8-K

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 8-K

CURRENT REPORT

Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934

Date of Report (Date of Earliest Event Reported): September 15, 2005

Cardinal Health, Inc.

(Exact Name of Registrant as Specified in its Charter)

Ohio
(State or Other Jurisdiction of Incorporation)

1-11373
(Commission File Number) 31-0958666
(IRS Employer
Identification Number)

7000 Cardinal Place, Dublin, Ohio 43017
(Address of Principal Executive Offices, Including Zip Code)

(614) 757-5000
(Registrant’s Telephone Number, Including Area Code)

     Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):

     o Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

     o Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

     o Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

     o Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

TABLE OF CONTENTS

Exhibit 10.01

Exhibit 99.01

Item 1.01 Entry into a Material Definitive Agreement

Amendment to Employment Agreement with a Named Executive Officer

     On September 15, 2005, Cardinal Health, Inc. (the “Company”) entered into an amendment, effective as of the same date, to an employment agreement with Ronald K. Labrum in connection with Mr. Labrum’s promotion to Chairman and Chief Executive Officer of Healthcare Supply Chain Services. The Company previously announced organizational changes that combine its distribution and logistics businesses, including its pharmaceutical distribution, medical products distribution and nuclear pharmacy services businesses, into a single operating unit. Mr. Labrum has been named to lead this operating unit. The following is a summary of the material terms of the amendment.

     The amendment increases Mr. Labrum’s annual base salary to a rate of not less than $650,000, and increases his annual bonus target to not less than 115% of his annual base salary. In addition, on September 15, 2005, Mr. Labrum was granted a stock option to purchase 84,288 common shares and 12,041 restricted share units (“RSUs”), payable in common shares, as “pull-forward” awards for the annual grant of equity awards during the fiscal year ending June 30, 2007. The option has a term of seven years and an exercise price of $62.38 per share (the fair market value of a common share on the grant date), and becomes exercisable, subject to Mr. Labrum’s continued employment, in four equal annual installments beginning on September 15, 2006. The restrictions on the RSUs will, subject to Mr. Labrum’s continued employment, lapse in three equal annual installments beginning on September 15, 2006. Mr. Labrum will not be eligible to receive an annual grant of equity awards during the Company’s fiscal year ending June 30, 2007, unless any such grant is authorized by the Human Resources and Compensation Committee (the “Compensation Committee”) of the Board of Directors of the Company. Mr. Labrum will again be eligible to participate in the Company annual grant of equity awards beginning in the fiscal year ending June 30, 2008.

     If the Company terminates Mr. Labrum’s employment without cause or if Mr. Labrum terminates his employment within one year after a change of control that leads to a material diminution of his duties, then, under the amendment, Mr. Labrum will receive: (i) the sum of two times (A) his salary in effect on the day immediately prior to termination and (B) his annual bonus target; (ii) any vested benefits required to be paid or provided by law; and (iii) all benefits provided for under the option awards granted under the employment agreement and the amendment. Mr. Labrum also agreed in the amendment to comply with certain non-compete and non-solicitation covenants during the term of his employment and for a period of two and three years, respectively, thereafter.

     The amendment is filed as Exhibit 10.01 to this report and the description of the amendment in this report is qualified in its entirety by reference to the exhibit. Except as amended by the amendment, Mr. Labrum’s original employment agreement remains in full force and effect.

Fiscal 2006 Performance Criteria under the Management Incentive Plan

     Also on September 15, 2005, the Compensation Committee established the performance criteria for annual cash incentive awards for the fiscal year ending June 30, 2006 under the Company’s Management Incentive Plan, in which all of the Company’s executive officers participate. Such criteria relate to the achievement over a one-year performance period ending June 30, 2006 of a specified level of the Company’s return on equity (determined in accordance with generally accepted accounting principles in the United States). The Compensation Committee may exercise discretion to reduce the amount of actual awards below the amounts earned under the objective performance criteria.

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Item 2.02 Results of Operations and Financial Condition

     The information set forth under this “Item 2.02 Results of Operations and Financial Condition” is intended to be furnished and such information, including Exhibit 99.01 furnished under this report, shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, nor shall it be deemed incorporated by reference in any filing under the Securities Act of 1933, as amended.

     On September 15, 2005, the Company issued a press release announcing certain organizational changes, which release referenced financial information for the fiscal year ended June 30, 2005. A copy of the press release is furnished under this report as Exhibit 99.01.

