-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, FcdJxXDGL9U3LdM3bGqkxYa3B1EkCU1U7IKkwDVS9FyrQU2h0uu1kMPvmlSuz3wh e0o4tD1JLqR6Fk+56wwI2w== 0001193125-10-023332.txt : 20100205 0001193125-10-023332.hdr.sgml : 20100205 20100205160050 ACCESSION NUMBER: 0001193125-10-023332 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 16 CONFORMED PERIOD OF REPORT: 20091231 FILED AS OF DATE: 20100205 DATE AS OF CHANGE: 20100205 FILER: COMPANY DATA: COMPANY CONFORMED NAME: CARDINAL HEALTH INC CENTRAL INDEX KEY: 0000721371 STANDARD INDUSTRIAL CLASSIFICATION: WHOLESALE-DRUGS PROPRIETARIES & DRUGGISTS' SUNDRIES [5122] IRS NUMBER: 310958666 STATE OF INCORPORATION: OH FISCAL YEAR END: 0630 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 001-11373 FILM NUMBER: 10577457 BUSINESS ADDRESS: STREET 1: 7000 CARDINAL PLACE CITY: DUBLIN STATE: OH ZIP: 43017 BUSINESS PHONE: 6147573033 MAIL ADDRESS: STREET 1: 7000 CARDINAL PLACE CITY: DUBLIN STATE: OH ZIP: 43017 FORMER COMPANY: FORMER CONFORMED NAME: CARDINAL DISTRIBUTION INC DATE OF NAME CHANGE: 19920703 10-Q 1 d10q.htm QUARTERLY REPORT Quarterly Report
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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, DC 20549

 

 

Form 10-Q

 

 

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF

THE SECURITIES EXCHANGE ACT OF 1934

For the quarter ended December 31, 2009

Commission File Number 1-11373

 

 

LOGO

Cardinal Health, Inc.

(Exact name of registrant as specified in its charter)

 

 

 

Ohio   31-0958666

(State or other jurisdiction of

incorporation or organization)

 

(I.R.S. Employer

Identification No.)

7000 CARDINAL PLACE, DUBLIN, OHIO 43017

(Address of principal executive offices and zip code)

(614) 757-5000

(Registrant’s telephone number, including area code)

 

 

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes  x    No  ¨

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).    Yes  x    No  ¨

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

 

Large accelerated filer   x    Accelerated filer   ¨
Non-accelerated filer   ¨  (Do not check if a smaller reporting company)    Smaller reporting company   ¨

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    Yes  ¨    No  x

The number of Registrant’s Common Shares outstanding at the close of business on February 2, 2010 was as follows:

Common Shares, without par value:  361,459,464

 

 

 


Table of Contents

CARDINAL HEALTH, INC. AND SUBSIDIARIES

Index *

 

          Page No.

Part I.

  

Financial Information:

   3

Item 1.

  

Financial Statements:

   3
  

Condensed Consolidated Statements of Earnings for the Three and Six Months Ended December 31, 2009 and 2008 (unaudited)

   3
  

Condensed Consolidated Balance Sheets at December 31, 2009 (unaudited) and June 30, 2009

   4
  

Condensed Consolidated Statements of Cash Flows for the Six Months Ended December 31, 2009 and 2008 (unaudited)

   5
  

Notes to Condensed Consolidated Financial Statements

   6

Item 2.

  

Management’s Discussion and Analysis of Financial Condition and Results of Operations

   23

Item 3.

  

Quantitative and Qualitative Disclosures about Market Risk

   34

Item 4.

  

Controls and Procedures

   34

Part II.

  

Other Information:

   35

Item 1.

  

Legal Proceedings

   35

Item 1A.

  

Risk Factors

   35

Item 2.

  

Unregistered Sales of Equity Securities and Use of Proceeds

   35

Item 4.

  

Submission of Matters to a Vote of Security Holders

   36

Item 6.

  

Exhibits

   37

 

* Items not listed are inapplicable.

