UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 11-K
(Mark One)
[ ] ANNUAL REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES EXCHANGE ACT
OF 1934
For the Fiscal Year Ended ______________
OR
[x] TRANSITION REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES EXCHANGE ACT
OF 1934
For the Transition Period from 6/30/02 to 12/31/02
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Commission File Number 1-11373
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Cardinal Health Profit Sharing, Retirement and Savings Plan for Employees of
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Puerto Rico
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(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
for Employees of Puerto Rico
Financial Statements and Supplemental Schedule
December 31, 2002 and June 30, 2002 and the six month period
ended December 31, 2002
TABLE OF CONTENTS
Report of Independent Auditors....................................................................... 3
Audited Financial Statements
Statements of Net Assets Available for Benefits................................................. 4
Statement of Changes in Net Assets Available for Benefits....................................... 5
Notes to Financial Statements................................................................... 6
Supplemental Schedule
Schedule of Assets (Held At End of Year)........................................................ 11
Signature............................................................................................ 12
Exhibits:
Exhibit 23.01 - Consent of Independent Auditors
Exhibit 99.01 - Certification of a Plan Committee Member
and the Plan Committee Chairperson, pursuant to
Section 906 of the Sarbanes-Oxley Act of 2002
2
Report of Independent Auditors
To the Plan Committee of
Cardinal Health Profit Sharing, Retirement and Savings Plan
For Employees of Puerto Rico
We have audited the accompanying statements of net assets available for benefits
of Cardinal Health Profit Sharing, Retirement & Savings Plan for Employees of
Puerto Rico as of December 31, 2002 and June 30, 2002, and the related statement
of changes in net assets available for benefits for the six month period ended
December 31, 2002. These financial statements are the responsibility of the
Plan's management. Our responsibility is to express an opinion on these
financial statements 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
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 audits provide a reasonable basis for our
opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the net assets available for benefits of the Plan at
December 31, 2002 and June 30, 2002, and the changes in its net assets available
for benefits for the six month period ended December 31, 2002, in conformity
with accounting principles generally accepted in the United States.
Our audits were performed for the purpose of forming an opinion on the 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 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 is the responsibility of the Plan's management and has been subjected
to the auditing procedures applied in our audits of the financial statements
and, in our opinion, is fairly stated in all material respects in relation to
the financial statements taken as a whole.
Columbus, Ohio /s/ Ernst & Young LLP
May 15, 2003
3
Cardinal Health Profit Sharing, Retirement and Savings Plan
For Employees of Puerto Rico
Statements of Net Assets Available for Benefits
DECEMBER 31, JUNE 30,
2002 2002
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ASSETS:
Investments, at fair value $ 9,613,403 $ 8,363,467
Receivables:
Contributions from employer 21,406 1,281,099
Contributions from participant 51,076 36,479
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Total receivables 72,482 1,317,578
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Net assets available for benefits $ 9,685,885 $ 9,681,045
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See accompanying notes.
4
Cardinal Health Profit Sharing, Retirement and Savings Plan
For Employees of Puerto Rico
Statement of Changes in Net Assets Available for Benefits
FOR THE SIX MONTH
PERIOD ENDED
DECEMBER 31,
2002
-------------------------
Additions:
Contributions:
Employer $ 196,717
Participant 508,185
Interest and dividend income 46,139
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Total additions 751,041
DEDUCTIONS:
Benefits paid directly to participants 349,011
Net depreciation in fair value of investments 225,100
Plan's interest in Master Trust net investment loss 149,507
Administrative expenses 22,583
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Total deductions 746,201
Net increase 4,840
Net assets available for benefits, beginning of period 9,681,045
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Net assets available for benefits, end of period $ 9,685,885
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See accompanying notes.
5
Cardinal Health Profit Sharing, Retirement and Savings Plan
for Employees of Puerto Rico
Notes to Financial Statements
December 31, 2002
1. DESCRIPTION OF PLAN
GENERAL
The Cardinal Health Profit Sharing, Retirement and Savings Plan for Employees of
Puerto Rico (the Plan) is a defined contribution plan covering substantially all
employees of Cardinal Health, Inc. (the Company) residing in Puerto Rico and 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 Document 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, the Company established the Master Trust for
Retirement Plans of Cardinal Health (the Master Trust) for the Plan and certain
other Company plans. Certain of the Plan's investments are not included in the
Master Trust.
Effective June 30, 2002, the Plan was amended to change the Plan year to a
calendar year, with a short Plan year for the six month period of July 1, 2002
to December 31, 2002.
CONTRIBUTIONS
Participants may contribute 1% to 10% 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 and profit sharing contributions are invested as directed
by participants. Contributions are subject to certain limitations.
