Cardinal Sets Aside $600 Million for Lawsuit Resolution

Cardinal Health Inc. said Monday it has established a $600 million reserve as it tries to settle a class-action lawsuit filed by shareholders.

The lawsuit stems from a 2004 Securities Exchange Commission investigation into Cardinal’s revenue classification methods from 2000 through the first three quarters of fiscal 2004. A proposed settlement with the SEC would require Cardinal to pay $35 million, an amount the company has already reserved.

Following that investigation, shareholders sued the health-care supply company to reclaim losses linked to restatement of the company’s financial results from 2000 through the first three quarters of 2004.

Cardinal (NYSE:CAH) is trying to negotiate a settlement with the shareholders, and it told investors it can’t guarantee that the dispute will be resolved through mediation.

The Dublin, Ohio-based company said its third-quarter profit will reflect a $384 million after-tax charge from setting up the reserves.

The company is scheduled to report its third-quarter results Thursday.

Earlier this month, the firm closed on the sale of its Pharmaceutical Technology and Services division, including two Triangle facilities with 350 workers, to a New York company for $3.3 billion. Cardinal now employs about 150 Triangle workers.

SOURCE: TRIANGLE BUSINESS JOURNAL