Item 9.01 Financial Statements and Exhibits

(c) Exhibits

10.01	First Amendment to Employment Agreement between the Registrant and Ronald K. Labrum, dated and effective as of September 15, 2005.
99.01	Press release issued by the Company on September 15, 2005, and furnished under this report.

SIGNATURES

     Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

	Cardinal Health, Inc.
	(Registrant)
Date: September 21, 2005	By:	/s/ Brendan A. Ford
		Name:	Brendan A. Ford
		Title:	Executive Vice President – Corporate
			Development, Interim General Counsel and
			Secretary

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EXHIBIT INDEX

10.01	First Amendment to Employment Agreement between the Registrant and Ronald K. Labrum, dated and effective as of September 15, 2005.
99.01	Press release issued by the Company on September 15, 2005, and furnished under this report.

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EX-10.01

Exhibit 10.01

FIRST AMENDMENT TO
EMPLOYMENT AGREEMENT

     This First Amendment to Employment Agreement (this “Amendment”) between Cardinal Health, Inc., an Ohio corporation (the “Company”) and Ronald K. Labrum (the “Executive”) is effective September 15, 2005 (the “Amendment Date”).

     WHEREAS, the Company and the Executive are parties to that certain Employment Agreement dated November 5, 2003 between the Company and the Executive (the “Employment Agreement”), pursuant to which the Executive renders services to the Company;

     WHEREAS, the Company and the Executive have agreed to amend certain provisions of the Executive’s Employment Agreement;

     WHEREAS, the Company and the Executive desire to set forth in writing such amendments to the Executive’s Employment Agreement;

     NOW, THEREFORE, the parties hereto, in consideration of the mutual covenants herein contained, and other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, and intending to be legally bound hereby, agree, effective as of the date of this First Amendment, as follows:

     1. Section 2(a) of the Employment Agreement is hereby amended by replacing the phrase “Executive Vice President & Group President — Medical Products and Services” with “Chairman and Chief Executive Officer of Healthcare Supply Chain Services”, and replacing the phrase “President and Chief Executive Officer — Healthcare Products and Services” with “President or Chief Executive Officer of the Company”.

     2. Section 2(b)(A) of the Employment Agreement is hereby amended by replacing the phrase “President and Chief Executive Officer — Healthcare Products and Services” with “President or Chief Executive Officer of the Company”.

     3. Section 2(c) of the Employment Agreement is hereby deleted in its entirety.

     4. Section 3(a) of the Employment Agreement is hereby amended by replacing the term “$480,000” with “$650,000”.

     5. Section 3(b) of the Employment Agreement is hereby amended by replacing the phrase “ninety percent (90%)” with “not less than one hundred and fifteen percent (115%)”.

     6. Section 4(c)(i) of the Employment Agreement is hereby amended by replacing the term “one” with “two”.

     7. Section 3(c) of the Employment Agreement is hereby amended by replacing the phrase “November 17, 2003” with “the Amendment Date”, and replacing the term “25,000” with “84,288”, and replacing the phrase “Agreement” with “First Amendment”. The Executive

acknowledges and agrees that he will not be eligible to receive an annual grant of options to purchase common shares of the Company during the Company’s fiscal year 2007, unless any such grant is authorized by the Human Resources and Compensation Committee of the Board of Directors of the Company. Beginning in the Company’s fiscal year 2008, the Executive will be eligible to participate in the Company’s annual grant of options pursuant to the Company’s then-standard practice for providing such grants to senior executives of the Company.

     8. Section 3(d) of the Employment Agreement is hereby amended by replacing the phrase “November 17, 2003” with “the Amendment Date”, and replacing the term “5,000” with “12,041”, and replacing the phrase “Agreement” with “First Amendment”. The Executive acknowledges and agrees that he will not be eligible to receive an annual grant of Restricted Share Units during the Company’s fiscal year 2007, unless any such grant is authorized by the Human Resources and Compensation Committee of the Board of Directors of the Company. Beginning in the Company’s fiscal year 2008, the Executive will be eligible to participate in the Company’s annual grant of Restricted Share Units pursuant to the Company’s then-standard practice for providing such grants to senior executives of the Company.

     9. Section 4(c)(i)(y) of the Employment Agreement is hereby amended by replacing the term “twelve (12)” with “twenty-four (24)”.

     10. The last sentence of Section 5(c) of the Employment Agreement is hereby amended by replacing the term “24” with “thirty-six (36)”.

