Press Releases

Q4 FY12

Q4 FY11

Y/Y

FY12

FY11

Y/Y

Revenue

$26.8 billion

$26.8 billion

0%

$107.6 billion

$102.6 billion

5%

Operating Earnings

$403 million

$359 million

12%

$1.8 billion

$1.5 billion

18%

Non-GAAP Operating Earnings

$425 million

$375 million

13%

$1.9 billion

$1.6 billion

13%

Earnings from Continuing Operations

$236 million

$207 million

14%

$1.1 billion

$966 million

11%

Non-GAAP Earnings from Continuing Operations

$255 million

$214 million

19%

$1.1 billion

$988 million

13%

Diluted EPS from Continuing Operations

$0.68

$0.58

17%

$3.06

$2.74

12%

Non-GAAP Diluted EPS from Continuing Operations

$0.73

$0.60

22%

$3.21

$2.80

15%

Q4 FY12

Q4 FY11

Y/Y

FY12

FY11

Y/Y

Revenue

$24.3 billion

$24.5 billion

(1%)

$97.9 billion

$93.7 billion

4%

Segment Profit

$354 million

$308 million

15%

$1.6 billion

$1.3 billion

17%

Q4 FY12

Q4 FY11

Y/Y

FY12

FY11

Y/Y

Revenue

$2.4 billion

$2.3 billion

5%

$9.6 billion

$8.9 billion

8%

Segment Profit

$79 million

$78 million

2%

$332 million

$373 million

(11%)

Schedule 1

Cardinal Health, Inc. and Subsidiaries

Condensed Consolidated Statements of Earnings (Unaudited)

Fourth Quarter

(in millions, except per Common Share amounts)

2012

2011

% Change

Revenue

$         26,764

$         26,764

0 %

Cost of products sold

25,628

25,720

(0)%

Gross margin

1,136

1,044

9 %

Operating expenses:

Distribution, selling, general and administrative expenses

712

671

6 %

Restructuring and employee severance

9

5

N.M.

Acquisition-related costs

11

15

N.M.

Impairments and loss on disposal of assets

1

-

N.M.

Litigation (recoveries)/charges, net

-

(6)

N.M.

Operating earnings

403

359

12 %

Other (income)/expenses, net

1

(2)

N.M.

Interest expense, net

25

24

4 %

Gain on sale of investment in CareFusion

-

(4)

N.M.

Earnings before income taxes and discontinued operations

377

341

11 %

Provision for income taxes

141

134

5 %

Earnings from continuing operations

236

207

14 %

Loss from discontinued operations, net of tax

-

(4)

N.M.

Net earnings

$              236

$              203

17 %

Basic earnings/(loss) per Common Share:

Continuing operations

$             0.68

$             0.59

15 %

Discontinued operations

-

(0.01)

N.M.

Net basic earnings per Common Share

$             0.68

$             0.58

17 %

Diluted earnings/(loss) per Common Share:

Continuing operations

$             0.68

$             0.58

17 %

Discontinued operations

-

(0.01)

N.M.

Net diluted earnings per Common Share

$             0.68

$             0.57

19 %

Weighted average number of Common Shares outstanding:

Basic

345

349

Diluted

349

355

Schedule 2

Cardinal Health, Inc. and Subsidiaries

Condensed Consolidated Statements of Earnings

Fiscal Year

(in millions, except per Common Share amounts)

2012

2011

% Change

(Unaudited)

Revenue

$       107,552

$       102,644

5 %

Cost of products sold

103,011

98,482

5 %

Gross margin

4,541

4,162

9 %

Operating expenses:

Distribution, selling, general and administrative expenses

2,677

2,528

6 %

Restructuring and employee severance

21

15

N.M.

Acquisition-related costs

33

90

N.M.

Impairments and loss on disposal of assets

21

9

N.M.

Litigation (recoveries)/charges, net

(3)

6

N.M.