 

2


Table of Contents

PART I. FINANCIAL INFORMATION

Item 1: Financial Statements

CARDINAL HEALTH, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS

(Unaudited)

(in millions, except per Common Share amounts)

 

     Three Months Ended
December 31,
    Six Months Ended
December 31,
 
     2009     2008     2009     2008  

Revenue

   $ 24,919.7      $ 24,117.8      $ 49,700.4      $ 47,554.9   

Cost of products sold

     23,962.0        23,202.7        47,833.9        45,738.6   
                                

Gross margin

     957.7        915.1        1,866.5        1,816.3   

Operating expenses

        

Distribution, selling, general and administrative expenses

     605.2        578.5        1,191.3        1,168.8   

Restructuring and employee severance

     10.7        16.9        70.4        37.6   

Impairments and loss on sale of assets

     0.4        6.9        24.0        10.5   

Litigation (credits)/charges, net

     (25.4     (0.3     (25.9     (0.3
                                

Operating earnings

     366.8        313.1        606.7        599.7   

Other (income)/expense, net

     (25.6     19.7        (34.5     22.2   

Interest expense, net

     27.4        22.2        61.3        51.4   

Loss on extinguishment of debt

     —          —          39.9        —     
                                

Earnings before income taxes and discontinued operations

     365.0        271.2        540.0        526.1   

Provision for income taxes

     134.8        102.2        371.6        184.9   
                                

Earnings from continuing operations

     230.2        169.0        168.4        341.2   

Earnings from discontinued operations (net of tax expense of $2.4 and $56.7, respectively, for the three months ended December 31, 2009 and 2008 and $28.4 and $88.7, respectively, for the six months ended December 31, 2009 and 2008)

     4.3        147.5        27.9        224.4   
                                

Net earnings

   $ 234.5      $ 316.5      $ 196.3      $ 565.6   
                                

Basic earnings per Common Share:

        

Continuing operations

   $ 0.64      $ 0.48      $ 0.47      $ 0.96   

Discontinued operations

     0.01        0.41        0.08        0.62   
                                

Net basic earnings per Common Share

   $ 0.65      $ 0.89      $ 0.55      $ 1.58   
                                

Diluted earnings per Common Share:

        

Continuing operations

   $ 0.64      $ 0.47      $ 0.47      $ 0.95   

Discontinued operations

     0.01        0.41        0.07        0.62   
                                

Net diluted earnings per Common Share

   $ 0.65      $ 0.88      $ 0.54      $ 1.57   
                                

Weighted average number of Common Shares outstanding:

        

Basic

     359.0        357.3        359.1        357.0   

Diluted

     361.0        360.3        361.1        361.2   

Cash dividends declared per Common Share

   $ 0.175      $ 0.140      $ 0.350      $ 0.280   

See notes to condensed consolidated financial statements.

 

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CARDINAL HEALTH, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(in millions)

 

     December 31,
2009
    June 30,
2009
 
     (Unaudited)        

ASSETS

    

Current assets:

    

Cash and equivalents

   $ 1,746.8      $ 1,221.6   

Trade receivables, net

     4,927.5        5,214.9   

Inventories

     7,961.0        6,832.8   

Prepaid expenses and other

     674.1        523.0   

Assets from businesses held for sale and discontinued operations

     148.9        7,189.4   
                

Total current assets

     15,458.3        20,981.7   
                

Property and equipment, at cost

     3,105.9        3,139.6   

Accumulated depreciation and amortization

     (1,682.7     (1,675.1
                

Property and equipment, net

     1,423.2        1,464.5   

Other assets:

    

Investment in CareFusion

     897.4        —     

Goodwill and other intangibles, net

     2,294.7        2,266.9   

Other

     747.9        405.7   
                

Total assets

   $ 20,821.5      $ 25,118.8   
                

LIABILITIES AND SHAREHOLDERS’ EQUITY

    

Current liabilities:

    

Current portion of long-term obligations and other short-term borrowings

   $ 12.7      $ 366.2   

Accounts payable

     10,543.1        9,041.9   

Other accrued liabilities

     1,609.9        1,496.2   

Liabilities from businesses held for sale and discontinued operations

     37.3        1,370.9   
                

Total current liabilities

     12,203.0        12,275.2   
                

Long-term obligations, less current portion and other short-term borrowings

     2,099.2        3,271.6   

Deferred income taxes and other liabilities

     1,293.2        847.3   

Shareholders’ equity:

    

