Cardinal Health Reports Fiscal 2010 Results, Raises Fiscal 2011 Outlook

Cardinal Health Reports Fiscal 2010 Results, Raises Fiscal 2011 Outlook

  • Full-year revenue increases 3 percent to $99 billion
  • Fiscal 2010 diluted earnings per share from continuing operations of $1.62, or $2.22 on a non-GAAP basis
  • Fiscal 2011 non-GAAP diluted EPS outlook raised to $2.38 to $2.48

DUBLIN, Ohio, Aug. 5, 2010 /PRNewswire-FirstCall/ - Cardinal Health today reported fiscal 2010 revenue of $98.5 billion and non-GAAP diluted earnings per share (EPS) from continuing operations(1) of $2.22. Revenue for the fourth quarter was $24.5 billion and diluted EPS from continuing operations for the quarter was $0.54, or $0.50 on a non-GAAP basis. The company also raised its non-GAAP diluted EPS outlook for fiscal 2011 to a range of $2.38 to $2.48 from its preliminary outlook of $2.35 to $2.45.

 

"I am extremely proud of the progress we made in FY2010 and the actions we took to shift our growth trajectory and position us for the coming years," said George Barrett, chairman and CEO of Cardinal Health. "Our Medical segment grew profits by 11 percent for the year, while continuing to make key strategic investments. The Pharmaceutical segment declined by 3 percent, but performed considerably better than we anticipated for the full year as a result of execution on major initiatives, disciplined cost controls and some unplanned generic launches. These items largely offset the dampening effect of the actions we took to improve our strategic positioning, the negative impact from the year-over-year comparison of generic launches and the severe supply shortages in nuclear pharmacy."

Operating cash flow for fiscal 2010 increased to $2.1 billion, driven by strong working capital management.

Q4 and FY10 SUMMARY


                     Q4 FY10       Q4 FY09    Y/Y            FY10       Y/Y
                   -------       -------    ---            ----       ---
  Revenue       $24.5 billion $24.3 billion   0.5%    $98.5 billion       3%
  -------       ------------- -------------   ---     -------------     ---


  Operating
   Earnings      $334 million  $307 million     9%     $1.3 billion       1%
  ---------      ------------  ------------   ---      ------------     ---
  Non-GAAP
   Operating
   Earnings (2)  $317 million  $356 million  (11%)     $1.4 billion     (2%)
  -------------  ------------  ------------ -----      ------------    ----


  Earnings from
   Continuing
   Operations    $194 million  $202 million   (4%)     $587 million    (23%)
  -------------  ------------  ------------  ----      ------------   -----
  Non-GAAP
   Earnings
   from
   Continuing
   Operations
   (3)           $181 million  $228 million  (21%) $804 million     (2%)
  -----------    ------------  ------------ -----      ------------    ----


  Diluted EPS
   from
   Continuing
   Operations           $0.54         $0.56   (4%)            $1.62    (23%)
  -----------           -----         -----  ----             -----   -----
  Non-GAAP
   Diluted EPS
   from
   Continuing
   Operations           $0.50         $0.63  (21%)        $2.22     (2%)
  ------------          -----         ----- -----             -----    ----

For the quarter, GAAP results included items that had a positive $0.04 per share net after-tax contribution, primarily from a previously disclosed litigation recovery. For the full year, GAAP results included items that had an aggregate net negative effect of $0.60 per share after-tax, primarily driven by tax charges in the first-quarter related to the portion of non-U.S. earnings that will no longer be indefinitely invested offshore following the spinoff of CareFusion Corp., and restructuring and severance. These charges were partially offset by gains on the sale of CareFusion stock and litigation recoveries.

 

SEGMENT RESULTS

Pharmaceutical Segment
Fourth-quarter revenue for the Pharmaceutical segment was $22.3 billion, with sales to non-bulk customers increasing 3 percent to $11.5 billion and sales to bulk customers decreasing 3 percent to $10.8 billion. Generic pharmaceutical sales grew 10 percent for the quarter. Segment profit declined 17 percent to $227 million, primarily driven by lower branded inflation income, the year-over-year impact from customer pricing changes and supply disruptions in nuclear pharmacy, partially offset by the positive margin contribution from the company's generic programs and other business initiatives.

For the full year, Pharmaceutical segment revenue grew 2 percent to $89.8 billion, with sales to non-bulk customers increasing 4 percent to $45.8 billion and sales to bulk customers increasing 1 percent to $44 billion. Annual segment profit declined 3 percent to $1 billion, due to customer pricing changes, supply shortages in nuclear pharmacy, fewer significant generic launches than the prior year and the Medicine Shoppe International transition. The decline in segment profit was partially offset by contributions from the company's generic programs, disciplined cost controls and solid performance from its branded manufacturer agreements.

"We made great strides in fiscal 2010 with key strategic priorities including our generic sales and sourcing initiatives, working capital optimization and customer-facing information technology improvements - all of which are starting to have a positive impact on the bottom line," Barrett said. "With the recent renewals of key customers, we have stabilized our base for the next several years. In addition, our recent acquisition of Healthcare Solutions Holding will help accelerate our strategy for specialty pharmaceuticals and contribute to long-term growth for the segment."

                    Q4 FY10       Q4 FY09     Y/Y       FY10      Y/Y
                    -------       -------     ---       ----      ---
  Revenue        $22.3 billion $22.3 billion   0.2% $89.8 billion     2%
  -------        ------------- -------------   ---  -------------   ---
  Segment Profit  $227 million  $273 million  (17%)    $1 billion   (3%)
  --------------  ------------  ------------ -----     ----------  ----

Medical Segment
Fourth-quarter revenue for the Medical segment increased 3 percent to $2.2 billion, primarily from sales growth with existing customers. Segment profit increased 22 percent to $102 million, primarily driven by growth in the Hospital Supply business and disciplined cost controls, partially offset by higher commodity prices.

For the full year, Medical segment revenue increased 7 percent to $8.8 billion, driven by growth from existing customers, new products and foreign exchange. Annual segment profit increased 11 percent to $428 million, aided by the decreased cost of raw materials associated with commodity price movements. Segment profit growth was partially dampened from investment expense associated with the Medical Business Transformation program.

"While our Medical segment reported solid top- and bottom-line growth for the year, we continued to make investments to further improve our customers' experience and position the business for sustainable growth," Barrett said. "By combining our extensive channel reach with our growing expertise in category management, we will enable the growth of our preferred products and service offerings to create even more value across the entire supply chain."

                   Q4 FY10       Q4 FY09   Y/Y       FY10     Y/Y
                   -------       -------   ---       ----     ---
  Revenue        $2.2 billion $2.1 billion    3% $8.8 billion     7%
  -------        ------------ ------------  ---  ------------   ---
  Segment Profit $102 million  $84 million   22% $428 million    11%
  -------------- ------------  -----------  ---  ------------   ---


FISCAL 2011 OUTLOOK

"We have gained additional clarity regarding key inputs to our planning process since offering our preliminary 2011 outlook in April," Barrett said. "Based on our current information, we are raising our fiscal 2011 guidance for non-GAAP diluted EPS from continuing operations to a range of $2.38 to $2.48."

 

ADDITIONAL FOURTH-QUARTER AND RECENT HIGHLIGHTS INCLUDE:

 

  • Increased the regular quarterly dividend by 11 percent to $0.195 per share;
  • Completed the acquisition of Healthcare Solutions Holding (P4 Healthcare and P4 Pathways) to bolster company offerings to specialty pharmaceutical customers; and
  • Record-breaking attendance at the company's annual Retail Business Conference, where the company launched new products and services that were well received by its retail independent customers.

