Exhibit 99.01
[Cardinal Health Logo]
7000 Cardinal Place
Dublin, OH 43017
www.cardinal.com
FOR IMMEDIATE RELEASE
CONTACTS:
Media: Jim Mazzola Investors: Jim Hinrichs
(614) 757-3690 (614) 757-7828
jim.mazzola@cardinal.com jim.hinrichs@cardinal.com
------------------------ -------------------------
CARDINAL HEALTH DELIVERS RECORD THIRD QUARTER RESULTS
DIVERSIFIED PORTFOLIO YIELDS STRONG REVENUE, EPS AND CASH FLOW
DUBLIN, OHIO, APRIL 22, 2004 --Strong customer demand for its diversified
portfolio of healthcare products and services, combined with disciplined expense
and asset management, drove record third-quarter operating performance for
Cardinal Health, Inc. (NYSE: CAH), the leading provider of products and services
supporting the health care industry announced today.
For the quarter ended March 31, 2004, in accordance with generally accepted
accounting principles (GAAP), revenue rose 14 percent to $14.6 billion,
operating earnings increased 9 percent to $665 million and earnings from
continuing operations were up 11 percent to $429 million. Earnings per diluted
share from continuing operations improved 15 percent to $0.98.
Year-to-date revenues now exceed $42 billion, with operating earnings and
earnings per diluted share from continuing operations reaching $1.8 billion and
$2.58, respectively. With strong operating cash flow of $787 million during the
quarter, the company expects to exceed its operating cash flow target of $1.3
billion for the full fiscal year ending June 30.
"Our results this quarter once again demonstrate the power of our diverse
portfolio of market-leading products and services and the tremendous growth
opportunities within the healthcare industry," said Robert D. Walter, chairman
and chief executive officer of Cardinal Health. "The success of our strategy to
achieve scale and integrate our offerings is once again reflected in this
quarter's results. In addition, continued exceptional cash flow allows us to
fund this strategy for the future and fuel long-term growth."
BUSINESS AND STRATEGIC HIGHLIGHTS
Cardinal Health made progress during the quarter against strategies to build
scale and drive competitive advantage in the health care industry, expand
product and service offerings, and make investments to deliver new levels of
customer value through integrated solutions. Highlights for the quarter include:
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CARDINAL HEALTH DELIVERS RECORD THIRD QUARTER RESULTS
PAGE 2
- Double-digit revenue and operating earnings growth in the Medical
Products and Services segment from strong distribution sales of more
than 300,000 medical products and a continued focus on productivity and
expense control. Growth in the segment continues to increase faster
than the industry rate.
- Positive momentum in pharmaceutical distribution, led by strong
customer demand, expense productivity and a disciplined approach to
pricing. Productive negotiations with pharmaceutical manufacturers
continued during the period regarding Cardinal Health's transition to
fee-for-service Distribution Service Agreements (DSA).
- Excellent growth in Pharmaceutical Technologies and Services, led by
nuclear pharmacy and packaging services. Solid revenue and earnings
contributions were also delivered by recently-acquired Intercare, plc.,
which is rapidly being integrated into Cardinal Health.
- Exceptional asset management, including a seven-day decline in days
inventory on hand, which lowered from 58 days to 51 days. Receivable
days also lowered, both contributing to strong operating cash flow for
the quarter.
- Repurchase of 6.9 million Cardinal Health shares, nearly completing the
$500 million repurchase authorization announced on Feb 27.
- Six new corporate agreements signed during the quarter, bringing the
total number of agreements, which represent products and services from
multiple Cardinal Health segments, to nearly 200. These integrated
offerings now represent well over $6 billion in annual sales and are
growing more than 23 percent annually.
"By continuing to fully leverage the breadth of our healthcare offerings, we are
in an excellent position to deliver unmatched value to customers," said George
L. Fotiades, president and chief operating officer of Cardinal Health. "Every
segment is benefiting from an increased focus on integrating and cross-selling
our products and services, with growth rates from corporate agreements
substantially higher than base growth rates for most segments."
FINANCIAL HIGHLIGHTS
Special items during the quarter totaled $8 million, primarily related to the
integration of recently acquired businesses. The following discussion adjusts
certain amounts to exclude special items incurred during the quarter. Please see
the attached financial table for a reconciliation of the reported amounts to the
amounts excluding these items.
- EARNINGS PER DILUTED SHARE from continuing operations rose 15 percent
to $0.99 versus $0.86 last year. Earnings from continuing operations
rose 11 percent to $434 million from $391 million a year ago.
- OPERATING EARNINGS rose 9 percent to $673 million from $618 million a
year ago. Strong earnings growth contributions were made by the
company's Pharmaceutical Technologies and Services, and Medical
Products and Services segments.
