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þ
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ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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o
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TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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Ohio
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31-0958666
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(State or other jurisdiction of
incorporation or organization)
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(IRS Employer
Identification No.)
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7000 Cardinal Place, Dublin, Ohio
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43017
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(Address of principal executive offices)
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(Zip Code)
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(614) 757-5000
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(Registrant’s telephone number, including area code)
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Securities registered pursuant to Section 12(b) of the Act:
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Title of class
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Name of each exchange on which registered
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Common shares (without par value)
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New York Stock Exchange
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Securities registered pursuant to Section 12(g) of the Act: None
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Large accelerated filer
þ
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Accelerated filer
o
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Non-accelerated filer
o
(Do not check if a smaller reporting company)
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Smaller reporting company
o
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Cardinal Health, Inc. and Subsidiaries
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Table of Contents
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Item
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Page
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1A
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1B
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2
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3
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4
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5
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6
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7
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7A
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8
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9
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9A
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9B
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10
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11
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12
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13
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14
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15
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Cardinal Health, Inc. and Subsidiaries
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•
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distributes branded and generic pharmaceutical, over-the-counter healthcare and consumer products through its Pharmaceutical Distribution division to retailers (including chain and independent drug stores and pharmacy departments of supermarkets and mass merchandisers), hospitals and other healthcare providers. This division:
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•
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maintains prime vendor relationships that streamline the purchasing process resulting in greater efficiency and lower costs for our customers;
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•
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renders services to pharmaceutical manufacturers including distribution, inventory management, data reporting, new product launch support, and contract pricing and chargeback administration;
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•
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provides pharmacy services to hospitals and other healthcare facilities; and
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•
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franchises retail pharmacies under the Medicine Shoppe
®
and Medicap
®
brands;
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•
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operates nuclear pharmacies and cyclotron facilities through its Nuclear Pharmacy Services division that manufacture, prepare and deliver radiopharmaceuticals for use in nuclear imaging and other procedures in hospitals and physician offices; and
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•
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distributes specialty pharmaceutical products, provides services to pharmaceutical manufacturers, third-party payors and healthcare providers supporting the development, marketing, distribution and payment for specialty pharmaceutical products, and operates specialty pharmacies through its Specialty Solutions division.
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Cardinal Health, Inc. and Subsidiaries
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Date
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Company
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Location
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Line
of Business
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Acquisition
Price
(in millions)
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|||
03/13
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AssuraMed, Inc.
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Twinsburg, OH
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Medical product distribution
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$
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2,070
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12/10
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Kinray, Inc.
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Whitestone, NY
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Pharmaceutical product distribution
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$
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1,336
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11/10
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Cardinal Health China
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Shanghai, China
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Pharmaceutical and medical product distribution
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$
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458
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(1)
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07/10
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Healthcare Solutions
Holding, LLC
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Ellicott City, MD
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Specialty pharmaceutical services
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$
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520
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(2)
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(1)
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Includes the assumption of approximately $57 million in debt.
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(2)
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Includes $506 million in cash paid on the acquisition date and $14 million paid in fiscal 2012 and 2013 in connection with a contingent consideration obligation. The contingent consideration obligation had an acquisition date fair value of $92 million.
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Cardinal Health, Inc. and Subsidiaries
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•
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the U.S. Food and Drug Administration (the “FDA”);
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•
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the U.S. Drug Enforcement Administration (the “DEA”);
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•
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the U.S. Nuclear Regulatory Commission (the “NRC”);
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•
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the U.S. Department of Health and Human Services;
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•
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the U.S. Federal Trade Commission;
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•
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U.S. Customs and Border Protection;
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•
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state boards of pharmacy;
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•
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state controlled substance agencies;
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•
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state health departments, insurance departments or other comparable state agencies; and
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•
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foreign agencies that are comparable to those listed above.
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Cardinal Health, Inc. and Subsidiaries
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Cardinal Health, Inc. and Subsidiaries
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Cardinal Health, Inc. and Subsidiaries
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Cardinal Health, Inc. and Subsidiaries
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•
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facilitate the purchase and distribution of inventory items from numerous distribution centers;
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•
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receive, process and ship orders on a timely basis;
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•
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manage the accurate billing and collections for thousands of customers;
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•
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process payments to suppliers;
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•
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facilitate the manufacturing and assembly of medical products; and
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•
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generate financial information.
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Cardinal Health, Inc. and Subsidiaries
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Cardinal Health, Inc. and Subsidiaries
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Name
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Age
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Position
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George S. Barrett
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59
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Chairman and Chief Executive Officer
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Jeffrey W. Henderson
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49
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Chief Financial Officer
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Michael C. Kaufmann
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51
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Chief Executive Officer, Pharmaceutical segment
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Donald M. Casey Jr.
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54
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Chief Executive Officer, Medical segment
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Craig S. Morford
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55
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Chief Legal and Compliance Officer
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Carole S. Watkins
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54
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Chief Human Resources Officer
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Mark R. Blake
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43
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Executive Vice President, Strategy and Corporate Development
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Stephen T. Falk
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49
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Executive Vice President, General Counsel and Corporate Secretary
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High
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Low
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Dividends
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||||||
Fiscal 2013
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||||||
Quarter Ended:
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||||||
September 30, 2012
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$
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43.50
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$
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37.75
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$
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0.2375
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December 31, 2012
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42.65
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39.29
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0.2750
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|||
March 31, 2013
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47.09
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41.62
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0.2750
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June 30, 2013
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48.76
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41.85
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0.3025
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||||||
Fiscal 2014
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||||||
Quarter Ended:
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||||||
September 30, 2013
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$
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53.57
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$
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47.02
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$
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0.3025
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December 31, 2013
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67.48
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52.95
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0.3025
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|||
March 31, 2014
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73.54
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65.26
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0.3025
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|||
June 30, 2014
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71.31
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63.80
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0.3425
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Fiscal 2015
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$
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72.75
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$
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69.59
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$
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0.3425
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Issuer Purchases of Equity Securities
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|||||||||||||
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Period
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Total Number
of Shares Purchased (1) |
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Average Price Paid per Share
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Total Number of Shares
Purchased as Part of Publicly Announced Programs (2) |
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Approximate
Dollar Value of
Shares That May
Yet be Purchased
Under the Programs (2)
(in millions)
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||||||
Apr 2014
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252
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$
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69.23
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—
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$
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1,011
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May 2014
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1,661,576
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67.32
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1,661,405
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900
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Jun 2014
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2,513,482
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68.64
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2,513,288
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727
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Total
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4,175,310
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$
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68.12
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4,174,693
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$
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727
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(1)
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Includes
252
,
171
and
194
common shares purchased in April, May and June 2014, respectively, through a rabbi trust as investments of participants in our Deferred Compensation Plan.
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(2)
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On August 8, 2012, our Board of Directors approved a $750 million share repurchase program, which expires on August 31, 2015. During the three months ended
June 30, 2014
, we repurchased $11 million of our common shares, the remaining amount under this program. On October 29, 2013, our Board of Directors approved a $1.0 billion share repurchase program, which expires on December 31, 2016. During the three months ended
June 30, 2014
, we repurchased
$273 million
of our common shares under this program. On August 6, 2014, our Board of Directors authorized an additional $1.0 billion under this share repurchase program.
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Cardinal Health, Inc. and Subsidiaries
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June 30
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|||||||||||||||||
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2009
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2010
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2011
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2012
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2013
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2014
|
||||||||||||
Cardinal Health, Inc.
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$
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100.00
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$
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156.67
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$
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216.08
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$
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204.09
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$
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235.31
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$
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348.54
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S&P 500 Index
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100.00
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114.42
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149.51
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157.61
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190.05
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236.75
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||||||
S&P 500 Healthcare Index
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100.00
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108.99
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140.09
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153.76
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196.42
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255.44
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Cardinal Health, Inc. and Subsidiaries
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(in millions, except per common share amounts)
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2014
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2013 (1)
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2012
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2011
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2010
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||||||||||
Earnings Data:
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Revenue
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$
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91,084
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$
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101,093
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$
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107,552
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$
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102,644
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$
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98,503
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||||||||||
Earnings from continuing operations
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$
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1,163
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$
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335
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$
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1,070
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$
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966
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$
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587
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Earnings/(loss) from discontinued operations (2)
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3
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(1
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)
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(1
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)
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(7
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)
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55
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|||||
Net earnings
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$
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1,166
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$
|
334
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$
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1,069
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$
|
959
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$
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642
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||||||||||
Basic earnings/(loss) per common share:
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||||||||||
Continuing operations
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$
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3.41
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$
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0.98
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|
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$
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3.10
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|
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$
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2.77
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|
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$
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1.64
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Discontinued operations (2)
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0.01
|
|
|
—
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|
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—
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(0.02
|
)
|
|
0.15
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|
|||||
Net basic earnings per common share
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$
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3.42
|
|
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$
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0.98
|
|
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$
|
3.10
|
|
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$
|
2.75
|
|
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$
|
1.79
|
|
|
|
|
|
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||||||||||
Diluted earnings/(loss) per common share:
|
|
|
|
|
|
|
|
|
|
||||||||||
Continuing operations
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$
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3.37
|
|
|
$
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0.97
|
|
|
$
|
3.06
|
|
|
$
|
2.74
|
|
|
$
|
1.62
|
|
Discontinued operations (2)
|
0.01
|
|
|
—
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|
|
—
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|
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(0.02
|
)
|
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0.15
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|
|||||
Net diluted earnings per common share
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$
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3.38
|
|
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$
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0.97
|
|
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$
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3.06
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|
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$
|
2.72
|
|
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$
|
1.77
|
|
|
|
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|
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|
||||||||||
Cash dividends declared per common share
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$
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1.2500
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$
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1.0900
|
|
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$
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0.8825
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$
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0.8000
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|
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$
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0.7200
|
|
|
|
|
|
|
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|
||||||||||
Balance Sheet Data:
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|
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|
||||||||||
Total assets
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$
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26,033
|
|
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$
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25,819
|
|
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$
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24,260
|
|
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$
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22,846
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$
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19,990
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Long-term obligations, less current portion
|
3,171
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|
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3,686
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|
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2,418
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|
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2,175
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|
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1,896
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|||||
Shareholders’ equity
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6,401
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|
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5,975
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|
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6,244
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|
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5,849
|
|
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5,276
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(1)
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During the fourth quarter of fiscal
2013
, we recognized a non-cash goodwill impairment charge of
$829 million
(
$799 million
, net of tax) related to our Nuclear Pharmacy Services division.
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(2)
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On August 31, 2009, we separated the clinical and medical products businesses from our other businesses through a pro rata distribution to shareholders of 81 percent of the then outstanding common stock of CareFusion and met the criteria for classification of these businesses as discontinued operations.
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Cardinal Health, Inc. and Subsidiaries
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|
Financial Review
|
|
Cardinal Health, Inc. and Subsidiaries
|
|
Financial Review (continued)
|
|
Revenue
|
|
Change
|
||||||||||||||
(in millions)
|
2014
|
|
2013
|
|
2012
|
|
2014
|
|
2013
|
||||||||
Pharmaceutical
|
$
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80,110
|
|
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$
|
91,097
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|
|
$
|
97,925
|
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(12
|
)%
|
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(7
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)%
|
Medical
|
10,962
|
|
|
10,060
|
|
|
9,642
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|
|
9
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%
|
|
4
|
%
|
|||
Total segment revenue
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91,072
|
|
|
101,157
|
|
|
107,567
|
|
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(10
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)%
|
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(6
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)%
|
|||
Corporate
|
12
|
|
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(64
|
)
|
|
(15
|
)
|
|
N.M.
|
|
|
N.M.
|
|
|||
Total revenue
|
$
|
91,084
|
|
|
$
|
101,093
|
|
|
$
|
107,552
|
|
|
(10
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)%
|
|
(6
|
)%
|
|
Gross Margin
|
|
Change
|
||||||||||||||
(in millions)
|
2014
|
|
2013
|
|
2012
|
|
2014
|
|
2013
|
||||||||
Gross margin
|
$
|
5,161
|
|
|
$
|
4,921
|
|
|
$
|
4,541
|
|
|
5
|
%
|
|
8
|
%
|
|
Cardinal Health, Inc. and Subsidiaries
|
|
Financial Review (continued)
|
|
SG&A Expenses
|
|
Change
|
||||||||||||||
(in millions)
|
2014
|
|
2013
|
|
2012
|
|
2014
|
|
2013
|
||||||||
SG&A expenses
|
$
|
3,028
|
|
|
$
|
2,875
|
|
|
$
|
2,677
|
|
|
5
|
%
|
|
7
|
%
|
(in millions)
|
2014
|
|
2013
|
|
2012
|
||||||
Restructuring and employee severance
|
$
|
31
|
|
|
$
|
71
|
|
|
$
|
21
|
|
Amortization and other acquisition-related costs
|
223
|
|
|
158
|
|
|
33
|
|
|||
Impairments and loss on disposal of assets
|
15
|
|
|
859
|
|
|
21
|
|
|||
Litigation (recoveries)/charges, net
|
(21
|
)
|
|
(38
|
)
|
|
(3
|
)
|
|
Cardinal Health, Inc. and Subsidiaries
|
|
Financial Review (continued)
|
|
Earnings Before Income Taxes
and Discontinued Operations
|
|
Change
|
||||||||||||||
(in millions)
|
2014
|
|
2013
|
|
2012
|
|
2014
|
|
2013
|
||||||||
Other income, net
|
$
|
(46
|
)
|
|
$
|
(15
|
)
|
|
$
|
(1
|
)
|
|
N.M.
