Attached files
©
Copyright 2010, Cardinal Health, Inc. or one of its subsidiaries. All rights
reserved. ©
Copyright 2010, Cardinal Health, Inc. or one of its subsidiaries. All rights
reserved. ©
Copyright 2010, Cardinal Health, Inc. or one of its subsidiaries. All rights
reserved. Q3 FY2010
Investor/Analyst Call
April 29, 2010
Exhibit 99.3 |
2
Forward-looking statements and GAAP
reconciliation
This
presentation
contains
forward-looking
statements
addressing
expectations,
prospects,
estimates
and
other matters that are dependent upon future events or developments. 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) 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 healthcare reform legislation; competitive pressures in Cardinal Healths various
lines of business; the loss of one or more key customer or supplier relationships
or changes to the terms of those relationships; disruptions in the supply of
medical isotopes for the nuclear pharmacy business; 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
Healths customers and vendors; and conditions in the pharmaceutical
market and general economic and market conditions. In addition, Cardinal Health is subject
to additional risks and uncertainties described in Cardinal Healths Form
10-K, Form 10-Q and Form 8-K reports
(including
all
amendments
to
those
reports)
and
exhibits
to
those
reports.
This
presentation
reflects
managements views as of April 29, 2010. Except to the extent required by
applicable law, Cardinal Health undertakes no obligation to update or revise
any forward-looking statement. In addition, this presentation includes
non-GAAP financial measures. Cardinal Health provides definitions and reconciling information at
the
end
of
this
presentation
and
on
its
investor
relations
page
at
www.cardinalhealth.com.
An
audio
replay
of
the
conference
call
will
be
available
on
the
investor
relations
page
at
www.cardinalhealth.com.
|
©
Copyright 2010, Cardinal Health, Inc. or one of its subsidiaries. All rights
reserved. ©
Copyright 2010, Cardinal Health, Inc. or one of its subsidiaries. All rights
reserved. Q3 FY2010 Results
3 |
4
Q3 FY2010 Business Analysis
Q3 FY10
Q3 FY09
1
Q3 FY10
Q3 FY09
1
Revenue
$24,343
$24,089
% change
1%
10%
Operating earnings
$366
$381
$385
$415
% change
(4)%
-
(7)%
2%
Ratio to revenue
1.50%
1.58%
1.58%
1.72%
Earnings from continuing ops
$225
$215
$222
$237
% change
5%
(9)%
(6)%
(7)%
Ratio to revenue
0.92%
0.89%
0.91%
0.98%
Diluted EPS from continuing ops
$0.62
$0.60
$0.61
$0.66
% change
3%
(9)%
(8)%
(7)%
Asset Management
Q3 FY10
Q3 FY09
1
Operating Cash Flow
$879
$617
Days Receivable
18.9
19.5
Days Inventory on Hand
25
27
Non-GAAP Basis
($M)
GAAP Basis
($M)
1
All FY09 financial information reflects the reclassification of CareFusion
to discontinued operations and change in reportable segments. See the
Companys Form 8-K filed on November 16, 2009. |
5
Q3FY10 Pharmaceutical Segment
Business Analysis
Highlights:
Revenue performance was driven by increased sales to existing pharmaceutical
distribution customers and solid growth in generics
Revenue from non-bulk customers increased 0.5% to $11.3 billion driven by
growth in retail chain, hospital and retail independents
Revenue from bulk customers increased 0.5% to $10.9 billion
