Form 8-K |
Ohio | 1-11373 | 31-0958666 |
(State or other jurisdiction of incorporation) | (Commission File Number) | (IRS Employer Identification No.) |
7000 Cardinal Place, Dublin, Ohio 43017 | ||
(Address of principal executive offices) (Zip Code) | ||
(614) 757-5000 | ||
(Registrant's telephone number, including area code) | ||
Exhibit Number | Exhibit Description |
99.1 | News release issued by the Company on October 30, 2012 announcing first quarter results. |
Cardinal Health, Inc. | |||
(Registrant) | |||
Date: | October 30, 2012 | By: | /s/ Stuart G. Laws |
Stuart G. Laws | |||
Senior Vice President and Chief Accounting Officer |
Exhibit Number | Exhibit Description |
99.1 | News release issued by the Company on October 30, 2012 announcing first quarter results. |
• | Operating earnings increase 11 percent to $457 million, or 6 percent to $469 million on a non-GAAP basis1 |
• | Diluted earnings per share from continuing operations increase 16 percent to $0.79, or 11 percent to $0.81 on a non-GAAP basis |
• | Board of directors approves further 16 percent dividend increase |
Q1 FY13 | Q1 FY12 | Y/Y | |||||||
Revenue | $ | 25.9 | billion | $ | 26.8 | billion | (3)% | ||
Operating Earnings | $ | 457 | million | $ | 412 | million | 11% | ||
Non-GAAP Operating Earnings | $ | 469 | million | $ | 442 | million | 6% | ||
Earnings from Continuing Operations | $ | 272 | million | $ | 237 | million | 15% | ||
Non-GAAP Earnings from Continuing Operations | $ | 281 | million | $ | 256 | million | 9% | ||
Diluted EPS from Continuing Operations | $ | 0.79 | $ | 0.68 | 16% | ||||
Non-GAAP Diluted EPS from Continuing Operations | $ | 0.81 | $ | 0.73 | 11% |
Q1 FY13 | Q1 FY12 | Y/Y | |||||||
Revenue | $ | 23.5 | billion | $ | 24.4 | billion | (4)% | ||
Segment Profit | $ | 400 | million | $ | 363 | million | 10% |
Q1 FY13 | Q1 FY12 | Y/Y | |||||||
Revenue | $ | 2.4 | billion | $ | 2.4 | billion | 1% | ||
Segment Profit | $ | 74 | million | $ | 79 | million | (6)% |
• | Elected Clayton M. Jones, chairman, president and CEO of Rockwell Collins, to board of directors. |
• | Launched evidence-based clinical pathways with Health Alliance Plan and Physician Resource Management to improve quality and curb cancer care costs for patients in Michigan. |
• | Launched ambulatory surgery center solution, Manage My ASC, to help surgical center owners and managers improve operational and financial performance. |
• | Introduced SecureSeal™ Octyl Topical Skin Adhesive making the company's topical skin adhesive portfolio the most comprehensive in the market. |
• | Annual Meeting of Shareholders at 8 a.m. local time on Nov. 2 at the company headquarters in Dublin, Ohio |
• | Credit Suisse Healthcare Conference at 8:30 a.m. local time on Nov. 14 at the Arizona Biltmore Hotel in Phoenix. |
1 | See the attached tables for definitions of the non-GAAP financial measures presented in this news release and reconciliations of the differences between the non-GAAP financial measures and their most directly comparable GAAP financial measures. |
First Quarter | ||||||||||
(in millions, except per Common Share amounts) | 2013 | 2012 | % Change | |||||||
Revenue | $ | 25,889 | $ | 26,792 | (3 | )% | ||||
Cost of products sold | 24,730 | 25,708 | (4 | )% | ||||||
Gross margin | 1,159 | 1,084 | 7 | % | ||||||
Operating expenses: | ||||||||||
Distribution, selling, general and administrative expenses | 690 | 644 | 7 | % | ||||||
Restructuring and employee severance | 5 | 3 | N.M. | |||||||
Acquisition-related costs | 28 | 27 | N.M. | |||||||
Impairments and loss on disposal of assets | 1 | 1 | N.M. | |||||||
Litigation (recoveries)/charges, net | (22 | ) | (3 | ) | N.M. | |||||
Operating earnings | 457 | 412 | 11 | % | ||||||