Operating earnings

1,792

1,514

18 %

Other income, net

(1)

(22)

N.M.

Interest expense, net

95

93

2 %

Gain on sale of investment in CareFusion

-

(75)

N.M.

Earnings before income taxes and discontinued operations

1,698

1,518

12 %

Provision for income taxes

628

552

14 %

Earnings from continuing operations

1,070

966

11 %

Loss from discontinued operations, net of tax

(1)

(7)

N.M.

Net earnings

$           1,069

$              959

11 %

Basic earnings/(loss) per Common Share:

Continuing operations

$             3.10

$             2.77

12 %

Discontinued operations

-

(0.02)

N.M.

Net basic earnings per Common Share

$             3.10

$             2.75

13 %

Diluted earnings/(loss) per Common Share:

Continuing operations

$             3.06

$             2.74

12 %

Discontinued operations

-

(0.02)

N.M.

Net diluted earnings per Common Share

$             3.06

$             2.72

13 %

Weighted average number of Common Shares outstanding:

Basic

345

349

Diluted

349

353

Schedule 3

Cardinal Health, Inc. and Subsidiaries

Condensed Consolidated Balance Sheets

June 30,

June 30,

(in millions)

2012

2011

(Unaudited)

Assets

Cash and equivalents

$           2,274

$           1,929

Trade receivables, net

6,355

6,156

Inventories

7,864

7,334

Prepaid expenses and other

1,017

897

Total current assets

17,510

16,316

Property and equipment, net

1,551

1,512

Goodwill and other intangibles, net

4,392

4,259

Other assets

807

759

Total assets

$         24,260

$         22,846

Liabilities and Shareholders' Equity

Accounts payable

$         11,726

$         11,332

Current portion of long-term obligations and other short-term borrowings

476

327

Other accrued liabilities

1,972

1,711

Total current liabilities

14,174

13,370

Long-term obligations, less current portion

2,418

2,175

Deferred income taxes and other liabilities

1,424

1,452

Total shareholders' equity

6,244

5,849

Total liabilities and shareholders' equity

$         24,260

$         22,846

Schedule 4

Cardinal Health, Inc. and Subsidiaries

Condensed Consolidated Statements of Cash Flows

Fourth Quarter

Fiscal Year

(in millions)

2012

2011

2012

2011

(Unaudited)

(Unaudited)

(Unaudited)

Cash Flows from Operating Activities:

Net earnings

$              236

$              203

$           1,069

$              959

Loss from discontinued operations

-

4

1

7

Earnings from continuing operations

236

207

1,070

966

Adjustments to reconcile earnings from continuing operations to net cash from operations:

Depreciation and amortization

86

74

325

313

Gain on sale of investment in CareFusion

-

(4)

-

(75)

Impairments and loss on disposal of assets

1

-

21

9

Share-based compensation

22

19

85

80

Provision for deferred income taxes

158

128

158

128

Provision for bad debts

7

5

22

27

Change in fair value of contingent consideration obligation

(18)

(6)

(71)

(7)

Change in operating assets and liabilities, net of effects from acquisitions:

Decrease/(increase) in trade receivables

190

122

(129)

(457)

Decrease/(increase) in inventories

375

384

(495)

(665)

Increase/(decrease) in accounts payable

(893)

(630)

319

1,356

Other accrued liabilities and operating items, net

(271)

(179)

(129)

(280)

Net cash provided by/(used in) operating activities

(107)

120

1,176

1,395

Cash Flows from Investing Activities:

Acquisition of subsidiaries, net of cash acquired

(31)

(5)

(174)

(2,300)

Purchase of held-to-maturity securities and other investments

(25)

-

(35)

(156)

Additions to property and equipment

(100)

(105)

(263)

(291)

Proceeds from divestitures and sale of property and equipment

(1)

-

3

3

Proceeds from sale of CareFusion

-

-

-

706

Proceeds from maturities of held-to-maturity securities

46

10

92

10

Net cash used in investing activities

(111)