Segment profit increased 7% to $307 million primarily from continued strong
performance under branded manufacturer agreements, positive margin
contribution from the companys generic programs and disciplined
expense management
Continued progress made in sourcing, contract compliance and customer-facing
IT initiatives
Excellent execution in nuclear pharmacy services
Continued solid working capital management
Revenue
Segment Profit
Segment Profit Margin
$22,226
$307
1.38%
Q3 FY10
($M)
$22,118
$286
1.29%
Q3 FY09
($M)
0.5%
7%
% Change |
6
Q3FY10 Medical Segment
Business Analysis
Revenue
Segment Profit
Segment Profit Margin
$2,123
$108
5.08%
Q3 FY10
($M)
$1,976
$128
6.49%
Q3 FY09
($M)
7%
(16)%
% Change
Highlights:
Revenue increase was driven by growth in existing domestic customer base, and
strong growth in Canada
Segment profit decline was due to an unusual year-over-year comparison in
cost of goods sold, the impact of performance-based employee
compensation and increased Medical Business Transformation investment
spend
Decline was partially offset from the positive profit impact of revenue growth
within the lab and ambulatory businesses as well as preferred
products
Segment profit increased sequentially from Q2 by more than $5M
Continued momentum in Medical Transformation and customer-facing IT
initiatives |
7
Q3FY10 GAAP to Non-GAAP Reconciliation
Note:
Costs
associated
with
the
CareFusion
spinoff
are
as
follows:
Operating
Earnings ($M)
Earnings from
Continuing
Operations ($M)
Diluted EPS from
Continuing
Operations
Operating
Earnings ($M)
Earnings from
Continuing
Operations ($M)
Diluted EPS from
Continuing
Operations
GAAP
$366
$225
$0.62
$381
$215
$0.60
Restructuring and Employee
Severance
(Note)
$14
$4
$0.01
$32
$27
$0.08
Impairments and Loss on Sale of
Assets
$4
$16
$0.04
$1
($6)
($0.02)
Litigation (Credits)/Charges, Net
($3)
($2)
($0.01)
$1
-
-
Other Spinoff Costs
(Note)
$4
$3
$0.01
$1
-
-
Gain on Sale of CareFusion
Stock
-
($23)
($0.06)
-
-
-
Non-GAAP
$385
$222
$0.61
$415
$237
$0.66
Spinoff Costs Included in
Restructuring and Employee
Severance
$3
($3)
Other Spinoff Costs
$4
$3
Total Spinoff Costs
$7
$0
Q3 FY 2009
Q3 FY 2010 |
8
Significant Q3 FY10 Items
CareFusion Investment
Sold 5.4 million shares for total proceeds of $136 million and realized gain of
$23 million
No income tax impact
Realized gain excluded from non-GAAP earnings
Remaining 30.5 million shares at 3/31/10 have market value of $805.2 million
Pre-tax
unrealized
gain
of
$43.3
million
recognized
in
equity
in
Q3;
no
earnings impact until shares are sold
Other Items
Completed
sale
of
Specialty
Scripts;
signed
definitive
agreement
to
sell
Martindale with close anticipated by end of June |
©
Copyright 2010, Cardinal Health, Inc. or one of its subsidiaries. All rights
reserved. ©
Copyright 2010, Cardinal Health, Inc. or one of its subsidiaries. All rights
reserved. FY2010 Outlook
9 |
10
FY10 outlook
FY09
Non-GAAP effective tax
rate
37%+
37%
Diluted weighted average
shares outstanding
~361M
361.5M
Interest and other, net
~$110M
$128M
Capital expenditures
$200M -
$250M
$421M
1
May change due to unique items affecting quarters
2
Includes $150M repurchase of assets under synthetic lease
CAH FY10 Overall Expectations
April 29, 2010
1
2 |
11
FY10 outlook
FY09
Revenue:
Low single digit
