DUBLIN, Ohio, May 10, 2006 — Cardinal Health, Inc., the leading provider of products and services supporting the health-care industry, today announced that its board of directors has approved an increase to the company’s quarterly dividend and adopted new corporate governance policies to better serve the interests of shareholders.
During a meeting on May 10, the board of directors approved an increased quarterly dividend of $0.09 per share payable on July 15 to shareholders of record on July 1. Cardinal Health has paid a 6-cents-per-share quarterly dividend since July 15, 2005. Future dividends are subject to approval by the board of directors.
“The increased dividend and $500-million share repurchase program we announced two weeks ago reflect our commitment to return a significant portion of operating cash flow to our investors,” said R. Kerry Clark, president and chief executive officer of Cardinal Health. “This action reinforces the disciplined approach to capital deployment that is a key part of our strategy.”
The increase supports Cardinal Health’s previously stated goal to raise dividends to up to 20 percent of earnings per share during the next several years and the long-term goal to return up to 50 percent of operating cash flow to shareholders. The dividend, payable on July 15, is the 87th consecutive regular quarterly dividend for Cardinal Health. The company had approximately 418 million shares outstanding as of May 8, 2006.
Previously, the company announced the completion of a $1-billion share repurchase in fiscal 2006, and the intention to complete an additional $500-million repurchase by the end of this quarter.
Corporate Governance Enhancements
In addition, the board approved a majority voting provision for directors that requires any director in an uncontested election who receives a greater number of votes “withheld” than votes “for” to tender his or her resignation. The board is required to act on that resignation within 90 days. The board will also ask shareholders to ratify auditor selection annually, beginning with the 2006 annual meeting.
“Cardinal Health continues to advance its corporate governance practices and provide more transparency for our investors,” said Robert D. Walter, chairman of Cardinal Health. “These important changes build upon a solid foundation of governance practices that will continue to evolve through our commitment to the highest standards of business conduct.”
The Cardinal Health board also adopted new guidelines on limiting the number of directorships for board members and the tender of resignation upon a job change for directors. These guidelines state that non-management directors should not serve on more than four public company boards in addition to the Cardinal Health board, and when a director’s principal occupation or business association changes substantially during his or her tenure, that director will tender his or her resignation for consideration by the board. The board also approved additional guidelines that formalize existing board practices.
Today’s changes follow other recent moves from Cardinal Health to strengthen its corporate governance, including last year’s decision to declassify the board, which requires an annual election of directors to one-year terms.
The full text of the corporate governance guidelines for Cardinal Health, including the most recent revisions, are available under the Investors link on the company’s Web site at www.cardinalhealth.com
About Cardinal Health
Headquartered in Dublin, Ohio, Cardinal Health, Inc. (NYSE: CAH) is a $75 billion, global company serving the health-care industry with a broad portfolio of products and services. Through its diverse offering, Cardinal Health delivers integrated health-care solutions that help customers reduce their costs, improve efficiency and deliver better care to patients. The company manufactures, packages and distributes pharmaceuticals and medical supplies, offers a range of clinical services and develops automation products that improve the management and delivery of supplies and medication for hospitals, physician offices and pharmacies. Ranked No. 19 on the Fortune 500, Cardinal Health employs more than 55,000 people on six continents. More information about the company may be found at www.cardinalhealth.com
Except for historical information, all other information in this news release consists of forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These forward-looking statements are subject to risks and uncertainties that could cause actual results to differ materially from those projected, anticipated or implied. The most significant of these uncertainties are described in Cardinal Health's Form 10-K, Form 8-K and Form 10-Q reports (including all amendments to those reports) and exhibits to those reports, and include (but are not limited to) the following: the costs, difficulties, and uncertainties related to the implementation of organizational changes and the integration of acquired businesses; the loss of one or more key customer or supplier relationships or changes to the terms of those relationships; difficulties and uncertainties related to transitions in senior management; changes in the distribution patterns or reimbursement rates for health-care products and/or services; the results, consequences, effects or timing of any inquiry or investigation by or settlement discussions with any regulatory authority or any legal and administrative proceedings; the impact of previously announced restatements; difficulties or delays or increased costs in implementing Cardinal Health's global restructuring program; difficulties in opening new facilities or fully utilizing existing capacity; with respect to future dividends, the decision by the board of directors to declare such dividends, which is expected to consider Cardinal Health’s surplus, earnings, cash flows, financial condition and prospects at the time any such action is considered; with respect to future share repurchases, the approval of the board of directors, which is expected to consider Cardinal Health’s then-current stock price, earnings, cash flows, financial condition and prospects as well as alternatives available to Cardinal Health at the time any such action is considered; and general economic and market conditions. Cardinal Health undertakes no obligation to update or revise any forward-looking statement.