINAL HEALTH REPORTS RECORD THIRD QUARTER REVENUES AND EARNINGS
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DUBLIN, OHIO, APRIL 23, 2003 - Cardinal Health, Inc. (NYSE: CAH), the leading
provider of products and services supporting the health care industry, today
reported record results for its fiscal 2003 third quarter ended March 31, 2003
(as reported in accordance with generally accepted accounting principles):
o Earnings per diluted share from continuing operations grew 29 percent to
$0.85.
o Operating revenues increased to $12.8 billion, up 11 percent.
o Operating earnings rose 23 percent to $608 million.
o Earnings from continuing operations improved 28 percent to $385 million.
"This quarter's revenue and earnings performance was record setting and broad
based," said Robert D. Walter, chairman and chief executive officer. "High
quality earnings yielded record rates of return on sales, committed capital and
equity, while expense and capital efficiency generated significant cash flow.
Additionally, we continued to invest in our future during the quarter."
"Demonstrating the benefits of our diverse portfolio of health care businesses,
earnings were driven by strong gains in each of the company's business segments,
highlighted by a terrific quarter at Automation and Information Services and
Medical Products and Services. The integration of Syncor International
Corporation, which we acquired in early January 2003, is progressing smoothly
and the combined nuclear pharmacy services business in Pharmaceutical
Technologies and Services delivered a very strong quarter."
"We are confident in our financial guidance for the remainder of the year and
will enter fiscal year 2004 with momentum. Working with our customers, Cardinal
Health is creating quality and efficiency in health care and our company's focus
remains on producing long-term value for our customers and shareholders,"
concluded Walter.
-more-
CARDINAL HEALTH REPORTS RECORD THIRD QUARTER RESULTS
PAGE 2
For the first nine months of fiscal year 2003, Cardinal Health generated
exceptionally strong revenue, earnings and cash flow. Operating revenues
increased 13 percent over prior year to $37 billion. Before the cumulative
effect of change in accounting, earnings from continuing operations rose 25
percent to $1 billion and earnings per diluted share from continuing operations
increased 27 percent to $2.30. Year-to-date operating cash flow totaled $516
million versus a use of cash totaling $443 million during the same period a year
ago.
FINANCIAL HIGHLIGHTS
The company incurred special items during the quarter, consisting primarily of
merger related costs, partially offset by settlement income received in
conjunction with litigation against vitamin manufacturers for overcharges in
prior periods. These items totaled $9.8 million ($6.4 million after tax) in the
current quarter, versus $39.1 million ($24.7 million after tax) in the same
period last year.
The following discussion adjusts certain amounts as reported to exclude special
items incurred during the quarter. See the attached financial table for a
reconciliation of the reported amounts to the reported amounts excluding these
items and for related definitions and components.
o EARNINGS PER DILUTED SHARE from continuing operations rose 21 percent to a
third quarter record $0.86.
o OPERATING EARNINGS rose 16 percent to an all-time record $618 million.
o OPERATING REVENUES increased 11 percent to an all-time record $12.8
billion while SELLING, GENERAL & ADMINISTRATIVE EXPENSES (SG&A) grew only
seven percent. Productivity improvements across the company resulted in a
15 basis point decrease in SG&A expenses as a percent of sales.
o The increased productivity combined with strong revenue growth, resulted
in an all-time record RETURN ON SALES of 4.81 percent, a 19 basis point
improvement.
o The slower growth in SG&A was accompanied by continued strategic
INVESTMENT SPENDING, charged against current earnings, totaling more than
$30 million during the quarter.
o EARNINGS from continuing operations rose 20 percent to an all-time record $391
million.
o Strong asset management and lower interest rates contributed to a 23 percent
decline in INTEREST EXPENSE AND OTHER.
o TAX EFFICIENCY improved as the tax rate declined 70 basis points to 33.4
percent based on international business activity.
o RETURN ON COMMITTED CAPITAL reached an all-time record high at 38.2 percent, a
substantial increase of 650 basis points over the prior year. Significant
capital efficiency gains were realized, reflecting the company's focus on
productivity initiatives and working capital leverage.
CARDINAL HEALTH REPORTS RECORD THIRD QUARTER RESULTS
PAGE 3
o OPERATING CASH FLOW was a healthy $157 million for the quarter, bringing the
year-to-date operating cash flow to $516 million. This contrasts against the
prior year which required the use of $443 million of cash for operating
purposes in the nine months ended March 31, 2002. The differential of nearly
$1 billion on a year-to-date basis reflects the strong earnings performance
combined with a reduction in the cash used for owned inventories.
o RETURN ON EQUITY increased a substantial 120 basis points to an all-time
record 22.7 percent.
o The company's ratio of NET DEBT TO TOTAL CAPITAL was a third quarter record
low of 20 percent, a decrease from 21 percent in prior year even as the
company repurchased more of its shares.
o The Board of Directors authorized a $500 million extension of the SHARE
REPURCHASE PROGRAM in February 2003 which was completed during the quarter.
During the first nine months of the fiscal year, the company spent
approximately $1.2 billion to repurchase a total of 19.6 million shares, 9.5
million of which were purchased during the quarter.
SEGMENT HIGHLIGHTS
Cardinal Health reported balanced revenue and earnings growth with each of the
four segments posting record revenues, earnings and return on committed capital.
Strong productivity and working capital improvements were realized across the
company.