growth
$96B
Non-GAAP EPS
1
:
$2.15 -
$2.20
$2.26
1
Non-GAAP diluted earnings per share from continuing operations
CAH FY10 Financial Expectations
April 29, 2010 |
©
Copyright 2010, Cardinal Health, Inc. or one of its subsidiaries. All rights
reserved. ©
Copyright 2010, Cardinal Health, Inc. or one of its subsidiaries. All rights
reserved. 12
FY2011 Preliminary Outlook
1
Non-GAAP diluted earnings per share from continuing operations
Non-GAAP EPS
: $2.35 -
$2.45
1 |
13
Pharmaceutical Segment
FY11 Preliminary Assumptions
April 29, 2010
Renewal of major contracts
Brand inflation comparable to FY10
Generic launches and deflation comparable to FY10
Continued improvement in generic programs
Nuclear pharmacy assumes raw material from Canadian reactor to be at
more normal levels in Q2 FY11
Continued significant investment in IT systems for longer-term benefits
Continued working capital improvement
Assumes no LIFO impact |
14
Medical Segment
FY11 Preliminary Assumptions
April 29, 2010
Benefit from investments in Ambulatory Care
Growth in higher margin preferred products category
Improvement in performance from kitting business, following a year of
stabilization and investment
Medical Transformation investment expense comparable to FY10
Raw materials costs/COGS increasing driven by oil and latex price
movements
Lean/operational excellence initiatives improving working capital
|
©
Copyright 2010, Cardinal Health, Inc. or one of its subsidiaries. All rights
reserved. ©
Copyright 2010, Cardinal Health, Inc. or one of its subsidiaries. All rights
reserved. 15
Q & A |
16 |
©
Copyright 2010, Cardinal Health, Inc. or one of its subsidiaries. All rights
reserved. ©
Copyright 2010, Cardinal Health, Inc. or one of its subsidiaries. All rights
reserved. 17
Q3 FY10 Trailing Five Quarters |
18
Q3 FY10 Segment Analysis
Q3FY09
Q4FY09
Q1FY10
Q2FY10
Q3FY10
Revenue ($M)
22,118
22,263
22,562
22,695
22,226
Segment
Profit ($M)
286
273
208
260
307
Q3FY09
Q4FY09
Q1FY10
Q2FY10
Q3FY10
Revenue
($M)
1,976
2,090
2,237
2,232
2,123
Segment
Profit ($M)
128
83
115
103
108
Pharmaceutical Segment
Medical Segment |
©
Copyright 2010, Cardinal Health, Inc. or one of its subsidiaries. All rights
reserved. ©
Copyright 2010, Cardinal Health, Inc. or one of its subsidiaries. All rights
reserved. 19
GAAP to Non-GAAP
Reconciliation Statements |
CARDINAL HEALTH, INC. AND SUBSIDIARIES
GAAP / NON-GAAP RECONCILIATION
Third Quarter 2010 | Year-To-Date 2010 | |||||||||||||||||||||||||||||||||||||||||||||||||
(in millions, |
GAAP | Restructuring and Employee Severance |
Impairments and Loss on Sale of Assets |
Litigation (Credits)/ Charges, Net |
Other Spin-Off Costs |
Gain on Sale of CareFusion Stock |
Non-GAAP | GAAP | Restructuring and Employee Severance |
Impairments and Loss on Sale of Assets |
Litigation (Credits)/ Charges, Net |
Other Spin-Off Costs |
Gain on Sale of CareFusion Stock |
Non-GAAP | ||||||||||||||||||||||||||||||||||||
Operating Earnings |
||||||||||||||||||||||||||||||||||||||||||||||||||
Amount |
$ | 366 | $ | 14 | $ | 4 | ($3 | ) | $ | 4 | | $ | 385 | $ | 973 | $ | 84 | $ | 28 | ($29 | ) | $ | 9 | | $ | 1,066 | ||||||||||||||||||||||||
Growth Rate |
(4 | )% | (7 | )% | (1 | )% | | |||||||||||||||||||||||||||||||||||||||||||