(100)

(377)

(2,028)

Cash Flows from Financing Activities:

Payment of contingent consideration

-

(10)

-

(10)

Net change in short-term borrowings

5

5

13

46

Reduction of long-term obligations

(206)

(1)

(251)

(229)

Proceeds from long-term obligations, net of issuance costs

496

-

496

495

Proceeds from issuance of Common Shares

19

27

42

63

Tax disbursements from exercises of stock options

(8)

(5)

(4)

(14)

Dividends on Common Shares

(74)

(68)

(300)

(274)

Purchase of treasury shares

(150)

-

(450)

(270)

Net cash provided by/(used in) financing activities

82

(52)

(454)

(193)

Net increase/(decrease) in cash and equivalents

(136)

(32)

345

(826)

Cash and equivalents at beginning of period

2,410

1,961

1,929

2,755

Cash and equivalents at end of period

$           2,274

$           1,929

$           2,274

$           1,929

Schedule 5

Cardinal Health, Inc. and Subsidiaries

Total Company Business Analysis

Non-GAAP

Fourth Quarter

Fourth Quarter

(in millions)

2012

2011

2012

2011

Revenue

Amount

$         26,764

$         26,764

Growth rate

0 %

9 %

Operating earnings

Amount

$              403

$              359

$              425

$              375

Growth rate

12 %

7 %

13 %

17 %

Earnings from continuing operations

Amount

$              236

$              207

$              255

$              214

Growth rate

14 %

7 %

19 %

17 %

Non-GAAP

Fiscal Year

Fiscal Year

(in millions)

2012

2011

2012

2011

Revenue

Amount

$       107,552

$       102,644

Growth rate

5 %

4 %

Operating earnings

Amount

$           1,792

$           1,514

$           1,866

$           1,644

Growth rate

18 %

16 %

13 %

18 %

Earnings from continuing operations

Amount

$           1,070

$              966

$           1,119

$              988

Growth rate

11 %

65 %

13 %

22 %

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

Schedule 6

Cardinal Health, Inc. and Subsidiaries

Segment Business Analysis

Fourth Quarter

Fourth Quarter

(in millions)

2012

2011

(in millions)

2012

2011

Pharmaceutical

Medical

Revenue

Revenue

Amount

$         24,335

$         24,458

Amount

$           2,432

$           2,312

Growth rate

(1)%

10 %

Growth rate

5 %

7 %

Mix

91 %

91 %

Mix

9 %

9 %

Segment profit

Segment profit

Amount

$              354

$              308

Amount

$                79

$                78

Growth rate

15 %

34 %

Growth rate

2 %

(24)%

Mix

82 %

80 %

Mix

18 %

20 %

Segment profit margin

1.46 %

1.26 %

Segment profit margin

3.27 %

3.38 %

Refer to definitions for an explanation of calculations.

Total consolidated revenue for the three months ended June 30, 2012 was $26,764 million, which included total segment revenue of $26,767 million and Corporate revenue of $(3) million. Total consolidated revenue for the three months ended June 30, 2011 was $26,764 million, which included total segment revenue of $26,770 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, 2012 were $403 million, which included total segment profit of $433 million and Corporate costs of $(30) million. Total consolidated operating earnings for the three months ended June 30, 2011 were $359 million, which included total segment profit of $386 million and Corporate costs of $(27) million. Corporate includes, among other things, restructuring and employee severance, acquisition-related costs (including amortization of acquisition-related intangible assets and changes in the fair value of contingent consideration obligations), impairments and loss on disposal of assets, litigation (recoveries)/charges, net and certain investment spending that are not allocated to the segments.

