Cardinal Health 2011 Annual Report Download - page 53

L
oss on extinguishment o
f
debt
D
uring fiscal 2010, we recognized a
$
40 million loss from the early retirement of over
$
1.1 billion of deb
t
securities throu
g
h a tender offer.
Gain on sa
l
eo
f
investment in CareFusion common stoc
k
We recognized $75 million and $45 million of income during fiscal 2011 and 2010, respectively, related to
realized
g
ains from the sale of shares of CareFusion common stock
.
P
rovision
f
or Income Taxes
Genera
lly
,
fl
uctuat
i
ons
i
nt
h
ee
ff
ect
i
ve tax rate are
d
ue to c
h
an
g
es w
i
t
hi
n
i
nternat
i
ona
l
an
d
Un
i
te
d
State
s
state effective tax rates resultin
g
from our business mix and discrete items. A reconciliation of the provisio
n
b
ase
d
on t
h
e
f
e
d
era
l
statutory
i
ncome tax rate to our e
ff
ect
i
ve
i
ncome tax rate
f
rom cont
i
nu
i
ng operat
i
ons
i
sa
s
f
o
ll
ows
f
or
fi
sca
l
2011, 2010 an
d
2009 (see Note 9 o
f
“Notes to Conso
lid
ate
d
F
i
nanc
i
a
l
Statements”
f
or
a
d
etailed disclosure of the effective tax rate reconciliation)
:
Fiscal Year Ended June 30
,
201
1
201
0
2009
Prov
i
s
i
on at Fe
d
era
l
statutory rat
e
..........................................
35
.
0
%
35
.
0
%
35
.
0
%
State and local income taxes, net of federal benefi
t
.
............................
2
.
24
.7
1
.
8
Ch
ange
i
n measurement o
f
an uncerta
i
n tax pos
i
t
i
o
n
.
.......................... 2.4 1.3 0.
0
Fore
i
gn tax rate
diff
erent
i
a
l
...............................................
(
2.5
)(
3.3
)(
3.8
)
Unremitted forei
g
n earnin
gs
..............................................
(0
.
1) 13
.
90
.
0
Va
l
uat
i
on a
ll
owances ....................................................
(
0.6
)(
2.3
)(
3.1
)
O
t
h
er
.
................................................................
0
.
02
.
34
.
7
E
ff
ect
iv
e
i
ncome tax rate
.
................................................
36
.4%
5
1.
6
%
3
4.
6
%
F
isca
l
2011 Com
p
are
d
to Fisca
l
201
0
T
he effective tax rate was favorabl
y
impacted b
y
$28 million, or 1.9 percenta
g
e points, attributable t
o
recognizing no income tax expense on the sale of CareFusion stock due to the release of a previously established
d
e
f
erre
d
tax va
l
uat
i
on a
ll
owance. An un
f
avora
bl
ec
h
arge attr
ib
uta
bl
e to earn
i
ngs no
l
onger
i
n
d
e
fi
n
i
te
l
y
i
nveste
d
o
ffshore in fiscal 2010 favorabl
y
impacted the
y
ear-over-
y
ear comparison of the effective tax rate (see below).
F
isca
l
2010 Com
p
are
d
to Fisca
l
200
9
T
he effective tax rate was unfavorabl
y
impacted b
y
a char
g
e of $168 million, or 13.9 percenta
g
e points
,
a
ttributable to earnin
g
s no lon
g
er indefinitel
y
invested offshore. The fiscal 2010 effective tax rate was als
o
u
n
f
avora
bl
y
i
mpacte
db
y 1.8 percentage po
i
nts
d
ue to c
h
anges
i
n our
b
us
i
ness m
i
x resu
l
t
i
ng
f
rom t
h
eSp
i
n-O
ff
w
hi
c
h
resu
l
te
di
na
high
er percenta
g
eo
f
our pretax
i
ncome
b
e
i
n
gg
enerate
di
nt
h
eUn
i
te
d
States t
h
an
i
n
l
ower tax
rate international
j
urisdictions. A favorable audit settlement with a state taxin
g
authorit
y
in fiscal 2009 als
o
u
n
f
avora
bl
y
i
mpacte
d
t
h
e year-over-year compar
i
son o
f
t
h
ee
ff
ect
i
ve tax rate.
Ongoing Au
d
its
T
he IRS is currentl
y
conductin
g
audits of fiscal
y
ears 2001 throu
g
h 2010. We have received propose
d
adj
ustments
f
rom t
h
e IRS re
l
ate
d
to our trans
f
er pr
i
c
i
ng arrangements
b
etween
f
ore
i
gn an
dd
omest
i
csu
b
s
idi
ar
i
e
s
a
nd the transfer of intellectual propert
y
amon
g
subsidiaries of an acquired entit
y
prior to its acquisition b
y
us.
T
he IRS proposed additional taxes of $849 million, excludin
g
penalties and interest. If this tax ultimatel
y
must be
2
7