Summary
Cardinal Health Inc. (CAH) filed an 8-K on August 13, 2008, to report on significant developments related to its distribution center license suspensions by the U.S. Drug Enforcement Administration (DEA). The company announced an oral agreement in principle with DEA staff to resolve the license suspensions, with an expectation that licenses will be reinstated during the quarter ending December 31, 2008. This development has led to an adjustment in the company's financial reserves. Specifically, Cardinal Health increased its reserve for the DEA matter by $10.5 million in the fourth quarter of fiscal year 2008, bringing the total reserve to $34.0 million. This increase, offset by a $3.0 million reduction in reserves for unrelated Syncor ERISA litigation and other legal matters, resulted in a net increase of $7.5 million in special items for the quarter and full fiscal year ended June 30, 2008, compared to figures initially reported on August 7, 2008. Investors should note that the agreement is still subject to definitive documentation and final approval.
Key Highlights
- 1Cardinal Health reached an oral agreement in principle with the DEA to resolve distribution center license suspensions.
- 2The company expects DEA licenses to be reinstated during the quarter ending December 31, 2008.
- 3An additional reserve of $10.5 million was recorded for the DEA matter, bringing the total reserve to $34.0 million.
- 4There was a $3.0 million reduction in reserves for unrelated Syncor ERISA litigation and other legal matters.
- 5The net impact of these adjustments resulted in a $7.5 million increase in special items for the quarter and fiscal year ended June 30, 2008.
- 6The resolution is subject to final documentation and approval by the DEA Administrator and U.S. Department of Justice.
- 7Updated financial tables reflecting these adjustments are provided as an exhibit to the filing.