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): August 5, 2010

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 2.02 Results of Operations and Financial Condition

On August 5, 2010, Cardinal Health, Inc. (“Cardinal Health” or the “Company”) issued a news release announcing its results for the quarter and fiscal year ended June 30, 2010. A copy of the news release is included as Exhibit 99.1 to this report.

A discussion of the reasons why management believes that the presentation of non-GAAP financial measures provides useful information to investors regarding Cardinal Health’s financial condition and results of operations is included as Exhibit 99.2 to this report.

Item 7.01 Regulation FD Disclosure

During a conference call scheduled to be held at 8:30 a.m. EDT on August 5, 2010, Cardinal Health’s Chairman and Chief Executive Officer and Chief Financial Officer will discuss the Company’s results for the quarter and fiscal year ended June 30, 2010 and outlook for the fiscal year ending June 30, 2011. The slide presentation for the conference call will be available on the Investors page at www.cardinalhealth.com. An audio replay of the conference call also will be available on the Investors page at www.cardinalhealth.com.

Item 9.01 Financial Statements and Exhibits

(d) Exhibits

99.1	News release issued by Cardinal Health on August 5, 2010 announcing fourth quarter and fiscal year results
99.2	Information disclosed by Cardinal Health on August 5, 2010

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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: August 5, 2010	By:	/s/ Stuart G. Laws
		Name:	Stuart G. Laws
		Title:	Senior Vice President and Chief Accounting Officer

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EXHIBIT INDEX

99.1	News release issued by Cardinal Health on August 5, 2010 announcing fourth quarter and fiscal year results
99.2	Information disclosed by Cardinal Health on August 5, 2010

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EX-99.1

Exhibit 99.1

Media: Troy Kirkpatrick (614) 757-6225 troy.kirkpatrick@cardinalhealth.com Investors: Sally Curley (614) 757-7115 sally.curley@cardinalhealth.com

CARDINAL HEALTH REPORTS FISCAL 2010 RESULTS, RAISES FISCAL 2011 OUTLOOK

• Full-year revenue increases 3 percent to $99 billion

• Fiscal 2010 diluted earnings per share from continuing operations of $1.62, or $2.22 on a non-GAAP basis

• Fiscal 2011 non-GAAP diluted EPS outlook raised to $2.38 to $2.48

DUBLIN, Ohio, Aug. 5, 2010 — Cardinal Health today reported fiscal 2010 revenue of $98.5 billion and non-GAAP diluted earnings per share (EPS) from continuing operations¹ of $2.22. Revenue for the fourth quarter was $24.5 billion and diluted EPS from continuing operations for the quarter was $0.54, or $0.50 on a non-GAAP basis. The company also raised its non-GAAP diluted EPS outlook for fiscal 2011 to a range of $2.38 to $2.48 from its preliminary outlook of $2.35 to $2.45.

“I am extremely proud of the progress we made in FY2010 and the actions we took to shift our growth trajectory and position us for the coming years,” said George Barrett, chairman and CEO of Cardinal Health. “Our Medical segment grew profits by 11 percent for the year, while continuing to make key strategic investments. The Pharmaceutical segment declined by 3 percent, but performed considerably better than we anticipated for the full year as a result of execution on major initiatives, disciplined cost controls and some unplanned generic launches. These items largely offset the dampening effect of the actions we took to improve our strategic positioning, the negative impact from the year-over-year comparison of generic launches and the severe supply shortages in nuclear pharmacy.”

Operating cash flow for fiscal 2010 increased to $2.1 billion, driven by strong working capital management.

Q4 and FY10 SUMMARY

	Q4 FY10		Q4 FY09		Y/Y		FY10		Y/Y
Revenue	$	24.5 billion	$	24.3 billion	0.5	%	$	98.5 billion	3	%
Operating Earnings	$	334 million	$	307 million	9	%	$	1.3 billion	1	%
Non-GAAP Operating Earnings2	$	317 million	$	356 million	(11	%)	$	1.4 billion	(2	%)
Earnings from Continuing Operations	$	194 million	$	202 million	(4	%)	$	587 million	(23	%)
Non-GAAP Earnings from Continuing Operations3	$	181 million	$	228 million	(21	%)	$	804 million	(2	%)
Diluted EPS from Continuing Operations	$	0.54	$	0.56	(4	%)	$	1.62	(23	%)
Non-GAAP Diluted EPS from Continuing Operations	$	0.50	$	0.63	(21	%)	$	2.22	(2	%)

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Cardinal Health

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For the quarter, GAAP results included items that had a positive $0.04 per share net after-tax contribution, primarily from a previously disclosed litigation recovery. For the full year, GAAP results included items that had an aggregate net negative effect of $0.60 per share after-tax, primarily driven by tax charges in the first-quarter related to the portion of non-U.S. earnings that will no longer be indefinitely invested offshore following the spinoff of CareFusion Corp., and restructuring and severance. These charges were partially offset by gains on the sale of CareFusion stock and litigation recoveries.

SEGMENT RESULTS

Pharmaceutical Segment

Fourth-quarter revenue for the Pharmaceutical segment was $22.3 billion, with sales to non-bulk customers increasing 3 percent to $11.5 billion and sales to bulk customers decreasing 3 percent to $10.8 billion. Generic pharmaceutical sales grew 10 percent for the quarter. Segment profit declined 17 percent to $227 million, primarily driven by lower branded inflation income, the year-over-year impact from customer pricing changes and supply disruptions in nuclear pharmacy, partially offset by the positive margin contribution from the company’s generic programs and other business initiatives.

For the full year, Pharmaceutical segment revenue grew 2 percent to $89.8 billion, with sales to non-bulk customers increasing 4 percent to $45.8 billion and sales to bulk customers increasing 1 percent to $44 billion. Annual segment profit declined 3 percent to $1 billion, due to customer pricing changes, supply shortages in nuclear pharmacy, fewer significant generic launches than the prior year and the Medicine Shoppe International transition. The decline in segment profit was partially offset by contributions from the company’s generic programs, disciplined cost controls and solid performance from its branded manufacturer agreements.

“We made great strides in fiscal 2010 with key strategic priorities including our generic sales and sourcing initiatives, working capital optimization and customer-facing information technology improvements – all of which are starting to have a positive impact on the bottom line,” Barrett said. “With the recent renewals of key customers, we have stabilized our base for the next several years. In addition, our recent acquisition of Healthcare Solutions Holding will help accelerate our strategy for specialty pharmaceuticals and contribute to long-term growth for the segment.”

	Q4 FY10		Q4 FY09		Y/Y		FY10		Y/Y
Revenue	$	22.3 billion	$	22.3 billion	0.2	%	$	89.8 billion	2	%
Segment Profit	$	227 million	$	273 million	(17	%)	$	1 billion	(3	%)

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Cardinal Health

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Medical Segment

Fourth-quarter revenue for the Medical segment increased 3 percent to $2.2 billion, primarily from sales growth with existing customers. Segment profit increased 22 percent to $102 million, primarily driven by growth in the Hospital Supply business and disciplined cost controls, partially offset by higher commodity prices.

