Cardinal Health 2008 Annual Report Download - page 63

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The following table summarizes segment profit for the fiscal years ended June 30, 2008, 2007 and 2006 (in
millions):
Growth (1) Segment Profit (4)
2008 2007 2008 2007 2006
Healthcare Supply Chain Services—Pharmaceutical (2)(5) . . . (14)% 14% $1,121.5 $1,299.8 $1,142.6
Healthcare Supply Chain Services—Medical (3)(5) ..... (5)% 1% 303.0 318.1 314.5
Clinical Technologies and Services .................. 29% 20% 496.6 385.7 320.3
Medical Products and Technologies (3) .............. 52% 20% 300.4 197.6 164.5
Total segment profit .......................... 1% 13% $2,221.5 $2,201.2 $1,941.9
Corporate (6) ............................... N.M. N.M. (100.3) (827.5) (97.0)
Consolidated operating earnings ........................ 54% (26)% $2,121.2 $1,373.7 $1,844.9
(1) Growth is calculated as the percentage increase or (decrease) for a given year as compared to the
immediately preceding year.
(2) During the first quarter of fiscal 2006, the Healthcare Supply Chain Services—Pharmaceutical segment
recorded a charge reflecting credits owed to certain vendors ($32 million) for prior periods. During the
fourth quarter of fiscal 2007, an adjustment ($4 million) was recorded to reduce a portion of the reserve
based upon a revised estimate.
(3) During the third quarter of fiscal 2007, the Company revised the method used to allocate certain shared
costs between the Healthcare Supply Chain Services—Medical segment and the Medical Products and
Technologies segment to better align costs with the segment that receives the related benefits. Prior period
information has been adjusted to reflect this change in methodology.
(4) A portion of the corporate costs previously allocated to the former Pharmaceutical Technologies and
Services segment have been reclassified to the remaining four segments based upon each segment’s
respective proportion of allocated corporate expenses. Prior period information has been adjusted to reflect
this change in methodology.
(5) During the first quarter of fiscal 2008, the Company revised the method used to allocate corporate costs to
the Healthcare Supply Chain Services—Pharmaceutical and Healthcare Supply Chain Services—Medical
segments, which resulted in decreased expense ($22 million) allocated to the Healthcare Supply Chain
Services—Pharmaceutical segment and increased expense ($22 million) allocated to the Healthcare Supply
Chain Services—Medical segment. This change was made in an effort to better align corporate spending
with the segment that receives the related benefits. Prior period information has not been adjusted to reflect
this change in methodology.
(6) For fiscal 2008, 2007 and 2006, Corporate includes, among other things, special items, impairments, (gain)/
loss on sale of assets and other, net and certain other Corporate investment spending described below:
(a) Special items: Corporate includes special items of $130 million, $772 million and $81 million for the
fiscal years ended June 30, 2008, 2007 and 2006, respectively (see Note 3 in the “Notes to
Consolidated Financial Statements” for discussion of special items).
(b) Impairments, (gain)/loss on sale of assets and other, net: Asset impairments and gains and losses from
the sale of assets not eligible to be classified as special items or discontinued operations are retained at
Corporate. Impairments, (gain)/loss on sale of assets and other, net were $(32) million, $17 million and
$6 million for the fiscal years ended June 30, 2008, 2007 and 2006, respectively (see Note 3 in the
“Notes to Consolidated Financial Statements” for further discussion of impairments, (gain)/loss on sale
of assets and other, net).
(c) Investment spending: The Company has encouraged its business units to identify investment projects
which will provide future returns. These projects typically require incremental strategic investments in
the form of additional capital or operating expenses. As approval decisions for such projects are
dependent upon executive management, the expenses for such projects are retained at Corporate.
Investment spending for fiscal years 2008, 2007 and 2006 was $28 million, $22 million and
$19 million, respectively.
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