UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 11-K
(Mark One)
[ x ] ANNUAL REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES EXCHANGE ACT
OF 1934
For the Fiscal Year Ended June 30, 2002
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the Transition Period from ________ to ________
Commission File Number 1-11373
Cardinal Health Profit Sharing, Retirement and Savings Plan
-----------------------------------------------------------
(Full Title of the Plan)
Cardinal Health, Inc.
7000 Cardinal Place
Dublin, Ohio 43017
(Name of Issuer of the Securities Held Pursuant to the Plan and
Address of its Principal Executive Office)
CARDINAL HEALTH
PROFIT SHARING, RETIREMENT AND SAVINGS PLAN
Index to Financial Statements
-----------------------------------------------------------------------------
Reports of Independent Auditors................................... 3
Audited Financial Statements:
Statements of Assets Available for Benefits as of
June 30, 2002 and 2001.................................... 5
Statement of Changes in Assets Available for Benefits for the
Year Ended June 30, 2002.................................. 6
Notes to Financial Statements................................. 7
Supplemental Schedule:
Schedule of Assets (Held at End of Year)...................... 12
Signature......................................................... 13
Exhibits:
Exhibit 23.01 - Consent of Independent Auditors
Exhibit 23.02 - Information Regarding Consent of Arthur Andersen LLP
2
Report of Independent Auditors
To the Plan Committee of
Cardinal Health Profit Sharing, Retirement and Savings Plan:
We have audited the accompanying statement of assets available for benefits of
Cardinal Health Profit Sharing, Retirement and Savings Plan as of June 30, 2002,
and the related statement of changes in assets available for benefits for the
year ended June 30, 2002. These financial statements and schedule referred to
below are the responsibility of the Plan's management. Our responsibility is to
express an opinion on these financial statements and schedule based on our
audit.
We conducted our audit in accordance with auditing standards generally accepted
in the United States. Those standards require that we plan and perform the audit
to obtain reasonable assurance about whether the financial statements are free
of material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial statement
presentation. We believe that our audit provides a reasonable basis for our
opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the assets available for benefits of the Plan at June 30,
2002, and the changes in its assets available for benefits for the year ended
June 30, 2002, in conformity with accounting principles generally accepted in
the United States.
Our audit was performed for the purpose of forming an opinion on the basic
financial statements taken as a whole. The supplemental schedule of assets (held
at end of year) is presented for purposes of additional analysis and is not a
required part of the basic financial statements but is supplementary information
required by the Department of Labor's Rules and Regulations for Reporting and
Disclosure under the Employee Retirement Income Security Act of 1974. The
supplemental schedule has been subjected to the auditing procedures applied in
the audit of the basic financial statements and, in our opinion, is fairly
stated in all material respects in relation to the basic financial statements
taken as a whole.
/s/ Ernst & Young LLP
ERNST & YOUNG LLP
Columbus, Ohio
December 6, 2002
3
Report of Independent Public Accountants
To the Plan Committee of
CARDINAL HEALTH
PROFIT SHARING, RETIREMENT AND SAVINGS PLAN:
We have audited the accompanying statements of assets available for plan
benefits of the CARDINAL HEALTH PROFIT SHARING, RETIREMENT AND SAVINGS PLAN (the
Plan) as of June 30, 2001 and 2000, and the related statement of changes in
assets available for plan benefits for the year ended June 30, 2001. These
financial statements and the schedule referred to below are the responsibility
of the Plan's management. Our responsibility is to express an opinion on these
financial statements and schedule based on our audits.
We conducted our audits in accordance with auditing standards generally accepted
in the United States. Those standards require that we plan and perform the audit
to obtain reasonable assurance about whether the financial statements are free
from material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements. An
audit also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the assets available for plan benefits of the Plan as of
June 30, 2001 and 2000, and the changes in assets available for plan benefits
for the year ended June 30, 2001, in conformity with accounting principles
generally accepted in the United States.
Our audits were made for the purpose of forming an opinion on the basic
financial statements taken as a whole. The supplemental schedule of assets held
for investment purposes is presented for the purposes of additional analysis and
is not a required part of the basic financial statements but is supplementary
information required by the Department of Labor's Rules and Regulations for
Reporting and Disclosure under the Employee Retirement Income Security Act of
1974. The supplemental schedule has been subjected to the auditing procedures
applied in the audits of the basic financial statements and, in our opinion, is
fairly stated in all material respects when considered in relation to the basic
financial statements taken as a whole.
