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Cardinal Health Board Declares Quarterly Dividend
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DUBLIN, Ohio, July 31 /PRNewswire/ -- Cardinal Health, Inc. (NYSE: CAH), a leading provider of products and services supporting the health-care industry, today reported record revenues, earnings, operating cash flow, and return on committed capital for its fourth quarter and fiscal year ending June 30, 2001. The company's performance was driven by strong growth in sales and operating earnings, rising returns on sales, and strong cash flow in each of its four business segments.
Financial Highlights - Fourth Quarter
Unless noted otherwise, the following discussion excludes special items.
- Net earnings rose 24 percent to a record $265 million from $214 million in the year-earlier period. Earnings per diluted share in the fourth quarter rose 21 percent to a record $0.58 from $0.48 a year ago.
- Operating earnings rose 20 percent to a record $445 million from $370 million a year ago. This growth was driven by strong performances in each of the company's four business segments.
- Operating revenues, the main driver in the company's improved operating earnings, increased 27 percent in the fourth quarter to a record $10.3 billion from $8.1 billion in the year-earlier period.
- The company continued to control costs effectively with a significant 53 basis-point improvement in fourth-quarter selling, general and administrative expenses as a percent of sales versus the prior-year period.
- As a result of the strong revenue and cost control performance, return on sales reached fourth-quarter records in every segment.
- The growth and improvement in operating earnings was notable as the company also increased its investment spending in the quarter. These investments in Cardinal Health's future growth totaled $23 million, up 101 percent over the prior year. Investment spending, which is taken out of current earnings, funds research and development in Cardinal's manufacturing businesses as well as new internal and external business ventures.
- Return on committed capital also increased to record levels, up 310 basis points to 32.2 percent due to the strong operating earnings performance and excellent asset management. Accounts receivable days outstanding reached an all-time low of 18 days, versus 21 days a year ago.
- Even with increased investments to support the capital needs of two major acquisitions, Cardinal Health was able to generate $884 million of operating cash flow in the quarter, an all-time high and an improvement of $117 million over the year-ago quarter. Strong cash flow in turn allowed the company to further strengthen its balance sheet and reduce interest expense versus the prior year. Net-debt-to- total capital reached an all-time low of 15 percent at year-end.
Financial Highlights - Fiscal Year
Unless noted otherwise, the following discussion excludes special items.
The strong fourth-quarter performance capped a fiscal year that set all-time company records for revenues, earnings, return on committed capital, return on equity, and cash flow. At the same time, Cardinal Health continued to make increasing investments to support its future growth.
- Net earnings rose 23 percent to a record $943 million from $768 million in the prior year. Earnings per diluted share for the year rose 21 percent to a record $2.07 from $1.71 a year ago.
- Operating revenues reached a record $38.7 billion, a 28 percent increase from the $30.3 billion in the prior year.
- Operating earnings for the year rose 20 percent to a record $1.612 billion from $1.345 billion a year ago. At the same time, the company increased investment spending by 83 percent to $82 million. Combined with more than $2.9 billion in acquisition investments, property and plant additions, and investments in working capital, Cardinal Health directed more than $3.0 billion in the fiscal year toward strategic investments to position itself for future growth and higher returns.
- Return on committed capital reached an all-time record 30.0 percent for the year. Strong operating earnings and asset management were the drivers of the performance, resulting in operating cash flow in the year of $872 million, up $368 million or 73 percent over the prior year. The operating cash flow performance was notable given the additional funding requirements of two major acquisitions during the year.
"We are realizing well-balanced performance across all of our segments, with significant achievements in growth, investment and returns," said Robert D. Walter, chairman and chief executive officer. "Our strategy of focusing on health care, while building scale, leadership positions and proprietary solutions is working. Our ability to cross-sell our products and services has accelerated our growth rate this year. In fiscal 2001, we signed more than 40 new agreements with health-care providers bringing the total to 72 corporate agreements. These agreements, that bring multiple Cardinal products and services together, provide about $1.4 billion in annual operating revenues. Similarly, we have been successful in selling our breadth and depth of pharmaceutical technologies and services to pharmaceutical manufacturers. The power to bring integrated solutions to our customers is reflected in the strength and diversity of our earnings this year."
Business-Segment Results
Cardinal Health reported well-balanced, strong growth in revenues and operating earnings across each of its segments. In the fourth quarter, pharmaceutical distribution and provider services accounted for 50 percent of Cardinal's operating earnings, medical-surgical products and services made up 25 percent, pharmaceutical technologies and services was 13 percent, and automation and information services contributed 12 percent.
Pharmaceutical Distribution and Provider Services
The Pharmaceutical Distribution and Provider Services segment recorded another outstanding quarter, with fourth-quarter records in revenues, operating earnings and return on committed capital. Cash flow in this segment also was outstanding. The segment posted fourth-quarter operating earnings of $244 million, up 29 percent over the fiscal 2000 fourth quarter. Return on sales improved to 2.95 percent from 2.93 percent in the prior year. Strong earnings and exceptional working capital management drove the return on committed capital to 32.1 percent, a significant improvement over 22.5 percent a year ago.
Strong revenue growth in all customer segments and a continued focus on operating expense controls drove the results. Revenues grew 28 percent in the quarter to $8.3 billion. Operating expenses, fully burdened with corporate expenses, declined 53 basis points to an all-time low of 2.23 percent versus the prior year. A favorable customer mix and increased productivity were the main drivers of the expense performance. Operating cash flow hit a record $679 million in the quarter on strong improvements in receivables management.