Schedule 7

Cardinal Health, Inc. and Subsidiaries

Segment Business Analysis

Fiscal Year

Fiscal Year

(in millions)

2012

2011

(in millions)

2012

2011

Pharmaceutical

Medical

Revenue

Revenue

Amount

$         97,925

$         93,744

Amount

$           9,642

$           8,922

Growth rate

4 %

4 %

Growth rate

8 %

2 %

Mix

91 %

91 %

Mix

9 %

9 %

Segment profit

Segment profit

Amount

$           1,558

$           1,329

Amount

$              332

$              373

Growth rate

17 %

31 %

Growth rate

(11)%

(13)%

Mix

82 %

78 %

Mix

18 %

22 %

Segment profit margin

1.59 %

1.42 %

Segment profit margin

3.45 %

4.18 %

Refer to definitions for an explanation of calculations.

Total consolidated revenue for the fiscal year ended June 30, 2012 was $107,552 million, which included total segment revenue of $107,567 million and Corporate revenue of $(15) million. Total consolidated revenue for the fiscal year ended June 30, 2011 was $102,644 million, which included total segment revenue of $102,666 million and Corporate revenue of $(22) million. Corporate revenue consists primarily of elimination of inter-segment revenue.

Total consolidated operating earnings for the fiscal year ended June 30, 2012 were $1,792 million, which included total segment profit of $1,890 million and Corporate costs of $(98) million. Total consolidated operating earnings for the fiscal year ended June 30, 2011 were $1,514 million, which included total segment profit of $1,702 million and Corporate costs of $(188) million. Corporate includes, among other things, restructuring and employee severance, acquisition-related costs (including amortization of acquisition-related intangible assets and changes in the fair value of contingent consideration obligations), impairments and loss on disposal of assets, litigation (recoveries)/charges, net and certain investment spending that are not allocated to the segments.

Schedule 8

Cardinal Health, Inc. and Subsidiaries

Schedule of Notable Items

Fourth Quarter

Fiscal Year

(in millions, except per Common Share amounts)

2012

2011

2012

2011

Restructuring and employee severance

Restructuring and employee severance

$                (9)

$                (5)

$              (21)

$              (15)

Tax benefit

3

2

8

5

Restructuring and employee severance, net of tax

$                (6)

$                (3)

$              (13)

$              (10)

Decrease to diluted EPS from continuing operations

$           (0.02)

$           (0.01)

$           (0.04)

$           (0.03)

Acquisition-related costs

Amortization of acquisition-related intangible assets

$              (20)

$              (14)

$              (78)

$              (67)

Tax benefit

8

8

29

21

Amortization of acquisition-related intangible assets, net of tax

$              (12)

$                (6)

$              (49)

$              (46)

Decrease to diluted EPS from continuing operations

$           (0.03)

$           (0.02)

$           (0.14)

$           (0.13)

Other acquisition-related costs ¹

$                  9

$                (1)

$                45

$              (23)

Tax benefit/(expense) ¹

(10)

(2)

(20)

1

Other acquisition-related costs, net of tax

$                (1)

$                (3)

$                25

$              (22)

Increase/(decrease) to diluted EPS from continuing operations ¹

$                  -

$           (0.01)

$             0.07

$           (0.06)

Total acquisition-related costs

$              (11)

$              (15)

$              (33)

$              (90)

Tax benefit/(expense)

(2)

6

9

22

Total acquisition-related costs, net of tax

$              (13)

$                (9)

$              (24)

$              (68)

Decrease to diluted EPS from continuing operations ²

$           (0.04)

$           (0.03)

$           (0.07)

$           (0.19)

Impairments and loss on disposal of assets

Impairments and loss on disposal of assets

$                (1)

$                  -

$              (21)

$                (9)

Tax benefit

1

-

8

3

Impairments and loss on disposal of assets, net of tax

$                  -

$                  -

$              (13)

$                (6)

Decrease to diluted EPS from continuing operations

$                  -

$                  -

$           (0.04)

$           (0.02)

Litigation recoveries/(charges), net

Litigation recoveries/(charges), net

$                  -

$                  6

$                  3

$                (6)

