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, 2002
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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
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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)
Cardinal Health Profit Sharing, Retirement and Savings
Plan for PRN Employees
Financial Statements and Supplemental Schedule
December 31, 2002 and the six month period ended December 31, 2002
TABLE OF CONTENTS
Report of Independent Auditors....................................................................... 3
Audited Financial Statements
Statement 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 PRN Employees
We have audited the accompanying statement of net assets available for benefits
of Cardinal Health Profit Sharing, Retirement and Savings Plan for PRN Employees
as of December 31, 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 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 net assets available for benefits of the Plan at
December 31, 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 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 and 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.
Columbus, Ohio /s/ Ernst & Young LLP
May 15, 2003
3
Cardinal Health Profit Sharings, Retirement and Savings Plan for PRN Employees
Statement of Net Assets Available for Benefits
DECEMBER 31,
2002
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Assets:
Investments, at fair value $ 8,831,664
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Net assets available for benefits $ 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 SIX MONTH
PERIOD ENDED
DECEMBER 31,
2002
-----------------------
ADDITIONS:
Participant contributions $ 115,597
Assets transferred from other qualified plans 9,843,797
Investment income 18,035
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Total additions 9,977,429
DEDUCTIONS:
Distributions to participants 720,311
Net depreciation in the fair value of investments 384,582
Plan's interest in Master Trust net investment loss 40,772
Administrative expenses 100
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Total deductions 1,145,765
Net increase 8,831,664
Net assets available for benefits, beginning of period -
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Net assets available for benefits, end of period $ 8,831,664
============
See accompanying notes.
5
Cardinal Health Profit Sharing, Retirement and Savings
Plan for PRN Employees
Notes to Financial Statements
December 31, 2002
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.
The Plan has a calendar year end; therefore, the statement of changes in the net
assets available for benefits is for the six month period since inception of the
Plan. 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.
Cardinal Health, Inc. 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.
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 PRN Employees
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 are as follows:
DECEMBER 31,
2002
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Cardinal Health, Inc. common stock $5,684,201
Plan's interest in Master Trust 1,704,962
Putnam Investors Fund, mutual fund 662,356
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 $ (152,169)
Cardinal Health, Inc. common stock (232,413)
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Total net depreciation $ (384,582)
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8
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 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
DECEMBER 31,
2002
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Investments at fair value:
Mutual funds $ 144,144,606
Common, Collective Trusts 382,873,704
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Total investments $ 527,018,310
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The Plan's share of assets in the Master Trust was less than 1% or $1,704,962 at
December 31, 2002.
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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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.
9
Cardinal Health Profit Sharing, Retirement and Savings
Plan for PRN Employees
Notes to Financial Statements (continued)
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 $5,684,201 of Cardinal Health, Inc. common stock as of December
31, 2002.
9. ASSET TRANSFERS
During 2002, assets of approximately $9,690,000 were transferred to the Plan
from the Cardinal Health Profit Sharing, Retirement and Savings Plan. In
addition, during 2002 assets of approximately $150,000 were transferred to the
Plan from the PHR 401(k) 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, 2002
IDENTITY OF ISSUER,
BORROWER, LESSOR, OR DESCRIPTION OF INVESTMENT INCLUDING MATURITY CURRENT
SIMILAR PARTY DATE, RATE OF INTEREST, MATURITY OR PAR VALUE VALUE
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COMMON STOCK
*Cardinal Health, Inc. 96,033 shares $5,684,201
MUTUAL FUNDS
Dodge & Cox Stock Fund 3,564 shares 313,848
PIMCO Total Return Fund 17,915 shares 191,154
Liberty Acorn USA Fund 10,178 shares 145,343
* Putnam Investors Fund 74,338 shares 662,356
* Putnam Vista Fund 9,451 shares 58,500
LOANS
Loans to participants 3.92 to 10.50% 71,300
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Total $7,126,702
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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 27, 2003 /s/ Richard J. Miller
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Richard J. Miller, Plan Committee Member
12