PHARMACEUTICAL DISTRIBUTION AND PROVIDER SERVICES (52 percent of operating
earnings)
Total revenues for the segment grew 10 percent to $10.4 billion, a third quarter
record. Pharmaceutical trading business revenue was down sharply due to a
decrease in product availability from manufacturers. PDPS segment revenue,
excluding the trading business, rose a healthy 15 percent driven by strong gains
from chain and mail order customers.
Operating earnings were an all-time record at $343 million, up 11 percent.
Continuing the recent trend, operating expenses declined an exceptional 47 basis
points to an all-time low of 1.60 percent, consistent with the rate experienced
in the second quarter. This favorable expense trend helped drive an all-time
record return on sales of 3.28 percent. Improved productivity, due to automation
investments and benefits from the consolidation of facilities, was the main
driver of the earnings performance. Strong earnings and exceptional working
capital management drove the return on committed capital to 39.1 percent, an
all-time high, up 820 basis points.
MEDICAL PRODUCTS AND SERVICES (24 percent of operating earnings)
Revenues grew by five percent to $1.6 billion, an all-time record. Growth
occurred across each of the major product lines with particular strength in
sales of self-manufactured medical-surgical products. This demand was driven by
sales of both existing and new products including the proprietary Procedure
Based Delivery Systems, custom sterile kits, and surgical and exam gloves.
Product demand and manufacturing productivity gains drove gross margin
CARDINAL HEALTH REPORTS RECORD THIRD QUARTER RESULTS
PAGE 4
improvements. Further productivity gains were made with SG&A declining 50 basis
points to a third quarter record low of 13.01 percent.
Operating earnings rose 18 percent to $164 million, an all-time record and
return on sales, also an all-time record, improved a substantial 107 basis point
to 9.95 percent. Earnings growth and working capital efficiency drove a
substantial gain in return on committed capital, which rose 430 basis points to
40.1 percent, an all-time high. New product introductions extended Cardinal
Health's market leadership positions including the recently FDA approved
Tiburon(TM), a fabric technology for surgical draping that expands the company's
leading infection control product line.
PHARMACEUTICAL TECHNOLOGIES AND SERVICES (14 percent of operating earnings)
Revenues rose 73 percent to $596 million based on the inclusion of Syncor
International Corporation, the acquisition of which was completed on January 1,
2003 combined with strong organic growth. The organic growth was driven by
increased volumes in several oral pharmaceutical products, continued strength in
sterile manufacturing, and solid performance from the company's existing nuclear
pharmacy services business. Demand was strong for sterile products, particularly
those utilizing blow-fill-seal technology, despite the temporary, planned
closure of the Albuquerque facility during the quarter for capacity expansion.
Demand for oral technologies such as Lilly's Zyprexa(R), used to combat
schizophrenia, and Mylan Laboratories' Amnesteem, for the treatment of acne,
showed sustained strength.
Operating earnings expanded 43 percent to $94 million, driven by solid revenue
growth and inclusion of results from Syncor's domestic operations. Return on
committed capital improved a significant 320 basis points to a third quarter
record 29.8 percent. The company continued to build scale to meet strong market
demand in proprietary sterile pharmaceutical manufacturing through facility
expansions in Albuquerque and Raleigh that will significantly increase its
capacity.
The integration of Syncor's network with the company's existing nuclear pharmacy
services infrastructure is proceeding well and will result in a projected
eighteen nuclear pharmacy consolidations representing approximately 10 percent
of total Nuclear Pharmacy Services facilities. Ten of these consolidations are
expected in the fourth quarter. Prior to the acquisition, Syncor had decided to
discontinue its imaging business and a portion of its international operations.
Subsequent to the completion of the acquisition, Cardinal Health decided to
discontinue all of the Syncor international operations. The liquidation of the
imaging and international operations is proceeding as planned with a substantial
number of imaging centers either sold or under contract to be sold. The
liquidation of both of these operations is expected to be completed by the end
of calendar year 2003.
AUTOMATION AND INFORMATION SERVICES (10 percent of operating earnings)
Revenues gained 17 percent to $166 million, a third quarter record, on strong
product demand for medication and supply automation product lines, renewals of
existing customer leases, and growing demand for bedside products such as
PATIENTSTATION(TM), an integrated point-of-care information system. The demand
for integration of the company's best-in-class offerings accelerated in the
areas of patient safety through Pyxis SafetyNet(TM) and medical-surgical and
pharmaceutical supply chain management through OneSource(SM) auto replenishment.
CARDINAL HEALTH REPORTS RECORD THIRD QUARTER RESULTS
PAGE 5
A favorable product mix, productivity gains driven by business model changes
implemented last year and expense productivity drove operating earnings up 21
percent to $64 million, a third quarter record. Gross margins improved 83 basis
points while SG&A expenses declined by 40 basis points. Return on sales improved
to a third quarter record of 38.72 percent. Return on committed capital
increased a significant 530 basis points to 44.5 percent, a third quarter
record. The ending backlog of committed contracts for Pyxis products awaiting
installation remained strong at $202 million at March 31, 2003.
WEBCAST TODAY
Cardinal Health will host a Webcast conference call today at 11 a.m.
Eastern Daylight Time to discuss its third quarter performance and outlook.
To access this discussion, please visit the Investor Relations page at
www.cardinal.com or dial the telephone call-in number - 706-679-0766.
A replay of the webcast will be available at the Investor Relations page at
www.cardinal.com. A replay will also be available until 12:00 midnight Eastern
Daylight Time April 25 by dialing 706-645-9291, pass code 8995698.
