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): May 23, 2007

Cardinal Health, Inc.

(Exact name of registrant as specified in its charter)

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)

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):

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

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

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

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

Item 5.02 Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers

(b)

On May 24, 2007, Eric R. Slusser, Executive Vice President, Chief Accounting Officer and Controller of Cardinal Health, Inc. (the “Company”), submitted his resignation with an effective date of June 29, 2007. Mr. Slusser will remain the Company’s principal accounting officer through the effective date of his departure. Mr. Slusser has notified the Company that he has accepted a position as a chief financial officer at a public company.

(c)

On May 23, 2007, the Board of Directors of the Company appointed Stuart G. Laws to be Vice President and Chief Accounting Officer, effective June 30, 2007. Mr. Laws will be the Company’s principal accounting officer.

Mr. Laws, age 44, has been Vice President, Accounting and Reporting of the Company since January 2007. From October 2004 to July 2006, he was Chief Financial Officer of Damon’s International, Inc., a restaurant operations and franchising company, and from January 1999 to October 2004, he was Senior Manager- Assurance and Advisory Services of Ernst & Young LLP, a public accounting firm.

Item 8.01 Other Items

Memorandum of Understanding to Settle Class-Action Securities Litigation

The Company has entered into a memorandum of understanding (“MOU”) to settle certain actions captioned In re Cardinal Health, Inc. Securities Litigation, No. C2-04-575, pending in the United States District Court for the Southern District of Ohio, against the Company and certain of its current and former officers and directors asserting claims under the federal securities laws (the “Cardinal Health federal securities actions”). The Cardinal Health federal securities actions are more fully described under the heading “Shareholder Litigation against Cardinal Health” in Note 8 of “Notes to Condensed Consolidated Financial Statements” included in the Company’s Quarterly Report on Form 10-Q for the period ended March 31, 2007 (the “March 31, 2007 Form 10-Q”).

Under the MOU, the Cardinal Health federal securities actions will be terminated for a payment of $600 million, an amount reserved by the Company in the third quarter of fiscal 2007. The Company transferred the $600 million into an escrow account on May 25, 2007. The defendants in the Cardinal Health federal securities actions continue to deny the violations of law alleged in those actions, and the settlement is solely to eliminate the uncertainties, burden and expense of further protracted litigation. The settlement is subject to completion of definitive documentation and certain conditions, including notice to the class of plaintiffs in the Cardinal Health federal securities actions and court approval. At this time, there can be no assurance that those conditions will be met and that the settlement will receive final court approval. A copy of the MOU is filed with this report as Exhibit 99.01, and the description of this settlement is qualified in its entirety by reference to such exhibit.

ERISA Litigation

The Company has reached an understanding with the counsel for the plaintiffs regarding a proposed settlement of the ERISA actions that are pending in the United States District Court for the Southern District of Ohio against the Company and certain officers, directors and employees of the Company by purported participants in the Cardinal Health Profit Sharing, Retirement and Savings Plan (now known as the Cardinal Health 401(k) Savings Plan, or the “401(k) Plan”) asserting claims under the Employee Retirement Income Security Act (the “Cardinal Health ERISA actions”). The Cardinal Health ERISA actions are more fully described under the heading “ERISA Litigation against Cardinal Health” in Note 8 of “Notes to Condensed Consolidated Financial Statements” included in the March 31, 2007 Form 10-Q.

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The understanding provides that the Cardinal Health ERISA actions will be terminated for a payment by the Company of $40 million. As a result, the Company will record a reserve of $40 million for the period ending June 30, 2007. The defendants in the ERISA litigation continue to deny the violations of law alleged in those actions, and the settlement reached is solely to eliminate the uncertainties, burden and expense of further protracted litigation. The proposed settlement reflected in the understanding is subject to completion of definitive documentation and certain conditions, including notice to the class of plaintiffs in the Cardinal Health ERISA actions, approval by an independent fiduciary on behalf of the 401(k) Plan and court approval. Unless and until the Cardinal Health ERISA actions are definitively resolved through settlement or otherwise, there can be no assurance that the amount reserved by the Company for this matter will be sufficient or that the Company’s efforts to resolve Cardinal Health ERISA actions will be successful, and the Company cannot predict the timing or outcome of these matters.