Tax expense

-

(3)

(1)

(1)

Litigation recoveries/(charges), net, net of tax

$                  -

$                  3

$                  2

$                (7)

Increase/(decrease) to diluted EPS from continuing operations

$                  -

$             0.01

$             0.01

$           (0.02)

Other Spin-Off costs

Other spin-off costs

$                  -

$                (3)

$                (2)

$              (10)

Tax benefit

-

1

1

4

Other spin-off costs, net of tax

$                  -

$                (2)

$                (1)

$                (6)

Decrease to diluted EPS from continuing operations

$                  -

$                  -

$                  -

$           (0.02)

Gain on sale of CareFusion stock

Gain on sale of CareFusion stock

$                  -

$                  4

$                  -

$                75

Tax benefit

-

-

-

-

Gain on sale of CareFusion stock, net of tax

$                  -

$                  4

$                  -

$                75

Increase to diluted EPS from continuing operations

$                  -

$             0.01

$                  -

$             0.21

Weighted average number of diluted shares outstanding

349

355

349

353

We apply varying tax rates depending on the item's nature and tax jurisdiction where it is incurred.

¹

Includes a $71 million decrease in the fair value of the total contingent consideration obligation related to
the P4 Healthcare acquisition for the fiscal year. The related tax expense was $29 million and diluted EPS from continuing operations increased $0.13.

²

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

Schedule 9

Cardinal Health, Inc. and Subsidiaries

Asset Management Analysis

Fourth Quarter

Fiscal Year

2012

2011

2012

2011

Days sales outstanding

22.3

20.3

Days inventory on hand

23.9

22.5

Days payable outstanding

35.6

34.8

Net working capital days¹

10.5

8.0

Debt to total capital

32 %

30 %

Net debt to capital

9 %

9 %

Return on equity

15.1 %

14.1 %

17.8 %

17.5 %

Non-GAAP return on equity

16.3 %

14.9 %

18.6 %

18.0 %

Effective tax rate from continuing operations

37.4 %

39.3 %

37.0 %

36.4 %

Non-GAAP effective tax rate from continuing operations

36.0 %

39.6 %

36.8 %

37.2 %

¹

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

Refer to the GAAP/Non-GAAP reconciliation for Non-GAAP calculations. Refer to DSO, DIOH and DPO for definitions and calculations.

Schedule 10

Cardinal Health, Inc. and Subsidiaries

GAAP / Non-GAAP Reconciliation

Fourth Quarter 2012

(in millions, except per Common Share amounts)

Operating
Earnings

Operating
Earnings
Growth
Rate

Earnings
Before
Income
Taxes and
Discontinued
Operations

Provision
for
Income
Taxes

Earnings
from
Continuing
Operations

Earnings
from
Continuing Operations Growth
Rate

Diluted
EPS from
Continuing
Operations

Diluted

EPS from

Continuing

Operations

Growth Rate

GAAP

$              403

12 %

$              377

$              141

$              236

14 %

$             0.68

17 %

Restructuring and employee severance

9

9

3

6

0.02

Acquisition-related costs

11

11

(2)

13

0.04

Impairments and loss on disposal of assets

1

1

1

-

-

Litigation (recoveries)/charges, net

-

-

-

-

-

Other Spin-Off costs

-

-

-

-

-

Gain on sale of CareFusion stock

-

-

-

-

-

Non-GAAP

$              425

13 %

$              398

$              143

$              255

19 %

$             0.73

22 %

Fourth Quarter 2011

GAAP

$              359

7 %

$              341

$              134

$              207

7 %

$             0.58

7 %

Restructuring and employee severance

5

5

2

3

0.01

Acquisition-related costs

15

15

6

9

0.03

Impairments and loss on disposal of assets

-

-

-

-

-

Litigation (recoveries)/charges, net

(6)

(6)

(3)