Highlights
- Reflecting continued growth in its market leadership and strong demand for pharmaceuticals overall, Cardinal Distribution reported sales growth in each of its customer segments -- independent pharmacies, retail chains, hospitals and health systems, and care continuum -- of more than 20 percent. In total, this business grew at more than twice the growth rate of the overall pharmaceutical industry. For more than a decade, Cardinal Distribution has exceeded industry growth by at least 50 percent in every year.
- The company continues to upgrade and streamline its distribution network as more than 90 percent of its pharmaceutical distribution facilities are new or remodeled within the past five years. At June 30, the company had 37 pharmaceutical distribution centers, including new, highly automated centers in Georgia and New Jersey that opened for business in the fourth quarter.
- Cardinal Health's merger integration with Bindley Western Industries is ahead of schedule. Four of 16 distribution centers have been consolidated, and another three will be consolidated by the end of December. Purchasing systems are also on track for consolidation and should quickly add buying and operational efficiencies. The expected merger synergies are on plan and estimated at $100 million, to be achieved by the third year following the merger.
Medical-Surgical Products and Services
Cardinal Health's medical-surgical products segment posted record revenues, operating earnings, and return on sales in the fourth quarter. On strong revenue growth of 23 percent to $1.6 billion, operating earnings were $122 million, a 23 percent increase versus the prior year. Return on sales hit an all-time high of 7.87 percent. These results include incremental revenues from the August 2000 acquisition of Bergen Brunswig Medical Corporation (BBMC), which was accounted for using purchase accounting. On a comparable basis with the prior year, excluding the BBMC revenues, this segment posted revenue growth of approximately 6 percent, with gains in most product segments, including self-manufactured products.
The segment continued to manage expenses effectively, with sales, general and administrative expenses declining by 100 basis points to an all-time low 14.45 percent of revenues in the quarter. Return on committed capital continued to improve, rising 110 basis points to a record 33.3 percent from 32.2 percent a year ago. These improvements are notable, given the higher costs the company is incurring from rising raw materials prices and negative swings in foreign-exchange rates.
Highlights
- Allegiance continued to see growth of self-manufactured products during the quarter, both in existing accounts and in new accounts that came with the BBMC merger. All manufactured product categories grew in the quarter with particular strength in sales of surgical instruments. In total, sales of self-manufactured products were up 7 percent.
- The integration of BBMC is well underway and is expected to achieve $30 million in synergies from new revenues and lower costs over the next two fiscal years, as announced previously. Several BBMC facilities and most of the company's information systems have now been consolidated with Allegiance.
- The company's medical-surgical distribution business continues to grow faster than the industry overall and new agreements with Novation hospitals and other customers are expected to help sustain this momentum.
Pharmaceutical Technologies and Services
Fourth-quarter revenues gained 16 percent to $318 million on strong demand for drug-delivery technologies and packaging services. The largest gains were from products in the company's Zydis(R) rapid-dissolving tablet and sterile-liquid pharmaceutical technologies. Recent acquisitions of extended release and dermatological technologies have broadened the company's drug-delivery offering, making its services more attractive to pharmaceutical developers and its cross-selling efforts more meaningful. The company now has an unmatched array of drug-delivery technologies to offer pharmaceutical manufacturers.
Operating earnings increased 16 percent to $60 million on strong revenue and gross margin performances and expense controls. Operating expenses declined 25 basis points to 14.02 percent from 14.27 percent in the prior year. Return on sales was a fourth-quarter record at 18.93 percent. Return on committed capital in the segment was 27.4 percent, reflecting sequential improvement over 23.8 percent in the third quarter of fiscal 2001.
Highlights
- Cardinal Health continued to broaden its offerings during the quarter. In addition to recent acquisitions, the company continued to add new capabilities to the manufacturing center in Puerto Rico it acquired last December. In addition, the construction of Cardinal's pharmaceutical technologies and services center in Franklin Township, New Jersey is on schedule to open in the fourth quarter of fiscal 2002. The center, an $80 million investment, will showcase Cardinal's comprehensive development, engineering, manufacturing, packaging, quality, testing and regulatory services for the drug industry.
- This segment benefited from better-than-expected demand for the Zydis(R) formulations of Eli Lilly and Company's schizophrenia drug Zyprexa(R) and WhiteHall Robins' Advil(R) Liqui-Gels(R), the softgel form of the well-known over-the-counter product. Continued strong demand for Xalatan(R), Pharmacia Corporation's glaucoma drug, led to exceptional results in Cardinal Health's sterile-liquid technologies. In addition, strong revenue performance from the company's packaging services contributed to the quarter's results. This segment's strong sales overcame a continued declining market for protease inhibitors and softgel nutritional supplements in the United States.
- In June the company acquired SP Pharmaceuticals, a provider of drug- development and manufacturing services for parenteral biotechnology and pharmaceutical products. SP Pharmaceuticals specializes in producing sterile, injectable drugs and biologics in liquid and lyophilized (freeze-dried) formulations packaged in glass vials and ampoules. Its customers include emerging biotechnology firms that need product-development assistance and clinical-supplies production, and large drug companies that are looking to outsource product manufacturing, a growing industry trend.