|
|
|
N.M.
|
|
Interest expense, net
|
133
|
|
|
123
|
|
|
95
|
|
|
8
|
%
|
|
29
|
%
|
|
2014
|
|
2013
|
|
2012
|
|||
Provision at Federal statutory rate
|
35.0
|
%
|
|
35.0
|
%
|
|
35.0
|
%
|
State and local income taxes, net of federal benefit
|
2.2
|
|
|
2.5
|
|
|
2.3
|
|
Foreign tax rate differential
|
(1.2
|
)
|
|
(4.0
|
)
|
|
(2.2
|
)
|
Nondeductible/nontaxable items
|
(0.2
|
)
|
|
(0.5
|
)
|
|
—
|
|
Nondeductible goodwill impairment
|
—
|
|
|
33.2
|
|
|
—
|
|
Change in measurement of an uncertain tax position and impact of IRS settlements
|
(0.4
|
)
|
|
(5.7
|
)
|
|
0.9
|
|
Other
|
(0.1
|
)
|
|
1.8
|
|
|
1.0
|
|
Effective income tax rate
|
35.3
|
%
|
|
62.3
|
%
|
|
37.0
|
%
|
|
Cardinal Health, Inc. and Subsidiaries
|
|
Financial Review (continued)
|
|
Cardinal Health, Inc. and Subsidiaries
|
|
Financial Review (continued)
|
(in millions)
|
2015
|
|
2016 to
2017
|
|
2018 to
2019
|
|
There-after
|
|
Total
|
||||||||||
Long-term debt and short-term borrowings (1)
|
$
|
800
|
|
|
$
|
787
|
|
|
$
|
560
|
|
|
$
|
1,796
|
|
|
$
|
3,943
|
|
Interest on long-term debt
|
155
|
|
|
236
|
|
|
151
|
|
|
562
|
|
|
1,104
|
|
|||||
Capital lease obligations (2)
|
1
|
|
|
23
|
|
|
2
|
|
|
3
|
|
|
29
|
|
|||||
Other liabilities (3)
|
3
|
|
|
2
|
|
|
—
|
|
|
—
|
|
|
5
|
|
|||||
Operating leases (4)
|
97
|
|
|
140
|
|
|
76
|
|
|
74
|
|
|
387
|
|
|||||
Purchase obligations and other payments (5)
|
275
|
|
|
293
|
|
|
236
|
|
|
513
|
|
|
1,317
|
|
|||||
Total contractual obligations
|
$
|
1,331
|
|
|
$
|
1,481
|
|
|
$
|
1,025
|
|
|
$
|
2,948
|
|
|
$
|
6,785
|
|
(1)
|
Represents maturities of our long-term debt obligations and other short-term borrowings excluding capital lease obligations described below. See Note 7 of the “Notes to Consolidated Financial Statements” for further information.
|
(2)
|
Represents maturities of our capital lease obligations included within long-term debt in our consolidated balance sheets.
|
(3)
|
Represents cash outflows by period for certain of our liabilities in which cash outflows could be reasonably estimated. Long-term liabilities, such as unrecognized tax benefits and deferred taxes, have been excluded from the table above because of the inherent uncertainty of the underlying tax positions or because of the inability to reasonably estimate the timing of any cash outflows. See Note 8 of the “Notes to Consolidated Financial Statements” for further discussion of income taxes.
|
(4)
|
Represents minimum rental payments and the related estimated future interest payments for operating leases having initial or remaining non-cancelable lease terms as described in Note 9 of the “Notes to Consolidated Financial Statements.”
|
(5)
|
A purchase obligation is defined as an agreement to purchase goods or services that is legally enforceable and specifies all significant terms, including fixed or minimum quantities to be purchased; fixed, minimum or variable price provisions; and approximate timing of the transaction. The purchase obligation amounts disclosed above represent estimates of the minimum for which we are obligated and the time period in which cash outflows will occur. Purchase orders and authorizations to purchase that involve no firm commitment from either party are excluded from the above table. In addition, contracts that can be unilaterally canceled with no termination fee or with proper notice are excluded from our total purchase obligations except for the amount of the termination fee or the minimum amount of goods that must be purchased during the requisite notice period. Purchase obligations and other payments also includes
39
quarterly payments of
$25.6 million
that we are required to pay CVS commencing in October 2014 in connection with the establishment of Red Oak Sourcing, but does not include contingent payments that may
|
|
Cardinal Health, Inc. and Subsidiaries
|
|
Financial Review (continued)
|
(in millions, except percentages)
|
2014
|
|
2013
|
|
2012
|
||||||
Allowance for doubtful accounts
|
$
|
156
|
|
|
$
|
152
|
|
|
$
|
143
|
|
Reduction to allowance for customer deductions and write-offs
|
51
|
|
|
34
|
|
|
30
|
|
|||
Charged to costs and expenses
|
51
|
|
|
41
|
|
|
22
|
|
|||
|
|
|
|
|
|
||||||
Allowance as a percentage of customer receivables
|
2.8
|
%
|
|
2.3
|
%
|
|
2.2
|
%
|
|||
Allowance as a percentage of revenue
|
0.17
|
%
|
|
0.15
|
%
|
|
0.13
|
%
|
|
Cardinal Health, Inc. and Subsidiaries
|
|
Financial Review (continued)
|
|
Cardinal Health, Inc. and Subsidiaries
|
|
Financial Review (continued)
|
(in millions)
|
2014
|
|
2013
|
||||
Net deferred income tax assets
|
$
|
444
|
|
|
$
|
510
|
|
Net deferred income tax liabilities
|
1,653
|
|
|
1,638
|
|
||
Loss and credit carryforwards included in net deferred income tax assets
|
191
|
|
|
158
|
|
||
Net valuation allowance against deferred income tax assets (1)
|
94
|
|
|
88
|
|
(1)
|
This valuation allowance primarily relates to federal, state and international loss carryforwards for which the ultimate realization of future benefits is uncertain.
|
|
Cardinal Health, Inc. and Subsidiaries
|
|
|
|
|
(in millions)
|
2014
|
|
2013
|
||||
Net estimated transactional exposure
|
$
|
378
|
|
|
$
|
368
|
|
|
|
|
|
||||
Sensitivity gain/loss
|
$
|
38
|
|
|
$
|
37
|
|
Estimated offsetting impact of hedges
|
(18
|
)
|
|
(17
|
)
|
||
Estimated net gain/loss
|
$
|
20
|
|
|
$
|
20
|
|
(in millions)
|
2014
|
|
2013
|
||||
Net estimated translational exposure
|
$
|
62
|
|
|
$
|
53
|
|
Sensitivity gain/loss
|
6
|
|
|
5
|
|
(in millions)
|
2014
|
|
2013
|
||||
Estimated commodity exposure
|
$
|
321
|
|
|
$
|
369
|
|
|
|
|
|
||||
Sensitivity gain/loss
|
$
|
32
|
|
|
$
|
37
|
|
Estimated offsetting impact of hedges
|
(1
|
)
|
|
(1
|
)
|
||
Estimated net gain/loss
|
$
|
31
|
|
|
$
|
36
|
|
|
Cardinal Health, Inc. and Subsidiaries
|
|
|
|
|
|
Page
|
|
|
Consolidated Financial Statements and Schedule:
|
|
|
Cardinal Health, Inc. and Subsidiaries
|
|
|
|
|
/s/ Ernst & Young LLP
|
|
Columbus, Ohio
|
August 13, 2014
|
|
Cardinal Health, Inc. and Subsidiaries
|
|
|
|
|
(in millions, except per common share amounts)
|
2014
|
|
2013
|
|
2012
|
||||||
Revenue
|
$
|
91,084
|
|
|
$
|
101,093
|
|
|
$
|
107,552
|
|
Cost of products sold
|
85,923
|
|
|
96,172
|
|
|
103,011
|
|
|||
Gross margin
|
5,161
|
|
|
4,921
|
|
|
4,541
|
|
|||
|
|
|
|
|
|
||||||
Operating expenses:
|
|
|
|
|
|
||||||
Distribution, selling, general and administrative expenses
|
3,028
|
|
|
2,875
|
|
|
2,677
|
|
|||
Restructuring and employee severance
|
31
|
|
|
71
|
|
|
21
|
|
|||
Amortization and other acquisition-related costs
|
223
|
|
|
158
|
|
|
33
|
|
|||
Impairments and loss on disposal of assets
|
15
|
|
|
859
|
|
|
21
|
|
|||
Litigation (recoveries)/charges, net
|
(21
|
)
|
|
(38
|
)
|
|
(3
|
)
|
|||
Operating earnings
|
1,885
|
|
|
996
|
|
|
1,792
|
|
|||
|
|
|
|
|
|
||||||
Other income, net
|
(46
|
)
|
|
(15
|
)
|
|
(1
|
)
|
|||
Interest expense, net
|
133
|
|
|
123
|
|
|
95
|
|
|||
Earnings before income taxes and discontinued operations
|
1,798
|
|
|
888
|
|
|
1,698
|
|
|||
|
|
|
|
|
|
||||||
Provision for income taxes
|
635
|
|
|
553
|
|
|
628
|
|
|||
Earnings from continuing operations
|
1,163
|
|
|
335
|
|
|
1,070
|
|
|||
|
|
|
|
|
|
||||||
Earnings/(loss) from discontinued operations, net of tax
|
3
|
|
|
(1
|
)
|
|
(1
|
)
|
|||
Net earnings
|
$
|
1,166
|
|
|
$
|
334
|
|
|
$
|
1,069
|
|
|
|
|
|
|
|
||||||
Basic earnings per common share:
|
|
|
|
|
|
||||||
Continuing operations
|
$
|
3.41
|
|
|
$
|
0.98
|
|
|
$
|
3.10
|
|
Discontinued operations
|
0.01
|
|
|
—
|
|
|
—
|
|
|||
Net basic earnings per common share
|
$
|
3.42
|
|
|
$
|
0.98
|
|
|
$
|
3.10
|
|
|
|
|
|
|
|
||||||
Diluted earnings per common share:
|
|
|
|
|
|
||||||
Continuing operations
|
$
|
3.37
|
|
|
$
|
0.97
|
|
|
$
|
3.06
|
|
Discontinued operations
|
0.01
|
|
|
—
|
|
|
—
|
|
|||
Net diluted earnings per common share
|
$
|
3.38
|
|
|
$
|
0.97
|
|
|
$
|
3.06
|
|
|
|
|
|
|
|
||||||
Weighted-average number of common shares outstanding:
|
|
|
|
|
|
||||||
Basic
|
341
|
|
|
341
|
|
|
345
|
|
|||
Diluted
|
345
|
|
|
344
|
|
|
349
|
|
|
Cardinal Health, Inc. and Subsidiaries
|
|
|
|
|
(in millions)
|
2014
|
|
2013
|
|
2012
|
||||||
Net earnings
|
$
|
1,166
|
|
|
$
|
334
|
|
|
$
|
1,069
|
|
|
|
|
|
|
|
||||||
Other comprehensive income/(loss):
|
|
|
|
|
|
||||||
Net change in foreign currency translation adjustments
|
9
|
|
|
18
|
|
|
(34
|
)
|
|||
Net unrealized gain/(loss) on derivative instruments, net of tax
|
(7
|
)
|
|
13
|
|
|
(6
|
)
|
|||
Total other comprehensive income/(loss), net of tax
|
2
|
|
|
31
|
|
|
(40
|
)
|
|||
Total comprehensive income
|
$
|
1,168
|
|
|
$
|
365
|
|
|
$
|
1,029
|
|
|
Cardinal Health, Inc. and Subsidiaries
|
|
|
|
|
|
June 30
|
||||||
(in millions)
|
2014
|
|
2013
|
||||
Assets
|
|
|
|
||||
Current assets:
|
|
|
|
||||
Cash and equivalents