ABOUT CARDINAL HEALTH
Cardinal Health, Inc. (www.cardinal.com) is the leading provider of products and
services supporting the health care industry. Cardinal Health businesses
develop, manufacture, package and market products for patient care; develop
drug-delivery technologies; distribute pharmaceuticals, medical-surgical and
laboratory supplies; and offer consulting and other services that improve
quality and efficiency in health care. Headquartered in Dublin, Ohio, Cardinal
Health employs approximately 50,000 people on five continents and produces
annual revenues of more than $47 billion. Cardinal Health is ranked #19 on the
Fortune 500 list and was named one of "The World's Best" companies by Forbes
magazine in 2003.
---------------------------------------------
Except for historical information, all other information in this news release
consists of forward-looking statements within the meaning of the Private
Securities Litigation Reform Act of 1995. These forward-looking statements are
subject to risks and uncertainties that could cause actual results to differ
materially from those projected, anticipated or implied. The most significant of
these uncertainties are described in Cardinal Health's Form 10-K, Form 8-K and
Form 10-Q reports (including all amendments to those reports) and exhibits to
those reports, and include (but are not limited to) the costs, difficulties, and
uncertainties related to the integration of acquired businesses, the loss of one
or more key customer or supplier relationships, changes in the distribution
patterns or reimbursement rates for health-care products and/or services, the
costs and other effects of governmental regulation and legal and administrative
proceedings, and general economic and market conditions. Cardinal Health
undertakes no obligation to update or revise any forward-looking statements.
CARDINAL HEALTH, INC.
CONSOLIDATED STATEMENTS OF EARNINGS (UNAUDITED)
(IN MILLIONS, EXCEPT PER SHARE AMOUNTS)
THIRD QUARTER
---------------------------------------------------------------
March March
2003 2002 % Change
---------------------------------------------------------------
Operating revenue $ 12,837.3 $ 11,541.3 11%
Operating cost of products sold 11,643.2 10,472.8 11%
------------ -----------
Operating gross margin 1,194.1 1,068.5 12%
Bulk deliveries to customer warehouses and other 1,534.0 1,700.7 (10)%
Cost of products sold - bulk deliveries and other 1,534.0 1,700.7 (10)%
------------ -----------
Bulk gross margin - - N.M.
Selling, general and administrative expenses 576.1 536.0 7%
Special items - merger charges 15.9 39.1 N.M.
- other (6.1) - N.M.
------------ -----------
Operating earnings 608.2 493.4 23%
Interest expense and other 30.6 39.6 (23)%
------------ -----------
Earnings before income taxes and discontinued operations 577.6 453.8 27%
Provision for income taxes 192.7 153.5 26%
------------ -----------
Earnings from continuing operations 384.9 300.3 28%
Loss from discontinued operations (net of tax of $1.1) (1.8) - N.M.
------------ -----------
Net earnings $ 383.1 $ 300.3 N.M.
============ ===========
Basic earnings per Common Share:
Continuing operations $ 0.86 $ 0.67 28%
Discontinued operations (0.01) - N.M.
------------ -----------
Net basic earnings per Common Share $ 0.85 $ 0.67 N.M.
============ ===========
Diluted earnings per Common Share:
Continuing operations $ 0.85 $ 0.66 29%
Discontinued operations (0.01) - N.M.
------------ -----------
Net diluted earnings per Common Share $ 0.84 $ 0.66 N.M.
============ ===========
Weighted average number of shares outstanding:
Basic 449.1 449.9
Diluted 456.3 459.1
- ------------------------------------------------------------------------------
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 - merger charges $ (10.0) $ (0.02) $ (24.7) $ (0.05)
- other 3.6 0.01 - -
---------- ---------- ------------- ---------
Impact of special items $ (6.4) $ (0.01) $ (24.7) $ (0.05)
========== ========== ============= =========
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CARDINAL HEALTH, INC.
CONSOLIDATED STATEMENTS OF EARNINGS (UNAUDITED)
(IN MILLIONS, EXCEPT PER SHARE AMOUNTS)
YEAR-TO-DATE
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March March
2003 2002 % Change
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Operating revenue $ 36,960.2 $ 32,628.4 13%
Operating cost of products sold 33,679.7 29,644.7 14%
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Operating gross margin 3,280.5 2,983.7 10%
Bulk deliveries to customer warehouses and other 4,588.2 5,479.1 (16)%
Cost of products sold - bulk deliveries and other 4,588.2 5,479.1 (16)%
----------- -----------
Bulk gross margin - - N.M.
Selling, general and administrative expenses 1,623.0 1,552.4 5%
Special items - merger charges 49.3 68.2 N.M.
- other (58.4) - N.M.
----------- -----------
Operating earnings 1,666.6 1,363.1 22%
Interest expense and other 92.7 107.0 (13)%
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Earnings before income taxes, discontinued operations, and 1,573.9 1,256.1 25%
cumulative effect of change in accounting
Provision for income taxes 533.2 426.1 25%
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Earnings from continuing operations before
cumulative effect of change in accounting 1,040.7 830.0 25%
Loss from discontinued operations (net of tax of $1.1) (1.8) - N.M.
Cumulative effect of change in accounting - (70.1) N.M.
----------- -----------
Net earnings $ 1,038.9 $ 759.9 N.M.
=========== ===========
Basic earnings per Common Share:
Continuing operations $ 2.34 $ 1.85 26%
Discontinued operations (0.01) -
Cumulative effect of change in accounting - (0.16) N.M.
----------- -----------
Net basic earnings per Common Share $ 2.33 $ 1.69 N.M.
=========== ===========
Diluted earnings per Common Share:
Continuing operations $ 2.30 $ 1.81 27%
Discontinued operations (0.01) - N.M.
