How we will grow our Pharmaceutical Distribution and Provider Services business: Jim Millar,  Group President,  Pharmaceutical Distribution  and Provider Services We continued our record of  strong performance with an  exceptionally good year in  fiscal 2000. Some of our  noteworthy accomplishments included:  Select investments in warehouse automation have helped Cardinal Distribution maintain the lowest cost structure in the industry.  • Growing our top line 22% (all inter nal), • Reducing our costs through improved efficiencies, • Achieving industry-leading returns on sales and capital, • Maintaining excellent customer service levels, • Making significant infrastructure investments to  support future growth, • Expanding our e-commerce capabilities through  cardinal.com. I am very pleased with the efforts of our 8,000  associates that enabled us to achieve these outstanding results. Looking forward, I remain very optimistic about our growth prospects for several reasons: Market Growth – U.S. pharmaceutical sales have experienced impressive 13% annual growth over the past decade due largely to demographics and new product introductions. In the United States today, about 42% of all drugs sold annually are consumed by individu- als age 65 and older, and persons over the age of 50 con - sume about 74% of all phar maceuticals sold. With the baby boom generation just entering its 50s, and the gen - eration of its children not far behind, the demographics driving this business remain very compelling.  # 1 Vital Role – Distributors play an important role as  a link between pharmaceutical manufacturers  and care providers. Both manufacturers and care providers utilize the distribution system as it af fords imme- diate access to products in a highly cost ef fective manner with significant economies of scale. Car dinal has continu- ally invested in its infrastructure and today has more than $4 billion of assets invested in its business. As a r esult,  we have achieved sufficient scale and an appropriate  structure to accommodate current demand as well as sub - stantial future growth. Even the largest of pharmaceutical manufacturers could not match Cardinal’s efficiency, as the company’s annual distribution volume is considerably larger than any drug manufacturer’s yearly U.S. sales. # 2 Customized, Integrated Solutions – By offering  complementary services that are responsive to the needs of drug makers and pharmacists, we can develop innovative programs that are customized to # 3 Our distribution businesses have historically gr own about 50% faster than the phar maceutical industry due to the breadth of our offering and superior customer service. Our growth, however, has been disciplined. We provide substantial value to our customers while focusing on ear n- ing an appropriate return for our shareholders. We do this by continuing to realize greater operational efficiencies in order to maintain the lowest cost str ucture in the industry. At the same time, we ar e extremely customer-focused.  By listening intently to our customers’ needs, we ar e able to help them by developing customized solutions utilizing a variety of services from Cardinal’s broad portfolio.  This disciplined approach has enabled us to pr ovide very real benefits to our customers, while r ealizing returns on revenues and committed capital that lead the industr y. Contributing to the group’s efficiency is the fact that we’ve conducted virtually all of our transactions with cus - tomers and suppliers electronically for many years. During 2000, we went a step fur ther with the development and introduction of cardinal.com in conjunction with other Cardinal businesses. This new system enables customers to order from one of the largest online catalogs in health- care with more than half a million phar maceutical, med- ical-surgical and laboratory products available over the Internet. In addition, cardinal.com provides our customers with critical information about their purchasing practices. address the issues most important to our customers. Many of Cardinal’s market-leading products and services work well with one another, providing the company with a unique opportunity to meaningfully improve the healthcare system. Whether the issue is cost containment, quality of care, labor shortages or need for innovation – no company  is better positioned today than Car dinal Health to help customers develop integrated, timely solutions.  10 Cardinal Health, Inc. Annual Report 2000