Cardinal Health 2010 Annual Report Download - page 51

F
iscal 2009 Com
p
ared to Fiscal 2008
Cost control pro
g
rams enabled us to decrease SG&A expenses in fiscal 2009 b
y
$7 million even thou
g
hwe
incurred hi
g
her bad debt expense ($38 million). The increased bad debt expense was due to poor economic
con
di
t
i
ons a
ff
ect
i
n
g
certa
i
n customers an
df
our re
gi
ona
l
c
h
a
i
n customers o
f
our P
h
armaceut
i
ca
l
se
g
ment
fili
n
g
f
or
b
an
k
ruptc
y.
S
egment Profit and Operating Earnings
C
hang
e
S
e
g
ment Profit and Operatin
g
Earning
s
20
1
0
2
009
2
0
1
0
2
009
2
008
Ph
a
rm
aceut
i
ca
l
......................................
(3)% 1%
$
1,001.8
$
1,035.7
$
1,022.4
Med
i
cal
............................................
11%
(6)% 427.7 384.9 411.3
T
ota
l
Segment Pro
fi
t
.
................................
1%
(
1
)
% 1,429.
5
1,420.6 1,433.7
C
orporat
e
..........................................
N.M. N.M.
(
122.6
)(
133.2
)(
41.3
)
Consolidated Operatin
g
Earnin
gs
.
....................... 2
%
(8)% $1,306.9 $1,287.4 $1,392.4
S
egment Pro
f
i
t
We evaluate the performance of the individual segments based upon, among other things, segment profit
,
which is segment revenu
e
le
ss
s
egment cost of products sold le
ss
segment SG&A expenses. We do not allocat
e
r
estructuring and employee severance, acquisition related costs, impairments and (gain)/loss on sale of assets
,
litigation (credits)/charges, net, certain investment and other spending to our segments. These costs are retained
at Corporate. Investment spending generally includes the first year spend for certain projects which requir
e
incremental strategic investments in the form of additional operating expenses. We encourage our segments to
identify investment projects which will promote innovation and provide future returns. As approval decisions fo
r
s
uch projects are dependent upon executive management, the expenses for such projects are retained at
Corporate. In addition, Spin-Off costs included within SG&A are not allocated to our segments.
Ph
armaceutica
l
se
g
ment
T
h
epr
i
nc
i
pa
ld
r
i
vers
f
or t
h
e
d
ecrease
d
ur
i
ng
fi
sca
l
2010 were pr
i
c
i
ng c
h
anges on renewe
d
custome
r
contracts,
f
ewer s
i
gn
ifi
cant gener
i
cp
h
armaceut
i
ca
ll
aunc
h
es t
h
an t
h
epr
i
or year an
d
t
h
eMe
di
c
i
ne S
h
oppe
f
ranc
hi
se trans
f
ormat
i
on. T
h
e
d
ec
li
ne
i
n segment pro
fi
t was part
i
a
ll
yo
ff
set
b
y contr
ib
ut
i
ons
f
rom our gener
i
c
p
rograms,
di
sc
i
p
li
ne
d
cost contro
l
san
d
so
lid b
ran
d
e
d
marg
i
n growt
h
.
T
h
epr
i
nc
i
pa
ld
r
i
vers
f
or t
h
e
i
ncrease
d
ur
i
ng
fi
sca
l
2009 were
i
ncrease
d
vo
l
ume an
d
contr
ib
ut
i
ons
f
rom ne
w
gener
i
c
l
aunc
h
es. T
h
e
i
ncrease was part
i
a
ll
yo
ff
set
b
ypr
i
c
i
ng c
h
anges on renewe
d
customer contracts, t
h
e
i
mpact
f
rom ant
i
-
di
vers
i
on act
i
v
i
t
i
es an
db
a
dd
e
b
t expense.
S
egment pro
fi
ts
f
rom sa
l
es to
b
u
lk
customers as a percentage o
f
P
h
armaceut
i
ca
l
segment pro
fi
t were 11%
,
1
7% and 1
5
% in fiscal 2010, 2009 and 2008. The decrease from fiscal 2009 to fiscal 2010 was due to pricing
c
h
anges on renewe
db
u
lk
customer contracts
.
M
edical segment
T
h
epr
i
nc
i
pa
ld
r
i
vers
f
or t
h
e
i
ncrease
d
ur
i
n
gfi
sca
l
2010 were
g
rowt
hi
nsa
l
es to certa
i
nex
i
st
i
n
g
customers
an
dd
ecrease
d
cost o
f
raw mater
i
a
l
s assoc
i
ate
d
w
i
t
h
commo
di
t
y
pr
i
ce movements. Se
g
ment pro
fi
t
g
rowt
h
was
p
art
i
a
lly d
ampene
df
rom
i
ncrease
d
spen
di
n
g
on strate
gi
c pro
j
ects
.
T
h
e
d
ecrease
d
ur
i
n
gfi
sca
l
2009 was pr
i
mar
ily d
ue to
i
ncrease
d
cost o
f
raw mater
i
a
l
s assoc
i
ate
d
w
i
t
h
commo
di
t
y
pr
i
ce movements an
d
t
h
ene
g
at
i
ve
i
mpact o
ff
ore
ig
n exc
h
an
g
e.
2
5