Exhibit 99.01
CARDINAL HEALTH
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 ANNOUNCES FOURTH QUARTER AND
YEAR-END RESULTS, FILES FISCAL 2004 10-K
DUBLIN, OHIO, OCT. 26, 2004-- Cardinal Health, Inc. (NYSE: CAH), the leading
provider of products and services supporting the health care industry, announced
fourth-quarter and fiscal 2004 results concurrent with the filing today of its
fiscal 2004 Form 10-K with the Securities and Exchange Commission (SEC).
For the quarter ended June 30, in accordance with generally accepted accounting
principles (GAAP), revenues rose 11 percent to $16.9 billion and increased 15
percent to $65.1 billion for the fiscal year. Earnings from continuing
operations for the quarter were up 11 percent to $397.4 million, and increased
10 percent to $1.5 billion on a full-year basis. Diluted earnings per share from
continuing operations for the quarter were $0.91, an increase of 15 percent. For
the year, diluted earnings per share from continuing operations rose 14 percent
to $3.47.
Cardinal Health Chairman and Chief Executive Officer Robert D. Walter said:
"Overall, solid progress was made during the year and the financial results we
delivered were in line with our revised expectations. Certain businesses
performed below our historic standards, but we also experienced continued strong
contributions from others, most notably our Medical Products and Services
segment. In Pharmaceutical Distribution and Provider Services, the business
model transition underway put pressure on our earnings; however, over the
long-term, we believe the future of pharmaceutical distribution is secure. We
provide a valuable service to manufacturers that continues to be validated in
the marketplace. Looking forward, we will continue to strengthen our market
positions in all segments and remain committed to achieving our long-term
performance goals."
FORM 10-K FILING
On Sept. 13, Cardinal Health announced initial conclusions from an internal
review by the Audit Committee of its board of directors, assisted by independent
counsel, which began in April. Updated details of these and additional findings
by the Audit Committee are
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CARDINAL HEALTH ANNOUNCES FOURTH QUARTER AND YEAR-END RESULTS,
FILES FISCAL 2004 10-K
PAGE 2
provided in the company's Form 10-K and include information about revenue
reclassification and the treatment of cash discounts within the company's
Pharmaceutical Distribution and Provider Services segment, timing of revenue
recognition within the Automation and Information Services segment and earnings
restatements from certain balance sheet reserve and accrual adjustments.
(Cardinal Health's Form 10-K is available on the Investor Relations page at
www.cardinal.com.)
FINANCIAL PERFORMANCE
After tax, special items during the quarter totaled $25.3 million, primarily
related to the integration of recently acquired businesses. For the year,
special items after tax totaled $35.6 million. (The following discussion
includes the effect of restatements and adjusts certain amounts to exclude
special items. Please see the attached financial table for a reconciliation of
the GAAP amounts to the amounts excluding these items.)
Results for key measures include:
o REVENUE rose 11 percent to $16.9 billion for the quarter and 15
percent to $65.1 billion for the year.
o EARNINGS PER DILUTED SHARE from continuing operations before special
items rose 13 percent for the fourth quarter to $0.97 versus $0.86
last year. For the year, earnings per share from continuing operations
before special items increased 14 percent to $3.55.
Earnings from continuing operations before special items rose 8
percent to $423 million for the quarter and reached $1.6 billion for
the year, an increase of 10 percent over fiscal 2003.
o RETURN ON EQUITY before special items was 20.7 percent for the year,
even with the prior year.
o CASH FLOW from operations for fiscal 2004 was $2.6 billion. Free cash
flow of $1.1 billion in the quarter was the result of strong earnings
combined with focused asset management. For the year, free cash flow
rose to $2.2 billion, or 148 percent of net earnings.
STRATEGIC AND OPERATIONAL RESULTS
Cardinal Health made progress during the year using 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. A total of $4.5 billion of capital was deployed
for the year, including more than $400 million in capital investments, $1.5
billion to repurchase 24.2 million shares of Cardinal Health stock and $2.6
billion to fund strategic acquisitions.
The company's Integrated Provider Solutions strategy continued to gain momentum
and deliver value to hospital customers. Revenues from corporate agreements with
health systems, which include products and services from multiple business
units, increased 20 percent for the year. These strategic agreements now total
more than $7 billion annually.
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CARDINAL HEALTH ANNOUNCES FOURTH QUARTER AND YEAR-END RESULTS,
FILES FISCAL 2004 10-K
PAGE 3
Under its Integrated Provider Solutions strategy, Cardinal Health has aligned
its resources for hospital customers, which contribute more than 50 percent of
the company's earnings.