Other (income)/expense, net | (8 | ) | 4 | N.M. | ||||||
Interest expense, net | 26 | 23 | 11 | % | ||||||
Earnings before income taxes and discontinued operations | 439 | 385 | 14 | % | ||||||
Provision for income taxes | 167 | 148 | 13 | % | ||||||
Earnings from continuing operations | 272 | 237 | 15 | % | ||||||
Loss from discontinued operations, net of tax | (1 | ) | — | N.M. | ||||||
Net earnings | $ | 271 | $ | 237 | 15 | % | ||||
Basic earnings per Common Share: | ||||||||||
Continuing operations | $ | 0.80 | $ | 0.69 | 16 | % | ||||
Discontinued operations | — | — | N.M. | |||||||
Net basic earnings per Common Share | $ | 0.80 | $ | 0.69 | 16 | % | ||||
Diluted earnings per Common Share: | ||||||||||
Continuing operations | $ | 0.79 | $ | 0.68 | 16 | % | ||||
Discontinued operations | — | — | N.M. | |||||||
Net diluted earnings per Common Share | $ | 0.79 | $ | 0.68 | 16 | % | ||||
Weighted-average number of Common Shares outstanding: | ||||||||||
Basic | 341 | 345 | ||||||||
Diluted | 344 | 349 |
(in millions) | September 30, 2012 | June 30, 2012 | |||||
(Unaudited) | |||||||
Assets | |||||||
Current assets: | |||||||
Cash and equivalents | $ | 2,440 | $ | 2,274 | |||
Trade receivables, net | 6,449 | 6,355 | |||||
Inventories | 8,105 | 7,864 | |||||
Prepaid expenses and other | 1,013 | 1,017 | |||||
Total current assets | 18,007 | 17,510 | |||||
Property and equipment, net | 1,511 | 1,551 | |||||
Goodwill and other intangibles, net | 4,441 | 4,392 | |||||
Other assets | 861 | 807 | |||||
Total assets | $ | 24,820 | $ | 24,260 | |||
Liabilities and Shareholders’ Equity | |||||||
Current liabilities: | |||||||
Accounts payable | $ | 12,215 | $ | 11,726 | |||
Current portion of long-term obligations and other short-term borrowings | 471 | 476 | |||||
Other accrued liabilities | 1,983 | 1,972 | |||||
Total current liabilities | 14,669 | 14,174 | |||||
Long-term obligations, less current portion | 2,408 | 2,418 | |||||
Deferred income taxes and other liabilities | 1,462 | 1,424 | |||||
Total shareholders’ equity | 6,281 | 6,244 | |||||
Total liabilities and shareholders’ equity | $ | 24,820 | $ | 24,260 |
First Quarter | |||||||
(in millions) | 2013 | 2012 | |||||
Cash flows from operating activities: | |||||||
Net earnings | $ | 271 | $ | 237 | |||
Loss from discontinued operations, net of tax | 1 | — | |||||
Earnings from continuing operations | 272 | 237 | |||||
Adjustments to reconcile earnings from continuing operations to net cash from operations: | |||||||
Depreciation and amortization | 88 | 78 | |||||
Impairments and loss on disposal of assets | 1 | 1 | |||||
Share-based compensation | 24 | 20 | |||||
Provision for bad debts | 1 | 1 | |||||
Change in operating assets and liabilities, net of effects from acquisitions: | |||||||
Increase in trade receivables | (71 | ) | (69 | ) | |||
Increase in inventories | (207 | ) | (161 | ) | |||
Increase in accounts payable | 464 | 410 | |||||
Other accrued liabilities and operating items, net | (4 | ) | (13 | ) | |||
Net cash provided by operating activities | 568 | 504 | |||||
Cash flows from investing activities: | |||||||
Acquisition of subsidiaries, net of cash acquired | (100 | ) | (7 | ) | |||
Additions to property and equipment | (26 | ) | (45 | ) | |||
Proceeds from maturities of held-to-maturity securities | 23 | 10 | |||||
Net cash used in investing activities | (103 | ) | (42 | ) | |||
Cash flows from financing activities: | |||||||
Net change in short-term borrowings | (10 | ) | (5 | ) | |||
Reduction of long-term obligations | (4 | ) | — | ||||
Proceeds from issuance of Common Shares | 21 | 18 | |||||
Tax disbursements from share-based compensation | (22 | ) | (17 | ) | |||
