Cardinal Health 2013 Annual Report Download - page 49

Cardinal Health, Inc. and Subsidiaries
Notes to Consolidated Financial Statements
47
Accumulated Other Comprehensive Income
The following table summarizes the balance in AOCI by component at
June 30:
(in millions) 2013 2012 2011
Foreign currency translation adjustments $ 54 $ 37 $ 71
Unrealized gain on derivatives, net of tax 14 — 6
Total $ 68 $ 37 $ 77
13. Earnings Per Share
The following table reconciles the number of common shares used to
compute basic and diluted EPS:
(in millions) 2013 2012 2011
Weighted-average common shares–basic 341 345 349
Effect of dilutive securities:
Employee stock options, restricted shares, restricted
share units and performance share units 34 4
Weighted-average common shares–diluted 344 349 353
The potentially dilutive employee stock options, restricted shares,
restricted share units and performance share units that were antidilutive
for fiscal 2013, 2012 and 2011 were 9 million, 10 million and 11 million,
respectively.
14. Segment Information
Our operations are principally managed on a products and services basis
and are comprised of two operating segments, which are the same as our
reportable segments: Pharmaceutical and Medical. The factors for
determining the reportable segments include the manner in which
management evaluates our performance combined with the nature of the
individual business activities.
The Pharmaceutical segment distributes branded and generic
pharmaceutical, specialty pharmaceutical, over-the-counter healthcare
and consumer products. This segment also operates nuclear pharmacies
and cyclotron facilities, provides pharmacy services to hospitals and other
healthcare facilities, and provides services to healthcare companies
supporting the marketing, distribution and payment for specialty
pharmaceutical products. Through our Cardinal Health China division, this
segment imports and distributes pharmaceuticals, over-the-counter and
consumer products as well as provides services in China.
The Medical segment distributes a broad range of medical, surgical and
laboratory products to hospitals, ambulatory surgery centers, clinical
laboratories, physician offices and other healthcare providers in the United
States, Canada and China and to patients in the home in the United States.
This segment also manufactures, sources and develops its own line of
private brand medical and surgical products. Our medical and surgical
products are sold directly or through third-party distributors in the United
States, Canada, Europe, South America and the Asia/Pacific region. The
results of AssuraMed, which we acquired on March 18, 2013, are included
in our Medical segment from the date of the acquisition. See Note 2 for
further discussion of this acquisition.
The following table presents revenue for each reportable segment and
reconciling items necessary to agree to amounts reported in the
consolidated statements of earnings:
(in millions) 2013 2012 2011
Pharmaceutical $ 91,097 $ 97,925 $ 93,744
Medical 10,060 9,642 8,922
Total segment revenue 101,157 107,567 102,666
Corporate (1) (64) (15) (22)
Total revenue $ 101,093 $ 107,552 $ 102,644
(1) Corporate revenue consists of the elimination of inter-segment revenue.
We evaluate segment performance based upon segment profit, among
other measures. Segment profit is segment revenue, less segment cost
of products sold, less segment SG&A expenses. Segment SG&A
expenses includes share-based compensation expense as well as
allocated corporate expenses for shared functions, including corporate
management, corporate finance, financial and customer care shared
services, human resources, information technology and legal. Corporate
expenses are allocated to the segments based upon headcount, level of
benefit provided and ratable allocation. Interest income and expense and
income taxes are not allocated to the segment level.
Restructuring and employee severance, acquisition-related costs,
impairments and loss on disposal of assets and litigation (recoveries)/
charges, net are not allocated to the segments. See Notes 1, 2, 3, 4 and
8 for further information about these items. In addition, certain investment
and other spending are not allocated to the segments. Investment
spending generally includes the first year spend for certain projects that
require incremental 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 $37 million, $21 million and $14 million for
fiscal 2013, 2012 and 2011, respectively.
The following table presents segment profit by reportable segment and
reconciling items necessary to agree to amounts reported in the
consolidated statements of earnings:
(in millions) 2013 2012 2011
Pharmaceutical $ 1,734 $ 1,558 $ 1,329
Medical 372 332 373
Total segment profit 2,106 1,890 1,702
Corporate (1,110) (98) (188)
Total operating earnings $ 996 $ 1,792 $ 1,514