Strong pharmaceutical demand drove a revenue increase within the PHARMACEUTICAL
DISTRIBUTION AND PROVIDER SERVICES segment of 12 percent for the quarter and 15
percent on a full-year basis. Operating earnings growth, however, was flat for
the quarter and decreased 1 percent for the year due to the ongoing transition
in how pharmaceutical manufacturers pay for the distribution services Cardinal
Health provides. As this transition takes effect, Cardinal Health expects to be
paid fees for distribution services on a non-contingent basis as services are
provided. The transition is expected to improve returns and provide greater
visibility to future earnings. In August, the company notified pharmaceutical
manufacturers of a change in policy intended to transition existing distribution
contracts to fee-based agreements by the next anniversary date of current
agreements or April 1, 2005.
Cardinal Health's MEDICAL PRODUCTS AND SERVICES segment reported above-market
revenue and earnings growth for the quarter and full year, including a
double-digit increase in sales to physicians' offices and acute care facilities
during the period. New product introductions and distribution contracts also
fueled growth. Revenues from medical products and services now total more than
$7.3 billion annually - an increase of 11 percent over the prior year - and
operating earnings were up 13 percent to $666 million.
Revenues in the PHARMACEUTICAL TECHNOLOGIES AND SERVICES segment rose 4 percent
during the quarter, while operating earnings improved 14 percent, led by
strength in the company's Intercare operations. Intercare was acquired earlier
in the year to expand Cardinal Health's global reach, enhance proprietary
sterile manufacturing capabilities and broaden the company's participation in
the European generic and injectible product markets. These results were
partially offset by declines in oral products, whose year ago results included
the key launch period for Mylan's Amnesteen(R) softgel product, and the
slower-than-expected ramp up of production in certain sterile manufacturing
projects with associated start up costs. For the full year, segment revenue
increased 25 percent to $2.8 billion, and operating earnings grew 26 percent to
$465 million. Excluding acquisitions, operating earnings would have increased 8
percent for the segment.
Capital spending pressure on hospital customers and the effect of product mix
issues during the quarter contributed to a decline in revenues and earnings
within the AUTOMATION AND INFORMATION SERVICES segment. For the year, revenues
increased 2 percent to $681 million and operating earnings grew 2 percent to
$270 million. With the $2 billion acquisition of Alaris Medical Systems now
complete, the company has established a new financial reporting segment called
CLINICAL TECHNOLOGIES AND SERVICES. Results for this segment, which will include
Alaris products, Pyxis products and associated clinical services, will be
reported for the first quarter of fiscal 2005 and will replace the company's
current Automation and Information Services segment.
(Tables with specific segment results for the fourth quarter and full fiscal
year are available at the Investor Relations page on www.cardinal.com.)
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CARDINAL HEALTH ANNOUNCES FOURTH QUARTER AND YEAR-END RESULTS,
FILES FISCAL 2004 10-K
PAGE 4
OUTLOOK
Based on current business conditions, the company expects earnings per share to
decline by 10 percent to 15 percent for the first half of fiscal 2005, with a
decline of approximately 25 percent in the first quarter. The largest factor
contributing to this decline is the ongoing business model transition in
Cardinal Health's pharmaceutical distribution segment. Challenges in other
business segments will also contribute to the decline, including margin pressure
on medical products, delays in the start-up of manufacturing in Humacao, Puerto
Rico, associated costs of new sterile manufacturing projects and continued
pressure on the sale of automation systems.
Cardinal Health has initiated strategic and operational actions to improve
long-term results, including a restructuring program targeting cost structure
improvements of $125 million in fiscal 2005, with greater annual savings over a
three-year period. Cardinal Health maintains an earnings-per-share growth goal
of at least 10 percent for the fiscal year. Achievement of this goal, however,
is dependent on the benefits of this restructuring program and operational
progress, most notably in its pharmaceutical distribution business.
The company continues to target long-term financial goals of:
o Annual earnings-per-share growth in the mid-teens or better;
o Revenue growth in the low-to-mid-teens, faster than growth in the
markets in which the company competes;
o Free cash flow greater than or equal to 60 percent of net earnings;
o Return on equity of more than 20 percent annually.
SEC INVESTIGATION
As previously reported, in October 2003, the SEC initiated an informal inquiry
regarding Cardinal Health seeking historical financial and related information.
In May, the company was notified that the SEC had converted the informal inquiry
into a formal investigation. In June, as part of the SEC's formal investigation,
Cardinal Health received an SEC subpoena that included a request for the
production of documents relating to revenue classification, and the methods used
for such classification, in the company's Pharmaceutical Distribution business
as either "Operating Revenues" or "Bulk Deliveries to Customer Warehouses and
Other." In addition, the company learned that the U.S. Attorney for the Southern
District of New York had also commenced an inquiry that the company understands
relates to the revenue classification issue. Cardinal Health continues to
respond to the investigations by providing all information required.
