CAREFUSION Corp - FORM 8-K - EX-99.2 - SLIDE PRESENTATION

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8-K - FORM 8-K - CAREFUSION Corp	d8k.htm
EX-99.1 - NEWS RELEASE - CAREFUSION Corp	dex991.htm
EX-99.3 - INFORMATION RELATED TO THE USE OF NON-GAAP FINANCIAL MEASURES - CAREFUSION Corp	dex993.htm

Q2 and 1H Fiscal 2011

Investor/Analyst Call

February 3, 2011

Exhibit 99.2

Forward-Looking Statements and GAAP

Reconciliation

“Safe

Harbor”

Statement

under

the

Private

Securities

Litigation

Reform

Act

1995:

This presentation contains

forward-looking

statements

addressing

expectations,

prospects,

estimates

and

other

matters

that

are

dependent

upon

future events or developments. The matters discussed in these forward-looking statements are subject to risks and

uncertainties that could cause actual results to differ materially from those projected, anticipated or implied. Forward-

looking statements include, but are not limited to, statements about the timing of the anticipated sale, and post sale plans

and

intentions,

the

company’s

ISP

and

OnSite

Services

businesses,

well

statements

regarding

the

company’s business and financial outlook. The forward-looking statements contained herein are based on current

expectations and assumptions and not on historical facts. There are important factors that could cause actual results to

differ materially from those set forth in the forward-looking statements including the satisfaction of conditions to closing the

sale of the ISP and OnSite

Services businesses and the effect these sales have on the company’s business and financial

results. Additional factors that may affect future results are described in CareFusion’s Form 10-K, Form 10-Q and Form 8-K

reports

(including

all

amendments

those

reports)

and

exhibits

those

reports,

and

include

(but

are

not

limited

to)

the

following: we may be unable to effectively enhance our existing products or introduce and market new products or may fail

to keep pace with advances in technology; we are subject to complex and costly regulation; cost containment efforts of our

customers, purchasing groups, third-party payers and governmental organizations could adversely affect our sales and

profitability;

current

economic

conditions

have

and

may

continue

adversely

affect

our

results

operations

and

financial

condition;

may

unable

realize

any

benefit

from

our

cost

reduction

and

restructuring

efforts

and

our

profitability

may be hurt or our business otherwise might be adversely affected; we may be unable to protect our intellectual property

rights or may infringe on the intellectual property rights of others; defects or failures associated with our products and/or

our quality system could lead to the filing of adverse event reports, recalls or safety alerts and negative publicity and could

subject us to regulatory actions; we are currently operating under an amended consent decree with the FDA and our failure

to comply with the requirements of the amended consent decree may have an adverse effect on our business; and our

success depends on our key personnel, and the loss of key personnel or the transition of key personnel, including our Chief

Executive

Officer,

could

disrupt

our

business.

This

presentation

reflects

management’s

views

February

2011.

Except

to the extent required by applicable law, we undertake no obligation to update or revise any forward-looking statement.

Non-GAAP Financial Measures:

The financial information included in this presentation includes Non-GAAP financial

measures. Reconciliations can be found on slides 15, 19 and 20 of this presentation. In addition, definitions and reconciling

information

can

found

CareFusion’s

website

www.carefusion.com

under

the

Investor

Relations

tab.

Today’s Speakers

•

Kieran Gallahue, Chairman and Chief Executive

Officer

•

Dave Schlotterbeck, Outgoing Chairman and Chief

Executive Officer

•

Jim Hinrichs, Chief Financial Officer

Q2 and 1H Fiscal 2011

Results

Q2 Fiscal 2011 Year-Over-Year

Quarterly Review

GAAP

Adjusted

%Change

Revenue

$1,002

(2)%

$1,002

(2)%

Operating Expenses

$349

(1)%

$320

(3)%

Operating Income

$126

(1)%

$155

Income from Continuing

Operations

$76

$98

11%

Diluted EPS from Continuing

Operations

$0.34

$0.44

13%

% Change over prior year period.

Adjusted operating expenses and adjusted operating income are Non-GAAP financial measures that exclude nonrecurring items related to

restructuring and acquisition integration charges, and nonrecurring related costs.

Adjusted income from continuing operations and adjusted diluted earnings per share from continuing operations are Non-GAAP financial measures that

exclude nonrecurring items related to restructuring and acquisition integration charges, nonrecurring related costs, and nonrecurring tax items.