 

 

CONFERENCE CALL

Cardinal Health will host a conference call and webcast today at 8:30 a.m. EDT to discuss fourth-quarter and full-year results and its future outlook. To access the call and corresponding slide presentation, go to the Investor page at cardinalhealth.com/investors or dial 617.213.4855, passcode 86433823. Presentation slides and an audio replay will be archived on the website after the conclusion of the meeting. The audio replay will also be available until 11 p.m. on Aug. 8 by dialing 617.801.6888, passcode 37905680.

 

UPCOMING EVENTS

 

  • Morgan Stanley Global Healthcare Conference on Sept. 13 at 1 p.m. EDT at the Grand Hyatt in New York;
  • Baird's 2010 Health Care Conference on Sept. 14 at 9:30 a.m. EDT at the St. Regis Hotel in New York;
  • Stifel Nicolaus Healthcare Conference on Sept. 15 at 10:55 a.m. EDT at the Four Seasons Hotel in Boston.

At these events, Cardinal Health CFO Jeff Henderson will discuss the company's diverse products and services, company performance and strategies for continued growth. To access more details and live webcasts of these events, including remarks, go to the Investors page at cardinalhealth.com.

 


About Cardinal Health
Headquartered in Dublin, Ohio, Cardinal Health, Inc. (NYSE:CAH) is a $99 billion health care services company that improves the cost-effectiveness of health care. As the business behind health care, Cardinal Health helps pharmacies, hospitals, ambulatory surgery centers and physician offices focus on patient care while reducing costs, improving efficiency and quality, and increasing profitability. Cardinal Health is an essential link in the health care supply chain, providing pharmaceuticals and medical products to more than 60,000 locations each day. The company is also a leading manufacturer of medical and surgical products, including gloves, surgical apparel and fluid management products. In addition, the company supports the growing diagnostic industry by supplying medical products to clinical laboratories and operating the nation's largest network of radiopharmacies that dispense products to aid in the early diagnosis and treatment of disease. Ranked #17 on the Fortune 500, Cardinal Health employs more than 30,000 people worldwide. More information about the company may be found at cardinalhealth.com.

(1) Non-GAAP diluted EPS from continuing operations: Non-GAAP earnings from continuing operations divided by diluted weighted average shares outstanding.

(2) Non-GAAP operating earnings: Operating earnings excluding (1) restructuring and employee severance, (2) acquisition related costs, (3) impairments and loss on sale of assets, (4) litigation (credits)/charges, net, and (5) Other Spinoff Costs (as defined at the end of the attached tables) included within distribution, selling, general and administrative expenses.

(3) Non-GAAP earnings from continuing operations: Earnings from continuing operations excluding (1) restructuring and employee severance, (2) acquisition related costs, (3) impairments and loss on sale of assets, (4) litigation (credits)/charges, net, (5) Other Spinoff Costs, and (6) gain on sale of CareFusion stock, each net of tax.

A reconciliation of the differences between these non-GAAP financial measures and their most directly comparable GAAP financial measures is provided in the attached tables and at cardinalhealth.com.

Cardinal Health uses its website as a channel of distribution for material company information. Important information, including news releases, analyst presentations and financial information regarding Cardinal Health is routinely posted and accessible on the Investors page at cardinalhealth.com.

Cautions Concerning Forward-Looking Statements
This news release contains forward-looking statements, which are not based on historical facts, addressing expectations, prospects, estimates and other matters that are dependent upon future events or developments. These statements may be identified by words such as "expect," "anticipate," "intend," "plan," "believe," "will," "should," "could," "would," "project," "continue," and similar expressions, and include statements reflecting future results or guidance, statements of outlook and tax accruals. These matters are subject to risks and uncertainties that could cause actual results to differ materially from those projected, anticipated or implied. These risks and uncertainties include (but are not limited to) the ability to achieve the expected benefits from the acquisition of Healthcare Solutions Holding and to grow our specialty distribution business; uncertainties and risks regarding the effect of the CareFusion spinoff on Cardinal Health; the performance of CareFusion and the proceeds realized from future sales of CareFusion stock; uncertainties due to government health care reform including the recently enacted federal health care reform legislation; competitive pressures in Cardinal Health's various lines of business; the loss of one or more key customer or supplier relationships or changes to the terms of those relationships; the timing of generic and branded pharmaceutical introductions and the frequency or rate of branded pharmaceutical price appreciation or generic pharmaceutical price deflation; 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 or administrative proceedings; the effects of disruptions in the financial markets, including uncertainties related to the availability and/or cost of credit on Cardinal Health's customers and vendors; and uncertainties related to demand for Cardinal Health's products and services. In addition, Cardinal Health is subject to additional risks and uncertainties described in Cardinal Health's Form 10-K, Form 10-Q and Form 8-K reports (including all amendments to those reports) and exhibits to those reports. This news release reflects management's views as of August 5, 2010. Except to the extent required by applicable law, Cardinal Health undertakes no obligation to update or revise any forward-looking statement.

                   CARDINAL HEALTH, INC. AND SUBSIDIARIES
         CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS (UNAUDITED)

                                          Fourth Quarter
                                          --------------
  (in millions, except per
   Common Share amounts)                  2010          2009  % Change
                                          ----          ----

  Revenue                            $24,459.6     $24,347.3       0.5 %
  Cost of products sold               23,555.5      23,403.0         1 %
                                      --------      --------
  Gross margin                           904.1         944.3        (4)%
  Operating expenses
      Distribution, selling, general
       and administrative expenses       588.2         591.7        (1)%
      Restructuring and employee
       severance (1)                       6.4          37.5       N.M.
      Acquisition related costs (1)        8.3           0.7       N.M.
      Impairments and loss on sale
       of assets                           0.9           2.7       N.M.
      Litigation (credits)/charges,
       net                               (33.6)          4.9       N.M.
                                         -----           ---
  Operating earnings                     333.9         306.8         9 %

  Other (income)/expense, net              2.3         (15.5)      N.M.
  Interest expense, net                   24.5          32.6       (25)%
  Gain on sale of CareFusion
   common stock                           (1.3)            -       N.M.
                                          ----           ---
  Earnings before income taxes
   and discontinued operations           308.4         289.7         6 %

  Provision for income taxes             114.6          87.7        31 %
                                         -----          ----
  Earnings from continuing
   operations                            193.8         202.0        (4)%

  Earnings from discontinued
   operations (net of tax
   expense                                29.7          71.2       N.M.
    of $0.0 million and $48.5
     million for the fourth
     quarter of                           ----          ----
    fiscal 2010 and 2009,
     respectively)

  Net earnings                          $223.5        $273.2       (18)%
                                        ------        ------

  Basic earnings per Common
   Share:
  Continuing operations                  $0.54         $0.56        (4)%
  Discontinued operations                 0.08          0.20       N.M.
                                          ----          ----
     Net basic earnings per Common
      Share                              $0.62         $0.76       (18)%
                                         =====         =====

  Diluted earnings per Common
   Share:
  Continuing operations                  $0.54         $0.56        (4)%
  Discontinued operations                 0.08          0.19       N.M.
                                          ----          ----
     Net diluted earnings per
      Common Share                       $0.62         $0.75       (17)%
                                         =====         =====

  Weighted average number of
   Common Shares outstanding:
  Basic                                  358.3         358.2
  Diluted                                361.8         361.1

  (1)  During the fourth quarter of fiscal 2010, the Company began
  presenting acquisition related costs separately on its
  condensed consolidated statements of earnings.  This amount had
  previously been included in restructuring and
  employee severance.  Prior periods have been changed to conform with
  this new presentation.