Cumulative effect of change in accounting - (0.15) N.M.
----------- -----------
Net diluted earnings per Common Share $ 2.29 $ 1.66 N.M.
=========== ===========
Weighted average number of shares outstanding:
Basic 445.8 449.8
Diluted 453.5 459.8
- ------------------------------------------------------------------------------
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 - merger charges $ (31.2) $ (0.07) $ (42.6) $ (0.09)
- other 31.3 0.07 - -
---------- ---------- ------------- ---------
Impact of special items $ 0.1 $ - $ (42.6) $ (0.09)
========== ========== ============= =========
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CARDINAL HEALTH, INC.
CONSOLIDATED BALANCE SHEETS
(IN MILLIONS)
(unaudited)
MARCH 31, June 30, March 31,
2003 2002 2002
-------------- ---------------- ----------------
ASSETS
CURRENT ASSETS
Cash and equivalents $ 545.2 $ 1,382.0 $ 869.2
Trade receivables 2,845.3 2,295.4 2,536.0
Current portion of investment in sales-type leases 185.7 218.3 204.6
Inventories 8,775.6 7,361.0 7,902.0
Prepaid expenses and other 710.5 649.9 870.8
Assets held for sale from discontinued operations 218.1 - -
------------- --------------- ---------------
Total current assets 13,280.4 11,906.6 12,382.6
------------- --------------- ---------------
Property and equipment - net 2,005.1 1,894.4 1,823.8
Investment in sales-type leases 589.5 618.6 569.6
Other assets 2,605.5 2,018.4 1,480.5
------------- --------------- ---------------
TOTAL ASSETS $ 18,480.5 $ 16,438.0 $ 16,256.5
============= =============== ===============
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES
Notes payable - banks and current portion of
long-term obligations $ 26.5 $ 18.2 $ 17.2
Accounts payable 6,465.2 5,504.5 5,266.9
Other accrued liabilities 1,465.0 1,287.7 1,486.6
Liabilities from discontinued operations 90.2 - -
------------- --------------- ---------------
Total current liabilities 8,046.9 6,810.4 6,770.7
------------- --------------- ---------------
Long-term obligations, less current portion 2,328.2 2,207.0 2,464.0
Deferred taxes and other liabilities 860.8 1,027.6 812.8
Total shareholders' equity 7,244.6 6,393.0 6,209.0
------------- --------------- ---------------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $ 18,480.5 $ 16,438.0 $ 16,256.5
============= =============== ===============
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CARDINAL HEALTH, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
(IN MILLIONS)
THREE MONTHS ENDED NINE MONTHS ENDED
-------------------------- ---------------------------
MARCH 31, MARCH 31,
-------------------------- ---------------------------
2003 2002 2003 2002
------------ ------------ ---------- ------------
CASH FLOWS FROM OPERATING ACTIVITIES:
Earnings from continuing operations before cumulative effect
of change in accounting $384.9 $300.3 $1,040.7 $830.0
Adjustments to reconcile earnings from continuing operations
before cumulative effect of change in accounting to net
cash from operations:
Depreciation and amortization 68.7 58.4 195.2 181.5
Change in operating assets and liabilities, net of
effects from acquisitions:
(Increase)/decrease in trade receivables (141.2) 27.4 (458.5) (127.5)
(Increase)/decrease in inventories (434.4) 353.2 (1,386.7) (1,609.2)
(Increase)/decrease in net investment in sales-type leases (74.5) (27.6) 61.7 133.9
Increase/(decrease) in accounts payable 305.6 (346.0) 895.6 (54.7)
Other operating items - net 47.8 138.5 167.8 203.2
------------------------- -----------------------------
Net cash provided by/(used in) operating activities 156.9 504.2 515.8 (442.8)
------------------------- -----------------------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Acquisition of subsidiaries, net of cash acquired 4.6 (8.1) (3.2) (10.9)
Proceeds from sale of property, equipment, and other assets 7.9 0.7 41.7 17.6
Additions to property and equipment (91.8) (64.8) (264.1) (186.1)
Proceeds from sale of discontinued operations 7.8 - 7.8 -
------------------------- -----------------------------
Net cash used in investing activities (71.5) (72.2) (217.8) (179.4)
------------------------- -----------------------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Net change in commercial paper and short-term debt 7.4 (286.3) 6.7 290.3
Net change in long-term obligations (34.5) 290.0 (41.5) 308.7
Proceeds from issuance of Common Shares 48.3 47.1 125.3 112.2
Purchase of Treasury Stock (549.0) (1.2) (1,191.7) (120.1)
Other (11.3) (11.3) (33.6) (33.8)
------------------------- -----------------------------