- INTEREST EXPENSE AND OTHER declined by 9 percent, driven by lower
interest rates and strong cash flow.
- TAX RATE decreased 60 basis points primarily due to a higher mix of
international business during the quarter.
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CARDINAL HEALTH DELIVERS RECORD THIRD QUARTER RESULTS
PAGE 3
- RETURN ON INVESTED CAPITAL improved 35 basis points to 9.06 percent,
reflecting excellent capital productivity and strong asset management.
RETURN ON EQUITY was 22.8 percent compared to 22.7 percent last year.
- OPERATING CASH FLOW of $787 million in the quarter was the result of
strong earnings combined with focused asset management. Year-to-date
cash flow rose to more than $1.3 billion.
- THE RATIO OF NET DEBT-TO-TOTAL CAPITAL was 21 percent, and the company
ended the quarter with $527 million cash on hand.
SEGMENT RESULTS
Segment results reflect the strength of Cardinal Health's diversified business,
comprised of market-leading products and services. Growth for the quarter was
led by Medical Products and Services, and Pharmaceutical Technologies and
Services, but all segments delivered strong cash flow and an improvement in
return on invested capital.
Specific segment results are included in the table below, followed by a
performance summary for each business.
THIRD QUARTER - SEGMENT RESULTS
-------------------------------
CONTRIBUTION TO
% OPERATING % OPERATING EARNINGS
($ IN MILLIONS) REVENUE CHANGE EARNINGS CHANGE MIX
------- ------- --------- ------- -----
Pharmaceutical Distribution
and Provider Services $11,909(1) 14% $344(1) 0% 48%
Medical Products and Services $1,876 14% $182 11% 26%
Pharmaceutical Technologies and
Services $678(1) 14% $115(1) 22% 16%
Automation and Information Services $172 4% $69 8% 10%
(1) Results for Intercare, acquired in December 2003, includes a parallel import
business that is similar to Cardinal Health's pharmaceutical distribution
business. For segment reporting purposes, this business is included in the
Pharmaceutical Distribution and Provider Services segment (Revenues of $87
million and operating earnings of $2.6 million for the third quarter).
PHARMACEUTICAL DISTRIBUTION AND PROVIDER SERVICES delivered strong overall
revenue growth of 14 percent to $11.9 billion. Within pharmaceutical
distribution, all customer segments experienced solid growth, with sales to
health systems increasing 17 percent as the company continued to leverage
integrated selling efforts as part of corporate agreements. Direct Store Door
(DSD) sales - buying full cases, breaking them down into customized orders and
distributing to customers -- rose 24 percent. DSD sales best represent
underlying customer demand within Cardinal Health's core distribution business.
Operating earnings improved sequentially to $344 million. Excellent asset
management resulted in strong cash flow and return on capital. Key customer
agreements signed during the quarter included an exclusive, multi-year contract
renewal with Express Scripts, Inc.
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CARDINAL HEALTH DELIVERS RECORD THIRD QUARTER RESULTS
PAGE 4
MEDICAL PRODUCTS AND SERVICES posted very strong, record revenue, which
increased 14 percent to $1.9 billion, and operating earnings, which increased 11
percent to $182 million. Revenue growth was all organic, driven by momentum in
medical products distribution and new self-manufactured products, primarily
surgeon gloves. The company acquired Snowden Pencer, Inc. during the quarter, a
manufacturer of specialty surgical instruments, to extend its market-leading
position with complementary products. The margin impact of pricing pressure,
increases in raw material costs and a higher mix of distribution sales were
substantially offset by productivity improvements and disciplined expense
control. After-tax earnings outside the U.S. increased sharply as a result of
streamlined international operations and focus on key geographies.
PHARMACEUTICAL TECHNOLOGIES AND SERVICES performance was highlighted by
double-digit operating earnings growth in packaging and nuclear pharmacy
services. Revenue increased 14 percent to $678 million and operating earnings
increased 22 percent to $115 million. Favorable product mix and productivity
gains drove a 116 basis point improvement in return on sales. Operational
highlights include the start of manufacturing validation processes at new
sterile facilities in Brussels, Belgium and Raleigh, N.C. The sales and
operating earnings benefit from the recent acquisition of Intercare, plc. was
partially offset by a delay in the sterile manufacturing approval for a key
product. That product is now approved for launch by the Food and Drug
Administration.
AUTOMATION AND INFORMATION SERVICES revenue grew 4 percent to $172 million as
hospitals continue to face capital spending pressures. Over the long term,
significant new product introductions and an ongoing focus on medication safety
initiatives within hospitals are expected to further extend market-leading
positions in this segment. In addition, renewal rates for existing contracts
continue to exceed 98 percent. Favorable product mix during the quarter,
including solid sales of Cardinal Health's flagship Pyxis MedStation(R) product,
and installation productivity led to an increase in return on sales of 162 basis
points with operating earnings rising 8 percent to $69 million. Other highlights
included an endorsement from the American Hospital Association for Cardinal
Health's Pyxis PatientStation(R) as the leading bedside technology platform for
patient education and clinical applications, and receiving the ISO 9001:2000
quality certification from the International Standards Organization. Committed
contracts grew 8 percent year-on-year and the backlog of committed contracts
ended the quarter at $186 million.