|
$
|
2,865
|
|
|
$
|
1,901
|
|
Trade receivables, net
|
5,380
|
|
|
6,304
|
|
||
Inventories, net
|
8,266
|
|
|
8,373
|
|
||
Prepaid expenses and other
|
1,428
|
|
|
1,192
|
|
||
Total current assets
|
17,939
|
|
|
17,770
|
|
||
|
|
|
|
||||
Property and equipment, net
|
1,459
|
|
|
1,489
|
|
||
Goodwill and other intangibles, net
|
5,870
|
|
|
5,574
|
|
||
Other assets
|
765
|
|
|
986
|
|
||
Total assets
|
$
|
26,033
|
|
|
$
|
25,819
|
|
|
|
|
|
||||
Liabilities and Shareholders’ Equity
|
|
|
|
||||
Current liabilities:
|
|
|
|
||||
Accounts payable
|
$
|
12,149
|
|
|
$
|
12,295
|
|
Current portion of long-term obligations and other short-term borrowings
|
801
|
|
|
168
|
|
||
Other accrued liabilities
|
2,165
|
|
|
2,127
|
|
||
Total current liabilities
|
15,115
|
|
|
14,590
|
|
||
|
|
|
|
||||
Long-term obligations, less current portion
|
3,171
|
|
|
3,686
|
|
||
Deferred income taxes and other liabilities
|
1,346
|
|
|
1,568
|
|
||
|
|
|
|
||||
Shareholders’ equity:
|
|
|
|
||||
Preferred shares, without par value:
|
|
|
|
||||
Authorized—
500 thousand
shares, Issued—
none
|
—
|
|
|
—
|
|
||
Common shares, without par value:
|
|
|
|
||||
Authorized—
755 million
shares, Issued—
364 million
shares at
June 30, 2014
and 2013
|
2,980
|
|
|
2,953
|
|
||
Retained earnings
|
4,774
|
|
|
4,038
|
|
||
Common shares in treasury, at cost:
27 million
shares and 25 million shares at
June 30, 2014
and 2013, respectively
|
(1,423
|
)
|
|
(1,084
|
)
|
||
Accumulated other comprehensive income
|
70
|
|
|
68
|
|
||
Total shareholders’ equity
|
6,401
|
|
|
5,975
|
|
||
Total liabilities and shareholders’ equity
|
$
|
26,033
|
|
|
$
|
25,819
|
|
|
Cardinal Health, Inc. and Subsidiaries
|
|
|
|
|
|
Common Shares
|
|
|
|
Treasury Shares
|
|
Accumulated Other
Comprehensive Income/(Loss) |
|
Total
Shareholders’ Equity |
||||||||||||||||
(in millions)
|
Shares Issued
|
|
Amount
|
|
Retained
Earnings |
|
Shares
|
|
Amount
|
|
|
||||||||||||||
Balance at June 30, 2011
|
364
|
|
|
$
|
2,898
|
|
|
$
|
3,331
|
|
|
(12
|
)
|
|
$
|
(457
|
)
|
|
$
|
77
|
|
|
$
|
5,849
|
|
Net earnings
|
|
|
|
|
1,069
|
|
|
|
|
|
|
|
|
1,069
|
|
||||||||||
Other comprehensive loss, net of tax
|
|
|
|
|
|
|
|
|
|
|
(40
|
)
|
|
(40
|
)
|
||||||||||
Employee stock plans activity, including tax impact of $4 million
|
—
|
|
|
32
|
|
|
|
|
1
|
|
|
91
|
|
|
|
|
123
|
|
|||||||
Treasury shares acquired
|
|
|
|
|
|
|
(10
|
)
|
|
(450
|
)
|
|
|
|
(450
|
)
|
|||||||||
Dividends declared
|
|
|
|
|
(307
|
)
|
|
|
|
|
|
|
|
(307
|
)
|
||||||||||
Balance at June 30, 2012
|
364
|
|
|
2,930
|
|
|
4,093
|
|
|
(21
|
)
|
|
(816
|
)
|
|
37
|
|
|
6,244
|
|
|||||
Net earnings
|
|
|
|
|
334
|
|
|
|
|
|
|
|
|
334
|
|
||||||||||
Other comprehensive income, net of tax
|
|
|
|
|
|
|
|
|
|
|
31
|
|
|
31
|
|
||||||||||
Employee stock plans activity, including tax impact of $19 million
|
—
|
|
|
23
|
|
|
|
|
6
|
|
|
182
|
|
|
|
|
205
|
|
|||||||
Treasury shares acquired
|
|
|
|
|
|
|
(10
|
)
|
|
(450
|
)
|
|
|
|
(450
|
)
|
|||||||||
Dividends declared
|
|
|
|
|
(374
|
)
|
|
|
|
|
|
|
|
(374
|
)
|
||||||||||
Other
|
|
|
|
|
(15
|
)
|
|
|
|
|
|
|
|
(15
|
)
|
||||||||||
Balance at June 30, 2013
|
364
|
|
|
2,953
|
|
|
4,038
|
|
|
(25
|
)
|
|
(1,084
|
)
|
|
68
|
|
|
5,975
|
|
|||||
Net earnings
|
|
|
|
|
1,166
|
|
|
|
|
|
|
|
|
1,166
|
|
||||||||||
Other comprehensive income, net of tax
|
|
|
|
|
|
|
|
|
|
|
2
|
|
|
2
|
|
||||||||||
Employee stock plans activity, including tax impact of $39 million
|
—
|
|
|
27
|
|
|
|
|
8
|
|
|
334
|
|
|
|
|
361
|
|
|||||||
Treasury shares acquired
|
|
|
|
|
|
|
(10
|
)
|
|
(673
|
)
|
|
|
|
(673
|
)
|
|||||||||
Dividends declared
|
|
|
|
|
(430
|
)
|
|
|
|
|
|
|
|
(430
|
)
|
||||||||||
Balance at June 30, 2014
|
364
|
|
|
$
|
2,980
|
|
|
$
|
4,774
|
|
|
(27
|
)
|
|
$
|
(1,423
|
)
|
|
$
|
70
|
|
|
$
|
6,401
|
|
|
Cardinal Health, Inc. and Subsidiaries
|
|
|
|
|
(in millions)
|
2014
|
|
2013
|
|
2012
|
||||||
Cash flows from operating activities:
|
|
|
|
|
|
||||||
Net earnings
|
$
|
1,166
|
|
|
$
|
334
|
|
|
$
|
1,069
|
|
(Earnings)/loss from discontinued operations, net of tax
|
(3
|
)
|
|
1
|
|
|
1
|
|
|||
Earnings from continuing operations
|
1,163
|
|
|
335
|
|
|
1,070
|
|
|||
|
|
|
|
|
|
||||||
Adjustments to reconcile earnings from continuing operations to net cash provided by operating activities:
|
|
|
|
|
|
||||||
Depreciation and amortization
|
459
|
|
|
397
|
|
|
325
|
|
|||
Gain on sale of investments
|
(32
|
)
|
|
—
|
|
|
—
|
|
|||
Impairments and loss on disposal of assets
|
15
|
|
|
859
|
|
|
21
|
|
|||
Share-based compensation
|
96
|
|
|
93
|
|
|
85
|
|
|||
Provision for deferred income taxes
|
26
|
|
|
21
|
|
|
158
|
|
|||
Provision for bad debts
|
42
|
|
|
31
|
|
|
22
|
|
|||
Change in fair value of contingent consideration obligation
|
—
|
|
|
—
|
|
|
(71
|
)
|
|||
Change in operating assets and liabilities, net of effects from acquisitions:
|
|
|
|
|
|
||||||
Decrease/(increase) in trade receivables
|
925
|
|
|
216
|
|
|
(129
|
)
|
|||
Decrease/(increase) in inventories
|
142
|
|
|
(370
|
)
|
|
(495
|
)
|
|||
Increase/(decrease) in accounts payable
|
(196
|
)
|
|
426
|
|
|
319
|
|
|||
Other accrued liabilities and operating items, net
|
(116
|
)
|
|
(281
|
)
|
|
(129
|
)
|
|||
Net cash provided by operating activities
|
2,524
|
|
|
1,727
|
|
|
1,176
|
|
|||
|
|
|
|
|
|
||||||
Cash flows from investing activities:
|
|
|
|
|
|
||||||
Acquisition of subsidiaries, net of cash acquired
|
(519
|
)
|
|
(2,239
|
)
|
|
(174
|
)
|
|||
Additions to property and equipment
|
(249
|
)
|
|
(195
|
)
|
|
(260
|
)
|
|||
Purchase of available-for-sale securities, held-to-maturity securities and other investments
|
(129
|
)
|
|
(12
|
)
|
|
(35
|
)
|
|||
Proceeds from sale of investments
|
47
|
|
|
—
|
|
|
—
|
|
|||
Proceeds from maturities of held-to-maturity securities
|
—
|
|
|
71
|
|
|
92
|
|
|||
Net cash used in investing activities
|
(850
|
)
|
|
(2,375
|
)
|
|
(377
|
)
|
|||
|
|
|
|
|
|
||||||
Cash flows from financing activities:
|
|
|
|
|
|
||||||
Payment of contingent consideration obligation
|
—
|
|
|
(4
|
)
|
|
—
|
|
|||
Net change in short-term borrowings
|
114
|
|
|
(1
|
)
|
|
13
|
|
|||
Reduction of long-term obligations
|
(2
|
)
|
|
(305
|
)
|
|
(251
|
)
|
|||
Proceeds from long-term obligations, net of issuance costs
|
—
|
|
|
1,286
|
|
|
496
|
|
|||
Net proceeds from issuance of common shares
|
227
|
|
|
121
|
|
|
42
|
|
|||
Tax proceeds/(disbursements) from share-based compensation
|
39
|
|
|
(19
|
)
|
|
(4
|
)
|
|||
Dividends on common shares
|
(415
|
)
|
|
(353
|
)
|
|
(300
|
)
|
|||
Purchase of treasury shares
|
(673
|
)
|
|
(450
|
)
|
|
(450
|
)
|
|||
Net cash provided by/(used in) financing activities
|
(710
|
)
|
|
275
|
|
|
(454
|
)
|
|||
|
|
|
|
|
|
||||||
Net increase/(decrease) in cash and equivalents
|
964
|
|
|
(373
|
)
|
|
345
|
|
|||
Cash and equivalents at beginning of period
|
1,901
|
|
|
2,274
|
|
|
1,929
|
|
|||
Cash and equivalents at end of period
|
$
|
2,865
|
|
|
$
|
1,901
|
|
|
$
|
2,274
|
|
|
|
|
|
|
|
||||||
Supplemental information:
|
|
|
|
|
|
||||||
Cash payments for interest
|
$
|
152
|
|
|
$
|
128
|
|
|
$
|
118
|
|
Cash payments for income taxes
|
632
|
|
|
899
|
|
|
513
|
|
|
Cardinal Health, Inc. and Subsidiaries
|
|
Notes to Consolidated Financial Statements
|
|
Cardinal Health, Inc. and Subsidiaries
|
|
Notes to Consolidated Financial Statements (continued)
|
|
Percent of Revenue
|
|
Percent of Gross Trade Receivables at June 30
|
|||||||||||
|
2014
|
|
2013
|
|
2012
|
|
2014
|
|
2013
|
|||||
CVS
|
28
|
%
|
|
23
|
%
|
|
22
|
%
|
|
22
|
%
|
|
19
|
%
|
Walgreen Co.
|
4
|
%
|
|
20
|
%
|
|
21
|
%
|
|
—
|
%
|
|
24
|
%
|
|
Cardinal Health, Inc. and Subsidiaries
|
|
Notes to Consolidated Financial Statements (continued)
|
(in millions)
|
2014
|
|
2013
|
||||
Land, building and improvements
|
$
|
1,419
|
|
|
$
|
1,398
|
|
Machinery and equipment
|
2,326
|
|
|
2,149
|
|
||
Furniture and fixtures
|
125
|
|
|
122
|
|
||
Total property and equipment, at cost
|
3,870
|
|
|
3,669
|
|
||
Accumulated depreciation and amortization
|
(2,411
|
)
|
|
(2,180
|
)
|
||
Property and equipment, net
|
$
|
1,459
|
|
|
$
|
1,489
|
|
|
Cardinal Health, Inc. and Subsidiaries
|
|
Notes to Consolidated Financial Statements (continued)
|
|
Cardinal Health, Inc. and Subsidiaries
|
|
Notes to Consolidated Financial Statements (continued)
|
|
Cardinal Health, Inc. and Subsidiaries
|
|
Notes to Consolidated Financial Statements (continued)
|
|
Cardinal Health, Inc. and Subsidiaries
|
|
Notes to Consolidated Financial Statements (continued)
|
Level 1 -
|
Observable prices in active markets for identical assets and liabilities.
|
Level 2 -
|
Observable inputs other than quoted prices in active markets for identical assets and liabilities.
|
Level 3 -
|
Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets and liabilities.