Dividends on Common Shares | (84 | ) | (77 | ) | |||
Purchase of treasury shares | (200 | ) | (300 | ) | |||
Net cash used in financing activities | (299 | ) | (381 | ) | |||
Net increase in cash and equivalents | 166 | 81 | |||||
Cash and equivalents at beginning of period | 2,274 | 1,930 | |||||
Cash and equivalents at end of period | $ | 2,440 | $ | 2,011 |
Non-GAAP | |||||||||||||||
First Quarter | First Quarter | ||||||||||||||
(in millions) | 2013 | 2012 | 2013 | 2012 | |||||||||||
Revenue | |||||||||||||||
Amount | $ | 25,889 | $ | 26,792 | |||||||||||
Growth rate | (3 | )% | 10 | % | |||||||||||
Operating earnings | |||||||||||||||
Amount | $ | 457 | $ | 412 | $ | 469 | $ | 442 | |||||||
Growth rate | 11 | % | 13 | % | 6 | % | 16 | % | |||||||
Earnings from continuing operations | |||||||||||||||
Amount | $ | 272 | $ | 237 | $ | 281 | $ | 256 | |||||||
Growth rate | 15 | % | (19 | )% | 9 | % | 11 | % |
First Quarter | First Quarter | |||||||||||||||
(in millions) | 2013 | 2012 | (in millions) | 2013 | 2012 | |||||||||||
Pharmaceutical | Medical | |||||||||||||||
Revenue | Revenue | |||||||||||||||
Amount | $ | 23,498 | $ | 24,418 | Amount | $ | 2,393 | $ | 2,380 | |||||||
Growth rate | (4 | )% | 10 | % | Growth rate | 1 | % | 10 | % | |||||||
Mix | 91 | % | 91 | % | Mix | 9 | % | 9 | % | |||||||
Segment profit | Segment profit | |||||||||||||||
Amount | $ | 400 | $ | 363 | Amount | $ | 74 | $ | 79 | |||||||
Growth rate | 10 | % | 19 | % | Growth rate | (6 | )% | (5 | )% | |||||||
Mix | 84 | % | 82 | % | Mix | 16 | % | 18 | % | |||||||
Segment profit margin | 1.70 | % | 1.49 | % | Segment profit margin | 3.11 | % | 3.32 | % |
First Quarter | |||||||
(in millions, except per Common Share amounts) | 2013 | 2012 | |||||
Restructuring and employee severance | $ | (5 | ) | $ | (3 | ) | |
Tax benefit | 2 | 1 | |||||
Restructuring and employee severance, net of tax | $ | (3 | ) | $ | (2 | ) | |
Decrease to diluted EPS from continuing operations | $ | (0.01 | ) | $ | (0.01 | ) | |
Acquisition-Related Costs | |||||||
Amortization of acquisition-related intangible assets | $ | (21 | ) | $ | (19 | ) | |
Tax benefit | 8 | 6 | |||||
Amortization of acquisition-related intangible assets, net of tax | $ | (13 | ) | $ | (13 | ) | |
Decrease to diluted EPS from continuing operations | $ | (0.04 | ) | $ | (0.04 | ) | |
Other acquisition-related costs | $ | (7 | ) | $ | (9 | ) | |
Tax benefit | 2 | 3 | |||||
Other acquisition-related costs, net of tax | $ | (5 | ) | $ | (6 | ) | |
Decrease to diluted EPS from continuing operations | $ | (0.01 | ) | $ | (0.02 | ) | |
Total acquisition-related costs1 | $ | (28 | ) | $ | (27 | ) | |
Tax benefit | 10 | 9 | |||||
Total acquisition-related costs, net of tax1 | $ | (18 | ) | $ | (18 | ) | |
Decrease to diluted EPS from continuing operations1 | $ | (0.05 | ) | $ | (0.05 | ) | |
Impairments and loss on disposal of assets | $ | (1 | ) | $ | (1 | ) | |
Tax benefit | — | — | |||||
Impairments and loss on disposal of assets, net of tax | $ | (1 | ) | $ | (1 | ) | |
Decrease to diluted EPS from continuing operations | $ | — | $ | — | |||
Litigation recoveries/(charges), net | $ | 22 | $ | 3 | |||
Tax expense | (9 | ) | (1 | ) | |||
Litigation recoveries/(charges), net, net of tax | $ | 13 | $ | 2 | |||
Increase to diluted EPS from continuing operations | $ | 0.04 | $ | 0.01 | |||
Other Spin-Off Costs | $ | — | $ | (1 | ) | ||
Tax benefit | — | 1 | |||||
Other Spin-Off Costs, net of tax | $ | — | $ | — | |||
Decrease to diluted EPS from continuing operations | $ | — | $ | — | |||
Weighted-average number of diluted shares outstanding | 344 | 349 |
1 | The sum of the components may not equal the total due to rounding. |
First Quarter | |||||
2013 | 2012 | ||||