OUTLOOK
Cardinal Health reiterated its long-term financial goals and expectation to
achieve targets set for the current fiscal year. The following table summarizes
long-term financial goals and outlook for the current fiscal year.
METRICS LONG-TERM GOALS 2004 FISCAL YEAR OUTLOOK
------- --------------- ------------------------
1. Earnings per share Mid-teens or better Achieve, at lower end of
growth range
2. Revenue growth Low- to mid-teens Achieve
3. Return on equity Greater than 20% Achieve
4. Free cash flow Greater than 60% of net Substantially exceed
earnings
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CARDINAL HEALTH DELIVERS RECORD THIRD QUARTER RESULTS
PAGE 5
CONFERENCE CALL
Cardinal Health has scheduled a conference call for today at 11 a.m. Eastern
Daylight Time to discuss its third quarter financial performance. To access this
discussion via the Internet, go to the Investor Relations page at
www.cardinal.com. The company has also established a telephone call-in line at
706-634-5100. An audio replay of the conference call will be available until
11:30 p.m. on April 24, 2004 by dialing 706-645-9291, passcode 6138821. A
transcript and replay of the Webcast will be available at the Investor Relations
page on www.cardinal.com.
ABOUT CARDINAL HEALTH
CARDINAL HEALTH, INC. (www.cardinal.com) is the leading provider of products and
services supporting the health care industry. Cardinal Health develops,
manufactures, packages and markets products for patient care; develops
drug-delivery technologies; distributes pharmaceuticals and medical, surgical
and laboratory supplies; and offers consulting and other services that improve
quality and efficiency in health care. Headquartered in Dublin, Ohio, Cardinal
Health employs more than 50,000 people on five continents and produces annual
revenues of more than $50 billion. Cardinal Health is ranked No.17 on the
current Fortune 500 list and named one of the best U.S. companies by Forbes
magazine for 2004.
####
- --------------------------
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 or changes to the terms of those
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 statement.
CARDINAL HEALTH, INC.
CONSOLIDATED STATEMENTS OF EARNINGS (UNAUDITED)
(IN MILLIONS, EXCEPT PER COMMON SHARE AMOUNTS)
THIRD QUARTER
-------------
March March
2004 2003 % Change
---- ---- --------
Operating revenue $14,638.9 $12,837.3 14%
Operating cost of products sold 13,358.1 11,643.2 15%
--------- ---------
Operating gross margin 1,280.8 1,194.1 7%
Bulk deliveries to customer warehouses and other 1,753.4 1,534.0 14%
Cost of products sold - bulk deliveries and other 1,753.4 1,534.0 14%
--------- ---------
Bulk gross margin - - N.M.
Selling, general and administrative expenses 608.0 576.1 6%
Special items - merger charges 7.2 15.9 N.M.
- other 1.1 (6.1) N.M.
--------- ---------
Operating earnings 664.5 608.2 9%
Interest expense and other 27.7 30.6 (9)%
--------- ---------
Earnings before income taxes and discontinued operations 636.8 577.6 10%
Provision for income taxes 207.9 192.7 8%
--------- ---------
Earnings from continuing operations 428.9 384.9 11%
Loss from discontinued operations (net of tax of $0.6 and $1.1 for the
quarters ending March 31, 2004 and 2003,
respectively) (0.8) (1.8) N.M.
--------- ---------
Net earnings $ 428.1 $ 383.1 N.M.
========= =========
Basic earnings per Common Share:
Continuing operations $ 0.99 $ 0.86 15%
Discontinued operations (0.01) (0.01) N.M.
--------- ---------
Net basic earnings per Common Share $ 0.98 $ 0.85 N.M.
========= =========
Diluted earnings per Common Share:
Continuing operations $ 0.98 $ 0.85 15%
Discontinued operations (0.01) (0.01) N.M.
--------- ---------
Net diluted earnings per Common Share $ 0.97 $ 0.84 N.M.
========= =========
Weighted average number of shares outstanding:
Basic 433.4 449.1
Diluted 439.3 456.3
- --------------------------------------------------------------------------------
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 $(4.5) $(0.01) $(10.0) $(0.02)
- other (0.4) - 3.6 0.01
---- ----- ----- -----
Impact of special items $(4.9) $(0.01) $ (6.4) $(0.01)
==== ===== ===== =====
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CARDINAL HEALTH, INC.