/s/ ARTHUR ANDERSEN LLP
Columbus, Ohio
December 14, 2001
NOTE: THIS IS A COPY OF THE AUDIT REPORT PREVIOUSLY ISSUED BY ARTHUR ANDERSEN
LLP ("ANDERSEN") IN CONNECTION WITH THE CARDINAL HEALTH PROFIT SHARING,
RETIREMENT AND SAVINGS PLAN FORM 11-K FILING FOR THE FISCAL YEAR ENDED JUNE 30,
2001. THE INCLUSION OF THIS PREVIOUSLY ISSUED ANDERSEN REPORT IS PURSUANT TO THE
"TEMPORARY FINAL RULE AND FINAL RULE REQUIREMENTS FOR ARTHUR ANDERSEN LLP
AUDITING CLIENTS," ISSUED BY THE U.S. SECURITIES AND EXCHANGE COMMISSION IN
MARCH 2002. NOTE THAT THIS PREVIOUSLY ISSUED ANDERSEN REPORT INCLUDES REFERENCES
TO CERTAIN FISCAL YEARS, WHICH ARE NOT REQUIRED TO BE PRESENTED IN THE
ACCOMPANYING CONSOLIDATED FINANCIAL STATEMENTS AS OF AND FOR THE YEARS ENDED
JUNE 30, 2002. THIS AUDIT REPORT HAS NOT BEEN REISSUED BY ARTHUR ANDERSEN LLP IN
CONNECTION WITH THIS FILING ON FORM 11-K. SEE EXHIBIT 23.02 FOR FURTHER
DISCUSSION.
4
Cardinal Health Profit Sharing, Retirement and Savings Plan
Statements of Assets Available for Benefits
As of June 30, 2002 and 2001
JUNE 30,
--------------------------------------
2002 2001
-------------- --------------
ASSETS:
Investments $1,093,339,112 $1,144,796,859
Cash 450,599 2,645,832
Receivables:
Employer 43,991,170 32,347,992
Participant 2,569,562 1,282,085
-------------- --------------
Total receivables 46,560,732 33,630,077
-------------- --------------
Assets available for benefits $1,140,350,443 $1,181,072,768
============== ==============
See accompanying notes.
5
Cardinal Health Profit Sharing, Retirement and Savings Plan
Statement of Changes in Assets Available for Benefits
For the year ended June 30, 2002
ADDITIONS:
Contributions:
Employer $ 64,647,348
Participant 69,647,671
---------------
Total contributions 134,295,019
Assets transferred from other qualified plans 15,732,561
Investment income 7,666,800
---------------
Total additions 157,694,380
DEDUCTIONS:
Distributions to participants 78,311,400
Net realized and unrealized depreciation in the fair value of investments 78,468,505
Plan's interest in Master Trust net investment loss 31,542,560
Assets transferred to another qualified plan 9,591,476
Administrative expenses 502,764
---------------
Total deductions 198,416,705
Net decrease in assets (40,722,325)
Assets available for benefits, beginning of year 1,181,072,768
---------------
Assets available for benefits, end of year $ 1,140,350,443
===============
See accompanying notes.
6
Cardinal Health Profit Sharing, Retirement and Savings Plan
Notes to Financial Statements
June 30, 2002
1. DESCRIPTION OF PLAN
GENERAL
The Cardinal Health Profit Sharing, Retirement and Savings Plan (the Plan) is a
defined contribution plan covering substantially all employees of Cardinal
Health, Inc. (the Company) and certain of its subsidiaries not covered by a
collective bargaining agreement who have completed one month of service, as
defined. This description of the Plan provides only general information.
Participants should refer to the Plan agreement for a more complete description
of the Plan's provisions.
The Plan is administered by the Plan committee. The Plan trustee, record keeper
and asset custodian is Putnam Fiduciary Trust Company (Putnam). Administrative
expenses may be paid by the Company or the Plan, excluding loan fees, which are
paid by the borrowing participant.
As record keeper and asset custodian of the Plan, Putnam maintains certain
accounting and other records of the Plan transactions and assets. Therefore, the
Plan and the Plan committee rely on Putnam to provide the appropriate
information for purposes of preparation of the financial statements for the
Plan. Although certain procedures are designed to obtain reasonable assurance
about whether the information provided by Putnam is complete and free of
material misstatement, the Plan and Plan committee's ability to verify the
information is somewhat limited. For purposes of disclosures made in these
financial statements and related certifications, the Plan and Plan committee
have no reason to believe that the information provided by Putnam does not
fairly present, in all material respects, the financial condition and results
of operations of the Plan.
