SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 11-K
Annual Report Pursuant to Section 15(d) of the
Securities Exchange Act of 1934
For the Period Ended June 30, 2001
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Commission File Number 1-11373
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Allegiance Retirement Plan for Union Employees of Hayward, California
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(Full Title of 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)
ALLEGIANCE RETIREMENT PLAN FOR UNION EMPLOYEES OF HAYWARD, CALIFORNIA
(FORMERLY "ALLEGIANCE RETIREMENT PLAN")
Index to Financial Statements and Schedule
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Signature 3
Report of Independent Public Accountants 4
Statements of Net Assets Available for Plan Benefits
as of June 30, 2001 and December 31, 2000 5
Statement of Changes in Net Assets Available for Plan Benefits
for the Six Months Ended June 30, 2001 6
Notes to Financial Statements and Schedule 7
Item 4(i) - Schedule of Assets Held for Investment Purposes
as of June 30, 2001 13
Consent of Independent Public Accountants 14
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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.
ALLEGIANCE RETIREMENT PLAN
FOR UNION EMPLOYEES
OF HAYWARD, CALIFORNIA
Date: May 07, 2002 /s/ Richard Miller
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Richard Miller, Plan Committee Member
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Report of Independent Public Accountants
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To the Plan Committee of the
ALLEGIANCE RETIREMENT PLAN FOR UNION EMPLOYEES OF HAYWARD, CALIFORNIA
(formerly "Allegiance Retirement Plan"):
We have audited the accompanying statements of net assets available for plan
benefits of the ALLEGIANCE RETIREMENT PLAN FOR UNION EMPLOYEES OF HAYWARD,
CALIFORNIA (the Plan) as of June 30, 2001 and December 31, 2000, and the related
statement of changes in net assets available for plan benefits for the six
months 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 net assets available for plan benefits of the Plan as
of June 30, 2001 and December 31, 2000, and the changes in net assets available
for plan benefits for the six months 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
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Columbus, Ohio,
April 26, 2002
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ALLEGIANCE RETIREMENT PLAN FOR UNION EMPLOYEES OF HAYWARD, CALIFORNIA
(FORMERLY "ALLEGIANCE RETIREMENT PLAN")
Statements of Net Assets Available for Plan Benefits
As of June 30, 2001 and December 31, 2000
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JUNE 30, DECEMBER 31,
2001 2000
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ASSETS:
Plan Investments:
Investments, at fair market value $ 695,060 $647,469,266
Plan's interest in Master Trust 1,853,662 -
Participant loans 212,764 20,287,478
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Total plan investments 2,761,486 667,756,744
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Receivables:
Employer - 14,845,890
Employee - 331,574
Dividends and interest - 441,834
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Total receivables - 15,619,298
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LIABILITIES:
Excess contributions payable - 236,479
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Total liabilities - 236,479
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NET ASSETS AVAILABLE FOR PLAN BENEFITS $ 2,761,486 $683,139,563
============ ============
The accompanying notes to financial statements and schedule are an integral part
of these statements.
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ALLEGIANCE RETIREMENT PLAN FOR UNION EMPLOYEES OF HAYWARD, CALIFORNIA
(FORMERLY "ALLEGIANCE RETIREMENT PLAN")
Statement of Changes in Net Assets Available for Plan Benefits
For the Six Months Ended June 30, 2001
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ADDITIONS:
Contributions:
Employer $ 110,380
Employee 55,557
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Total contributions 165,937
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Net realized and unrealized gains 41,869
Plan's interest in Master Trust net investment performance 53,210
Dividends and interest 10,685
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Total additions 271,701
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DEDUCTIONS:
Assets transferred to another qualified plan (680,520,873)
Distributions to participants (128,555)
Administrative expenses (350)
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Total deductions (680,649,778)
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NET DECREASE (680,378,077)
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NET ASSETS AVAILABLE FOR PLAN BENEFITS, BEGINNING OF PERIOD 683,139,563
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NET ASSETS AVAILABLE FOR PLAN BENEFITS, END OF PERIOD $ 2,761,486
=============
The accompanying notes to financial statements and schedule are an integral part
of this statement.