Insurance Coverage with respect to Cardinal Health derivative actions and Cardinal Health federal securities actions

As previously disclosed, the Company believes that there is some insurance coverage available under the Company’s insurance policies with respect to, inter alia, the derivative actions described under the heading “Derivative Actions” in Note 8 of “Notes to Condensed Consolidated Financial Statements” included in the March 31, 2007 Form 10-Q (the “Cardinal Health derivative actions”) and the Cardinal Health federal securities actions. The litigation between the Company and its insurers relating to this insurance coverage is described under the heading “Insurance Coverage for Shareholder/ERISA Litigation against Cardinal Health and Derivative Actions” in Note 8 of “Notes to Condensed Consolidated Financial Statements” included in the March 31, 2007 Form 10-Q.

The Company has reached agreements-in-principle on the basic terms of settlements of the insurance coverage litigation with four insurance companies. Definitive agreements are in the process of being finalized. The four insurance companies have agreed to pay an aggregate amount of $94 million, which would be available as appropriate for the benefit of the Company and the individuals who are defendants in the Cardinal Health derivative actions and the Cardinal Health federal securities actions. The Company will not receive or record the proceeds of the insurance settlements until definitive settlement agreements have been finalized and executed and allocation of the proceeds among the defendants has been determined. The Company believes that it has additional insurance coverage available from other carriers to partially satisfy its defense costs and liabilities in these matters, but any such additional coverage is likely to be immaterial in amount.

Derivative Actions

The MOU relating to the Cardinal Health federal securities actions and the understanding relating to the Cardinal Health ERISA actions do not resolve the Cardinal Health derivative actions. The Company has commenced settlement discussions with counsel for the plaintiffs in the Cardinal Health derivative actions. The Company currently does not believe that resolution of the Cardinal Health derivative actions will have a material adverse effect on the Company’s results of operations or financial condition.

Item 9.01 Financial Statements and Exhibits

(d) Exhibits

99.01 Memorandum of Understanding effective as of May 24, 2007.

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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: May 30, 2007	By:	/s/ Ivan K. Fong
	Name:	Ivan K. Fong
	Title:	Chief Legal Officer

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EXHIBIT INDEX

99.01 Memorandum of Understanding effective as of May 24, 2007.

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EX-99.01

EXHIBIT 99.01

MEMORANDUM OF UNDERSTANDING

TERMS OF SETTLEMENT

This Memorandum of Understanding (“MOU”) contains the terms of settlement in principle between Cardinal Health, Inc. (“Cardinal”) and Robert Walter, George Fotiades, Richard J. Miller, James F. Millar and Mark Parrish (together with Cardinal, “Defendants”) and Lead Plaintiffs in the consolidated action captioned In re Cardinal Health, Inc. Securities Litigation, No. C2-04-575 (S.D. Ohio) (“Action”). Defendants and Lead Plaintiffs will cooperate expeditiously and in good faith to prepare a stipulation of settlement (including standard accompanying exhibits) embodying this MOU. Nothing in this MOU constitutes an admission of liability or an admission against interest by Defendants or an admission against interest by Lead Plaintiffs with respect to their claims asserted in the Action.

1. In full and final settlement of all claims, Cardinal, acting on behalf of all Defendants, will pay Six Hundred Million Dollars ($600,000,000) (the “Settlement Amount”), to be transferred to an interest-bearing account or accounts designated by Lead Plaintiffs (subject to continuing court oversight) not later than the close of business, eastern time, on May 25, 2007.