|
|
Cardinal Health, Inc. and Subsidiaries
|
|
Notes to Consolidated Financial Statements (continued)
|
(in millions)
|
Amount
|
|
Weighted-Average Useful Lives of Identifiable Intangible Assets
|
||
Identifiable intangible assets:
|
|
|
|
||
Customer relationships
|
$
|
460
|
|
|
9
|
Trade names
|
160
|
|
|
11
|
|
Other
|
7
|
|
|
3
|
|
Total identifiable intangible assets
|
627
|
|
|
9
|
|
|
|
|
|
||
Cash and equivalents
|
25
|
|
|
|
|
Trade receivables
|
103
|
|
|
|
|
Inventories
|
69
|
|
|
|
|
Prepaid expenses and other
|
102
|
|
|
|
|
Property and equipment
|
40
|
|
|
|
|
Accounts payable
|
(71
|
)
|
|
|
|
Other accrued liabilities
|
(24
|
)
|
|
|
|
Deferred income taxes and other liabilities
|
(180
|
)
|
|
|
|
Total identifiable net assets acquired
|
691
|
|
|
|
|
Goodwill
|
1,404
|
|
|
|
|
Total net assets acquired
|
$
|
2,095
|
|
|
|
|
Cardinal Health, Inc. and Subsidiaries
|
|
Notes to Consolidated Financial Statements (continued)
|
(in millions)
|
2014 (3)
|
|
2013 (4)
|
|
2012
|
||||||
Employee-related costs (1)
|
$
|
13
|
|
|
$
|
59
|
|
|
$
|
20
|
|
Facility exit and other costs (2)
|
18
|
|
|
12
|
|
|
1
|
|
|||
Total restructuring and employee severance
|
$
|
31
|
|
|
$
|
71
|
|
|
$
|
21
|
|
(1)
|
Employee-related costs primarily consist of termination benefits provided to employees who have been involuntarily terminated and duplicate payroll costs during transition periods.
|
(2)
|
Facility exit and other costs primarily consist of lease termination costs, accelerated depreciation, equipment relocation costs, project consulting fees and costs associated with restructuring our delivery of information technology infrastructure services.
|
(3)
|
Includes
$10 million
of primarily facility exit and other costs related to the restructuring within our Medical segment described further below.
|
(4)
|
Includes
$30 million
of employee-related costs and
$10 million
of facility exit and other costs related to the restructuring within our Medical segment described further below.
|
(in millions)
|
Employee-
Related Costs
|
|
Facility Exit
and Other Costs
|
|
Total
|
||||||
Balance at June 30, 2011
|
$
|
6
|
|
|
$
|
4
|
|
|
$
|
10
|
|
Additions
|
22
|
|
|
1
|
|
|
23
|
|
|||
Payments and other adjustments
|
(12
|
)
|
|
(3
|
)
|
|
(15
|
)
|
|||
Balance at June 30, 2012
|
$
|
16
|
|
|
$
|
2
|
|
|
$
|
18
|
|
Additions
|
63
|
|
|
2
|
|
|
65
|
|
|||
Payments and other adjustments
|
(24
|
)
|
|
(2
|
)
|
|
(26
|
)
|
|||
Balance at June 30, 2013
|
$
|
55
|
|
|
$
|
2
|
|
|
$
|
57
|
|
Additions
|
23
|
|
|
1
|
|
|
24
|
|
|||
Payments and other adjustments
|
(54
|
)
|
|
(3
|
)
|
|
(57
|
)
|
|||
Balance at June 30, 2014
|
$
|
24
|
|
|
$
|
—
|
|
|
$
|
24
|
|
|
Cardinal Health, Inc. and Subsidiaries
|
|
Notes to Consolidated Financial Statements (continued)
|
(in millions)
|
Pharmaceutical (1)
|
|
Medical
|
|
Total
|
||||||
Balance at June 30, 2012
|
$
|
2,876
|
|
|
$
|
1,102
|
|
|
$
|
3,978
|
|
Goodwill acquired, net of purchase price adjustments
|
40
|
|
|
1,409
|
|
|
1,449
|
|
|||
Foreign currency translation adjustments and other
|
7
|
|
|
(4
|
)
|
|
3
|
|
|||
Impairment
|
(829
|
)
|
|
—
|
|
|
(829
|
)
|
|||
Balance at June 30, 2013
|
$
|
2,094
|
|
|
$
|
2,507
|
|
|
$
|
4,601
|
|
Goodwill acquired, net of purchase price adjustments
|
68
|
|
|
216
|
|
|
284
|
|
|||
Foreign currency translation adjustments and other
|
(4
|
)
|
|
(3
|
)
|
|
(7
|
)
|
|||
Balance at June 30, 2014
|
$
|
2,158
|
|
|
$
|
2,720
|
|
|
$
|
4,878
|
|
(1)
|
At
June 30, 2014
and
2013
, the accumulated goodwill impairment loss was
$829 million
.
|
|
2014
|
||||||||||
(in millions)
|
Gross
Intangible
|
|
Accumulated
Amortization
|
|
Net
Intangible
|
||||||
Indefinite-life intangibles:
|
|
|
|
|
|
||||||
Trademarks and other
|
$
|
14
|
|
|
$
|
—
|
|
|
$
|
14
|
|
Total indefinite-life intangibles
|
14
|
|
|
—
|
|
|
14
|
|
|||
|
|
|
|
|
|
||||||
Definite-life intangibles:
|
|
|
|
|
|
||||||
Customer relationships
|
1,043
|
|
|
388
|
|
|
655
|
|
|||
Trademarks, trade names and patents
|
213
|
|
|
69
|
|
|
144
|
|
|||
Non-compete agreements
|
15
|
|
|
11
|
|
|
4
|
|
|||
Developed technology and other
|
243
|
|
|
68
|
|
|
175
|
|
|||
Total definite-life intangibles
|
1,514
|
|
|
536
|
|
|
978
|
|
|||
Total other intangible assets
|
$
|
1,528
|
|
|
$
|
536
|
|
|
$
|
992
|
|
|
Cardinal Health, Inc. and Subsidiaries
|
|
Notes to Consolidated Financial Statements (continued)
|
|
2013
|
||||||||||
(in millions)
|
Gross
Intangible
|
|
Accumulated
Amortization
|
|
Net
Intangible
|
||||||
Indefinite-life intangibles:
|
|
|
|
|
|
||||||
Trademarks and other
|
$
|
11
|
|
|
$
|
—
|
|
|
$
|
11
|
|
Total indefinite-life intangibles
|
11
|
|
|
—
|
|
|
11
|
|
|||
|
|
|
|
|
|
||||||
Definite-life intangibles:
|
|
|
|
|
|
||||||
Customer relationships
|
982
|
|
|
230
|
|
|
752
|
|
|||
Trademarks, trade names and patents
|
209
|
|
|
49
|
|
|
160
|
|
|||
Non-compete agreements
|
15
|
|
|
10
|
|
|
5
|
|
|||
Developed technology and other
|
101
|
|
|
56
|
|
|
45
|
|
|||
Total definite-life intangibles
|
1,307
|
|
|
345
|
|
|
962
|
|
|||
Total other intangible assets
|
$
|
1,318
|
|
|
$
|
345
|
|
|
$
|
973
|
|
(in millions)
|
2014
|
||
Current available-for-sale securities:
|
|
||
Commercial paper
|
$
|
4
|
|
Treasury bills
|
85
|
|
|
International bonds
|
1
|
|
|
Corporate bonds
|
3
|
|
|
Total current available-for-sale securities
|
93
|
|
|
|
|
||
Long-term available-for-sale securities:
|
|
||
Corporate bonds
|
5
|
|
|
U.S. agency bonds
|
2
|
|
|
Total long-term available-for-sale securities
|
7
|
|
|
Total available-for-sale securities
|
$
|
100
|
|
(in millions)
|
2014
|
|
2013
|
||||
1.7% Notes due 2018
|
$
|
401
|
|
|
$
|
399
|
|
1.9% Notes due 2017
|
251
|
|
|
250
|
|
||
3.2% Notes due 2022
|
248
|
|
|
247
|
|
||
3.2% Notes due 2023
|
549
|
|
|
549
|
|
||
4.0% Notes due 2015
|
513
|
|
|
524
|
|
||
4.6% Notes due 2043
|
349
|
|
|
349
|
|
||
4.625% Notes due 2020
|
525
|
|
|
527
|
|
||
5.8% Notes due 2016
|
301
|
|
|
301
|
|
||
5.85% Notes due 2017
|
158
|
|
|
157
|
|
||
6.0% Notes due 2017
|
197
|
|
|
200
|
|
||
7.0% Debentures due 2026
|
124
|
|
|
124
|
|
||
7.8% Debentures due 2016
|
37
|
|
|
37
|
|
||
Other obligations
|
319
|
|
|
190
|
|
||
Total
|
$
|
3,972
|
|
|
$
|
3,854
|
|
Less: current portion of long-term obligations and other short-term borrowings
|
801
|
|
|
168
|
|
||
Long-term obligations, less current portion
|
$
|
3,171
|
|
|
$
|
3,686
|
|
|
Cardinal Health, Inc. and Subsidiaries
|
|
Notes to Consolidated Financial Statements (continued)
|
(in millions)
|
2014
|
|
2013
|
|
2012
|
||||||
U.S. Operations
|
$
|
1,665
|
|
|
$
|
651
|
|
|
$
|
1,514
|
|
Non-U.S. Operations
|
133
|
|
|
237
|
|
|
184
|
|
|||
Earnings before income taxes and discontinued operations
|
$
|
1,798
|
|
|
$
|
888
|
|
|
$
|
1,698
|
|
(in millions)
|
2014
|
|
2013
|
|
2012
|
||||||
Current:
|
|
|
|
|
|
||||||
Federal
|
$
|
521
|
|
|
$
|
451
|
|
|
$
|
430
|
|
State and local
|
51
|
|
|
62
|
|
|
27
|
|
|||
Non-U.S.
|
37
|
|
|
19
|
|
|
13
|
|
|||
Total current
|
$
|
609
|
|
|
$
|
532
|
|
|
$
|
470
|
|
|
|
|
|
|
|
||||||
Deferred:
|
|
|
|
|
|
||||||
Federal
|
$
|
24
|
|
|
$
|
28
|
|
|
$
|
124
|
|
State and local
|
3
|
|
|
(5
|
)
|
|
28
|
|
|||
Non-U.S.
|
(1
|
)
|
|
(2
|
)
|
|
6
|
|
|||
Total deferred
|
26
|
|
|
21
|
|
|
158
|
|
|||
Provision for income taxes
|
$
|
635
|
|
|
$
|
553
|
|
|
$
|
628
|
|
|
Cardinal Health, Inc. and Subsidiaries
|
|
Notes to Consolidated Financial Statements (continued)
|
|
2014
|
|
2013
|
|
2012
|
|||
Provision at Federal statutory rate
|
35.0
|
%
|
|
35.0
|
%
|
|
35.0
|
%
|
State and local income taxes, net of federal benefit
|
2.2
|
|
|
2.5
|
|
|
2.3
|
|
Foreign tax rate differential
|
(1.2
|
)
|
|
(4.0
|
)
|
|
(2.2
|
)
|
Nondeductible/nontaxable items
|
(0.2
|
)
|
|
(0.5
|
)
|
|
—
|
|
Nondeductible goodwill impairment
|
—
|
|
|
33.2
|
|
|
—
|
|
Change in measurement of an uncertain tax position and impact of IRS settlements
|
(0.4
|
)
|
|
(5.7
|
)
|
|
0.9
|
|
Other
|
(0.1
|
)
|
|
1.8
|
|
|
1.0
|
|
Effective income tax rate
|
35.3
|
%
|
|
62.3
|
%
|
|
37.0
|
%
|
(in millions)
|
2014
|
|
2013
|
||||
Deferred income tax assets:
|
|
|
|
||||
Receivable basis difference
|
$
|
59
|
|
|
$
|
50
|
|
Accrued liabilities
|
111
|
|
|
115
|
|
||
Share-based compensation
|
51
|
|
|
66
|
|
||
Loss and tax credit carryforwards
|
191
|
|
|
158
|
|
||
Deferred tax assets related to uncertain tax positions
|
84
|
|
|
127
|
|
||
Other
|
42
|
|
|
82
|
|
||
Total deferred income tax assets
|
538
|
|
|
598
|
|
||
Valuation allowance for deferred income tax assets
|
(94
|
)
|
|
(88
|
)
|
||
Net deferred income tax assets
|
$
|
444
|
|
|
$
|
510
|
|
|
|
|
|
||||
Deferred income tax liabilities:
|
|
|
|
||||
Inventory basis differences
|
$
|
(1,164
|
)
|
|
$
|
(1,160
|
)
|
Property-related
|
(142
|
)
|
|
(173
|
)
|
||
Goodwill and other intangibles
|
(340
|
)
|
|
(299
|
)
|
||
Other
|
(7
|
)
|
|
(6
|
)
|
||
Total deferred income tax liabilities
|
(1,653
|
)
|
|
(1,638
|
)
|
||
Net deferred income tax liability
|
$
|
(1,209
|
)
|
|
$
|
(1,128
|
)
|
|
Cardinal Health, Inc. and Subsidiaries
|
|
Notes to Consolidated Financial Statements (continued)
|
(in millions)
|
2014
|
|
2013
|
||||
Current deferred income tax asset (1)
|
$
|
18
|
|
|
$
|
15
|
|
Noncurrent deferred income tax asset (2)
|
15
|
|
|
17
|
|
||
Current deferred income tax liability (3)
|
(918
|
)
|
|
(908
|
)
|
||
Noncurrent deferred income tax liability (4)
|
(324
|
)
|
|
(252
|
)
|
||
Net deferred income tax liability
|
$
|
(1,209
|
)
|
|
$
|
(1,128
|
)
|
(1)
|
Included in prepaid expenses and other in the consolidated balance sheets.