Automation and Information Services
New product sales helped produce this segment's best quarter ever, as revenues grew 19 percent to $150 million, a $24 million increase from the previous year. Operating earnings posted an even stronger performance, increasing to $59 million, a 26 percent improvement over the prior year. Revenue growth and improved gross margins drove a 196 basis point improvement in return on sales to a record 39.07 percent from 37.11 percent in the prior year. Gross margins improved 298 basis points to 71.12 percent primarily on sales of the higher margin MEDSTATION(R) line of products.
Highlights
- New product introductions have accelerated, with approximately 34 percent of fourth-quarter revenues coming from products introduced within the last 18 months. Introduced in early 2000, MEDSTATION(R) SN sales increased dramatically in the quarter versus the prior year. With medication safety an increasing focus of hospital administrators, sales of MEDSTATION(R) SN are expected to show continued growth. In addition, the recently introduced SUPPLYSTATION(R) System 30 is expected to be a driver of future growth in the medical supply side of this business.
- On July 30, Cardinal Health joined with industry-leading retail pharmacy providers to form a new pharmaceutical-information services company called ArcLight Systems LLC. ArcLight provides a constant stream of pharmaceutical prescription data over the Internet from the nearly one billion annual prescriptions filled at the partners' pharmacies. The patient de-identified data are made available to pharmaceutical marketers within minutes via RxealTime(TM), ArcLight's initial product offering.
Summary and Fiscal 2002 Outlook
"Strong top line growth, solid expense control and excellent asset management drove the excellent results this quarter and fiscal year," Walter said. "We exceeded the targets established at the beginning of the fiscal year. In fact, this is the 14th straight year that we have surpassed our stated goal of growing annual earnings per share at 20 percent, combining that growth with rising returns and strong cash flow to fund future growth.
"As we move into a new fiscal year, our confidence in future growth has never been stronger," Walter added. "The markets we serve are growing, driven by demographic shifts and technological advancement. Our customers need and value the services we offer, and their confidence in us has driven our leadership positions. Cardinal's financial plan is complete for fiscal 2002 and our management teams are focused. The momentum we have as we enter this new year, combined with the strength of our balance sheet, give us the confidence that Cardinal will be able to capitalize on the many opportunities we see going forward. As a result, we reiterate our long-term commitment to produce annual growth in earnings per share of 20 percent."
Cardinal Health, Inc. ( http://www.cardinal.com ) is a leading provider of products and services supporting the health-care industry. Cardinal companies develop, manufacture, package and market products for patient care; develop drug-delivery technologies; distribute pharmaceuticals, medical-surgical and laboratory supplies; and offer consulting and other services that improve quality and efficiency in health care. The company employs more than 45,000 people on five continents and produces annual revenues of more than $38 billion.
Webcast Today
Cardinal Health has scheduled an Internet "Webcast" today to discuss its fourth-quarter and full-year financial performance and outlook. To access this discussion, please visit http://www.cardinal.com and follow directions to the company's Investor Center. The conference will begin at 11 a.m. Eastern Time today. If you have difficulty accessing the call via the Internet, the company has established a call-in number at 212-896-6133 for telephone access. A replay of the Webcast will be available until 1:00 p.m. Eastern Time August 3rd on the Internet at cardinal.com's Investor Center or by dialing 800-633-8284, reservation number 19201287.
Annual Investor Conference
Cardinal Health is hosting its annual investor conference in New York City on August 16, 2001 from 12:30 PM to approximately 5:30 PM. To access the discussion, please visit http://www.cardinal.com and follow directions to the company's Investor Center. A replay of the Webcast will be available until 1:00 p.m. Eastern Time August 20th on the Internet at cardinal.com's Investor Center.
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 and exhibits to those reports, and include (but are not limited to) the costs and difficulties related to the integration of acquired businesses, the loss of one or more key customer or supplier relationships, changes in the distribution outsourcing pattern for health-care products and/or services, and the costs and other effects of governmental regulation and legal and administrative proceedings. Cardinal undertakes no obligation to update or revise any forward-looking statements.
CARDINAL HEALTH, INC.
CONSOLIDATED STATEMENTS OF EARNINGS (UNAUDITED)
(in millions, except per share amounts)
FOURTH QUARTER
June June
2001 2000 % Change
Revenue:
Operating Revenue $10,254.3 $8,085.7 27 %
Bulk Deliveries to Customer
Warehouses 2,146.7 2,449.4 (12)%
Total Revenue 12,401.0 10,535.1 18 %
Cost of Products Sold:
Operating Cost of Products Sold 9,279.1 7,254.1 28 %
Cost of Products Sold - Bulk
Deliveries 2,146.0 2,448.9 (12)%
Total Cost of Products Sold 11,425.1 9,703.0 18 %
Gross Margin 975.9 832.1 17 %
S, G & A Expenses 530.6 462.0 15 %
Special Charges 18.3 11.7 N.M.
Operating Earnings 427.0 358.4 19 %
Interest Expense and Other 38.0 38.4 (1)%
Earnings Before Income Taxes 389.0 320.0 22 %
Provision for Income Taxes 135.7 114.0 19 %
Net Earnings $253.3 $206.0 23 %
Earnings Per Common Share:
Basic $0.57 $0.47 21 %
Diluted $0.55 $0.46 20 %
Weighted Average Number of Shares
Outstanding:
Basic 446.7 435.3 -
Diluted 458.6 445.0 -
The following table summarizes the impact of special charges 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
Special Charges $(11.5) $(0.03) $(7.6) $(0.02)
CARDINAL HEALTH, INC.