Preferred Shares, without par value: Authorized – 0.5 million shares, Issued – none

     —          —     

Common Shares, without par value: Authorized – 755.0 million shares, Issued – 363.6 million shares and 363.7 million shares at December 31, 2009 and June 30, 2009, respectively

     2,893.0        3,031.6   

Retained earnings

     2,306.5        5,953.9   

Common Shares in treasury, at cost, 2.3 million shares and 3.7 million shares at December 31, 2009 and June 30, 2009, respectively

     (173.8     (343.0

Accumulated other comprehensive income

     200.4        82.2   
                

Total shareholders’ equity

     5,226.1        8,724.7   
                

Total liabilities and shareholders’ equity

   $ 20,821.5      $ 25,118.8   
                

See notes to condensed consolidated financial statements.

 

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CARDINAL HEALTH, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

(in millions)

 

     Six Months Ended
December 31,
 
     2009     2008  

CASH FLOWS FROM OPERATING ACTIVITIES:

    

Net earnings

   $ 196.3      $ 565.6   

Earnings from discontinued operations

     (27.9     (224.4
                

Earnings from continuing operations

     168.4        341.2   

Adjustments to reconcile earnings from continuing operations to net cash provided by operating activities:

    

Depreciation and amortization

     125.8        116.1   

Loss on extinguishment of debt

     39.9        —     

Gain on sale of CareFusion common stock

     (20.0     —     

Impairments and loss on sale of assets

     24.0        10.5   

Share based payment compensation

     42.1        50.2   

Provision for bad debts

     21.4        21.8   

Change in operating assets and liabilities, net of effects from acquisitions:

    

Decrease/(increase) in trade receivables

     269.2        (238.6

Increase in inventories

     (1,127.2     (1,820.3

Increase in accounts payable

     1,499.2        1,299.1   

Other accrued liabilities and operating items, net

     (259.0     (286.4
                

Net cash provided by/(used in) operating activities – continuing operations

     783.8        (506.4

Net cash provided by operating activities – discontinued operations

     146.8        717.6   
                

Net cash provided by operating activities

     930.6        211.2   
                

CASH FLOWS FROM INVESTING ACTIVITIES:

    

Acquisition of subsidiaries, net of divestitures and cash acquired

     (32.0     (6.2

Proceeds from sale of property and equipment

     4.3        12.3   

Additions to property and equipment

     (79.9     (130.5

Proceeds from sale of CareFusion common stock

     135.0        —     
                

Net cash provided by/(used in) investing activities – continuing operations

     27.4        (124.4

Net cash used in investing activities – discontinued operations

     (9.9     (51.7
                

Net cash provided by/(used in) investing activities

     17.5        (176.1
                

CASH FLOWS FROM FINANCING ACTIVITIES:

    

Net change in commercial paper and short-term borrowings

     —          101.1   

Reduction of long-term obligations

     (1,484.9     (304.5

Proceeds from long-term obligations, net of issuance costs

     —          21.4   

Proceeds from issuance of Common Shares

     27.9        20.7   

Tax (expense)/benefit from stock options

     (6.1     2.3   

Payment of premiums for debt extinguishment

     (66.4     —     

Dividends on Common Shares

     (127.2     (100.0

Purchase of treasury shares

     (50.0     —     
                

Net cash used in financing activities – continuing operations

     (1,706.7     (259.0

Net cash provided by/(used in) financing activities – discontinued operations

     1,283.8        (2.3
                

Net cash used in financing activities

     (422.9     (261.3
                

NET INCREASE/(DECREASE) IN CASH AND EQUIVALENTS

     525.2        (226.2

CASH AND EQUIVALENTS AT BEGINNING OF PERIOD

     1,221.6        808.8   
                

CASH AND EQUIVALENTS AT END OF PERIOD

   $ 1,746.8      $ 582.6   
                

SUPPLEMENTAL INFORMATION

    

Non-cash investing and financing transactions for:

    

Investment in CareFusion

     863.1        —     

Non-cash dividend in connection with Spin-Off

     3,728.4        —     

See notes to condensed consolidated financial statements.