 

 


                        CARDINAL HEALTH, INC. AND SUBSIDIARIES
              CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS (UNAUDITED)


                                                Fiscal Year
                                                -----------
  (in millions, except per Common
   Share amounts)                             2010           2009 % Change
                                              ----           ----

  Revenue                                $98,502.8      $95,991.5       3 %
  Cost of products sold                   94,722.1       92,244.0       3 %
                                          --------       --------
  Gross margin                             3,780.7        3,747.5       1 %
  Operating expenses
     Distribution, selling, general and
      administrative expenses              2,408.0        2,333.5       3 %
     Restructuring and employee
      severance (1)                           90.7          104.7     N.M.
     Acquisition related costs (1)             8.4            2.8     N.M.
     Impairments and loss on sale of
      assets                                  29.1           13.9     N.M.
     Litigation (credits)/charges, net       (62.4)           5.2     N.M.
                                             -----            ---
  Operating earnings                       1,306.9        1,287.4       1 %

  Other (income)/expense, net                (13.5)          13.2     N.M.
  Interest expense, net                      113.5          114.4      (1)%
  Loss on extinguishment of debt              39.9              -     N.M.
  Gain on sale of CareFusion common
   stock                                     (44.6)             -     N.M.
                                             -----            ---
  Earnings before income taxes and
   discontinued operations                 1,211.6        1,159.8       4 %

  Provision for income taxes                 624.6          401.6     N.M.
                                             -----          -----
  Earnings from continuing operations        587.0          758.2     (23)%

  Earnings from discontinued
   operations (net of tax expense of
   $35.5 million                              55.2          393.4     N.M.
     and $131.2 million for fiscal 2010
      and 2009, respectively)                 ----          -----

  Net earnings                              $642.2       $1,151.6     (44)%
                                            ------       --------

  Basic earnings per Common Share:
  Continuing operations                      $1.64          $2.12     (23)%
  Discontinued operations                     0.15           1.10     N.M.
                                              ----           ----
     Net basic earnings per Common Share     $1.79          $3.22     (43)%
                                             =====          =====

  Diluted earnings per Common Share:
  Continuing operations                      $1.62          $2.10     (23)%
  Discontinued operations                     0.15           1.08     N.M.
                                              ----           ----
     Net diluted earnings per Common
      Share                                  $1.77          $3.18     (44)%
                                             =====          =====

  Weighted average number of Common
   Shares outstanding:
  Basic                                      358.8          357.6
  Diluted                                    361.4          361.5

  (1)  During the fourth quarter of fiscal 2010, the Company began
  presenting acquisition related costs separately on its condensed
  consolidated statements of earnings.  This amount had previously been
  included in restructuring and employee severance.  Prior
  periods have been changed to conform with this new presentation.

 

 

 

                 CARDINAL HEALTH, INC. AND SUBSIDIARIES
                  CONDENSED CONSOLIDATED BALANCE SHEETS


                                                June 30,  June 30,
  (in millions)                                      2010      2009
                                                     ----      ----

  Assets
  Cash and equivalents                           $2,755.3  $1,221.6
  Trade receivables, net                          5,170.6   5,214.9
  Inventories                                     6,355.9   6,832.8
  Prepaid expenses and other                        637.1     523.0
  Assets from businesses held for sale and
   discontinued operations                              -   7,189.4
                                                      ---   -------
    Total current assets                         14,918.9  20,981.7
                                                 --------  --------

  Property and equipment, net                     1,468.8   1,464.5
  Investment in CareFusion                          691.5         -
  Goodwill and other intangibles, net             2,253.2   2,266.9
  Other assets                                      657.8     405.7
                                                    -----     -----
    Total assets                                $19,990.2 $25,118.8
                                                ========= =========


  Liabilities and Shareholders' Equity
  Current portion of long-term obligations and
   other short-term borrowings                     $233.2    $366.2
  Accounts payable                                9,494.9   9,041.9
  Other accrued liabilities                       1,809.5   1,496.2
  Liabilities from businesses held for sale and
   discontinued operations                              -   1,370.9
                                                      ---   -------
    Total current liabilities                    11,537.6  12,275.2
                                                 --------  --------

  Long-term obligations, less current portion     1,896.1   3,271.6
  Deferred income taxes and other liabilities     1,280.4     847.3
    Total shareholders' equity                    5,276.1   8,724.7
    Total liabilities and shareholders' equity  $19,990.2 $25,118.8
                                                ========= =========

 

 

 


             CARDINAL HEALTH, INC. AND SUBSIDIARIES
   CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)


                                                   Fourth Quarter
                                                   --------------
  (in millions)                                     2010          2009
                                                    ----          ----

  Cash Flows From Operating Activities:
  Net earnings                                    $223.5        $273.2
  Earnings from discontinued operations            (29.7)        (71.2)
                                                   -----         -----
    Earnings from continuing operations            193.8         202.0
  Adjustments to reconcile earnings from
   continuing operations
    to net cash provided by operating
     activities:
    Depreciation and amortization                   60.0          57.0
    Loss on debt extinguishment                        -             -
    Gain on sale of CareFusion common stock         (1.3)            -
    Impairments and loss on sale of assets           0.9           2.7
    Share-based payment compensation                20.6          27.1
    Provision for deferred income taxes            120.2         149.4
    Provision for bad debts                         (6.4)          6.2
  Change in operating assets and
   liabilities, net of
    effects from acquisitions:
    Decrease/(increase) in trade receivables       386.0         268.8
    Decrease/(increase) in inventories             858.5         912.5
    Increase/(decrease) in accounts payable     (1,271.7)       (866.5)
    Other accrued liabilities and operating
     items, net                                    (35.9)          0.7
                                                   -----           ---
      Net cash provided by operating activities
       -continuing operations                      324.7         759.9
      Net cash provided by/(used in) operating
       activities -discontinued operations          (0.4)       (151.8)
                                                    ----        ------
  Net cash provided by operating activities        324.3         608.1
                                                   -----         -----

  Cash Flows From Investing Activities:
  Proceeds from divestitures                       141.3             -
  Acquisition of subsidiaries, net of cash
   acquired                                            -             -
  Net additions to property and equipment         (119.8)       (229.1)
  Proceeds from sale of CareFusion common
   stock                                               -             -
                                                     ---           ---
      Net cash provided by/(used in) investing
       activities -continuing operations            21.5        (229.1)
      Net cash used in investing activities -
       discontinued operations                         -         (57.8)
                                                     ---         -----
  Net cash provided by/(used in) investing
   activities                                       21.5        (286.9)
                                                    ----        ------

  Cash Flows From Financing Activities:
  Reduction of long-term obligations                (0.4)        (18.9)
  Issuance of Common Shares                         15.5           0.6
  Tax expense from stock options                    (1.3)         (2.7)
  Payment of premiums for debt
   extinguishment                                      -             -
  Dividends on Common Shares                       (62.9)        (50.3)
  Purchase of treasury shares                     (180.2)            -
                                                  ------           ---
      Net cash used in financing activities -
       continuing operations                      (229.3)        (71.3)
      Net cash provided by/(used in) financing
       activities -discontinued operations             -          (0.1)
                                                     ---          ----
  Net cash used in financing activities           (229.3)        (71.4)
                                                  ------         -----

  Net increase in cash and equivalents             116.5         249.8

  Cash and equivalents at beginning of
   period                                        2,638.8         971.8
                                                 -------         -----

  Cash and equivalents at end of period         $2,755.3      $1,221.6
                                                ========      ========

 

 


                                                     Fiscal Year
                                                     -----------
  (in millions)                                     2010          2009
                                                    ----          ----