For the full year, Medical segment revenue increased 7 percent to $8.8 billion, driven by growth from existing customers, new products and foreign exchange. Annual segment profit increased 11 percent to $428 million, aided by the decreased cost of raw materials associated with commodity price movements. Segment profit growth was partially dampened from investment expense associated with the Medical Business Transformation program.

“While our Medical segment reported solid top- and bottom-line growth for the year, we continued to make investments to further improve our customers’ experience and position the business for sustainable growth,” Barrett said. “By combining our extensive channel reach with our growing expertise in category management, we will enable the growth of our preferred products and service offerings to create even more value across the entire supply chain.”

	Q4 FY10		Q4 FY09		Y/Y		FY10		Y/Y
Revenue	$	2.2 billion	$	2.1 billion	3	%	$	8.8 billion	7	%
Segment Profit	$	102 million	$	84 million	22	%	$	428 million	11	%

FISCAL 2011 OUTLOOK

“We have gained additional clarity regarding key inputs to our planning process since offering our preliminary 2011 outlook in April,” Barrett said. “Based on our current information, we are raising our fiscal 2011 guidance for non-GAAP diluted EPS from continuing operations to a range of $2.38 to $2.48.”

ADDITIONAL FOURTH-QUARTER AND RECENT HIGHLIGHTS INCLUDE:

• Increased the regular quarterly dividend by 11 percent to $0.195 per share;

• Completed the acquisition of Healthcare Solutions Holding (P4 Healthcare and P4 Pathways) to bolster company offerings to specialty pharmaceutical customers; and

• Record-breaking attendance at the company’s annual Retail Business Conference, where the company launched new products and services that were well received by its retail independent customers.

CONFERENCE CALL

Cardinal Health will host a conference call and webcast today at 8:30 a.m. EDT to discuss fourth-quarter and full-year results and its future outlook. To access the call and corresponding slide presentation, go to the Investor page at cardinalhealth.com/investors or dial 617.213.4855, passcode 86433823. Presentation slides and an audio replay will be archived on the website after the conclusion of the meeting. The audio replay will also be available until 11 p.m. on Aug. 8 by dialing 617.801.6888, passcode 37905680.

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Cardinal Health

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UPCOMING EVENTS

• Morgan Stanley Global Healthcare Conference on Sept. 13 at 1 p.m. EDT at the Grand Hyatt in New York;

• Baird’s 2010 Health Care Conference on Sept. 14 at 9:30 a.m. EDT at the St. Regis Hotel in New York;

• Stifel Nicolaus Healthcare Conference on Sept. 15 at 10:55 a.m. EDT at the Four Seasons Hotel in Boston.

At these events, Cardinal Health CFO Jeff Henderson will discuss the company’s diverse products and services, company performance and strategies for continued growth. To access more details and live webcasts of these events, including remarks, go to the Investors page at cardinalhealth.com.

About Cardinal Health

Headquartered in Dublin, Ohio, Cardinal Health, Inc. (NYSE: CAH) is a $99 billion health care services company that improves the cost-effectiveness of health care. As the business behind health care, Cardinal Health helps pharmacies, hospitals, ambulatory surgery centers and physician offices focus on patient care while reducing costs, improving efficiency and quality, and increasing profitability. Cardinal Health is an essential link in the health care supply chain, providing pharmaceuticals and medical products to more than 60,000 locations each day. The company is also a leading manufacturer of medical and surgical products, including gloves, surgical apparel and fluid management products. In addition, the company supports the growing diagnostic industry by supplying medical products to clinical laboratories and operating the nation’s largest network of radiopharmacies that dispense products to aid in the early diagnosis and treatment of disease. Ranked #17 on the Fortune 500, Cardinal Health employs more than 30,000 people worldwide. More information about the company may be found at cardinalhealth.com.

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¹ Non-GAAP diluted EPS from continuing operations: Non-GAAP earnings from continuing operations divided by diluted weighted average shares outstanding.

² Non-GAAP operating earnings: Operating earnings excluding (1) restructuring and employee severance, (2) acquisition related costs, (3) impairments and loss on sale of assets, (4) litigation (credits)/charges, net, and (5) Other Spinoff Costs (as defined at the end of the attached tables) included within distribution, selling, general and administrative expenses.

³ Non-GAAP earnings from continuing operations: Earnings from continuing operations excluding (1) restructuring and employee severance, (2) acquisition related costs, (3) impairments and loss on sale of assets, (4) litigation (credits)/charges, net, (5) Other Spinoff Costs, and (6) gain on sale of CareFusion stock, each net of tax.

A reconciliation of the differences between these non-GAAP financial measures and their most directly comparable GAAP financial measures is provided in the attached tables and at cardinalhealth.com.

Cardinal Health uses its website as a channel of distribution for material company information. Important information, including news releases, analyst presentations and financial information regarding Cardinal Health is routinely posted and accessible on the Investors page at cardinalhealth.com.

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Cardinal Health

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Cautions Concerning Forward-Looking Statements

This news release contains forward-looking statements, which are not based on historical facts, addressing expectations, prospects, estimates and other matters that are dependent upon future events or developments. These statements may be identified by words such as “expect,” “anticipate,” “intend,” “plan,” “believe,” “will,” “should,” “could,” “would,” “project,” “continue,” and similar expressions, and include statements reflecting future results or guidance, statements of outlook and tax accruals. These matters are subject to risks and uncertainties that could cause actual results to differ materially from those projected, anticipated or implied. These risks and uncertainties include (but are not limited to) the ability to achieve the expected benefits from the acquisition of Healthcare Solutions Holding and to grow our specialty distribution business; uncertainties and risks regarding the effect of the CareFusion spinoff on Cardinal Health; the performance of CareFusion and the proceeds realized from future sales of CareFusion stock; uncertainties due to government health care reform including the recently enacted federal health care reform legislation; competitive pressures in Cardinal Health’s various lines of business; the loss of one or more key customer or supplier relationships or changes to the terms of those relationships; the timing of generic and branded pharmaceutical introductions and the frequency or rate of branded pharmaceutical price appreciation or generic pharmaceutical price deflation; 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 or administrative proceedings; the effects of disruptions in the financial markets, including uncertainties related to the availability and/or cost of credit on Cardinal Health’s customers and vendors; and uncertainties related to demand for Cardinal Health’s products and services. In addition, Cardinal Health is subject to additional risks and uncertainties described in Cardinal Health’s Form 10-K, Form 10-Q and Form 8-K reports (including all amendments to those reports) and exhibits to those reports. This news release reflects management’s views as of August 5, 2010. Except to the extent required by applicable law, Cardinal Health undertakes no obligation to update or revise any forward-looking statement.