CONSOLIDATED STATEMENTS OF EARNINGS (UNAUDITED)
(in millions, except per share amounts)
YEAR-TO-DATE
June June
2001 2000 % Change
Revenue:
Operating Revenue $38,660.1 $30,257.8 28 %
Bulk Deliveries to Customer
Warehouses 9,287.5 8,092.1 15 %
Total Revenue 47,947.6 38,349.9 25 %
Cost of Products Sold:
Operating Cost of Products Sold 35,050.2 27,163.8 29 %
Cost of Products Sold - Bulk
Deliveries 9,285.8 8,089.9 15 %
Total Cost of Products Sold 44,336.0 35,253.7 26 %
Gross Margin 3,611.6 3,096.2 17 %
S, G & A Expenses 1,999.6 1,751.0 14 %
Special Charges 124.9 64.7 N.M.
Operating Earnings 1,487.1 1,280.5 16 %
Interest Expense & Other 154.9 138.7 12 %
Earnings Before Income Taxes 1,332.2 1,141.8 17 %
Provision for Income Taxes 474.8 424.0 12 %
Net Earnings $857.4 $717.8 19 %
Earnings Per Common Share:
Basic $1.93 $1.64 18 %
Diluted $1.88 $1.60 18 %
Weighted Average Number of
Shares Outstanding:
Basic 443.2 438.8 -
Diluted 455.5 448.7 -
The following table summarizes the impact of special charges on net
earnings and diluted earnings per Common Share in the periods in which
they were recorded:
Current Year Prior Year
Net Diluted Net Diluted
Earnings EPS Earnings EPS
Special Charges $(85.3) $(0.19) $(49.8) $(0.11)
CARDINAL HEALTH, INC.
CONSOLIDATED BALANCE SHEETS (UNAUDITED)
(in millions)
June 30, March 31, June 30,
2001 2001 2000
ASSETS
CURRENT ASSETS
Cash and Equivalents $934.1 $396.2 $539.5
Trade Receivables 2,408.7 2,862.3 2,398.8
Current Portion of Investment in
Sales-Type Leases 236.3 214.3 187.7
Inventories 6,286.1 6,127.7 4,657.0
Prepaid Expenses and Other 897.9 765.1 663.4
Total Current Assets 10,763.1 10,365.6 8,446.4
Property and Equipment - Net 1,838.3 1,859.0 1,728.3
Investment in Sales-Type Leases 671.7 631.8 578.6
Other Assets 1,495.8 1,374.1 1,270.8
TOTAL ASSETS $14,768.9 $14,230.5 $12,024.1
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES
Notes Payable - Banks and Current
Portion of Long-Term Obligations $14.2 $23.1 $423.4
Accounts Payable 5,319.9 5,141.9 3,895.1
Other Accrued Liabilities 1,194.5 1,185.5 1,228.2
Total Current Liabilities 6,528.6 6,350.5 5,546.7
Long-Term Obligations, Less
Current Portion 1,871.0 2,169.8 1,524.5
Deferred Taxes and Other Liabilities 932.2 618.0 552.5
Total Shareholders' Equity 5,437.1 5,092.2 4,400.4
TOTAL LIABILITIES AND
SHAREHOLDERS' EQUITY $14,768.9 $14,230.5 $12,024.1
CARDINAL HEALTH, INC. CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
(in millions)
Three months ended For the year ended
June 30, June 30,
2001 2000 2001 2000
Cash Flows From Operating
Activities:
Net earnings available for
Common Shares $253.3 $206.0 $857.4 $717.8
Adjustments to reconcile net
earnings to net cash
from operations:
Depreciation and
amortization 71.6 57.5 280.6 257.0
Change in operating assets
and liabilities, net of
effects from acquisitions:
(Increase)/decrease in
trade receivables 453.8 83.9 10.0 (339.8)
(Increase)/decrease in
inventories (158.2) 333.2 (1,517.8) (1,071.6)
Increase in net investment
in sales-type leases (62.0) (50.9) (141.8) (159.5)
Increase in accounts payable 178.1 71.8 1,313.8 899.4
Other operating items - net 146.8 65.6 69.5 200.7
Net cash provided by
operating activities 883.4 767.1 871.7 504.0
Cash Flows From Investing Activities:
Net acquisition of subsidiaries,
net of cash acquired (41.0) (2.1) (364.3) (69.6)