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ALLEGIANCE RETIREMENT PLAN FOR UNION EMPLOYEES OF HAYWARD, CALIFORNIA
(FORMERLY "ALLEGIANCE RETIREMENT PLAN")
Notes to Financial Statements and Schedule
June 30, 2001 and December 31, 2000
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(1) DESCRIPTION OF PLAN
The following description of the Allegiance Retirement Plan for Union
Employees of Hayward, California (the Plan) provides only general
information. Participants should refer to the Plan agreement for a more
complete description of the Plan's provisions.
(a) GENERAL--The Plan is a defined contribution plan covering
substantially all union employees of the Allegiance facility
located at Hayward, California who have completed 800 hours of
service. Allegiance Corporation is a wholly-owned subsidiary of
Cardinal Health, Inc. (the Company). The Plan was formerly known
as the Allegiance Retirement Plan. On January 1, 2001, assets for
all participants who were not union employees at Hayward,
California in the amount of $680,520,873 were transferred to the
Cardinal Health Profit Sharing, Retirement and Savings Plan. The
Plan is subject to the provisions of the Employee Retirement
Income Security Act (ERISA).
The Plan is administered by the Plan committee. The Plan trustee,
record keeper and asset custodian is Putnam Investments (Putnam).
Administrative expenses may be paid by the Company or the Plan,
excluding loan fees which are paid by the borrowing participant.
The Plan incurred $350 of administrative fees for the six months
ended June 30, 2001.
Effective January 2, 2001, the Company established the Master
Trust for Retirement Plans of Cardinal Health (the Master Trust)
for the Plan and certain other Company plans. Putnam serves as the
trustee, record keeper and asset custodian for the Master Trust.
See Note 7 for further information pertaining to the Master Trust.
(b) CONTRIBUTIONS--Each year, participants may contribute to the Plan
no less than 1 percent, and no more than 20 percent of their
compensation, as defined. Participants direct the investment of
their contributions into various investment options offered by the
Plan. The Plan currently offers five separate investment funds and
one master trust fund comprised of six separate investments as
investment options for participants. The Company may contribute
discretionary matching contributions to the Plan. The Company's
discretionary matching contributions are invested as directed by
the participants. Contributions are subject to certain
limitations.
(c) FORFEITURES--Forfeitures, including forfeitures of excess
aggregate contribution, if any, will be applied to reduce employer
contributions.
(d) 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.
(e) 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.
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ALLEGIANCE RETIREMENT PLAN FOR UNION EMPLOYEES OF HAYWARD, CALIFORNIA
(FORMERLY "ALLEGIANCE RETIREMENT PLAN")
Notes to Financial Statements and Schedule
June 30, 2001 and December 31, 2000
--------------------------------------------------------------------------------
(f) PARTICIPANT LOANS--Participant loans are permitted by the Plan.
Participant loans will be considered a directed investment of the
participant and any such loans will be allocated directly to the
account of the participant.
(g) PAYMENT OF BENEFITS--Upon termination of service, death, total
disability or retirement, a participant may elect to receive
a lump-sum amount equal to the value of the participant's
vested interest in his or her account.
(h) INVESTMENT OPTIONS
Upon enrollment in the Plan, a participant may direct
contributions in any combination of the following investment
options. Participants may change their investment options at
any time.
Participants have invested or may invest in one or more of the
following accounts:
Master Trust Investment Options:
- PUTNAM CONSERVATIVE BALANCED FUND - This fund seeks
to preserve principal and have some exposure to
stocks to keep pace with inflation. This fund is
designed for more conservative investors.
- PUTNAM MODERATE BALANCED FUND - This fund seeks a
balance between capital appreciation and capital
preservation. The fund is designed for investors who
are willing to accept a moderate level of risk in a
portfolio balanced between stocks and bonds.
- PUTNAM GROWTH BALANCED FUND - This fund seeks capital
appreciation with current income as a secondary goal.
This fund is designed for investors with a long
investment time horizon who are willing to accept a
higher degree of risk.
