Cardinal Health 2012 Annual Report Download - page 37

Cardinal Health, Inc. and Subsidiaries
Notes to Consolidated Financial Statements
35
The results included in discontinued operations for fiscal 2012, 2011 and
2010 are summarized as follows:
(in millions) 2012 (1) 2011 (1) 2010 (2)
Revenue $—$ — $ 691
Earnings before income taxes $—$1$91
Income tax expense (1) (8) (36)
Earnings/(loss) from discontinued operations $ (1) $(7)$55
(1) Primarily reflects subsequent changes in certain estimates made at the time of the
Spin-Off.
(2) Reflects the results of Martindale through the date of the sale, the results of CareFusion
through August 31, 2009, the date the Spin-Off was completed and subsequent
changes in certain estimates made at the time of the Spin-Off.
During the third quarter of fiscal 2010, we completed the sale of
SpecialtyScripts and it met the criteria for classification as held for sale in
our financial statements. The results of SpecialtyScripts are reported
within earnings from continuing operations in the consolidated statements
of earnings through the date of sale because it did not satisfy the criteria
for classification as discontinued operations.
6. Goodwill and Other Intangible Assets
Goodwill
The following table summarizes the changes in the carrying amount of
goodwill, in total and by segment, during fiscal 2012 and 2011. The
increase in the Pharmaceutical segment in fiscal 2011 is primarily due to
the acquisition of Kinray, Cardinal Health China and P4 Healthcare.
Goodwill recognized in connection with these acquisitions primarily
represents the expected benefit from synergies of integrating these
businesses as well as the existing workforce of the acquired entities. See
Note 2 for further discussion of these acquisitions.
(in millions) Pharmaceutical Medical Total
Balance at June 30, 2010 $ 1,248 $ 957 $ 2,205
Goodwill acquired, net of purchase price
adjustments 1,599 33 1,632
Foreign currency translation adjustments and other 639
Balance at June 30, 2011 2,853 993 3,846
Goodwill acquired, net of purchase price
adjustments 16 114 130
Foreign currency translation adjustments and other 7(5)2
Balance at June 30, 2012 $ 2,876 $ 1,102 $ 3,978
Other Intangible Assets
Intangible assets with definite lives are amortized over their useful lives,
which range from two to twenty years. The following table summarizes
other intangible assets by class as of June 30, 2012. The decrease in
indefinite life intangible assets during fiscal 2012 is primarily due to the
write-off of the P4 Healthcare trade name. See Note 4 for further discussion
of this write-off.
(in millions) Gross
Intangible
Accumulated
Amortization
Net
Intangible
Indefinite life intangibles:
Trademarks $17$ —$17
Total indefinite life intangibles 17 — 17
Definite life intangibles:
Customer relationships 473 141 332
Trademarks and patents 45 36 9
Non-compete agreements 14 8 6
Other 93 43 50
Total definite life intangibles 625 228 397
Total intangibles $ 642 $ 228 $ 414
The following table summarizes other intangible assets by class as of
June 30, 2011:
(in millions) Gross
Intangible
Accumulated
Amortization
Net
Intangible
Indefinite life intangibles:
Trademarks $ 27 $ — $ 27
Total indefinite life intangibles 27 — 27
Definite life intangibles:
Customer relationships 393 89 304
Trademarks and patents 43 25 18
Non-compete agreements 14 6 8
Other 86 30 56
Total definite life intangibles 536 150 386
Total intangibles $ 563 $ 150 $ 413
The following table summarizes amortization during fiscal 2012, 2011 and
2010:
(in millions) 2012 2011 2010
Amortization of acquisition-related intangible assets $78$67$10
Amortization of other intangible assets 111
Total amortization of intangible assets $ 79 $68$11
Estimated annual amortization of intangible assets is as follows: $77
million, $67 million, $51 million, $43 million and $35 million for fiscal 2013
through 2017.
7. Long-Term Obligations and Other Short-Term
Borrowings
The following table summarizes long-term obligations and other short-
term borrowings as of June 30, 2012 and 2011:
(in millions) 2012 2011
1.900% Notes due 2017 $ 250 $—
3.200% Notes due 2022 250 —
4.00% Notes due 2015 536 537
4.625% Notes due 2020 538 500
5.50% Notes due 2013 304 307
5.65% Notes due 2012 —212
5.80% Notes due 2016 305 307
5.85% Notes due 2017 160 158
6.00% Notes due 2017 206 210
7.00% Debentures due 2026 125 124
7.80% Debentures due 2016 37 37
Other obligations 183 110
Total 2,894 2,502
Less: current portion and other short-term borrowings 476 327
Long-term obligations, less current portion $ 2,418 $ 2,175
Maturities of long-term obligations and other short-term borrowings are
as follows: $476 million, $1 million, $526 million, $21 million, $792 million
for fiscal 2013 through 2017, and $1,078 million thereafter.
Long-Term Debt
The 1.900%, 3.200%, 4.00%, 4.625%, 5.50%, 5.80%, 5.85%, and
6.00% Notes represent unsecured obligations. The 7.00% and
7.80% Debentures represent unsecured obligations of Allegiance
Corporation (a wholly-owned subsidiary), which Cardinal Health, Inc. has
guaranteed. None of these obligations are subject to a sinking fund and
the Allegiance obligations are not redeemable prior to maturity. Interest is
paid pursuant to the terms of the obligations. These notes are effectively