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 December 31, 2003
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 PRN Employees
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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)
1
Cardinal Health Profit Sharing, Retirement and Savings
Plan for PRN Employees
Financial Statements and Supplemental Schedule
December 31, 2003 and 2002 and for the
Year Ended December 31, 2003
TABLE OF CONTENTS
Report of Independent Registered Public Accounting Firm ..................... 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)................................ 12
Signature.................................................................... 13
Exhibits:
Exhibit 23.01 - Consent of Independent Registered Public Accounting Firm
2
Report of Independent Registered Public Accounting Firm
To the Plan Committee of
Cardinal Health Profit Sharing, Retirement and Savings Plan for PRN Employees
We have audited the accompanying statements of net assets available for benefits
of Cardinal Health Profit Sharing, Retirement and Savings Plan for PRN Employees
as of December 31, 2003 and 2002, and the related statement of changes in net
assets available for benefits for the year ended December 31, 2003. 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 the standards of the Public Company
Accounting Oversight Board (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, 2003 and 2002, and the changes in its net assets available for
benefits for the year ended December 31, 2003, in conformity with U.S. generally
accepted accounting principles.
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
June 22, 2004
3
Cardinal Health Profit Sharing,
Retirement and Savings Plan for PRN Employees
Statements of Net Assets Available for Benefits
DECEMBER 31
2003 2002
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ASSETS:
Investments, at fair value $ 7,857,992 $ 8,831,664
Receivables:
Contributions from participants 2,655 -
----------- -----------
Net assets available for benefits $ 7,860,647 $ 8,831,664
=========== ===========
See accompanying notes.
4
Cardinal Health Profit Sharing,
Retirement and Savings Plan for PRN Employees
Statement of Changes in Net Assets Available for Benefits
FOR THE YEAR ENDED
DECEMBER 31, 2003
------------------
ADDITIONS:
Contributions:
Participant $ 162,177
Assets transferred from other qualified plans 433,276
Net appreciation in the fair value of investments 410,245
Plan's interest in Master Trust net investment gain 186,062
Interest and dividend income 41,875
------------------
Total additions 1,233,635
DEDUCTIONS:
Benefits paid directly to participants 2,194,063
Administrative expenses 10,589
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Total deductions 2,204,652
Net decrease (971,017)
Net assets available for benefits, beginning of period 8,831,664
------------------
Net assets available for benefits, end of period $ 7,860,647
==================
See accompanying notes.
5
Cardinal Health Profit Sharing, Retirement and Savings
Plan for PRN Employees
Notes to Financial Statements
December 31, 2003
1. DESCRIPTION OF PLAN
GENERAL
The Cardinal Health Profit Sharing, Retirement and Savings Plan for PRN
Employees, established July 1, 2002, is a defined contribution plan covering all
employees classified as PRN who have completed one year 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, 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 investments are not included in the
Master Trust.
CONTRIBUTIONS
Participants may contribute 1% to 50% 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 PRN Employees
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 balance. 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
principal residence. The loans are secured by the remaining vested balance in
the participant's account and bear interest at a rate comparable to the rates
being charged by commercial lending institutions for similar loans at the time
the loan is approved. 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.
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Cardinal Health Profit Sharing, Retirement and Savings
Plan for PRN Employees
Notes to Financial Statements (continued)
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
BASIS OF PRESENTATION
The financial statements of the Plan are prepared on the accrual basis of
accounting in conformity with U.S. generally accepted accounting principles.
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.
8
Cardinal Health Profit Sharing, Retirement and Savings
Plan for PRN Employees
Notes to Financial Statements (continued)
3. INVESTMENTS
The fair market values of individual assets that represent 5% or more of the
Plan's assets as of December 31, 2003 and 2002 are as follows:
DECEMBER 31, DECEMBER 31,
2003 2002
------------ ------------
Cardinal Health, Inc. common shares $ 4,390,273 $ 5,684,201
Plan's interest in Master Trust 1,653,198 1,704,962
Montag & Caldwell Growth Fund, mutual fund 578,337 --
Dodge & Cox Stock Fund, mutual fund 493,599 --
Putnam Investors Fund, mutual fund -- 662,356
Net appreciation in fair value of investments is as follows:
FOR THE YEAR
ENDED
DECEMBER 31,
2003
------------
Net appreciation in fair value of investments
as determined by quoted market prices:
Mutual funds $ 301,334
Cardinal Health, Inc. common shares 108,911
------------
Total net appreciation $ 410,245
============
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Cardinal Health Profit Sharing, Retirement and Savings
Plan for PRN Employees
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 gain
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, DECEMBER 31,
2003 2002
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Investments at fair value:
Mutual funds $ 193,636,628 $ 144,144,606
Common, Collective Trusts 474,353,972 382,873,704
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Total investments $ 667,990,600 $ 527,018,310
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The Plan's share of assets in the Master Trust was less than 1% or $1,653,198
and $1,704,962 at December 31, 2003, and 2002, respectively.
MASTER TRUST INVESTMENT INCOME:
FOR THE YEAR
ENDED
DECEMBER 31,
2003
------------
Dividend and interest income $ 12,865,382
Net appreciation in fair value of investments as determined
by quoted market prices:
Mutual funds 22,505,075
Common, Collective Trusts 34,479,241
------------
Total investment gain $ 69,849,698
============
10
Cardinal Health Profit Sharing, Retirement and Savings
Plan for PRN Employees
Notes to Financial Statements (continued)
5. INCOME TAX STATUS
The Plan has not received a determination letter from the Internal Revenue
Service stating that the Plan is qualified under Section 401(a) of the Internal
Revenue Code (the "Code"). Once qualified, the Plan is required to operate in
conformity with the Code to maintain its qualification. The Plan Administrator
believes that 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 shares, 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 $4,390,273 and $5,684,201 of Cardinal Health, Inc. common shares
as of December 31, 2003 and 2002, respectively.
9. ASSET TRANSFERS
During 2003, net assets of approximately $433,000 were transferred to the Plan
from the Cardinal Health Profit Sharing, Retirement and Savings Plan.
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Cardinal Health Profit Sharing, Retirement and Savings Plan for PRN Employees
Schedule of Assets (Held At End of Year)
(Schedule H, Part IV, Line 4i on Form 5500)
As of December 31, 2003
EIN:31-0958666
Plan Number:059
(b) (c) (e)
DESCRIPTION OF INVESTMENT INCLUDING
IDENTITY OF ISSUER, BORROWER, MATURITY DATE, RATE OF INTEREST, MATURITY
LESSOR, OR SIMILAR PARTY OR PAR VALUE CURRENT VALUE
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COMMON STOCK
*Cardinal Health, Inc. 71,783 shares $ 4,390,273
MUTUAL FUNDS
Dodge & Cox Stock Fund 4,338 shares 493,599
Montag & Caldwell Growth Fund 26,432 shares 578,337
Artisan Mid Cap Fund 5,167 shares 133,215
Pimco Total Return Fund 27,709 shares 296,763
Columbia Acorn USA Fund Z 11,241 shares 236,170
LOANS
Loans to participants 5.0 to 10.50% 76,438
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Total $ 6,204,795
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* Denotes party-in-interest.
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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 PRN EMPLOYEES
Date: June 28, 2004 /s/ Richard J. Miller
----------------------------------------
Richard J. Miller, Plan Committee Member
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