Cardinal Health 2008 Annual Report Download - page 105

(2) Other headcount reduction includes, among other restructuring projects, employees displaced as a result of
the relocation of the Healthcare Supply Chain—Medical headquarters and certain corporate functions from
Waukegan, Illinois to the Company’s corporate headquarters in Dublin, Ohio. Most of this reduction is
expected to be offset by the positions created at the corporate headquarters.
Acquisition Integration Charges
Costs of integrating operations of various acquired companies are recorded as acquisition integration
charges when incurred. The acquisition integration charges incurred during fiscal 2008 were primarily a result of
the acquisitions of Viasys and Enturia. The costs incurred during fiscal 2007 and 2006 were primarily a result of
the acquisition of the wholesale pharmaceutical, health and beauty related drugstore products distribution
business of The F. Dohmen Co. and certain of its subsidiaries (“Dohmen”), ALARIS Medical Systems, Inc.
(“Alaris”), ParMed Pharmaceutical, Inc. (“ParMed”) and Syncor. During the fiscal years noted above, the
Company also incurred acquisition integration charges for numerous smaller acquisitions. The following table
and paragraphs provide additional detail regarding the types of acquisition integration charges incurred by the
Company for the fiscal years ended June 30, 2008, 2007 and 2006:
For the Fiscal Year Ended
June 30,
(in millions) 2008 2007 2006
Acquisition integration charges:
Employee-related costs ............................................... $ 3.8 $ 1.9 $ 9.1
Asset impairments and other exit costs ................................... 0.2 1.5 1.5
IPR&D costs ........................................................ 18.0 84.5 —
Other integration costs ................................................ 22.9 13.6 14.8
Total acquisition integration charges ......................................... $44.9 $101.5 $25.4
Employee-Related Costs. These costs primarily consist of severance, stay bonuses, non-compete agreements
and other forms of compensatory payouts made to employees as a direct result of the acquisitions. The fiscal
2008 costs primarily related to the acquisition of Care Fusion Incorporated (“Care Fusion”) and Viasys. The
Fiscal 2007 costs primarily related to the acquisition of Dohmen. The fiscal 2006 charges primarily related to the
Alaris acquisition.
Asset Impairments and Other Exit Costs. The fiscal 2008 costs primarily related to the Viasys acquisition.
The fiscal 2007 and 2006 costs primarily related to facility integration for the Alaris acquisition.
IPR&D Costs. During fiscal 2008, the Company recorded charges of $17.7 million and $25.3 million related
to the write-off of IPR&D costs associated with Enturia and another minor acquisition, respectively. These
charges were partially offset by a $25.0 million adjustment to reduce the total write-off of IPR&D associated
with the Viasys acquisition to $58.9 million. See Note 2 for further information. During fiscal 2007, the
Company recorded charges of $83.9 million and $0.6 million related to the write-off of IPR&D costs associated
with Viasys and Care Fusion, respectively.
Other Integration Costs. Other integration costs generally relate to expenses incurred to integrate the
acquired company’s operations and systems into the Company’s existing operations and systems. These costs
include, but are not limited to, the integration of information systems, employee benefits and compensation,
accounting, finance, tax, treasury, internal audit, risk management, compliance, administrative services, sales and
marketing and other. The costs for fiscal 2008 primarily related to the acquisitions of Viasys, Dohmen and
Alaris. The costs for fiscal 2007 primarily related to the acquisitions of Dohmen, ParMed and Alaris. The costs
for fiscal 2006 primarily related to the acquisition of Alaris.
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