Net cash provided by/(used in) financing activities (539.1) 38.3 (1,134.8) 557.3
------------------------- -----------------------------
NET INCREASE/(DECREASE) IN CASH AND EQUIVALENTS (453.7) 470.3 (836.8) (64.9)
CASH AND EQUIVALENTS AT BEGINNING OF PERIOD 998.9 398.9 1,382.0 934.1
------------------------- -----------------------------
CASH AND EQUIVALENTS AT END OF PERIOD 545.2 869.2 545.2 869.2
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CARDINAL HEALTH, INC. - THIRD QUARTER FY 2003 BUSINESS ANALYSIS
($ MILLIONS)
PHARMACEUTICAL DISTRIBUTION AND PROVIDER SERVICES
2003 2002 COMMENT
---- ---- -------
.. REVENUE
- Amount $10,446 $9,513 Q3 RECORD
- Growth Rate 10% 13%
- Mix 81% 83%
.. OPERATING EARNINGS
- Amount $343 $310 RECORD
- Growth Rate 11% 22%
- Mix 52% 55%
.. RATIO TO REVENUE
- Gross Margin 4.88% 5.33% Mix, opportunity decline
- Expenses 1.60% 2.07% RECORD LOW
- Operating Earnings 3.28% 3.26% RECORD
.. PRODUCTIVITY
- Margin Per Expense Dollar $3.05 $2.57 19% improvement
.. ASSET MANAGEMENT
- Average Committed Capital $3,507 $4,012 Owned inventory decline
- Return On Committed Capital 39.1% 30.9% RECORD
- Operating Cash Flow ($11) $313 Timing - YTD +$1B
- Capital Expenditures Investment $17 $21
PHARMACEUTICAL TECHNOLOGIES AND SERVICES
2003 2002 COMMENT
---- ---- -------
.. REVENUE
- Amount $596 $345 RECORD
- Growth Rate 73% 7% Syncor impact
- Mix 5% 3%
.. OPERATING EARNINGS
- Amount $94 $66 RECORD
- Growth Rate 43% 18% Syncor impact
- Mix 14% 12%
.. RATIO TO REVENUE
- Gross Margin 31.75% 33.70% Syncor impact, mix
- Expenses 15.92% 14.60% Syncor impact, mix
- Operating Earnings 15.83% 19.10%
.. PRODUCTIVITY
- Margin Per Expense Dollar $1.99 $2.31 Syncor impact
.. ASSET MANAGEMENT
- Average Committed Capital $1,265 $994 Syncor, investments
- Return On Committed Capital 29.8% 26.6% Q3 RECORD
- Operating Cash Flow $132 $36
- Capital Expenditures Investment $43 $23
MEDICAL PRODUCTS AND SERVICES
2003 2002 COMMENT
---- ---- -------
.. REVENUE
- Amount $1,645 $1,561 RECORD
- Growth Rate 5% 4%
- Mix 13% 13%
.. OPERATING EARNINGS
- Amount $164 $139 RECORD
- Growth Rate 18% 15%
- Mix 24% 24%
.. RATIO TO REVENUE
- Gross Margin 22.96% 22.39% Self-manufactured mix
- Expenses 13.01% 13.51% Restructuring, productivity
- Operating Earnings 9.95% 8.88% RECORD
.. PRODUCTIVITY
- Margin Per Expense Dollar $1.77 $1.66 7% improvement
.. ASSET MANAGEMENT
- Average Committed Capital $1,632 $1,546 Working capital efficiency
- Return On Committed Capital 40.1% 35.8% RECORD
- Operating Cash Flow $41 $184
- Capital Expenditures Investment $15 $18
AUTOMATION AND INFORMATION SERVICES
2003 2002 COMMENT
---- ---- -------
.. REVENUE
- Amount $166 $142 Q3 RECORD
- Growth Rate 17% 27%
- Mix 1% 1%
.. OPERATING EARNINGS
- Amount $64 $53 Q3 RECORD
- Growth Rate 21% 29%
- Mix 10% 9%
.. RATIO TO REVENUE
- Gross Margin 69.89% 69.06% Productivity, mix
- Expenses 31.17% 31.57% Productivity
- Operating Earnings 38.72% 37.49% Q3 RECORD
.. PRODUCTIVITY
- Margin Per Expense Dollar $2.24 $2.19
.. ASSET MANAGEMENT
- Average Committed Capital $578 $544
- Return On Committed Capital 44.5% 39.2% Q3 RECORD
- Operating Cash Flow ($5) ($29)
- Capital Expenditures Investment $3 $3
- - Revenue and all ratios to revenue exclude bulk deliveries to customer
warehouses and other customer pass through charges.
- - Margin per expense dollar = ratio of gross margin to expenses
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CARDINAL HEALTH, INC. - THIRD QUARTER FY 2003 BUSINESS ANALYSIS
($ MILLIONS)
TOTAL
-----
2003 2002
---- ----
.. REVENUE
- Amount $12,837 $11,541 Excluding Special Charges
- Growth Rate 11% 12% 2003 2002
---- ----
.. OPERATING EARNINGS
- Amount $608 $493 $618 $533
- Growth Rate 23% 36% 16% 19%
.. RATIO TO REVENUE
- Gross Margin 9.30% 9.26%
- Expenses 4.49% 4.64%
- Special Charges 0.07% 0.34%
- Operating Earnings 4.74% 4.28% 4.81% 4.62%
.. NET EARNINGS*
- Amount $385 $300 $391 $325
- Growth Rate 28% 47% 20% 22%
- Ratio to Revenue 3.00% 2.60% 3.05% 2.81%
.. PRODUCTIVITY
- Margin Per Expense Dollar $2.07 $1.99
.. ASSET MANAGEMENT
- Average Committed Capital** $6,479 $6,710
- Return On Committed Capital** 37.6% 29.4% 38.2% 31.7%
- Operating Cash Flow $157 $504
- Capital Expenditures Investment $91 $65
- Revenue and all ratios to revenue exclude bulk deliveries to customer
warehouses and other customer pass through charges.
- Margin per expense dollar = ratio of gross margin to expenses
* The net earnings section is presented before discontinued operations.
** Average committed capital and return on committed capital excludes
discontinued operations.