 

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CARDINAL HEALTH, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Spin-Off of CareFusion Corporation

Effective August 31, 2009, Cardinal Health, Inc. (the “Company”) completed the distribution to its shareholders of approximately 81% of the then outstanding common stock of CareFusion Corporation (“CareFusion”), with the Company retaining 41.4 million shares of CareFusion common stock (the “Spin-Off”). Under the requirements of the Private Letter Ruling obtained from the Internal Revenue Service, the Company is required to dispose of the retained shares of CareFusion common stock within five years of the Spin-Off. During the second quarter of fiscal 2010, the Company disposed of approximately 5.5 million shares of CareFusion common stock. Refer to Note 6 for additional information. While Cardinal Health is a party to a separation agreement and various other agreements relating to the separation, including a transition services agreement, a tax matters agreement, an employee matters agreement, intellectual property agreements and certain other commercial agreements, the Company has determined that it has no significant continuing involvement in the operations of CareFusion. Accordingly, the net assets of CareFusion are presented separately in these condensed consolidated financial statements as assets from businesses held for sale and discontinued operations and the operating results of CareFusion are presented within discontinued operations for all periods presented through the date of the Spin-Off. The Company retained certain surgical and exam gloves, surgical drapes and apparel and fluid management businesses previously within the Clinical and Medical Products segment following the Spin-Off.

For fiscal 2009, the Company had three reportable segments — Healthcare Supply Chain Services, Clinical and Medical Products and All Other. Effective July 1, 2009, the Company changed its reportable segments to: Pharmaceutical, Medical and CareFusion. The Pharmaceutical segment encompasses the businesses previously within the Healthcare Supply Chain Services segment that distributed pharmaceutical, radiopharmaceutical and over-the-counter healthcare products as well as the businesses previously within the All Other segment. The Medical segment encompasses the remaining businesses within the Healthcare Supply Chain Services segment as well as certain surgical and exam gloves, surgical drapes and apparel and fluid management businesses previously within the Clinical and Medical Products segment. The CareFusion segment encompasses the businesses previously within the Clinical and Medical Products segment excluding the above-referenced surgical and exam gloves, surgical drapes and apparel and fluid management businesses and includes all businesses included in the Spin-Off.

In connection with the Spin-Off, the Company reorganized its reportable segments into two segments: Pharmaceutical and Medical. See Note 14 for information about these segments.

Relationship between the Company and CareFusion

On July 22, 2009, the Company and CareFusion entered into a separation agreement to effect the Spin-Off and provide a framework for the relationship between the Company and CareFusion after the Spin-Off. In addition, on August 31, 2009, the Company and CareFusion entered into a transition services agreement, a tax matters agreement, an employee matters agreement, intellectual property agreements and certain other commercial agreements. These agreements, including the separation agreement, provide for allocation between the Company and CareFusion of the Company’s assets, employees, liabilities and obligations (including its investments, property and employee benefits and tax-related assets and liabilities) attributable to periods prior to, at and after the Spin-Off and govern certain relationships between the Company and CareFusion after the Spin-Off. The Company and CareFusion also entered into a stockholder’s and registration rights agreement pursuant to which, among other things, CareFusion agrees that, upon the request of the Company, CareFusion will use its commercially reasonable efforts to effect the registration under applicable federal and state securities laws of any shares of CareFusion common stock retained by Cardinal Health.

Pursuant to the transition services agreement, for the three months ended December 31, 2009, the Company recognized approximately $42.5 million in transition service fee income which approximately offsets the costs associated with providing the transition services. The Company has recognized $55.2 million in transition service fee income year-to-date since the Spin-Off. Additionally, the Company purchased $167.2 million of CareFusion trade receivables pursuant to an accounts receivable factoring arrangement between the Company and CareFusion during the three months ended December 31, 2009. The Company has purchased $273.5 million of CareFusion trade receivables year-to-date since the Spin-Off.

Basis of Presentation

The condensed consolidated financial statements of the Company include the accounts of all majority-owned subsidiaries and all significant intercompany amounts have been eliminated. References to the “Company” or “Cardinal Health” in these condensed consolidated financial statements shall be deemed to be references to Cardinal Health, Inc. and its majority-owned subsidiaries unless the context otherwise requires.