- PUTNAM INTERNATIONAL EQUITY FUND - This fund seeks
capital appreciation by allocating contributed assets
between two mutual funds that focus on stocks of
companies located outside the United States.
- S & P 500 INDEX FUND - This fund seeks to achieve a
return, before the assessment of any fees, that
closely approximates the return of the Standard &
Poor's 500 Composite Stock Price Index, a common
measure of U.S. market performance.
- PUTNAM STABLE VALUE FUND - The goal of this fund is
to maintain stability of principal while seeking a
competitive rate of return. At the same time the fund
seeks to maintain sufficient liquidity to make
participant-directed benefit payments.
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ALLEGIANCE RETIREMENT PLAN FOR UNION EMPLOYEES OF HAYWARD, CALIFORNIA
(FORMERLY "ALLEGIANCE RETIREMENT PLAN")
Notes to Financial Statements and Schedule
June 30, 2001 and December 31, 2000
--------------------------------------------------------------------------------
Other Investment Options:
- DODGE & COX STOCK FUND - This fund seeks long-term
growth of principal and income. A secondary objective
is to achieve a reasonable current income. The fund
invests mainly in a broadly diversified portfolio of
common stocks.
- FRANKLIN TEMPLETON SMALL CAP GROWTH FUND - This
fund's investment goal is long-term capital growth.
The fund typically invests in equity securities of
small-capitalization companies.
- PIMCO TOTAL RETURN FUND - This fund seeks to achieve
its investment objective by investing under normal
circumstances at least 65% of its assets in a
diversified portfolio of fixed income instruments of
varying maturities.
- PUTNAM INVESTORS FUND - This fund seeks long-term
growth of capital and any increased income that
results from this growth.
- CARDINAL HEALTH, INC. STOCK - This fund is entirely
comprised of Cardinal Health, Inc. common stock.
(2) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
BASIS OF ACCOUNTING AND USE OF ESTIMATES
The accompanying financial statements have been prepared using the
accrual method of accounting. The preparation of financial statements in
conformity with generally accepted accounting principles requires
management to make estimates and assumptions that affect the reported
amounts of assets and liabilities and changes therein, and disclosure of
contingent assets and liabilities. Actual results could differ from those
estimates.
INVESTMENT VALUATION AND INCOME RECOGNITION
The investments of the Plan, except participant loans, are stated at fair
market value as determined by the asset custodian, using established
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 such
changes could materially affect the amounts reported in the statements of
net assets available for plan benefits. Participant loans are valued at
cost, which approximates fair market value.
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ALLEGIANCE RETIREMENT PLAN FOR UNION EMPLOYEES OF HAYWARD, CALIFORNIA
(FORMERLY "ALLEGIANCE RETIREMENT PLAN")
Notes to Financial Statements and Schedule
June 30, 2001 and December 31, 2000
--------------------------------------------------------------------------------
In accordance with Department of Labor regulations, net realized and
unrealized gains and losses on sales are based on the value of the
investment as of the later of the beginning of the Plan period or at the
time of purchase during the period. Unrealized appreciation or
depreciation is included in net realized and unrealized gains currently
on the statement of changes in net assets available for plan benefits.
Purchases and sales of securities are recorded on a trade-date basis.
Dividends are recorded on the ex-dividend date.
(3) INVESTMENTS
The following presents investments that represent 5 percent or more of
the Plan's assets at June 30, 2001:
Plan's Interest in Master Trust $ 1,853,662
Cardinal Health, Inc. Stock 596,424
(4) PARTY-IN-INTEREST TRANSACTIONS
Certain investments of the Plan are shares of investment funds managed by
Putnam. Putnam is also the trustee, recordkeeper, and asset custodian as
defined by the Plan and, therefore, related investment transactions
qualify as party-in-interest transactions.
The Plan offers loans to participants. Related loan transactions qualify
as party-in-interest transactions.
(5) TAX STATUS
The Plan obtained its latest determination letter on February 24, 1998 in
which the IRS stated that the Plan, as then designed, was in compliance
with the applicable requirements of the Internal Revenue Code (IRC). The
Plan has been amended and restated since the latest determination letter.
However, the Company believes that the Plan, as currently designed and
operated, is in compliance with the applicable requirements of the IRC.
