Cardinal changes!

It seems as if Cardinal Health (CAH) is becoming a lot more sensitive to its quarterly practice of taking special charges. As noted in Chapter 4, during the 20 quarters between 1998 and 2002, Cardinal took special charges or gains in 19 quarters. Although there’s nothing wrong with that as far as existing accounting rules are concerned, it makes it much more difficult for investors to figure out what’s really going on. In its 10-K filed Monday, Cardinal notes that it has changed the way it accounts for merger-related charges. As a result, those charges decreased sharply in 2003, even though the value of mergers done in 2003 was much higher than those completed in 2002. Another sign of sensitivity? Cardinal doubled its footnote disclosure to investors on merger-related charges in 2003.