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CARDINAL HEALTH, INC. - FIRST NINE MONTHS OF FY 2003 BUSINESS ANALYSIS
($ MILLIONS)
PHARMACEUTICAL DISTRIBUTION AND PROVIDER SERVICES
2003 2002
---- ----
. REVENUE
- Amount $30,270 $26,638
- Growth Rate 14% 16%
- Mix 82% 82%
. OPERATING EARNINGS
- Amount $900 $780
- Growth Rate 15% 23%
- Mix 51% 52%
. RATIO TO REVENUE
- Gross Margin 4.70% 5.06%
- Expenses 1.73% 2.13%
- Operating Earnings 2.97% 2.93%
. PRODUCTIVITY
- Margin Per Expense Dollar $2.71 $2.37
. ASSET MANAGEMENT
- Average Committed Capital $3,299 $3,531
- Return On Committed Capital 36.4% 29.4%
- Operating Cash Flow ($4) ($1,014)
- Capital Expenditures Investment $79 $49
PHARMACEUTICAL TECHNOLOGIES AND SERVICES
2003 2002
---- ----
. REVENUE
- Amount $1,399 $1,027
- Growth Rate 36% 12%
- Mix 4% 3%
. OPERATING EARNINGS
- Amount $252 $202
- Growth Rate 25% 16%
- Mix 14% 13%
. RATIO TO REVENUE
- Gross Margin 33.12% 34.28%
- Expenses 15.10% 14.72%
- Operating Earnings 18.02% 19.56%
. PRODUCTIVITY
- Margin Per Expense Dollar $2.19 $2.33
. ASSET MANAGEMENT
- Average Committed Capital $1,168 $965
- Return On Committed Capital 28.8% 27.8%
- Operating Cash Flow $179 $114
- Capital Expenditures Investment $122 $74
MEDICAL PRODUCTS AND SERVICES
2003 2002
---- ----
.. REVENUE
- Amount $4,879 $4,625
- Growth Rate 5% 6%
- Mix 13% 14%
.. OPERATING EARNINGS
- Amount $446 $396
- Growth Rate 13% 15%
- Mix 25% 26%
.. RATIO TO REVENUE
- Gross Margin 21.82% 21.98%
- Expenses 12.68% 13.43%
- Operating Earnings 9.14% 8.55%
.. PRODUCTIVITY
- Margin Per Expense Dollar $1.72 $1.64
.. ASSET MANAGEMENT
- Average Committed Capital $1,538 $1,524
- Return On Committed Capital 38.7% 34.6%
- Operating Cash Flow $155 $308
- Capital Expenditures Investment $41 $52
AUTOMATION AND INFORMATION SERVICES
2003 2002
---- ----
.. REVENUE
- Amount $465 $390
- Growth Rate 19% 21%
- Mix 1% 1%
.. OPERATING EARNINGS
- Amount $180 $138
- Growth Rate 30% 25%
- Mix 10% 9%
.. RATIO TO REVENUE
- Gross Margin 71.45% 68.06%
- Expenses 32.75% 32.65%
- Operating Earnings 38.70% 35.41%
.. PRODUCTIVITY
- Margin Per Expense Dollar $2.18 $2.08
.. ASSET MANAGEMENT
- Average Committed Capital $630 $566
- Return On Committed Capital 38.0% 32.6%
- Operating Cash Flow $186 $149
- Capital Expenditures Investment $9 $11
- - Revenue and all ratios to revenue exclude bulk deliveries to customer
warehouses and other customer pass through charges.
- - Margin Per Expense Dollar = Ratio of gross margin to expenses
-- more --
CARDINAL HEALTH, INC. - FIRST NINE MONTHS OF FY 2003 BUSINESS ANALYSIS
($ MILLIONS)
TOTAL
-----
2003 2002
---- ----
.. REVENUE
- Amount $36,960 $32,628 Excluding Special Charges
- Growth Rate 13% 15% -------------------------
2003 2002
---- ----
.. OPERATING EARNINGS
- Amount $1,667 $1,363 $1,658 $1,431
- Growth Rate 22% 24% 16% 19%
.. RATIO TO REVENUE
- Gross Margin 8.88% 9.14%
- Expenses 4.39% 4.76%
- Special Charges (0.02)% 0.21%
- Operating Earnings 4.51% 4.17% 4.49% 4.38%
.. NET EARNINGS*
- Amount $1,041 $830 $1,041 $873
- Growth Rate 25% 30% 19% 23%
- Ratio to Revenue 2.82% 2.54% 2.82% 2.67%
.. PRODUCTIVITY
- Margin Per Expense Dollar $2.02 $1.92
.. ASSET MANAGEMENT
- Average Committed Capital** $6,186 $6,145
- Return On Committed Capital** 35.9% 29.6% 35.7% 31.1%
-----------------------------
- Operating Cash Flow $516 ($443)
- Capital Expenditures Investment $264 $186
- - Revenue and all ratios to revenue exclude bulk deliveries to customer
warehouses and other customer pass through charges.
- - Margin Per Expense Dollar = Ratio of gross margin to expenses
* The net earnings section is presented before discontinued operations and
cumulative effect of change in accounting.
** Average committed capital and return on committed capital excludes
discontinued operations.
