SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 11-K
Annual Report Pursuant to Section 15(d) of the
Securities Exchange Act of 1934
For the Fiscal Year Ended June 30, 2001
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Commission File Number 0-11373
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CARDINAL HEALTH PROFIT SHARING, RETIREMENT AND SAVINGS PLAN
-----------------------------------------------------------
(Full Title of 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 and Schedule
------------------------------------------------------------------------------
Signature 3
Report of Independent Public Accountants 4
Statements of Assets Available for Plan Benefits as of June 30, 2001
and 2000 5
Statement of Changes in Assets Available for Plan Benefits for the
Year Ended June 30, 2001 6
Notes to Financial Statements and Schedule 7
Item 4(i) - Schedule of Assets Held for Investment Purposes as of
June 30, 2001 15
Consent of Independent Public Accountants 16
2
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 20, 2001 /s/ Richard Miller
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Richard Miller, Plan Committee Member
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
4
CARDINAL HEALTH
PROFIT SHARING, RETIREMENT AND SAVINGS PLAN
Statements of Assets Available for Plan Benefits
As of June 30, 2001 and 2000
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2001 2000
--------------- ------------------
ASSETS
Plan Investments:
Investments, at fair market value $ 589,071,037 $ 362,149,672
Plan's interest in Master Trust 521,226,049 -
Participant loans 34,499,773 9,557,104
--------------- ------------------
Total plan investments 1,144,796,859 371,706,776
--------------- ------------------
Cash 2,645,832 -
Receivables:
Employer 32,347,992 19,354,871
Employee 1,282,085 865,980
--------------- ------------------
Total receivables 33,630,077 20,220,851
--------------- ------------------
ASSETS AVAILABLE FOR PLAN BENEFITS $ 1,181,072,768 $ 391,927,627
=============== =================
The accompanying notes to financial statements and schedule are an integral part
of these statements.
5
CARDINAL HEALTH
PROFIT SHARING, RETIREMENT AND SAVINGS PLAN
Statement of Changes in Assets Available for Plan Benefits
For the Year Ended June 30, 2001
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ADDITIONS:
Contributions:
Employer $ 59,828,671
Employee 45,057,140
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Total 104,885,811
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Assets transferred from other qualified plans 731,868,751
Net realized and unrealized gains 15,115,271
Plan's interest in Master Trust net investment performance (19,944,332)
Dividends and interest 14,378,396
-----------------
Total 741,418,086
-----------------
Total additions 846,303,897
-----------------
DEDUCTIONS:
Distributions to participants (57,078,040)
Administrative expenses (80,716)
-----------------
Total deductions (57,158,756)
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NET INCREASE 789,145,141
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ASSETS AVAILABLE FOR PLAN BENEFITS, BEGINNING OF YEAR 391,927,627
-----------------
ASSETS AVAILABLE FOR PLAN BENEFITS, END OF YEAR $ 1,181,072,768
=================
The accompanying notes to financial statements and schedule are an integral part
of this statement.
6
CARDINAL HEALTH
PROFIT SHARING, RETIREMENT AND SAVINGS PLAN
Notes to Financial Statements and Schedule
June 30, 2001
--------------------------------------------------------------------------------
(1) DESCRIPTION OF PLAN
The following description of the Cardinal Health Profit Sharing, Retirement
and Savings Plan (the Plan) provides only general information. Participants
should refer to the Plan agreement for a more complete description of the
Plan's provisions.
GENERAL
The Plan was adopted on March 25, 1987 and was most recently amended and
restated effective January 1, 2001. 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 at least 180 days of service if hired between
July 1, 1999 and January 1, 2001. As amended on January 1, 2001, employees
hired after that date are eligible after completing one month of service,
as defined by the Plan agreement.
Effective January 1, 2001, the Plan name was changed from the Cardinal
Health, Inc. Profit Sharing and Retirement Savings Plan to the Cardinal
Health Profit Sharing, Retirement and Savings Plan.
The Plan is administered by the Plan committee. The Plan trustee, record
keeper and asset custodian is Putnam Investments (Putnam). Administrative
expenses may be paid by the Company or the Plan, excluding loan fees which
are paid by the borrowing participant. The Plan incurred $80,716 of
administrative fees during the Plan year ended June 30, 2001.
Effective January 2, 2001, the Company established the Master Trust for
Retirement Plans of Cardinal Health (the Master Trust) for the Plan and
certain other Company plans. Putnam serves as the trustee, record keeper
and asset custodian for the Master Trust. See Note 6 for further
information pertaining to the Master Trust.
INVESTMENT OPTIONS
Upon enrollment in the Plan, a participant may direct contributions in
any combination of the following investment options. Participants may
change their investment options at any time.
