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 July 30, 2015 announcing fourth quarter and fiscal year results. |
Cardinal Health, Inc. | |||
(Registrant) | |||
Date: | July 30, 2015 | 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 July 30, 2015 announcing fourth quarter and fiscal year results. |
Media: | Debbie Mitchell | Investors: | Sally Curley | |
(614) 757-6225 | (614) 757-7115 | |||
debbie.mitchell@cardinalhealth.com | sally.curley@cardinalhealth.com |
• | 33 percent increase in non-GAAP1 operating earnings to $611 million for the fourth quarter |
• | 16 percent growth to record $2.5 billion in non-GAAP operating earnings for fiscal 2015 |
• | 20 percent increase in non-GAAP diluted earnings per share from continuing operations to $1.00 for the fourth quarter |
• | 14 percent increase in non-GAAP diluted earnings per share from continuing operations to $4.38 for fiscal 2015 |
• | Fiscal 2016 outlook for non-GAAP diluted earnings per share raised to $4.85 to $5.05, or 11 to 15 percent growth in FY2016 |
Q4 FY15 | Q4 FY14 | Y/Y | FY15 | FY14 | Y/Y | ||||||||||||||
Revenue | $ | 27.5 | billion | $ | 22.9 | billion | 20% | $ | 102.5 | billion | $ | 91.1 | billion | 13% | |||||
Operating earnings | $ | 558 | million | $ | 387 | million | 44% | $ | 2,161 | million | $ | 1,885 | million | 15% | |||||
Non-GAAP operating earnings | $ | 611 | million | $ | 461 | million | 33% | $ | 2,472 | million | $ | 2,133 | million | 16% | |||||
Earnings from continuing operations | $ | 293 | million | $ | 234 | million | 25% | $ | 1,212 | million | $ | 1,163 | million | 4% | |||||
Non-GAAP earnings from continuing operations | $ | 333 | million | $ | 284 | million | 17% | $ | 1,469 | million | $ | 1,324 | million | 11% | |||||
Diluted EPS from continuing operations | $ | 0.88 | $ | 0.68 | 29% | $ | 3.61 | $ | 3.37 | 7% | |||||||||
Non-GAAP diluted EPS from continuing operations | $ | 1.00 | $ | 0.83 | 20% | $ | 4.38 | $ | 3.84 | 14% |
Q4 FY15 | Q4 FY14 | Y/Y | FY15 | FY14 | Y/Y | ||||||||||||||
Revenue | $ | 24.7 | billion | $ | 20.1 | billion | 23% | $ | 91.1 | billion | $ | 80.1 | billion | 14% | |||||
Segment profit | $ | 535 | million | $ | 377 | million | 42% | $ | 2.1 | billion | $ | 1.7 | billion | 20% |
Q4 FY15 | Q4 FY14 | Y/Y | FY15 | FY14 | Y/Y | ||||||||||||||
Revenue | $ | 2.9 | billion | $ | 2.8 | billion | 2% | $ | 11.4 | billion | $ | 11.0 | billion | 4% | |||||
Segment profit | $ | 103 | million | $ | 96 | million | 7% | $ | 433 | million | $ | 444 | million | (3)% |
• | Entered into an agreement to acquire The Harvard Drug Group, a distributor of generic pharmaceuticals, over-the-counter medications and related products to retail, institutional and alternate care customers, increasing Cardinal Health's generics scale and reach; acquisition completed July 2015 |
• | Entered into an agreement to acquire Cordis, a worldwide leader in cardiovascular medical products |
• | Acquired the specialty distribution business of Metro Medical Supply Inc., expanding scale and deepening reach into rheumatology, oncology and nephrology segments |
• | Entered into a long-term strategic agreement with Henry Schein, the world's largest provider of health care products and services to office-based dental, animal health and medical practitioners, to provide one of the most comprehensive service and product offerings to office-based medical practices |