(3)

(0.01)

Other Spin-Off costs

3

3

1

2

-

Gain on sale of CareFusion stock

-

(4)

-

(4)

(0.01)

Non-GAAP

$              375

17 %

$              354

$              140

$              214

17 %

$             0.60

20 %

Fiscal Year 2012

(in millions, except per Common Share amounts)

Operating

Earnings

Operating

Earnings

Growth Rate

Earnings

Before

Income

Taxes and

Discontinued

Operations

Provision

for

Income

Taxes

Earnings

from

Continuing

Operations

Earnings

from

Continuing

Operations

Growth Rate

Diluted

EPS from

Continuing

Operations

Diluted

EPS from

Continuing

Operations

Growth Rate

GAAP

$           1,792

18 %

$           1,698

$              628

$           1,070

11 %

$             3.06

12 %

Restructuring and employee severance

21

21

8

13

0.04

Acquisition-related costs

33

33

9

24

0.07

Impairments and loss on disposal of assets

21

21

8

13

0.04

Litigation (recoveries)/charges, net

(3)

(3)

(1)

(2)

(0.01)

Other Spin-Off costs

2

2

1

1

-

Gain on sale of CareFusion stock

-

-

-

-

-

Non-GAAP

$           1,866

13 %

$           1,772

$              653

$           1,119

13 %

$             3.21

15 %

Fiscal Year 2011

GAAP

$           1,514

16 %

$           1,518

$              552

$              966

65 %

$             2.74

69 %

Restructuring and employee severance

15

15

5

10

0.03

Acquisition-related costs

90

90

22

68

0.19

Impairments and loss on disposal of assets

9

9

3

6

0.02

Litigation (recoveries)/charges, net

6

6

(1)

7

0.02

Other Spin-Off costs

10

10

4

6

0.02

Gain on sale of CareFusion stock

-

(75)

-

(75)

(0.21)

Non-GAAP

$           1,644

18 %

$           1,573

$              585

$              988

22 %

$             2.80

25 %

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

We apply varying tax rates depending on the item's nature and tax jurisdiction where it is incurred.

Schedule 11

Cardinal Health, Inc. and Subsidiaries

GAAP / Non-GAAP Reconciliation

Fourth Quarter

(in millions)

2012

2011

GAAP return on equity

15.1 %

14.1 %

Non-GAAP return on equity

Net earnings

$              236

$              203

Restructuring and employee severance, net of tax, in continuing operations

6

3

Acquisition-related costs, net of tax, in continuing operations

13

9

Impairments and loss on disposal of assets, net of tax, in continuing operations

-

-

Litigation (recoveries)/charges, net, net of tax, in continuing operations

-

(3)

Other spin-off costs, net of tax, in continuing operations

-

2

Gain on sale of CareFusion stock, net of tax

-

(4)

CareFusion net loss in discontinued operations ¹

-

4

Adjusted net earnings

$              255

$              214

Annualized

$           1,020

$              856

Fourth

Third

Fourth

Third

Quarter

Quarter

Quarter

Quarter

2012

2012

2011

2011

Total shareholders' equity

$           6,244

$           6,240

$           5,849

$           5,657

Divided by average shareholders' equity

$           6,242

$           5,753

Non-GAAP return on equity

16.3 %

14.9 %

We apply varying tax rates depending on the item's nature and tax jurisdiction where it is incurred.

¹

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.  