 

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The condensed consolidated financial statements have been prepared in accordance with the U.S. Securities and Exchange Commission (“SEC”) instructions to Quarterly Reports on Form 10-Q and include all of the information and disclosures required by accounting principles generally accepted in the United States (“GAAP”) for interim financial reporting. The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect amounts reported in the condensed consolidated financial statements and accompanying notes. Actual amounts may differ from these estimated amounts. In addition, operating results presented for this fiscal 2010 interim period are not necessarily indicative of the results that may be expected for the full fiscal year ending June 30, 2010. Beginning in the first quarter of fiscal 2010, the Company changed the presentation of certain items on the condensed consolidated statements of earnings. Prior periods have been adjusted to conform with this new presentation. The Company has disclosed all material subsequent events through February 5, 2010, the date the financial statements were issued.

These condensed consolidated financial statements are unaudited and are presented pursuant to the rules and regulations of the SEC. Accordingly, the condensed consolidated financial statements included in this Quarterly Report on Form 10-Q (this “Form 10-Q”) should be read in conjunction with the audited consolidated financial statements and related notes contained in the Company’s Annual Report on Form 10-K for the fiscal year ended June 30, 2009, as updated by the Company’s Form 8-K filed on November 16, 2009 (“FY2009 Financial Statements”). Note 1 of the “Notes to Consolidated Financial Statements” from the FY2009 Financial Statements is specifically incorporated in this Form 10-Q by reference. In the opinion of management, all adjustments necessary for a fair presentation of the condensed consolidated financial statements have been included. Except as disclosed elsewhere in this Form 10-Q, all such adjustments are of a normal and recurring nature.

Revenue Recognition. The Company recognizes revenue when persuasive evidence of an arrangement exists, product delivery has occurred or the services have been rendered, the price is fixed or determinable and collectability is reasonably assured. Revenue is recognized net of sales returns and allowances.

Pharmaceutical. This segment recognizes distribution revenue when title transfers to its customers and the business has no further obligation to provide services related to such merchandise.

Revenue within this segment includes revenue from bulk customers. Most deliveries to bulk customers consist of product shipped in the same form as the product is received from the manufacturer. Bulk customers have the ability to process large quantities of products in central locations and self distribute these products to their individual retail stores or customers. Revenue from bulk customers is recorded when title transfers to the customer and the Company has no further obligation to provide services related to such merchandise.

Revenue for deliveries that are directly shipped to customer warehouses from the manufacturer whereby the Company acts as an intermediary in the ordering and delivery of products is recorded gross in accordance with accounting standards addressing reporting revenue on a gross basis as a principal versus on a net basis as an agent. This revenue is recorded on a gross basis since the Company incurs credit risk from the customer, bears the risk of loss for incomplete shipments and does not receive a separate fee or commission for the transaction and, as such, is the primary obligor.

Radiopharmaceutical revenue is recognized upon delivery of the product to the customer. Service-related revenue, including fees received for analytical services or sales and marketing services, is recognized upon the completion of such services.

Pharmacy management and other service revenue is recognized as the services are rendered according to the contracts established. A fee is charged under such contracts through a capitation fee, a dispensing fee, a monthly management fee or an actual costs-incurred arrangement. Under certain contracts, fees for services are guaranteed by the Company not to exceed stipulated amounts or have other risk-sharing provisions. Revenue is adjusted to reflect the estimated effects of such contractual guarantees and risk-sharing provisions.

Through its Medicine Shoppe International, Inc. and Medicap Pharmacies Incorporated franchise operations (collectively, “Medicine Shoppe”), the Company has apothecary-style pharmacy franchisees from which it earns franchise and origination fees. Franchise fees represent monthly fees that are either fixed or based upon franchisees’ sales and are recognized as revenue when they are earned. Origination fees from signing new franchise agreements are recognized as revenue when the new franchise store is opened.

Medical. This segment recognizes distribution revenue when title transfers to its customers and the business has no further obligation to provide services related to such merchandise. Revenue from the sale of medical products and supplies is recognized when title and risk of loss transfers to its customers, which is typically upon delivery.

Multiple Segments or Business Units. Arrangements involving multiple segments or business units containing no software or software which is incidental to the functionality of the product or service are accounted for as revenue arrangements with multiple deliverables. If the deliverable meets the criterion of a separate unit of accounting, the arrangement revenue is allocated to each element based upon its relative fair value and recognized in accordance with the applicable revenue recognition criteria for each element.