• | Unveiled the Cardinal HealthTM negative pressure wound therapy PRO family of devices for use in the acute care setting, at discharge and in the home |
• | Ranked #1 on the Gartner Healthcare Supply Chain Top 25 for the fourth consecutive year |
• | Selected as one of Institutional Investor magazine's Most Honored Companies |
• | Named one of 15 recipients of the Department of Defense 2015 Secretary of Defense Employer Support Freedom Award, the highest honor the department gives to employers for support of National Guard and Reserve employees |
• | Named among the 2015 Best Companies for Leaders by Chief Executive magazine |
• | Named one of the "Top 50 Companies for Executive Women" by the National Association for Female Executives and one of the Working Mother 100 Best Companies, marking repeat designation since 2012 |
• | Named to the Human Rights Campaign (HRC) "Best Places to Work for LGBT Equality" for third consecutive year based on ratings in HRC's 2015 Corporate Equality Index |
• | Named among the National Business Group on Health Best Employers for Healthy Lifestyles Platinum Award recipients |
• | Included in Becker's Healthcare 150 Great Places to Work in Healthcare 2015 listing |
• | Named to the Dow Jones Sustainability Index for the ninth consecutive year |
• | Designated a 2015 Top Green Company in the U.S. by Newsweek magazine |
• | FBR Second Annual Healthcare Conference on Sept. 9 at 12 p.m. Eastern in Boston |
• | Baird's 2015 Healthcare Conference on Sept. 10 at 7:50 a.m. Eastern in New York |
• | Morgan Stanley Global Healthcare Conference on Sept. 16 at 8:45 a.m. Eastern in New York |
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. |
Fourth Quarter | ||||||||||
(in millions, except per common share amounts) | 2015 | 2014 | % Change | |||||||
Revenue | $ | 27,547 | $ | 22,894 | 20 | % | ||||
Cost of products sold | 26,089 | 21,638 | 21 | % | ||||||
Gross margin | 1,458 | 1,256 | 16 | % | ||||||
Operating expenses: | ||||||||||
Distribution, selling, general and administrative expenses | 847 | 795 | 7 | % | ||||||
Restructuring and employee severance | 11 | 6 | N.M. | |||||||
Amortization and other acquisition-related costs | 91 | 63 | N.M. | |||||||
Impairments and (gain)/loss on disposal of assets | — | 4 | N.M. | |||||||
Litigation (recoveries)/charges, net | (49 | ) | 1 | N.M. | ||||||
Operating earnings | 558 | 387 | 44 | % | ||||||
Other income, net | (1 | ) | (3 | ) | N.M. | |||||
Interest expense, net | 36 | 33 | 9 | % | ||||||
Earnings before income taxes and discontinued operations | 523 | 357 | 46 | % | ||||||
Provision for income taxes | 230 | 123 | 87 | % | ||||||
Earnings from continuing operations | 293 | 234 | 25 | % | ||||||
Earnings from discontinued operations, net of tax | 2 | — | N.M. | |||||||
Net earnings | $ | 295 | $ | 234 | 26 | % | ||||
Basic earnings per common share: | ||||||||||
Continuing operations | $ | 0.89 | $ | 0.69 | 29 | % | ||||
Discontinued operations | — | — | N.M. | |||||||
Net basic earnings per common share | $ | 0.89 | $ | 0.69 | 29 | % | ||||
Diluted earnings per common share: | ||||||||||
Continuing operations | $ | 0.88 | $ | 0.68 | 29 | % | ||||
Discontinued operations | — | — | N.M. | |||||||