CONSOLIDATED STATEMENTS OF EARNINGS (UNAUDITED)
(IN MILLIONS, EXCEPT PER COMMON SHARE AMOUNTS)
YEAR-TO-DATE
------------
March March
2004 2003 % Change
---- ---- --------
Operating revenue $42,020.8 $36,960.2 14%
Operating cost of products sold 38,486.1 33,679.7 14%
--------- ---------
Operating gross margin 3,534.7 3,280.5 8%
Bulk deliveries to customer warehouses and other 6,110.6 4,588.2 33%
Cost of products sold - bulk deliveries and other 6,110.6 4,588.2 33%
--------- ---------
Bulk gross margin - - N.M.
Selling, general and administrative expenses 1,742.5 1,623.0 7%
Special items - merger charges 23.6 49.3 N.M.
- other (5.6) (58.4) N.M.
--------- ---------
Operating earnings 1,774.2 1,666.6 6%
Interest expense and other 75.1 92.7 (19)%
--------- ---------
Earnings before income taxes and discontinued operations 1,699.1 1,573.9 8%
Provision for income taxes 558.9 533.2 5%
--------- ---------
Earnings from continuing operations 1,140.2 1,040.7 10 %
Loss from discontinued operations (net of tax of $4.8 and $1.1 for the
year-to-date periods ending March 31, 2004
and 2003, respectively) (7.7) (1.8) N.M.
--------- ---------
Net earnings $ 1,132.5 $ 1,038.9 N.M.
========= =========
Basic earnings per Common Share:
Continuing operations $ 2.62 $ 2.34 12%
Discontinued operations (0.02) (0.01) N.M.
--------- ---------
Net basic earnings per Common Share $ 2.60 $ 2.33 N.M.
========= =========
Diluted earnings per Common Share:
Continuing operations $ 2.58 $ 2.30 12%
Discontinued operations (0.02) (0.01) N.M.
--------- ---------
Net diluted earnings per Common Share $ 2.56 $ 2.29 N.M.
========= =========
Weighted average number of shares outstanding:
Basic 435.7 445.8
Diluted 441.6 453.5
- --------------------------------------------------------------------------------
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 $(14.5) $(0.03) $(31.2) $(0.07)
- other 4.2 0.01 31.3 0.07
------ ------ ------ ------
Impact of special items $(10.3) $(0.02) $ 0.1 $ -
====== ====== ====== ======
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CARDINAL HEALTH, INC.
CONSOLIDATED BALANCE SHEETS
(IN MILLIONS)
(unaudited)
MARCH 31, June 30, March 31,
2004 2003 2003
---- ---- ----
ASSETS
CURRENT ASSETS
Cash and equivalents $ 527.2 $ 1,724.0 $ 545.2
Trade receivables 3,497.8 2,784.4 2,845.3
Current portion of investment in sales-type leases 256.1 171.8 185.7
Inventories 8,652.1 7,623.3 8,775.6
Prepaid expenses and other 739.6 776.0 710.5
Assets held for sale from discontinued operations 139.0 170.1 218.1
----------- ----------- -----------
Total current assets 13,811.8 13,249.6 13,280.4
----------- ----------- -----------
Property and equipment - net 2,233.5 2,089.5 2,005.1
Investment in sales-type leases 538.4 557.3 589.5
Other assets 3,375.7 2,625.0 2,605.5
----------- ----------- -----------
TOTAL ASSETS $ 19,959.4 $ 18,521.4 $ 18,480.5
=========== =========== ===========
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES
Notes payable - banks and current portion of
long-term obligations $ 54.4 $ 228.7 $ 26.5
Accounts payable 6,998.2 5,288.4 6,465.2
Other accrued liabilities 1,704.2 1,733.0 1,465.0
Liabilities from discontinued operations 60.9 64.3 90.2
----------- ----------- -----------
Total current liabilities 8,817.7 7,314.4 8,046.9
----------- ----------- -----------
Long-term obligations, less current portion 2,477.0 2,471.9 2,328.2
Deferred taxes and other liabilities 1,007.3 977.0 860.8
Total shareholders' equity 7,657.4 7,758.1 7,244.6
----------- ----------- -----------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $ 19,959.4 $ 18,521.4 $ 18,480.5
=========== =========== ===========
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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,