 

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Recent Financial Accounting Standards

In December 2007, the FASB issued new accounting guidance on the accounting and reporting for business combinations and minority interests in consolidated financial statements. This guidance is effective for fiscal years beginning after December 15, 2008. The adoption of this new accounting guidance in the first quarter of fiscal 2010 did not have a material impact on the Company’s financial position or results of operations; however, it may have an impact on the Company’s accounting and disclosure practices for future business combinations.

In June 2008, the FASB issued new accounting guidance addressing whether instruments granted in share-based payment transactions are participating securities prior to vesting and, therefore, need to be included in the computation of earnings per share. This guidance is effective for fiscal years beginning after December 15, 2008, and interim periods within those fiscal years. The adoption of this new accounting guidance in the first quarter of fiscal 2010 did not have a material impact on the Company’s financial position or results of operations.

In June 2009, the FASB issued new accounting guidance on the accounting for transfers of financial assets. This guidance improves the relevance, representational faithfulness and comparability of information provided about a transfer of financial assets, the effects of a transfer of financial assets on an entity’s financial statements, and a transferor’s continuing involvement, if any, in financial assets transferred. This guidance is effective for fiscal years beginning after November 15, 2009. The Company is in the process of determining the impact of adopting this new accounting guidance.

In June 2009, the FASB issued new accounting guidance regarding the consolidation of variable interest entities. This guidance improves the financial reporting by enterprises involved with variable interest entities. This guidance is effective for fiscal years beginning after November 15, 2009. The Company is in the process of determining the impact of adopting this new accounting guidance.

In June 2009, the FASB issued the Accounting Standards Codification (the “Codification”), which became the source of authoritative GAAP recognized by the FASB to be applied by nongovernmental entities effective July 1, 2009. Rules and interpretive releases of the SEC under authority of federal securities laws are also sources of authoritative GAAP for SEC registrants. Effective July 1, 2009, the Codification superseded all then-existing non-SEC accounting and reporting standards. The adoption of this new accounting guidance in the first quarter of fiscal 2010 did not have an impact on the Company’s financial position or results of operations. The Company has updated its disclosures in the notes to the financial statements to reflect the updated accounting guidance.

2. RESTRUCTURING AND EMPLOYEE SEVERANCE

Restructuring Policy

The Company classifies a restructuring activity as a program whereby the Company fundamentally changes its operations such as closing facilities, moving manufacturing of a product to another location or outsourcing the production of a product. Restructuring activities may also involve substantial re-alignment of the management structure of a business unit in response to changing market conditions. A liability for a cost associated with an exit or disposal activity is recognized and measured initially at its fair value in the period in which it is incurred except for a liability for a one-time termination benefit which is recognized over its future service period.

Restructuring and Employee Severance

Effective July 1, 2008, the Company consolidated its businesses into two primary operating and reportable segments to reduce costs and align resources with the needs of each segment. The costs incurred related to this consolidation during the three months ended December 31, 2008 were $(0.9) million and for the six months ended December 31, 2009 and 2008 were $1.0 million and $17.2 million, respectively. In connection with the Spin-Off, these reportable segments have since been reorganized. Refer to Notes 1 and 14 for additional information regarding the Company’s current reportable segments.

Also, during fiscal 2009 and the first half of fiscal 2010, the Company incurred restructuring expenses related to the Spin-Off consisting of employee-related costs, costs to evaluate and execute the transaction, costs to separate certain functions and information technology systems and other one-time transaction related costs. The costs incurred related to this restructuring during the three months ended December 31, 2009 and 2008 were $6.6 million and $12.7 million, respectively, and for the six months ended December 31, 2009 and 2008 were $56.1 million and $13.0 million, respectively.

In addition to the restructuring programs discussed above, from time to time the Company incurs costs to implement smaller restructuring efforts for specific operations within its segments. These restructuring plans focus on various aspects of operations, including closing and consolidating certain manufacturing and distribution operations, rationalizing headcount, and aligning operations in the most strategic and cost-efficient structure.