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CARDINAL HEALTH, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS (UNAUDITED)

	Fourth Quarter
(in millions, except per Common Share amounts)	2010			2009			% Change
Revenue	$	24,459.6		$	24,347.3		0.5	%
Cost of products sold		23,555.5			23,403.0		1	%
Gross margin		904.1			944.3		(4	)%
Operating expenses
Distribution, selling, general and administrative expenses		588.2			591.7		(1	)%
Restructuring and employee severance1		6.4			37.5		N.M.
Acquisition related costs1		8.3			0.7		N.M.
Impairments and loss on sale of assets		0.9			2.7		N.M.
Litigation (credits)/charges, net		(33.6	)		4.9		N.M.
Operating earnings		333.9			306.8		9	%
Other (income)/expense, net		2.3			(15.5	)	N.M.
Interest expense, net		24.5			32.6		(25	)%
Gain on sale of CareFusion common stock		(1.3	)		—		N.M.
Earnings before income taxes and discontinued operations		308.4			289.7		6	%
Provision for income taxes		114.6			87.7		31	%
Earnings from continuing operations		193.8			202.0		(4	)%
Earnings from discontinued operations (net of tax expense of $0.0 million and $48.5 million for the fourth quarter of fiscal 2010 and 2009, respectively)		29.7			71.2		N.M.
Net earnings	$	223.5		$	273.2		(18	)%
Basic earnings per Common Share:
Continuing operations	$	0.54		$	0.56		(4	)%
Discontinued operations		0.08			0.20		N.M.
Net basic earnings per Common Share	$	0.62		$	0.76		(18	)%
Diluted earnings per Common Share:
Continuing operations	$	0.54		$	0.56		(4	)%
Discontinued operations		0.08			0.19		N.M.
Net diluted earnings per Common Share	$	0.62		$	0.75		(17	)%
Weighted average number of Common Shares outstanding:
Basic		358.3			358.2
Diluted		361.8			361.1

¹ During the fourth quarter of fiscal 2010, the Company began presenting acquisition related costs separately on its condensed consolidated statements of earnings. This amount had previously been included in restructuring and employee severance. Prior periods have been changed to conform with this new presentation.

CARDINAL HEALTH, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS (UNAUDITED)

	Fiscal Year
(in millions, except per Common Share amounts)	2010			2009		% Change
Revenue	$	98,502.8		$	95,991.5	3	%
Cost of products sold		94,722.1			92,244.0	3	%
Gross margin		3,780.7			3,747.5	1	%
Operating expenses
Distribution, selling, general and administrative expenses		2,408.0			2,333.5	3	%
Restructuring and employee severance1		90.7			104.7	N.M.
Acquisition related costs1		8.4			2.8	N.M.
Impairments and loss on sale of assets		29.1			13.9	N.M.
Litigation (credits)/charges, net		(62.4	)		5.2	N.M.
Operating earnings		1,306.9			1,287.4	1	%
Other (income)/expense, net		(13.5	)		13.2	N.M.
Interest expense, net		113.5			114.4	(1	)%
Loss on extinguishment of debt		39.9			—	N.M.
Gain on sale of CareFusion common stock		(44.6	)		—	N.M.
Earnings before income taxes and discontinued operations		1,211.6			1,159.8	4	%
Provision for income taxes		624.6			401.6	N.M.
Earnings from continuing operations		587.0			758.2	(23	)%
Earnings from discontinued operations (net of tax expense of $35.5 million and $131.2 million for fiscal 2010 and 2009, respectively)		55.2			393.4	N.M.
Net earnings	$	642.2		$	1,151.6	(44	)%
Basic earnings per Common Share:
Continuing operations	$	1.64		$	2.12	(23	)%
Discontinued operations		0.15			1.10	N.M.
Net basic earnings per Common Share	$	1.79		$	3.22	(43	)%
Diluted earnings per Common Share:
Continuing operations	$	1.62		$	2.10	(23	)%
Discontinued operations		0.15			1.08	N.M.
Net diluted earnings per Common Share	$	1.77		$	3.18	(44	)%
Weighted average number of Common Shares outstanding:
Basic		358.8			357.6
Diluted		361.4			361.5

¹ During the fourth quarter of fiscal 2010, the Company began presenting acquisition related costs separately on its condensed consolidated statements of earnings. This amount had previously been included in restructuring and employee severance. Prior periods have been changed to conform with this new presentation.

CARDINAL HEALTH, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(in millions)	June 30, 2010		June 30, 2009
Assets
Cash and equivalents	$	2,755.3	$	1,221.6
Trade receivables, net		5,170.6		5,214.9
Inventories		6,355.9		6,832.8
Prepaid expenses and other		637.1		523.0
Assets from businesses held for sale and discontinued operations		—		7,189.4
Total current assets		14,918.9		20,981.7
Property and equipment, net		1,468.8		1,464.5
Investment in CareFusion		691.5		—
Goodwill and other intangibles, net		2,253.2		2,266.9
Other assets		657.8		405.7
Total assets	$	19,990.2	$	25,118.8
Liabilities and Shareholders’ Equity
Current portion of long-term obligations and other short-term borrowings	$	233.2	$	366.2
Accounts payable		9,494.9		9,041.9
Other accrued liabilities		1,809.5		1,496.2
Liabilities from businesses held for sale and discontinued operations		—		1,370.9
Total current liabilities		11,537.6		12,275.2
Long-term obligations, less current portion		1,896.1		3,271.6
Deferred income taxes and other liabilities		1,280.4		847.3
Total shareholders’ equity		5,276.1		8,724.7
Total liabilities and shareholders’ equity	$	19,990.2	$	25,118.8

CARDINAL HEALTH, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)