Q2 Fiscal 2011 Year-Over-Year

Quarterly Segment Review

GAAP

Adjusted

Critical Care Technologies (CCT)

% Change

Revenues

$684

Segment

Profit

$110

(1)%

$128

Medical Technologies and Services

(MTS)

% Change

Revenues

$318

(6)%

$318

(6)%

Segment

Profit

$16

$27

17%

% Change over prior year period.

Adjusted segment profit is a Non-GAAP financial measure that excludes nonrecurring items related to restructuring and acquisition integration

charges, and nonrecurring related costs.

1H Fiscal 2011 Review

GAAP

Adjusted

% Change

Revenue

$1,910

(2)%

$1,910

(2)%

Operating

Expenses

$707

$638

(1)%

Operating

Income

$208

(15)%

$277

(2)%

Income from Continuing

Operations

$114

(11)%

$165

(5)%

Diluted EPS from Continuing

Operations

$0.51

(12)%

$0.73

(8)%

% Change over prior year period.

Adjusted operating expenses and adjusted operating income are Non-GAAP financial measures that exclude nonrecurring items related to

restructuring and acquisition integration charges, and nonrecurring related costs.

Adjusted income from continuing operations and adjusted diluted earnings per share from continuing operations are Non-GAAP financial measures that

exclude nonrecurring items related to restructuring and acquisition integration charges, nonrecurring related costs, and nonrecurring tax items.

1H Fiscal 2011 Segment Review

GAAP

Adjusted

Critical Care Technologies (CCT)

Change

Revenues

$1,301

Segment

Profit

$181

(15)%

$228

(4)%

Medical Technologies and Services

(MTS)

% Change

Revenues

$609

(5)%

$609

(5)%

Segment

Profit

$27

(16)%

$49

% Change over prior year period.

Adjusted segment profit is a Non-GAAP financial measure that excludes nonrecurring items related to restructuring and acquisition integration

charges, and nonrecurring related costs.

Fiscal 2011

Guidance

Fiscal 2011 Financial Guidance

Feb. 3, 2011

$ in millions

FY11 Outlook

Updated

FY11 Outlook

Total Revenue

Mid single digit growth over

FY10 reported revenue of

$3.9B

Low single digit growth over

FY10 reported revenue of

$3.9B on a reported and

constant currency basis

Low single digit growth over

FY10 revenue of $3.5B on a

reported and constant

currency basis

Adjusted Operating

Expenses

33% of total revenue

32 -

33% of total revenue

34% of total revenue

Gross Margin

~48%

50 –

51%

Adjusted Operating Margin

~15%

~17%

Adjusted Effective Tax Rate

30 -

32%

28 -

30%

28 -

30%

Adjusted Diluted EPS

$1.58 -

$1.68

$1.65 -

$1.72

$1.58 -

$1.65

Nonrecurring Items

$100 -

$110

$120

Diluted Weighted Average

Shares Outstanding

~225M

Capital Expenditures

$160 -

$180

$150 -

$160

$150 -

$160

Updated FY11 Outlook,

Adjusted for Divestitures²

Provided by CareFusion on November 2, 2010.

Reflects

expected impact

the

divestitures

OnSite

Services

and

International

Surgical

Products

(ISP)

businesses.

Assumes the OnSite divestiture will

reduce revenues and adjusted diluted EPS by approximately $13 million and $0.01, respectively, in Q4 FY11. Assumes ISP will be treated as discontinued

operations and will reduce revenues and adjusted diluted EPS by approximately $440 million and $0.06, respectively, for FY11.

Assumes foreign exchange rates as of December 31, 2010.

Adjusted operating expenses and adjusted operating margin are Non-GAAP financial measures that exclude nonrecurring items related to restructuring

and acquisition integration charges, and nonrecurring related costs.

Adjusted effective tax rate and adjusted diluted earnings per share are Non-GAAP financial measures that exclude nonrecurring items related to

restructuring and acquisition integration charges, nonrecurring related costs, and nonrecurring tax items.

Nonrecurring items are related to restructuring and acquisition integration charges, nonrecurring related costs, and nonrecurring tax items.