6
Cardinal Health Profit Sharing, Retirement and Savings Plan
for Employees of Puerto Rico
Notes to Financial Statements (continued)
1. DESCRIPTION OF PLAN (CONTINUED)
FORFEITURES
Non-vested account balances are generally forfeited either upon full
distribution or completion of five consecutive one-year breaks in service, as
defined. 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. A participant is entitled to the
benefit provided from the participant's vested account. All amounts in
participant accounts are participant-directed.
VESTING
Participants are vested immediately in their elective 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 vesting 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 employment, 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.
7
Cardinal Health Profit Sharing, Retirement and Savings Plan
for Employees of Puerto Rico
Notes to Financial Statements (continued)
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
USE OF ESTIMATES
The preparation of financial statements requires management to make estimates
and assumptions that affect the financial statements and accompanying notes.
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 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. 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 December 31, 2002 and June 30, 2002 are as follows:
DECEMBER 31, JUNE 30,
2002 2002
--------------------------------
Plan's interest in Master Trust $4,681,127 $4,021,255
Dodge & Cox Stock Fund, mutual fund 1,114,668 1,096,948
PIMCO Total Return Fund, mutual fund 504,217 350,321
Cardinal Health, Inc. common stock 651,672 375,343
NET DEPRECIATION IN FAIR VALUE OF INVESTMENTS
FOR THE SIX MONTHS ENDED DECEMBER 31, 2002:
Net depreciation in fair value of investments as determined by quoted market
prices:
Mutual Funds $ (211,439)
Cardinal Health, Inc. common stock (13,661)
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Total net depreciation $ (225,100)
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8
Cardinal Health Profit Sharing, Retirement and Savings Plan
for Employees of Puerto Rico
Notes to Financial Statements (continued)
4. ASSETS HELD IN MASTER TRUST
The Master Trust assets are valued by the trustee daily, based on quoted market
prices, 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 net 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:
DECEMBER 31, JUNE 30,
2002 2002
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Investments at fair value:
Mutual funds $144,144,606 $149,937,923
Common, Collective Trusts 382,873,704 370,893,945
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Total investments $527,018,310 $520,831,868
==================== ===================
The Plan's share of assets in the Master Trust was less than 1% or $4,681,127
and $4,021,255 at December 31, 2002 and June 30, 2002, respectively.
MASTER TRUST
INVESTMENT INCOME (LOSS)
FOR THE SIX MONTHS ENDED DECEMBER 31, 2002:
Dividend and interest income $ 6,428,062
Net depreciation in fair value of investments as determined by quoted market prices:
Mutual funds (10,142,598)
Common, Collective Trusts (12,547,922)
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Total investment loss $ (16,262,458)
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9
Cardinal Health Profit Sharing, Retirement and Savings Plan
for Employees of Puerto Rico
Notes to Financial Statements (continued)
5. INCOME TAX STATUS
The Plan has received a determination letter from the Puerto Rican Department of
Treasury dated July 10, 2000, stating that the Plan is qualified under Section
1165(a) of the Puerto Rico Internal Revenue Code of 1994 (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. 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,
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 net
assets available for benefits and changes in net assets available for benefits.
7. 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.
8. RELATED PARTY TRANSACTIONS
The Plan held $651,672 and $375,343 of Cardinal Health, Inc. common stock as of
December 31, 2002 and June 30, 2002, respectively.
10
Cardinal Health Profit Sharing, Retirement & Savings Plan
for Employees of Puerto Rico
Schedule of Assets (Held at End of Year)
(Schedule H, Part IV, Line 4i on Form 5500)
As of December 31, 2002
IDENTITY OF ISSUER, BORROWER, DESCRIPTION OF INVESTMENT INCLUDING MATURITY DATE, CURRENT
LESSOR, OR SIMILAR PARTY RATE OF INTEREST, MATURITY OR PAR VALUE VALUE
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COMMON STOCK
*Cardinal Health, Inc. 11,010 shares $ 651,672
MUTUAL FUNDS
Dodge & Cox Stock Fund 12,659 shares 1,114,668
PIMCO Total Return Fund 47,256 shares 504,217
Liberty Acorn USA Fund 26,571 shares 379,433
* Putnam Vista Fund 23,219 shares 143,724
* Putnam Investors Fund 53,288 shares 474,798
LOANS
Loans to participants 3.92 to 10.50% 1,663,764
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Total $ 4,932,276
====================
* Denotes party-in-interest.
11
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the members
of the Plan committee have duly caused this transition report to be signed on
its behalf by the undersigned thereunto duly authorized.
CARDINAL HEALTH
PROFIT SHARING, RETIREMENT AND
SAVINGS PLAN FOR EMPLOYEES OF
PUERTO RICO
Date: June 27, 2003 /s/ Richard J. Miller
-----------------------------------
Richard J. Miller, Plan Committee Member
12