|
(2)
|
Included in other assets in the consolidated balance sheets.
|
(3)
|
Included in other accrued liabilities in the consolidated balance sheets.
|
(4)
|
Included in deferred income taxes and other liabilities in the consolidated balance sheets.
|
(in millions)
|
2014
|
|
2013
|
|
2012
|
||||||
Balance at beginning of fiscal year
|
$
|
650
|
|
|
$
|
654
|
|
|
$
|
747
|
|
Additions for tax positions of the current year
|
16
|
|
|
22
|
|
|
16
|
|
|||
Additions for tax positions of prior years
|
94
|
|
|
97
|
|
|
68
|
|
|||
Reductions for tax positions of prior years
|
(40
|
)
|
|
(30
|
)
|
|
(3
|
)
|
|||
Settlements with tax authorities
|
(210
|
)
|
|
(93
|
)
|
|
(172
|
)
|
|||
Expiration of the statute of limitations
|
—
|
|
|
—
|
|
|
(2
|
)
|
|||
Balance at end of fiscal year
|
$
|
510
|
|
|
$
|
650
|
|
|
$
|
654
|
|
|
Cardinal Health, Inc. and Subsidiaries
|
|
Notes to Consolidated Financial Statements (continued)
|
|
Cardinal Health, Inc. and Subsidiaries
|
|
Notes to Consolidated Financial Statements (continued)
|
|
2014
|
||||||||||||||
(in millions)
|
Level 1
|
|
Level 2
|
|
Level 3
|
|
Total
|
||||||||
Cash equivalents (1)
|
$
|
740
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
740
|
|
Forward contracts (2)
|
—
|
|
|
10
|
|
|
—
|
|
|
10
|
|
||||
Available-for-sale securities (3)
|
—
|
|
|
100
|
|
|
—
|
|
|
100
|
|
||||
Other investments (4)
|
106
|
|
|
—
|
|
|
—
|
|
|
106
|
|
||||
Total
|
$
|
846
|
|
|
$
|
110
|
|
|
$
|
—
|
|
|
$
|
956
|
|
|
2013
|
||||||||||||||
(in millions)
|
Level 1
|
|
Level 2
|
|
Level 3
|
|
Total
|
||||||||
Cash equivalents (1)
|
$
|
348
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
348
|
|
Forward contracts (2)
|
—
|
|
|
12
|
|
|
—
|
|
|
12
|
|
||||
Other investments (4)
|
89
|
|
|
—
|
|
|
—
|
|
|
89
|
|
||||
Total
|
$
|
437
|
|
|
$
|
12
|
|
|
$
|
—
|
|
|
$
|
449
|
|
(1)
|
Cash equivalents are comprised of highly liquid investments purchased with a maturity of three months or less. The carrying value of these cash equivalents approximates fair value due to their short-term maturities.
|
(2)
|
The fair value of interest rate swaps, foreign currency contracts and commodity contracts is determined based on the present value of expected future cash flows considering the risks involved, including non-performance risk, and using discount rates appropriate for the respective maturities. Observable level 2 inputs are used to determine the present value of expected future cash flows. The fair value of these derivative contracts, which are subject to master netting arrangements under certain circumstances, is presented on a gross basis in the consolidated balance sheets.
|
(3)
|
During fiscal
2014
, we purchased marketable securities, which are class
ified as available-
for-sale and are carried at fair value in the consolidated balance sheets. Observable level 2 inputs such as quoted prices for similar securities, interest rate spreads, yield curves and credit
|
(4)
|
The other investments balance includes investments in mutual funds, which are used to offset fluctuations in defer
red compensation liabilities. These mutual funds primarily invest in the equity securities of companies with large market capitalization
and high quality fixed income debt securities. The fair value of these investments is determined using quoted market prices.
|
|
Cardinal Health, Inc. and Subsidiaries
|
|
Notes to Consolidated Financial Statements (continued)
|
(in millions)
|
2014
|
|
2013
|
||||
Assets:
|
|
|
|
||||
Foreign currency contracts (1)
|
$
|
1
|
|
|
$
|
4
|
|
Forward interest rate swaps (1)
|
10
|
|
|
—
|
|
||
Forward interest rate swaps (2)
|
—
|
|
|
20
|
|
||
Pay-floating interest rate swaps (2)
|
5
|
|
|
—
|
|
||
Commodity contracts (2)
|
1
|
|
|
—
|
|
||
Total assets
|
$
|
17
|
|
|
$
|
24
|
|
|
|
|
|
||||
Liabilities:
|
|
|
|
||||
Foreign currency contracts (3)
|
$
|
1
|
|
|
$
|
1
|
|
Forward interest rate swaps (4)
|
1
|
|
|
—
|
|
||
Pay-floating interest rate swaps (4)
|
5
|
|
|
11
|
|
||
Total liabilities
|
$
|
7
|
|
|
$
|
12
|
|
(1)
|
Included in prepaid expenses and other in the consolidated balance sheets.
|
(2)
|
Included in other assets in the consolidated balance sheets.
|
(3)
|
Included in other accrued liabilities in the consolidated balance sheets.
|
(4)
|
Included in deferred income taxes and other liabilities in the consolidated balance sheets.
|
|
2014
|
||||||
(in millions)
|
Notional Amount
|
|
Maturity Date
|
||||
Pay-floating interest rate swaps
|
$
|
1,438
|
|
|
Jun 2015
|
-
|
Jun 2022
|
|
2013
|
||||||
(in millions)
|
Notional Amount
|
|
Maturity Date
|
||||
Pay-floating interest rate swaps
|
$
|
1,138
|
|
|
Jun 2015
|
-
|
Jun 2022
|
(in millions)
|
2014
|
|
2013
|
|
2012
|
||||||
Pay-floating interest rate swaps (1)
|
$
|
23
|
|
|
$
|
28
|
|
|
$
|
38
|
|
Fixed-rate debt (1)
|
(23
|
)
|
|
(28
|
)
|
|
(38
|
)
|
(1)
|
Included in interest expense, net in the consolidated statements of earnings.
|
|
Cardinal Health, Inc. and Subsidiaries
|
|
Notes to Consolidated Financial Statements (continued)
|
|
2014
|
||||||
(in millions)
|
Notional Amount
|
|
Maturity Date
|
||||
Forward interest rate swaps
|
$
|
300
|
|
|
Jun 2025
|
-
|
Oct 2026
|
Foreign currency contracts
|
182
|
|
|
Jul 2014
|
-
|
Jun 2015
|
|
Commodity contracts
|
24
|
|
|
Jul 2014
|
-
|
Mar 2017
|
|
2013
|
||||||
(in millions)
|
Notional Amount
|
|
Maturity Date
|
||||
Forward interest rate swaps
|
$
|
250
|
|
|
Jun 2025
|
||
Foreign currency contracts
|
164
|
|
|
Jul 2013
|
-
|
Jun 2014
|
|
Commodity contracts
|
24
|
|
|
Jul 2013
|
-
|
Mar 2016
|
(in millions)
|
2014
|
|
2013
|
||||
Forward interest rate swaps
|
$
|
9
|
|
|
$
|
20
|
|
Commodity contracts
|
1
|
|
|
—
|
|
||
Foreign currency contracts
|
(1
|
)
|
|
3
|
|
(in millions)
|
2014
|
|
2013
|
|
2012
|
||||||
Foreign currency contracts (1)
|
$
|
—
|
|
|
$
|
1
|
|
|
$
|
1
|
|
Foreign currency contracts (2)
|
2
|
|
|
1
|
|
|
(1
|
)
|
|||
Foreign currency contracts (3)
|
1
|
|
|
1
|
|
|
(1
|
)
|
|||
Commodity contracts (3)
|
—
|
|
|
1
|
|
|
2
|
|
|||
Forward interest rate swaps (4)
|
—
|
|
|
1
|
|
|
—
|
|
(1)
|
Included in revenue in the consolidated statements of earnings.
|
(2)
|
Included in cost of products sold in the consolidated statements of earnings.
|
(3)
|
Included in SG&A expenses in the consolidated statements of earnings.
|
(4)
|
Included in interest expense, net in the consolidated statements of earnings.
|
|
2014
|
||||||
(in millions)
|
Notional Amount
|
|
Maturity Date
|
||||
Foreign currency contracts
|
$
|
461
|
|
|
Jul 2014
|
-
|
Sep 2014
|
|
2013
|
||||||
(in millions)
|
Notional Amount
|
|
Maturity Date
|
||||
Foreign currency contracts
|
$
|
479
|
|
|
Jul 2013
|
-
|
Sep 2013
|
(in millions)
|
2014
|
|
2013
|
|
2012
|
||||||
Foreign currency contracts (1)
|
$
|
12
|
|
|
$
|
6
|
|
|
$
|
(39
|
)
|
Commodity contracts (1)
|
—
|
|
|
—
|
|
|
(1
|
)
|
(1)
|
Included in other income, net in the consolidated statements of earnings.
|
(in millions)
|
2014
|
|
2013
|
||||
Estimated fair value
|
$
|
4,115
|
|
|
$
|
3,899
|
|
Carrying amount
|
3,972
|
|
|
3,854
|
|
|
Cardinal Health, Inc. and Subsidiaries
|
|
Notes to Consolidated Financial Statements (continued)
|
|
2014
|
|
2013
|
||||||||||||
(in millions)
|
Notional
Amount |
|
Fair Value
Gain/(Loss) |
|
Notional
Amount |
|
Fair Value
Gain/(Loss) |
||||||||
Pay-floating interest rate swaps
|
$
|
1,438
|
|
|
$
|
—
|
|
|
$
|
1,138
|
|
|
$
|
(11
|
)
|
Foreign currency contracts
|
643
|
|
|
—
|
|
|
643
|
|
|
3
|
|
||||
Forward interest rate swaps
|
300
|
|
|
9
|
|
|
250
|
|
|
20
|
|
||||
Commodity contracts
|
24
|
|
|
1
|
|
|
24
|
|
|
—
|
|
(in millions)
|
Foreign
Currency
Translation
Adjustments
|
|
Unrealized
Gain on
Derivatives,
net of tax
|
|
Accumulated Other
Comprehensive
Income
|
||||||
Balance at June 30, 2012
|
$
|
36
|
|
|
$
|
1
|
|
|
$
|
37
|
|
|
|
|
|
|
|
||||||
Other comprehensive income/(loss), net of tax before reclassifications
|
18
|
|
|
8
|
|
|
26
|
|
|||
Amounts reclassified to earnings
|
—
|
|
|
5
|
|
|
5
|
|
|||
Total other comprehensive income, net of tax of $9 million
|
18
|
|
|
13
|
|
|
31
|
|
|||
Balance at June 30, 2013
|
$
|
54
|
|
|
$
|
14
|
|
|
$
|
68
|
|
|
|
|
|
|
|
||||||
Other comprehensive income/(loss), net of tax before reclassifications
|
9
|
|
|
(10
|
)
|
|
(1
|
)
|
|||
Amounts reclassified to earnings
|
—
|
|
|
3
|
|
|
3
|
|
|||
Total other comprehensive income/(loss), net of tax of $5 million
|
9
|
|
|
(7
|
)
|
|
2
|
|
|||
Balance at June 30, 2014
|
$
|
63
|
|
|
$
|
7
|
|
|
$
|
70
|
|
(in millions)
|
2014
|
|
2013
|
|
2012
|
|||
Weighted-average common shares–basic
|
341
|
|
|
341
|
|
|
345
|
|
|
|
|
|
|
|
|||
Effect of dilutive securities:
|
|
|
|
|
|
|||
Employee stock options, restricted shares, restricted share units and performance share units
|
4
|
|
|
3
|
|
|
4
|
|
Weighted-average common shares–diluted
|
345
|
|
|
344
|
|
|
349
|
|
|
Cardinal Health, Inc. and Subsidiaries
|
|
Notes to Consolidated Financial Statements (continued)
|
(in millions)
|
2014
|
|
2013
|
|
2012
|
||||||
Pharmaceutical (1)
|
$
|
80,110
|
|
|
$
|
91,097
|
|
|
$
|
97,925
|
|
Medical
|
10,962
|
|
|
10,060
|
|
|
9,642
|
|
|||
Total segment revenue
|
91,072
|
|
|
101,157
|
|
|
107,567
|
|
|||
Corporate (2)
|
12
|
|
|
(64
|
)
|
|
(15
|
)
|
|||
Total revenue
|
$
|
91,084
|
|
|
$
|
101,093
|
|
|
$
|
107,552
|
|
(1)
|
Our pharmaceutical distribution contract with Walgreens expired on
August 31, 2013
. Our pharmaceutical distribution contract with Express Scripts, Inc. expired on
September 30, 2012
.