Updated Fiscal 2011 Revenue

Guidance and Assumptions

Guidance

•

Revenue growth lowered to low single digit growth

Assumptions

•

Infusion revenue lowered as timing of infusion pump conversions

shifts a portion of revenue from FY11 to FY12

•

Over 50% of revenue expected in 2H FY11

•

Hospital capital spending grows low to mid single digits; customers

continue prioritizing spending

•

International Surgical Products (ISP) annual revenue of $440

million for FY11 included in discontinued operations as of Q3 FY11

•

OnSite

divestiture reduces Q4 FY11 revenue by $13 million

•

Foreign exchange rates remain at December 31, 2010 levels

Updated Fiscal 2011 Adjusted EPS

Guidance and Assumptions

Guidance

•

Adjusted diluted EPS expected to be in the range of $1.58 to $1.65

Assumptions

•

Flexibility on operating expense line partially offsets impact of

lower revenue

•

Lowered FY11 tax rate guidance of 28% to 30% provides ~$0.04

benefit

•

ISP included in discontinued operations as of Q3 FY11 and

negatively impacts adjusted diluted EPS by $0.06

•

OnSite

divestiture reduces Q4 FY11 adjusted diluted EPS by $0.01

•

August 2010 restructuring provides $85 million to $95 million in

pre-tax cost savings in FY11

•

Foreign exchange rates remain at December 31, 2010 levels

Updated Fiscal 2011 CCT Segment-related

Assumptions vs. Fiscal 2010 Results

•

Segment revenue grows on a percentage basis by

mid single digits

Infusion:

Revenues grow on a percentage basis in the low

teens due to Medegen

acquisition and from incremental

market share gains in 2H FY11 following FDA requirement

for Baxter to remove its Colleague pump base within two

years

Respiratory:

Revenues are down mid single digits year-

over-year as sales related to H1N1 have not reoccurred

this year and the flu season to date has been very light

which negatively impacts capital and consumables

Dispensing:

Revenues grow on a percentage basis by low

to mid single digits

Updated Fiscal 2011 MTS Segment-related

Assumptions vs. Fiscal 2010 Results

•

Segment revenue grows low single digits

ChloraPrep

business

grows double digits based on successful

execution of growth strategy both domestically and internationally

Medical Specialties business

continues to grow, driven by full

commercial launch of AVAmax

Vertebral Balloon (Kyphoplasty) and

other portfolio products

International

Surgical

Products

included

discontinued

operations

as of Q3 FY11

•

FY11 revenue and adjusted diluted EPS of $440 million and $0.06,

respectively, to be included in discontinued operations

Research

Services

divestiture,

which

closed

May

2010

and was

not classified as discontinued operations, negatively impacts top line

by $59 million

OnSite

Services

divestiture

closes

April

2011

and

not

included

in discontinued operations; negatively impacts top line by $13

million and adjusted diluted EPS by $0.01 in Q4 FY11

Fiscal 2010 Results with ISP as D.O.

At a Glance

Reflects

the

expected

impact

the

divestiture

the

ISP

business,

which

will

treated

discontinued

operations

FY11.

Adjusted operating margin is a Non-GAAP financial measure that excludes nonrecurring items related to restructuring and acquisition integration charges,

and nonrecurring related costs.

Adjusted diluted earnings per share is a Non-GAAP financial measure that excludes nonrecurring items related restructuring and acquisition integration

charges, nonrecurring related costs, and nonrecurring tax items.

Note:

A full GAAP to Non-GAAP reconciliation

included

Exhibit

99.1

Form

8-K filed

the

company

Aug. 10, 2010.

$ in millions

FY10 GAAP

As Reported

FY10

As Adjusted

FY10

Adjusted

with ISP as

D.O.

Difference

Total Revenue

$3,929

$3,472

$(457)

Gross Margin

47.5%

49.9%

2.4%

Operating Margin

12.0%

13.8%

14.8%

1.0%

Diluted EPS

$0.87

$1.42

$1.33

$(0.09)

Fiscal 2011 Guidance Walk Over

Includes impact of lowering revenue guidance for FY11, flexibility in operating expenses and updated tax rate guidance of 28% to 30%.

Reflects

expected

impact

the

divestitures

OnSite

Services

and

ISP

businesses.

Assumes

the

OnSite

divestiture

will

reduce

revenues and adjusted diluted EPS by approximately $13 million and $0.01, respectively, in Q4 FY11. Assumes ISP will be treated as discontinued

operations and will reduce revenues and adjusted diluted EPS by approximately $440 million and $0.06, respectively, for FY11.