------------------ -------------------
2004 2003 2004 2003
---- ---- ---- ----
CASH FLOWS FROM OPERATING ACTIVITIES:
Earnings from continuing operations $ 428.9 $ 384.9 $ 1,140.2 $ 1,040.7
Adjustments to reconcile earnings from continuing operations
to net cash from operations:
Depreciation and amortization 77.2 68.7 220.4 195.2
Change in operating assets and liabilities, net of
effects from acquisitions:
Increase in trade receivables (122.3) (141.2) (613.3) (458.5)
Increase in inventories (98.8) (434.4) (960.1) (1,386.7)
(Increase)/decrease in net investment in sales-type leases (87.4) (74.5) (65.4) 61.7
Increase in accounts payable 647.6 305.6 1,611.9 895.6
Other operating items - net (58.2) 47.8 1.7 167.8
-------- -------- ---------- ----------
Net cash provided by operating activities 787.0 156.9 1,335.4 515.8
-------- -------- ---------- ----------
CASH FLOWS FROM INVESTING ACTIVITIES:
Acquisition/divestiture of subsidiaries, net of cash acquired (62.1) 4.6 (561.2) (3.2)
Proceeds from sale of property, equipment, and other assets 3.1 7.9 8.3 41.7
Additions to property and equipment (107.9) (91.8) (272.0) (264.1)
Proceeds from sale of discontinued operations 5.1 7.8 5.1 7.8
-------- -------- ---------- ----------
Net cash used in investing activities (161.8) (71.5) (819.8) (217.8)
-------- -------- ---------- ----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Net change in commercial paper and short-term debt (1.5) 7.4 (0.9) 6.7
Net change in long-term obligations (231.8) (34.5) (356.1) (41.5)
Proceeds from issuance of Common Shares 64.3 48.3 144.3 125.3
Purchase of Treasury Stock (460.3) (549.0) (1,460.3) (1,191.7)
Dividends on Common Shares (13.0) (11.3) (39.4) (33.6)
-------- -------- ---------- ----------
Net cash used in financing activities (642.3) (539.1) (1,712.4) (1,134.8)
-------- -------- ---------- ----------
NET DECREASE IN CASH AND EQUIVALENTS (17.1) (453.7) (1,196.8) (836.8)
CASH AND EQUIVALENTS AT BEGINNING OF PERIOD 544.3 998.9 1,724.0 1,382.0
-------- -------- ---------- ----------
CASH AND EQUIVALENTS AT END OF PERIOD 527.2 545.2 527.2 545.2
======== ======== ========== ==========
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CARDINAL HEALTH, INC. - THIRD QUARTER FY 2004 BUSINESS ANALYSIS
($ MILLIONS)
- -----------------------------------------------------------------------
PHARMACEUTICAL DISTRIBUTION AND PROVIDER SERVICES
2004 2003
---- ----
. REVENUE
- Amount $11,909 $10,446
- Growth Rate 14% 10%
- Mix 81% 81%
. OPERATING EARNINGS
- Amount $344 $343
- Growth Rate 0% 11%
- Mix 48% 52%
- Ratio to Revenue 2.89% 3.28%
- -----------------------------------------------------------------------
MEDICAL PRODUCTS AND SERVICES
2004 2003
---- ----
. REVENUE
- Amount $1,876 $1,645
- Growth Rate 14% 5%
- Mix 13% 13%
. OPERATING EARNINGS
- Amount $182 $164
- Growth Rate 11% 18%
- Mix 26% 24%
- Ratio to Revenue 9.72% 9.95%
- -----------------------------------------------------------------------
PHARMACEUTICAL TECHNOLOGIES AND SERVICES
2004 2003
---- ----
. REVENUE
- Amount $678 $596
- Growth Rate 14% 73%
- Mix 5% 5%
. OPERATING EARNINGS
- Amount $115 $94
- Growth Rate 22% 43%
- Mix 16% 14%
- Ratio to Revenue 16.99% 15.83%
- -----------------------------------------------------------------------
AUTOMATION AND INFORMATION SERVICES
2004 2003
---- ----
. REVENUE
- Amount $172 $166
- Growth Rate 4% 17%
- Mix 1% 1%
. OPERATING EARNINGS
- Amount $69 $64
- Growth Rate 8% 21%
- Mix 10% 10%
- Ratio to Revenue 40.34% 38.72%
- -----------------------------------------------------------------------
- - REVENUE AND ALL RATIOS TO REVENUE EXCLUDE BULK DELIVERIES TO CUSTOMER
WAREHOUSES AND OTHER CUSTOMER PASS THROUGH CHARGES.