  Cash Flows From Operating Activities:
  Net earnings                                    $642.2      $1,151.6
  Earnings from discontinued operations            (55.2)       (393.4)
                                                   -----        ------
    Earnings from continuing operations            587.0         758.2
  Adjustments to reconcile earnings from
   continuing operations
    to net cash provided by operating
     activities:
    Depreciation and amortization                  254.4         225.8
    Loss on debt extinguishment                     39.9             -
    Gain on sale of CareFusion common stock        (44.6)            -
    Impairments and loss on sale of assets          29.1          13.9
    Share-based payment compensation                99.5         109.9
    Provision for deferred income taxes            120.2         149.4
    Provision for bad debts                         26.8          51.4
  Change in operating assets and
   liabilities, net of
    effects from acquisitions:
    Decrease/(increase) in trade receivables        20.6        (713.6)
    Decrease/(increase) in inventories             477.4        (431.2)
    Increase/(decrease) in accounts payable        451.0         768.1
    Other accrued liabilities and operating
     items, net                                    (74.6)         19.3
                                                   -----          ----
      Net cash provided by operating activities
       -continuing operations                    1,986.7         951.2
      Net cash provided by/(used in) operating
       activities -discontinued operations         147.4         472.7
                                                   -----         -----
  Net cash provided by operating activities      2,134.1       1,423.9
                                                 -------       -------

  Cash Flows From Investing Activities:
  Proceeds from divestitures                       154.1         123.3
  Acquisition of subsidiaries, net of cash
   acquired                                        (32.0)       (128.6)
  Net additions to property and equipment         (255.8)       (408.3)
  Proceeds from sale of CareFusion common
   stock                                           270.7             -
                                                   -----           ---
      Net cash provided by/(used in) investing
       activities -continuing operations           137.0        (413.6)
      Net cash used in investing activities -
       discontinued operations                      (9.9)       (129.3)
                                                    ----        ------
  Net cash provided by/(used in) investing
   activities                                      127.1        (542.9)
                                                   -----        ------

  Cash Flows From Financing Activities:
  Reduction of long-term obligations            (1,485.5)       (301.4)
  Issuance of Common Shares                         40.0          39.2
  Tax expense from stock options                   (16.1)         (2.9)
  Payment of premiums for debt
   extinguishment                                  (66.4)            -
  Dividends on Common Shares                      (253.1)       (200.4)
  Purchase of treasury shares                     (230.2)            -
                                                  ------           ---
      Net cash used in financing activities -
       continuing operations                    (2,011.3)       (465.5)
      Net cash provided by/(used in) financing
       activities -discontinued operations       1,283.8          (2.7)
                                                 -------          ----
  Net cash used in financing activities           (727.5)       (468.2)
                                                  ------        ------

  Net increase in cash and equivalents           1,533.7         412.8

  Cash and equivalents at beginning of
   period                                        1,221.6         808.8
                                                 -------         -----

  Cash and equivalents at end of period         $2,755.3      $1,221.6
                                                ========      ========

 

 

 

                        CARDINAL HEALTH, INC. AND SUBSIDIARIES
                                   BUSINESS ANALYSIS

                                    TOTAL COMPANY

 


                                                         Non-GAAP
                             Fourth Quarter           Fourth Quarter
                             --------------           --------------
  (in millions)             2010           2009    2010          2009
                            ----           ----    ----          ----


  Revenue
  Amount                 $24,460        $24,347
  Growth Rate               0.5 %           11 %

  Operating Earnings
  Amount                    $334           $307    $317          $356
  Growth Rate                 9 %           (9)%   (11)%           6 %

  Earnings from
   Continuing Operations
  Amount                    $194           $202    $181          $228
  Growth Rate                (4)%           10 %   (21)%          14 %
                                                   ----           ---


                                                   Non-GAAP
                            Fiscal Year           Fiscal Year
                            -----------           -----------
                            2010           2009    2010          2009
                            ----           ----    ----          ----


  Revenue
  Amount                 $98,503        $95,992
  Growth Rate                 3 %           10 %

  Operating Earnings
  Amount                  $1,307         $1,287  $1,383        $1,419
  Growth Rate                 1 %           (8)%    (2)%          (1)%

  Earnings from
   Continuing Operations
  Amount                    $587           $758    $804          $816
  Growth Rate               (23)%          (11)%    (2)%          (8)%
                                                    ---           ---


  Refer to the GAAP /Non-GAAP Reconciliation for definitions and
  calculations supporting the non-GAAP balances.

 

 


                       CARDINAL HEALTH, INC. AND SUBSIDIARIES
                              SEGMENT BUSINESS ANALYSIS

 

 

                     Fourth Quarter                          Fourth Quarter
                     --------------                          --------------
  (in millions)     2010         2009  (in millions)     2010          2009
                    ----         ----                    ----          ----

  PHARMACEUTICAL                       MEDICAL


  Revenue                              Revenue
  Amount         $22,307      $22,263  Amount          $2,158        $2,090
  Growth Rate       0.2 %         12 % Growth Rate         3 %           3 %
  Mix                91 %         91 % Mix                 9 %           9 %

  Segment Profit                       Segment Profit
  Amount            $227         $273  Amount            $102           $84
  Growth Rate       (17)%         22 % Growth Rate        22 %         (23)%
  Mix                69 %         76 % Mix                31 %          24 %
  Segment Profit                        Segment Profit
   Margin          1.02 %       1.23 %  Margin          4.75 %        4.03 %
  --------------   -----        -----  --------------   -----         -----


  Refer to definitions for an explanation of calculations.

  Total consolidated revenue for the three months ended June 30, 2010
  was $24,460 million, which included total segment revenue
  of $24,465 million and Corporate revenue of $(5) million.  Total
  consolidated revenue for the three months ended June 30, 2009
  was $24,347 million, which included total segment revenue of $24,353
  million and Corporate revenue of $(6) million.  Corporate
  revenue consists primarily of elimination of inter-segment revenue.

  Total consolidated operating earnings for the three months ended June
  30, 2010 were $334 million, which included total segment
  profit of $329 million and Corporate gain of $5 million.  Total
  consolidated operating earnings for the three months ended June 30,
  2009 were $307 million, which included total segment profit of $357
  million and Corporate loss of $(50) million.  Corporate includes,
  among other things, restructuring and employee severance, acquisition
  related costs, impairments and loss on sale of assets,
  litigation (credits)/charges, net and certain investment spending
  that are not allocated to the segments.

 

 

 


                   CARDINAL HEALTH, INC. AND SUBSIDIARIES
                          SEGMENT BUSINESS ANALYSIS

 

 

                       Fiscal Year                             Fiscal Year
                       -----------                             -----------
  (in millions)     2010          2009  (in millions)     2010         2009
                    ----          ----                    ----         ----

  PHARMACEUTICAL                        MEDICAL


  Revenue                               Revenue
  Amount         $89,790       $87,863  Amount          $8,750       $8,159
  Growth Rate         2 %          11 % Growth Rate         7 %          3 %
  Mix                91 %          92 % Mix                 9 %          8 %

  Segment Profit                        Segment Profit
  Amount          $1,002        $1,036  Amount            $428         $385
  Growth Rate        (3)%           1 % Growth Rate        11 %         (6)%
  Mix                70 %          73 % Mix                30 %         27 %
  Segment Profit                         Segment Profit
   Margin          1.12 %        1.18 %  Margin          4.89 %       4.72 %
  --------------   -----         -----  --------------   -----        -----


  Refer to definitions for an explanation of calculations.

  Total consolidated revenue for the fiscal year ended June 30, 2010
  was $98,503 million, which included total segment
  revenue of $98,540 million and Corporate revenue of $(37) million.
  Total consolidated revenue for the fiscal year
  ended June 30, 2009 was $95,992 million, which included total segment
  revenue of $96,022 million and Corporate
  revenue of $(30) million.  Corporate revenue consists primarily of
  elimination of inter-segment revenue.

  Total consolidated operating earnings for the fiscal year ended June
  30, 2010 were $1,307 million, which included
  total segment profit of $1,430 million and Corporate loss of $(123)
  million. Total consolidated operating earnings for
  the fiscal year ended June 30, 2009 were $1,287 million, which
  included total segment profit of $1,421 million and
  Corporate loss of $(134) million.  Corporate includes, among other
  things, restructuring and employee severance,
  acquisition related costs, impairments and loss on sale of assets,
  litigation (credits)/charges, net and certain
  investment spending that are not allocated to the segments.