	Fourth Quarter						Fiscal Year
(in millions)	2010			2009			2010			2009
Cash Flows From Operating Activities:
Net earnings	$	223.5		$	273.2		$	642.2		$	1,151.6
Earnings from discontinued operations		(29.7	)		(71.2	)		(55.2	)		(393.4	)
Earnings from continuing operations		193.8			202.0			587.0			758.2
Adjustments to reconcile earnings from continuing operations to net cash provided by operating activities:
Depreciation and amortization		60.0			57.0			254.4			225.8
Loss on debt extinguishment		—			—			39.9			—
Gain on sale of CareFusion common stock		(1.3	)		—			(44.6	)		—
Impairments and loss on sale of assets		0.9			2.7			29.1			13.9
Share-based payment compensation		20.6			27.1			99.5			109.9
Provision for deferred income taxes		120.2			149.4			120.2			149.4
Provision for bad debts		(6.4	)		6.2			26.8			51.4
Change in operating assets and liabilities, net of effects from acquisitions:
Decrease/(increase) in trade receivables		386.0			268.8			20.6			(713.6	)
Decrease/(increase) in inventories		858.5			912.5			477.4			(431.2	)
Increase/(decrease) in accounts payable		(1,271.7	)		(866.5	)		451.0			768.1
Other accrued liabilities and operating items, net		(35.9	)		0.7			(74.6	)		19.3
Net cash provided by operating activities - continuing operations		324.7			759.9			1,986.7			951.2
Net cash provided by/(used in) operating activities - discontinued operations		(0.4	)		(151.8	)		147.4			472.7
Net cash provided by operating activities		324.3			608.1			2,134.1			1,423.9
Cash Flows From Investing Activities:
Proceeds from divestitures		141.3			—			154.1			123.3
Acquisition of subsidiaries, net of cash acquired		—			—			(32.0	)		(128.6	)
Net additions to property and equipment		(119.8	)		(229.1	)		(255.8	)		(408.3	)
Proceeds from sale of CareFusion common stock		—			—			270.7			—
Net cash provided by/(used in) investing activities - continuing operations		21.5			(229.1	)		137.0			(413.6	)
Net cash used in investing activities - discontinued operations		—			(57.8	)		(9.9	)		(129.3	)
Net cash provided by/(used in) investing activities		21.5			(286.9	)		127.1			(542.9	)
Cash Flows From Financing Activities:
Reduction of long-term obligations		(0.4	)		(18.9	)		(1,485.5	)		(301.4	)
Issuance of Common Shares		15.5			0.6			40.0			39.2
Tax expense from stock options		(1.3	)		(2.7	)		(16.1	)		(2.9	)
Payment of premiums for debt extinguishment		—			—			(66.4	)		—
Dividends on Common Shares		(62.9	)		(50.3	)		(253.1	)		(200.4	)
Purchase of treasury shares		(180.2	)		—			(230.2	)		—
Net cash used in financing activities - continuing operations		(229.3	)		(71.3	)		(2,011.3	)		(465.5	)
Net cash provided by/(used in) financing activities - discontinued operations		—			(0.1	)		1,283.8			(2.7	)
Net cash used in financing activities		(229.3	)		(71.4	)		(727.5	)		(468.2	)
Net increase in cash and equivalents		116.5			249.8			1,533.7			412.8
Cash and equivalents at beginning of period		2,638.8			971.8			1,221.6			808.8
Cash and equivalents at end of period	$	2,755.3		$	1,221.6		$	2,755.3		$	1,221.6

CARDINAL HEALTH, INC. AND SUBSIDIARIES

BUSINESS ANALYSIS

TOTAL COMPANY

	Fourth Quarter						Non-GAAP Fourth Quarter
(in millions)	2010			2009			2010			2009
Revenue
Amount	$	24,460		$	24,347
Growth Rate		0.5	%		11	%
Operating Earnings
Amount	$	334		$	307		$	317		$	356
Growth Rate		9	%		(9	)%		(11	)%		6	%
Earnings from Continuing Operations
Amount	$	194		$	202		$	181		$	228
Growth Rate		(4	)%		10	%		(21	)%		14	%
	Fiscal Year						Non-GAAP Fiscal Year
	2010			2009			2010			2009
Revenue
Amount	$	98,503		$	95,992
Growth Rate		3	%		10	%
Operating Earnings
Amount	$	1,307		$	1,287		$	1,383		$	1,419
Growth Rate		1	%		(8	)%		(2	)%		(1	)%
Earnings from Continuing Operations
Amount	$	587		$	758		$	804		$	816
Growth Rate		(23	)%		(11	)%		(2	)%		(8	)%

Refer to the GAAP / Non-GAAP Reconciliation for definitions and calculations supporting the non-GAAP balances.

CARDINAL HEALTH, INC. AND SUBSIDIARIES

SEGMENT BUSINESS ANALYSIS

	Fourth Quarter
(in millions)	2010			2009
PHARMACEUTICAL
Revenue
Amount	$	22,307		$	22,263
Growth Rate		0.2	%		12	%
Mix		91	%		91	%
Segment Profit
Amount	$	227		$	273
Growth Rate		(17	)%		22	%
Mix		69	%		76	%
Segment Profit Margin		1.02	%		1.23	%

	Fourth Quarter
(in millions)	2010			2009
MEDICAL
Revenue
Amount	$	2,158		$	2,090
Growth Rate		3	%		3	%
Mix		9	%		9	%
Segment Profit
Amount	$	102		$	84
Growth Rate		22	%		(23	)%
Mix		31	%		24	%
Segment Profit Margin		4.75	%		4.03	%

Refer to definitions for an explanation of calculations.

Total consolidated revenue for the three months ended June 30, 2010 was $24,460 million, which included total segment revenue of $24,465 million and Corporate revenue of $(5) million. Total consolidated revenue for the three months ended June 30, 2009 was $24,347 million, which included total segment revenue of $24,353 million and Corporate revenue of $(6) million. Corporate revenue consists primarily of elimination of inter-segment revenue.

Total consolidated operating earnings for the three months ended June 30, 2010 were $334 million, which included total segment profit of $329 million and Corporate gain of $5 million. Total consolidated operating earnings for the three months ended June 30, 2009 were $307 million, which included total segment profit of $357 million and Corporate loss of $(50) million. Corporate includes, among other things, restructuring and employee severance, acquisition related costs, impairments and loss on sale of assets, litigation (credits)/charges, net and certain investment spending that are not allocated to the segments.

CARDINAL HEALTH, INC. AND SUBSIDIARIES

SEGMENT BUSINESS ANALYSIS

	Fiscal Year
(in millions)	2010			2009
PHARMACEUTICAL
Revenue
Amount	$	89,790		$	87,863
Growth Rate		2	%		11	%
Mix		91	%		92	%
Segment Profit
Amount	$	1,002		$	1,036
Growth Rate		(3	)%		1	%
Mix		70	%		73	%
Segment Profit Margin		1.12	%		1.18	%

	Fiscal Year
(in millions)	2010			2009
MEDICAL
Revenue
Amount	$	8,750		$	8,159
Growth Rate		7	%		3	%
Mix		9	%		8	%
Segment Profit
Amount	$	428		$	385
Growth Rate		11	%		(6	)%
Mix		30	%		27	%
Segment Profit Margin		4.89	%		4.72	%

Refer to definitions for an explanation of calculations.

Total consolidated revenue for the fiscal year ended June 30, 2010 was $98,503 million, which included total segment revenue of $98,540 million and Corporate revenue of $(37) million. Total consolidated revenue for the fiscal year ended June 30, 2009 was $95,992 million, which included total segment revenue of $96,022 million and Corporate revenue of $(30) million. Corporate revenue consists primarily of elimination of inter-segment revenue.

Total consolidated operating earnings for the fiscal year ended June 30, 2010 were $1,307 million, which included total segment profit of $1,430 million and Corporate loss of $(123) million. Total consolidated operating earnings for the fiscal year ended June 30, 2009 were $1,287 million, which included total segment profit of $1,421 million and Corporate loss of $(134) million. Corporate includes, among other things, restructuring and employee severance, acquisition related costs, impairments and loss on sale of assets, litigation (credits)/charges, net and certain investment spending that are not allocated to the segments.

