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65
2014 Annual Report
Changes in accumulated other comprehensive income (loss) by component are shown below:
YEAR ENDED DECEMBER 31, 2014(1)
Pension
Losses on and Other
Foreign Cash Flow Postretirement
IN MILLIONS Currency Hedges Benefits Total
Balance, December 31, 2013 $ (30) $ (13) $ (106) $ (149)
Other comprehensive income (loss) before
reclassifications (35) — — (35)
Amounts reclassified from accumulated
other comprehensive income (2) — 4 (37) (33)
Net other comprehensive income (loss) (35) 4 (37) (68)
Balance, December 31, 2014
$ (65) $ (9) $ (143) $ (217)
YEAR ENDED DECEMBER 31, 2013(1)
Pension
Losses on and Other
Foreign Cash Flow Postretirement
IN MILLIONS Currency Hedges Benefits Total
Balance, December 31, 2012 $ — $ (16) $ (165) $ (181)
Other comprehensive income (loss) before
reclassifications (30) — — (30)
Amounts reclassified from accumulated
other comprehensive income (2) — 3 59 62
Net other comprehensive income (loss) (30) 3 59 32
Balance, December 31, 2013 $ (30) $ (13) $ (106) $ (149)
(1) All amounts are net of tax.
(2) The amounts reclassified from accumulated other comprehensive income for cash flow hedges are recorded within interest expense,
net on the consolidated statement of income. The amounts reclassified from accumulated other comprehensive income for pension and
other postretirement benefits are included in operating expenses on the consolidated statement of income.
Stock-based compensation — Stock-based compensation is measured at the grant date based on the fair value
of the award and is recognized as expense over the applicable requisite service period of the stock award (generally
3 to 5 years) using the straight-line method.
Variable interest entity — In July 2014, the Company and Cardinal Health, Inc. (“Cardinal”) established Red Oak
Sourcing, LLC (“Red Oak”), a generic pharmaceutical sourcing entity in which the Company and Cardinal each own
50%. The Red Oak arrangement has an initial term of ten years. Under this arrangement, the Company and Cardinal
contributed their sourcing and supply chain expertise to Red Oak and agreed to source and negotiate generic
pharmaceutical supply contracts for both companies through Red Oak; however, Red Oak does not own or hold
inventory on behalf of either company. No physical assets (e.g., property and equipment) were contributed to Red
Oak by either company and minimal funding was provided to capitalize Red Oak.
The Company has determined that it is the primary beneficiary of this variable interest entity because it has the
ability to direct the activities of Red Oak. Consequently, the Company consolidates Red Oak in its consolidated
financial statements within the Retail Pharmacy Segment. Revenues associated with Red Oak expenses reimbursed
by Cardinal for the year ended December 31, 2014 and amounts due to Cardinal from Red Oak at December 31,
2014 were immaterial.