 

 

                            CARDINAL HEALTH, INC. AND SUBSIDIARIES
                                   SCHEDULE OF NOTABLE ITEMS

 

                               Fourth Quarter            Fiscal Year
                               --------------            -----------
  (in millions, except
   per Common Share
   amounts)                   2010         2009     2010          2009
                              ----         ----     ----          ----


  Restructuring and
   Employee Severance
  Restructuring and
   employee severance        $(6.4)      $(37.5)  $(90.7)      $(104.7)
    Tax benefit                1.7         11.1     31.7          29.3
                               ---         ----     ----          ----
    Restructuring and
     employee severance,
     net of tax              $(4.7)      $(26.4)  $(59.0)       $(75.4)
                             =====       ======   ======        ======

    Decrease to diluted EPS
     from continuing
     operations             $(0.01)      $(0.07)  $(0.16)       $(0.21)
                            ======       ======   ======        ======

  Acquisition related
   costs
  Acquisition related
   costs                     $(8.3)       $(0.7)   $(8.4)        $(2.8)
    Tax benefit                2.7          0.3      2.7           1.1
                               ---          ---      ---           ---
    Acquisition related
     costs, net of tax       $(5.6)       $(0.4)   $(5.7)        $(1.7)
                             =====        =====    =====         =====

    Decrease to diluted EPS
     from continuing
     operations             $(0.02)          $-   $(0.02)           $-
                            ======          ===   ======           ===

  Impairments and Loss on
   Sale of Assets
  Impairments and loss on
   sale of assets            $(0.9)       $(2.7)  $(29.1)       $(13.9)
    Tax benefit/(expense)     (1.9)         8.5     (5.1)         39.4
                              ----          ---     ----          ----
    Impairments and loss on
     sale of asset, net of
     tax                     $(2.8)        $5.8   $(34.2)        $25.5
                             =====         ====   ======         =====

    Increase/(decrease) to
     diluted EPS from
     continuing operations  $(0.01)       $0.02   $(0.09)        $0.07
                            ======        =====   ======         =====

  Litigation Credits/
   (Charges), Net
  Litigation credits/
   (charges), net            $33.6        $(4.9)   $62.4         $(5.2)
    Tax benefit/(expense)    (12.3)         1.8    (23.2)          1.9
                             -----          ---    -----           ---
    Litigation credits/
     (charges), net, net of
     tax                     $21.3        $(3.1)   $39.2         $(3.3)
                             =====        =====    =====         =====

    Increase/(decrease) to
     diluted EPS from
     continuing operations   $0.06       $(0.01)   $0.11        $(0.01)
                             =====       ======    =====        ======

  Other Spin-Off Costs
  Other spin-off costs
   (1)                       $(1.6)       $(3.8)  $(53.1)        $(4.5)
    Tax benefit/(expense)
     (2)                       4.7          1.4   (148.5)          1.7
                               ---          ---   ------           ---
    Other spin-off costs,
     net of tax               $3.1        $(2.4) $(201.6)        $(2.8)
                              ====        =====  =======         =====

    Increase/(decrease) to
     diluted EPS from
     continuing operations   $0.01       $(0.01)  $(0.56)       $(0.01)
                             =====       ======   ======        ======

  Gain on Sale of
   CareFusion Stock
  Gain on sale of
   CareFusion stock           $1.3           $-    $44.6            $-
    Tax expense                  -            -        -             -
                               ---                   ---
    Gain on sale of
     CareFusion stock, net
     of tax                   $1.3           $-    $44.6            $-
                              ====          ===    =====           ===

    Increase to diluted EPS
     from continuing
     operations                 $-           $-    $0.12            $-
                               ===          ===    =====           ===

  Weighted Average Number
   of Diluted Shares
   Outstanding               361.8        361.1    361.4         361.5

  (1)  Other spin-off costs included in other (income)/expense, net
  for the fiscal year ended June 30, 2010 were $2.4 million. Other
  spin-off costs also
  include the $39.9 million loss on extinguishment of debt for the
  fiscal year ended June 30, 2010.    The remaining other spin-off
  costs are included
  within distribution, selling, general and administrative expenses for
  all periods presented.

  (2)  The fiscal 2010 year-to-date tax expense associated with the
  other spin-off costs includes $168.3 million related to the
  anticipated repatriation of a
  portion of cash loaned to the Company's entities within the United States.

 

 

 

                       CARDINAL HEALTH, INC. AND SUBSIDIARIES
                             ASSET MANAGEMENT ANALYSIS


                                       Fourth Quarter        Fiscal Year
                                       --------------        -----------
                                     2010         2009  2010         2009
                                     ----         ----  ----         ----


  Receivable Days                    18.6         19.1
  Days Inventory on Hand               21           23

  Debt to Total Capital               29 %         29 %
  Net Debt to Capital                (13)%         22 %

  Return on Equity                   16.8%        12.7% 10.9%        14.1%
  Non-GAAP Return on Equity          15.8%        19.3% 16.4%        18.5%

  Effective Tax Rate from Continuing
   Operations                        37.2%       30.3 % 51.6%        34.6%
  Non-GAAP Effective Tax Rate from
   Continuing Operations             37.7%       32.6 % 37.5%        36.8%


  Refer to the GAAP / Non-GAAP Reconciliation for non-GAAP calculations.

 

 

 

 

 

 

   CARDINAL HEALTH, INC. AND SUBSIDIARIES
       GAAP / NON-GAAP RECONCILIATION


                             Fourth Quarter 2010
                             -------------------
  (in millions,
   except per
   Common Share
   amounts)         GAAP   Restructuring       Acquisition Impairments
                                and              Related     and Loss
                                                             on Sale
                             Employee              Costs         of
                             Severance                        Assets

  Operating
   Earnings
  Amount             $334             $6                $8          $1
  Growth Rate          9 %

  Earnings Before
   Income Taxes and
   Discontinued
   Operations        $308             $6                $8          $1

  Provision for
   Income Taxes (1)  $115             $2                $3         ($2)

  Earnings from
   Continuing
   Operations
  Amount             $194             $5                $6          $3
  Growth Rate         (4)%

  Diluted EPS from
   Continuing
   Operations
  Amount            $0.54          $0.01             $0.02       $0.01
  Growth Rate         (4)%

 

 


                                   Fourth Quarter 2010
                                   -------------------
  (in millions, except
   per Common Share                                               Non-
   amounts)            Litigation      Other          Gain on     GAAP
                                        Spin-
                       (Credits)/        Off          Sale of
                        Charges,       Costs         CareFusion
                          Net                           Stock

  Operating Earnings
  Amount                     ($34)          $2                -   $317
  Growth Rate                                                     (11)%

  Earnings Before
   Income Taxes and
   Discontinued
   Operations                ($34)          $2              ($1)  $291

  Provision for Income
   Taxes (1)                 ($12)          $5                -   $110

  Earnings from
   Continuing
   Operations
  Amount                     ($21)         ($3)             ($1)  $181
  Growth Rate                                                     (21)%

  Diluted EPS from
   Continuing
   Operations
  Amount                   ($0.06)      ($0.01)               -  $0.50
  Growth Rate                                                     (21)%

 

 

 

                                   Fiscal Year 2010
                                   ----------------
  (in millions,
   except per
   Common Share
   amounts)        GAAP    Restructuring       Acquisition  Impairments
                                and              Related      and Loss
                                                              on Sale
                             Employee             Costs          of
                            Severance                          Assets

  Operating
   Earnings
  Amount           $1,307            $91                $8          $29
  Growth Rate          1 %