Participants have invested or may invest in one or more of the following
accounts:
Master Trust Investment Options:
- PUTNAM CONSERVATIVE BALANCED FUND - This fund seeks to preserve
principal and have some exposure to stocks to keep pace with
inflation. This fund is designed for more conservative investors.
- PUTNAM MODERATE BALANCED FUND - This fund seeks a balance between
capital appreciation and capital preservation. The fund is designed
for investors who are willing to accept a moderate level of risk in a
portfolio balanced between stocks and bonds.
- PUTNAM GROWTH BALANCED FUND - This fund seeks capital appreciation
with current income as a secondary goal. This fund is designed for
investors with a long investment time horizon who are willing to
accept a higher degree of risk.
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CARDINAL HEALTH
PROFIT SHARING, RETIREMENT AND SAVINGS PLAN
Notes to Financial Statements and Schedule
June 30, 2001
--------------------------------------------------------------------------------
- PUTNAM INTERNATIONAL EQUITY FUND - This fund seeks capital
appreciation by allocating contributed assets between two mutual funds
that focus on stocks of companies located outside the United States.
- S & P 500 INDEX FUND - This fund seeks to achieve a return, before the
assessment of any fees, that closely approximates the return of the
Standard & Poor's 500 Composite Stock Price Index, a common measure of
U.S. market performance.
- PUTNAM STABLE VALUE FUND - The goal of this fund is to maintain
stability of principal while seeking a competitive rate of return. At
the same time the fund seeks to maintain sufficient liquidity to make
participant-directed benefit payments.
Other Investment Options:
- DODGE & COX STOCK FUND - This fund seeks long-term growth of principal
and income. A secondary objective is to achieve a reasonable current
income. The fund invests mainly in a broadly diversified portfolio of
common stocks.
- FRANKLIN TEMPLETON SMALL CAP GROWTH FUND - This fund's investment goal
is long-term capital growth. The fund typically invests in equity
securities of small-capitalization companies.
- PIMCO TOTAL RETURN FUND - This fund seeks to achieve its investment
objective by investing under normal circumstances at least 65% of its
assets in a diversified portfolio of fixed income instruments of
varying maturities.
- PUTNAM INVESTORS FUND - This fund seeks long-term growth of capital
and any increased income that results from this growth.
8
CARDINAL HEALTH
PROFIT SHARING, RETIREMENT AND SAVINGS PLAN
Notes to Financial Statements and Schedule
June 30, 2001
--------------------------------------------------------------------------------
- PUTNAM VISTA FUND - This fund seeks capital appreciation by investing
mainly in common stocks of U.S. companies, with a focus on growth
stocks.
- CARDINAL HEALTH, INC. STOCK - This fund is entirely comprised of
Cardinal Health, Inc. common stock.
- BERGEN STOCK - This fund is entirely comprised of AmerisourceBergen
Corp. common stock. In August 2000, the Company acquired Bergen
Brunswig Medical Corporation. In connection with the merger of the
Bergen Brunswig Pre-Tax Investment Retirement Account Plus Employer
Contribution Plan (see Note 8), those participants were allowed to
maintain their respective investments in AmerisourceBergen Corp.
common stock. Further contributions to this fund were frozen in
conjunction with the Plan merger and participants could elect to
transfer their respective balances to other Plan investment options
subsequent to the merger date.
CONTRIBUTIONS TO THE PLAN
Participants may elect to contribute from 1% to 20% of their compensation,
as defined in the Plan agreement, through payroll deductions, subject to
certain limitations or the maximum allowed under the Internal Revenue
Service (IRS) guidelines.
The Plan also provides for discretionary matching and profit sharing
contributions by the Company in an amount to be determined by the Employer
and announced to participants and eligible employees on a prospective basis
only. Participants may direct the investment of Employer contributions. In
any event, the Employer will not make a matching contribution for any
participant to the extent that the contribution would exceed the
participant's permissible amount. The discretionary contributions for the
Plan year ended June 30, 2001 totaled $59,828,671.
ELIGIBILITY AND VESTING
Participants are immediately vested in their contributions and rollovers,
plus actual earnings thereon. Upon death, disability, or attainment of
retirement age, the participant's interest in the qualified employer
matching contributions and earnings thereon, become fully vested. If a
participant's employment is terminated prior to any of these conditions
being met, vesting in the qualified matching contributions, and earnings
thereon, is based on years of continuous service. Participants are vested
in the applicable percentage of such matching contributions as follows:
Participants employed on or before December 31, 1996 and terminated prior
to January 1, 2001 are fully vested in Company matching contributions and
profit sharing contributions.