Adjusted diluted earnings per share is a Non-GAAP financial measure that excludes nonrecurring items related restructuring and acquisition integration

charges, nonrecurring related costs, and nonrecurring tax items.

FY11

Guidance

Nov. 2, 2010

Revenue grows

mid single digits

over FY10 reported

revenue of $3.9B

Adjusted Diluted

EPS range of

$1.58 -

$1.68

Updated FY11

Guidance with

Updated

Assumptions

Revenue grows

low single digits

over FY10 revenue

of $3.9B

Adjusted Diluted

EPS range of

$1.65 -

$1.72

Updated FY11

Guidance,

Adjusted for

Divestitures

Revenue grows

low single digits

over FY10 revenue

of $3.5B, which

excludes ISP

revenue

Adjusted Diluted

EPS range of

$1.58 -

$1.65

Fiscal 2011 Growth Expectations

Compared to Fiscal 2010 with ISP as D.O.

$ in millions

FY10 Adjusted

with ISP as D.O.

FY11 Guidance

Growth

Total Revenue

$3,472

Low single digit

growth

Low single digit

growth

Gross Margin

49.9%

50 –

51%

0 –

1 ppt

Adjusted Operating

Margin

14.8%

~17%

~2 ppt

Adjusted Diluted

EPS

$1.33

$1.58 -

$1.65

19 -

24%

Reflects the expected impact of the divestiture of the ISP business, which will be treated as discontinued operations in Q3

FY11. See reconciliation from our reported GAAP financial information presented on slide 15.

Adjusted operating margin is a Non-GAAP financial measure that excludes nonrecurring items related to restructuring and acquisition integration charges,

and nonrecurring related costs.

Adjusted diluted earnings per share is a Non-GAAP financial measure that excludes nonrecurring items related restructuring and acquisition integration

charges, nonrecurring related costs, and nonrecurring tax items.

Q&A

Q2 Fiscal 2011 Non-GAAP

Reconciliations

$ in millions

Q2 FY11

GAAP

Nonrecurring

Items

Q2 FY11

Adjusted

Operating Expenses

$349

$(29)

$320

Operating Income

$126

$29

$155

Income From Continuing Operations

$76

$22

$98

Diluted EPS From Continuing

Operations

$0.34

$0.10

$0.44

Critical Care Technologies

Segment Profit

$110

$18

$128

Medical Technologies and

Services Segment Profit

$16

$11

$27

Nonrecurring items are related to restructuring and acquisition integration charges, nonrecurring related costs, and nonrecurring tax items.

Earnings per share calculations are performed for each column presented. Therefore, the sum of the per share adjustments from the table above may

not equal the adjusted per share total presented.

Note: A full GAAP to non-GAAP reconciliation can be found on CareFusion’s website at www.carefusion.com under the Investor Relations tab. A discussion of

the reasons why management believes that the presentation of non-GAAP financial measures provides useful information to investors regarding the company’s

financial condition and results of operations is included in Exhibit 99.3 of Form 8-K filed by the company on Feb. 3, 2011.

1H Fiscal 2011 Non-GAAP

Reconciliations

$ in millions

1H FY11

GAAP

Nonrecurring

Items

1H FY11

Adjusted

Operating Expenses

$707

$(69)

$638

Operating Income

$208

$69

$277

Income From Continuing Operations

$114

$51

$165

Diluted EPS From Continuing

Operations

$0.51

$0.23

$0.73

Critical Care Technologies

Segment Profit

$181

$47

$228

Medical Technologies and

Services Segment Profit

$27

$22

$49

Nonrecurring items are related to restructuring and acquisition integration charges, nonrecurring related costs, and nonrecurring tax items.

Earnings per share calculations are performed for each column presented. Therefore, the sum of the per share adjustments from the table above may

not equal the adjusted per share total presented.

Note: A full GAAP to non-GAAP reconciliation can be found on CareFusion’s website at www.carefusion.com under the Investor Relations tab. A discussion of

the reasons why management believes that the presentation of non-GAAP financial measures provides useful information to investors regarding the

company’s financial condition and results of operations is included in Exhibit 99.3 of Form 8-K filed by the company on Feb. 3, 2011.

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