  Earnings Before
   Income Taxes
   and
   Discontinued
   Operations      $1,212         $91             $8       $29

  Provision for
   Income Taxes
   (1)               $625            $32                $3          ($5)

  Earnings from
   Continuing
   Operations
  Amount             $587            $59                $6          $34
  Growth Rate        (23)%

  Diluted EPS from
   Continuing
   Operations
  Amount            $1.62          $0.16             $0.02        $0.09
  Growth Rate        (23)%

 

 

 

                               Fiscal Year 2010
                               ----------------
  (in millions,
   except per
   Common Share
   amounts)        Litigation       Other         Gain on        Non-GAAP
                                    Spin-
                   (Credits)/         Off         Sale of
                    Charges,        Costs       CareFusion
                       Net                          Stock

  Operating
   Earnings
  Amount                 ($62)         $11                -         $1,383
  Growth Rate                                                          (2)%

  Earnings Before
   Income Taxes
   and
   Discontinued
   Operations            ($62)      $53          ($45)     $1,286

  Provision for
   Income Taxes
   (1)                   ($23)       ($149)               -           $482

  Earnings from
   Continuing
   Operations
  Amount                 ($39)        $202             ($45)          $804
  Growth Rate                                                          (2)%

  Diluted EPS from
   Continuing
   Operations
  Amount               ($0.11)       $0.56           ($0.12)         $2.22
  Growth Rate                                                          (2)%

 

 

 

                                  Fourth Quarter 2009
                                  -------------------
                                 GAAP Restructuring Acquisition Impairments
                                             and      Related     and Loss
                                                                  on Sale
                                          Employee     Costs         of
                                         Severance                 Assets


  Operating Earnings
  Amount                           $307           $38        $1          $3
  Growth Rate                       (9)%

  Earnings Before Income Taxes
   and Discontinued Operations     $290           $38        $1          $3

  Provision for Income Taxes (1)    $88           $11         -          $9

  Earnings from Continuing
   Operations
  Amount                           $202           $26        $1         ($6)
  Growth Rate                       10 %

  Diluted EPS from Continuing
   Operations
  Amount                          $0.56         $0.07         -      ($0.02)
  Growth Rate                       10 %

 

 

                                   Fourth Quarter 2009
                                   -------------------
                                                               Non-
                                 Litigation Other   Gain on    GAAP
                                            Spin-
                                 (Credits)/   Off   Sale of
                                  Charges,  Costs  CareFusion
                                    Net               Stock


  Operating Earnings
  Amount                                 $5     $4          -  $356
  Growth Rate                                                    6 %

  Earnings Before Income Taxes
   and Discontinued Operations           $5     $4          -  $339

  Provision for Income Taxes (1)         $2     $1          -  $111

  Earnings from Continuing
   Operations
  Amount                                 $3     $2          -  $228
  Growth Rate                                                   14 %

  Diluted EPS from Continuing
   Operations
  Amount                              $0.01  $0.01          - $0.63
  Growth Rate                                                   13 %

 

 

                                        Fiscal Year 2009
                                        ----------------
                                 GAAP Restructuring Acquisition Impairments
                                             and        Related  and Loss
                                                                  on Sale
                                          Employee       Costs       of
                                         Severance                 Assets


  Operating Earnings
  Amount                         $1,287          $105          $3       $14
  Growth Rate                       (8)%

  Earnings Before Income Taxes
   and Discontinued Operations   $1,160          $105          $3       $14

  Provision for Income Taxes (1)   $402           $29          $1       $39

  Earnings from Continuing
   Operations
  Amount                           $758           $75          $2      ($26)
  Growth Rate                      (11)%

  Diluted EPS from Continuing
   Operations
  Amount                          $2.10         $0.21           -    ($0.07)
  Growth Rate                      (10)%

 

 

                                 Fiscal Year 2009
                                 ----------------
                                 Litigation Other  Gain on   Non-GAAP
                                            Spin-
                                 (Credits)/   Off  Sale of
                                  Charges,  Costs CareFusion
                                    Net              Stock


  Operating Earnings
  Amount                                 $5     $5         -    $1,419
  Growth Rate                                                      (1)%

  Earnings Before Income Taxes
   and Discontinued Operations           $5     $5         -    $1,291

  Provision for Income Taxes (1)         $2     $2         -      $475

  Earnings from Continuing
   Operations
  Amount                                 $3     $3         -      $816
  Growth Rate                                                      (8)%

  Diluted EPS from Continuing
   Operations
  Amount                              $0.01  $0.01         -     $2.26
  Growth Rate                                                      (8)%


  The sum of the components may not equal the total due to rounding.

  (1)  The Company applies varying tax rates depending upon the tax
  jurisdiction where the items are incurred.

 

 

 


   CARDINAL HEALTH, INC. AND SUBSIDIARIES
       GAAP / NON-GAAP RECONCILIATION

 

                                     Fourth Quarter
                                     --------------
  (in millions)                                   2010
                                                  ----


  GAAP Return on Equity                          16.8 %

  Non-GAAP Return on Equity
  Net earnings                                  $223.5
  Restructuring and employee
   severance, net of tax, in
   continuing operations (1)                       4.7
  Acquisition related costs, net of
   tax, in continuing operations (1)               5.6
  Impairments and loss on sale of
   assets, net of tax, in continuing
   operations (1)                                  2.8
  Litigation (credits)/charges, net,
   net of tax, in continuing
   operations (1)                                (21.3)
  Other spin-off costs, net of tax
   (1)                                            (3.1)
  Gain on sale of CareFusion stock,
   net of tax (1)                                 (1.3)
  CareFusion net earnings in
   discontinued operations (1, 2)                 (0.4)
                                                  ----
    Adjusted net earnings                       $210.5

    Annualized                                  $842.0

                                     Fourth Quarter     Third Quarter
                                                  2010              2010
                                                  ----              ----
  Non-GAAP Shareholders' Equity
  Total shareholders' equity                  $5,276.1          $5,360.9
  Non-cash dividend related to
   CareFusion spin-off                               -                 -
  Non-GAAP shareholders' equity               $5,276.1          $5,360.9
                                              --------          --------

    Divided by average shareholders'
     equity                                    5,318.5

  Non-GAAP return on equity                       15.8%

 

 

 

                                     Fourth Quarter
                                     --------------
  (in millions)                                   2009
                                                  ----


  GAAP Return on Equity                           12.7%

  Non-GAAP Return on Equity
  Net earnings                                  $273.2
  Restructuring and employee
   severance, net of tax, in
   continuing operations (1)                      26.4
  Acquisition related costs, net of
   tax, in continuing operations
   (1)                                             0.4
  Impairments and loss on sale of
   assets, net of tax, in
   continuing operations (1)                      (5.8)
  Litigation (credits)/charges,
   net, net of tax, in continuing
   operations (1)                                  3.1
  Other spin-off costs, net of tax
   (1)                                             2.4
  Gain on sale of CareFusion stock,
   net of tax (1)                                    -
  CareFusion net earnings in
   discontinued operations (1, 2)                (65.5)
                                                 -----
    Adjusted net earnings                       $234.2

    Annualized                                  $937.2

                                     Fourth Quarter     Third Quarter
                                     --------------     -------------
                                                  2009              2009
                                                  ----              ----
  Non-GAAP Shareholders' Equity
  Total shareholders' equity                  $8,724.7          $8,434.5
  Non-cash dividend related to
   CareFusion spin-off                        (3,723.8)         (3,723.8)
  Non-GAAP shareholders' equity               $5,000.9          $4,710.7
                                              --------          --------

    Divided by average shareholders'
     equity                                    4,855.8

  Non-GAAP return on equity                       19.3%


  (1)  The Company applies varying tax rates depending upon the tax
  jurisdiction where the items are incurred.
  (2)  To properly reflect the impact of the spin-off, on a non-GAAP
  basis, CareFusion net earnings included in discontinued operations
  are excluded from adjusted net earnings for all periods presented.

