Cardinal Health 2015 Annual Report Download - page 15

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MD&A Results of Operations
Cardinal Health | Fiscal 2015 Form 10-K 14
Other Components of Consolidated Operating Earnings
In addition to revenue, gross margin and SG&A expenses discussed previously, consolidated operating earnings were impacted by the following:
(in millions) 2015 2014 2013
Restructuring and employee severance $ 44 $ 31 $ 71
Amortization and other acquisition-related costs 281 223 158
Impairments and (gain)/loss on disposal of assets, net (19) 15 859
Litigation (recoveries)/charges, net 5(21) (38)
Restructuring and Employee Severance
The majority of restructuring and employee severance incurred during
fiscal 2015, 2014 and 2013 were related to activities within our Medical
segment.
Amortization and Other Acquisition-Related Costs
Amortization of acquisition-related intangible assets was $189 million,
$187 million and $118 million for fiscal 2015, 2014 and 2013,
respectively. During 2015, amortization and other acquisition-related
costs included $44 million of transaction and integration costs
associated with the pending acquisition of Cordis. We anticipate a
significant increase in amortization of acquisition-related intangible
assets in fiscal 2016 as a result of the Harvard Drug and Cordis
acquisitions and in other acquisition-related costs due to the size and
complexity of the Cordis integration.
Impairments and (Gain)/Loss on Disposal of Assets
During fiscal 2013, we recognized an $829 million ($799 million, net
of tax) goodwill impairment charge related to our Nuclear Pharmacy
Services division, as discussed further in Note 4 of the "Notes to
Consolidated Financial Statements".
Litigation (Recoveries)/Charges, Net
During fiscal 2015, we incurred litigation charges of $41 million related
to the DEA investigation and related matters and $27 million related
to the FTC investigation and we recognized litigation recoveries of
$71 million, primarily consisting of settlements of class action antitrust
claims in which we were a class member. These matters are discussed
further in Note 9 of the "Notes to Consolidated Financial Statements."
We recognized litigation recoveries resulting from settlements of class
action antitrust claims of $24 million and $38 million during 2014 and
2013, respectively.
Earnings Before Income Taxes and Discontinued Operations
In addition to the items discussed above, earnings before income taxes and discontinued operations were impacted by the following:
Earnings Before Income Taxes
and Discontinued Operations Change
(in millions) 2015 2014 2013 2015 2014
Other income, net $ (7) $ (46) $ (15) N.M. N.M.
Interest expense, net 141 133 123 6% 8%
Loss on extinguishment of debt 60 — — N.M. N.M
Other Income, Net
Other income, net for fiscal 2014 included a $32 million pre-tax gain
related to the sale of our minority interest in two investments.
Interest Expense, Net
We expect interest expense to increase in fiscal 2016 as a result of
the additional $1.5 billion of debt issued to fund the Harvard Drug
acquisition and pending Cordis acquisition.
Loss on Extinguishment of Debt
In December 2014, we redeemed certain debt resulting in a loss on
the extinguishment of debt of $60 million ($37 million, net of tax). See
Note 7 of "Notes to Consolidated Financial Statements" for additional
information.