Cardinal Health 2009 Annual Report Download - page 55

Download and view the complete annual report

Please find page 55 of the 2009 Cardinal Health annual report below. You can navigate through the pages in the report by either clicking on the pages listed below, or by using the keyword search tool below to find specific information within the annual report.

Page out of 154

  • 1
  • 2
  • 3
  • 4
  • 5
  • 6
  • 7
  • 8
  • 9
  • 10
  • 11
  • 12
  • 13
  • 14
  • 15
  • 16
  • 17
  • 18
  • 19
  • 20
  • 21
  • 22
  • 23
  • 24
  • 25
  • 26
  • 27
  • 28
  • 29
  • 30
  • 31
  • 32
  • 33
  • 34
  • 35
  • 36
  • 37
  • 38
  • 39
  • 40
  • 41
  • 42
  • 43
  • 44
  • 45
  • 46
  • 47
  • 48
  • 49
  • 50
  • 51
  • 52
  • 53
  • 54
  • 55
  • 56
  • 57
  • 58
  • 59
  • 60
  • 61
  • 62
  • 63
  • 64
  • 65
  • 66
  • 67
  • 68
  • 69
  • 70
  • 71
  • 72
  • 73
  • 74
  • 75
  • 76
  • 77
  • 78
  • 79
  • 80
  • 81
  • 82
  • 83
  • 84
  • 85
  • 86
  • 87
  • 88
  • 89
  • 90
  • 91
  • 92
  • 93
  • 94
  • 95
  • 96
  • 97
  • 98
  • 99
  • 100
  • 101
  • 102
  • 103
  • 104
  • 105
  • 106
  • 107
  • 108
  • 109
  • 110
  • 111
  • 112
  • 113
  • 114
  • 115
  • 116
  • 117
  • 118
  • 119
  • 120
  • 121
  • 122
  • 123
  • 124
  • 125
  • 126
  • 127
  • 128
  • 129
  • 130
  • 131
  • 132
  • 133
  • 134
  • 135
  • 136
  • 137
  • 138
  • 139
  • 140
  • 141
  • 142
  • 143
  • 144
  • 145
  • 146
  • 147
  • 148
  • 149
  • 150
  • 151
  • 152
  • 153
  • 154

fixed-to-floating interest rate swaps. Cash used in investing activities was $543 million primarily due to capital
spending ($533 million), which includes $151 million to repurchase assets previously under an operating lease
arrangement. Cash used in financing activities was $468 million primarily due to the Company’s repayment of
certain long-term obligations ($305 million) and the payment of dividends ($200 million). In the fourth quarter of
fiscal 2009, the Company’s Board of Directors increased the regular quarterly dividend by 25% to $0.175 per
share, which was payable on July 15, 2009 to shareholders of record on July 1, 2009. The Company anticipates
that its quarterly dividend will remain $0.175 per share after the Spin-Off; the payment and amount of future
dividends remain, however, within the discretion of the Company’s Board of Directors and will depend upon the
Company’s future earnings, financial condition, capital requirements and other factors.
During the fourth quarter of fiscal 2009, the Company committed to plans to sell its United Kingdom-based
Martindale injectable manufacturing business (“Martindale”) and SpecialtyScripts, LLC (“SpecialtyScripts”)
within its Healthcare Supply Chain Services segment. The net assets of Martindale and SpecialtyScripts are
presented separately as held for sale. The operating results of Martindale are presented within discontinued
operations for all periods presented. The results of SpecialtyScripts are reported within earnings from continuing
operations on the Company’s consolidated statements of earnings.
Consolidated Results of Operations
The following table summarizes the Company’s consolidated results of operations for the fiscal years ended
June 30, 2009, 2008 and 2007 (in millions, except per Common Share amounts):
Change (1) Consolidated Results of Operations
2009 2008 2009 2008 2007
Revenue .................................... 9% 5% $99,512.4 $90,975.5 $86,755.0
Cost of products sold .......................... 10% 5% 93,986.0 85,395.8 81,557.6
Gross margin ................................ (1)% 7% $ 5,526.4 $ 5,579.7 $ 5,197.4
Selling, general and administrative expenses (2) ..... 1% 11% 3,438.3 3,390.1 3,061.3
Impairments, (gain)/loss on sale of assets and other,
net....................................... N.M. N.M. 25.0 (32.0) 17.3
Special items ................................ N.M. N.M. 177.4 130.1 772.0
Operating earnings ............................ (10)% 55% $ 1,885.7 $ 2,091.5 $ 1,346.8
Interest expense and other ...................... 29% 41% 218.7 169.4 120.6
Earnings before income taxes and discontinued
operations ................................. (13)% 57% $ 1,667.0 $ 1,922.1 $ 1,226.2
Provision for income taxes ...................... (16)% 54% 524.2 626.1 405.5
Earnings from continuing operations .............. (12)% 58% $ 1,142.8 $ 1,296.0 $ 820.7
Earnings from discontinued operations, net ......... N.M. N.M. 8.8 4.6 1,110.4
Net earnings ................................. (11)% (33)% $ 1,151.6 $ 1,300.6 $ 1,931.1
Net diluted earnings per Common Share ........... (11)% (25)% $ 3.18 $ 3.57 $ 4.77
(1) Change is calculated as the percentage increase or (decrease) for a given year compared to the immediately
preceding year.
(2) Equity-based compensation expense was $123 million, $122 million and $138 million, respectively, for the
fiscal years ended June 30, 2009, 2008 and 2007.
Revenue
Revenue for fiscal 2009 increased $8.5 billion or 9% compared to the prior year. The increase was due to
pharmaceutical price appreciation and increased volume from existing customers (the combined impact of these
33