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CARDINAL HEALTH, INC. - THIRD QUARTER FY 2004 BUSINESS ANALYSIS
($ MILLIONS)
TOTAL
-----
2004 2003
---- ----
. REVENUE
- Amount $14,639 $12,837 Excluding Special Items
- Growth Rate 14% 11% -----------------------
2004 2003
---- ----
. OPERATING EARNINGS
- Amount $665 $608 $673 $618
- Growth Rate 9% 23% 9% 16%
. RATIO TO REVENUE
- Gross Margin 8.75% 9.30%
- Expenses 4.15% 4.49%
- Special Items 0.06% 0.07%
- Operating Earnings 4.54% 4.74% 4.60% 4.81%
. NET EARNINGS*
- Amount $429 $385 $434 $391
- Growth Rate 11% 28% 11% 20%
- Ratio to Revenue 2.93% 3.00% 2.96% 3.05%
. PRODUCTIVITY
- Margin Per Expense Dollar $2.11 $2.07
. ASSET MANAGEMENT
- Operating Cash Flow $787 $157
- Free Cash Flow $669 $62
- Return on Invested Capital 8.96% 8.58% 9.06% 8.71%
- - REVENUE AND ALL RATIOS TO REVENUE EXCLUDE BULK DELIVERIES TO CUSTOMER
WAREHOUSES AND OTHER CUSTOMER PASS THROUGH CHARGES.
- - MARGIN PER EXPENSE DOLLAR = RATIO OF GROSS MARGIN TO EXPENSES
* THE NET EARNINGS SECTION IS PRESENTED BEFORE DISCONTINUED OPERATIONS.
SEE THE GAAP/NON-GAAP RECONCILIATION FOR THE CALCULATIONS AND DEFINITIONS
SUPPORTING THE BALANCES EXCLUDING SPECIAL ITEMS.
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CARDINAL HEALTH, INC. - FIRST NINE MONTHS FY 2004 BUSINESS ANALYSIS
($ MILLIONS)
- -----------------------------------------------------------------------
PHARMACEUTICAL DISTRIBUTION AND PROVIDER SERVICES
2004 2003
---- ----
. REVENUE
- Amount $34,148 $30,270
- Growth Rate 13% 14%
- Mix 81% 82%
. OPERATING EARNINGS
- Amount $881 $900
- Growth Rate (2)% 15%
- Mix 46% 51%
- Ratio to Revenue 2.58% 2.97%
- -----------------------------------------------------------------------
MEDICAL PRODUCTS AND SERVICES
2004 2003
---- ----
. REVENUE
- Amount $5,448 $4,879
- Growth Rate 12% 5%
- Mix 13% 13%
. OPERATING EARNINGS
- Amount $493 $446
- Growth Rate 10% 13%
- Mix 26% 25%
- Ratio to Revenue 9.04% 9.14%
- -----------------------------------------------------------------------
PHARMACEUTICAL TECHNOLOGIES AND SERVICES
2004 2003
---- ----
. REVENUE
- Amount $1,943 $1,399
- Growth Rate 39% 36%
- Mix 5% 4%
. OPERATING EARNINGS
- Amount $335 $252
- Growth Rate 33% 25%
- Mix 17% 14%
- Ratio to Revenue 17.24% 18.02%
- -----------------------------------------------------------------------
AUTOMATION AND INFORMATION SERVICES
2004 2003
---- ----
. REVENUE
- Amount $502 $465
- Growth Rate 8% 19%
- Mix 1% 1%
. OPERATING EARNINGS
- Amount $202 $180
- Growth Rate 12% 30%
- Mix 11% 10%
- Ratio to Revenue 40.23% 38.70%
- -----------------------------------------------------------------------
- - REVENUE AND ALL RATIOS TO REVENUE EXCLUDE BULK DELIVERIES TO CUSTOMER
WAREHOUSES AND OTHER CUSTOMER PASS THROUGH CHARGES.
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CARDINAL HEALTH, INC. - FIRST NINE MONTHS FY 2004 BUSINESS ANALYSIS
($ MILLIONS)
TOTAL
-----
2004 2003
---- ----
. REVENUE
- Amount $42,021 $36,960 Excluding Special Items
- Growth Rate 14% 13% -----------------------
2004 2003
---- ----
. OPERATING EARNINGS
- Amount $1,774 $1,667 $1,792 $1,658
- Growth Rate 6% 22% 8% 16%
. RATIO TO REVENUE
- Gross Margin 8.41% 8.88%
- Expenses 4.15% 4.39%
- Special Items 0.04% (0.02)%
- Operating Earnings 4.22% 4.51% 4.26% 4.49%
. NET EARNINGS*
- Amount $1,140 $1,041 $1,151 $1,041
- Growth Rate 10% 25% 11% 19%
- Ratio to Revenue 2.71% 2.82% 2.74% 2.82%
. PRODUCTIVITY
- Margin Per Expense Dollar $2.03 $2.02
. ASSET MANAGEMENT
- Operating Cash Flow $1,335 $516
- Free Cash Flow $1,032 $260
- Return on Invested Capital 7.97% 7.90% 8.04% 7.90%
- - REVENUE AND ALL RATIOS TO REVENUE EXCLUDE BULK DELIVERIES TO CUSTOMER
WAREHOUSES AND OTHER CUSTOMER PASS THROUGH CHARGES.
