Cardinal Health 2009 Annual Report Download - page 54

the Company; and (ix) 4.00% Notes due June 15, 2015 of the Company. The amount of each series of debt
securities that is purchased will be based on a $1.2 billion cap, and the order of priority set forth above. In
addition, the Company is only offering to purchase 7.00% Debentures due October 15, 2026 of Allegiance
Corporation with an aggregate purchase price, excluding accrued interest, fees and expenses, of up to
$100,000,000 in the tender offer. The Company intends to fund the purchase of the 7.80% Debentures due
October 15, 2016 of Allegiance Corporation and the 7.00% Debentures due October 15, 2026 of Allegiance
Corporation from cash on hand. If 7.00% Debentures due 2026 are tendered such that the aggregate purchase
price for the notes would exceed $100 million, they will be subject to proration. All debt securities of any series
tendered having a higher acceptance priority level will be accepted before any debt securities of any series
having a lower acceptance priority level. Debt securities of the series in the lowest acceptance priority level
accepted for purchase in accordance with the terms and conditions of the tender offer may be subject to
proration, as described in the offer to purchase and related letter of transmittal, each dated August 27, 2009,
relating to the tender offer. The tender offer is conditioned upon the Company’s receipt of the approximately
$1.4 billion cash distribution from CareFusion and other customary conditions set forth in the offer to purchase
and related letter of transmittal. The tender offer will expire on September 24, 2009, unless extended or earlier
terminated by the Company.
Relationship between the Company and CareFusion following the Spin-Off
On July 22, 2009, the Company and CareFusion entered into a separation agreement to effect the Spin-Off
and provide a framework for the relationship between the Company and CareFusion after the Spin-Off. In
addition, the Company will enter into other agreements with CareFusion, including a transition services
agreement, a tax matters agreement, an employee matters agreement, intellectual property agreements and certain
other commercial agreements. These agreements, including the separation agreement, will provide for the
allocation between the Company and CareFusion of the Company’s assets, employees, liabilities and obligations
(including its investments, property and employee benefits and tax-related assets and liabilities) attributable to
periods prior to, at and after CareFusion’s separation from the Company and will govern certain relationships
between the Company and CareFusion after the Spin-Off. The Company and CareFusion will also enter into a
stockholder’s and registration rights agreement pursuant to which, among other things, CareFusion will agree
that, upon the request of the Company, CareFusion will use its commercially reasonable efforts to effect the
registration under applicable federal and state securities laws of any shares of CareFusion common stock retained
by Cardinal Health.
Remaining Products and Businesses
Cardinal Health’s supply chain businesses consolidate pharmaceuticals and medical products from
thousands of manufacturers into site-specific deliveries to retail pharmacies, hospitals, physician offices, surgery
centers and alternate care facilities. Cardinal Health provides comprehensive financial, inventory, contract
management and marketing services. Cardinal Health is also the largest provider of specialized nuclear
pharmaceuticals, delivering nearly 10 million doses each year to hospitals and outpatient care centers.
For further information regarding the Company’s businesses, see “Item 1—Business” within this
Form 10-K.
Financial Overview
The Company has been negatively affected by the current economic downturn as exhibited by the deferral
of hospital capital spending affecting the Clinical and Medical Products segment and increased bad debt expense
within the Healthcare Supply Chain Services segment. However, customer demand within the Healthcare Supply
Chain Services segment remained relatively strong resulting in increased revenue and slightly increased segment
profit for fiscal 2009. Demand for the Company’s products and services during fiscal 2009 led to revenue of
$99.5 billion, up 9%. Operating earnings were approximately $1.9 billion, down 10% during fiscal 2009
primarily due to an increase in restructuring expenses ($99 million) and a decrease in gross margin ($53 million).
Net earnings for fiscal 2009 were $1.2 billion and net diluted earnings per Common Share were $3.18.
Cash provided by operating activities totaled $1.6 billion during fiscal 2009. Included in cash provided by
operating activities were $123 million of settlement proceeds related to the termination of certain
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