 

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The following table summarizes activity related to the Company’s restructuring and employee severance costs during the three and six months ended December 31, 2009 and 2008:

 

     Three Months Ended
December 31,
   Six Months Ended
December 31,

(in millions)

   2009    2008    2009    2008

Employee related costs (1)

   $ 2.1    $ 0.1    $ 29.2    $ 21.1

Facility exit and other costs (2)

     8.6      16.8      41.2      16.5
                           

Total restructuring and employee severance

   $ 10.7    $ 16.9    $ 70.4    $ 37.6
                           

 

(1) Employee-Related Costs. These costs primarily consist of one-time termination benefits provided to employees who have been involuntarily terminated and duplicate payroll costs during transition periods. In addition, during the six months ended December 31, 2009, the Company incurred $18.6 million of costs related to the retirement of its former Chairman and Chief Executive Officer upon completion of the Spin-Off.
(2) Facility Exit and Other CostsFacility exit and other costs consist of accelerated depreciation, equipment relocation costs, project consulting fees and costs associated with restructuring the Company’s delivery of information technology infrastructure services. In addition, facility exit and other costs include certain costs related to the Spin-Off such as costs to evaluate and execute the transaction, costs to separate certain functions and information technology systems and other one-time transaction related costs.

Restructuring and Employee Severance Accrual Rollforward

The following table summarizes activity related to liabilities associated with the Company’s restructuring and employee severance activities during the six months ended December 31, 2009:

 

(in millions)

   Employee Related
Costs
    Facility Exit and
Other Costs
    Total  

Balance at June 30, 2009 (1)

   $ 14.0      $ 17.2      $ 31.2   

Additions

     29.2        41.2        70.4   

Payments and other adjustments

     (25.8     (44.7     (70.5
                        

Balance at December 31, 2009 (1)

   $ 17.4      $ 13.7      $ 31.1   
                        

 

(1) Included within employee related costs are accruals of $6.3 million and $10.6 million at June 30, 2009 and December 31, 2009, respectively, related to the Spin-Off. Included within facility exit and other costs are accruals of $11.7 million and $5.9 million at June 30, 2009 and December 31, 2009, respectively, related to the Spin-Off.

3. IMPAIRMENTS AND LOSS ON SALE OF ASSETS

During the six months ended December 31, 2009, the Company recognized a $20.0 million impairment loss related to the write-down of SpecialtyScripts, LLC (“SpecialtyScripts”), a business within the Pharmaceutical segment, to expected fair value less costs to sell. See Note 4 for further information regarding the anticipated sale of SpecialtyScripts.

4. DISCONTINUED OPERATIONS AND ASSETS HELD FOR SALE

CareFusion

Effective August 31, 2009, the Company completed the distribution to its shareholders of approximately 81% of the then outstanding common stock of CareFusion, with the Company retaining 41.4 million shares of CareFusion common stock, and met the criteria for classification as discontinued operations in the Company’s financial statements. During the second quarter of fiscal 2010, the Company disposed of approximately 5.5 million shares of CareFusion common stock. The Company’s investment in CareFusion common stock does not provide the Company the ability to influence the operating or financial policies of CareFusion and accordingly does not constitute significant continuing involvement. Furthermore, while the Company is a party to a separation agreement and various other agreements relating to the separation, including a transition services agreement, a tax matters agreement, an employee matters agreement, intellectual property agreements and certain other commercial agreements, the Company has determined that the continuing cash flows generated by these agreements, which are expected to be eliminated within 5 years, and its investment in CareFusion common stock, do not constitute significant continuing involvement in the operations of CareFusion. Accordingly, the net assets of CareFusion are presented separately as discontinued operations and the operating results are presented within discontinued operations for all periods presented through the date of the Spin-Off.

 

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The results of CareFusion included in discontinued operations for the three and six months ended December 31, 2009 and 2008 are summarized as follows:

 

     Three Months Ended
December 31,
    Six Months Ended
December 31,
 

(in millions)

   2009    2008     2009 (1)     2008  

Revenue

   $ —      $ 957.0      $ 592.1      $ 1,840.9   

Earnings before income taxes and discontinued operations

     —        200.2        43.7        304.1   

Income tax expense

     —        (53.2     (23.6     (83.1

Earnings from discontinued operations

     —        147.0        20.1        221.0   

 

(1) Reflects the results of CareFusion through August 31, 2009, the effective date of the Spin-Off.