Earnings Before Income Taxes and Discontinued Operations |
$ | 363 | $ | 14 | $ | 4 | ($3 | ) | $ | 4 | ($23 | ) | $ | 359 | $ | 903 | $ | 84 | $ | 28 | ($29 | ) | $ | 52 | ($43 | ) | $ | 995 | ||||||||||||||||||||||
Provision for Income Taxes1 |
$ | 138 | $ | 10 | ($12 | ) | ($1 | ) | $ | 1 | | $ | 137 | $ | 510 | $ | 30 | ($3 | ) | ($11 | ) | ($153 | ) | | $ | 373 | ||||||||||||||||||||||||
Earnings from Continuing Operations |
||||||||||||||||||||||||||||||||||||||||||||||||||
Amount |
$ | 225 | $ | 4 | $ | 16 | ($2 | ) | $ | 3 | ($23 | ) | $ | 222 | $ | 393 | $ | 54 | $ | 32 | ($18 | ) | $ | 205 | ($43 | ) | $ | 622 | ||||||||||||||||||||||
Growth Rate |
5 | % | (6 | )% | (29 | )% | 6 | % | ||||||||||||||||||||||||||||||||||||||||||
Diluted EPS from Continuing Operations |
||||||||||||||||||||||||||||||||||||||||||||||||||
Amount |
$ | 0.62 | $ | 0.01 | $ | 0.04 | ($0.01 | ) | $ | 0.01 | ($0.06 | ) | $ | 0.61 | $ | 1.09 | $ | 0.15 | $ | 0.09 | ($0.05 | ) | $ | 0.56 | ($0.12 | ) | $ | 1.72 | ||||||||||||||||||||||
Growth Rate |
3 | % | (8 | )% | (29 | )% | 6 | % | ||||||||||||||||||||||||||||||||||||||||||
Third Quarter 2009 | Year-To-Date 2009 | |||||||||||||||||||||||||||||||||||||||||||||||||
GAAP | Restructuring and Employee Severance |
Impairments and Loss on Sale of Assets |
Litigation (Credits)/ Charges, Net |
Other Spin-Off Costs |
Gain on Sale of CareFusion Stock |
Non-GAAP | GAAP | Restructuring and Employee Severance |
Impairments and Loss on Sale of Assets |
Litigation (Credits)/ Charges, Net |
Other Spin-Off Costs |
Gain on Sale of CareFusion Stock |
Non-GAAP | |||||||||||||||||||||||||||||||||||||
Operating Earnings |
||||||||||||||||||||||||||||||||||||||||||||||||||
Amount |
$ | 381 | $ | 32 | $ | 1 | $ | 1 | $ | 1 | | $ | 415 | $ | 981 | $ | 69 | $ | 11 | | $ | 1 | | $ | 1,062 | |||||||||||||||||||||||||
Growth Rate |
| 2 | % | (7 | )% | (3 | )% | |||||||||||||||||||||||||||||||||||||||||||
Earnings Before Income Taxes and Discontinued Operations |
$ | 344 | $ | 32 | $ | 1 | $ | 1 | $ | 1 | | $ | 378 | $ | 870 | $ | 69 | $ | 11 | | $ | 1 | | $ | 951 | |||||||||||||||||||||||||
Provision for Income Taxes 1 |
$ | 129 | $ | 5 | $ | 7 | | | | $ | 141 | $ | 314 | $ | 19 | $ | 31 | | | | $ | 364 | ||||||||||||||||||||||||||||
Earnings from Continuing Operations |
||||||||||||||||||||||||||||||||||||||||||||||||||
Amount |
$ | 215 | $ | 27 | ($6 | ) | | | | $ | 237 | $ | 556 | $ | 50 | ($20 | ) | | $ | 1 | | $ | 587 | |||||||||||||||||||||||||||
Growth Rate |
(9 | )% | (7 | )% | (16 | )% | (15 | )% | ||||||||||||||||||||||||||||||||||||||||||
Diluted EPS from Continuing Operations |
||||||||||||||||||||||||||||||||||||||||||||||||||
Amount |
$ | 0.60 | $ | 0.08 | ($0.02 | ) | | | | $ | 0.66 | $ | 1.54 | $ | 0.14 | ($0.05 | ) | | | | $ | 1.63 | ||||||||||||||||||||||||||||
Growth Rate |
(9 | )% | (7 | )% | (15 | )% | (14 | )% |
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
Third Quarter | Third Quarter | ||||||||||||||
(in millions) |
2010 | 2009 | |||||||||||||
GAAP Return on Equity |
16.8 | % | 15.1 | % | |||||||||||
Non-GAAP Return on Equity |
|||||||||||||||
Net earnings |
$ | 222.4 | $ | 312.9 | |||||||||||
Restructuring and employee severance, net of tax, in continuing operations1 |
3.9 | 26.8 | |||||||||||||
