Cardinal Health 2010 Annual Report Download - page 89

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r
eceivable and financing entity. The amount of additional tax, excluding penalties and interest, proposed by the
IRS in these notices was
$
178.9 million. We anticipate that this transaction could be the subject of propose
d
adjustments by the IRS in tax audits of fiscal years 200
6
to 2009. Due to the anticipated repatriation of th
e
earnings, the tax associated with the transaction, including the tax assessed by the IRS, no longer represented a
n
uncertain tax benefit during fiscal 2010 and, as such, was classified as deferred taxes and other liabilities o
r
current taxes payable in the balance sheet
.
During fiscal 2009, we received a Revenue Agent’s Report for tax years 2003 through 200
5
, which include
d
new NPA’s re
l
ate
d
to our trans
f
er pr
i
c
i
ng arrangements
b
etween
f
ore
i
gn an
dd
omest
i
csu
b
s
idi
ar
i
es an
d
t
h
e
trans
f
er o
fi
nte
ll
ectua
l
property among su
b
s
idi
ar
i
es o
f
an acqu
i
re
d
ent
i
ty pr
i
or to
i
ts acqu
i
s
i
t
i
on
b
y us. T
h
e
amount of additional tax proposed by the IRS in the new notices total
$
598.1 million, excluding penalties and
interest, but including
$
462.1 million related to issues for which CareFusion is liable under the tax matters
agreement
i
nt
h
e event t
h
e amount must
b
epa
id
to t
h
e tax
i
ng aut
h
or
i
ty. We
di
sagree w
i
t
h
t
h
ese propose
d
a
dj
ustments an
di
nten
d
to v
i
gorous
l
y contest t
h
em. We
b
e
li
eve t
h
at we are a
d
equate
l
y reserve
df
or t
h
e uncerta
i
n
tax pos
i
t
i
on re
l
at
i
ng to t
h
ese matters.
I
t
i
s reasona
bly
poss
ibl
et
h
at t
h
ere cou
ld b
eac
h
an
g
e
i
nt
h
e amount o
f
unreco
g
n
i
ze
d
tax
b
ene
fi
ts w
i
t
hi
nt
h
e
next 12 mont
h
s
d
ue to act
i
v
i
t
i
es o
f
t
h
e IRS or ot
h
er tax
i
n
g
aut
h
or
i
t
i
es,
i
nc
l
u
di
n
g
propose
d
assessments o
f
a
ddi
t
i
ona
l
tax, poss
ibl
e sett
l
ement o
f
au
di
t
i
ssues, or t
h
e exp
i
rat
i
on o
f
app
li
ca
bl
e statutes o
fli
m
i
tat
i
ons. W
e
est
i
mate t
h
at t
h
e ran
g
eo
f
t
h
e poss
ibl
ec
h
an
g
e
i
n unreco
g
n
i
ze
d
tax
b
ene
fi
ts w
i
t
hi
nt
h
e next 12 mont
h
s
i
sa
decrease of approximatel
y
zero to $45 million exclusive of penalties and interest.
1
0. COMMITMENTS, CONTINGENT LIABILITIES AND LITIGATIO
N
C
ommitment
s
T
h
e
f
uture m
i
n
i
mum renta
l
pa
y
ments
f
or operat
i
n
gl
eases
h
av
i
n
gi
n
i
t
i
a
l
or rema
i
n
i
n
g
non-cance
l
a
bl
e
l
eas
e
terms
i
n excess o
f
one
y
ear at June 30, 2010 are:
(
in millions
)
20
11 2
0
1
2
201
3
20
1
4
2
0
1
5
Therea
f
ter
T
ota
l
Minimum rental payments
....................
$
65.8
$
53.3
$
40.2
$
21.7
$
14.2
$
26.2
$
221.4
Rental expense relating to operating leases was
$
80.3 million,
$
84.7 million and
$
55.7 million in fiscal
2
010, 2009 an
d
2008, respect
i
ve
l
y. Su
bl
ease renta
li
ncome was not mater
i
a
lf
or any per
i
o
d
presente
dh
ere
i
n.
L
e
g
a
l
Procee
d
in
g
s
We become involved from time-to-time in litigation and regulatory matters incidental to our business,
including governmental investigations, enforcement actions, personal injury claims, employment matters,
commercial disputes, intellectual property matters, disputes regarding environmental clean-up costs, litigation in
connection with acquisitions and divestitures, and other matters arising out of the normal conduct of the business
.
W
e intend to vigorously defend ourselves against such litigation. We do not believe that the outcome of an
y
p
ending litigation will have a material adverse effect on the consolidated financial statements.
O
ccas
i
ona
ll
y, we may suspect t
h
at pro
d
ucts we manu
f
acture, mar
k
et or
di
str
ib
ute
d
o not meet our
s
pec
ifi
cat
i
ons, pu
bli
s
h
e
d
stan
d
ar
d
s or regu
l
atory requ
i
rements. In suc
h
c
i
rcumstances, we w
ill i
nvest
i
gate an
d
ta
k
e appropr
i
ate correct
i
ve act
i
on. Suc
h
act
i
ons can
l
ea
d
to costs to repa
i
r or rep
l
ace a
ff
ecte
d
pro
d
ucts, temporary
i
nterrupt
i
ons
i
n pro
d
uct sa
l
es, an
d
act
i
on
by
re
g
u
l
ators
.
We accrue for contin
g
encies related to liti
g
ation and re
g
ulator
y
matters. We will accrue an estimated loss
contin
g
enc
y
in our consolidated financial statements if it is probable that a liabilit
y
has been incurred and the
amount of the loss can be reasonabl
y
estimated. Because liti
g
ation is inherentl
y
unpredictable and unfavorabl
e
6
3