     11. The last sentence of Section 5(d) of the Employment Agreement is hereby amended by replacing the term “twelve (12)” with “twenty-four (24)”.

     Except as specifically amended by the provisions of this First Amendment, all terms of the Employment Agreement are unmodified and remain in full force and effect.

CARDINAL HEALTH, INC.	EXECUTIVE
/s/ George L. Fotiades	/s/ Ronald K. Labrum
GEORGE L. FOTIADES	RONALD K. LABRUM
President and Chief Operating Officer

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EX-99.01

Exhibit 99.01

	7000 Cardinal Place
	Dublin,OH 43017
	www.cardinalhealth.com		FOR IMMEDIATE RELEASE
	Contacts:
Media:	Jim Mazzola	Investors:	Jason Strohm
	(614) 757-3690		(614) 757-7542
	jim.mazzola@cardinal.com		jason.strohm@cardinal.com

CARDINAL HEALTH SHARPENS CUSTOMER FOCUS, OPERATIONAL EFFICIENCY
BY CREATING $70 BILLION SUPPLY CHAIN SERVICES UNIT

Company Aligns Distribution and Supply Chain Services for Pharmaceuticals,
Medical Products, Nuclear Medicine, Surgical and Laboratory Supplies

Names Ron K. Labrum to Lead New Business

DUBLIN, Ohio, Sept. 15, 2005 — Cardinal Health, Inc., announced today organizational changes that combine its market-leading pharmaceutical distribution, medical products distribution and nuclear pharmacy services businesses into a single operating unit focused on addressing customer needs for greater information, efficiency and innovation in their supply chains.

The new business offers the most comprehensive portfolio of supply chain services in the health-care industry and is one of its largest providers, with more than $70 billion in annual sales. Today, Cardinal Health’s logistics network handles one-third of all pharmaceutical, medical and laboratory products in the industry that flow from drug and medical-supply manufacturers to health-care providers. This represents 50,000 deliveries every day to 40,000 acute care hospitals, retail pharmacy chains, independent and mail-order pharmacies, clinical laboratories and other providers of care.

By organizing around its core skills in distribution, logistics, procurement and financial and information-management, Cardinal Health expects to become more efficient as it serves a market that is approximately $300 billion in the United States alone. The new business also complements Cardinal Health’s Integrated Provider Solutions organization, which was formed earlier this year to align the company’s sales and marketing resources for hospitals and health-system customers.

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Cardinal Health Sharpens Customer Focus, Operational Efficiency with New Supply Chain Services Unit
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“Cardinal Health has a long history of innovation and expertise within health-care distribution that is reflected in our new supply chain organization,” said Robert D. Walter, chairman and chief executive officer of Cardinal Health. “The formation of the new unit is consistent with One Cardinal Health, our program to better align company resources behind our efforts to create integrated health-care solutions for customers.”

Benefits of Healthcare Supply Chain Services

New, integrated solutions developed by the supply chain services organization will be designed to address customers’ needs for:

• Information — To track usage patterns and compliance, forecast demand and monitor supplier quality;

• Efficiency — Supply chain costs represent the largest expense for pharmacies and the second largest for hospitals. They are a growing focus for pharmaceutical and medical product manufacturers; and

• Innovation — To redesign outdated processes, automate key functions, improve service levels and share risk.

In addition, today’s moves will help accelerate company programs to streamline and standardize customer service and support operations, make better use of transportation resources, facilitate the adoption of best practices, improve purchasing leverage and adopt common technology platforms to support the new business. Cardinal Health will initially consolidate more than 25 customer service centers to two main centers in the United States during a three-month period beginning in January 2006.

Key Organization and Management Changes

Ron K. Labrum will lead the new organization as chairman and chief executive officer of Healthcare Supply Chain Services, continuing to report to George Fotiades, president and chief operating officer of Cardinal Health. Labrum, who joined Cardinal Health in 1999 through the acquisition of Allegiance Healthcare Corp., has nearly 25 years of health-care experience, including managing complex supply chain services organizations.

“By integrating our supply chain businesses, we see an opportunity to leverage our significant resources to deliver solutions that can improve the operating performance of our customers and help make health care even more efficient,” Labrum said. “At the same time, we will make Cardinal Health more efficient by standardizing our infrastructure and establishing best practices across our distribution network.”