Days sales outstanding1 | 22.4 | 20.9 | |||
Days inventory on hand | 25.4 | 23.0 | |||
Days payable outstanding | 38.3 | 36.1 | |||
Net working capital days2 | 9.5 | 7.9 | |||
Debt to total capital | 31 | % | 31 | % | |
Net debt to capital | 7 | % | 8 | % | |
Return on equity | 17.3 | % | 16.4 | % | |
Non-GAAP return on equity | 17.9 | % | 17.7 | % | |
Effective tax rate from continuing operations | 38.1 | % | 38.4 | % | |
Non-GAAP effective tax rate from continuing operations | 37.8 | % | 38.1 | % |
1 | We changed our method of calculating days sales outstanding and have revised prior year information to conform. |
2 | The sum of the components may not equal the total due to rounding. |
First Quarter 2013 | |||||||||||||||||||||
Operating | Earnings Before | Provision | Earnings | Earnings from | Diluted EPS | Diluted EPS | |||||||||||||||
Earnings | Income Taxes | for | from | Continuing | from | from Continuing | |||||||||||||||
Operating | Growth | and Discontinued | Income | Continuing | Operations | Continuing | Operations | ||||||||||||||
(in millions, except per Common Share amounts) | Earnings | Rate | Operations | Taxes | Operations | Growth Rate | Operations | Growth Rate | |||||||||||||
GAAP | $ | 457 | 11 | % | $ | 439 | $ | 167 | $ | 272 | 15 | % | $ | 0.79 | 16 | % | |||||
Restructuring and employee severance | 5 | 5 | 2 | 3 | 0.01 | ||||||||||||||||
Acquisition-related costs | 28 | 28 | 10 | 18 | 0.05 | ||||||||||||||||
Impairments and loss on disposal of assets | 1 | 1 | — | 1 | — | ||||||||||||||||
Litigation (recoveries)/charges, net | (22 | ) | (22 | ) | (9 | ) | (13 | ) | (0.04 | ) | |||||||||||
Other Spin-Off Costs | — | — | — | — | — | ||||||||||||||||
Non-GAAP | $ | 469 | 6 | % | $ | 451 | $ | 170 | $ | 281 | 9 | % | $ | 0.81 | 11 | % | |||||
First Quarter 2012 | |||||||||||||||||||||
GAAP | $ | 412 | 13 | % | $ | 385 | $ | 148 | $ | 237 | (19 | )% | $ | 0.68 | (19 | )% | |||||
Restructuring and employee severance | 3 | 3 | 1 | 2 | 0.01 | ||||||||||||||||
Acquisition-related costs | 27 | 27 | 9 | 18 | 0.05 | ||||||||||||||||
Impairments and loss on disposal of assets | 1 | 1 | — | 1 | — | ||||||||||||||||
Litigation (recoveries)/charges, net | (3 | ) | (3 | ) | (1 | ) | (2 | ) | (0.01 | ) | |||||||||||
Other Spin-Off Costs | 1 | 1 | 1 | — | — | ||||||||||||||||
Non-GAAP | $ | 442 | 16 | % | $ | 414 | $ | 158 | $ | 256 | 11 | % | $ | 0.73 | 11 | % |
First Quarter | |||||||||||||||
(in millions) | 2013 | 2012 | |||||||||||||
GAAP return on equity | 17.3 | % | 16.4 | % | |||||||||||
Non-GAAP return on equity | |||||||||||||||
Net earnings | $ | 271 | $ | 237 | |||||||||||
Restructuring and employee severance, net of tax, in continuing operations | 3 | 2 | |||||||||||||
Acquisition-related costs, net of tax, in continuing operations | 18 | 18 | |||||||||||||
Impairments and loss on disposal of assets, net of tax, in continuing operations | 1 | 1 | |||||||||||||
Litigation (recoveries)/charges, net, net of tax, in continuing operations | (13 | ) | (2 | ) | |||||||||||
Other Spin-Off Costs, net of tax, in continuing operations | — | — | |||||||||||||
Adjusted net earnings | $ | 280 | $ | 256 | |||||||||||
Annualized | $ | 1,120 | $ | 1,024 | |||||||||||
First | Fourth | First | Fourth | ||||||||||||
Quarter | Quarter | Quarter | Quarter | ||||||||||||
2013 | 2012 | 2012 | 2011 | ||||||||||||
Total shareholders' equity | $ | 6,281 | $ | 6,244 | $ | 5,714 | $ | 5,849 | |||||||
Divided by average shareholders' equity | $ | 6,263 | $ | 5,781 | |||||||||||
Non-GAAP return on equity | 17.9 | % | 17.7 | % |
First Quarter | |||||||
(in millions) | 2013 | 2012 | |||||
GAAP effective tax rate from continuing operations | 38.1 | % | 38.4 | % | |||