CARDINAL HEALTH, INC. AND SUBSIDIARIES

SCHEDULE OF NOTABLE ITEMS

	Fourth Quarter						Fiscal Year
(in millions, except per Common Share amounts)	2010			2009			2010			2009
Restructuring and Employee Severance
Restructuring and employee severance	$	(6.4	)	$	(37.5	)	$	(90.7	)	$	(104.7	)
Tax benefit		1.7			11.1			31.7			29.3
Restructuring and employee severance, net of tax	$	(4.7	)	$	(26.4	)	$	(59.0	)	$	(75.4	)
Decrease to diluted EPS from continuing operations	$	(0.01	)	$	(0.07	)	$	(0.16	)	$	(0.21	)
Acquisition related costs
Acquisition related costs	$	(8.3	)	$	(0.7	)	$	(8.4	)	$	(2.8	)
Tax benefit		2.7			0.3			2.7			1.1
Acquisition related costs, net of tax	$	(5.6	)	$	(0.4	)	$	(5.7	)	$	(1.7	)
Decrease to diluted EPS from continuing operations	$	(0.02	)	$	—		$	(0.02	)	$	—
Impairments and Loss on Sale of Assets
Impairments and loss on sale of assets	$	(0.9	)	$	(2.7	)	$	(29.1	)	$	(13.9	)
Tax benefit/(expense)		(1.9	)		8.5			(5.1	)		39.4
Impairments and loss on sale of asset, net of tax	$	(2.8	)	$	5.8		$	(34.2	)	$	25.5
Increase/(decrease) to diluted EPS from continuing operations	$	(0.01	)	$	0.02		$	(0.09	)	$	0.07
Litigation Credits/(Charges), Net
Litigation credits/(charges), net	$	33.6		$	(4.9	)	$	62.4		$	(5.2	)
Tax benefit/(expense)		(12.3	)		1.8			(23.2	)		1.9
Litigation credits/(charges), net, net of tax	$	21.3		$	(3.1	)	$	39.2		$	(3.3	)
Increase/(decrease) to diluted EPS from continuing operations	$	0.06		$	(0.01	)	$	0.11		$	(0.01	)
Other Spin-Off Costs
Other spin-off costs 1	$	(1.6	)	$	(3.8	)	$	(53.1	)	$	(4.5	)
Tax benefit/(expense) 2		4.7			1.4			(148.5	)		1.7
Other spin-off costs, net of tax	$	3.1		$	(2.4	)	$	(201.6	)	$	(2.8	)
Increase/(decrease) to diluted EPS from continuing operations	$	0.01		$	(0.01	)	$	(0.56	)	$	(0.01	)
Gain on Sale of CareFusion Stock
Gain on sale of CareFusion stock	$	1.3		$	—		$	44.6		$	—
Tax expense		—			—			—			—
Gain on sale of CareFusion stock, net of tax	$	1.3		$	—		$	44.6		$	—
Increase to diluted EPS from continuing operations	$	—		$	—		$	0.12		$	—
Weighted Average Number of Diluted Shares Outstanding		361.8			361.1			361.4			361.5

¹ Other spin-off costs included in other (income)/expense, net for the fiscal year ended June 30, 2010 were $2.4 million. Other spin-off costs also include the $39.9 million loss on extinguishment of debt for the fiscal year ended June 30, 2010. The remaining other spin-off costs are included within distribution, selling, general and administrative expenses for all periods presented.

² The fiscal 2010 year-to-date tax expense associated with the other spin-off costs includes $168.3 million related to the anticipated repatriation of a portion of cash loaned to the Company’s entities within the United States.

CARDINAL HEALTH, INC. AND SUBSIDIARIES

ASSET MANAGEMENT ANALYSIS

	Fourth Quarter				Fiscal Year
	2010		2009		2010		2009
Receivable Days	18.6		19.1
Days Inventory on Hand	21		23
Debt to Total Capital	29	%	29	%
Net Debt to Capital	(13	)%	22	%
Return on Equity	16.8	%	12.7	%	10.9	%	14.1	%
Non-GAAP Return on Equity	15.8	%	19.3	%	16.4	%	18.5	%
Effective Tax Rate from Continuing Operations	37.2	%	30.3	%	51.6	%	34.6	%
Non-GAAP Effective Tax Rate from Continuing Operations	37.7	%	32.6	%	37.5	%	36.8	%

Refer to the GAAP / Non-GAAP Reconciliation for non-GAAP calculations.

CARDINAL HEALTH, INC. AND SUBSIDIARIES

GAAP / NON-GAAP RECONCILIATION

	Fourth Quarter 2010																						Fiscal Year 2010
(in millions, except per Common Share amounts)	GAAP			Restru- cturing and Employee Severance		Acqui- sition Related Costs		Impair- ments and Loss on Sale of Assets			Litigation (Credits)/ Charges, Net			Other Spin-Off Costs			Gain on Sale of Care- Fusion Stock			Non- GAAP			GAAP			Restru- cturing and Employee Severance		Acqui- sition Related Costs		Impair- ments and Loss on Sale of Assets			Litigation (Credits)/ Charges, Net			Other Spin-Off Costs			Gain on Sale of Care- Fusion Stock			Non- GAAP
Operating Earnings
Amount	$	334		$	6	$	8	$	1		$	(34	)	$	2			—		$	317		$	1,307		$	91	$	8	$	29		$	(62	)	$	11			—		$	1,383
Growth Rate		9	%																		(11	)%		1	%																		(2	)%
Earnings Before Income Taxes and Discontinued Operations	$	308		$	6	$	8	$	1		$	(34	)	$	2		$	(1	)	$	291		$	1,212		$	91	$	8	$	29		$	(62	)	$	53		$	(45	)	$	1,286
Provision for Income Taxes 1	$	115		$	2	$	3	$	(2	)	$	(12	)	$	5			—		$	110		$	625		$	32	$	3	$	(5	)	$	(23	)	$	(149	)		—		$	482
Earnings from Continuing Operations
Amount	$	194		$	5	$	6	$	3		$	(21	)	$	(3	)	$	(1	)	$	181		$	587		$	59	$	6	$	34		$	(39	)	$	202		$	(45	)	$	804
Growth Rate		(4	)%																		(21	)%		(23	)%																		(2	)%
Diluted EPS from Continuing Operations
Amount	$	0.54		$	0.01	$	0.02	$	0.01		$	(0.06	)	$	(0.01	)		—		$	0.50		$	1.62		$	0.16	$	0.02	$	0.09		$	(0.11	)	$	0.56		$	(0.12	)	$	2.22
Growth Rate		(4	)%																		(21	)%		(23	)%																		(2	)%
	Fourth Quarter 2009																						Fiscal Year 2009
	GAAP			Restru- cturing and Employee Severance		Acqui- sition Related Costs		Impair- ments and Loss on Sale of Assets			Litigation (Credits)/ Charges, Net			Other Spin-Off Costs			Gain on Sale of Care- Fusion Stock			Non- GAAP			GAAP			Restru- cturing and Employee Severance		Acqui- sition Related Costs		Impair- ments and Loss on Sale of Assets			Litigation (Credits)/ Charges, Net			Other Spin-Off Costs			Gain on Sale of Care- Fusion Stock			Non- GAAP
Operating Earnings
Amount	$	307		$	38	$	1	$	3		$	5		$	4			—		$	356		$	1,287		$	105	$	3	$	14		$	5		$	5			—		$	1,419
Growth Rate		(9	)%																		6	%		(8	)%																		(1	)%
Earnings Before Income Taxes and Discontinued Operations	$	290		$	38	$	1	$	3		$	5		$	4			—		$	339		$	1,160		$	105	$	3	$	14		$	5		$	5			—		$	1,291
Provision for Income Taxes 1	$	88		$	11		—	$	9		$	2		$	1			—		$	111		$	402		$	29	$	1	$	39		$	2		$	2			—		$	475
Earnings from Continuing Operations
Amount	$	202		$	26	$	1	$	(6	)	$	3		$	2			—		$	228		$	758		$	75	$	2	$	(26	)	$	3		$	3			—		$	816
Growth Rate		10	%																		14	%		(11	)%																		(8	)%
Diluted EPS from Continuing Operations
Amount	$	0.56		$	0.07		—	$	(0.02	)	$	0.01		$	0.01			—		$	0.63		$	2.10		$	0.21		—	$	(0.07	)	$	0.01		$	0.01			—		$	2.26
Growth Rate		10	%																		13	%		(10	)%																		(8	)%