Proceeds from sale of property
and equipment 54.3 16.9 72.1 60.2
Additions to property and
equipment (106.4) (105.6) (341.2) (331.1)
Other - - - 48.4
Net cash used in investing
activities (93.1) (90.8) (633.4) (292.1)
Cash Flows From Financing Activities:
Net short-term borrowing
activity (288.8) (520.0) (824.9) 552.0
Net change in long-term
obligations (19.5) (21.0) 857.5 (179.3)
Proceeds from issuance of
Common Shares 65.2 42.1 252.1 97.5
Purchase of Treasury Stock (0.6) - (139.4) (341.4)
Other (8.7) (6.9) (36.6) (29.6)
Net cash provided by/(used
in) financing activities (252.4) (505.8) 108.7 99.2
Net Increase in Cash and
Equivalents 537.9 170.5 347.0 311.1
Change in Bindley's fiscal year - - 47.6 -
Cash and Equivalents at
Beginning of Period 396.2 369.0 539.5 228.4
Cash and Equivalents at End of
Period 934.1 539.5 934.1 539.5
CARDINAL HEALTH, INC. - FOURTH QUARTER FY 2001 BUSINESS ANALYSIS
($ millions)
PHARMACEUTICAL DISTRIBUTION AND PROVIDER SERVICES
2001 2000 Comment
* REVENUE
- Amount $8,257 $6,432 Q4 RECORD
- Growth Rate 28% 23% Organic Growth
- Mix 80% 79%
* OPERATING EARNINGS
- Amount $244 $188 Q4 RECORD
- Growth Rate 29% 28%
- Mix 50% 49%
* RATIO TO REVENUE
- Gross Margin 5.18% 5.69% Customer mix and terms
- Expenses 2.23% 2.76% RECORD LOW
- Operating Earnings 2.95% 2.93% Q4 RECORD
* PRODUCTIVITY
- Margin Per Expense
Dollar* $2.33 $2.06 13% improvement
* ASSET MANAGEMENT
- Average Committed Asset management, BDY
Capital $2,976 $3,222 synergies
- Return On Committed
Capital 32.1% 22.5% RECORD
- Operating Cash Flow $679 $648 RECORD
MEDICAL-SURGICAL PRODUCTS AND SERVICES
2001 2000 Comment
* REVENUE
- Amount $1,552 $1,264 RECORD
- Growth Rate 23% 6% BBMC acquisition
- Mix 15% 16%
* OPERATING EARNINGS
- Amount $122 $99 RECORD
- Growth Rate 23% 20%
- Mix 25% 26%
* RATIO TO REVENUE
- Gross Margin 22.32% 23.31% BBMC impact
- Expenses 14.45% 15.45% Expense control
- Operating Earnings 7.87% 7.86% RECORD
* PRODUCTIVITY
- Margin Per Expense
Dollar* $1.54 $1.51
* ASSET MANAGEMENT
- Average Committed
Capital $1,465 $1,234 BBMC impact
- Return On Committed
Capital 33.3% 32.2% RECORD
- Operating Cash Flow $134 $144
PHARMACEUTICAL TECHNOLOGIES AND SERVICES
2001 2000 COMMENT
* REVENUE
- Amount $318 $275 RECORD
- Growth Rate 16% 14%
- Mix 3% 3%
* OPERATING EARNINGS
- Amount $60 $52 RECORD
- Growth Rate 16% 16%
- Mix 13% 13%
* RATIO TO REVENUE
- Gross Margin 32.95% 33.14%
- Expenses 14.02% 14.27%
- Operating Earnings 18.93% 18.87% Q4 RECORD
* PRODUCTIVITY
- Margin Per Expense
Dollar* $2.35 $2.32
* ASSET MANAGEMENT
- Average Committed Capital $879 $710 Strategic investment
- Return On Committed Sequential increase
Capital 27.4% 29.2% from Q3
- Operating Cash Flow $31 ($30)
AUTOMATION AND INFORMATION SERVICES
2001 2000 COMMENT
* REVENUE
- Amount $150 $126 RECORD
- Growth Rate 19% (1)%
- Mix 2% 2%
* OPERATING EARNINGS
- Amount $59 $47 RECORD
- Growth Rate 26% (1)%
- Mix 12% 12%
* RATIO TO REVENUE
- Gross Margin 71.12% 68.14% RECORD
- Expenses 32.05% 31.03%
- Operating Earnings 39.07% 37.11% RECORD
* PRODUCTIVITY
- Margin Per Expense
Dollar* $2.22 $2.20
* ASSET MANAGEMENT
- Average Committed Capital $706 $616 Lease investment
- Return On Committed
Capital 33.3% 30.4%
- Operating Cash Flow $40 $5
- Revenue and all ratios to revenue exclude bulk deliveries to customer warehouses.
