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 ANNOUNCES GLOBAL RESTRUCTURING PLAN TO ACCELERATE GROWTH
BOARD OF DIRECTORS AUTHORIZES $500 MILLION SHARE REPURCHASE
DUBLIN, OHIO, DEC. 13, 2004 -- Cardinal Health, Inc. (NYSE: CAH), the leading
provider of products and services supporting the health care industry, today
announced details of a previously disclosed three-year restructuring plan
expected to improve annual operating earnings by $500 million. The company also
announced that its board of directors has authorized the purchase up to $500
million of its common shares as management deems appropriate.
"We are bringing the company together by integrating externally to align our
businesses for customers and internally to become even more efficient," said
Robert D. Walter, chairman and chief executive officer of Cardinal Health. "Both
actions - integrating externally and integrating internally -- will help us
deliver even more value to customers and improve returns to shareholders."
The restructuring supports "One Cardinal Health," a long-term program launched
by the company to increase the value it provides customers through better
integration of existing businesses and improved efficiency from a more
disciplined approach to procurement and resource allocation.
The restructuring will be implemented in two phases over a three-year period,
the company said.
PHASE ONE OF RESTRUCTURING PLAN
The cost to execute the first phase of restructuring is estimated to be $300
million to $350 million, for asset impairment, employee severance and other
costs. Cost savings and profit improvements from this phase are expected to add
$125 million to operating earnings in fiscal 2005 and reach an annualized amount
of $200 million for fiscal 2006.
-more-
CARDINAL HEALTH ANNOUNCES GLOBAL RESTRUCTURING PLAN TO ACCELERATE GROWTH
PAGE 2
The company expects to reduce its 58,000 global workforce by 4,200 during this
phase, primarily through business consolidations and process improvements,
resulting in the closing of approximately 25 facilities worldwide. More than 100
profit-improvement actions underway include rationalizing and discontinuing
overlapping or underperforming product lines and improving product pricing.
PHASE TWO OF RESTRUCTURING PLAN
The second phase of the restructuring will focus on longer term integration to
drive top line growth and create greater productivity, including:
o Company-wide, world-class shared services for administrative functions
such as finance, human resources and information technology.
o Strategic sourcing to better leverage Cardinal Health's global scale
and purchasing power.
o An integrated go-to-market strategy for the company's hospital and
pharmaceutical manufacturer customers.
o Efficiency and quality improvement plans across Cardinal Health's
manufacturing and logistics operations.
Through specific projects already identified, the company expects the financial
benefit of phase two to be $250 million to $350 million in annual operating
earnings improvements. The cost to implement phase two has not been finalized
and will be announced at a future date following approval by the board of
directors.
"Through the 'One Cardinal Health' program we are focused on building lasting
discipline into our operations, making the company more agile and driving
organic growth well into the future," said George L. Fotiades, president and
chief operating officer of Cardinal Health.
FISCAL 2005 FINANCIAL IMPACT AND OUTLOOK
Of the phase one restructuring costs, the company expects approximately $230
million to $270 million will be recognized as special items in the quarters in
which the costs are incurred. Approximately $70 million to $80 million of the
costs to write down impaired assets will be recognized as non-recurring
operating expenses. Of this amount, approximately $53 million will be incurred
during the second quarter, reducing operating results for the period.
The company now expects earnings per share for the first half of fiscal 2005 to
decline approximately 15 percent, excluding special items and non-recurring
charges. Non-recurring charges primarily relate to $53 million for the impaired
assets announced today. The company continues to forecast a much stronger second
half for the fiscal year, with full-year earnings-per-share growth in the low
single digits, excluding special items and non-recurring charges. Achievement of
this growth is dependent on benefits of the restructuring program and
operational progress, most notably in the pharmaceutical distribution business.
These new expectations are below the company's previously stated goal of at
least 10 percent earnings-per-share growth for fiscal 2005.
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CARDINAL HEALTH ANNOUNCES GLOBAL RESTRUCTURING PLAN TO ACCELERATE GROWTH
PAGE 3
SHARE REPURCHASE PROGRAM
Historically, Cardinal Health has used its strong cash flow to finance growth
and working capital, while returning excess cash to shareholders in the form of
dividends and share repurchases. The $500 million share-repurchase program
reflects that commitment and will be funded from normal cash flow, the company
said. Over the past three years, Cardinal Health has repurchased $3 billion of
its shares. The company expects to begin repurchasing shares in the third
quarter of fiscal 2005.
CONFERENCE CALL
Cardinal Health has scheduled a conference call for investors today at 11:30
a.m. Eastern Standard Time (EST) to discuss its updated outlook. To access this
discussion via the Internet, go to the Investor Relations page at
www.cardinalhealth.com. The company has also established a telephone call-in
line at (706) 634-5100, conference ID 2852907. An audio replay of the conference
call will be available until 11 p.m. EST on Dec. 15 by dialing (706) 645-9291,
passcode 2852907. A transcript and replay of the Webcast will be available at
the Investor Relations page on www.cardinalhealth.com.
ABOUT CARDINAL HEALTH
CARDINAL HEALTH, INC. (www.cardinalhealth.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.
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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, the effects, timing or success of restructuring
programs or plans, the impact of previously announced restatements, and general
economic and market conditions. Cardinal Health undertakes no obligation to
update or revise any forward-looking statement.