Impairments and loss on sale of assets, net of tax, in continuing operations1 |
15.7 | (6.0 | ) | ||||||||||||
Litigation (credits)/charges, net, net of tax, in continuing operations1 |
(1.8 | ) | 0.4 | ||||||||||||
Other spin-off costs, net of tax1 |
2.5 | 0.4 | |||||||||||||
Gain on sale of CareFusion stock, net of tax1 |
(23.2 | ) | | ||||||||||||
CareFusion net earnings in discontinued operations, net of tax1, 2 |
4.7 | (98.0 | ) | ||||||||||||
Adjusted net earnings |
$ | 224.2 | $ | 236.5 | |||||||||||
Annualized |
$ | 896.8 | $ | 946.0 | |||||||||||
Third Quarter | Second Quarter | Third Quarter | Second Quarter | ||||||||||||
2010 | 2010 | 2009 | 2009 | ||||||||||||
Non-GAAP Shareholders Equity |
|||||||||||||||
Total shareholders equity |
$ | 5,360.9 | $ | 5,226.1 | $ | 8,434.5 | $ | 8,127.9 | |||||||
Non-cash dividend related to CareFusion spin-off |
| | (3,758.0 | ) | (3,758.0 | ) | |||||||||
Non-GAAP shareholders equity |
$ | 5,360.9 | $ | 5,226.1 | $ | 4,676.5 | $ | 4,369.9 | |||||||
Divided by average shareholders equity |
5,293.5 | 4,523.2 | |||||||||||||
Non-GAAP return on equity |
16.9 | % | 20.9 | % |
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
Year-To-Date | Year-To-Date | |||||||||||||||||||||||||||||
(in millions) |
2010 | 2009 | ||||||||||||||||||||||||||||
GAAP Return on Equity |
9.2 | % | 14.5 | % | ||||||||||||||||||||||||||
Non-GAAP Return on Equity |
||||||||||||||||||||||||||||||
Net earnings |
$ | 418.7 | $ | 878.4 | ||||||||||||||||||||||||||
Restructuring and employee severance, net of tax, in continuing operations1 |
54.3 | 50.3 | ||||||||||||||||||||||||||||
Impairments and loss on sale of assets, net of tax, in continuing operations1 |
31.5 | (19.7 | ) | |||||||||||||||||||||||||||
Litigation (credits)/charges, net, net of tax, in continuing operations1 |
(17.9 | ) | 0.2 | |||||||||||||||||||||||||||
Other spin-off costs, net of tax1 |
204.7 | 0.4 | ||||||||||||||||||||||||||||
Gain on sale of CareFusion stock, net of tax1 |
(43.3 | ) | | |||||||||||||||||||||||||||
CareFusion net earnings in discontinued operations, net of tax1, 2 |
(15.4 | ) | (319.1 | ) | ||||||||||||||||||||||||||
Adjusted net earnings |
$ | 632.6 | $ | 590.5 | ||||||||||||||||||||||||||
Annualized |
$ | 843.5 | $ | 787.3 | ||||||||||||||||||||||||||
Third Quarter | Second Quarter | First Quarter | Fourth Quarter | Third Quarter | Second Quarter | First Quarter | Fourth Quarter | |||||||||||||||||||||||
2010 | 2010 | 2010 | 2009 | 2009 | 2009 | 2009 | 2008 | |||||||||||||||||||||||
Non-GAAP Shareholders Equity |
||||||||||||||||||||||||||||||
Total shareholders equity |
$ | 5,360.9 | $ | 5,226.1 | $ | 4,941.2 | $ | 8,724.7 | $ | 8,434.5 | $ | 8,127.9 | $ | 7,918.1 | $ | 7,747.5 | ||||||||||||||
Non-cash dividend related to CareFusion spin-off |
| | | (3,758.0 | ) | (3,758.0 | ) | (3,758.0 | ) | (3,758.0 | ) | (3,758.0 | ) | |||||||||||||||||
Non-GAAP shareholders equity |
$ | 5,360.9 | $ | 5,226.1 | $ | 4,941.2 | $ | 4,966.7 | $ | 4,676.5 | $ | 4,369.9 | $ | 4,160.1 | $ | 3,989.5 | ||||||||||||||
Divided by average shareholders equity |
5,123.7 | 4,299.0 | ||||||||||||||||||||||||||||
Non-GAAP return on equity |
16.5 | % | 18.3 | % |
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
Third Quarter | Year-to-Date | |||||||||||||||