|
(2)
|
Corporate revenue consists of the elimination of inter-segment revenue and other revenue not allocated to the segments.
|
(in millions)
|
2014
|
|
2013
|
|
2012
|
||||||
Pharmaceutical
|
$
|
1,745
|
|
|
$
|
1,734
|
|
|
$
|
1,558
|
|
Medical
|
444
|
|
|
372
|
|
|
332
|
|
|||
Total segment profit
|
2,189
|
|
|
2,106
|
|
|
1,890
|
|
|||
Corporate
|
(304
|
)
|
|
(1,110
|
)
|
|
(98
|
)
|
|||
Total operating earnings
|
$
|
1,885
|
|
|
$
|
996
|
|
|
$
|
1,792
|
|
(in millions)
|
2014
|
|
2013
|
|
2012
|
||||||
Pharmaceutical
|
$
|
128
|
|
|
$
|
125
|
|
|
$
|
114
|
|
Medical
|
130
|
|
|
137
|
|
|
119
|
|
|||
Corporate
|
201
|
|
|
135
|
|
|
92
|
|
|||
Total depreciation and amortization
|
$
|
459
|
|
|
$
|
397
|
|
|
$
|
325
|
|
(in millions)
|
2014
|
|
2013
|
|
2012
|
||||||
Pharmaceutical
|
$
|
72
|
|
|
$
|
46
|
|
|
$
|
44
|
|
Medical
|
72
|
|
|
48
|
|
|
100
|
|
|||
Corporate
|
105
|
|
|
101
|
|
|
116
|
|
|||
Total additions to property and equipment
|
$
|
249
|
|
|
$
|
195
|
|
|
$
|
260
|
|
(in millions)
|
2014
|
|
2013
|
|
2012
|
||||||
Pharmaceutical
|
$
|
15,361
|
|
|
$
|
16,258
|
|
|
$
|
16,642
|
|
Medical
|
6,768
|
|
|
6,521
|
|
|
4,399
|
|
|||
Corporate
|
3,904
|
|
|
3,040
|
|
|
3,219
|
|
|||
Total assets
|
$
|
26,033
|
|
|
$
|
25,819
|
|
|
$
|
24,260
|
|
|
Cardinal Health, Inc. and Subsidiaries
|
|
Notes to Consolidated Financial Statements (continued)
|
(in millions)
|
2014
|
|
2013
|
|
2012
|
||||||
United States
|
$
|
87,449
|
|
|
$
|
97,994
|
|
|
$
|
105,205
|
|
International
|
3,635
|
|
|
3,099
|
|
|
2,347
|
|
|||
Total revenue
|
$
|
91,084
|
|
|
$
|
101,093
|
|
|
$
|
107,552
|
|
(in millions)
|
2014
|
|
2013
|
|
2012
|
||||||
United States
|
$
|
1,301
|
|
|
$
|
1,355
|
|
|
$
|
1,425
|
|
International
|
158
|
|
|
134
|
|
|
126
|
|
|||
Property and equipment, net
|
$
|
1,459
|
|
|
$
|
1,489
|
|
|
$
|
1,551
|
|
(in millions)
|
2014
|
|
2013
|
|
2012
|
||||||
Restricted shares and share unit expense
|
$
|
62
|
|
|
$
|
60
|
|
|
$
|
55
|
|
Employee stock option expense
|
21
|
|
|
23
|
|
|
25
|
|
|||
Performance share unit expense
|
13
|
|
|
10
|
|
|
6
|
|
|||
Stock appreciation right income
|
—
|
|
|
—
|
|
|
(1
|
)
|
|||
Total share-based compensation
|
$
|
96
|
|
|
$
|
93
|
|
|
$
|
85
|
|
(in millions, except per share amounts)
|
Stock
Options
|
|
Weighted-Average
Exercise Price per
Common Share
|
|||
Outstanding at June 30, 2012
|
21
|
|
|
$
|
37.29
|
|
Granted
|
3
|
|
|
39.81
|
|
|
Exercised
|
(6
|
)
|
|
33.19
|
|
|
Canceled and forfeited
|
(3
|
)
|
|
46.91
|
|
|
Outstanding at June 30, 2013
|
15
|
|
|
$
|
36.97
|
|
Granted
|
2
|
|
|
51.77
|
|
|
Exercised
|
(7
|
)
|
|
38.29
|
|
|
Canceled and forfeited
|
—
|
|
|
—
|
|
|
Outstanding at June 30, 2014
|
10
|
|
|
$
|
39.16
|
|
Exercisable at June 30, 2014
|
5
|
|
|
$
|
33.62
|
|
(in millions, except per share amounts)
|
2014
|
|
2013
|
|
2012
|
||||||
Aggregate intrinsic value of outstanding options at period end
|
$
|
282
|
|
|
$
|
156
|
|
|
$
|
137
|
|
Aggregate intrinsic value of exercisable options at period end
|
185
|
|
|
113
|
|
|
84
|
|
|||
Aggregate intrinsic value of exercised options
|
155
|
|
|
64
|
|
|
27
|
|
|||
Cash received upon exercise
|
227
|
|
|
121
|
|
|
42
|
|
|||
Cash tax proceeds/(disbursements) realized related to exercise
|
39
|
|
|
(19
|
)
|
|
(4
|
)
|
|||
Total compensation cost, net of estimated forfeitures, related to unvested stock options not yet recognized, pre-tax
|
24
|
|
|
22
|
|
|
25
|
|
|||
Total fair value of shares vested during the year
|
20
|
|
|
28
|
|
|
26
|
|
|||
Weighted-average grant date fair value per stock option
|
10.32
|
|
|
8.15
|
|
|
9.26
|
|
(in years)
|
2014
|
|
2013
|
|
2012
|
Weighted-average remaining contractual life of outstanding options
|
6
|
|
4
|
|
3
|
Weighted-average remaining contractual life of exercisable options
|
4
|
|
3
|
|
2
|
Weighted-average period over which stock option compensation cost is expected to be recognized
|
2
|
|
2
|
|
2
|
|
Cardinal Health, Inc. and Subsidiaries
|
|
Notes to Consolidated Financial Statements (continued)
|
(in millions, except per share amounts)
|
Shares
|
|
Weighted-Average
Grant Date Fair
Value per Share
|
|||
Nonvested at June 30, 2012
|
4
|
|
|
$
|
35.46
|
|
Granted
|
2
|
|
|
40.02
|
|
|
Vested
|
(2
|
)
|
|
33.41
|
|
|
Canceled and forfeited
|
(1
|
)
|
|
38.84
|
|
|
Nonvested at June 30, 2013
|
3
|
|
|
$
|
38.74
|
|
Granted
|
1
|
|
|
52.40
|
|
|
Vested
|
(1
|
)
|
|
37.59
|
|
|
Canceled and forfeited
|
—
|
|
|
—
|
|
|
Nonvested at June 30, 2014
|
3
|
|
|
$
|
45.65
|
|
(in millions)
|
2014
|
|
2013
|
|
2012
|
||||||
Total compensation cost, net of estimated forfeitures, related to nonvested restricted share and share unit awards not yet recognized, pre-tax
|
$
|
75
|
|
|
$
|
67
|
|
|
$
|
67
|
|
Weighted-average period over which restricted share and share unit cost is expected to be recognized (in years)
|
2
|
|
|
2
|
|
|
2
|
|
|||
Total fair value of shares vested during the year
|
$
|
55
|
|
|
$
|
60
|
|
|
$
|
54
|
|
(in millions, except per share amounts)
|
Performance
Share Units
|
|
Weighted-Average
Grant Date Fair
Value per Share
|
|||
Nonvested at June 30, 2012
|
0.5
|
|
|
$
|
42.60
|
|
Granted
|
0.3
|
|
|
39.81
|
|
|
Vested
|
—
|
|
|
—
|
|
|
Canceled and forfeited
|
—
|
|
|
—
|
|
|
Nonvested at June 30, 2013
|
0.8
|
|
|
$
|
41.37
|
|
Granted
|
0.3
|
|
|
51.49
|
|
|
Vested (1)
|
(0.2
|
)
|
|
41.60
|
|
|
Canceled and forfeited
|
—
|
|
|
—
|
|
|
Nonvested at June 30, 2014
|
0.9
|
|
|
$
|
44.41
|
|
(1)
|
Vested based on achievement of
143 percent
of the target performance goal.
|
(in millions)
|
2014
|
|
2013
|
|
2012
|
||||||
Total compensation cost, net of estimated forfeitures, related to nonvested performance share units not yet recognized, pre-tax
|
$
|
15
|
|
|
$
|
12
|
|
|
$
|
12
|
|
Weighted-average period over which performance share unit cost is expected to be recognized (in years)
|
2
|
|
|
2
|
|
|
2
|
|
|||
Total fair value of shares vested during the year
|
$
|
7
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
Cardinal Health, Inc. and Subsidiaries
|
|
Notes to Consolidated Financial Statements (continued)
|
(in millions, except per common share amounts)
|
First
Quarter |
|
Second
Quarter |
|
Third
Quarter |
|
Fourth
Quarter (1) |
||||||||
Fiscal 2014
|
|
|
|
|
|
|
|
||||||||
Revenue
|
$
|
24,523
|
|
|
$
|
22,240
|
|
|
$
|
21,427
|
|
|
$
|
22,894
|
|
Gross margin
|
1,264
|
|
|
1,345
|
|
|
1,297
|
|
|
1,256
|
|
||||
Distribution, selling, general and administrative expenses
|
732
|
|
|
766
|
|
|
736
|
|
|
795
|
|
||||
Earnings from continuing operations
|
340
|
|
|
275
|
|
|
315
|
|
|
234
|
|
||||
Earnings/(loss) from discontinued operations
|
(1
|
)
|
|
3
|
|
|
—
|
|
|
—
|
|
||||
Net earnings
|
339
|
|
|
278
|
|
|
315
|
|
|
234
|
|
||||
|
|
|
|
|
|
|
|
||||||||
Earnings from continuing operations per common share:
|
|
|
|
|
|
|
|
||||||||
Basic
|
$
|
1.00
|
|
|
$
|
0.80
|
|
|
$
|
0.92
|
|
|
$
|
0.69
|
|
Diluted
|
0.99
|
|
|
0.79
|
|
|
0.91
|
|
|
0.68
|
|
(in millions, except per common share amounts)
|
First
Quarter |
|
Second
Quarter |
|
Third
Quarter |
|
Fourth
Quarter (2) |
||||||||
Fiscal 2013
|
|
|
|
|
|
|
|
||||||||
Revenue
|
$
|
25,889
|
|
|
$
|
25,232
|
|
|
$
|
24,552
|
|
|
$
|
25,420
|
|
Gross margin
|
1,159
|
|
|
1,224
|
|
|
1,291
|
|
|
1,247
|
|
||||
Distribution, selling, general and administrative expenses
|
690
|
|
|
699
|
|
|
712
|
|
|
775
|
|
||||
Earnings/(loss) from continuing operations
|
272
|
|
|
303
|
|
|
346
|
|
|
(586
|
)
|
||||
Loss from discontinued operations, net of tax
|
(1
|
)
|
|
—
|
|
|
(1
|
)
|
|
—
|
|
||||
Net earnings/(loss)
|
271
|
|
|
303
|
|
|
345
|
|
|
(586
|
)
|
||||
|
|
|
|
|
|
|
|
||||||||
Earnings/(loss) from continuing operations per common share:
|
|
|
|
|
|
|
|
||||||||
Basic
|
$
|
0.80
|
|
|
$
|
0.89
|
|
|
$
|
1.01
|
|
|
$
|
(1.72
|
)
|
Diluted (3)
|
0.79
|
|
|
0.88
|
|
|
1.00
|
|
|
(1.72
|
)
|
(1)
|
During the fourth quarter of fiscal
2014
, we recorded an out-of-period decrease in revenue of
$14 million
related to customer pricing adjustments, of which $1 million pertained to each of the first three quarters of fiscal
2014
and each quarter of fiscal
2013
. The amounts were not material individually or in the aggregate to current or prior periods.
|
(2)
|
During the fourth quarter of fiscal
2013
, we recorded an out-of-period increase in income tax expense of
$14 million
related to uncertain tax benefits, of which generally less than $1 million pertained to the each of the first three quarters of fiscal
2013
. The amounts were not material individually or in the aggregate to current or prior periods.
|
(3)
|
Due to the loss from continuing operations incurred during the fourth quarter of fiscal
2013
, potential dilutive common shares have not been included in the denominator of the diluted per share computation for this period due to their antidilutive effect.