Schedule 12

Cardinal Health, Inc. and Subsidiaries

GAAP / Non-GAAP Reconciliation

Fiscal Year

Fiscal Year

(in millions)

2012

2011

GAAP return on equity

17.8 %

17.5 %

Non-GAAP return on equity

Net earnings

$           1,069

$              959

Restructuring and employee severance, net of tax, in continuing operations

13

10

Acquisition-related costs, net of tax, in continuing operations

24

68

Impairments and loss on disposal of assets, net of tax, in continuing operations

13

6

Litigation (recoveries)/charges, net, net of tax, in continuing operations

(2)

7

Other spin-off costs, net of tax, in continuing operations

1

6

Gain on sale of CareFusion stock, net of tax

-

(75)

CareFusion net loss in discontinued operations ¹

-

7

Adjusted net earnings

$           1,118

$              988

Fourth

Third

Second

First

Fourth

Fourth

Third

Second

First

Fourth

Quarter

Quarter

Quarter

Quarter

Quarter

Quarter

Quarter

Quarter

Quarter

Quarter

2012

2012

2012

2012

2011

2011

2011

2011

2011

2010

Total shareholders' equity

$           6,244

$       6,240

$       5,928

$       5,714

$       5,849

$           5,849

$       5,657

$       5,421

$       5,239

$       5,276

Divided by average shareholders' equity

$           5,995

$           5,488

Non-GAAP return on equity

18.6 %

18.0 %

We apply varying tax rates depending on the item's nature and tax jurisdiction where it is incurred.

¹

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.  

Schedule 13

Cardinal Health, Inc. and Subsidiaries

GAAP / Non-GAAP Reconciliation

Fourth Quarter

Fiscal Year

(in millions)

2012

2011

2012

2011

GAAP effective tax rate from continuing operations

37.4 %

39.3 %

37.0 %

36.4 %

Non-GAAP effective tax rate from continuing operations

Earnings before income taxes and discontinued operations

$              377

$              341

$           1,698

$           1,518

Restructuring and employee severance

9

5

21

15

Acquisition-related costs

11

15

33

90

Impairments and loss on disposal of assets

1

-

21

9

Litigation (recoveries)/charges, net

-

(6)

(3)

6

Other Spin-Off costs

-

3

2

10

Gain on sale of CareFusion stock

-

(4)

-

(75)

Adjusted earnings before income taxes and discontinued operations

$              398

$              354

$           1,772

$           1,573

Provision for income taxes

$              141

$              134

$              628

$              552

Restructuring and employee severance tax benefit

3

2

8

5

Acquisition-related costs tax benefit/(expense)

(2)

6

9

22

Impairments and loss on disposal of assets tax benefit

1

-

8

3

Litigation (recoveries)/charges, net tax expense

-

(3)

(1)

(1)

Other spin-off costs tax benefit

-

1

1

4

Gain on sale of CareFusion stock tax benefit

-

-

-

-

Adjusted provision for income taxes

$              143

$              140

$              653

$              585

Non-GAAP effective tax rate from continuing operations

36.0 %

39.6 %

36.8 %

37.2 %

Fourth Quarter

2012

2011

Debt to total capital

32 %

30 %

Net debt to capital

Current portion of long-term obligations and other short-term borrowings

$              476

$              327

Long-term obligations, less current portion

2,418

2,175

Debt

$           2,894

$           2,502

Cash and equivalents

(2,274)

(1,929)

Net Debt

$              620

$              573

Total shareholders' equity

6,244

5,849

Capital

$           6,864

$           6,422

Net debt to capital

9 %

9 %

We apply varying tax rates depending on the item's nature and tax jurisdiction where it is incurred.

Forward-Looking Non-GAAP Financial Measures 

We present 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. We are unable to provide a quantitative
reconciliation of these forward-looking non-GAAP measures to the most directly comparable forward-looking
GAAP measures because we cannot reliably forecast restructuring and employee severance, acquisition-related
costs, impairments and loss on disposal of assets, litigation (recoveries)/charges, net, and
other spin-off costs, which are difficult to predict and estimate and are primarily dependent on future events.
Please note that the unavailable reconciling items could significantly impact our future financial results.  