Net diluted earnings per common share | $ | 0.88 | $ | 0.68 | 29 | % | ||||
Weighted-average number of common shares outstanding: | ||||||||||
Basic | 330 | 339 | ||||||||
Diluted | 333 | 343 |
Fiscal Year | ||||||||||
(in millions, except per common share amounts) | 2015 | 2014 | % Change | |||||||
(Unaudited) | ||||||||||
Revenue | $ | 102,531 | $ | 91,084 | 13 | % | ||||
Cost of products sold | 96,819 | 85,923 | 13 | % | ||||||
Gross margin | 5,712 | 5,161 | 11 | % | ||||||
Operating expenses: | ||||||||||
Distribution, selling, general and administrative expenses | 3,240 | 3,028 | 7 | % | ||||||
Restructuring and employee severance | 44 | 31 | N.M. | |||||||
Amortization and other acquisition-related costs | 281 | 223 | N.M. | |||||||
Impairments and (gain)/loss on disposal of assets | (19 | ) | 15 | N.M. | ||||||
Litigation (recoveries)/charges, net | 5 | (21 | ) | N.M. | ||||||
Operating earnings | 2,161 | 1,885 | 15 | % | ||||||
Other income, net | (7 | ) | (46 | ) | N.M. | |||||
Interest expense, net | 141 | 133 | 6 | % | ||||||
Loss on extinguishment of debt | 60 | — | N.M. | |||||||
Earnings before income taxes and discontinued operations | 1,967 | 1,798 | 9 | % | ||||||
Provision for income taxes | 755 | 635 | 19 | % | ||||||
Earnings from continuing operations | 1,212 | 1,163 | 4 | % | ||||||
Earnings from discontinued operations, net of tax | 3 | 3 | N.M. | |||||||
Net earnings | $ | 1,215 | $ | 1,166 | 4 | % | ||||
Basic earnings per common share: | ||||||||||
Continuing operations | $ | 3.65 | $ | 3.41 | 7 | % | ||||
Discontinued operations | 0.01 | 0.01 | N.M. | |||||||
Net basic earnings per common share | $ | 3.66 | $ | 3.42 | 7 | % | ||||
Diluted earnings per common share: | ||||||||||
Continuing operations | $ | 3.61 | $ | 3.37 | 7 | % | ||||
Discontinued operations | 0.01 | 0.01 | N.M. | |||||||
Net diluted earnings per common share | $ | 3.62 | $ | 3.38 | 7 | % | ||||
Weighted-average number of common shares outstanding: | ||||||||||
Basic | 332 | 341 | ||||||||
Diluted | 335 | 345 |
(in millions) | June 30, 2015 | June 30, 2014 | |||||
(Unaudited) | |||||||
Assets | |||||||
Current assets: | |||||||
Cash and equivalents | $ | 4,616 | $ | 2,865 | |||
Trade receivables, net | 6,523 | 5,380 | |||||
Inventories, net | 9,211 | 8,266 | |||||
Prepaid expenses and other | 1,402 | 1,428 | |||||
Total current assets | 21,752 | 17,939 | |||||
Property and equipment, net | 1,506 | 1,459 | |||||
Goodwill and other intangibles, net | 6,018 | 5,870 | |||||
Other assets | 866 | 765 | |||||
Total assets | $ | 30,142 | $ | 26,033 | |||
Liabilities and Shareholders’ Equity | |||||||
Current liabilities: | |||||||
Accounts payable | $ | 14,368 | $ | 12,149 | |||
Current portion of long-term obligations and other short-term borrowings | 281 | 801 | |||||
Other accrued liabilities | 2,594 | 2,165 | |||||
Total current liabilities | 17,243 | 15,115 | |||||
Long-term obligations, less current portion | 5,211 | 3,171 | |||||
Deferred income taxes and other liabilities | 1,432 | 1,346 | |||||
Total shareholders’ equity | 6,256 | 6,401 | |||||
Total liabilities and shareholders’ equity | $ | 30,142 | $ | 26,033 |
Fourth Quarter | Fiscal Year | ||||||||||||||
(in millions) | 2015 | 2014 | 2015 | 2014 | |||||||||||
(Unaudited) | (Unaudited) | (Unaudited) | |||||||||||||