-- more --
CARDINAL HEALTH, INC. - QUARTERLY FY 2003 BUSINESS ANALYSIS
($ MILLIONS)
PHARMACEUTICAL DISTRIBUTION AND PROVIDER SERVICES
Q1 Q2 Q3 Q4 TOTAL
-- -- -- -- -----
. REVENUE
- Amount $9,319 $10,505 $10,446
- Growth Rate 17% 14% 10%
- Mix 82% 83% 81%
. OPERATING EARNINGS
- Amount $262 $295 $343
- Growth Rate 20% 17% 11%
- Mix 50% 50% 52%
. RATIO TO REVENUE
- Gross Margin 4.82% 4.43% 4.88%
- Expenses 2.01% 1.62% 1.60%
- Operating Earnings 2.81% 2.81% 3.28%
. PRODUCTIVITY
- Margin Per Expense Dollar $2.40 $2.73 $3.05
. ASSET MANAGEMENT
- Average Committed Capital $3,090 $3,332 $3,507
- Return On Committed Capital 33.9% 35.4% 39.1%
- Operating Cash Flow ($74) $81 ($11)
- Capital Expenditures Investment $24 $38 $17
PHARMACEUTICAL TECHNOLOGIES AND SERVICES
Q1 Q2 Q3 Q4 TOTAL
-- -- -- -- -----
. REVENUE
- Amount $387 $416 $596
- Growth Rate 19% 17% 73%
- Mix 3% 3% 5%
. OPERATING EARNINGS
- Amount $73 $85 $94
- Growth Rate 18% 16% 43%
- Mix 14% 14% 14%
. RATIO TO REVENUE
- Gross Margin 34.09% 34.18% 31.75%
- Expenses 15.33% 13.72% 15.92%
- Operating Earnings 18.76% 20.46% 15.83%
. PRODUCTIVITY
- Margin Per Expense Dollar $2.22 $2.49 $1.99
. ASSET MANAGEMENT
- Average Committed Capital $1,070 $1,162 $1,265
- Return On Committed Capital 27.2% 29.3% 29.8%
- Operating Cash Flow $4 $43 $132
- Capital Expenditures Investment $33 $46 $43
MEDICAL PRODUCTS AND SERVICES
Q1 Q2 Q3 Q4 TOTAL
-- -- -- -- -----
.. REVENUE
- Amount $1,595 $1,639 $1,645
- Growth Rate 6% 5% 5%
- Mix 14% 13% 13%
.. OPERATING EARNINGS
- Amount $139 $144 $164
- Growth Rate 10% 10% 18%
- Mix 27% 24% 24%
.. RATIO TO REVENUE
- Gross Margin 20.91% 21.57% 22.96%
- Expenses 12.21% 12.81% 13.01%
- Operating Earnings 8.70% 8.76% 9.95%
.. PRODUCTIVITY
- Margin Per Expense Dollar $1.71 $1.68 $1.77
.. ASSET MANAGEMENT
- Average Committed Capital $1,445 $1,534 $1,632
- Return On Committed Capital 38.4% 37.5% 40.1%
- Operating Cash Flow $60 $54 $41
- Capital Expenditures Investment $12 $14 $15
AUTOMATION AND INFORMATION SERVICES
Q1 Q2 Q3 Q4 TOTAL
-- -- -- -- -----
.. REVENUE
- Amount $134 $165 $166
- Growth Rate 24% 18% 17%
- Mix 1% 1% 1%
.. OPERATING EARNINGS
- Amount $46 $69 $64
- Growth Rate 55% 26% 21%
- Mix 9% 12% 10%
.. RATIO TO REVENUE
- Gross Margin 70.86% 73.51% 69.89%
- Expenses 36.35% 31.42% 31.17%
- Operating Earnings 34.51% 42.09% 38.72%
.. PRODUCTIVITY
- Margin Per Expense Dollar $1.95 $2.34 $2.24
.. ASSET MANAGEMENT
- Average Committed Capital $682 $626 $578
- Return On Committed Capital 27.1% 44.3% 44.5%
- Operating Cash Flow ($4) $195 ($5)
- Capital Expenditures Investment $2 $4 $3
- - Revenue and all ratios to revenue exclude bulk deliveries to customer
warehouses and other customer pass through charges.
- - Margin Per Expense Dollar = Ratio of gross margin to expenses
-- more --
CARDINAL HEALTH, INC. - QUARTERLY FY 2003 BUSINESS ANALYSIS
($ MILLIONS)
TOTAL (EXCLUDING SPECIAL CHARGES)
Q1 Q2 Q3 Q4 TOTAL
-- -- -- -- -----
.. REVENUE
- Amount $11,417 $12,706 $12,837
- Growth Rate 16% 13% 11%
.. OPERATING EARNINGS
- Amount $486 $553 $618
- Growth Rate 18% 14% 16%
.. RATIO TO REVENUE
- Gross Margin 8.82% 8.50% 9.30%
- Expenses 4.56% 4.14% 4.49%
- Operating Earnings 4.26% 4.36% 4.81%
.. NET EARNINGS*
- Amount $304 $345 $391
- Growth Rate 20% 18% 20%
- Ratio to Revenue 2.66% 2.72% 3.05%
.. PRODUCTIVITY
- Margin Per Expense Dollar $1.93 $2.05 $2.07
.. ASSET MANAGEMENT
- Average Committed Capital** $5,894 $6,158 $6,479
- Return On Committed Capital** 33.0% 35.9% 38.2%
- Operating Cash Flow ($14) $373 $157
- Capital Expenditures Investment $71 $102 $91
- - Revenue and all ratios to revenue exclude bulk deliveries to customer
warehouses and other customer pass through charges.
- - Margin Per Expense Dollar = Ratio of gross margin to expenses
* The net earnings section is presented before discontinued operations.
** Average committed capital and return on committed capital excludes
discontinued operations.