CONFERENCE CALL AND INVESTOR MEETING
Cardinal Health has scheduled a conference call for today at 5:30 p.m. Eastern
Daylight Time to discuss its fiscal year financial performance. To access this
discussion and the corresponding slide presentation, go to the Investor
Relations page at www.cardinal.com. The conference call may also be accessed by
calling 706-634-5100, passcode 1816714. An audio replay of the conference call
will be available until 11:30 p.m. on Oct. 28 at 706-645-9291, passcode 1816714.
A transcript and audio replay of the Webcast will also be available at
www.cardinal.com.
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CARDINAL HEALTH ANNOUNCES FOURTH QUARTER AND YEAR-END RESULTS,
FILES FISCAL 2004 10-K
PAGE 5
In addition, Cardinal Health will host a management update for invited analysts
and investment professionals concurrent with the release of its first-quarter
fiscal 2005 earnings on the morning of Friday, Nov. 5. Cardinal Health's annual
meeting of shareholders has been scheduled for Dec. 8 in Dublin, Ohio.
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 55,000 people on six continents and produces annual
revenues of more than $65 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 results, consequences, effects or
timing of any inquiry or investigation by any regulatory authority or any legal
and administrative proceedings, and general economic and market conditions.
Cardinal Health undertakes no obligation to update or revise any forward-looking
statement.
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CARDINAL HEALTH, INC.
CONSOLIDATED STATEMENTS OF EARNINGS (UNAUDITED)
(IN MILLIONS, EXCEPT PER COMMON SHARE AMOUNTS)
FOURTH QUARTER
--------------------------------------
June June
2004 2003 % Change
--------------------------------------
(Restated)
Revenue $16,922.7 $ 15,183.8 11%
Cost of products sold 15,698.7 13,968.3 12%
--------- ------------
Gross margin 1,224.0 1,215.5 1%
Selling, general and administrative expenses 602.1 609.0 (1)%
Special items - merger charges 21.1 25.1 N.M.
- foundation contribution 31.7 - N.M.
- other (13.4) 23.9 N.M.
--------- ------------
Operating earnings 582.5 557.5 4%
Interest expense and other 23.8 22.6 5%
--------- ------------
Earnings before income taxes and discontinued operations 558.7 534.9 4%
Provision for income taxes 161.3 175.7 (8)%
--------- ------------
Earnings from continuing operations 397.4 359.2 11%
Loss from discontinued operations (net of tax of $2.6 and
$1.4 for the quarters ending June 30, 2004 and 2003,
respectively) (3.9) (4.3) N.M.
--------- ------------
Net earnings $ 393.5 $ 354.9 N.M.
========= ============
Basic earnings per Common Share:
Continuing operations $ 0.92 $ 0.80 15%
Discontinued operations (0.01) (0.01) N.M.
--------- ------------
Net basic earnings per Common Share $ 0.91 $ 0.79 N.M.
========= ============
Diluted earnings per Common Share:
Continuing operations $ 0.91 $ 0.79 15%
Discontinued operations (0.01) (0.01) N.M.
--------- ------------
Net diluted earnings per Common Share $ 0.90 $ 0.78 N.M.
========= ============
Weighted average number of shares outstanding:
Basic 430.4 446.8
Diluted 436.7 453.3
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 $ (13.2) $ (0.03) $ (16.3) $(0.03)
- foundation contribution (21.3) (0.05) - -
- other 9.2 0.02 (17.0) (0.04)
------- --------- ------- ------
Impact of special items $ (25.3) $ (0.06) $ (33.3) $(0.07)
======= ========= ======= ======
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CARDINAL HEALTH, INC.
CONSOLIDATED STATEMENTS OF EARNINGS (UNAUDITED)
(IN MILLIONS, EXCEPT PER COMMON SHARE AMOUNTS)
YEAR-TO-DATE
---------------------------------------------------------
June June
2004 2003 % Change
------------------ -------------------- ------------
(Restated)
Revenue $ 65,053.5 $ 56,731.5 15%
Cost of products sold 60,312.3 52,249.3 15%
------------------ -------------------
Gross margin 4,741.2 4,482.2 6%
Selling, general and administrative expenses 2,346.5 2,246.3 4%
Special items - merger charges 44.7 74.4 N.M.
- foundation contribution 31.7 - N.M.
- other (19.0) (34.5) N.M.
------------------ -------------------
Operating earnings 2,337.3 2,196.0 6%
Interest expense and other 98.9 115.3 (14)%
------------------ -------------------
Earnings before income taxes, discontinued operations and
cumulative effect of change in accounting 2,238.4 2,080.7 8%
Provision for income taxes 713.7 699.5 2%
------------------ -------------------
Earnings from continuing operations before cumulative effect
of change in accounting 1,524.7 1,381.2 10%
Loss from discontinued operations (net of tax of $7.4 and $2.5 for the
year-to-date periods ending June 30, 2004
and 2003, respectively) (11.7) (6.1) N.M.
