Cardinal Health 2011 Annual Report Download - page 70

C
ARDINAL HEALTH
,
INC. AND SUBSIDIARIE
S
NO
TE
S
T
OCO
N
SO
LIDATED FINAN
C
IAL
S
TATEMENT
S
1
.BA
S
I
SO
F PRE
S
ENTATI
O
N AND
SU
MMARY
O
F
S
I
G
NIFI
C
ANT A
CCOU
NTIN
G
P
O
LI
C
IE
S
Car
di
na
l
Hea
l
t
h
, Inc., an O
hi
o corporat
i
on
f
orme
di
n 1979,
i
sa
h
ea
l
t
h
care serv
i
ces company prov
idi
ng
pharmaceutical and medical products and services that help pharmacies, hospitals, sur
g
er
y
centers, ph
y
sicia
n
o
ffices and other healthcare providers focus on patient care while reducing costs, enhancing efficiency and
i
mprov
i
ng qua
li
ty. Re
f
erences to “we”, “our” an
d
s
i
m
il
ar pronouns
i
nt
h
ese conso
lid
ate
dfi
nanc
i
a
l
statements are
to Cardinal Health, Inc. and its ma
j
orit
y
-owned subsidiaries unless the context otherwise requires
.
O
ur fiscal
y
ear ends on June 30. References to fiscal 2011, 2010 and 2009 in these consolidated financial
statements are to the fiscal years ended June 30, 2011, 2010 and 2009, respectively
.
S
pin-O
ff
o
f
CareFusion Corporatio
n
. Effective August 31, 2009, we separated our clinical and medical
pro
d
ucts
b
us
i
nesses t
h
roug
h
a
di
str
ib
ut
i
on to our s
h
are
h
o
ld
ers o
f
81 percent o
f
t
h
et
h
en outstan
di
ng commo
n
stock of CareFusion Corporation (“CareFusion”) and retained the remainin
g
41.4 million shares of CareFusio
n
common stock (the “Spin-Off”). During fiscal 2011 and 2010, we disposed of 30.
5
million and 10.9 million
s
h
ares o
f
CareFus
i
on common stoc
k
, respect
i
ve
l
y. W
hil
e we are a party to a separat
i
on agreement an
d
var
i
ous
o
ther a
g
reements relatin
g
to the separation, we have determined that we have no si
g
nificant continuin
g
involvement in the operations of CareFusion. Accordingly, the operating results of CareFusion are presente
d
w
i
t
hi
n
di
scont
i
nue
d
operat
i
ons
f
or a
ll
per
i
o
d
s presente
d
t
h
roug
h
t
h
e
d
ate o
f
t
h
eSp
i
n-O
ff.
O
ur Re
l
ations
h
i
p
wit
h
CareFusion.OnJu
l
y 22, 2009, we entere
di
nto a separat
i
on agreement w
i
t
h
C
areFusion to effect the S
p
in-Off and
p
rovide a framework for our relationshi
p
with CareFusion after the S
p
in-
Off. In addition, on August 31, 2009, we entered into a transition services agreement, a tax matters agreement
a
n
d
an accounts rece
i
va
bl
e
f
actor
i
ng agreement w
i
t
h
CareFus
i
on, among ot
h
er agreements. T
h
ese agreements,
includin
g
the separation a
g
reement, provide for allocation of assets, emplo
y
ees, liabilities, and obli
g
ations
(including investments, property and employee benefits; and tax-related assets and liabilities) attributable t
o
per
i
o
d
spr
i
or to, at an
d
a
f
ter t
h
eSp
i
n-O
ff
an
d
govern certa
i
nre
l
at
i
ons
hi
ps
b
etween CareFus
i
on an
d
us a
f
ter t
he
S
p
in-Off.
Under the transition services a
g
reement, durin
g
fiscal 2011 and 2010, we reco
g
nized $64.7 million an
d
$
99.2 million, respectively, in transition service fee income, which approximately offsets the costs associate
d
w
i
t
h
prov
idi
ng t
h
e trans
i
t
i
on serv
i
ces. Su
b
stant
i
a
ll
ya
ll
o
f
t
h
e trans
i
t
i
on serv
i
ce arrangements exp
i
re
di
n
fi
sca
l
2011 and earl
y
fiscal 2012
.
Under the accounts receivable factorin
g
a
g
reement, durin
g
fiscal 2011 and 2010, we purchased $460.
4
million and
$
605.6 million, respectively, of CareFusion trade receivables. The accounts receivable factoring
a
rrangement exp
i
re
d
on Apr
il
1, 2011.
Un
d
er t
h
e tax matters agreement, CareFus
i
on
i
so
bli
gate
d
to
i
n
d
emn
if
yus
f
or certa
i
n tax exposures an
d
transaction taxes
p
rior to the S
p
in-Off. The indemnification receivable is included in our balance sheet and was
$
263.9 million and
$
244.6 million at June 30, 2011 and 2010, respectively
.
Basis o
f
Presentation
.
Our consolidated financial statements include the accounts of all majority-owned
su
b
s
idi
ar
i
es, an
d
a
ll
s
i
gn
ifi
cant
i
ntercompany transact
i
ons an
d
amounts
h
ave
b
een e
li
m
i
nate
d
. Certa
i
npr
i
or yea
r
balances have been reclassified to conform to the current
y
ear presentation. The results of businesses acquired o
r
d
is
p
osed of are included in the consolidated financial statements from the effective date of the ac
q
uisition or u
p
to t
h
e
d
ate o
fdi
sposa
l
, respect
i
ve
l
y
.
Use of Estimates
.
T
h
e conso
lid
ate
dfi
nanc
i
a
l
statements are prepare
di
n accor
d
ance w
i
t
h
account
i
ng
principles
g
enerall
y
accepted in the United States (“GAAP”). The preparation of financial statements i
n
a
ccordance with GAAP requires us to make estimates, judgments and assumptions that affect the amounts
44