- - MARGIN PER EXPENSE DOLLAR = RATIO OF GROSS MARGIN TO EXPENSES
* THE NET EARNINGS SECTION IS PRESENTED BEFORE DISCONTINUED OPERATIONS.
SEE THE GAAP/NON-GAAP RECONCILIATION FOR THE CALCULATIONS AND DEFINITIONS
SUPPORTING THE BALANCES EXCLUDING SPECIAL ITEMS.
-- more --
CARDINAL HEALTH, INC. - QUARTERLY FY 2004 BUSINESS ANALYSIS
($ MILLIONS)
- --------------------------------------------------------------------------------
PHARMACEUTICAL DISTRIBUTION AND PROVIDER SERVICES
Q1 Q2 Q3 Q4 TOTAL
-- -- -- -- -----
. REVENUE
- Amount $10,824 $11,414 $11,909
- Growth Rate 16% 9% 14%
- Mix 81% 81% 81%
. OPERATING EARNINGS
- Amount $266 $271 $344
- Growth Rate 2% (8)% 0%
- Mix 46% 43% 48%
- Ratio to Revenue 2.45% 2.37% 2.89%
- --------------------------------------------------------------------------------
MEDICAL PRODUCTS AND SERVICES
Q1 Q2 Q3 Q4 TOTAL
-- -- -- -- -----
. REVENUE
- Amount $1,733 $1,839 $1,876
- Growth Rate 9% 12% 14%
- Mix 13% 13% 13%
. OPERATING EARNINGS
- Amount $150 $160 $182
- Growth Rate 8% 12% 11%
- Mix 26% 26% 26%
- Ratio to Revenue 8.67% 8.71% 9.72%
- --------------------------------------------------------------------------------
PHARMACEUTICAL TECHNOLOGIES AND SERVICES
Q1 Q2 Q3 Q4 TOTAL
-- -- -- -- -----
. REVENUE
- Amount $606 $659 $678
- Growth Rate 57% 58% 14%
- Mix 5% 5% 5%
. OPERATING EARNINGS
- Amount $107 $113 $115
- Growth Rate 47% 33% 22%
- Mix 19% 18% 16%
- Ratio to Revenue 17.63% 17.14% 16.99%
- --------------------------------------------------------------------------------
AUTOMATION AND INFORMATION SERVICES
Q1 Q2 Q3 Q4 TOTAL
-- -- -- -- -----
. REVENUE
- Amount $143 $187 $172
- Growth Rate 7% 14% 4%
- Mix 1% 1% 1%
. OPERATING EARNINGS
- Amount $53 $80 $69
- Growth Rate 15% 15% 8%
- Mix 9% 13% 10%
- Ratio to Revenue 37.17% 42.46% 40.34%
- --------------------------------------------------------------------------------
- - REVENUE AND ALL RATIOS TO REVENUE EXCLUDE BULK DELIVERIES TO CUSTOMER
WAREHOUSES AND OTHER CUSTOMER PASS THROUGH CHARGES.
-- more --
CARDINAL HEALTH, INC. - QUARTERLY FY 2004 BUSINESS ANALYSIS
($ MILLIONS)
TOTAL (EXCLUDING SPECIAL ITEMS)
Q1 Q2 Q3 Q4 TOTAL
-- -- -- -- -----
. REVENUE
- Amount $13,288 $14,094 $14,639
- Growth Rate 16% 11% 14%
. OPERATING EARNINGS
- Amount $536 $584 $673
- Growth Rate 10% 6% 9%
. RATIO TO REVENUE
- Gross Margin 8.15% 8.31% 8.75%
- Expenses 4.12% 4.16% 4.15%
- Operating Earnings 4.03% 4.15% 4.60%
. NET EARNINGS*
- Amount $339 $378 $434
- Growth Rate 12% 9% 11%
- Ratio to Revenue 2.55% 2.68% 2.96%
. PRODUCTIVITY
- Margin Per Expense Dollar $1.98 $1.99 $2.11
. ASSET MANAGEMENT
- Operating Cash Flow $294 $254 $787
- Free Cash Flow $205 $158 $669
- Return on Invested Capital 7.21% 7.90% 9.06%
- - REVENUE AND ALL RATIOS TO REVENUE EXCLUDE BULK DELIVERIES TO CUSTOMER
WAREHOUSES AND OTHER CUSTOMER PASS THROUGH CHARGES.
- - MARGIN PER EXPENSE DOLLAR = RATIO OF GROSS MARGIN TO EXPENSES
* THE NET EARNINGS SECTION IS PRESENTED BEFORE DISCONTINUED OPERATIONS.
SEE THE GAAP/NON-GAAP RECONCILIATION FOR THE CALCULATIONS AND DEFINITIONS
SUPPORTING THE BALANCES EXCLUDING SPECIAL ITEMS.
