Cardinal Health 2008 Annual Report Download - page 71

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Assumed liabilities of these acquired businesses were approximately $149 million. The consolidated financial
statements include the results of operations from each of these business combinations from the date of
acquisition.
The Company’s trend with regard to acquisitions has been to expand its role as a provider of services and
innovative products to the healthcare industry. This trend has resulted in expansion into areas that complement
the Company’s existing operations and provide opportunities for the Company to develop synergies with, and
strengthen, the acquired business. As the healthcare industry continues to change, the Company evaluates
possible candidates for acquisition and considers opportunities to expand its role as a provider of services to the
healthcare industry through all its reportable segments. There can be no assurance, however, that the Company
will be able to successfully take advantage of any such opportunity if and when it arises or consummate any such
transaction, if pursued. If additional transactions are pursued or consummated, the Company would incur
additional acquisition integration charges, and may need to enter into funding arrangements for such acquisitions.
There can be no assurance that the integration efforts associated with any such transaction would be successful.
Divestitures
During fiscal 2007, the Company completed the sale of the PTS Business to an affiliate of The Blackstone
Group. At the closing of the sale, the Company received approximately $3.2 billion in cash, which was the
purchase price of approximately $3.3 billion as adjusted pursuant to certain provisions in the purchase
agreement. The Company recognized an after-tax book gain of approximately $1.1 billion from this transaction.
The Company used the after-tax net proceeds of approximately $3.1 billion from the sale to repurchase shares.
The purchase agreement contained customary indemnification provisions for sale transactions of this type.
The Company continues to evaluate the performance and strategic fit of its businesses and may decide to
sell a business or product line based on such an evaluation. As discussed above, effective July 1, 2008, the
Company will begin reporting in three reportable segments. As of July 1, 2008, the All Other segment includes
Medicine Shoppe and the pharmacy services, Tecomet and MedSystems businesses. While these businesses
continue to add value to the Company, the Company will be conducting an in-depth review during fiscal 2009 to
evaluate the fit of such businesses in the existing segment structure. The Company entered into a definitive
agreement to sell the Tecomet business to Charlesbank Capital Partners and Tecomet management on July 22,
2008.
Any divestitures may result in significant write-offs, including those related to goodwill and other intangible
assets, which could have an adverse effect on the Company’s results of operations and financial condition. In
addition, the Company may encounter difficulty in finding buyers or alternative exit strategies at acceptable
prices and terms and in a timely manner.
Government Investigations and Legal Proceedings
During the last few fiscal years, the Company has been involved in a number of significant government
investigations and litigation matters. During fiscal 2008, the Company settled with the SEC to conclude, with
respect to the Company, the previously-reported SEC investigation relating principally to the Company’s
financial reporting and disclosures, which included a civil penalty of $35 million. In addition, during fiscal 2007,
the Company settled the Cardinal Health federal securities litigation for a payment of $600 million and the
Cardinal Health ERISA litigation for a payment of $40 million. Also during fiscal 2007, the Company entered
into a civil settlement and paid $11 million to resolve a civil investigation by the New York Attorney General’s
Office focusing on trading in the secondary market for pharmaceuticals, and the Company entered into a Consent
Decree with the FDA to resolve seizure litigation over Alaris SE pumps. For further information regarding these
matters, see the 2007 Form 10-K.
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