-- more --
CARDINAL HEALTH, INC.- FIRST NINE MONTHS FISCAL 2003 AND 2002 ASSET MANAGEMENT
ANALYSIS
($ MILLIONS)
2003
----
Q1 Q2 Q3 YTD COMMENT
-- -- -- --- -------
.. RECEIVABLE DAYS 19 17 18 Syncor impact
.. INVENTORY TURNS 6.8 7.0 6.2 Opportunity decline
.. CASH $946 $999 $545
.. DEBT $2,255 $2,260 $2,355
.. EQUITY $6,354 $6,532 $7,245
.. NET DEBT/TOTAL CAPITAL 17% 16% 20% Q3 RECORD LOW
.. TANGIBLE NET WORTH $4,786 $4,960 $4,927
.. RETURN ON EQUITY 18.1% 22.8% 22.4% 20.9%
EXCLUDING SPECIAL ITEMS 19.0% 21.5% 22.7% 20.9% RECORD
.. TAX RATE 34.0% 34.3% 33.4% 33.9%
EXCLUDING SPECIAL ITEMS 33.3% 33.8% 33.4% 33.5% Business mix
2002
----
Q1 Q2 Q3 YTD
-- -- -- ---
.. RECEIVABLE DAYS 20 19 18
.. INVENTORY TURNS 6.0 5.6 5.5
.. CASH $872 $399 $869
.. DEBT $2,315 $2,480 $2,481
.. EQUITY $5,670 $5,863 $6,209
.. NET DEBT/TOTAL CAPITAL 20% 26% 21%
.. TANGIBLE NET WORTH $4,503 $4,697 $5,031
.. RETURN ON EQUITY 17.8% 19.7% 19.9% 19.1%
EXCLUDING SPECIAL ITEMS 18.3% 20.3% 21.5% 20.0%
.. TAX RATE 33.7% 34.3% 33.8% 33.9%
EXCLUDING SPECIAL ITEMS 33.8% 34.4% 34.1% 34.1%
-- more --
CARDINAL HEALTH, INC. - BUSINESS ANALYSIS RECONCILIATION
($ MILLIONS)
THIRD QUARTER FISCAL 2003
GAAP* EXCLUDING
BASIS SPECIAL ITEMS SPECIAL ITEMS
. SPECIAL ITEMS
- Merger Related Costs $16 $16 -
- Other, Primarily Litigation Settlements ($6) ($6) -
. OPERATING EARNINGS
- Amount $608 $10 $618
- Growth Rate 23% 16%
- Ratio to Revenue (Return on Sales) 4.74% 4.81%
. NET EARNINGS**
- Amount $385 $6 $391
- Growth Rate 28% 20%
- Ratio to Revenue 3.00% 3.05%
- Diluted EPS $0.85 $0.01 $0.86
. INCOME TAX PROVISION
-Income Tax Provision ($193) ($4) ($197)
FIRST NINE MONTHS OF FISCAL 2003
GAAP* EXCLUDING
BASIS SPECIAL ITEMS SPECIAL ITEMS
. SPECIAL ITEMS
- Merger Related Costs $49 $49 -
- Restructuring Items $41 $41 -
- Litigation Settlement ($99) ($99) -
. OPERATING EARNINGS
- Amount $1,667 ($9) $1,658
- Growth Rate 22% 16%
- Ratio to Revenue (Return on Sales) 4.51% 4.49%
. NET EARNINGS***
- Amount $1,041 - $1,041
- Growth Rate 25% 19%
- Ratio to Revenue 2.82% 2.82%
- Diluted EPS $2.30 - $2.30
. INCOME TAX PROVISION
- Income Tax Provision ($533) $9 ($524)
THIRD QUARTER FISCAL 2002
GAAP* EXCLUDING
BASIS SPECIAL ITEMS SPECIAL ITEMS
.. SPECIAL ITEMS
- Merger Related Costs $40 $40 -
.. OPERATING EARNINGS
- Amount $493 $40 $533
- Growth Rate 36% 19%
- Ratio to Revenue (Return on Sales) 4.28% 4.62%
.. NET EARNINGS**
- Amount $300 $25 $325
- Growth Rate 47% 22%
- Ratio to Revenue 2.60% 2.81%
- Diluted EPS $0.66 $0.05 $0.71
.. INCOME TAX PROVISION
-Income Tax Provision ($154) ($15) ($169)
FIRST NINE MONTHS OF FISCAL 2002
GAAP* EXCLUDING
BASIS SPECIAL ITEMS SPECIAL ITEMS
.. SPECIAL ITEMS
- Merger Related Costs $68 $68 -
.. OPERATING EARNINGS
- Amount $1,363 $68 $1,431
- Growth Rate 24 % 19%
- Ratio to Revenue (Return on Sales) 4.17% 4.38%
.. NET EARNINGS***
- Amount $830 $43 $873
- Growth Rate 30% 23%
- Ratio to Revenue 2.54% 2.67%
- Diluted EPS $1.81 $0.09 $1.90
.. INCOME TAX PROVISION
- Income Tax Provision ($426) ($25) ($451)
* GAAP - Amounts that conform with generally accepted accounting principles.
** The net earnings section is presented before discontinued operations.
*** The net earnings section is presented before discontinued operations and
cumulative effect of change in accounting.
DEFINITIONS:
RETURN ON COMMITTED CAPITAL (EXCLUDING SPECIAL ITEMS) = Operating Earnings
Excluding Special Items (Annualized) / Average Committed Capital
RETURN ON EQUITY (EXCLUDING SPECIAL ITEMS) = Net Earnings Excluding Special
Items (Annualized) / (Average Shareholders Equity + Average Special Items After
Tax)
EFFECTIVE TAX RATE (EXCLUDING SPECIAL ITEMS) = (Income Tax Provision + Tax
Effect of Special Items) / (Earnings Before Income Taxes + Special Items)
###