-- more --
CARDINAL HEALTH, INC. - FIRST NINE MONTHS FISCAL 2004 AND 2003 ASSET
MANAGEMENT ANALYSIS
($ MILLIONS)
2004
----
Q1 Q2 Q3 YTD
-- -- -- ---
. RECEIVABLE DAYS 18 17 17
. DAYS INVENTORY ON HAND 55 54 51
. CASH $992 $544 $527
. DEBT $2,724 $2,726 $2,531
. EQUITY $7,123 $7,592 $7,657
. NET DEBT/TOTAL CAPITAL 20% 22% 21%
. TANGIBLE NET WORTH $4,782 $4,695 $4,655
. RETURN ON EQUITY 17.8% 20.7% 22.5% 20.2%
EXCLUDING SPECIAL ITEMS 18.2% 20.5% 22.8% 20.4%
. TAX RATE 33.2% 32.9% 32.7% 32.9%
EXCLUDING SPECIAL ITEMS 33.2% 33.1% 32.8% 33.0%
2003
----
Q1 Q2 Q3 YTD
-- -- -- ---
. RECEIVABLE DAYS 19 17 18
. DAYS INVENTORY ON HAND 53 51 58
. 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%
. TANGIBLE NET WORTH $4,786 $4,960 $4,927
. RETURN ON EQUITY 18.1% 22.8% 22.4% 20.9%
EXCLUDING SPECIAL ITEMS 19.0% 21.5% 22.7% 20.9%
. TAX RATE 34.0% 34.3% 33.4% 33.9%
EXCLUDING SPECIAL ITEMS 33.3% 33.8% 33.4% 33.5%
-- more --
CARDINAL HEALTH, INC. - GAAP / NON-GAAP RECONCILIATION
($ MILLIONS)
- -----------------------------------------------------------------------
THIRD QUARTER FISCAL 2004
GAAP* EXCLUDING
BASIS SPECIAL ITEMS SPECIAL ITEMS
----- ------------- -------------
. SPECIAL ITEMS
- Merger related costs $7 $7 -
- Other, primarily restructuring charges $1 $1 -
. OPERATING EARNINGS
- Amount $665 $8 $673
- Growth rate 9% 9%
- Ratio to revenue (Return on sales) 4.54% 4.60%
. NET EARNINGS**
- Amount $429 $5 $434
- Growth rate 11% 11%
- Ratio to revenue 2.93% 2.96%
- Diluted EPS $0.98 $0.01 $0.99
. INCOME TAX PROVISION
- Income tax provision $208 $3 $211
- -----------------------------------------------------------------------
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 2004
GAAP* EXCLUDING
BASIS SPECIAL ITEMS SPECIAL ITEMS
----- ------------- -------------
. SPECIAL ITEMS
- Merger related costs $24 $24 -
- Other, primarily litigation settlements ($6) ($6) -
. OPERATING EARNINGS
- Amount $1,774 $18 $1,792
- Growth rate 6% 8%
- Ratio to revenue (Return on sales) 4.22% 4.26%
. NET EARNINGS**
- Amount $1,140 $11 $1,151
- Growth rate 10% 11%
- Ratio to revenue 2.71% 2.74%
- Diluted EPS $2.58 $0.02 $2.60
. INCOME TAX PROVISION
- Income tax provision $559 $7 $566
- -----------------------------------------------------------------------
FIRST NINE MONTHS OF FISCAL 2003
GAAP* EXCLUDING
BASIS SPECIAL ITEMS SPECIAL ITEMS
----- ------------- -------------
. SPECIAL ITEMS
- Merger related costs $49 $49 -
- Other, primarily litigation settlements ($58) ($58) -
. 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
- -----------------------------------------------------------------------
* GAAP - AMOUNTS THAT CONFORM WITH GENERALLY ACCEPTED ACCOUNTING PRINCIPLES.
** THE NET EARNINGS SECTION IS PRESENTED BEFORE DISCONTINUED OPERATIONS.
DEFINITIONS:
RETURN ON EQUITY (EXCLUDING SPECIAL ITEMS) = (Earnings from continuing
operations + special items after tax) annualized / average shareholders' equity
excluding special items
Note: Average shareholders' equity excluding special items used in the
return on equity calculation was $7.6 billion and $6.9 billion in the third
quarter of fiscal 2004 and 2003, respectively. Average shareholders' equity
excluding special items was $7.5 billion and $6.6 billion year to date
fiscal 2004 and 2003, 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 / operating revenue
FREE CASH FLOW = Operating cash flow - net property activity - dividends
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 2004 and fiscal 2003.
NET DEBT TO TOTAL CAPITAL = Net Debt / (net debt + shareholders' equity)
Note: Net debt = long-term obligations + short-term obligations + notes
payable banks - cash
###