 

 

 

   CARDINAL HEALTH, INC. AND SUBSIDIARIES
       GAAP / NON-GAAP RECONCILIATION


                              Fiscal Year
                              -----------
  (in millions)                       2010
                                      ----


  GAAP Return on Equity              10.9 %


  Non-GAAP Return on Equity
  Net earnings                      $642.2
  Restructuring and
   employee severance, net
   of tax, in continuing
   operations (1)                     59.0
  Acquisition related
   costs, net of tax, in
   continuing operations
   (1)                                 5.7
  Impairments and loss on
   sale of assets, net of
   tax, in continuing
   operations (1)                     34.2
  Litigation
   (credits)/charges, net,
   net of tax, in
   continuing operations
   (1)                            (39.2)
  Other spin-off costs,
   net of tax (1)                    201.6
  Gain on sale of
   CareFusion stock, net of
   tax (1)                           (44.6)
  CareFusion net earnings
   in discontinued
   operations (1, 2)                 (15.0)
                                     -----
    Adjusted net earnings           $843.9


                            Fourth Quarter  Third Quarter Second Quarter
                            --------------  ------------- --------------
                                      2010           2010           2010
                                      ----           ----           ----
  Non-GAAP Shareholders'
   Equity
  Total shareholders'
   equity                         $5,276.1       $5,360.9       $5,226.1
  Non-cash dividend
   related to CareFusion
   spin-off                              -              -              -
                                       ---            ---            ---
  Non-GAAP shareholders'
   equity                         $5,276.1       $5,360.9       $5,226.1
                                  --------       --------       --------

    Divided by average
     shareholders' equity          5,161.0

  Non-GAAP return on equity           16.4%

 

 

 

  (in millions)


  GAAP Return on Equity


  Non-GAAP Return on Equity
  Net earnings
  Restructuring and employee severance, net of
   tax, in continuing operations (1)
  Acquisition related costs, net of tax, in
   continuing operations (1)
  Impairments and loss on sale of assets, net of
   tax, in continuing operations (1)
  Litigation (credits)/charges, net, net of tax,
   in continuing operations (1)
  Other spin-off costs, net of tax (1)
  Gain on sale of CareFusion stock, net of tax
   (1)
  CareFusion net earnings in discontinued
   operations (1, 2)
    Adjusted net earnings


                                                                Fourth
                                                 First Quarter  Quarter
                                                 ------------- -------
                                                          2010       2009
                                                          ----       ----
  Non-GAAP Shareholders' Equity
  Total shareholders' equity                          $4,941.2   $8,724.7
  Non-cash dividend related to CareFusion spin-
   off                                                       -   (3,723.8)
                                                           ---   --------
  Non-GAAP shareholders' equity                       $4,941.2   $5,000.9
                                                      --------   --------

    Divided by average shareholders' equity

  Non-GAAP return on equity

 

 


                            Fiscal Year
                            -----------
  (in millions)                     2009
                                    ----


  GAAP Return on Equity             14.1%


  Non-GAAP Return on Equity
  Net earnings                  $1,151.6
  Restructuring and
   employee severance, net
   of tax, in continuing
   operations (1)                   75.4
  Acquisition related
   costs, net of tax, in
   continuing operations
   (1)                               1.7
  Impairments and loss on
   sale of assets, net of
   tax, in continuing
   operations (1)                  (25.5)
  Litigation
   (credits)/charges, net,
   net of tax, in
   continuing operations
   (1)                            3.3
  Other spin-off costs,
   net of tax (1)                    2.8
  Gain on sale of
   CareFusion stock, net of
   tax (1)                             -
  CareFusion net earnings
   in discontinued
   operations (1, 2)              (384.6)
                                  ------
    Adjusted net earnings         $824.7


                               Fourth
                               Quarter    Third Quarter  Second Quarter
                              -------     -------------  --------------
                                    2009           2009            2009
                                    ----           ----            ----
  Non-GAAP Shareholders'
   Equity
  Total shareholders'
   equity                       $8,724.7       $8,434.5        $8,127.9
  Non-cash dividend
   related to CareFusion
   spin-off                     (3,723.8)      (3,723.8)       (3,723.8)
                                --------       --------        --------
  Non-GAAP shareholders'
   equity                       $5,000.9       $4,710.7        $4,404.1
                                --------       --------        --------

    Divided by average
     shareholders' equity        4,466.7

  Non-GAAP return on equity         18.5%

 

 

 

  (in millions)


  GAAP Return on Equity


  Non-GAAP Return on Equity
  Net earnings
  Restructuring and employee severance, net of
   tax, in continuing operations (1)
  Acquisition related costs, net of tax, in
   continuing operations (1)
  Impairments and loss on sale of assets, net of
   tax, in continuing operations (1)
  Litigation (credits)/charges, net, net of tax,
   in continuing operations (1)
  Other spin-off costs, net of tax (1)
  Gain on sale of CareFusion stock, net of tax
   (1)
  CareFusion net earnings in discontinued
   operations (1, 2)
    Adjusted net earnings


                                                                 Fourth
                                                 First Quarter  Quarter
                                                 -------------  -------
                                                          2009       2008
                                                          ----       ----
  Non-GAAP Shareholders' Equity
  Total shareholders' equity                          $7,918.1   $7,747.5
  Non-cash dividend related to CareFusion spin-
   off                                                (3,723.8)  (3,723.8)
                                                      --------   --------
  Non-GAAP shareholders' equity                       $4,194.3   $4,023.7
                                                      --------   --------

    Divided by average shareholders' equity

  Non-GAAP return on equity


  (1)  The Company applies varying tax rates depending upon the tax
  jurisdiction where the items are incurred.
  (2)  To properly reflect the impact of the spin-off, on a non-GAAP
  basis, CareFusion net earnings included in discontinued operations
  are excluded from adjusted net earnings for all periods presented.

 

 

 


                              CARDINAL HEALTH, INC. AND SUBSIDIARIES
                                  GAAP / NON-GAAP RECONCILIATION

 

                             Fourth Quarter              Fiscal Year
                             --------------              -----------
  (in millions)              2010           2009      2010          2009
                             ----           ----      ----          ----


  GAAP Effective Tax
   Rate from
   Continuing
   Operations               37.2 %         30.3 %    51.6 %        34.6 %

  Non-GAAP Effective
   Tax Rate from
   Continuing
   Operations
  Earnings before
   income taxes and
   discontinued
   operations              $308.4         $289.7  $1,211.6      $1,159.8
  Restructuring and
   employee severance         6.4           37.5      90.7         104.7
  Acquisition related
   costs                      8.3            0.7       8.4           2.8
  Impairments and loss
   on sale of assets          0.9            2.7      29.1          13.9
  Litigation
   (credits)/charges,
   net                      (33.6)           4.9     (62.4)          5.2
  Other spin-off costs        1.6            3.8      53.1           4.5
  Gain on sale of
   CareFusion stock          (1.3)             -     (44.6)            -
                             ----            ---     -----           ---
    Adjusted earnings
     before income taxes
     and discontinued
     operations            $290.7         $339.3  $1,285.9      $1,290.9

  Provision for income
   taxes (1)               $114.6          $87.7    $624.6        $401.6
  Restructuring and
   employee severance
   tax benefit (1)            1.7           11.1      31.7          29.3
  Acquisition related
   costs tax benefit
   (1)                        2.7            0.3       2.7           1.1
  Impairments and loss
   on sale of assets
   tax benefit/
   (expense) (1)             (1.9)           8.5      (5.1)         39.4
  Litigation
   (credits)/charges,
   net tax benefit/
   (expense) (1)            (12.3)           1.8     (23.2)          1.9
  Other spin-off
   costs tax benefit/
   (expense) (1)              4.7            1.4    (148.5)          1.7
  Gain on sale of
   CareFusion stock
   tax expense (1)              -              -         -             -
                              ---            ---       ---           ---
    Adjusted provision
     for income taxes      $109.5         $110.8    $482.2        $475.0