Effective January 1, 2001, Cardinal Health, Inc. established the Master Trust
for Retirement Plans of Cardinal Health (the Master Trust) for the Plan and
certain other Company plans.
Effective June 30, 2002, the Plan was amended to change the Plan year to the
calendar year, with a short Plan year of July 1, 2002 to December 31, 2002.
CONTRIBUTIONS
Participants may contribute 1% to 20% of their compensation, as defined, to the
Plan. Participants direct the investment of their contributions into various
investment options offered by the Plan. The Company may contribute discretionary
matching and profit sharing contributions to the Plan. The Company's
discretionary matching contributions are invested as directed by participants.
Contributions are subject to certain limitations.
FORFEITURES
Non-vested account balances are generally forfeited upon termination. Such
forfeited amounts are used to reduce future Company contributions to the Plan.
PARTICIPANT ACCOUNTS
Each participant's account is credited with the participant's elective
contributions, allocations of the Company's contributions, Plan earnings and any
rollover contributions made by the participant. The benefit to which a
participant is entitled is the benefit that can be provided from the
participant's vested account balance. All amounts in participant accounts are
participant-directed.
7
Cardinal Health Profit Sharing, Retirement and Savings Plan
Notes to Financial Statements (continued)
June 30, 2002
VESTING
Participants are vested immediately in their contributions, plus actual earnings
thereon. Vesting in the Company's discretionary contribution portion of their
accounts is based on years of continuous service. A participant is 100 percent
vested after three years of credited service.
PARTICIPANT LOANS
Participants may borrow from their fund accounts a minimum of $1,000 up to a
maximum equal to the lesser of $50,000 or 50 percent of their vested account
balance. Loan terms range from 1-5 years or up to 15 years for the purchase of a
primary residence. The loans are secured by the remaining vested balance in the
participant's account and bear interest at a rate commensurate with local
prevailing rates as determined monthly by the Plan Administrator. Principal and
interest are repaid ratably through regular payroll deductions.
PAYMENT OF BENEFITS
Upon termination of service, death, retirement or disability, all distributions
will be made in the form of a lump-sum payment. In addition, the Plan includes a
provision for participants to make withdrawals from their account under certain
"hardship" circumstances.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
BASIS OF PRESENTATION
The financial statements of the Plan are prepared on the accrual basis of
accounting.
USE OF ESTIMATES
The preparation of financial statements requires management to make estimates
and assumptions that affect the accompanying financial statements and
disclosures. Actual results could differ from those estimates.
RISKS AND UNCERTAINTIES
The Plan has a significant participant-directed investment in Cardinal Health,
Inc. Common Stock, which is exposed to various risks, such as interest rate and
overall market volatility risk. Due to the level of risk involved with certain
investment securities, it is reasonably possible that changes in the values of
investment securities will occur in the near
8
Cardinal Health Profit Sharing, Retirement and Savings Plan
Notes to Financial Statements (continued)
June 30, 2002
term and that such changes could materially affect the amounts reported in the
statements of assets available for benefits.
INVESTMENT VALUATION AND INCOME RECOGNITION
The investments of the Plan are stated at fair market value as determined by the
asset custodian using quoted market prices of underlying investments. Investment
securities, in general, are exposed to various risks, such as interest rate,
credit, and overall market volatility risk. Due to the level of risk involved
with certain investment securities, it is reasonably possible that changes in
the values of investment securities will occur in the near term and that such
changes could materially affect the amounts reported in the statements of assets
available for benefits. Participant loans are valued at cost, which approximates
fair market value.
Purchases and sales of securities are recorded on a trade-date basis. Dividends
are recorded on the ex-dividend date.
3. INVESTMENTS
The fair market values of individual assets that represent 5% or more of the
Plan's assets as of June 30, 2002 and 2001 are as follows:
2002 2001
------------- -------------
Plan's Interest in Master Trust $ 511,372,001 $ 521,226,049
Cardinal Health, Inc. Common Stock 342,003,616 400,754,986
Putnam Investors Fund 51,946,893 68,249,444
Dodge & Cox Stock Fund 73,222,530 40,874,876
9
Cardinal Health Profit Sharing, Retirement and Savings Plan
Notes to Financial Statements (continued)
June 30, 2002
4. ASSETS HELD IN MASTER TRUST
The Master Trust assets are valued by the trustee daily and allocated to the
Plan based on its equitable share of the total Master Trust assets. The Plan's
interest in Master Trust net investment loss presented in the statement of
changes in assets available for benefits, consists of the unrealized and
realized gains (losses) and the dividends on those investments.