Cumulative effect of change in accounting (38.5) - N.M.
------------------ -------------------
Net earnings $ 1,474.5 $ 1,375.1 N.M.
================== ===================
Basic earnings per Common Share:
Continuing operations $ 3.51 $ 3.10 13%
Discontinued operations (0.03) (0.02) N.M.
Cumulative effect of change in accounting (0.09) - N.M.
------------------ -------------------
Net basic earnings per Common Share $ 3.39 $ 3.08 N.M.
================== ===================
Diluted earnings per Common Share:
Continuing operations $ 3.47 $ 3.05 14%
Discontinued operations (0.03) (0.02) N.M.
Cumulative effect of change in accounting (0.09) - N.M.
------------------ -------------------
Net diluted earnings per Common Share $ 3.35 $ 3.03 N.M.
================== ===================
Weighted average number of shares outstanding:
Basic 434.4 446.0
Diluted 440.0 453.3
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 $ (27.7) $ (0.06) $ (47.5) $ (0.10)
- foundation contribution (21.3) (0.05) - -
- other 13.4 0.03 14.3 0.03
------------- ------------ ------------ -----------
Impact of special items $ (35.6) $ (0.08) $ (33.2) $ (0.07)
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CARDINAL HEALTH, INC.
CONSOLIDATED BALANCE SHEETS
(IN MILLIONS)
(unaudited)
JUNE 30, March 31, June 30,
2004 2004 2003
----------- ----------- -----------
(Restated) (Restated)
ASSETS
CURRENT ASSETS
Cash and equivalents $ 1,096.0 $ 527.2 $ 1,724.0
Trade receivables 3,432.7 3,496.8 2,784.4
Current portion of investment in sales-type leases 202.1 256.1 171.8
Inventories 7,471.3 8,522.5 7,570.9
Prepaid expenses and other 795.4 739.6 776.0
Assets held for sale from discontinued operations 60.4 139.0 170.1
----------- ----------- -----------
Total current assets 13,057.9 13,681.2 13,197.2
----------- ----------- -----------
Property and equipment - net 2,364.0 2,233.5 2,089.5
Investment in sales-type leases 546.0 538.4 557.3
Other assets 5,401.2 3,369.8 2,621.1
----------- ----------- -----------
TOTAL ASSETS $ 21,369.1 $ 19,822.9 $ 18,465.1
=========== =========== ===========
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES
Notes payable - banks and current portion of
long-term obligations $ 860.6 $ 54.5 $ 228.7
Accounts payable 6,432.4 6,998.6 5,288.8
Other accrued liabilities 2,021.3 1,670.8 1,728.4
Liabilities from discontinued operations 55.1 60.9 64.3
----------- ----------- -----------
Total current liabilities 9,369.4 8,784.8 7,310.2
----------- ----------- -----------
Long-term obligations, less current portion 2,834.7 2,477.0 2,471.9
Deferred taxes and other liabilities 1,188.7 1,038.8 1,008.5
Total shareholders' equity 7,976.3 7,522.3 7,674.5
----------- ----------- -----------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $ 21,369.1 $ 19,822.9 $ 18,465.1
=========== =========== ===========
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CARDINAL HEALTH, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
(IN MILLIONS)
THREE MONTHS ENDED FOR THE YEAR ENDED
---------------------- ----------------------
JUNE 30, JUNE 30,
---------------------- ----------------------
2004 2003 2004 2003
---------- ---------- ---------- ----------
(RESTATED) (RESTATED)
CASH FLOWS FROM OPERATING ACTIVITIES:
Earnings from continuing operations before cumulative effect $ 397.4 $ 359.2 $ 1,524.7 $ 1,381.2
of change in accounting
Adjustments to reconcile earnings from continuing operations before
cumulative effect of change in accounting to net cash from operations:
Depreciation and amortization 78.8 70.6 299.2 265.8
Change in operating assets and liabilities, net of
effects from acquisitions:
(Increase)/decrease in trade receivables 156.7 61.3 (455.6) (391.5)
(Increase)/decrease in inventories 1,153.1 1,161.1 245.5 (217.9)
(Increase)/decrease in net investment in sales-type leases 58.2 46.1 (7.2) 107.8
Increase/(decrease) in accounts payable (597.3) (1,175.1) 1,014.6 (278.5)
