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 for
Employees of Puerto Rico
(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
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
For Employees of Puerto Rico:
We have audited the accompanying statement of assets available for benefits of
Cardinal Health Profit Sharing, Retirement & Savings Plan for Employees of
Puerto Rico 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 are the responsibility of the Plan's management. Our responsibility
is to express an opinion on these financial statements 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 financial
statements taken as a whole. The accompanying 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. The
supplemental schedule has been subjected to the auditing procedures applied in
our audit 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.
/s/ Ernst & Young LLP
ERNST & YOUNG LLP
Columbus, Ohio
December 6, 2002
3
Report of Independent Accountants
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 assets available for plan
benefits of the CARDINAL HEALTH PROFIT SHARING, RETIREMENT AND SAVINGS PLAN FOR
EMPLOYEES OF PUERTO RICO (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 its 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 AUDIT OF THE CARDINAL HEALTH PROFIT
SHARING, RETIREMENT AND SAVINGS PLAN FOR EMPLOYEES OF PUERTO RICO 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
For Employees of Puerto Rico
Statements of Assets Available for Benefits
As of June 30, 2002 and 2001
JUNE 30,
-----------------------
2002 2001
---------- ----------
ASSETS:
Investments $8,363,467 $4,311,804
Receivables:
Employer 1,281,099 937,292
Participant 36,479 29,628
---------- ----------
Total receivables 1,317,578 966,920
---------- ----------
Assets available for benefits $9,681,045 $5,278,724
========== ==========
See accompanying notes.
5
Cardinal Health Profit Sharing, Retirement and Savings Plan
For Employees of Puerto Rico
Statement of Changes in Assets Available for Benefits
For the year ended June 30, 2002
Additions:
Contributions:
Employer $1,601,792
Participant 1,394,702
----------
Total contributions 2,996,494
Assets transferred from another qualified plan 2,475,231
Investment income 170,158
----------
Total additions 5,641,883
Deductions:
Distributions to participants 691,500
Net realized and unrealized depreciation in the fair value of investments 404,040
Plan's interest in Master Trust net investment loss 84,208
Administrative expenses 59,814
----------
Total deductions 1,239,562
Net increase in assets 4,402,321
Assets available for benefits, beginning of year 5,278,724
----------
Assets available for benefits, end of year $9,681,045
==========
See accompanying notes.
6
Cardinal Health Profit Sharing, Retirement and Savings Plan
for Employees of Puerto Rico
Notes to Financial Statements
June 30, 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 Summary Plan Description 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.
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 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.
FORFEITURES
Non-vested account balances are generally forfeited upon termination. Such
forfeited amounts are used to reduce future Company contributions to the Plan.
7
Cardinal Health Profit Sharing, Retirement and Savings Plan
for Employees of Puerto Rico
Notes to Financial Statements (continued)
June 30, 2002
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. All amounts in participant accounts are
participant-directed.
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.
8
Cardinal Health Profit Sharing, Retirement and Savings Plan
for Employees of Puerto Rico
Notes to Financial Statements (continued)
June 30, 2002
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.
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 $4,021,255 $1,763,535
Dodge & Cox Stock Fund 1,096,948 1,077,086
Putnam Investors Fund 441,127 651,971
Franklin Templeton Small Cap Growth Fund -- 392,327
PIMCO Total Return Fund 350,321 343,325
9
Cardinal Health Profit Sharing, Retirement and Savings Plan
for Employees of Puerto Rico
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 .8% ($4,021,255) and .3% ($1,763,535)
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
for Employees of Puerto Rico
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 July 10, 2000, 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 MERGER
Effective July 1, 2001, the assets of the Retirement Savings Plan for Rexam
Employees in Puerto Rico were merged into the Plan. Assets of approximately
$2,475,000 were transferred into the Plan from the Retirement Savings Plan for
Rexam Employees in Puerto Rico as a result of the Plan merger.
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 $375,343 and $0 of Cardinal Health, Inc. common stock as of June
30, 2002 and 2001, respectively.
11
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 June 30, 2002
DESCRIPTION OF INVESTMENT INCLUDING
IDENTITY OF ISSUE BORROWER, MATURITY DATE, RATE OF INTEREST, CURRENT
LESSOR, OR SIMILAR PARTY MATURITY OR PAR VALUE VALUE
------------------------ --------------------- -----
COMMON STOCK
*Cardinal Health, Inc. Stock 6,112 shares $ 375,343
MUTUAL FUNDS
Dodge & Cox Stock Fund 11,182 shares 1,096,948
PIMCO Total Return Fund 32,956 shares 350,321
Liberty Acorn USA Fund 27,659 shares 463,012
* Putnam Vista Fund 18,533 shares 132,882
* Putnam Investors Fund 44,739 shares 441,127
LOANS
Loans to participants 1,482,579
----------
Total $4,342,212
==========
* 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 FOR EMPLOYEES OF
PUERTO RICO
Date: December 19, 2002 /s/ Richard J. Miller
---------------------------------------------
Richard J. Miller, Plan Committee Member
13