- Corporate costs are fully allocated to businesses except for special charges and eliminations
- Margin Per Expense Dollar = Ratio of gross margin to expenses
($ millions)
TOTAL
Special Charges
2001 2000 2001 2000
* REVENUE
- Amount $10,254 $8,086
- Growth Rate 27% 19%
OPERATING EARNINGS
- Amount $427 $358 $445 $370
- Growth Rate 19% 33% 20% 19%
RATIO TO REVENUE
- Gross Margin 9.52% 10.29%
- Expenses 5.18% 5.71%
- Special Charges 0.18% 0.15%
- Operating Earnings 4.16% 4.43% 4.34% 4.58%
NET EARNINGS
- Amount $253 $206 $265 $214
- Growth Rate 23% 37% 24% 20%
- Ratio to Revenue 2.47% 2.55% 2.58% 2.64%
PRODUCTIVITY
- Margin Per Expense Dollar* $1.84 $1.80
ASSET MANAGEMENT
Average Committed Capital $5,480 $4,998
- Return On Committed Capital 30.8% 28.1% 32.2% 29.1%
- Operating Cash Flow $884 $767
- Revenue and all ratios to revenue exclude bulk deliveries to customer warehouses
- Margin Per Expense Dollar = Ratio of gross margin to expenses
($ millions)
PHARMACEUTICAL DISTRIBUTION AND PROVIDER SERVICES
2001 2000
* REVENUE
- Amount $31,186 $23,850
- Growth Rate 31% 22%
- Mix 81% 79%
* OPERATING EARNINGS
- Amount $884 $675
- Growth Rate 31% 25%
- Mix 51% 49%
* RATIO TO REVENUE
- Gross Margin 5.20% 5.53%
- Expenses 2.37% 2.70%
- Operating Earnings 2.83% 2.83%
* PRODUCTIVITY
- Margin Per Expense Dollar* $2.20 $2.05
* ASSET MANAGEMENT
- Average Committed Capital $3,020 $2,860
- Return On Committed Capital 29.1% 23.3%
- Operating Cash Flow $492 $152
MEDICAL-SURGICAL PRODUCTS AND SERVICES
2001 2000
* REVENUE
- Amount $5,903 $4,960
- Growth Rate 19% 5%
- Mix 15% 16%
* OPERATING EARNINGS
- Amount $442 $368
- Growth Rate 20% 21%
- Mix 26% 26%
* RATIO TO REVENUE
- Gross Margin 22.09% 23.18%
- Expenses 14.60% 15.76%
- Operating Earnings 7.49% 7.42%
* PRODUCTIVITY
- Margin Per Expense Dollar* $1.51 $1.47
* ASSET MANAGEMENT
- Average Committed Capital $1,389 $1,235
- Return On Committed Capital 31.9% 29.8%
- Operating Cash Flow $293 $355
PHARMACEUTICAL TECHNOLOGIES AND SERVICES
2001 2000
* REVENUE
- Amount $1,178 $1,081
- Growth Rate 9% 15%
- Mix 3% 4%
* OPERATING EARNINGS
- Amount $219 $201
- Growth Rate 9% 25%
- Mix 13% 15%
* RATIO TO REVENUE
- Gross Margin 33.27% 33.11%
- Expenses 14.68% 14.53%
- Operating Earnings 18.59% 18.58%
* PRODUCTIVITY
- Margin Per Expense
Dollar* $2.27 $2.28
* ASSET MANAGEMENT
- Average Committed Capital $813 $677
- Return On Committed
Capital 27.0% 29.6%
- Operating Cash Flow $79 $78
AUTOMATION AND INFORMATION SERVICES
2001 2000
* REVENUE
- Amount $472 $402
- Growth Rate 17% (2)%
- Mix 1% 1%
* OPERATING EARNINGS
- Amount $168 $138
- Growth Rate 22% (2)%
- Mix 10% 10%
* RATIO TO REVENUE
- Gross Margin 68.56% 69.21%
- Expenses 32.91% 34.92%
- Operating Earnings 35.65% 34.29%
* PRODUCTIVITY
- Margin Per Expense Dollar* $2.08 $1.98
* ASSET MANAGEMENT
- Average Committed Capital $667 $563
- Return On Committed Capital 25.2% 24.5%
- Operating Cash Flow $8 ($81)
* REVENUE
- Amount $31,186 $23,850
- Growth Rate 31% 22%
- Mix 81% 79%
* OPERATING EARNINGS
- Amount $884 $675
- Growth Rate 31% 25%
- Mix 51% 49%
* RATIO TO REVENUE
- Gross Margin 5.20% 5.53%
- Expenses 2.37% 2.70%
- Operating Earnings 2.83% 2.83%
* PRODUCTIVITY
- Margin Per Expense Dollar* $2.20 $2.05
* ASSET MANAGEMENT
- Average Committed Capital $3,020 $2,860
- Return On Committed Capital 29.1% 23.3%
- Operating Cash Flow $492 $152
MEDICAL-SURGICAL PRODUCTS AND SERVICES
2001 2000
* REVENUE
- Amount $5,903 $4,960
- Growth Rate 19% 5%
- Mix 15% 16%
* OPERATING EARNINGS
- Amount $442 $368
- Growth Rate 20% 21%
- Mix 26% 26%
* RATIO TO REVENUE
- Gross Margin 22.09% 23.18%
- Expenses 14.60% 15.76%
- Operating Earnings 7.49% 7.42%
* PRODUCTIVITY
- Margin Per Expense Dollar* $1.51 $1.47
* ASSET MANAGEMENT
- Average Committed Capital $1,389 $1,235