2. The class to be covered by the settlement will be as previously certified by stipulated Court Order dated December 12, 2006:

All persons (and their beneficiaries) who purchased or otherwise acquired Cardinal Health, Inc. common stock between October 24, 2000 and July 26, 2004 (the “Class Period”), inclusive. Excluded from the Class are the defendants; and persons who during or after the Class Period were officers or directors of Cardinal Health, Inc.; any corporation, trust or other entity in which any defendant has a controlling interest; and the members of the immediate families of the individual defendants or their successors, heirs, assigns and legal representatives.

3. Defendants, together with their present and former officers, directors, employees, subsidiaries, parents, affiliates, accountants, consultants, advisers, successors, heirs and assigns

will receive a broad release covering all claims arising out of, in connection with, or in any way related to, directly or indirectly, both the purchase or other acquisition of Cardinal common stock during the Class Period and the acts, facts, statements or omissions that were or could have been alleged by the Lead Plaintiffs in this action, but not covering derivative claims or claims under the Employee Retirement Income Security Act of 1974. Lead Plaintiffs will take all steps necessary to secure dismissal of the Action with prejudice as to Ernst & Young.

4. Defendants will have an option to withdraw from the settlement entirely if the number of assertedly eligible shares opting out is in excess of five million. The information required to be submitted for a successful opt out by those proposing to opt out shall be sufficient to enable the parties to determine the total number of assertedly eligible shares opting out. For this purpose, “eligible shares” is defined as shares of Cardinal common stock purchased or otherwise acquired during the class period. The administrator handling the notice and opt out process shall provide all data on opt outs to counsel for Defendants and Lead Plaintiffs within no more than ten days after the last day for opting out. A period of no fewer than twenty days will be provided between the day on which the administrator completes the delivery of data on opt outs to counsel for Defendants and the day by which Defendants must exercise (or not) the option to withdraw from the settlement.

5. Except as provided in ¶¶ 4, 14 and 15, the settlement will be non-recapture, i.e., it is not a claims-made settlement and the Defendants shall have no ability to recover from the Settlement Amount any of the Settlement Amount they have paid. The account or accounts described in ¶ 1 above will be structured as a “qualified settlement fund” described in the regulations issued under Section 468B of the Internal Revenue Code. Lead Plaintiffs’ counsel or a party (other than a Defendant) designated by it will be the “administrator” for this purpose.

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The administrator will file all tax returns required to be filed and pay all taxes required to be paid by the qualified settlement fund. At Cardinal’s request, the administrator will join with Cardinal in making the “relation-back” election permitted under the Section 468B regulations. The administrator will obtain and provide Cardinal with the settlement fund’s federal taxpayer identification number on or before the date that Cardinal transfers the Settlement Amount to the fund. The settlement claims process will be administered by an independent claims administrator selected by Lead Plaintiffs’ counsel and approved by the Court. The Defendants will have no involvement in or responsibility for reviewing or challenging claims.

6. The settlement is subject to targeted additional discovery that is reasonably necessary for Lead Plaintiffs to confirm the adequacy of the settlement, in the form of (a) document deliveries, specifically (i) contents of a set of binders delivered by Gibson Dunn & Crutcher to the Cardinal Audit Committee; (ii) backup material concerning the “bulk sales” presentation by Tom Long at the March 28, 2007 mediation session; (iii) backup material concerning the September 3, 2004 memorandum by Mary Scherer and Eric Johnson entitled Bulk Delivery Revenues; (iv) transcripts of testimony of certain defendants in the Action, to the extent not already in possession of Lead Plaintiffs, and (b) interviews of current Cardinal employees whose employment positions are at the Vice President level and below, not to exceed eighteen in number or ninety hours in total. Lead Plaintiffs and Cardinal will cooperate, in accordance with prior discussion and correspondence between their respective counsel, in identifying potential interviewees and prioritizing their interviews to minimize both the number and duration of interviews as much as is reasonably possible.

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7. The settlement is not conditioned on Court approval of Lead Plaintiffs’ allocation of recovery amounts among various claimants, or Court approval of Lead Plaintiffs’ request for attorneys’ fees and expenses.