The Healthcare Supply Chain Services organization will consist of three primary businesses, reporting to Labrum:

• Supply Chain Services — Pharmaceuticals — As president and chief operating officer of Supply Chain Services — Pharmaceuticals, Mark Parrish will continue to lead pharmaceutical distribution and provider services, and assumes responsibility for U.K. pharmaceutical distribution, specialty distribution of oncology and blood products and third-party logistics services for pharmaceutical and biotech firms.

• Supply Chain Services — Medical Supply — As group president of Supply Chain Services - Medical Supply, Tom Slagle will continue to lead hospital supply,

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Cardinal Health Sharpens Customer Focus, Operational Efficiency with New Supply Chain Services Unit
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	scientific products and ambulatory care distribution, and assumes responsibility for PreSource surgical packs and logistics offerings.
•	Nuclear Pharmacy Services - Gordon Troup continues as group president of Nuclear Pharmacy Services, the industry’s largest provider of radiopharmaceuticals used in medical treatment and diagnostic testing. Troup is responsible for Cardinal Health’s network of more than 170 nuclear pharmacies delivering 14 million radiopharmaceutical doses to hospitals and outpatient care centers every year.

In addition, Michael Lynch, group president of medical products manufacturing, will report directly to Fotiades. Lynch manages Cardinal Health’s line of infection prevention and medical specialties products, including surgical gloves, masks and drapes; surgical instruments; and respiratory care products. Responsibilities also expand for David Schlotterbeck, chairman and chief executive officer of Clinical Technologies and Services, who will now also lead Cardinal Health’s international strategy.

“We have one of the most experienced management teams in health care and today’s moves allow us to continue to build on that strength by expanding the responsibilities of key leaders,” Fotiades said.

As a result of today’s organizational changes, Cardinal Health plans to report results in four operating segments beginning later in fiscal 2006: Healthcare Supply Chain Services, Medical Products Manufacturing, Pharmaceutical Technologies and Services, and Clinical Technologies and Services. The company said that businesses comprising the new Healthcare Supply Chain Services segment represented more than 60 percent of Cardinal Health’s operating earnings during fiscal 2005.

Conference Call

Cardinal Health will host a conference call at 4:30 p.m. eastern daylight time to discuss today’s announcement. To access the discussion, go to the Investors page at www.cardinalhealth.com or dial 706-634-5100, passcode 9571038. An audio replay will be available until 11:30 p.m. on Sept. 23 at 706-645-9291, passcode 9571038. A transcript and audio replay will also be available at www.cardinalhealth.com.

About Cardinal Health

Headquartered in Dublin, Ohio, Cardinal Health, Inc. (NYSE: CAH) is a $75 billion, global company serving the health-care industry with a broad portfolio of products and services. It manufactures and distributes pharmaceuticals and medical supplies, offers a range of clinical services and develops automation products that improve the management and delivery of supplies and medication for hospitals, physician offices and pharmacies. Through this diverse offering, Cardinal Health delivers integrated health-care solutions that help customers reduce their costs, improve efficiency and deliver better care to patients. Ranked No. 16 on the Fortune 500, Cardinal Health employs more than 55,000 people on six continents. More information about the company may be found at www.cardinalhealth.com.

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Cardinal Health Sharpens Customer Focus, Operational Efficiency with New Supply Chain Services Unit
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Except for historical information, all other information in this news release consists of forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These forward-looking statements are subject to risks and uncertainties that could cause actual results to differ materially from those projected, anticipated or implied. The most significant of these uncertainties are described in Cardinal Health’s Form 10-K, Form 8-K and Form 10-Q reports (including all amendments to those reports) and exhibits to those reports, and include (but are not limited to) the following: the costs, difficulties, and uncertainties related to the implementation of the organization changes described in this news release or the integration of acquired businesses; the loss of one or more key customer or supplier relationships or changes to the terms of those relationships; changes in the distribution patterns or reimbursement rates for health-care products and/or services; the results, consequences, effects or timing of any inquiry or investigation by any regulatory authority or any legal and administrative proceedings; the impact of previously announced restatements; difficulties or delays or increased costs in implementing its global restructuring program, including the facility rationalization described in this news release; difficulties in opening new facilities or fully utilizing existing capacity; difficulties and uncertainties associated with business model transitions, including the conversion of margin generated from branded pharmaceutical manufacturers to non-contingent consideration; and general economic and market conditions. Cardinal Health undertakes no obligation to update or revise any forward-looking statement.