- Return On Committed Capital 31.9% 29.8%
- Operating Cash Flow $293 $355
PHARMACEUTICAL TECHNOLOGIES AND SERVICES
2001 2000
* REVENUE
- Amount $1,178 $1,081
- Growth Rate 9% 15%
- Mix 3% 4%
* OPERATING EARNINGS
- Amount $219 $201
- Growth Rate 9% 25%
- Mix 13% 15%
* RATIO TO REVENUE
- Gross Margin 33.27% 33.11%
- Expenses 14.68% 14.53%
- Operating Earnings 18.59% 18.58%
* PRODUCTIVITY
- Margin Per Expense
Dollar* $2.27 $2.28
* ASSET MANAGEMENT
- Average Committed Capital $813 $677
- Return On Committed
Capital 27.0% 29.6%
- Operating Cash Flow $79 $78
AUTOMATION AND INFORMATION SERVICES
2001 2000
* REVENUE
- Amount $472 $402
- Growth Rate 17% (2)%
- Mix 1% 1%
* OPERATING EARNINGS
- Amount $168 $138
- Growth Rate 22% (2)%
- Mix 10% 10%
* RATIO TO REVENUE
- Gross Margin 68.56% 69.21%
- Expenses 32.91% 34.92%
- Operating Earnings 35.65% 34.29%
* PRODUCTIVITY
- Margin Per Expense Dollar* $2.08 $1.98
* ASSET MANAGEMENT
- Average Committed Capital $667 $563
- Return On Committed Capital 25.2% 24.5%
- Operating Cash Flow $8 ($81)
- Revenue and all ratios to revenue exclude bulk deliveries to customer warehouses
- Corporate costs are fully allocated to businesses except for special charges and eliminations
- Margin Per Expense Dollar = Ratio of gross margin to expenses
($ millions)
TOTAL
Special Charges
2001 2000 2001 2000
* REVENUE
- Amount $38,660 $30,258
- Growth Rate 28% 18%
OPERATING EARNINGS
- Amount $1,487 $1,281 $1,612 $1,345
- Growth Rate 16% 34% 20% 20%
RATIO TO REVENUE
- Gross Margin 9.34% 10.23%
- Expenses 5.17% 5.79%
- Special Charges 0.32% 0.21%
- Operating Earnings 3.85% 4.23% 4.17% 4.44%
NET EARNINGS
- Amount $857 $718 $943 $768
- Growth Rate 19% 44% 23% 22%
- Ratio to Revenue 2.22% 2.37% 2.44% 2.54%
PRODUCTIVITY
- Margin Per Expense Dollar* $1.81 $1.77
ASSET MANAGEMENT
- Average Committed Capital $5,356 $4,814
- Return On Committed Capital 27.7% 26.5% 30.0% 27.8%
- Operating Cash Flow $872 $504
- Revenue and all ratios to revenue exclude bulk deliveries to customer warehouses
- Margin Per Expense Dollar = Ratio of gross margin to expenses
CARDINAL HEALTH, INC. - QUARTERLY FY 2001 BUSINESS ANALYSIS
($ millions)
PHARMACEUTICAL DISTRIBUTION AND PROVIDER SERVICES
Q1 Q2 Q3 Q4 TOTAL
* REVENUE
- Amount $6,780 $7,701 $8,448 $8,257 $31,186
- Growth Rate 23% 32% 39% 28% 31%
- Mix 80% 80% 82% 80% 81%
* OPERATING EARNINGS
- Amount $177 $205 $258 $244 $884
- Growth Rate 23% 32% 38% 29% 31%
- Mix 50% 49% 56% 50% 51%
* RATIO TO REVENUE
- Gross Margin 5.16% 5.05% 5.41% 5.18% 5.20%
- Expenses 2.54% 2.39% 2.36% 2.23% 2.37%
- Operating Earnings 2.62% 2.66% 3.05% 2.95% 2.83%
* PRODUCTIVITY
- Margin Per Expense Dollar* $2.03 $2.11 $2.29 $2.33 $2.20
* ASSET MANAGEMENT
- Average Committed Capital $2,890 $3,207 $3,302 $2,976 $3,020
- Return On Committed Capital 24.6% 25.5% 31.2% 32.1% 29.1%
- Operating Cash Flow ($378) $4 $187 $679 $492
MEDICAL-SURGICAL PRODUCTS AND SERVICES
Q1 Q2 Q3 Q4 TOTAL
* REVENUE
- Amount $1,379 $1,474 $1,498 $1,552 $5,903
- Growth Rate 14% 15% 24% 23% 19%
- Mix 16% 16% 14% 15% 15%
* OPERATING EARNINGS
- Amount $102 $106 $112 $122 $442
- Growth Rate 19% 19% 20% 23% 20%
- Mix 29% 26% 24% 25% 26%
* RATIO TO REVENUE
- Gross Margin 22.50% 21.60% 21.97% 22.32% 22.09%
- Expenses 15.06% 14.43% 14.49% 14.45% 14.60%
- Operating Earnings 7.44% 7.17% 7.48% 7.87% 7.49%
* PRODUCTIVITY
- Margin Per Expense Dollar* $1.49 $1.50 $1.52 $1.54 $1.51
* ASSET MANAGEMENT
- Average Committed Capital $1,302 $1,398 $1,440 $1,465 $1,389
- Return On Committed Capital 31.5% 30.2% 31.1% 33.3% 31.9%
- Operating Cash Flow $9 $103 $47 $134 $293
PHARMACEUTICAL TECHNOLOGIES AND SERVICES
Q1 Q2 Q3 Q4 TOTAL
* REVENUE
- Amount $272 $287 $301 $318 $1,178
- Growth Rate 5% 9% 6% 16% 9%
- Mix 3% 3% 3% 3% 3%
* OPERATING EARNINGS