Prior to January 1, 2001, participants hired after December 31, 1996
vested in Company matching contributions and profit sharing contributions
over a seven year period, based on years of service as follows:
YEARS OF SERVICE VESTED PERCENTAGE
---------------- -----------------
Less than 3 0%
3 20%
4 40%
5 60%
6 80%
7 100%
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CARDINAL HEALTH
PROFIT SHARING, RETIREMENT AND SAVINGS PLAN
Notes to Financial Statements and Schedule
June 30, 2001
--------------------------------------------------------------------------------
Effective January 1, 2001, the above vesting schedule was amended such
that participants vest in Company matching contributions and profit sharing
contributions after a three year period, based on years of service as
follows:
YEARS OF SERVICE VESTED PERCENTAGE
---------------- ------------------
Less than 3 0%
3 100%
DISTRIBUTION OF BENEFITS
Prior to January 1, 2001, upon termination of service, death, retirement or
disability, the participant could elect to receive a lump-sum distribution,
installment payments, life annuity contract, joint survivor annuity, or
rollover the balance into another qualified plan. Participants attaining
age 59 1/2 are allowed to request distribution from the fully vested
portion of their account balance. Effective January 1, 2001, all
distributions, excluding retirement benefits, will be made in the form of a
lump-sum payment only. Also effective January 1, 2001, employees are
eligible to retire at age 65, regardless of whether they have completed
five years of service and employees with a rollover account may elect to
withdraw from that account. In addition, the Plan includes a provision for
employees to make withdrawals from their account under certain "hardship"
circumstances.
FORFEITURES
Non-vested account balances are generally forfeited upon termination.
Employer matching contributions and earnings thereon forfeited by
terminated employees totaled $1,498,533 for the year ended June 30, 2001.
Such forfeited amounts are used to reduce future Company contributions to
the Plan or to pay reasonable expenses.
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% 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.
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CARDINAL HEALTH
PROFIT SHARING, RETIREMENT AND SAVINGS PLAN
Notes to Financial Statements and Schedule
June 30, 2001
--------------------------------------------------------------------------------
(2) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
BASIS OF ACCOUNTING AND USE OF ESTIMATES
The accompanying financial statements have been prepared using the accrual
method of accounting. The preparation of the financial statements in
conformity with accounting principles generally accepted in the United
States requires the Plan's management to use estimates and assumptions that
affect the accompanying financial statements and disclosures. Actual
results could differ from those estimates.
INVESTMENT VALUATION AND INCOME RECOGNITION
The investments of the Plan are stated at fair market value as determined
by the asset custodian, using established 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 such changes could materially affect the
amounts reported in the statements of assets available for plan benefits.
Participant loans are valued at cost, which approximates fair market value.
The net realized gains and losses on sales of assets are based on sale
proceeds and the market value of assets at the beginning of the Plan year
or cost at the time of purchase during the year. Unrealized appreciation
or depreciation is included in net realized and unrealized gains currently
on the statement of changes in assets available for plan benefits.
RECLASSIFICATIONS
Certain prior year amounts have been reclassified to conform with the 2001
presentation.
(3) TAX STATUS
The Plan obtained its latest determination letter on September 30, 1994 in
which the IRS stated that the Plan, as then designed, was in compliance
with the applicable requirements of the INTERNAL REVENUE CODE (IRC). The
Plan has been amended and restated since the latest determination letter.
However, the Company believes that the Plan, as currently designed and
operated, is in compliance with the applicable requirements of the IRC.
11
CARDINAL HEALTH
PROFIT SHARING, RETIREMENT AND SAVINGS PLAN
Notes to Financial Statements and Schedule
June 30, 2001
--------------------------------------------------------------------------------
(4) PARTY-IN-INTEREST TRANSACTIONS
Certain investments of the Plan are shares of investment funds managed by
Putnam. Putnam is also the trustee, recordkeeper, and asset custodian as
defined by the Plan and, therefore, related investment transactions qualify
as party-in-interest transactions.
The Plan offers loans to participants. Related loan transactions qualify as
party-in-interest transactions.
(5) INVESTMENTS
The fair market values of individual assets that represent 5% or more of
the Plan's assets as of June 30, 2001 and 2000 are as follows:
2001 2000
---------------- ----------------
Janus Worldwide Fund $ - $ 25,994,885
Vanguard Prime Money Market Fund - 23,323,427
The George Putnam Fund of Boston - 23,552,048
Putnam Investors Fund 68,249,444 77,425,509
Cardinal Health, Inc. Stock 400,754,986 144,750,219
Plan's Interest in Master Trust 521,226,049 -
(6) 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 performance presented in the
statement of changes in assets available for plan benefits, consists of the
unrealized gains (losses) and the dividends on those investments. The value
of the units in the Master Trust is adjusted monthly to reflect earnings on
investments, plus market value appreciation or depreciation.