Cash flows from operating activities: | |||||||||||||||
Net earnings | $ | 295 | $ | 234 | $ | 1,215 | $ | 1,166 | |||||||
Earnings from discontinued operations, net of tax | (2 | ) | — | (3 | ) | (3 | ) | ||||||||
Earnings from continuing operations | 293 | 234 | 1,212 | 1,163 | |||||||||||
Adjustments to reconcile earnings from continuing operations to net cash provided by operating activities: | |||||||||||||||
Depreciation and amortization | 115 | 115 | 451 | 459 | |||||||||||
Loss on extinguishment of debt | — | — | 60 | — | |||||||||||
Gain on sale of other investments | — | — | (5 | ) | (32 | ) | |||||||||
Impairments and (gain)/loss on disposal of assets, net | — | 4 | (19 | ) | 15 | ||||||||||
Share-based compensation | 30 | 24 | 110 | 96 | |||||||||||
Provision for deferred income taxes | 219 | 26 | 219 | 26 | |||||||||||
Provision for bad debts | 10 | 11 | 52 | 42 | |||||||||||
Change in fair value of contingent consideration obligation | 8 | — | 8 | — | |||||||||||
Change in operating assets and liabilities, net of effects from acquisitions: | |||||||||||||||
Decrease/(increase) in trade receivables | (152 | ) | (548 | ) | (870 | ) | 925 | ||||||||
Decrease/(increase) in inventories | 71 | (208 | ) | (779 | ) | 142 | |||||||||
Increase/(decrease) in accounts payable | 291 | 1,196 | 1,948 | (196 | ) | ||||||||||
Other accrued liabilities and operating items, net | (17 | ) | (138 | ) | 153 | (116 | ) | ||||||||
Net cash provided by operating activities | 868 | 716 | 2,540 | 2,524 | |||||||||||
Cash flows from investing activities: | |||||||||||||||
Acquisition of subsidiaries, net of cash acquired | (184 | ) | (351 | ) | (503 | ) | (519 | ) | |||||||
Additions to property and equipment | (161 | ) | (111 | ) | (300 | ) | (249 | ) | |||||||
Purchase of available-for-sale securities and other investments | (208 | ) | (102 | ) | (342 | ) | (129 | ) | |||||||
Proceeds from sale of available-for-sale securities and other investments | 77 | — | 206 | 47 | |||||||||||
Proceeds from maturities of available-for-sale securities | 13 | — | 37 | — | |||||||||||
Proceeds from divestitures and disposal of held for sale assets | — | — | 53 | — | |||||||||||
Net cash used in investing activities | (463 | ) | (564 | ) | (849 | ) | (850 | ) | |||||||
Cash flows from financing activities: | |||||||||||||||
Payment of contingent consideration obligation | (4 | ) | — | (7 | ) | — | |||||||||
Net change in short-term borrowings | (3 | ) | 49 | (12 | ) | 114 | |||||||||
Reduction of long-term obligations | — | (1 | ) | (1,221 | ) | (2 | ) | ||||||||
Proceeds from long-term obligations, net of issuance costs | 1,490 | — | 2,672 | — | |||||||||||
Net proceeds from issuance of common shares | 13 | 8 | 72 | 227 | |||||||||||
Tax proceeds/(disbursements) from share-based compensation | (4 | ) | 3 | 52 | 39 | ||||||||||
Dividends on common shares | (114 | ) | (103 | ) | (460 | ) | (415 | ) | |||||||
Purchase of treasury shares | (350 | ) | (284 | ) | (1,036 | ) | (673 | ) | |||||||
Net cash provided by/(used in) financing activities | 1,028 | (328 | ) | 60 | (710 | ) | |||||||||
Net increase/(decrease) in cash and equivalents | 1,433 | (176 | ) | 1,751 | 964 | ||||||||||
Cash and equivalents at beginning of period | 3,183 | 3,041 | 2,865 | 1,901 | |||||||||||