Other operating items - net 42.4 359.0 3.5 531.1
---------- ---------- ---------- ----------
Net cash provided by operating activities 1,289.3 882.2 2,624.7 1,398.0
---------- ---------- ---------- ----------
CASH FLOWS FROM INVESTING ACTIVITIES:
Acquisition/divestiture of subsidiaries, net of cash acquired (1,528.5) (23.6) (2,089.7) (26.8)
Proceeds from sale of property, equipment, and other assets 11.2 16.0 19.5 57.7
Additions to property and equipment (138.2) (159.1) (410.2) (423.2)
Proceeds from sale of discontinued operations 38.3 40.8 43.4 48.6
---------- ---------- ---------- ----------
Net cash used in investing activities (1,617.2) (125.9) (2,437.0) (343.7)
---------- ---------- ---------- ----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Net change in commercial paper and short-term debt 647.1 1.8 646.2 8.5
Net change in long-term obligations 229.8 359.9 (126.3) 318.4
Proceeds from issuance of Common Shares 72.4 72.0 216.7 197.3
Purchase of Treasury Stock (39.7) - (1,500.0) (1,191.7)
Dividends on Common Shares (12.9) (11.2) (52.3) (44.8)
---------- ---------- ---------- ----------
Net cash provided by/(used in) financing activities 896.7 422.5 (815.7) (712.3)
---------- ---------- ---------- ----------
NET INCREASE/(DECREASE) IN CASH AND EQUIVALENTS 568.8 1,178.8 (628.0) 342.0
CASH AND EQUIVALENTS AT BEGINNING OF PERIOD 527.2 545.2 1,724.0 1,382.0
---------- ---------- ---------- ----------
CASH AND EQUIVALENTS AT END OF PERIOD $ 1,096.0 $ 1,724.0 $ 1,096.0 $ 1,724.0
========== ========== ========== ==========
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CARDINAL HEALTH, INC. - FOURTH QUARTER FY 2004 BUSINESS ANALYSIS
($ MILLIONS)
PHARMACEUTICAL DISTRIBUTION AND PROVIDER SERVICES
2004 2003
------- -------
- REVENUE
- Amount $14,095 $12,541
- Growth Rate 12% 15%
- Mix 83% 83%
- OPERATING EARNINGS
- Amount $ 309 $ 307
- Growth Rate 0% (1)%
- Mix 45% 46%
- Ratio to Revenue 2.19% 2.45%
- -------------------------------------------------------------------------------------
MEDICAL PRODUCTS AND SERVICES
2004 2003
------- -------
- REVENUE
- Amount $ 1,909 $ 1,737
- Growth Rate 10% 7%
- Mix 11% 11%
- OPERATING EARNINGS
- Amount $ 174 $ 156
- Growth Rate 12% 11%
- Mix 26% 24%
- Ratio to Revenue 9.14% 9.00%
- -------------------------------------------------------------------------------------
PHARMACEUTICAL TECHNOLOGIES AND SERVICES
2004 2003
------- -------
- REVENUE
- Amount $ 740 $ 711
- Growth Rate 4% 83%
- Mix 5% 5%
- OPERATING EARNINGS
- Amount $ 132 $ 115
- Growth Rate 14% 52%
- Mix 19% 17%
- Ratio to Revenue 17.81% 16.18%
- -------------------------------------------------------------------------------------
AUTOMATION AND INFORMATION SERVICES
2004 2003
------- -------
- REVENUE
- Amount $ 178 $ 202
- Growth Rate (12)% 19%
- Mix 1% 1%
- OPERATING EARNINGS
- Amount $ 68 $ 86
- Growth Rate (21)% 21%
- Mix 10% 13%
- Ratio to Revenue 38.13% 42.68%
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CARDINAL HEALTH, INC. - FOURTH QUARTER FY 2004 BUSINESS ANALYSIS
($ MILLIONS)
TOTAL Excluding Special Items
------------------------ -------------------------
2004 2003 2004 2003
-------- -------- ------ ------
- - REVENUE
- Amount $16,923 $15,184
- Growth Rate 11% 17%
- - OPERATING EARNINGS
- Amount $ 583 $ 557 $ 622 $ 606
- Growth Rate 4% 10% 3% 10%
- - RATIO TO REVENUE
- Gross Margin 7.23% 8.00%
- Expenses 3.56% 4.01%
- Special Items 0.23% 0.32%
- Operating Earnings 3.44% 3.67% 3.67% 3.99%
- - NET EARNINGS*
- Amount $ 397 $ 359 $ 423 $ 393
- Growth Rate 11% 13% 8% 12%
- Ratio to Revenue 2.35% 2.36% 2.50% 2.59%
- - PRODUCTIVITY
- Margin Per Expense Dollar $ 2.03 $ 2.00
- - ASSET MANAGEMENT
- Operating Cash Flow $ 1,289 $ 882
- Free Cash Flow $ 1,149 $ 728
- Return on Invested Capital 8.06% 7.62% 8.55% 8.30%
- - 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. - FISCAL YEAR 2004 BUSINESS ANALYSIS
($ MILLIONS)