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ALLEGIANCE RETIREMENT PLAN FOR UNION EMPLOYEES OF HAYWARD, CALIFORNIA
(FORMERLY "ALLEGIANCE RETIREMENT PLAN")
Notes to Financial Statements and Schedule
June 30, 2001 and December 31, 2000
--------------------------------------------------------------------------------
(6) CERTIFICATION
The following information is based on information provided by the
trustee, Putnam Investments, as of and for the six months ended June 30,
2001:
- Investments, at fair market value
- Net depreciation/appreciation in fair value of investments
- Interest and dividends
(7) 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 performance, presented
in the statement of changes in net assets available for plan benefits,
consists of the unrealized gains (losses) and the dividends on those
investments. The value of the units in the Master Trust is adjusted
monthly to reflect earnings on investments, plus market value
appreciation or depreciation.
The summarized Statement of Assets Available to Participating Plans as of
June 30, 2001 and the Statement of Changes in Assets Available to
Participating Plans for the year then ended, presented below, reflect the
assets and activities of the Master Trust, as certified by the trustee in
accordance with 29 CFR 2520.103-5(c) of the Department of Labor's Rules
and Regulations for Reporting Disclosure under the ERISA:
MASTER TRUST
STATEMENT OF ASSETS AVAILABLE TO PARTICIPATING PLANS
AS OF JUNE 30, 2001
Investments at fair value-
Conservative Balanced Fund $ 11,308,842
Growth Balanced Fund 14,673,732
International Equity Fund 46,225,415
Moderate Balanced Fund 88,778,068
Stable Value Fund 217,847,688
S & P 500 Index Fund 156,154,237
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Total investments $ 534,987,982
==================
The Plan's share in the Master Trust assets was less than 1% ($1,853,662)
at June 30, 2001.
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ALLEGIANCE RETIREMENT PLAN FOR UNION EMPLOYEES OF HAYWARD, CALIFORNIA
(FORMERLY "ALLEGIANCE RETIREMENT PLAN")
Notes to Financial Statements and Schedule
June 30, 2001 and December 31, 2000
--------------------------------------------------------------------------------
MASTER TRUST
STATEMENT OF CHANGES IN ASSETS AVAILABLE TO PARTICIPATING PLANS
FOR THE YEAR ENDED JUNE 30, 2001
Investment income (loss)-
Net realized/unrealized gains (losses) $ (27,047,038)
Dividends 6,597,862
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Total investment income (loss) $ (20,449,176)
==================
(8) PLAN TERMINATION
The Company reserves the right, under the Plan, to terminate the Plan
subject to the provision of ERISA. In the event of termination of the
Plan, participants will become fully vested in their account balances and
all balances, net of expenses, will be distributed to the participants or
beneficiaries.
(9) REQUIRED SCHEDULE INFORMATION
No information is to be reported for the following schedules as of June
30, 2001, or for the six months then ended.
a. Non-exempt Transactions
b. Leases in Default or Classified as Uncollectible
c. Investment Assets Both Acquired and Disposed of During the Plan
Period
d. Loans or Fixed Income Obligations
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ALLEGIANCE RETIREMENT PLAN FOR UNION EMPLOYEES OF HAYWARD, CALIFORNIA
(FORMERLY "ALLEGIANCE RETIREMENT PLAN")
Item 4(i) - Schedule of Assets Held for Investment Purposes
As of June 30, 2001 Schedule I
--------------------------------------------------------------------------------
IDENTITY OF ISSUER, BORROWER, MARKET
LESSOR OR SIMILAR PARTY DESCRIPTION VALUE
---------------------------------------- -------------------------------------------------- ----------------
* Cardinal Health, Inc. Common Stock $ 596,424
Dodge & Cox Stock Fund 15,240
Franklin Templeton Small Cap Growth Fund 76,717
PIMCO Funds Total Return Fund 2,662
* Putnam Investors Fund 4,017
* Various participants Participant loans 212,764
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Total $ 907,824
================
* Denotes party-in-interest.
The accompanying financial statements and notes thereto are an integral part of
this schedule.
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