Cash and equivalents at end of period | $ | 4,616 | $ | 2,865 | $ | 4,616 | $ | 2,865 |
Non-GAAP | |||||||||||||||
Fourth Quarter | Fourth Quarter | ||||||||||||||
(in millions) | 2015 | 2014 | 2015 | 2014 | |||||||||||
Revenue | |||||||||||||||
Amount | $ | 27,547 | $ | 22,894 | |||||||||||
Growth rate | 20 | % | (10 | )% | |||||||||||
Operating earnings | |||||||||||||||
Amount | $ | 558 | $ | 387 | $ | 611 | $ | 461 | |||||||
Growth rate | 44 | % | N.M. | 33 | % | (2 | )% | ||||||||
Earnings from continuing operations | |||||||||||||||
Amount | $ | 293 | $ | 234 | $ | 333 | $ | 284 | |||||||
Growth rate | 25 | % | N.M. | 17 | % | 4 | % | ||||||||
Return on equity | 18.7 | % | 14.5 | % | 21.3 | % | 17.6 | % | |||||||
Effective tax rate from continuing operations | 44.1 | % | 34.4 | % | 42.2 | % | 34.2 | % | |||||||
Debt to total capital | 47 | % | 38 | % | |||||||||||
Net debt to total capital | 12 | % | 15 | % |
Non-GAAP | |||||||||||||||
Fiscal Year | Fiscal Year | ||||||||||||||
(in millions) | 2015 | 2014 | 2015 | 2014 | |||||||||||
Revenue | |||||||||||||||
Amount | $ | 102,531 | $ | 91,084 | |||||||||||
Growth rate1 | 13 | % | (10 | )% | |||||||||||
Operating earnings | |||||||||||||||
Amount | $ | 2,161 | $ | 1,885 | $ | 2,472 | $ | 2,133 | |||||||
Growth rate | 15 | % | 89 | % | 16 | % | 4 | % | |||||||
Earnings from continuing operations | |||||||||||||||
Amount | $ | 1,212 | $ | 1,163 | $ | 1,469 | $ | 1,324 | |||||||
Growth rate | 4 | % | 247 | % | 11 | % | 3 | % | |||||||
Return on equity | 19.4 | % | 18.3 | % | 23.4 | % | 20.9 | % | |||||||
Effective tax rate from continuing operations | 38.4 | % | 35.3 | % | 37.2 | % | 35.3 | % |
1 | Revenue from Walgreens was $3.3 billion for the fiscal year ended June 30, 2014. Excluding the impact of the Walgreens contract expiration, the fiscal 2015 revenue growth rate would have been 17 percent. |
Fourth Quarter | Fourth Quarter | |||||||||||||||
(in millions) | 2015 | 2014 | (in millions) | 2015 | 2014 | |||||||||||
Pharmaceutical | Medical | |||||||||||||||
Revenue | Revenue | |||||||||||||||
Amount | $ | 24,676 | $ | 20,092 | Amount | $ | 2,855 | $ | 2,794 | |||||||
Growth rate | 23 | % | (12 | )% | Growth rate | 2 | % | 4 | % | |||||||
Segment profit | Segment profit | |||||||||||||||
Amount | $ | 535 | $ | 377 | Amount | $ | 103 | $ | 96 | |||||||
Growth rate | 42 | % | (5 | )% | Growth rate | 7 | % | (8 | )% | |||||||
Segment profit margin | 2.17 | % | 1.88 | % | Segment profit margin | 3.59 | % | 3.43 | % |
Fiscal Year | Fiscal Year | |||||||||||||||
(in millions) | 2015 | 2014 | (in millions) | 2015 | 2014 | |||||||||||
Pharmaceutical | Medical | |||||||||||||||
Revenue | Revenue | |||||||||||||||
Amount | $ | 91,116 | $ | 80,110 | Amount | $ | 11,395 | $ | 10,962 | |||||||
Growth rate1 | 14 | % | (12 | )% | Growth rate | 4 | % | 9 | % | |||||||
Segment profit | Segment profit | |||||||||||||||
Amount | $ | 2,094 | $ | 1,745 | Amount | $ | 433 | $ | 444 | |||||||
Growth rate | 20 | % | 1 | % | Growth rate | (3 | )% | 19 | % | |||||||
Segment profit margin | 2.30 | % | 2.18 | % | Segment profit margin | 3.80 | % | 4.05 | % |
1 | Revenue from Walgreens was $3.3 billion for the fiscal year ended June 30, 2014. Excluding the impact of the Walgreens contract expiration, the fiscal 2015 Pharmaceutical segment revenue growth rate would have been 19 percent. |