The summarized Statement of Assets Available to Participating Plans as of
June 30, 2001 and the Statement of Changes in Assets Available to
Participating Plans for the year then ended, presented below, reflect the
assets and activities of the Master Trust, as certified by the trustee in
accordance with 29 CFR 2520.103-5(c) of the Department of Labor's Rules and
Regulations for Reporting Disclosure under the ERISA:
12
CARDINAL HEALTH
PROFIT SHARING, RETIREMENT AND SAVINGS PLAN
Notes to Financial Statements and Schedule
June 30, 2001
--------------------------------------------------------------------------------
MASTER TRUST
STATEMENT OF ASSETS AVAILABLE TO PARTICIPATING PLANS
AS OF JUNE 30, 2001
Investments at fair value-
Conservative Balanced Fund $ 11,308,842
Growth Balanced Fund 14,673,732
International Equity Fund 46,225,415
Moderate Balanced Fund 88,778,068
Stable Value Fund 217,847,688
S & P 500 Index Fund 156,154,237
------------------
Total investments $ 534,987,982
==================
The Plan's share in the Master Trust assets was 97.4% ($521,226,049) at
June 30, 2001.
MASTER TRUST
STATEMENT OF CHANGES IN ASSETS AVAILABLE TO PARTICIPATING PLANS
FOR THE YEAR ENDED JUNE 30, 2001
Investment income (loss)-
Net realized/unrealized gains (losses) $ (27,047,038)
Dividends 6,597,862
------------------
Total investment income (loss) $ (20,449,176)
==================
(7) PLAN TERMINATION
Although it has not expressed any intent to do so, the Company has the
right under the Plan to terminate the Plan subject to the provisions of
ERISA. In the event of plan termination, participants will become fully
vested in their account balances.
(8) PLAN MERGERS
Effective January 1, 2001, the assets of the Allegiance Retirement Plan,
the Automatic Liquid Packaging, Inc. Employees 401(k) Savings Plan, the
Bergen Brunswig Pre-Tax Investment Retirement Account Plus Employer
Contribution Plan and the Pacific Surgical Innovation, Inc. 401(k) Plan
were merged into the Plan. For the year ended June 30, 2001, the total
assets transferred resulting from the Plan mergers was approximately
$732,000,000.
13
CARDINAL HEALTH
PROFIT SHARING, RETIREMENT AND SAVINGS PLAN
Notes to Financial Statements and Schedule
June 30, 2001
--------------------------------------------------------------------------------
(9) SUBSEQUENT EVENTS
Effective July 1, 2001, September 1, 2001 and December 1, 2001,
respectively, the assets of the International Processing Corp. 401(k)
Plan, the American Threshold Industries, Inc. 401(k) Profit Sharing Plan
and the Cardinal Health, Inc. Frozen Retirement Plan were merged with the
Plan. Assets of approximately $449,000, $1,083,000 and $13,725,000 were
transferred into the Plan from the International Processing Corp. 401(k)
Plan, the American Threshold Industries, Inc. 401(k) Profit Sharing Plan
and the Cardinal Health, Inc. Frozen Retirement Plan, respectively, as a
result of these Plan mergers.
(10) REQUIRED SCHEDULE INFORMATION
No information is to be reported for the following schedules as of June 30,
2001, or for the year then ended.
a. Nonexempt Transactions
b. Leases in Default or Classified as Uncollectible
c. Investment Assets Both Acquired and Disposed of During the Plan Year
d. Loans or Fixed Income Obligations
14
CARDINAL HEALTH
PROFIT SHARING, RETIREMENT AND SAVINGS PLAN
Item 4(i) - Schedule of Assets Held for Investment Purposes
As of June 30, 2001 Schedule I
--------------------------------------------------------------------------------
IDENTITY OF ISSUER,
BORROWER, LESSOR OR MARKET
SIMILAR PARTY DESCRIPTION VALUE
------------------------- ------------------------------------------------------------------ -------------------
* Cardinal Health, Inc. Common Stock $ 400,754,986
AmerisourceBergen Corp. Common Stock 5,132,992
Dodge & Cox Stock Fund 40,874,876
Franklin Templeton Small Cap Growth Fund 46,417,297
PIMCO Funds Total Return Fund 16,687,968
* Putnam Investors Fund 68,249,444
* Putnam Vista Fund 10,953,474
* Various participants Participant loans (interest rates ranging from 6.0% to 11.0%) 34,499,773
-------------------
Total $ 623,570,810
===================
* Denotes party-in-interest.
The accompanying financial statements and notes thereto are an integral part of
this schedule.
15