The sum of the components may not equal the total due to rounding.

¹ The Company applies varying tax rates depending upon the tax jurisdiction where the items are incurred.

CARDINAL HEALTH, INC. AND SUBSIDIARIES

GAAP / NON-GAAP RECONCILIATION

	Fourth Quarter					Fourth Quarter
(in millions)	2010					2009
GAAP Return on Equity		16.8	%				12.7	%
Non-GAAP Return on Equity
Net earnings	$	223.5				$	273.2
Restructuring and employee severance, net of tax, in continuing operations1		4.7					26.4
Acquisition related costs, net of tax, in continuing operations1		5.6					0.4
Impairments and loss on sale of assets, net of tax, in continuing operations1		2.8					(5.8	)
Litigation (credits)/charges, net, net of tax, in continuing operations1		(21.3	)				3.1
Other spin-off costs, net of tax1		(3.1	)				2.4
Gain on sale of CareFusion stock, net of tax1		(1.3	)				—
CareFusion net earnings in discontinued operations1, 2		(0.4	)				(65.5	)
Adjusted net earnings	$	210.5				$	234.2
Annualized	$	842.0				$	937.2
	Fourth Quarter			Third Quarter		Fourth Quarter			Third Quarter
	2010			2010		2009			2009
Non-GAAP Shareholders’ Equity
Total shareholders’ equity	$	5,276.1		$	5,360.9	$	8,724.7		$	8,434.5
Non-cash dividend related to CareFusion spin-off		—			—		(3,723.8	)		(3,723.8	)
Non-GAAP shareholders’ equity	$	5,276.1		$	5,360.9	$	5,000.9		$	4,710.7
Divided by average shareholders’ equity		5,318.5					4,855.8
Non-GAAP return on equity		15.8	%				19.3	%

¹ The Company applies varying tax rates depending upon the tax jurisdiction where the items are incurred.

² To properly reflect the impact of the spin-off, on a non-GAAP basis, CareFusion net earnings included in discontinued operations are excluded from adjusted net earnings for all periods presented.

CARDINAL HEALTH, INC. AND SUBSIDIARIES

GAAP / NON-GAAP RECONCILIATION

	Fiscal Year												Fiscal Year
(in millions)	2010												2009
GAAP Return on Equity		10.9	%											14.1	%
Non-GAAP Return on Equity
Net earnings	$	642.2											$	1,151.6
Restructuring and employee severance, net of tax, in continuing operations1		59.0												75.4
Acquisition related costs, net of tax, in continuing operations1		5.7												1.7
Impairments and loss on sale of assets, net of tax, in continuing operations1		34.2												(25.5	)
Litigation (credits)/charges, net, net of tax, in continuing operations1		(39.2	)											3.3
Other spin-off costs, net of tax1		201.6												2.8
Gain on sale of CareFusion stock, net of tax1		(44.6	)											—
CareFusion net earnings in discontinued operations1, 2		(15.0	)											(384.6	)
Adjusted net earnings	$	843.9											$	824.7
	Fourth Quarter			Third Quarter		Second Quarter		First Quarter		Fourth Quarter			Fourth Quarter			Third Quarter			Second Quarter			First Quarter			Fourth Quarter
	2010			2010		2010		2010		2009			2009			2009			2009			2009			2008
Non-GAAP Shareholders’ Equity
Total shareholders’ equity	$	5,276.1		$	5,360.9	$	5,226.1	$	4,941.2	$	8,724.7		$	8,724.7		$	8,434.5		$	8,127.9		$	7,918.1		$	7,747.5
Non-cash dividend related to CareFusion spin-off		—			—		—		—		(3,723.8	)		(3,723.8	)		(3,723.8	)		(3,723.8	)		(3,723.8	)		(3,723.8	)
Non-GAAP shareholders’ equity	$	5,276.1		$	5,360.9	$	5,226.1	$	4,941.2	$	5,000.9		$	5,000.9		$	4,710.7		$	4,404.1		$	4,194.3		$	4,023.7
Divided by average shareholders’ equity		5,161.0												4,466.7
Non-GAAP return on equity		16.4	%											18.5	%

¹ The Company applies varying tax rates depending upon the tax jurisdiction where the items are incurred.

² To properly reflect the impact of the spin-off, on a non-GAAP basis, CareFusion net earnings included in discontinued operations are excluded from adjusted net earnings for all periods presented.

CARDINAL HEALTH, INC. AND SUBSIDIARIES

GAAP / NON-GAAP RECONCILIATION

	Fourth Quarter						Fiscal Year
(in millions)	2010			2009			2010			2009
GAAP Effective Tax Rate from Continuing Operations		37.2	%		30.3	%		51.6	%		34.6	%
Non-GAAP Effective Tax Rate from Continuing Operations
Earnings before income taxes and discontinued operations	$	308.4		$	289.7		$	1,211.6		$	1,159.8
Restructuring and employee severance		6.4			37.5			90.7			104.7
Acquisiton related costs		8.3			0.7			8.4			2.8
Impairments and loss on sale of assets		0.9			2.7			29.1			13.9
Litigation (credits)/charges, net		(33.6	)		4.9			(62.4	)		5.2
Other spin-off costs		1.6			3.8			53.1			4.5
Gain on sale of CareFusion stock		(1.3	)		—			(44.6	)		—
Adjusted earnings before income taxes and discontinued operations	$	290.7		$	339.3		$	1,285.9		$	1,290.9
Provision for income taxes1	$	114.6		$	87.7		$	624.6		$	401.6
Restructuring and employee severance tax benefit1		1.7			11.1			31.7			29.3
Acquisiton related costs tax benefit1		2.7			0.3			2.7			1.1
Impairments and loss on sale of assets tax benefit/(expense)1		(1.9	)		8.5			(5.1	)		39.4
Litigation (credits)/charges, net tax benefit/(expense)1		(12.3	)		1.8			(23.2	)		1.9
Other spin-off costs tax benefit/(expense)1		4.7			1.4			(148.5	)		1.7
Gain on sale of CareFusion stock tax expense1		—			—			—			—
Adjusted provision for income taxes	$	109.5		$	110.8		$	482.2		$	475.0
Non-GAAP effective tax rate from continuing operations		37.7	%		32.6	%		37.5	%		36.8	%
	Fourth Quarter
	2010			2009
Debt to Total Capital		29	%		29	%
Net Debt to Capital
Current portion of long-term obligations and other short-term borrowings	$	233.2		$	366.2
Long-term obligations, less current portion		1,896.1			3,271.6
Debt	$	2,129.3		$	3,637.8
Cash and equivalents		(2,755.3	)		(1,221.6	)
Net debt	$	(626.0	)	$	2,416.2
Total shareholders’ equity	$	5,276.1		$	8,724.7
Capital	$	4,650.1		$	11,140.9
Net Debt to Capital		(13	)%		22	%