PHARMACEUTICAL DISTRIBUTION AND PROVIDER SERVICES
2004 2003
------- -------
- - REVENUE
- Amount $54,231 $47,260
- Growth Rate 15% 10%
- Mix 84% 83%
- - OPERATING EARNINGS
- Amount $ 1,173 $ 1,188
- Growth Rate (1)% 10%
- Mix 46% 49%
- Ratio to Revenue 2.16% 2.51%
- -------------------------------------------------------------------------------
MEDICAL PRODUCTS AND SERVICES
2004 2003
------- -------
- - REVENUE
- Amount $ 7,358 $ 6,615
- Growth Rate 11% 6%
- Mix 11% 12%
- - OPERATING EARNINGS
- Amount $ 666 $ 592
- Growth Rate 13% 9%
- Mix 26% 25%
- Ratio to Revenue 9.05% 8.95%
- -------------------------------------------------------------------------------
PHARMACEUTICAL TECHNOLOGIES AND SERVICES
2004 2003
------- -------
- - REVENUE
- Amount $ 2,804 $ 2,250
- Growth Rate 25% 59%
- Mix 4% 4%
- - OPERATING EARNINGS
- Amount $ 465 $ 368
- Growth Rate 26% 39%
- Mix 18% 15%
- Ratio to Revenue 16.60% 16.37%
- -------------------------------------------------------------------------------
AUTOMATION AND INFORMATION SERVICES
2004 2003
------- -------
- - REVENUE
- Amount $ 681 $ 667
- Growth Rate 2% 19%
- Mix 1% 1%
- - OPERATING EARNINGS
- Amount $ 270 $ 266
- Growth Rate 2% 27%
- Mix 10% 11%
- Ratio to Revenue 39.68% 39.91%
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CARDINAL HEALTH, INC. - FISCAL YEAR 2004 BUSINESS ANALYSIS
($ MILLIONS)
TOTAL Excluding Special Items
----- -----------------------
2004 2003 2004 2003
------- ------- ------ ------
- - REVENUE
- Amount $65,053 $56,732
- Growth Rate 15% 11%
- - OPERATING EARNINGS
- Amount $ 2,337 $ 2,196 $2,395 $2,236
- Growth Rate 6% 18% 7% 13%
- - RATIO TO REVENUE
- Gross Margin 7.29% 7.90%
- Expenses 3.61% 3.96%
- Special Items 0.09% 0.07%
- Operating Earnings 3.59% 3.87% 3.68% 3.94%
- - NET EARNINGS*
- Amount $ 1,525 $ 1,381 $1,560 $1,414
- Growth Rate 10% 21% 10% 16%
- Ratio to Revenue 2.34% 2.43% 2.40% 2.49%
- - PRODUCTIVITY
- Margin Per Expense Dollar $ 2.02 $ 2.00
- - ASSET MANAGEMENT
- Operating Cash Flow $ 2,625 $ 1,398
- Free Cash Flow $ 2,182 $ 988
- Return on Invested Capital 7.92% 7.73% 8.10% 7.91%
- - 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.
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 $12,883 $13,623 $13,630 $14,095 $54,231
- Growth Rate 18% 15% 14% 12% 15%
- Mix 84% 83% 83% 83% 84%
- - OPERATING EARNINGS
- Amount $ 256 $ 261 $ 348 $ 309 $ 1,173
- Growth Rate (3)% (12)% 8% 0% (1)%
- Mix 45% 43% 49% 45% 46%
- Ratio to Revenue 1.99% 1.92% 2.55% 2.19% 2.16%
- -------------------------------------------------------------------------------------------
MEDICAL PRODUCTS AND SERVICES
Q1 Q2 Q3 Q4 TOTAL
-- -- -- -- -----
- - REVENUE
- Amount $ 1,733 $ 1,839 $ 1,876 $ 1,909 $ 7,358
- Growth Rate 9% 12% 14% 10% 11%
- Mix 11% 11% 12% 11% 11%
- - OPERATING EARNINGS
- Amount $ 150 $ 160 $ 182 $ 174 $ 666
- Growth Rate 15% 12% 13% 12% 13%
- Mix 27% 26% 25% 26% 26%
- Ratio to Revenue 8.66% 8.67% 9.70% 9.14% 9.05%
- -------------------------------------------------------------------------------------------
PHARMACEUTICAL TECHNOLOGIES AND SERVICES
Q1 Q2 Q3 Q4 TOTAL
-- -- -- -- -----
- - REVENUE
- Amount $ 647 $ 708 $ 710 $ 740 $ 2,804
- Growth Rate 52% 52% 9% 4% 25%
- Mix 4% 5% 4% 5% 4%
- - OPERATING EARNINGS
- Amount $ 106 $ 113 $ 114 $ 132 $ 465
- Growth Rate 47% 32% 20% 14% 26%
- Mix 19% 18% 16% 19% 18%
- Ratio to Revenue 16.45% 16.02% 16.04% 17.81% 16.60%
- -------------------------------------------------------------------------------------------
AUTOMATION AND INFORMATION SERVICES
Q1 Q2 Q3 Q4 TOTAL
-- -- -- -- -----
- - REVENUE
- Amount $ 143 $ 187 $ 172 $ 178 $ 681
- Growth Rate 7% 14% 4% (12)% 2%
- Mix 1% 1% 1% 1% 1%
- - OPERATING EARNINGS
- Amount $ 53 $ 80 $ 69 $ 68 $ 270
- Growth Rate 15% 15% 8% (21)% 2%
- Mix 9% 13% 10% 10% 10%
- Ratio to Revenue 37.17% 42.46% 40.34% 38.13% 39.68%
- -THE SUM OF THE QUARTERS MAY NOT EQUAL YEAR-TO-DATE DUE TO ROUNDING.