MASTER TRUST
ASSETS AVAILABLE TO PARTICIPATING PLANS
AS OF JUNE 30, 2002 AND 2001:
2002 2001
------------ ------------
Investments at fair value:
Mutual funds $149,937,923 $160,986,057
Common, Collective Trusts 370,893,945 374,001,925
------------ ------------
Total investments $520,831,868 $534,987,982
============ ============
The Plan's share in the Master Trust was 98.2% ($511,372,001) and 97.4%
($521,226,049) at June 30, 2002 and 2001, respectively.
MASTER TRUST
INVESTMENT INCOME (LOSS)
FOR THE YEAR ENDED JUNE 30, 2002:
Dividend and interest income $ 12,793,471
Net depreciation in fair value of investments:
Mutual funds (16,930,075)
Common, Collective Trusts (27,974,582)
------------
Total investment loss $(32,111,186)
============
10
Cardinal Health Profit Sharing, Retirement and Savings Plan
Notes to Financial Statements (continued)
June 30, 2002
5. INCOME TAX STATUS
The Plan has received a determination letter from the Internal Revenue Service
dated September 30, 1994, stating that the Plan is qualified under Section
401(a) of the Internal Revenue Code (the Code) and, therefore, the related trust
is exempt from taxation. Once qualified, the Plan is required to operate in
conformity with the Code to maintain its qualification. The plan administrator
believes the Plan is being operated in compliance with the applicable
requirements of the Code and, therefore, believes that the Plan is qualified and
the related trust is tax exempt.
6. PLAN MERGERS
Effective July 1, 2001, September 1, 2001, December 1, 2001 and May 1, 2002,
respectively, the assets of the International Processing Corp. 401(k) Plan, the
American Threshold Industries, Inc. 401(k) Profit Sharing Plan, the Cardinal
Health, Inc. Frozen Retirement Plan and the Premier Pharmacy Services, P.C.
401(k) Plan were merged into the Plan. Assets of approximately $475,000,
$1,083,000, $14,051,000 and $124,000 were transferred into the Plan from the
International Processing Corp. 401(k) Plan, the American Threshold Industries,
Inc. 401(k) Profit Sharing Plan, the Cardinal Health, Inc. Frozen Retirement
Plan and the Premier Pharmacy Services, P.C. 401(k) Plan, respectively as a
result of these mergers.
7. ASSET TRANSFER
Effective June 30, 2002, assets for all participants employed by Pharmacists:
PRN were transferred to another qualified Company-sponsored plan, resulting in
the transfer of assets of approximately $9,591,000 from the Plan.
8. PLAN TERMINATION
Although it has not expressed any intent to do so, the Company has the right
under the Plan to discontinue its contributions at any time and to terminate the
Plan subject to the provisions of ERISA. In the event of Plan termination,
participants will become 100 percent vested in their accounts.
11
Cardinal Health Profit Sharing, Retirement and Savings Plan
Schedule of Assets (Held At End of Year)
(Schedule H, Part IV, Line 4i on Form 5500)
As of June 30, 2002
DESCRIPTION OF INVESTMENT INCLUDING
IDENTITY OF ISSUE, BORROWER, MATURITY DATE, RATE OF INTEREST,
LESSOR, OR SIMILAR PARTY MATURITY OR PAR VALUE CURRENT VALUE
-----------------------------------------------------------------------------------
COMMON STOCK
*Cardinal Health, Inc. Stock 5,569,184 shares $342,003,616
MUTUAL FUNDS
Dodge & Cox Stock Fund 746,407 shares 73,222,530
PIMCO Total Return Fund 2,510,836 shares 26,690,187
Liberty Acorn USA Fund 2,405,515 shares 40,268,324
* Putnam Investors Fund 5,268,448 shares 51,946,893
* Putnam Vista Fund 1,293,718 shares 9,275,957
LOANS
Loans to participants 38,559,604
------------
Total $581,967,111
============
* Denotes party-in-interest.
12
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the members
of the Plan Committee have duly caused this annual report to be signed on its
behalf by the undersigned thereunto duly authorized.
CARDINAL HEALTH
PROFIT SHARING, RETIREMENT
AND SAVINGS PLAN
Date: December 19, 2002 /s/ Richard J. Miller
----------------------------------------
Richard J. Miller, Plan Committee Member
13