Schedule 14

Cardinal Health, Inc. and Subsidiaries

Fourth Quarter

(in millions)

2012

2011

Days Sales Outstanding

22.3

20.3

Days Inventory on Hand

Inventories

$           7,864

$           7,334

Cost of products sold

$         25,628

$         25,720

Chargeback billings

3,984

3,556

Adjusted cost of products sold

$         29,612

$         29,276

Adjusted cost of products sold divided by 90 days

$              329

$              325

Days Inventory on Hand

23.9

22.5

Days Payable Outstanding

Accounts payable

$         11,726

$         11,332

Cost of products sold

$         25,628

$         25,720

Chargeback billings

3,984

3,556

Adjusted cost of products sold

$         29,612

$         29,276

Adjusted cost of products sold divided by 90 days

$              329

$              325

Days Payable Outstanding

35.6

34.8

Net Working Capital Days¹

10.5

8.0

¹

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

Days Sales Outstanding: trade receivables, net divided by (monthly revenue divided by 30 days).

Days Inventory on Hand: inventory divided by ((quarterly cost 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. 

Days Payable Outstanding: accounts payable divided by ((quarterly cost of products sold plus
chargeback billings) divided by 90 days).

Net Working Capital Days: days sales outstanding plus days inventory on hand less days payable
outstanding.

Cardinal Health, Inc. and Subsidiaries

Use of Non-GAAP Measures

This earnings release contains financial measures that are not calculated in accordance with U.S. generally accepted accounting principles ("GAAP").  In general, the measures exclude items and charges that (i) management does not believe reflect Cardinal Health, Inc.'s (the "Company") core business and relate more to strategic, multi-year corporate activities; or (ii) relate to activities or actions that may have occurred over multiple or in prior periods without predictable trends.  Management uses these non-GAAP financial measures internally to evaluate the Company's performance, evaluate the balance sheet, engage in financial and operational planning and determine incentive compensation.

Management provides these non-GAAP financial measures to investors as supplemental metrics to assist readers in assessing the effects of items and events on its financial and operating results and in comparing the Company's performance to that of its competitors.  However, 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 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 set forth above should be carefully evaluated.

Definitions

Debt: long-term obligations plus short-term borrowings.

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

Net Debt: a Non-GAAP measure defined as debt minus (cash and equivalents).

Net Debt to Capital: a Non-GAAP measure defined as net debt divided by (net debt plus total shareholders' equity).

Non-GAAP Diluted EPS from Continuing Operations and growth rate calculation ¹: non-GAAP earnings from continuing operations divided by diluted weighted average shares outstanding. 

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

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 disposal of assets, (4) litigation (recoveries)/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 the same six items). 

Non-GAAP Operating Earnings and growth rate calculation: operating earnings excluding (1) restructuring and employee severance, (2) acquisition-related costs, (3) impairments and loss on disposal of assets, (4) litigation (recoveries)/charges, net and (5) Other Spin-Off Costs.

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 disposal of assets, (4) litigation (recoveries)/charges, net, (5) Other Spin-Off Costs, (6) gain on sale of CareFusion stock and (7) CareFusion net loss in discontinued operations, each net of tax) and divided by average shareholders' equity.

Other Spin-Off Costs: costs incurred in connection with our Spin-Off of CareFusion which are included in distribution, selling, general and administrative expenses. 

Return on Equity: annualized current period net earnings divided by average shareholders' equity. 

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

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.

¹

In this earnings release growth rates are determined by dividing the difference between current period results and prior period results by prior period results.

²

Programs whereby the Company fundamentally changes its operations such as closing and consolidating certain manufacturing and distribution facilities, moving manufacturing of a product to another location, outsourcing the production of a product, employee severance (including rationalizing headcount or other significant changes in personnel) and realigning operations (including substantial realignment of the management structure of a business unit in response to changing market conditions).

³

Costs that consist primarily of transaction costs, integration costs, changes in the fair value of contingent consideration obligations and amortization of acquisition-related intangible assets.

⁴

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

⁵

Loss contingencies related to litigation and regulatory matters and income from favorable resolution of legal matters.