10-QPeriod: Q3 FY2003

CARDINAL HEALTH INC Quarterly Report for Q3 Ended Mar 31, 2003

Filed May 15, 2003For Securities:CAH

Summary

Cardinal Health, Inc. reported strong financial performance for the nine months ended March 31, 2003, with operating revenue increasing by 13% to $36.96 billion compared to the prior year. Net earnings also saw a significant rise, reaching $1.04 billion for the nine-month period. This growth was driven by increased sales volume across all segments, particularly in Pharmaceutical Distribution and Provider Services, and bolstered by the acquisition of Syncor. The company also reported a substantial $99.6 million gain from litigation settlements related to vitamin antitrust claims, positively impacting the "Other Special Items" category. Despite overall positive trends, the company is managing various restructuring and integration costs associated with recent mergers and acquisitions, totaling $49.3 million for merger-related costs and $18.3 million in other special charges (excluding litigation settlements) during the nine-month period. The balance sheet reflects a significant increase in inventories and trade receivables, contributing to a larger working capital position, while cash and equivalents decreased due to share repurchases. The company maintains a strong liquidity position with an unused $1.5 billion credit facility.

Key Highlights

  • 1Total operating revenue for the nine months ended March 31, 2003, increased 13% to $36.96 billion, driven by growth across all segments.
  • 2Net earnings for the nine months ended March 31, 2003, rose to $1.04 billion, a significant increase from $759.9 million in the prior year.
  • 3The acquisition of Syncor on January 1, 2003, contributed to revenue growth and significant goodwill of $700.4 million.
  • 4The company recorded a substantial $99.6 million gain from litigation settlements related to vitamin antitrust claims during the nine months ended March 31, 2003.
  • 5Total merger-related costs and other special items (excluding litigation settlements) amounted to $49.3 million and $18.3 million respectively for the nine-month period, reflecting ongoing integration and restructuring efforts.
  • 6Inventories increased by approximately $1.4 billion and trade receivables by $550 million, leading to higher overall working capital.
  • 7Cardinal Health utilized $1.19 billion for share repurchases during the nine months ended March 31, 2003, leading to a decrease in cash and equivalents.
  • 8The company has an undrawn $1.5 billion credit facility, ensuring strong liquidity.

Frequently Asked Questions

Cardinal Health demonstrated strong performance, with operating revenue increasing by 13% to $36.96 billion and net earnings rising significantly to $1.04 billion for the nine months ended March 31, 2003, compared to the same period in the prior year. This growth was broad-based across its operating segments.

The acquisition of Syncor, completed on January 1, 2003, contributed to revenue growth and added approximately $700.4 million in goodwill and $36.8 million in identifiable intangible assets. Syncor's operations are now reported within the Pharmaceutical Technologies and Services segment.

The company reported $49.3 million in merger-related costs and $18.3 million in other special charges (excluding litigation settlements) for the nine months ended March 31, 2003, reflecting integration and restructuring activities. However, a significant positive impact came from $99.6 million in litigation settlement income related to vitamin antitrust claims. The net effect of all special items for the nine months was a slight increase of $0.1 million to earnings from continuing operations.

Cardinal Health maintains a strong liquidity position. While cash and equivalents decreased due to significant share repurchases ($1.19 billion in the nine-month period), the company has an unused $1.5 billion credit facility. Working capital increased due to higher inventories and receivables, reflecting business growth.