Fourth Quarter 2015 | |||||||||||||||||||||
Operating | Earnings Before | Provision | Earnings | Earnings from | Diluted EPS | Diluted EPS | |||||||||||||||
Earnings | Income Taxes | for | from | Continuing | from | from Continuing | |||||||||||||||
(in millions, except per common share amounts) | Operating | Growth | and Discontinued | Income | Continuing | Operations | Continuing | Operations | |||||||||||||
Earnings | Rate | Operations | Taxes | Operations | Growth Rate | Operations | Growth Rate | ||||||||||||||
GAAP | $ | 558 | 44 | % | $ | 523 | $ | 230 | $ | 293 | 25 | % | $ | 0.88 | 29 | % | |||||
Restructuring and employee severance | 11 | 11 | 4 | 7 | 0.02 | ||||||||||||||||
Amortization and other acquisition-related costs | 91 | 91 | 31 | 60 | 0.18 | ||||||||||||||||
Impairments and (gain)/loss on disposal of assets | — | — | — | — | — | ||||||||||||||||
Litigation (recoveries)/charges, net | (49 | ) | (49 | ) | (22 | ) | (27 | ) | (0.08 | ) | |||||||||||
Loss on extinguishment of debt | — | — | — | — | — | ||||||||||||||||
Non-GAAP | $ | 611 | 33 | % | $ | 577 | $ | 243 | $ | 333 | 17 | % | $ | 1.00 | 20 | % | |||||
Fourth Quarter 2014 | |||||||||||||||||||||
GAAP | $ | 387 | N.M. | $ | 357 | $ | 123 | $ | 234 | N.M. | $ | 0.68 | N.M. | ||||||||
Restructuring and employee severance | 6 | 6 | 2 | 4 | 0.01 | ||||||||||||||||
Amortization and other acquisition-related costs | 63 | 63 | 22 | 41 | 0.12 | ||||||||||||||||
Impairments and loss on disposal of assets | 4 | 4 | 1 | 3 | 0.01 | ||||||||||||||||
Litigation (recoveries)/charges, net | 1 | 1 | — | 1 | — | ||||||||||||||||
Loss on extinguishment of debt | — | — | — | — | — | ||||||||||||||||
Non-GAAP | $ | 461 | (2 | )% | $ | 432 | $ | 148 | $ | 284 | 4 | % | $ | 0.83 | 5 | % |
Fiscal Year 2015 | |||||||||||||||||||||
Operating | Earnings Before | Provision | Earnings | Earnings from | Diluted EPS | Diluted EPS | |||||||||||||||
Earnings | Income Taxes | for | from | Continuing | from | from Continuing | |||||||||||||||
(in millions, except per common share amounts) | Operating | Growth | and Discontinued | Income | Continuing | Operations | Continuing | Operations | |||||||||||||
Earnings | Rate | Operations | Taxes | Operations | Growth Rate | Operations | Growth Rate | ||||||||||||||
GAAP | $ | 2,161 | 15 | % | $ | 1,967 | $ | 755 | $ | 1,212 | 4 | % | $ | 3.61 | 7 | % | |||||
Restructuring and employee severance | 44 | 44 | 15 | 29 | 0.09 | ||||||||||||||||
Amortization and other acquisition-related costs | 281 | 281 | 100 | 181 | 0.54 | ||||||||||||||||
Impairments and (gain)/loss on disposal of assets | (19 | ) | (19 | ) | (10 | ) | (9 | ) | (0.03 | ) | |||||||||||
Litigation (recoveries)/charges, net | 5 | 5 | (14 | ) | 19 | 0.06 | |||||||||||||||
Loss on extinguishment of debt | — | 60 | 23 | 37 | 0.11 | ||||||||||||||||
Non-GAAP | $ | 2,472 | 16 | % | $ | 2,339 | $ | 870 | $ | 1,469 | 11 | % | $ | 4.38 | 14 | % | |||||
Fiscal Year 2014 | |||||||||||||||||||||
GAAP | $ | 1,885 | 89 | % | $ | 1,798 | $ | 635 | $ | 1,163 | 247 | % | $ | 3.37 | 247 | % | |||||
Restructuring and employee severance | 31 | 31 | 11 | 20 | 0.06 | ||||||||||||||||
Amortization and other acquisition-related costs | 223 | 223 | 79 | 144 | 0.42 | ||||||||||||||||
