Cardinal Health 2014 Annual Report Download - page 49

Cardinal Health, Inc. and Subsidiaries
Notes to Consolidated Financial Statements
47
The following tables present revenue and property and
equipment, net by geographic area:
(in millions) 2014 2013 2012
United States $ 87,449 $ 97,994 $ 105,205
International 3,635 3,099 2,347
Total revenue $ 91,084 $ 101,093 $ 107,552
(in millions) 2014 2013 2012
United States $ 1,301 $ 1,355 $ 1,425
International 158 134 126
Property and equipment, net $ 1,459 $ 1,489 $ 1,551
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, 2014, 26 million shares remain available for future
issuances under the Cardinal Health, Inc. 2011 Long-Term
Incentive Plan (“2011 LTIP”). Under the 2011 LTIP's fungible
share counting 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 10 million
shares could be issued under awards other than stock options
while 26 million shares could be issued under stock options.
Shares are issued out of treasury shares when stock options
are exercised and when restricted share units and performance
share units vest.
The following table provides total share-based compensation
expense by type of award:
(in millions) 2014 2013 2012
Restricted shares and share
unit expense $ 62 $ 60 $ 55
Employee stock option expense 21 23 25
Performance share unit
expense 13 10 6
Stock appreciation right income —— (1)
Total share-based
compensation $ 96 $ 93 $ 85
The total tax benefit related to share-based compensation was
$33 million, $32 million and $31 million for fiscal 2014, 2013 and
2012, respectively.
Stock Options
Employee stock options granted under the Plans generally vest
in equal annual installments over three years and are
exercisable for periods ranging from seven to ten years from
the grant date. All stock options are exercisable at a price equal
to the market value of the common shares underlying the option
on the grant date.
The following table summarizes all stock option transactions
under the Plans:
(in millions, except per share amounts)
Stock
Options
Weighted-Average
Exercise Price per
Common Share
Outstanding at June 30, 2012 21 $ 37.29
Granted 3 39.81
Exercised (6) 33.19
Canceled and forfeited (3) 46.91
Outstanding at June 30, 2013 15 $ 36.97
Granted 2 51.77
Exercised (7) 38.29
Canceled and forfeited — —
Outstanding at June 30, 2014 10 $ 39.16
Exercisable at June 30, 2014 5 $ 33.62
The following tables provide additional data related to stock
option activity:
(in millions, except per share amounts) 2014 2013 2012
Aggregate intrinsic value of outstanding
options at period end $ 282 $ 156 $ 137
Aggregate intrinsic value of exercisable
options at period end 185 113 84
Aggregate intrinsic value of exercised options 155 64 27
Cash received upon exercise 227 121 42
Cash tax proceeds/(disbursements) realized
related to exercise 39 (19) (4)
Total compensation cost, net of estimated
forfeitures, related to unvested stock options
not yet recognized, pre-tax 24 22 25
Total fair value of shares vested during the
year 20 28 26
Weighted-average grant date fair value per
stock option 10.32 8.15 9.26
(in years) 2014 2013 2012
Weighted-average remaining contractual life
of outstanding options 64 3
Weighted-average remaining contractual life
of exercisable options 43 2
Weighted-average period over which stock
option compensation cost is expected to be
recognized 22 2
Stock options are granted to our officers and certain employees.
The fair values were estimated on the grant date using a lattice
valuation model. We believe the lattice model provides
reasonable estimates because it has the ability to take into
account individual exercise patterns based on changes in our
stock price and other variables, and it provides for a range of
input assumptions, which are disclosed in the table below. The
risk-free rate is based on the U.S. Treasury yield curve at the
time of the grant. We analyzed historical data to estimate option
exercise behaviors and employee terminations to be used within
the lattice model. The expected life of the options granted was
calculated from the option valuation model and represents the