Cardinal Health 2015 Annual Report Download - page 68

Notes to Financial Statements
67 Cardinal Health | Fiscal 2015 Form 10-K
(in millions)
Foreign
Currency
Translation
Adjustments
Unrealized
Gain/(Loss)
on
Derivatives,
net of tax
Accumulated
Other
Comprehensive
Income/(Loss)
Balance at June 30, 2013 $ 54 $ 14 $ 68
Other comprehensive income/
(loss), net of tax before
reclassifications 9 $ (10) (1)
Amounts reclassified to
earnings — 3 3
Total other comprehensive
income/(loss), net of tax of $5
million 9 $ (7) 2
Balance at June 30, 2014 $ 63 $ 7 $ 70
Other comprehensive income/
(loss), net of tax before
reclassifications (104) 9 (95)
Amounts reclassified to
earnings — 2 2
Total other comprehensive
income/(loss), net of tax of
$7 million (104) 11 (93)
Balance at June 30, 2015 $ (41) $ 18 $ (23)
Activity related to realized and unrealized gains and losses on
available-for-sale securities as described in Note 6, was immaterial
during fiscal 2015 and 2014.
14. Earnings Per Share
The following table reconciles the number of common shares used
to compute basic and diluted earnings per share:
(in millions) 2015 2014 2013
Weighted-average common shares–basic 332 341 341
Effect of dilutive securities:
Employee stock options, restricted share units
and performance share units 34 3
Weighted-average common shares–
diluted 335 345 344
The potentially dilutive employee stock options, restricted share units
and performance share units that were antidilutive for fiscal 2015,
2014 and 2013 were 1 million, zero and 9 million, respectively.
15. 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 performance for purposes of
allocating resources and assessing 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 in the United States. This
segment also operates nuclear pharmacies and cyclotron facilities,
provides pharmacy operations, medication therapy management and
patient outcomes services to hospitals and other healthcare
providers, provides services to healthcare companies supporting the
marketing, distribution and payment for specialty pharmaceutical
products and manufactures and repackages generic
pharmaceuticals and over-the-counter healthcare products. This
segment also imports and distributes pharmaceuticals, over-the-
counter healthcare and consumer products as well as provides
specialty pharmacy and other services in China.
The Medical segment distributes a broad range of medical, surgical
and laboratory products and provides services to hospitals,
ambulatory surgery centers, clinical laboratories 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 our own Cardinal Health brand
medical and surgical products, which are sold directly or through
third-party distributors in the United States, Canada, Europe and
other regions internationally.
The following tables present revenue for each reportable segment
and Corporate:
(in millions) 2015 2014 2013
Pharmaceutical (1) $ 91,116 $ 80,110 $ 91,097
Medical 11,395 10,962 10,060
Total segment revenue 102,511 91,072 101,157
Corporate (2) 20 12 (64)
Total revenue $ 102,531 $ 91,084 $ 101,093
(1) Our pharmaceutical distribution contract with Walgreen Co. expired on
August 31, 2013.
(2) Corporate revenue consists of the elimination of inter-segment revenue and
other revenue not allocated to the segments.
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 include 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 and compliance. Corporate
expenses are allocated to the segments based upon headcount, level
of benefit provided and other ratable allocation methodologies.
We do not allocate the following items to our segments: LIFO
inventory charges/(credits); restructuring and employee severance;
amortization and other acquisition-related costs; impairments and
(gain)/loss on disposal of assets; litigation (recoveries)/charges, net;
other income, net; interest expense, net; loss on extinguishment of
debt; and provision for income taxes. We did not recognize any LIFO
charges or credits during fiscal 2015, 2014, or 2013. 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
and corporate functions to identify investment projects that will
promote innovation and provide future returns. As approval decisions
for such projects are dependent upon executive management, the