Cardinal Health 2011 Annual Report Download - page 94

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(2) The fair value of foreign currency contracts, commodity contracts and interest rate swaps is determine
d
b
ase
d
on t
h
e present va
l
ue o
f
expecte
df
uture cas
hfl
ows cons
id
er
i
ng t
h
er
i
s
k
s
i
nvo
l
ve
d
,
i
nc
l
u
di
ng
n
on-performance risk, and usin
g
discount rates appropriate for the respective maturities. Observable Level
2
i
n
p
uts are used to determine the
p
resent value of ex
p
ected future cash flows. See Note 12 for furthe
r
i
n
f
ormat
i
on regar
di
ng t
h
e
f
a
i
rva
l
ue o
ffi
nanc
i
a
li
nstruments.
(3) The other investments balance includes investments in mutual funds, which are used to offset fluctuations i
n
d
eferred compensation liabilities. These mutual funds are primarily comprised of large cap domestic an
d
i
nternat
i
ona
l
equ
i
ty secur
i
t
i
es. T
h
e
f
a
i
rva
l
ue o
f
t
h
ese
i
nvestments
i
s
d
eterm
i
ne
d
us
i
ng quote
d
mar
k
et pr
i
ces.
(4) Contin
g
ent consideration represents the obli
g
ation incurred in connection with the acquisition of P4
Healthcare. The fair value of the contingent consideration obligation is determined based on a probability-
we
i
g
h
te
di
ncome approac
hd
er
i
ve
df
rom EBITDA est
i
mates an
d
pro
b
a
bili
ty assessments w
i
t
h
respect to t
he
likelihood of achievin
g
the various EBITDA tar
g
ets. The fair value measurement is based on si
g
nificant
i
n
p
uts unobservable in the market and thus re
p
resents a Level 3 measurement. The
$
16.6 million decrease i
n
the contingent consideration liability reflects a cash payment of
$
10.2 million for the first measurement
period, and chan
g
es in our estimate of performance in future measurement periods. Failure to meet curren
t
e
xpectations of progress could increase the probability of not achieving the targets within the measuremen
t
per
i
o
d
san
d
resu
l
t
i
n a mater
i
a
l
re
d
uct
i
on
i
nt
h
e
f
a
i
rva
l
ue o
f
t
h
e cont
i
ngent cons
id
erat
i
on o
bli
gat
i
on. See
Note 2 for additional information re
g
ardin
g
the contin
g
ent consideration obli
g
ation related to the P4
Healthcare ac
q
uisition.
(5) The fair value of our investment in CareFusion common stock was determined using the quoted marke
t
price of the securit
y
.
1
4. SHAREHOLDERS’ EQUITY
A
t June 30, 2011 and 2010, authorized capital shares consisted of the following: 7
5
0.0 million Class A
common shares, without par value; 5.0 million Class B common shares, without par value; and 0.5 millio
n
non-votin
g
preferred shares, without par value. The Class A common shares and Class B common shares are
collectively referred to below as “Common Shares”. Holders of Common Shares are entitled to share equally in
a
ny
di
v
id
en
d
s
d
ec
l
are
db
yt
h
e Boar
d
o
f
D
i
rectors an
d
to part
i
c
i
pate equa
ll
y
i
na
ll di
str
ib
ut
i
ons o
f
assets upo
n
l
iquidation. Generall
y
, the holders of Class A common shares are entitled to one vote per share, and the holder
s
o
f Class B common shares are entitled to one-fifth of one vote
p
er share on
p
ro
p
osals
p
resented to shareholders
f
or vote. Un
d
er certa
i
nc
i
rcumstances, t
h
e
h
o
ld
ers o
f
C
l
ass B common s
h
ares are ent
i
t
l
e
d
to vote as a separate
class. Onl
y
Class A common shares were outstandin
g
as of June 30, 2011 and 2010
.
We repurchased
$
500.0 million of our Common Shares, in aggregate, through share repurchase program
s
d
urin
g
fiscal 2011, 2010 and 2009, as described below. We funded the repurchases throu
g
h available cash. The
C
ommon Shares repurchased are held in treasury to be used for general corporate purposes.
Fisc
a
l2
0
1
1
O
n November 3, 2010, our board of directors approved a new
$
750.0 million share repurchase progra
m
which expires November 30, 2013. Durin
g
the twelve months ended June 30, 2011, we did not repurchase an
y
o
f
o
ur Common Shares under this program
.
D
urin
g
the three months ended September 30, 2010, we repurchased 7.
5
million Common Shares havin
g
an
a
ggregate cost of approximately
$
250.0 million, which completed the authorized amount of share repurchase
s
a
va
il
a
bl
eun
d
er our s
h
are repurc
h
ase program
i
np
l
ace at Septem
b
er 30, 2010
.
T
he average price paid per common share for all Common Shares repurchased during fiscal 2011 wa
s
$
33.22
.
6
8