(in millions) |
2010 | 2009 | 2010 | 2009 | ||||||||||||
GAAP Effective Tax Rate from Continuing Operations |
38.1 | % | 37.5 | % | 56.5 | % | 36.1 | % | ||||||||
Non-GAAP Effective Tax Rate from Continuing Operations |
||||||||||||||||
Earnings before income taxes and discontinued operations |
$ | 363.2 | $ | 344.1 | $ | 903.2 | $ | 870.1 | ||||||||
Restructuring and employee severance |
13.9 | 31.7 | 84.4 | 69.3 | ||||||||||||
Impairments and loss on sale of assets |
4.2 | 0.7 | 28.2 | 11.2 | ||||||||||||
Litigation (credits)/charges, net |
(2.9 | ) | 0.6 | (28.8 | ) | 0.3 | ||||||||||
Other spin-off costs |
3.7 | 0.7 | 51.5 | 0.7 | ||||||||||||
Gain on sale of CareFusion stock |
(23.2 | ) | | (43.3 | ) | | ||||||||||
Adjusted earnings before income taxes and discontinued operations |
$ | 358.9 | $ | 377.8 | $ | 995.2 | $ | 951.6 | ||||||||
Provision for income taxes1 |
$ | 138.4 | $ | 129.0 | $ | 510.0 | $ | 313.9 | ||||||||
Restructuring and employee severance tax benefit1 |
10.0 | 4.9 | 30.1 | 19.0 | ||||||||||||
Impairments and loss on sale of assets, tax benefit/(expense)1 |
(11.5 | ) | 6.7 | (3.3 | ) | 30.9 | ||||||||||
Litigation (credits)/charges, net tax benefit/(expense)1 |
(1.1 | ) | 0.2 | (10.9 | ) | 0.1 | ||||||||||
Other spin-off costs tax benefit/(expense)1 |
1.2 | 0.3 | (153.2 | ) | 0.3 | |||||||||||
Gain on sale of CareFusion stock tax expense1 |
| | | | ||||||||||||
Adjusted provision for income taxes |
$ | 137.0 | $ | 141.1 | $ | 372.7 | $ | 364.2 | ||||||||
Non-GAAP effective tax rate from continuing operations |
38.2 | % | 37.3 | % | 37.5 | % | 38.3 | % | ||||||||
Third Quarter | ||||||||||||||||
2010 | 2009 | |||||||||||||||
Debt to Total Capital |
28 | % | 30 | % | ||||||||||||
Net Debt to Capital |
||||||||||||||||
Current portion of long-term obligations and other short-term borrowings |
$ | 232.6 | $ | 359.8 | ||||||||||||
Long-term obligations, less current portion and other short-term borrowings |
1,875.6 | 3,300.6 | ||||||||||||||
Debt |
$ | 2,108.2 | $ | 3,660.4 | ||||||||||||
Cash and equivalents |
(2,638.8 | ) | (971.8 | ) | ||||||||||||
Net debt |
$ | (530.6 | ) | $ | 2,688.6 | |||||||||||
Total shareholders equity |
$ | 5,360.9 | $ | 8,434.5 | ||||||||||||
Capital |
$ | 4,830.3 | $ | 11,123.1 | ||||||||||||
Net Debt to Capital |
(11 | )% | 24 | % |
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
Third Quarter | ||||||||
(in millions) |
2010 | 2009 | ||||||
Distribution, selling, general and administrative expenses |
$ | 628.6 | $ | 573.0 | ||||
Restructuring and employee severance |
13.9 | 31.7 | ||||||
Impairments and loss on sale of assets |
4.2 | 0.7 | ||||||
Litigation (credits)/charges, net |
(2.9 | ) | 0.6 | |||||
Total GAAP operating expenses |
$ | 643.8 | $ | 606.0 | ||||
Restructuring and employee severance |
(13.9 | ) | (31.7 | ) | ||||
Impairments and loss on sale of assets |
(4.2 | ) | (0.7 | ) | ||||
Litigation credits/(charges), net |
2.9 | (0.6 | ) | |||||
Other spin-off costs |
(3.7 | ) | (0.7 | ) | ||||
Total non-GAAP operating expenses |
$ | 624.9 | $ | 572.3 | ||||
Growth Rate |
9.2 | % |
CARDINAL HEALTH, INC. AND SUBSIDIARIES
GAAP / NON-GAAP RECONCILIATION
Fiscal 2009 | |||||||||||||||||||||
GAAP | Restructuring and Employee Severance |