- Amount $50 $59 $50 $60 $219
- Growth Rate 11% 15% (4)% 16% 9%
- Mix 14% 14% 11% 13% 13%
* RATIO TO REVENUE
- Gross Margin 32.44% 35.77% 31.98% 32.95% 33.27%
- Expenses 14.08% 15.22% 15.39% 14.02% 14.68%
- Operating Earnings 18.36% 20.55% 16.59% 18.93% 18.59%
* PRODUCTIVITY
- Margin Per Expense Dollar* $2.30 $2.35 $2.08 $2.35 $2.27
* ASSET MANAGEMENT
- Average Committed Capital $750 $782 $840 $879 $813
- Return On Committed Capital 26.6% 30.1% 23.8% 27.4% 27.0%
- Operating Cash Flow $9 $20 $19 $31 $79
AUTOMATION AND INFORMATION SERVICES
Q1 Q2 Q3 Q4 TOTAL
* REVENUE
- Amount $90 $120 $112 $150 $472
- Growth Rate 29% 15% 10% 19% 17%
- Mix 1% 1% 1% 2% 1%
* OPERATING EARNINGS
- Amount $23 $45 $41 $59 $168
- Growth Rate 35% 17% 17% 26% 22%
- Mix 7% 11% 9% 12% 10%
* RATIO TO REVENUE
- Gross Margin 64.32% 68.30% 68.81% 71.12% 68.56%
- Expenses 38.68% 30.31% 32.20% 32.05% 32.91%
- Operating Earnings 25.64% 37.99% 36.61% 39.07% 35.65%
* PRODUCTIVITY
- Margin Per Expense Dollar* $1.66 $2.25 $2.14 $2.22 $2.08
* ASSET MANAGEMENT
- Average Committed Capital $623 $659 $692 $706 $667
- Return On Committed Capital 14.8% 27.6% 23.8% 33.3% 25.2%
- Operating Cash Flow ($22) ($7) ($3) $40 $8
- Revenue and all ratios to revenue exclude bulk deliveries to customer warehouses
- Corporate costs are fully allocated to businesses except for special charges and eliminations
- Margin Per Expense Dollar = Ratio of gross margin to expenses
CARDINAL HEALTH, INC. - QUARTERLY FY 2001 BUSINESS ANALYSIS
($ millions)
TOTAL (EXCLUDING SPECIAL CHARGES)
Q1 Q2 Q3 Q4 TOTAL
* REVENUE
- Amount $8,511 $9,561 $10,334 $10,254 $38,660
- Growth Rate 21% 28% 35% 27% 28%
OPERATING EARNINGS
- Amount $337 $394 $436 $445 $1,612
- Growth Rate 19% 21% 19% 20% 20%
RATIO TO REVENUE
- Gross Margin 9.45% 9.26% 9.15% 9.52% 9.34%
- Expenses 5.49% 5.14% 4.93% 5.18% 5.17%
- Operating Earnings 3.96% 4.12% 4.22% 4.34% 4.17%
NET EARNINGS
- Amount $196 $227 $255 $265 $943
- Growth Rate 22% 22% 23% 24% 23%
- Ratio to Revenue 2.30% 2.38% 2.46% 2.58% 2.44%
PRODUCTIVITY
- Margin Per Expense Dollar* $1.72 $1.80 $1.86 $1.84 $1.81
ASSET MANAGEMENT
- Average Committed Capital $5,082 $5,528 $5,702 $5,480 $5,356
- Return On Committed Capital 26.5% 28.5% 30.6% 32.2% 30.0%
- Operating Cash Flow ($382) $120 $250 $884 $872
- Revenue and all ratios to revenue exclude bulk deliveries to customer warehouses
- Margin Per Expense Dollar = Ratio of gross margin to expenses
CARDINAL HEALTH, INC. - FISCAL 2001 AND 2000 ASSET MANAGEMENT ANALYSIS
($ millions)
2001
Q1 Q2 Q3 Q4 YTD COMMENT
* RECEIVABLE DAYS 22 22 21 18 RECORD
* INVENTORY TURNS 6.1 6.3 6.6 6.3 Investment
opportunity
* CASH $573 $541 $396 $934
* DEBT $2,433 $2,502 $2,193 $1,885
* EQUITY $4,668 $4,798 $5,092 $5,437
NET DEBT/TOTAL
CAPITAL 28% 29% 26% 15% RECORD
TANGIBLE NET
WORTH $3,540 $3,694 $3,950 $4,262
* RETURN ON EQUITY 16.8% 18.7% 15.6% 19.2% 17.6%
EXCLUDING SPECIAL
ITEMS 17.3% 19.2% 20.5% 20.0% 19.3% RECORD
* TAX RATE 34.7% 36.1% 37.0% 34.9% 35.6%
EXCLUDING SPECIAL International
ITEMS 35.3% 35.8% 35.1% 35.0% 35.3% initiatives
2000
Q1 Q2 Q3 Q4 YTD
* RECEIVABLE DAYS 23 23 22 21
* INVENTORY TURNS 6.7 6.1 5.9 6.6
* CASH $195 $302 $369 $540
* DEBT $1,934 $2,156 $2,482 $1,948
* EQUITY $4,010 $4,201 $4,166 $4,400
NET DEBT/TOTAL
CAPITAL 30% 31% 34% 24%
TANGIBLE NET
WORTH $3,023 $3,214 $3,117 $3,357
* RETURN ON EQUITY 13.3% 17.8% 19.0% 19.2% 17.4%
EXCLUDING SPECIAL
ITEMS 16.2% 18.0% 19.8% 19.9% 18.5%
* TAX RATE 39.5% 36.9% 37.2% 35.6% 37.1%
EXCLUDING SPECIAL
ITEMS 36.6% 36.9% 36.5% 35.6% 36.4%
SOURCE Cardinal Health, Inc.
CONTACT: Investors, Stephen T. Fischbach,+1-614-757-7067, or Media, Geoffrey D. Fenton, +1-614-757-7871, both of Cardinal Health/
Feedback: Media relations
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