|
|
Cardinal Health, Inc. and Subsidiaries
|
|
|
|
|
|
Cardinal Health, Inc. and Subsidiaries
|
|
|
|
|
/s/ Ernst & Young, LLP
|
|
Columbus, Ohio
|
August 13, 2014
|
|
Cardinal Health, Inc. and Subsidiaries
|
|
|
|
|
|
Page
|
|
|
Consolidated Financial Statements and Schedule:
|
|
Exhibit
Number
|
Exhibit Description
|
2.1
|
Agreement and Plan of Merger, dated February 13, 2013, by and among Cardinal Health, Inc., AssuraMed, Inc., Mesa Merger Corp. and Clayton, Dubilier & Rice, LLC, as Representative of AssuraMed, Inc.’s stockholders (incorporated by reference to Exhibit 2.1 to Cardinal Health’s Current Report on Form 8-K filed on February 14, 2013, File No. 1-11373)
|
3.1
|
Amended and Restated Articles of Incorporation of Cardinal Health, Inc., as amended (incorporated by reference to Exhibit 3.1 to Cardinal Health’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2008, File No. 1-11373)
|
3.2
|
Cardinal Health, Inc. Restated Code of Regulations (incorporated by reference to Exhibit 3.2 to Cardinal Health’s Current Report on Form 8-K filed on August 10, 2012, File No. 1-11373)
|
4.1
|
Specimen Certificate for Common Shares of Cardinal Health, Inc. (incorporated by reference to Exhibit 4.01 to Cardinal Health’s Annual Report on Form 10-K for the fiscal year ended June 30, 2001, File No. 1-11373)
|
4.2.1
|
Indenture, dated as of April 18, 1997, between Cardinal Health, Inc. and Bank One, Columbus, NA, Trustee (incorporated by reference to Exhibit 1 to Cardinal Health’s Current Report on Form 8-K filed on April 21, 1997, File No. 1-11373)
|
4.2.2
|
Supplemental Indenture, dated October 3, 2006, between Cardinal Health, Inc. and The Bank of New York Trust Company, N.A., as trustee (successor to J.P. Morgan Trust Company, National Association, successor to Bank One, N.A., formerly known as Bank One, Columbus, N.A.) (incorporated by reference to Exhibit 4.3 to Cardinal Health’s Current Report on Form 8-K filed on October 4, 2006, File No. 1-11373)
|
4.2.3
|
Second Supplemental Indenture, dated June 8, 2007, between Cardinal Health, Inc. and The Bank of New York Trust Company, N.A., (successor to J.P. Morgan Trust Company, National Association, successor to Bank One, N.A., formerly known as Bank One, Columbus, N.A.), as trustee (incorporated by reference to Exhibit 4.01 to Cardinal Health’s Current Report on Form 8-K filed on June 8, 2007, File No. 1-11373)
|
4.2.4
|
4.00% Notes due 2015 (incorporated by reference to Exhibit 4.2.8 to Cardinal Health’s Annual Report on Form 10-K for the fiscal year ended June 30, 2008, File No. 1-11373)
|
4.2.5
|
5.85% Notes due 2017 (incorporated by reference to Exhibit 4.2.9 to Cardinal Health’s Annual Report on Form 10-K for the fiscal year ended June 30, 2008, File No. 1-11373)
|
4.2.6
|
5.80% Notes due 2016 (incorporated by reference to Exhibit 4.2.11 to Cardinal Health’s Annual Report on Form 10-K for the fiscal year ended June 30, 2008, File No. 1-11373)
|
4.2.7
|
6.00% Notes due 2017 (incorporated by reference to Exhibit 4.2.12 to Cardinal Health’s Annual Report on Form 10-K for the fiscal year ended June 30, 2008, File No. 1-11373)
|
4.3.1
|
Indenture, dated as of June 2, 2008, between Cardinal Health, Inc. and The Bank of New York Trust Company, N.A. (incorporated by reference to Exhibit 4.1 to Cardinal Health’s Current Report on Form 8-K filed on June 2, 2008, File No. 1-11373)
|
4.3.2
|
4.625% Notes due 2020 (incorporated by reference to Exhibit 4.1 to Cardinal Health’s Current Report on Form 8-K filed on December 14, 2010, File No. 1-11373)
|
4.3.3
|
1.900% Notes due 2017 (incorporated by reference to Exhibit 4.1 to Cardinal Health's Current Report on Form 8-K filed on May 21, 2012, File No. 1-11373)
|
4.3.4
|
3.200% Notes due 2022 (incorporated by reference to Exhibit 4.2 to Cardinal Health's Current Report on Form 8-K filed on May 21, 2012, File No. 1-11373)
|
|
Cardinal Health, Inc. and Subsidiaries
|
|
|
|
|
|
Cardinal Health, Inc. and Subsidiaries
|
|
|
|
|
|
Cardinal Health, Inc. and Subsidiaries
|
|
|
|
|
|
Cardinal Health, Inc. and Subsidiaries
|
|
|
|
|
|
Cardinal Health, Inc. and Subsidiaries
|
|
|
|
|
|
Cardinal Health, Inc.
|
|
|
|
|
|
By:
|
/s/ GEORGE S. BARRETT
|
|
|
George S. Barrett
|
|
|
Chairman and Chief Executive Officer
|
Name
|
|
Title
|
/s/ GEORGE S. BARRETT
|
|
Chairman and Chief Executive Officer and Director (principal executive officer)
|
George S. Barrett
|
|
|
|
|
|
/s/ JEFFREY W. HENDERSON
|
|
Chief Financial Officer (principal financial officer)
|
Jeffrey W. Henderson
|
|
|
|
|
|
/s/ STUART G. LAWS
|
|
Senior Vice President and Chief Accounting Officer (principal accounting officer)
|
Stuart G. Laws
|
|
|
|
|
|
/s/ DAVID J. ANDERSON
|
|
Director
|
David J. Anderson
|
|
|
|
|
|
/s/ COLLEEN F. ARNOLD
|
|
Director
|
Colleen F. Arnold
|
|
|
|
|
|
/s/ CARRIE S. COX
|
|
Director
|
Carrie S. Cox
|
|
|
|
|
|
/s/ CALVIN DARDEN
|
|
Director
|
Calvin Darden
|
|
|
|
|
|
/s/ BRUCE L. DOWNEY
|
|
Director
|
Bruce L. Downey
|
|
|
|
|
|
/s/ JOHN F. FINN
|
|
Director
|
John F. Finn
|
|
|
|
|
|
/s/ PATRICIA A. HEMINGWAY HALL
|
|
Director
|
Patricia A. Hemingway Hall
|
|
|
|
|
|
/s/ CLAYTON M. JONES
|
|
Director
|
Clayton M. Jones
|
|
|
|
|
|
/s/ GREGORY B. KENNY
|
|
Director
|
Gregory B. Kenny
|
|
|
|
|
|
/s/ DAVID P. KING
|
|
Director
|
David P. King
|
|
|
|
|
|
/s/ RICHARD C. NOTEBAERT
|
|
Director
|
Richard C. Notebaert
|
|
|
(in millions)
|
Balance at
Beginning of Period
|
|
Charged to Costs
and Expenses (2)
|
|
Charged to
Other Accounts (3)
|
|
Deductions (4)
|
|
Balance at
End of Period
|
||||||||||
Fiscal 2014
|
|
|
|
|
|
|
|
|
|
||||||||||
Accounts receivable
|
$
|
134
|
|
|
$
|
51
|
|
|
$
|
2
|
|
|
$
|
(50
|
)
|
|
$
|
137
|
|
Finance notes receivable
|
17
|
|
|
—
|
|
|
2
|
|
|
(1
|
)
|
|
18
|
|
|||||
Sales returns and allowances (5)
|
291
|
|
|
1,735
|
|
|
—
|
|
|
(1,753
|
)
|
|
273
|
|
|||||
Other
|
1
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
1
|
|
|||||
|
$
|
443
|
|
|
$
|
1,786
|
|
|
$
|
4
|
|
|
$
|
(1,804
|
)
|
|
$
|
429
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Fiscal 2013
|
|
|
|
|
|
|
|
|
|
||||||||||
Accounts receivable
|
$
|
126
|
|
|
$
|
40
|
|
|
$
|
2
|
|
|
$
|
(34
|
)
|
|
$
|
134
|
|
Finance notes receivable
|
16
|
|
|
1
|
|
|
—
|
|
|
—
|
|
|
17
|
|
|||||
Sales returns and allowances (5)
|
—
|
|
|
291
|
|
|
—
|
|
|
—
|
|
|
291
|
|
|||||
Other
|
1
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
1
|
|
|||||
|
$
|
143
|
|
|
$
|
332
|
|
|
$
|
2
|
|
|
$
|
(34
|
)
|
|
$
|
443
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Fiscal 2012
|
|
|
|
|
|
|
|
|
|
||||||||||
Accounts receivable
|
$
|
134
|
|
|
$
|
22
|
|
|
$
|
1
|
|
|
$
|
(31
|
)
|
|
$
|
126
|
|
Finance notes receivable
|
15
|
|
|
—
|
|
|
—
|
|
|
1
|
|
|
16
|
|
|||||
Other
|
1
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
1
|
|
|||||
|
$
|
150
|
|
|
$
|
22
|
|
|
$
|
1
|
|
|
$
|
(30
|
)
|
|
$
|
143
|
|
(1)
|
Amounts included herein pertain to the continuing operations of the Company.
|
(2)
|
Fiscal
2014
and
2013
include
$9 million
and
$10 million
, respectively, for reserves related to customer pricing disputes, excluded from provision for bad debts on the consolidated statements of cash flows and classified as a reduction in gross margin in the consolidated statements of earnings.
|
(3)
|
Recoveries of amounts provided for or written off in prior years were
$3 million
for fiscal
2014
and
$1 million
for both fiscal
2013
and
2012
, respectively.
|
(4)
|
Write-off of uncollectible accounts or actual sales returns.
|
(5)
|
Effective
June 30, 2013
, we prospectively updated our policy to accrue for estimated sales returns and allowances at the time of sale based upon historical customer return trends, margin rates and processing costs. Prior to this change in policy, we recognized sales returns as a reduction of revenue and cost of products sold for the sales price and cost, respectively, when products were returned.
|
|
CARDINAL HEALTH, INC.
|
|||
|
By:________________________________________
|
|||
|
Its:________________________________________
|
|
[________________________________________
|
|||
|
Awardee's Signature
|
|||
|
________________________________________
|
|||
|
Date]
|
|
|
Exhibit 12.1
|
Cardinal Health, Inc. and Subsidiaries
|
|
June 30
|
||||||||||||||||||
(in millions, except ratios)
|
2010
|
|
2011
|
|
2012
|
|
2013
|
|
2014
|
||||||||||
Earnings before income taxes and discontinued operations
|
$
|
1,211.6
|
|
|
$
|
1,518.3
|
|
|
$
|
1,698.1
|
|
|
$
|
888.3
|
|
|
$
|
1,798.3
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Plus fixed charges:
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
Interest expense
|
125.5
|
|
|
95.2
|
|
|
92.3
|
|
|
119.2
|
|
|
129.4
|
|
|||||
Capitalized interest
|
2.9
|
|
|
5.7
|
|
|
6.0
|
|
|
1.7
|
|
|
1.2
|
|
|||||
Amortization of debt offering costs
|
9.9
|
|
|
1.8
|
|
|
2.8
|
|
|
3.5
|
|
|
3.6
|
|
|||||
Interest portion of rent expense
|
6.0
|
|
|
7.1
|
|
|
7.8
|
|
|
8.3
|
|
|
9.8
|
|
|||||
Fixed charges
|
144.3
|
|
|
109.8
|
|
|
108.9
|
|
|
132.7
|
|
|
144.0
|
|
|||||
Plus: amortization of capitalized interest
|
6.5
|
|
|
5.3
|
|
|
3.2
|
|
|
3.4
|
|
|
2.9
|
|
|||||
Less: capitalized interest
|
(2.9
|
)
|
|
(5.7
|
)
|
|
(6.0
|
)
|
|
(1.7
|
)
|
|
(1.2
|
)
|
|||||
Earnings
|
$
|
1,359.5
|
|
|
$
|
1,627.7
|
|
|
$
|
1,804.2
|
|
|
$
|
1,022.7
|
|
|
$
|
1,944.0
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
Ratio of earnings to fixed charges (1)
|
9.4
|
|
|
14.8
|
|
|
16.6
|
|
|
7.7
|
|
|
13.5
|
|
(1)
|
The ratio of earnings to fixed charges is computed by dividing fixed charges into earnings before income taxes and discontinued operations plus fixed charges and capitalized interest. Fixed charges include interest expense, amortization of debt offering costs and the portion of rent expense that is deemed to be representative of the interest factor. Interest expense recorded on tax exposures has been recorded in income tax expense and has therefore been excluded from the calculation.
|
Subsidiary Name
|
|
State/Jurisdiction
of Incorporation
|
Access Closure, Inc.
|
|
California
|
Allegiance Corporation
|
|
Delaware
|
AssuraMed, Inc.
|
|
Delaware
|
Cardinal Health (H.K.) Co. Limited
|
|
Hong Kong
|
Cardinal Health (L) Co., Ltd.
|
|
Malaysia
|
Cardinal Health 100, Inc.
|
|
Indiana
|
Cardinal Health 104 LP
|
|
Ohio
|
Cardinal Health 105, Inc.
