Cardinal Health 2010 Annual Report Download - page 48

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shares of CareFusion common stock had an estimated fair value of
$
692 million. Under the private letter ruling
f
rom the IRS relating to the Spin-Off, we must dispose of the CareFusion shares as soon as practicable after the
Spin-Off and consistent with our reasons for retaining the shares, but no later than August 31, 2014. CareFusion
has registered the CareFusion stock we own with the SEC, although we may sell the stock under an exemption
f
rom registration.
The net assets of CareFusion are presented separately as assets from businesses held for sale and
discontinued operations and its operating results are presented within discontinued operations for all reporting
p
eriods through the date of the Spin-Off.
Our Continuing Relationship with CareFusion
On July 22, 2009, we entered into a separation agreement with CareFusion to effect the Spin-Off and
p
rovide a framework for our relationship with CareFusion after the Spin-Off. In addition, on August 31, 2009, we
entered into a transition services agreement, a tax matters agreement, an employee matters agreement,
intellectual property agreements and certain other commercial agreements with CareFusion. These agreements
,
including the separation agreement, provide for the allocation of assets, employees, liabilities and obligation
s
(including investments, property and employee benefits and tax-related assets and liabilities) attributable t
o
p
eriods prior to, at and after the Spin-Off and govern certain relationships between CareFusion and us after the
S
p
in-Off
.
Pursuant to our transition services agreement with CareFusion, for fiscal 2010 we recognized approximately
$
99 million in transition service fee income which approximately offsets the costs associated with providing th
e
transition services. Additionally, during fiscal 2010 we purchased
$
606 million of CareFusion trade receivables
p
ursuant to an accounts receivable factoring arrangement between CareFusion and us.
Under the tax matters agreement in connection with the Spin-Off, CareFusion is obligated to indemnify us
f
or certain tax ex
p
osures and transaction taxes
p
rior to the S
p
in-Off. As of June 30, 2010, we have a
$
245 million
indemnification receivable on our balance sheet related to this item.
R
esults o
fOp
erat
i
ons
Reve
nu
e
Chang
e
R
evenue
2010
2009
2010
2009
2008
Ph
a
rm
aceut
i
ca
l ....................................
2% 11%
$
89,789.9
$
87,862.9
$
79,498.
3
M
ed
i
cal
.......................................... 7
%3%
8,7
5
0.1 8,1
5
9.3 7,916.
7
C
or
p
orat
e
........................................
N.M. N.M. (37.2) (30.7) (
6
.8
)
Conso
lid
ate
d
revenue
.
.............................. 3% 10
%
$
98
,
502.8
$
95
,
991.5
$
87
,
408.2
F
isca
l
2010 Compare
d
to Fisca
l
200
9
P
h
armaceutica
l
segment
P
h
armaceut
i
ca
l
segment revenue was pos
i
t
i
ve
l
y
i
mpacte
db
yp
h
armaceut
i
ca
l
pr
i
ce apprec
i
at
i
on an
d
increased volume from existing customers (a combined impact of $3.4 billion), partially offset by losses of
customers in excess of gains ($1.3 billion)
.
Revenue from non-bulk customers was $45.8 billion
,
$44.1 billion and $42.2 billion for fiscal 2010
,
2009
and 2008, respectivel
y
. Revenue from bulk customers was $44.0 billion, $43.7 billion and $37.3 billion for fisca
l
2010, 2009 an
d
2008, respect
i
ve
ly
. See Item 1: Bus
i
ness
f
or more
i
n
f
ormat
i
on a
b
out
b
u
lk
an
d
non-
b
u
lk
customers
.
22