¹ The Company applies varying tax rates depending upon the tax jurisdiction where the items are incurred.

Forward-Looking Non-GAAP Financial Measures

The Company presents non-GAAP earnings from continuing operations and non-GAAP effective tax rate from continuing operations (and presentations derived from these financial measures, including per share calculations) on a forward-looking basis. The most directly comparable forward-looking GAAP measures are earnings from continuing operations and effective tax rate from continuing operations. The Company is unable to provide a quantitative reconciliation of these forward-looking non-GAAP measures to the most directly comparable forward-looking GAAP measures because the Company cannot reliably forecast restructuring and employee severance, acquisition related costs, impairments and loss on sale of assets, litigation (credits)/charges, net, other spin-off costs and gains or losses on sale of CareFusion stock, which are difficult to predict and estimate and are primarily dependent on future events. Please note that the unavailable reconciling items could significantly impact the Company’s future financial results.

CARDINAL HEALTH, INC. AND SUBSIDIARIES

	Fourth Quarter
(in millions)	2010		2009
Days Inventory on Hand
Inventories	$	6,355.9	$	6,832.8
Cost of products sold	$	23,555.5	$	23,403.0
Chargeback billings		3,066.0		3,271.2
Adjusted cost of products sold	$	26,621.5	$	26,674.2
Adjusted cost of products sold divided by 90 days	$	295.8	$	296.4
Days inventory on hand		21		23

Days Inventory on Hand: inventory divided by ((quarterly costs of products sold plus chargeback billings) divided by 90 days). Chargeback billings are the difference between a product’s wholesale acquisition cost and the contract price established between pharmaceutical manufacturers and the end customer.

CARDINAL HEALTH, INC. AND SUBSIDIARIES

DEFINITIONS

GAAP

Debt: long-term obligations plus short-term borrowings

Debt to Total Capital: debt divided by (debt plus total shareholders’ equity)

Diluted EPS from Continuing Operations: earnings from continuing operations divided by diluted weighted average shares outstanding

Effective Tax Rate from Continuing Operations: provision for income taxes divided by earnings before income taxes and discontinued operations

Gain on Sale of CareFusion Stock: realized gains and losses from the sale of the Company’s ownership of CareFusion common stock retained in connection with the spin-off

Other Spin-Off Costs: costs and tax charges incurred in connection with the Company’s spin-off of CareFusion that are not included in restructuring and employee severance, acquisition related costs, impairments and loss on sale of assets and litigation (credits)/charges, net. Other spin-off costs include, among other things, the loss on extinguishment of debt and the income tax charge related to the anticipated repatriation of a portion of cash loaned to the Company’s entities within the United States

Receivable Days: trade receivables, net divided by (monthly revenue divided by 30 days)

Segment Profit: segment revenue minus (segment cost of products sold and segment distribution, selling, general and administrative expenses)

Segment Profit Margin: segment profit divided by segment revenue

Segment Profit Mix: segment profit divided by total segment profit for all segments

Return on Equity: annualized net earnings divided by average shareholders’ equity

Revenue Mix: segment revenue divided by total segment revenue for all segments

NON-GAAP

Net Debt to Capital: net debt divided by (net debt plus total shareholders’ equity)

Net Debt: debt minus (cash and equivalents)

Non-GAAP Diluted EPS from Continuing Operations: non-GAAP earnings from continuing operations divided by diluted weighted average shares outstanding

Non-GAAP Diluted EPS from Continuing Operations Growth Rate: (current period non-GAAP diluted EPS from continuing operations minus prior period non-GAAP diluted EPS from continuing operations) divided by prior period non-GAAP diluted EPS from continuing operations

Non-GAAP Earnings from Continuing Operations: earnings from continuing operations excluding (1) restructuring and employee severance, (2) acquisition related costs, (3) impairments and loss on sale of assets, (4) litigation (credits)/charges, net, (5) Other Spin-Off Costs and (6) gain on sale of CareFusion stock, each net of tax

Non-GAAP Earnings from Continuing Operations Growth Rate: (current period non-GAAP earnings from continuing operations minus prior period non-GAAP earnings from continuing operations) divided by prior period non-GAAP earnings from continuing operations

Non-GAAP Effective Tax Rate from Continuing Operations: (provision for income taxes adjusted for (1) restructuring and employee severance, (2) acquisition related costs, (3) impairments and loss on sale of assets, (4) litigation (credits)/charges, net, (5) Other Spin-Off Costs and (6) gain on sale of CareFusion stock) divided by (earnings before income taxes and discontinued operations adjusted for (1) restructuring and employee severance, (2) acquisition related costs, (3) impairments and loss on sale of assets, (4) litigation (credits)/charges, net, (5) Other Spin-Off Costs and (6) gain on sale of CareFusion stock)

Non-GAAP Operating Earnings: operating earnings excluding (1) restructuring and employee severance, (2) acquisition related costs, (3) impairments and loss on sale of assets, (4) litigation credits/(charges), net and (5) Other Spin-Off Costs included within distribution, selling, general and administrative expenses

Non-GAAP Operating Earnings Growth Rate: (current period non-GAAP operating earnings minus prior period non-GAAP operating earnings) divided by prior period non-GAAP operating earnings

Non-GAAP Return on Equity: (annualized current period net earnings excluding (1) restructuring and employee severance, (2) acquisition related costs, (3) impairments and loss on sale of assets, (4) litigation (credits)/charges, net, (5) Other Spin-Off Costs, (6) CareFusion net earnings in discontinued operations and (7) gain on sale of CareFusion stock, each net of tax) divided by average shareholders’ equity adjusted for the $3.7 billion non-cash dividend issued in connection with the spin-off

EX-99.2

Exhibit 99.2

Use of Non-GAAP Financial Measures

In addition to disclosing financial results calculated in accordance with U.S. generally accepted accounting principles (“GAAP”), Cardinal Health, Inc.’s (the “Company’s”) earnings release contains non-GAAP financial measures. Management uses these non-GAAP financial measures to evaluate the Company’s performance and provides them to investors because the measures exclude items and charges that management believes are not reflective of the day-to-day offering of the Company’s products and services and relate more to strategic, multi-year corporate actions or, in the case of litigation credits and charges, activities that may have occurred in prior or multiple periods, in each case without predictable trends, that may obscure the trends and financial performance of the Company’s core business. As discussed below, following the August 31, 2009 spin-off of CareFusion Corporation (“CareFusion”) through a pro rata distribution to its shareholders of approximately 81% of the shares of CareFusion common stock (the “Spin-Off”), some of these non-GAAP financial measures exclude net earnings of CareFusion included in discontinued operations and other items associated with the Spin-Off. The purpose for these adjustments is to provide for better comparability between periods by removing the impact of CareFusion on all periods. By doing so, management believes that these non-GAAP financial measures provide useful information regarding the historical trend of these measures as they relate to the remaining operations of the Company.