8. There shall be a stipulated order dismissing the Action in its entirety with prejudice and without costs to any party (except as expressly provided in this MOU), and establishing a comprehensive bar order satisfactory to the Defendants, but not containing or conditioned upon releases among Defendants or between Defendants and third parties.

9. The settlement shall acknowledge compliance with Rule 11; that is, while retaining their right to deny liability, Defendants will agree that, based upon the publicly available information at the time, the Action filed was filed in good faith, was not frivolous, and is being settled voluntarily by the Defendants after consultation with competent legal counsel in an amount and in a fashion that reflects multiple considerations.

10. If so ordered by the Court upon preliminary approval, Lead Plaintiffs’ counsel shall be entitled to provisional reimbursement from the settlement fund of 75% of their expenses incurred, subject to Lead Plaintiffs’ counsel’s obligation to make appropriate refunds or repayments to the settlement fund plus interest at the same rate as earned on the settlement fund if, and when, as a result of any order, the final fee or expense award is lower than that amount.

11. Upon appropriate Court order so providing, which Defendants shall not oppose, any attorneys’ fees and costs awarded to Lead Plaintiffs’ counsel by the Court shall be paid from the settlement fund immediately upon award by the Court, notwithstanding the existence of any timely filed objections thereto, or appeal (actual or potential) therefrom, or collateral attack on the settlement or any part thereof, subject to Lead Plaintiffs’ counsel’s obligation to make appropriate refunds or repayments to the settlement fund plus interest at the same rate earned on the settlement fund, if and when, as a result of any appeal and/or further proceedings on remand, or successful collateral attack, the fee or cost award is reduced.

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12. Upon appropriate court order so providing, which Defendants shall not oppose, notice costs shall be advanced on a non-recourse, non-recaptureable basis out of the Settlement Amount.

13. The class notice will provide for a 30-day opt-out period, or such other period as may be ordered by the Court. Lead Plaintiffs will make all reasonable and appropriate efforts to reduce or eliminate the number of shares that opt-out.

14. The settlement is subject to the negotiation and execution of a definitive settlement agreement. The parties agree to proceed in good faith to prepare appropriate documentation and to seek Court approval of any settlement expeditiously.

15. If the parties are unable to reach and execute a definitive agreement or if a definitive agreement is rejected by the Court, the Settlement Amount plus interest less notice costs, other administrative expenses or taxes incurred, shall be returned to Cardinal as soon as practicable.

16. The settlement shall provide for no admission of wrongdoing or liability by the Defendants, their officers, directors, employees, subsidiaries, parents, affiliates, accountants, consultants, advisers, successors, heirs and assigns, and shall acknowledge that the Defendants are entering into this settlement solely to eliminate the uncertainties, burdens and expenses of protracted litigation.

17. This MOU may be executed in counterpart and by facsimile.

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18. The parties will cooperate regarding the timing of the joint announcement of the MOU and the settlement, and will exchange draft press releases regarding the MOU and the settlement.

19. This MOU is to be governed in all respects by Ohio law.

20. Subject to the F.R.C.P. 23(e) requirement of Court approval, this MOU is binding on the parties. The only other contingencies that would permit any party not to proceed with the settlement are specified in this MOU.

Agreed to as of the 24th day of May, 2007:

Cardinal Health, Inc.		Robert Walter, George Fotiades, and Mark Parrish
By:	/s/ Ivan K. Fong	By:	/s/ John M. Newman, Jr.
	Ivan K. Fong		John M. Newman, Jr.
			Jones Day
Richard J. Miller
By:	/s/ Arthur Greenspan	James Miller
	Arthur Greenspan	By:	/s/ James Benjamin
	Richards Kibbe & Orbe LLP		James Benjamin
Lead Plaintiffs
By:	/s/ Henry Rosen
	Henry Rosen
	Lerach Coughlin Stoia Geller Rudman & Robbins LLP

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