Cardinal Health 2012 Annual Report Download - page 45

Cardinal Health, Inc. and Subsidiaries
Notes to Consolidated Financial Statements
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Restructuring and employee severance, acquisition-related costs,
impairments and loss on disposal of assets, litigation (recoveries)/
charges, net, certain investment and other spending are not allocated to
the segments. See Notes 2, 3, 4 and 9, respectively for further discussion
of our acquisition-related costs, restructuring and employee severance,
impairments and loss on disposal of assets and litigation (recoveries)/
charges, net and Note 1 for a discussion of the reclassification of
amortization of acquisition-related intangible assets. Investment spending
generally includes the first year spend for certain projects that require
incremental strategic investments in the form of additional operating
expenses. We encourage our segments to identify investment projects
that will promote innovation and provide future returns. As approval
decisions for such projects are dependent upon executive management,
the expenses for such projects are often retained at Corporate. Investment
spending within Corporate was $21 million, $14 million and $26 million for
fiscal 2012, 2011 and 2010, respectively. Spin-Off costs included in SG&A
expenses of $2 million, $10 million and $11 million for fiscal 2012, 2011
and 2010, respectively, are not allocated to our segments.
The following table includes segment profit by reportable segment and
reconciling items necessary to agree to amounts reported in the
consolidated financial statements:
(in millions) 2012 2011 2010
Pharmaceutical $ 1,558 $ 1,329 $ 1,011
Medical 332 373 429
Total segment profit 1,890 1,702 1,440
Corporate (98) (188) (133)
Total consolidated operating earnings $ 1,792 $ 1,514 $ 1,307
The following tables include depreciation and amortization and capital
expenditures for fiscal 2012, 2011 and 2010 for each segment:
(in millions) 2012 2011 2010
Pharmaceutical $42$42$41
Medical 72 62 63
Corporate 211 209 150
Total depreciation and amortization $ 325 $ 313 $ 254
(in millions) 2012 2011 2010
Pharmaceutical $44$55$33
Medical 100 123 81
Corporate 119 113 146
Total capital expenditures $ 263 $ 291 $ 260
The following table includes total assets at June 30, 2012, 2011 and 2010
for each segment as well as reconciling items necessary to total the
amounts reported in the consolidated financial statements:
(in millions) 2012 2011 2010
Pharmaceutical $ 16,642 $ 16,126 $ 12,103
Medical 4,399 3,895 3,868
Corporate 3,219 2,825 4,019
Total consolidated assets $ 24,260 $ 22,846 $ 19,990
The following tables present revenue and net property and equipment for
fiscal 2012, 2011 and 2010 by geographic area:
(in millions) 2012 2011 2010
United States $ 105,205 $ 101,080 $ 97,663
International 2,347 1,564 840
Total consolidated revenue $ 107,552 $ 102,644 $ 98,503
(in millions) 2012 2011 2010
United States $ 1,425 $ 1,398 $ 1,355
International 126 114 114
Total consolidated property and
equipment, net $ 1,551 $ 1,512 $ 1,469
16. Share-Based Compensation and Savings Plans
Share-Based Compensation Plans
We maintain stock incentive plans (collectively, the “Plans”) for the benefit
of certain of our officers, directors and employees. At June 30, 2012, 42
million shares remain available for future issuances under the Plans. This
amount includes 33 million shares available under the Cardinal Health,
Inc. 2011 Long-Term Incentive Plan (“2011 LTIP”), 1 million shares
available under the Cardinal Health, Inc. 2007 Nonemployee Directors
Equity Incentive Plan and 8 million shares available under our employee
stock purchase plans which were indefinitely suspended in May 2009. The
number of shares authorized for issuance under the 2011 LTIP will
increase by shares that are not issued under outstanding equity awards.
The 2011 LTIP contains fungible share counting provisions. Under these
provisions, stock options are counted against the plan as one share for
every share issued; awards other than stock options are counted against
the plan as two and one-half shares for every share issued. This means
that only 13 million shares could be issued under awards other than stock
options while 33 million shares could be issued under stock options.
The following table provides total share-based compensation expense
from continuing operations by type of award for fiscal 2012, 2011 and
2010:
(in millions) 2012 2011 2010 (1)
Restricted share and share unit expense $55$52$ 57
Employee stock option expense 25 26 41
Performance share unit expense 6——
Employee stock purchase plan expense ——1
Stock appreciation right (income)/expense (1) 21
Total share-based compensation expense from
continuing operations $85$ 80 $ 100
(1) Excludes share-based compensation expense charged to discontinued operations,
which was approximately $2 million, net of tax, during fiscal 2010. Share-based
compensation expense charged to restructuring and employee severance related to
the Spin-Off was approximately $10 million, net of tax, during fiscal 2010.
The total tax benefit from continuing operations related to share-based
compensation was $31 million, $29 million and $36 million for fiscal 2012,
2011 and 2010, respectively.
Stock Options
Employee stock options granted under the Plans generally vest in equal
annual installments over three years and are exercisable for periods