Impairments and Loss on Sale of Assets |
Litigation (Credits)/ Charges, Net |
Other Spin-Off Costs |
Gain on Sale of CareFusion Stock |
Non-GAAP | |||||||||||||||
Diluted EPS from Continuing Operations |
|||||||||||||||||||||
Amount |
$ | 2.10 | $ | 0.21 | $ | (0.07 | ) | $ | 0.01 | $ | 0.01 | | $ | 2.26 |
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, 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 Companys future financial results.
CARDINAL HEALTH, INC. AND SUBSIDIARIES
Third Quarter | ||||||
(in millions) |
2010 | 2009 | ||||
Days Inventory on Hand |
||||||
Inventories |
$ | 7,214.9 | $ | 7,748.0 | ||
Cost of products sold |
$ | 23,332.7 | $ | 23,102.4 | ||
Chargeback billings |
3,053.2 | 2,981.5 | ||||
Adjusted cost of products sold |
$ | 26,385.9 | $ | 26,083.9 | ||
Adjusted cost of products sold divided by 90 days |
$ | 293.2 | $ | 289.8 | ||
Days inventory on hand |
25 | 27 |
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 products 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 Companys ownership of CareFusion common stock retained in connection with the spin-off
Operating Expenses: distribution, selling, general and administrative expenses, restructuring and employee severance, impairments and loss on sale of assets, and litigation (credits)/charges, net
Other Spin-Off Costs: costs and tax charges incurred in connection with the Companys spin-off of CareFusion that are not included in restructuring and employee severance, 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 Companys 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) impairments and loss on sale of assets, (3) litigation (credits)/charges, net, (4) Other Spin-Off Costs and (5) 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) impairments and loss on sale of assets, (3) litigation (credits)/charges, net, (4) Other Spin-Off Costs and (5) gain on sale of CareFusion stock) divided by (earnings before income taxes and discontinued operations adjusted for (1) restructuring and employee severance, (2) impairments and loss on sale of assets, (3) litigation (credits)/charges, net, (4) Other Spin-Off Costs and (5) gain on sale of CareFusion stock)
Non-GAAP Operating Earnings: operating earnings excluding (1) restructuring and employee severance, (2) impairments and loss on sale of assets, (3) litigation credits/(charges), net and (4) 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 Operating Expenses: operating expenses excluding (1) restructuring and employee severance, (2) impairments and loss on sale of assets, (3) litigation (credits)/charges, net and (4) Other Spin-Off Costs
Non-GAAP Operating Expenses Growth Rate: (current period non-GAAP operating expenses minus prior period non-GAAP operating expenses) divided by prior period non-GAAP operating expenses
Non-GAAP Return on Equity: (annualized current period net earnings excluding (1) restructuring and employee severance, (2) impairments and loss on sale of assets, (3) litigation (credits)/charges, net, (4) Other Spin-Off Costs, (5) CareFusion net earnings in discontinued operations and (6) gain on sale of CareFusion stock, each net of tax) divided by average shareholders equity adjusted for the $3.8 billion non-cash dividend issued in connection with the spin-off