-- more --
CARDINAL HEALTH, INC. - QUARTERLY FY 2004 BUSINESS ANALYSIS
($ MILLIONS)
TOTAL (EXCLUDING SPECIAL ITEMS)
Q1 Q2 Q3 Q4 TOTAL
------- ------- ------- ------- -------
- - REVENUE
- Amount $15,388 $16,351 $16,392 $16,923 $65,053
- Growth Rate 18% 16% 14% 11% 15%
- - OPERATING EARNINGS
- Amount $ 525 $ 573 $ 675 $ 622 $ 2,395
- Growth Rate 10% 3% 13% 3% 7%
- - RATIO TO REVENUE
- Gross Margin 6.97% 7.10% 7.83% 7.23% 7.29%
- Expenses 3.56% 3.60% 3.71% 3.56% 3.61%
- Operating Earnings 3.41% 3.50% 4.12% 3.67% 3.68%
- - NET EARNINGS*
- Amount $ 332 $ 370 $ 435 $ 423 $ 1,560
- Growth Rate 12% 6% 15% 8% 10%
- Ratio to Revenue 2.16% 2.26% 2.65% 2.50% 2.40%
- - PRODUCTIVITY
- Margin Per Expense Dollar $ 1.96 $ 1.97 $ 2.11 $ 2.03 $ 2.02
- - ASSET MANAGEMENT
- Operating Cash Flow $ 294 $ 254 $ 787 $ 1,289 $ 2,625
- Free Cash Flow $ 205 $ 158 $ 669 $ 1,149 $ 2,182
- Return on Invested Capital 7.11% 7.80% 9.16% 8.55% 8.10%
- - MARGIN PER EXPENSE DOLLAR = RATIO OF GROSS MARGIN TO EXPENSES
- - THE SUM OF THE QUARTERS MAY NOT EQUAL YEAR-TO-DATE DUE TO ROUNDING.
* THE NET EARNINGS SECTION IS PRESENTED BEFORE DISCONTINUED OPERATIONS AND
CUMULATIVE EFFECT OF CHANGE IN ACCOUNTING.
SEE THE GAAP/NON-GAAP RECONCILIATION FOR THE CALCULATIONS AND DEFINITIONS
SUPPORTING THE BALANCES EXCLUDING SPECIAL ITEMS.
-- more --
CARDINAL HEALTH, INC. - FISCAL 2004 AND 2003 ASSET MANAGEMENT ANALYSIS
($ MILLIONS)
2004
----
Q1 Q2 Q3 Q4 YTD
-- -- -- -- ---
- - RECEIVABLE DAYS 17.5 17.4 17.5 17.7
- - DAYS INVENTORY ON HAND 45 44 45 38
- - CASH $ 992 $ 544 $ 527 $1,096
- - DEBT $2,724 $2,726 $2,532 $3,695
- - EQUITY $6,993 $7,456 $7,522 $7,976
- - NET DEBT/TOTAL CAPITAL 20% 23% 21% 25%
- - TANGIBLE NET WORTH $4,653 $4,558 $4,520 $3,038
- - RETURN ON EQUITY 17.6% 20.7% 23.0% 20.5% 20.3%
EXCLUDING SPECIAL ITEMS 18.1% 20.5% 23.2% 21.8% 20.7%
- - TAX RATE 33.2% 32.9% 32.7% 28.9% 31.9%
EXCLUDING SPECIAL ITEMS 33.2% 33.1% 32.8% 29.3% 32.0%
2003
----
Q1 Q2 Q3 Q4 YTD
-- -- -- -- ---
- - RECEIVABLE DAYS 18.0 16.1 16.8 16.6
- - DAYS INVENTORY ON HAND 47 51 53 43
- - CASH $ 946 $ 999 $ 545 $1,724
- - DEBT $2,255 $2,260 $2,355 $2,701
- - EQUITY $6,305 $6,487 $7,185 $7,675
- - NET DEBT/TOTAL CAPITAL 17% 16% 20% 11%
- - TANGIBLE NET WORTH $4,738 $4,914 $4,867 $5,342
- - RETURN ON EQUITY 17.8% 23.1% 21.7% 19.3% 20.3%
EXCLUDING SPECIAL ITEMS 18.6% 21.8% 22.1% 21.1% 20.7%
- - TAX RATE 34.0% 34.3% 33.4% 32.8% 33.6%
EXCLUDING SPECIAL ITEMS 33.3% 33.8% 33.4% 32.8% 33.3%
-- more --
SEE THE GAAP/NON-GAAP RECONCILIATION FOR THE CALCULATIONS AND DEFINITIONS
SUPPORTING THE BALANCES EXCLUDING SPECIAL ITEMS.
