Cardinal Health 2009 Annual Report Download - page 51

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(“EITF”) Issue No. 03-13, “Applying the Conditions in Paragraph 42 of FASB Statement No. 144,
Accounting for the Impairment or Disposal of Long-Lived Assets, in Determining Whether to Report
Discontinued Operations.” During the second quarter of fiscal 2007, the Company committed to plans to sell
the PTS Business and met the criteria for classification of discontinued operations in accordance with
SFAS No. 144 and EITF Issue No. 03-13. During the third quarter of fiscal 2006, the Company committed
to plans to sell a significant portion of its healthcare marketing services business and its United Kingdom-
based Intercare pharmaceutical distribution business, and met the held for sale criteria set forth in
SFAS No. 144. During the first quarter of fiscal 2006, the Company decided to discontinue its sterile
pharmaceutical manufacturing business in Humacao, Puerto Rico, and met the criteria for classification of
discontinued operations in accordance with SFAS No. 144 and EITF Issue No. 03-13. In addition, on
January 1, 2003, the Company acquired Syncor. Prior to the acquisition, Syncor had announced the
discontinuation of certain operations including the medical imaging business and certain overseas
operations. The Company proceeded with the discontinuation of these operations and included additional
international and non-core domestic businesses in the discontinued operations. The Company sold
substantially all of the Syncor-related discontinued operations prior to the end of the third quarter of fiscal
2005. For additional information regarding discontinued operations, see Note 7 of “Notes to Consolidated
Financial Statements.”
(4) In the first quarter of fiscal 2008, the Company adopted the provisions of FASB Interpretation (“FIN”)
No. 48, “Accounting for Uncertainty in Income Taxes.” FIN No. 48 clarifies the accounting for uncertainty
in income taxes recognized in the financial statements in accordance with SFAS No. 109, “Accounting for
Income Taxes.” This standard provides that a tax benefit from an uncertain tax position may be recognized
when it is more likely than not that the position will be sustained upon examination, including resolutions of
any related appeals or litigation processes, based on the technical merits. The amount recognized is
measured as the largest amount of tax benefit that is greater than 50% likely of being realized upon
settlement. The cumulative effect of adoption of this interpretation was a $139.3 million reduction of
retained earnings.
Item 7: Management’s Discussion and Analysis of Financial Condition and Results of Operations
The discussion and analysis presented below refers to and should be read in conjunction with the
consolidated financial statements and related notes included in this Form 10-K. Unless otherwise indicated,
throughout this Management’s Discussion and Analysis of Financial Condition and Results of Operations,
discussion of matters in the Company’s consolidated financial statements refers to continuing operations.
Company Overview
Strategic Overview
Cardinal Health, Inc. (the “Company”) is an approximately $100 billion, global company serving the
healthcare industry with products and services that help hospitals, physician offices and pharmacies reduce costs,
improve safety and productivity, and deliver better care to patients.
Spin-Off of CareFusion Corporation
In 2008, the management of Cardinal Health commenced a review of long-term strategy for Cardinal
Health’s businesses. On September 29, 2008, the Company announced that it intended to separate its clinical and
medical products businesses from its other businesses through a pro rata distribution to its shareholders (the
“distribution” or “Spin-Off”) of common stock of a wholly owned subsidiary, CareFusion Corporation
(“CareFusion”), formed for the purpose of holding the majority of its clinical and medical products businesses.
After the Spin-Off, the Company will retain certain surgical and exam gloves, surgical drapes and apparel and
fluid management businesses that were previously part of its Clinical and Medical Products segment.
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