|
|
Ohio
|
Cardinal Health 107, LLC
|
|
Ohio
|
Cardinal Health 108, LLC
|
|
Delaware
|
Cardinal Health 110, LLC
|
|
Delaware
|
Cardinal Health 112, LLC
|
|
Delaware
|
Cardinal Health 114, Inc.
|
|
Delaware
|
Cardinal Health 115, LLC
|
|
Ohio
|
Cardinal Health 116, LLC
|
|
Delaware
|
Cardinal Health 118, LLC
|
|
Delaware
|
Cardinal Health 119, LLC
|
|
Delaware
|
Cardinal Health 121, LLC
|
|
Delaware
|
Cardinal Health 122, LLC
|
|
Delaware
|
Cardinal Health 123, LLC
|
|
Delaware
|
Cardinal Health 124, LLC
|
|
Delaware
|
Cardinal Health 126, LLC
|
|
Delaware
|
Cardinal Health 127, Inc.
|
|
Kansas
|
Cardinal Health 2, LLC
|
|
Nevada
|
Cardinal Health 200, LLC
|
|
Delaware
|
Cardinal Health 201 Canada L.P.
|
|
Alberta
|
Cardinal Health 201, Inc.
|
|
Delaware
|
Cardinal Health 222 (Thailand) Ltd.
|
|
Thailand
|
Cardinal Health 3, LLC
|
|
Delaware
|
Cardinal Health 411, Inc.
|
|
Ohio
|
Cardinal Health 414, LLC
|
|
Delaware
|
Cardinal Health 5, LLC
|
|
Delaware
|
Cardinal Health 6, Inc.
|
|
Nevada
|
Cardinal Health 7, LLC
|
|
Delaware
|
Cardinal Health Canada Inc.
|
|
Canada
|
Cardinal Health Cayman Islands Holding Co. Ltd
|
|
Cayman Islands
|
Cardinal Health Cayman Islands Ltd.
|
|
Cayman Islands
|
Cardinal Health D.R. 203 II Ltd.
|
|
Bermuda
|
Cardinal Health Finance
|
|
England & Wales
|
Cardinal Health Foundation
|
|
Ohio
|
Cardinal Health Funding, LLC
|
|
Nevada
|
Subsidiary Name
|
|
State/Jurisdiction
of Incorporation
|
Cardinal Health IPS, LLC
|
|
Delaware
|
Cardinal Health Ireland 419 Limited
|
|
Ireland
|
Cardinal Health Luxembourg 420 S.a.r.l.
|
|
Luxembourg
|
Cardinal Health Malaysia 211 Sdn. Bhd.
|
|
Malaysia
|
Cardinal Health Malta 212 Limited
|
|
Malta
|
Cardinal Health Managed Care Services, LLC
|
|
Delaware
|
Cardinal Health P.R. 120, Inc.
|
|
Puerto Rico
|
Cardinal Health P.R. 218, Inc.
|
|
Puerto Rico
|
Cardinal Health Pharmaceutical Contracting, LLC
|
|
Delaware
|
Cardinal Health Pharmacy Services, LLC
|
|
Delaware
|
Cardinal Health Singapore 225 Pte. Ltd.
|
|
Singapore
|
Cardinal Health Systems, Inc.
|
|
Ohio
|
Cardinal Health Technologies Switzerland GmbH
|
|
Switzerland
|
Cardinal Health Technologies, LLC
|
|
Nevada
|
Cardinal Health U.K. International Holding LLP
|
|
England & Wales
|
Cirpro de Delicias S.A. de C.V.
|
|
Mexico
|
Convertors de Mexico S.A. de C.V.
|
|
Mexico
|
Dutch American Manufacturers II (D.A.M. II) B.V.
|
|
Netherlands
|
EPIC Insurance Company
|
|
Vermont
|
Griffin Capital, LLC
|
|
Nevada
|
Kinray, LLC
|
|
New York
|
Lake Charles Pharmaceutical Supply Company, L.L.C.
|
|
Louisiana
|
Leader Drugstores, Inc.
|
|
Delaware
|
Medicine Shoppe International, Inc.
|
|
Delaware
|
OncoSource Rx, LLC
|
|
Delaware
|
One Cloverleaf, LLC
|
|
Delaware
|
Parmed Pharmaceuticals, LLC
|
|
Delaware
|
Pinnacle Intellectual Property Services, Inc.
|
|
Nevada
|
Pinnacle Intellectual Property Services-International, Inc.
|
|
Nevada
|
Quiroproductos de Cuauhtmoc S. de R.L. de C.V.
|
|
Mexico
|
Ransdell Surgical, Inc.
|
|
Kentucky
|
RGH Enterprises, Inc.
|
|
Ohio
|
Rxealtime, Inc.
|
|
Nevada
|
Sonexus Health, LLC
|
|
Texas
|
Sonexus Health Access & Patient Support, LLC
|
|
Texas
|
Sonexus Health Distribution Services, LLC
|
|
Texas
|
Sonexus Health Financial Solutions, LLC
|
|
Texas
|
Sonexus Health Pharmacy Services, LLC
|
|
Texas
|
WaveMark, Inc.
|
|
Delaware
|
WaveMark Lebanon Offshore s.a.l.
|
|
Lebanon
|
|
|
Exhibit 23.1
|
(1)
|
Registration Statement on Form S-3 N
o. 333-190741
of Cardinal Health, Inc.,
|
(2)
|
Registration Statements on Form S-4 No. 333-62938 and No. 333-74761 of Cardinal Health, Inc., and
|
(3)
|
Registration Statements on Form S-8 No. 33-42357, No. 33-64337, No. 333-71727, No. 333-91849, No. 333-72727, No. 333-68819, No. 333-90417, No. 333-90423, No. 333-92841, No. 333-38198, No. 333-38190, No. 333-38192, No. 333-56010, No. 333-53394, No. 333-102369, No. 333-100564, No. 333-120006, No. 333-129725, No. 333-144368, No. 333-149107, No. 333-155156, No. 333-155158, No. 333-163128, No. 333-164736, No. 333-177728, No. 333-183471 of Cardinal Health, Inc.;
|
/s/ Ernst & Young LLP
|
|
|
|
Columbus, Ohio
|
|
August 13, 2014
|
|
|
|
Exhibit 31.1
|
1.
|
I have reviewed this Form 10-K of Cardinal Health, Inc.;
|
2.
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
3.
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
|
4.
|
The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
|
(a)
|
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
(b)
|
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
(c)
|
Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
(d)
|
Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
|
5.
|
The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
|
(a)
|
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
|
(b)
|
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
|
/s/ G
EORGE
S. B
ARRETT
|
|
George S. Barrett
|
|
Chairman and Chief Executive Officer
|
|
|
|
Exhibit 31.2
|
1.
|
I have reviewed this Form 10-K of Cardinal Health, Inc.;
|
2.
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
3.
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
|
4.
|
The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
|
(a)
|
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
(b)
|
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
(c)
|
Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
(d)
|
Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
|
5.
|
The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
|
(a)
|
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
|
(b)
|
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
|
/s/ J
EFFREY
W. H
ENDERSON
|
|
Jeffrey W. Henderson
|
|
Chief Financial Officer
|
|
|
|
Exhibit 32.1
|
(1)
|
the Annual Report on Form 10-K for the fiscal year ended
June 30, 2014
containing the financial statements of the Company (the “Periodic Report”), which this statement accompanies, fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934 (15 U.S.C. 78m or 78o(d)); and
|
(2)
|
the information contained in the Periodic Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
|
|
/s/ G
EORGE
S. B
ARRETT
|
|
George S. Barrett
|
|
Chairman and Chief Executive Officer
|
|
/s/ J
EFFREY
W. H
ENDERSON
|
|
Jeffrey W. Henderson
|
|
Chief Financial Officer
|
|
|
Exhibit 99.1
|
•
|
competitive pressures in the markets in which we operate, including pricing pressures;
|
•
|
increasing consolidation in the healthcare industry, which could give the resulting enterprises greater bargaining power and may increase pressure on prices for our products and services;
|
•
|
uncertainties due to government healthcare reform;
|
•
|
changes to the prescription drug reimbursement formula and related reporting requirements for generic pharmaceuticals under Medicaid;
|
•
|
material reductions in purchases, non-renewal or early termination of contracts, or a default, by key customers;
|
•
|
risks associated with the generic sourcing joint venture with CVS Caremark Corporation, including those related to our ability to realize the expected benefits from the joint venture;
|
•
|
actions of regulatory bodies and other governmental authorities, including the U.S. Drug Enforcement Administration (“DEA”), the U.S. Food and Drug Administration, the U.S. Nuclear Regulatory Commission, the U.S. Department of Health and Human Services, the U.S. Federal Trade Commission, various state boards of pharmacy, state health departments, state insurance departments or comparable agencies or foreign equivalents that could delay, limit or suspend product development, manufacturing, distribution, importation or sales or result in warning letters, recalls, seizures, injunctions and monetary sanctions;
|
•
|
the possibility of civil fines levied against us by the U.S. Department of Justice for conduct covered by the settlement agreement that we entered into in connection with the DEA's suspension of our Lakeland, Florida distribution center's registration to distribute controlled substances;
|
•
|
the loss of, or default by, one or more key suppliers for which alternative suppliers may not be readily available;
|
•
|
unfavorable changes to the terms of key customer or supplier relationships, or changes in customer mix;
|
•
|
changes in manufacturers' pricing, selling, inventory, distribution or supply policies or practices;
|
•
|
changes in hospital buying groups or hospital buying practices;
|
•
|
changes in the frequency or magnitude of brand or generic pharmaceutical price appreciation, restrictions in the amount of inventory available to us, or changes in the timing or frequency of generic launches or the introduction of brand pharmaceuticals;
|
•
|
uncertainties relating to market conditions for pharmaceuticals;
|
•
|
uncertainties relating to demand for our products and services;
|
•
|
changes in the distribution or outsourcing pattern for pharmaceutical and medical/surgical products and services, including an increase in direct and limited distribution;
|
•
|
the costs, difficulties and uncertainties related to the integration of acquired businesses, including liabilities related to the operations or activities of such businesses prior to their acquisition;
|
•
|
uncertainties related to our ability to achieve the anticipated results from the acquisitions of Access Closure, Inc. and Sonexus Health;
|
•
|
uncertainties related to our ability to achieve the anticipated results from the acquisition of AssuraMed, Inc. ("AssuraMed") and the impact on AssuraMed's business of competitive bidding by Medicare;
|
•
|
risks arising from certain of our businesses being a Medicare-certified supplier and participating in state Medicaid programs, which may require meeting defined quality standards and maintaining accreditation to receive reimbursement as well as compliance with applicable billing, payment and record-keeping requirements;
|
•
|
uncertainties relating to growth of the pharmaceutical market in China;
|
•
|
risks arising from possible violations of (1) the U.S. Foreign Corrupt Practices Act, Chinese anti-corruption laws and other similar anti-bribery laws in other jurisdictions and (2) U.S. and foreign export control, trade embargo and customs laws;
|
•
|
risks arising from possible violations of healthcare fraud and abuse laws;
|
•
|
our ability to introduce and market new products and our ability to keep pace with advances in technology;
|
•
|
our ability to maintain to adequate intellectual property protection;
|
•
|
changes in laws or in the interpretation or application of laws or regulations, as well as possible failures to comply with applicable laws or regulations as a result of possible misinterpretations or misapplications;
|
•
|
the continued financial viability and success of our customers and suppliers;
|
•
|
costs or claims resulting from potential errors or defects in our manufacturing, compounding, repackaging, information systems or pharmacy management services that may injure persons or damage property or operations, including costs from remediation efforts or recalls;
|
•
|
the results, costs, effects or timing of any commercial disputes, government contract compliance matters, patent infringement claims,
qui tam
actions or other legal proceedings;
|
•
|
the costs, effects, timing or success of restructuring programs or plans;
|
•
|
significant charges to earnings if goodwill or intangible assets become impaired;
|
•
|
increased costs for commodities used in the Medical segment including various components, compounds, raw materials or energy such as oil-based resins, cotton, latex and other commodities;
|
•
|
shortages in commodities, components, compounds, raw materials or energy used by our businesses, including supply disruptions of radioisotopes;
|
•
|
the risks of counterfeit products in the supply chain;
|
•
|
risks associated with global operations, including the effect of local economic environments, inflation, recession, currency volatility and global competition, in addition to risks associated with compliance with U.S and international laws relating to global operations;
|
•
|
difficulties or delays in the development, production, manufacturing, sourcing and marketing of new or existing products and services, including difficulties or delays associated with obtaining requisite regulatory consents or approvals associated with those activities;
|
•
|
disruption or damage to or failure of our information or controls systems or a data security breach;
|
•
|
disruptions to the proper functioning of our critical facilities, including our national logistics center;
|
•
|
uncertainties relating to general political, business, industry, regulatory and market conditions;
|
•
|
adverse changes in U.S. or foreign tax laws, unfavorable challenges to our tax positions and payments to settle these challenges; and
|
•
|
other factors described in “Item 1A-Risk Factors” of the 2014 Form 10-K.
|