CARDINAL HEALTH, INC. - GAAP / NON-GAAP RECONCILIATION
($ MILLIONS)
FOURTH QUARTER FISCAL 2004
GAAP* EXCLUDING
BASIS SPECIAL ITEMS SPECIAL ITEMS
----- ------------- -------------
- - SPECIAL ITEMS
- Merger related costs $ 21 $ 21 -
- Foundation contribution $ 32 $ 32 -
- Other, primarily litigation settlements ($ 13) ($ 13) -
- - OPERATING EARNINGS
- Amount $ 583 $ 39 $ 622
- Growth rate 4% 3%
- Ratio to revenue (Return on sales) 3.44% 3.67%
- - NET EARNINGS**
- Amount $ 397 $ 26 $ 423
- Growth rate 11% 8%
- Ratio to revenue 2.35% 2.50%
- Diluted EPS $0.91 $0.06 $0.97
- - INCOME TAX PROVISION
- Income tax provision $ 161 $ 13 $ 174
- -------------------------------------------------------------------------------
FOURTH QUARTER FISCAL 2003
GAAP* EXCLUDING
BASIS SPECIAL ITEMS SPECIAL ITEMS
----- ------------- -------------
- - SPECIAL ITEMS
- Merger related costs $ 25 $ 25 -
- Foundation contribution - - -
- Other, primarily restructuring charges $ 24 $ 24 -
- - OPERATING EARNINGS
- Amount $ 557 $ 49 $ 606
- Growth rate 10% 10%
- Ratio to revenue (Return on sales) 3.67% 3.99%
- - NET EARNINGS**
- Amount $ 359 $ 34 $ 393
- Growth rate 13% 12%
- Ratio to revenue 2.36% 2.59%
- Diluted EPS $0.79 $0.07 $0.86
- - INCOME TAX PROVISION
- Income tax provision $ 176 $ 15 $ 191
- -------------------------------------------------------------------------------
FISCAL 2004
GAAP* EXCLUDING
BASIS SPECIAL ITEMS SPECIAL ITEMS
----- ------------- -------------
- - SPECIAL ITEMS
- Merger related costs $ 45 $ 45 -
- Foundation contribution $ 32 $ 32 -
- Other, primarily litigation settlements ($ 19) ($ 19) -
- - OPERATING EARNINGS
- Amount $ 2,337 $ 58 $ 2,395
- Growth rate 6% 7%
- Ratio to revenue (Return on sales) 3.59% 3.68%
- - NET EARNINGS**
- Amount $ 1,525 $ 35 $ 1,560
- Growth rate 10% 10%
- Ratio to revenue 2.34% 2.40%
- Diluted EPS $ 3.47 $ 0.08 $ 3.55
- - INCOME TAX PROVISION
- Income tax provision $ 714 $ 23 $ 737
- -------------------------------------------------------------------------------
FISCAL 2003
GAAP* EXCLUDING
BASIS SPECIAL ITEMS SPECIAL ITEMS
----- ------------- -------------
- - SPECIAL ITEMS
- Merger related costs $ 74 $ 74 -
- Foundation contribution - - -
- Other, primarily litigation settlements ($ 34) ($ 34) -
- - OPERATING EARNINGS
- Amount $ 2,196 $ 40 $ 2,236
- Growth rate 18% 13%
- Ratio to revenue (Return on sales) 3.87% 3.94%
- - NET EARNINGS**
- Amount $ 1,381 $ 33 $ 1,414
- Growth rate 21% 16%
- Ratio to revenue 2.43% 2.49%
- Diluted EPS $ 3.05 $ 0.07 $ 3.12
- - INCOME TAX PROVISION
- Income tax provision $ 700 $ 7 $ 707
* GAAP - AMOUNTS THAT CONFORM WITH GENERALLY ACCEPTED ACCOUNTING PRINCIPLES.
** THE NET EARNINGS SECTION IS PRESENTED BEFORE DISCONTINUED OPERATIONS AND
CUMULATIVE EFFECT OF CHANGE IN ACCOUNTING.
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 $7.8 billion and $7.4 billion in the fourth
quarter of fiscal 2004 and 2003, respectively. Average shareholders'
equity excluding special items was $7.5 billion and $6.8 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
###