Cardinal Health 2015 Annual Report Download - page 58

Notes to Financial Statements
57 Cardinal Health | Fiscal 2015 Form 10-K
We completed our annual goodwill impairment test for fiscal 2013,
which we perform annually in the fourth quarter, in conjunction with
the preparation of our fiscal 2013 consolidated financial statements.
Using a combination of the income-based approach (using a discount
rate of 10 percent) and the market-based approach, the fair value of
this reporting unit was estimated to be below the carrying amount
and therefore indicated impairment. The second step of the
impairment test resulted in the impairment of the entire $829
million carrying amount of goodwill for this reporting unit. Our fair
value estimates utilize significant unobservable inputs and thus
represent Level 3 fair value measurements. This impairment charge
did not impact our liquidity, cash flows from operations, or compliance
with debt covenants.
We also recognized an $8 million loss during fiscal 2013 to write down
commercial software under development within our Pharmaceutical
segment in connection with our decision to discontinue this project.
5. Goodwill and Other Intangible Assets
Goodwill
The following table summarizes the changes in the carrying amount
of goodwill, by segment and in total:
(in millions) Pharmaceutical (1) Medical Total
Balance at June 30, 2013 $ 2,094 $ 2,507 $ 4,601
Goodwill acquired, net of purchase
price adjustments $ 68 $ 216 $ 284
Foreign currency translation
adjustments and other $ (4) $ (3) $ (7)
Balance at June 30, 2014 $ 2,158 $ 2,720 $ 4,878
Goodwill acquired, net of purchase
price adjustments 41 179 220
Foreign currency translation
adjustments and other — (28) (28)
Balance at June 30, 2015 $ 2,199 $ 2,871 $ 5,070
(1) At June 30, 2015, 2014 and 2013 the accumulated goodwill impairment loss
was $829 million.
The increase in the Medical segment goodwill during fiscal 2014 was
primarily due to the AccessClosure acquisition. Goodwill recognized
in connection with this acquisition primarily represents the expected
benefits from synergies of integrating this business, the existing
workforce of the acquired entity, expected growth from new
customers and new products, and improvements to existing
technologies. See Note 2 for further discussion of this acquisition.
Other Intangible Assets
Other intangible assets are amortized over periods ranging from one
to twenty years. The following tables summarize other intangible
assets by class at June 30:
2015
(in millions) Gross Intangible Accumulated Amortization Net Intangible
Indefinite-life intangibles:
Trademarks and other $ 14 $ — $ 14
Total indefinite-life intangibles 14 — 14
Definite-life intangibles:
Customer relationships 1,103 501 602
Trademarks, trade names and
patents 237 91 146
Developed technology and other 320 134 186
Total definite-life intangibles 1,660 726 934
Total other intangible assets $ 1,674 $ 726 $ 948
2014
(in millions) Gross Intangible Accumulated Amortization Net Intangible
Indefinite-life intangibles:
Trademarks and other $ 14 $ — $ 14
Total indefinite-life intangibles 14 — 14
Definite-life intangibles:
Customer relationships 1,043 388 655
Trademarks, trade names and
patents 213 69 144
Developed technology and other 258 79 179
Total definite-life intangibles 1,514 536 978
Total other intangible assets $ 1,528 $ 536 $ 992
Total amortization of intangible assets was $191 million, $188 million
and $121 million for fiscal 2015, 2014 and 2013, respectively. For
acquisitions that have closed on or before June 30, 2015, estimated
annual amortization of intangible assets for the remainder of fiscal
2016 through 2020 is as follows: $194 million, $184 million, $136
million, $88 million and $79 million. These estimates do not include
amortization of intangibles relating to the Harvard Drug and Cordis
acquisitions, which may be significant.
6. Available-for-Sale Securities
During fiscal 2015 and 2014, we purchased marketable securities,
which are classified as available-for-sale and are carried at fair value
in the consolidated balance sheets. We held the following
investments in marketable securities at fair value at June 30: