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 Employees of
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)
1
Cardinal Health Profit Sharing, Retirement and Savings Plan
for Employees of Puerto Rico
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 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, 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 Employees of Puerto Rico
Statements of Net Assets Available for Benefits
DECEMBER 31
2003 2002
----------- -----------
ASSETS:
Cash $ 18,792 $ -
Investments, at fair value 12,912,372 9,613,403
Receivables:
Contributions from employer 10,183 21,406
Contributions from participant 24,923 51,076
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Total receivables 35,106 72,482
Net assets available for benefits $ 12,966,270 $ 9,685,885
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See accompanying notes.
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Cardinal Health Profit Sharing, Retirement and Savings Plan
For Employees of Puerto Rico
Statement of Changes in Net Assets Available for Benefits
FOR THE YEAR ENDED
DECEMBER 31, 2003
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ADDITIONS:
Contributions:
Employer $ 1,612,452
Participant 892,466
Net appreciation in fair value of investments 873,417
Plan's interest in Master Trust net investment gain 669,281
Interest and dividend income 170,706
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Total additions 4,218,322
DEDUCTIONS:
Benefits paid directly to participants 892,953
Administrative expenses 44,984
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Total deductions 937,937
Net increase 3,280,385
Net assets available for benefits, beginning of period 9,685,885
------------
Net assets available for benefits, end of period $ 12,966,270
============
See accompanying notes.
5
Cardinal Health Profit Sharing, Retirement and Savings Plan
for Employees of Puerto Rico
Notes to Financial Statements
December 31, 2003
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 record keeper and asset
custodian is Putnam Fiduciary Trust Company (Putnam). The Plan Trustee is Banco
Santander. 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's investments are not included in the
Master Trust. Putnam is the Trustee for the Master Trust.
6
Cardinal Health Profit Sharing, Retirement and Savings Plan
for Employees of Puerto Rico
Notes to Financial Statements (continued)
1. DESCRIPTION OF PLAN (CONTINUED)
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 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.
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Cardinal Health Profit Sharing, Retirement and Savings Plan
for Employees of Puerto Rico
Notes to Financial Statements (continued)
1. DESCRIPTION OF PLAN (CONTINUED)
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 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 Employees of Puerto Rico
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
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Plan's interest in Master Trust $5,875,831 $4,681,127
Dodge & Cox Stock Fund, mutual fund 1,701,405 1,114,668
Cardinal Health, Inc. common shares 1,072,671 651,672
Columbia Acorn USA Fund Z Shares, mutual fund 734,841 --
PIMCO Total Return Fund, mutual fund 663,622 504,217
Net appreciation in fair value of investments is as follows:
FOR THE YEAR ENDED
DECEMBER 31, 2003
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Net appreciation in fair value of investments
as determined by quoted market prices:
Mutual funds $ 831,789
Cardinal Health, Inc. common shares 41,628
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Total net appreciation $ 873,417
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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 gain
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:
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
============ ============
The Plan's share of assets in the Master Trust was less than 1% or
$5,875,831 and $4,681,127 at December 31, 2003 and 2002, respectively.
MASTER TRUST INVESTMENT INCOME:
FOR THE YEAR ENDED
DECEMBER 31, 2003
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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
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Total investment gain $ 69,849,698
==================
10
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 June 30, 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 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 $1,072,671 and $651,672 of Cardinal Health, Inc. common shares as
of December 31, 2003 and 2002, respectively.
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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, 2003
EIN: 23-1856478
Plan Number: 003
(c)
(b) DESCRIPTION OF INVESTMENT (e)
INCLUDING MATURITY DATE,
IDENTITY OF ISSUE BORROWER, RATE OF INTEREST,
LESSOR, OR SIMILAR PARTY MATURITY OR PAR VALUE CURRENT VALUE
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COMMON STOCK
*Cardinal Health, Inc. 17,539 shares $ 1,072,671
MUTUAL FUNDS
Dodge & Cox Stock Fund 14,953 shares 1,701,405
Artisan Mid Cap Fund 13,659 shares 352,120
Pimco Total Return Fund 61,963 shares 663,622
Columbia Acorn USA Fund Z 34,976 shares 734,841
LOANS
Loans to participants 5.0 to 7.75% 1,866,967
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Total $ 6,391,626
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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 EMPLOYEES OF
PUERTO RICO
Date: June 28, 2004 /s/ Richard J. Miller
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Richard J. Miller, Plan Committee Member
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