Non-GAAP effective tax rate from continuing operations | |||||||
Earnings before income taxes and discontinued operations | $ | 439 | $ | 385 | |||
Restructuring and employee severance | 5 | 3 | |||||
Acquisition-related costs | 28 | 27 | |||||
Impairments and loss on disposal of assets | 1 | 1 | |||||
Litigation (recoveries)/charges, net | (22 | ) | (3 | ) | |||
Other Spin-Off Costs | — | 1 | |||||
Adjusted earnings before income taxes and discontinued operations | $ | 451 | $ | 414 | |||
Provision for income taxes | $ | 167 | $ | 148 | |||
Restructuring and employee severance tax benefit | 2 | 1 | |||||
Acquisition-related costs tax benefit | 10 | 9 | |||||
Impairments and loss on disposal of assets tax benefit | — | — | |||||
Litigation (recoveries)/charges, net tax expense | (9 | ) | (1 | ) | |||
Other Spin-Off Costs tax benefit | — | 1 | |||||
Adjusted provision for income taxes | $ | 170 | $ | 158 | |||
Non-GAAP effective tax rate from continuing operations | 37.8 | % | 38.1 | % | |||
First Quarter | |||||||
2013 | 2012 | ||||||
Debt to total capital | 31 | % | 31 | % | |||
Net debt to capital | |||||||
Current portion of long-term obligations and other short-term borrowings | $ | 471 | $ | 333 | |||
Long-term obligations, less current portion | 2,408 | 2,195 | |||||
Debt | $ | 2,879 | $ | 2,528 | |||
Cash and equivalents | (2,440 | ) | (2,011 | ) | |||
Net debt | $ | 439 | $ | 517 | |||
Total shareholders' equity | 6,281 | 5,714 | |||||
Capital | $ | 6,720 | $ | 6,231 | |||
Net debt to capital | 7 | % | 8 | % |
First Quarter | |||||||
(in millions) | 2013 | 2012 | |||||
Days sales outstanding | 22.4 | 20.9 | |||||
Days inventory on hand | |||||||
Inventories | $ | 8,105 | $ | 7,497 | |||
Cost of products sold | $ | 24,730 | $ | 25,708 | |||
Chargeback billings | 3,976 | 3,610 | |||||
Adjusted cost of products sold | $ | 28,706 | $ | 29,318 | |||
Adjusted cost of products sold divided by 90 days | $ | 319 | $ | 326 | |||
Days inventory on hand | 25.4 | 23.0 | |||||
Days payable outstanding | |||||||
Accounts payable | $ | 12,215 | $ | 11,749 | |||
Cost of products sold | $ | 24,730 | $ | 25,708 | |||
Chargeback billings | 3,976 | 3,610 | |||||
Adjusted cost of products sold | $ | 28,706 | $ | 29,318 | |||
Adjusted cost of products sold divided by 90 days | $ | 319 | $ | 326 | |||
Days payable outstanding | 38.3 | 36.1 | |||||
Net working capital days1 | 9.5 | 7.9 |
1 | The sum of the components may not equal the total due to rounding. |
1 | In this earnings release growth rates are determined by dividing the difference between current period results and prior period results by prior period results. |
2 | Programs whereby the Company fundamentally changes its operations such as closing and consolidating facilities, moving manufacturing of a product to another location, production or business process sourcing, employee severance (including rationalizing headcount or other significant changes in personnel) and realigning operations (including substantial realignment of the management structure of a business unit in response to changing market conditions). |
3 | Costs that consist primarily of transaction costs, integration costs, changes in the fair value of contingent consideration obligations and amortization of acquisition-related intangible assets. |
4 | Asset impairments and losses from the disposal of assets not eligible to be classified as discontinued operations are classified within impairments and loss on disposal of assets within the condensed consolidated statements of earnings. |
5 | Loss contingencies related to litigation and regulatory matters and income from favorable resolution of legal matters. |
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