  Non-GAAP effective
   tax rate from
   continuing
   operations                37.7%          32.6%     37.5%         36.8%


                            Fourth Quarter
                            --------------
                             2010           2009
                             ----           ----


  Debt to Total
   Capital                     29%            29%

  Net Debt to Capital
  Current portion of
   long-term
   obligations and
   other short-term
   borrowings            $233.2      $366.2
  Long-term
   obligations, less
   current portion        1,896.1        3,271.6
                          -------        -------
    Debt                 $2,129.3       $3,637.8
  Cash and equivalents   (2,755.3)     (1,221.6)
                         --------       --------
    Net debt              $(626.0)      $2,416.2
  Total shareholders'
   equity                $5,276.1       $8,724.7
  Capital                $4,650.1      $11,140.9
    Net Debt to Capital      (13)%            22%

  (1) The Company applies varying tax rates depending upon the tax
  jurisdiction where the items are incurred.

  Forward-Looking Non-GAAP Financial Measures
  The Company presents non-GAAP earnings from continuing operations
  and non-GAAP effective tax rate from continuing operations (and
  presentations
  derived from these financial measures, including per share
  calculations) on a forward-looking basis.

  The most directly comparable forward-looking GAAP measures are
  earnings from continuing operations and effective tax rate from
  continuing operations.
  The Company is unable to provide a quantitative reconciliation of
  these forward-looking non-GAAP measures to the most directly
  comparable forward-
  looking GAAP measures because the Company cannot reliably forecast
  restructuring and employee severance, acquisition related costs,
  impairments and
  loss on sale of assets, litigation (credits)/charges, net, other
  spin-off costs and gains or losses on sale of CareFusion stock,
  which are difficult to predict and
  estimate and are primarily dependent on future events.  Please note
  that the unavailable reconciling items could significantly impact
  the Company's future
  financial results.

 

 

                           CARDINAL HEALTH, INC. AND SUBSIDIARIES

                                                      Fourth Quarter
                                                      --------------
   (in millions)                                          2010        2009
                                                          ----        ----

   Days Inventory on Hand
   Inventories                                        $6,355.9    $6,832.8

   Cost of products sold                             $23,555.5   $23,403.0
   Chargeback billings                                 3,066.0     3,271.2
                                                       -------     -------
     Adjusted cost of products sold                  $26,621.5   $26,674.2

   Adjusted cost of products sold divided by 90 days    $295.8      $296.4

   Days inventory on hand                                   21          23

  Days Inventory on Hand: inventory divided by ((quarterly costs of
  products sold plus chargeback billings) divided by 90 days).
  Chargeback billings are the difference between a product's wholesale
  acquisition cost and the contract price established between
  pharmaceutical manufacturers and the end customer.

 

 


                           CARDINAL HEALTH, INC. AND SUBSIDIARIES
                                        DEFINITIONS

    GAAP
    Debt:  long-term obligations plus short-term borrowings
    Debt to Total Capital:  debt divided by (debt plus total
     shareholders' equity)
    Diluted EPS from Continuing Operations:  earnings  from continuing
     operations divided by diluted weighted average shares outstanding
    Effective Tax Rate from Continuing Operations:  provision for income
     taxes divided by earnings before income taxes and discontinued
     operations
    Gain on Sale of CareFusion Stock: realized gains and losses from the
     sale of the Company's ownership of CareFusion common stock retained
     in connection with the spin-off
    Other Spin-Off Costs: costs and tax charges incurred in connection
     with the Company's spin-off of CareFusion that are not included in
     restructuring and employee severance, acquisition related costs,
     impairments and loss on sale of assets and litigation
     (credits)/charges, net.  Other spin-off costs include, among other
     things, the loss on extinguishment of debt and the income tax
     charge related to the anticipated repatriation of a portion of cash
     loaned to the Company's entities within the United States
    Receivable Days: trade receivables, net divided by (monthly revenue
     divided by 30 days)
    Segment Profit:  segment revenue minus (segment cost of products
     sold and segment distribution, selling, general and administrative
     expenses)
    Segment Profit Margin:  segment profit divided by segment revenue
    Segment Profit Mix:  segment profit divided by total segment profit
     for all segments
    Return on Equity:  annualized net earnings divided by average
     shareholders' equity
    Revenue Mix:  segment revenue divided by total segment revenue for
     all segments

    NON-GAAP
    Net Debt to Capital:  net debt divided by (net debt plus total
     shareholders' equity)
    Net Debt:  debt minus (cash and equivalents)
    Non-GAAP Diluted EPS from Continuing Operations:  non-GAAP
     earnings from continuing operations divided by diluted weighted
     average shares outstanding
    Non-GAAP Diluted EPS from Continuing Operations Growth Rate:
     (current period non-GAAP diluted EPS from continuing operations
     minus prior period non-GAAP diluted EPS from continuing
     operations) divided by prior period non-GAAP diluted EPS from
     continuing operations
    Non-GAAP Earnings from Continuing Operations:  earnings from
     continuing operations excluding (1) restructuring and employee
     severance, (2) acquisition related costs, (3) impairments and loss
     on sale of assets, (4) litigation (credits)/charges, net, (5) Other
     Spin-Off Costs and (6) gain on sale of CareFusion stock, each net
     of tax
    Non-GAAP Earnings from Continuing Operations Growth Rate:  (current
     period non-GAAP earnings from continuing operations minus prior
     period non-GAAP earnings from continuing operations) divided by
     prior period non-GAAP earnings from continuing operations
    Non-GAAP Effective Tax Rate from Continuing Operations:  (provision
     for income taxes adjusted for (1) restructuring and employee
     severance, (2) acquisition related costs, (3) impairments and loss
     on sale of assets, (4) litigation (credits)/charges, net, (5) Other
     Spin-Off Costs and (6) gain on sale of CareFusion stock) divided
     by (earnings before income taxes and discontinued operations
     adjusted for (1) restructuring and employee severance, (2)
     acquisition related costs, (3) impairments and loss on sale of
     assets, (4) litigation (credits)/charges, net, (5) Other Spin-Off
     Costs and (6) gain on sale of CareFusion stock)
    Non-GAAP Operating Earnings:  operating earnings excluding (1)
     restructuring and employee severance, (2) acquisition related
     costs, (3) impairments and loss on sale of assets, (4) litigation
     credits/(charges), net and (5) Other Spin-Off Costs included
     within distribution, selling, general and administrative expenses
    Non-GAAP Operating Earnings Growth Rate:  (current period non-GAAP
     operating earnings minus prior period non-GAAP operating earnings)
     divided by prior period non-GAAP operating earnings
    Non-GAAP Return on Equity:   (annualized current period net
     earnings excluding (1) restructuring and employee severance, (2)
     acquisition related costs, (3) impairments and loss on sale of
     assets, (4) litigation (credits)/charges, net, (5) Other Spin-Off
     Costs, (6) CareFusion net earnings in discontinued operations and
     (7) gain on sale of CareFusion stock, each net of tax) divided by
     average shareholders' equity adjusted for the $3.7 billion non-
     cash dividend issued in connection with the spin-off
Source:  Cardinal Health, Inc.

CONTACT: Media: Troy Kirkpatrick, +1-614-757-6225,
[email protected]; Investors: Sally Curley, +1-614-757-7115,
[email protected]

Web Site: http://www.cardinalhealth.com/

 

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