The non-GAAP financial measures disclosed by the Company should not be considered a substitute for, or superior to, financial measures calculated in accordance with GAAP, and the financial results calculated in accordance with GAAP and reconciliations to those financial statements should be carefully evaluated. Many of the charges and other items excluded in the calculation of these non-GAAP financial measures may be recurring items and, with the exception of asset impairments, litigation gains and gain on sale of CareFusion stock, the excluded items include transactions that reflect cash costs to the Company. Accordingly, these non-GAAP measures should be evaluated in combination with the most comparable GAAP measures because the non-GAAP measures do not reflect items that impact current period operating results and may be higher than the comparable GAAP measures. Management encourages readers to rely upon the GAAP numbers, but includes the non-GAAP financial measures as supplemental metrics to assist readers. The non-GAAP financial measures used by the Company may be calculated differently from, and therefore may not be comparable to, similarly titled measures used by other companies.

The Company has provided reconciliations of the historical non-GAAP financial measures to the most directly comparable historical GAAP financial measures in the earnings release. Definitions of the non-GAAP financial measures also are included in the earnings release.

Non-GAAP operating earnings and presentations derived from it (growth rate calculation). The Company presents the non-GAAP financial measure “non-GAAP operating earnings” and presentations derived from this measure. This non-GAAP financial measure excludes restructuring and employee severance, acquisition related costs, impairments and loss on sale of assets and litigation (credits)/charges, net, and Other Spin-Off Costs included within distribution, selling, general and administrative expense (“SG&A Expense”).

The Company classifies a restructuring activity as a program whereby the Company fundamentally changes its operations such as closing facilities, moving manufacturing of a product to another location or outsourcing the production of a product. Restructuring activities may also involve substantial re-alignment of the management structure of a business unit in response to changing market conditions. A liability for a cost associated with an exit or disposal activity is recognized and measured initially at its fair value in the period in which it is incurred except for a liability for a one-time termination benefit which is recognized over its future service period.

Acquisition related costs incurred during the initial evaluation of a potential targeted enterprise or incurred to combine the operations of an acquired enterprise are classified within acquisition related costs within the consolidated statements of earnings.

Asset impairments and losses from the sale of assets not eligible to be classified as discontinued operations are classified within impairments and loss on sale of assets within the consolidated statements of earnings.

Estimated loss contingencies related to litigation and regulatory matters and income from favorable resolution of legal and regulatory matters are recognized in litigation (credits)/charges, net within the consolidated statements of earnings.

Non-GAAP earnings from continuing operations and presentations derived from it (per share and growth rate calculations). The Company presents the non-GAAP financial measure “non-GAAP earnings from continuing operations” and presentations derived from this measure. This non-GAAP financial measure excludes restructuring and employee severance, acquisition related costs, impairments and loss on sale of assets, and litigation (credits)/charges, net, each net of tax. See the discussion of these classifications above under the heading “non-GAAP operating earnings and presentations derived from it (growth rate calculation)” for information regarding their components. This non-GAAP measure also excludes Other Spin-Off Costs and gain on sale of CareFusion stock, each net of tax. Other Spin-Off Costs excluded from this non-GAAP financial measure include the year-to-date loss on extinguishment of debt, the year-to-date tax expense related to the anticipated repatriation of a portion of cash loaned to the Company’s entities within the United States, and other year-to-date costs included within SG&A Expense and other (income)/expense, net on the consolidated statement of earnings for the fiscal year ended June 30, 2010. Gains and losses on sale of CareFusion stock relate to the Company’s sales of a portion of the 41.4 million shares of CareFusion common stock that the Company retained in the Spin-Off.

Non-GAAP return on equity. The Company presents the non-GAAP financial measure “non-GAAP return on equity.” This non-GAAP financial measure excludes restructuring and employee severance, acquisition related costs, impairments and loss on sale of assets and litigation (credits)/charges, net, each net of tax, from the numerator of the calculation. See the discussion of these classifications above under the heading “non-GAAP operating earnings and presentations derived from it (growth rate calculation)” for information regarding their components. This non-GAAP financial measure also excludes Other Spin-Off Costs and gain on sale of CareFusion stock, each net of tax, from the numerator of the calculation.

In addition to the adjustments described above, following the Spin-Off, the Company is excluding the net earnings of CareFusion included in discontinued operations from adjusted net earnings in the calculation of non-GAAP return on equity for all periods presented. Also, the Company is excluding the non-cash dividend from average shareholders’ equity in the calculation of non-GAAP return on equity to remove CareFusion equity for all periods presented.

Non-GAAP effective tax rate from continuing operations. The Company presents the non-GAAP financial measure “non-GAAP effective tax rate from continuing operations.” This non-GAAP financial measure excludes restructuring and employee severance, acquisition related costs, impairments and loss on sale of assets and litigation (credits)/charges, net from the denominator of the calculation and the tax effect of restructuring and employee severance, acquisition related costs, impairments and loss on sale of assets and litigation (credits)/charges, net from the numerator of the calculation. See the discussion of these classifications above under the heading “non-GAAP operating earnings and presentations derived from it (growth rate calculation)” for information regarding their components. This non-GAAP financial measure excludes Other Spin-Off Costs and gain on sale of CareFusion stock from the denominator of the calculation and the tax effect of Other Spin-Off Costs, including the year-to-date tax expense related to the anticipated repatriation of a portion of cash loaned to the Company’s entities within the United States, and gain on sale of CareFusion stock from the numerator of the calculation.

Net debt to capital. The Company presents the non-GAAP financial measure “net debt to capital,” which is net debt divided by capital (net debt plus total shareholders’ equity). “Net debt,” also a non-GAAP financial measure, is debt (the most comparable GAAP measure, calculated as long-term obligations plus short-term borrowings) minus cash and equivalents. Management believes that net debt to capital is an

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important measure to monitor leverage and evaluate the balance sheet. With respect to net debt, cash and equivalents are subtracted from the GAAP measure because they could be used to reduce the Company’s debt obligations. A limitation associated with using net debt is that it subtracts cash and equivalents and therefore may imply that there is less Company debt than the most comparable GAAP measure indicates. Management believes that investors may find it useful to monitor leverage and evaluate the balance sheet.

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