Impairments and loss on disposal of assets | 15 | 15 | 5 | 10 | 0.03 | ||||||||||||||||
Litigation (recoveries)/charges, net | (21 | ) | (21 | ) | (8 | ) | (13 | ) | (0.04 | ) | |||||||||||
Loss on extinguishment of debt | — | — | — | — | — | ||||||||||||||||
Non-GAAP | $ | 2,133 | 4 | % | $ | 2,047 | $ | 722 | $ | 1,324 | 3 | % | $ | 3.84 | 3 | % |
Fourth Quarter | |||||||||||||||
(in millions) | 2015 | 2014 | |||||||||||||
GAAP return on equity | 18.7 | % | 14.5 | % | |||||||||||
Non-GAAP return on equity | |||||||||||||||
Net earnings | $ | 295 | $ | 234 | |||||||||||
Restructuring and employee severance, net of tax, in continuing operations | 7 | 4 | |||||||||||||
Amortization and other acquisition-related costs, net of tax, in continuing operations | 60 | 41 | |||||||||||||
Impairments and (gain)/loss on disposal of assets, net of tax, in continuing operations | — | 3 | |||||||||||||
Litigation (recoveries)/charges, net, net of tax, in continuing operations | (27 | ) | 1 | ||||||||||||
Adjusted net earnings | $ | 335 | $ | 283 | |||||||||||
Annualized | $ | 1,340 | $ | 1,132 | |||||||||||
Fourth | Third | Fourth | Third | ||||||||||||
Quarter | Quarter | Quarter | Quarter | ||||||||||||
2015 | 2015 | 2014 | 2014 | ||||||||||||
Total shareholders' equity | $ | 6,256 | $ | 6,369 | $ | 6,401 | $ | 6,532 | |||||||
Divided by average shareholders' equity | $ | 6,312 | $ | 6,466 | |||||||||||
Non-GAAP return on equity | 21.3 | % | 17.6 | % |
Fiscal Year | |||||||||||||||||||||||||||||||||||||||
(in millions) | 2015 | 2014 | |||||||||||||||||||||||||||||||||||||
GAAP return on equity | 19.4 | % | 18.3 | % | |||||||||||||||||||||||||||||||||||
Non-GAAP return on equity | |||||||||||||||||||||||||||||||||||||||
Net earnings | $ | 1,215 | $ | 1,166 | |||||||||||||||||||||||||||||||||||
Restructuring and employee severance, net of tax, in continuing operations | 29 | 20 | |||||||||||||||||||||||||||||||||||||
Amortization and other acquisition-related costs, net of tax, in continuing operations | 181 | 144 | |||||||||||||||||||||||||||||||||||||
Impairments and (gain)/loss on disposal of assets, net of tax, in continuing operations | (9 | ) | 10 | ||||||||||||||||||||||||||||||||||||
Litigation (recoveries)/charges, net, net of tax, in continuing operations | 19 | (13 | ) | ||||||||||||||||||||||||||||||||||||
Loss on extinguishment of debt, net of tax, in continuing operations | 37 | — | |||||||||||||||||||||||||||||||||||||
Adjusted net earnings | $ | 1,472 | $ | 1,327 | |||||||||||||||||||||||||||||||||||
Fourth | Third | Second | First | Fourth | Fourth | Third | Second | First | Fourth | ||||||||||||||||||||||||||||||
Quarter | Quarter | Quarter | Quarter | Quarter | Quarter | Quarter | Quarter | Quarter | Quarter | ||||||||||||||||||||||||||||||
2015 | 2015 | 2015 | 2015 | 2014 | 2014 | 2014 | 2014 | 2014 | 2013 | ||||||||||||||||||||||||||||||
Total shareholders' equity | $ | 6,256 | $ | 6,369 | $ | 6,100 | $ | 6,256 | $ | 6,401 | $ | 6,401 | $ | 6,532 | $ | 6,589 | $ | 6,297 | $ | 5,975 | |||||||||||||||||||
Divided by average shareholders' equity | $ | 6,276 | $ | 6,359 | |||||||||||||||||||||||||||||||||||
Non-GAAP return on equity | 23.4 | % | 20.9 | % |
Fourth Quarter | Fiscal Year | ||||||||||||||
(in millions) | 2015 | 2014 | 2015 | 2014 | |||||||||||
GAAP effective tax rate from continuing operations | 44.1 | % | 34.4 | % | 38.4 | % | 35.3 | % | |||||||
Non-GAAP effective tax rate from continuing operations | |||||||||||||||
Earnings before income taxes and discontinued operations | $ | 523 | $ | 357 | $ | 1,967 | $ | 1,798 | |||||||
Restructuring and employee severance | 11 | 6 | 44 | 31 | |||||||||||
Amortization and other acquisition-related costs | 91 | 63 | 281 | 223 | |||||||||||
Impairments and (gain)/loss on disposal of assets | — | 4 | (19 | ) | 15 | ||||||||||
Litigation (recoveries)/charges, net | (49 | ) | 1 | 5 | (21 | ) | |||||||||
Loss on extinguishment of debt | — | — | 60 | — | |||||||||||
Adjusted earnings before income taxes and discontinued operations | $ | 577 | $ | 432 | $ | 2,339 | $ | 2,047 | |||||||
Provision for income taxes | $ | 230 | $ | 123 | $ | 755 | $ | 635 | |||||||
Restructuring and employee severance tax benefit | 4 | 2 | 15 | 11 | |||||||||||
Amortization and other acquisition-related costs tax benefit | 31 | 22 | 100 | 79 | |||||||||||
Impairments and (gain)/loss on disposal of assets tax benefit/(expense) | — | 1 | (10 | ) | 5 | ||||||||||
Litigation (recoveries)/charges, net tax expense | (22 | ) | — | (14 | ) | (8 | ) | ||||||||
Loss on extinguishment of debt tax benefit | — | — | 23 | — | |||||||||||
Adjusted provision for income taxes | $ | 243 | $ | 148 | $ | 870 | $ | 722 | |||||||
Non-GAAP effective tax rate from continuing operations | 42.2 | % | 34.2 | % | 37.2 | % | 35.3 | % | |||||||
Fourth Quarter | |||||||||||||||
2015 | 2014 | ||||||||||||||
Debt to total capital | 47 | % | 38 | % | |||||||||||
Net debt to capital | |||||||||||||||
Current portion of long-term obligations and other short-term borrowings | $ | 281 | $ | 801 | |||||||||||
Long-term obligations, less current portion | 5,211 | 3,171 | |||||||||||||
Debt | $ | 5,492 | $ | 3,972 | |||||||||||
Cash and equivalents | (4,616 | ) | (2,865 | ) | |||||||||||
Net debt | $ | 876 | $ | 1,107 | |||||||||||
Total shareholders' equity | 6,256 | 6,401 | |||||||||||||
Capital | $ | 7,132 | $ | 7,508 | |||||||||||
Net debt to capital | 12 | % | 15 | % |
1 | Programs by which 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 realignment of the management structure of a business unit in response to changing market conditions). |
2 | Costs that consist primarily of amortization of acquisition-related intangibles assets, transaction costs, integration costs and changes in the fair value of contingent consideration obligations. |
3 | Asset impairments and (gains)/losses from the disposal of assets not eligible to be classified as discontinued operations are classified within impairments and (gain)/loss on disposal of assets within the consolidated statements of earnings. |
4 | Loss contingencies related to litigation and regulatory matters and income from favorable resolution of legal matters. |
5 | The inventories of the Company's core pharmaceutical distribution facilities in the Pharmaceutical segment are valued at the lower of cost, using the LIFO method, or market. These charges or credits are included in cost of products sold, and represent changes in the Company's LIFO inventory reserve. |
6 | Charges related to the make-whole premium on the redemption of notes. |
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