Interest expense allocated to discontinued operations for CareFusion was $16.5 million for the three months ended December 31, 2008 and $12.8 million and $38.1 million for the six months ended December 31, 2009 and 2008, respectively. Interest expense was allocated considering the debt issued by CareFusion in connection with the Spin-Off and the overall debt balance of the Company. In addition, a portion of the corporate costs previously allocated to CareFusion have been reclassified to the remaining two segments.

There were no assets and liabilities from businesses held for sale for CareFusion at December 31, 2009. At June 30, 2009, the major components of assets and liabilities from businesses held for sale for CareFusion were as follows:

 

(in millions)

   June 30,
2009

Current assets

   $ 1,832.0

Property and equipment

     408.5

Other assets

     4,774.2
      

Total assets

   $ 7,014.7
      

Current liabilities

     469.2

Long-term debt and other

     875.4
      

Total liabilities

   $ 1,344.6
      

Cash flows from discontinued operations are presented separately on the Company’s condensed consolidated statements of cash flows.

PTS Business

See Note 7 of the “Notes to Consolidated Financial Statements” from the FY2009 Financial Statements, for information regarding the sale of the former Pharmaceutical Technologies and Services segment, other than certain generic-focused businesses (the “PTS Business”), during the fourth quarter of fiscal 2007.

The Company incurred minor amounts of activity related to the PTS Business during the three and six months ended December 31, 2008 as a result of changes in certain estimates made at the time of the sale, activity under a transition services agreement and other adjustments. The loss related to the PTS Business included in discontinued operations was $0.2 million and $0.8 million for the three and six months ended December 31, 2009, respectively. The loss related to the PTS Business included in discontinued operations was $2.4 million and $3.1 million for the three and six months ended December 31, 2008, respectively.

The liabilities of the PTS Business included in liabilities held for sale were $1.4 million as of December 31, 2009 and June 30, 2009.

Cash flows from discontinued operations are presented separately on the Company’s condensed consolidated statements of cash flows.

Other

During the fourth quarter of fiscal 2009, the Company committed to plans to sell its United Kingdom-based Martindale injectable manufacturing business (“Martindale”) within its Pharmaceutical segment, and met the criteria for classification as assets held for sale in the Company’s financial statements. Accordingly, the net assets of Martindale are presented separately as held for sale and discontinued operations and the operating results are presented within discontinued operations for all periods presented. During the fourth quarter of fiscal 2009, the Company also committed to plans to sell SpecialtyScripts within its Pharmaceutical segment, and met the criteria for classification as held for sale in the Company’s financial statements. Accordingly, the net assets of this business are presented separately as assets held for sale on the Company’s condensed consolidated balance sheet at December 31, 2009 and June 30, 2009. The results of SpecialtyScripts are reported within earnings from continuing operations on the Company’s condensed consolidated statements of earnings because it did not satisfy the criteria for classification as discontinued operations. Additionally, the net assets held for sale of SpecialtyScripts were recorded at the net expected fair value less costs to sell, as this amount was lower than its net carrying value (see Note 3 for further information).

 

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The results of Martindale included in discontinued operations for the three and six months ended December 31, 2009 and 2008 are summarized as follows:

 

     Three Months Ended
December 31,
    Six Months Ended
December 31,
 

(in millions)

   2009     2008     2009     2008  

Revenue

   $ 30.6      $ 24.6      $ 59.6      $ 50.9   

Earnings before income taxes and discontinued operations

     6.4        4.0        12.3        9.1   

Income tax expense

     (1.9     (1.1     (3.7     (2.6

Earnings from discontinued operations

     4.5        2.9        8.6        6.5   

Cash flows from discontinued operations are presented separately on the Company’s condensed consolidated statements of cash flows.

At December 31, 2009 and June 30, 2009, the major components of assets and liabilities from businesses held for sale related to Martindale and SpecialtyScripts were as follows:

 

(in millions)

   December 31,
2009
   June 30,
2009

Current assets

   $ 59.1    $ 74.2

Property and equipment

     22.8      19.3

Other assets

     67.0      81.2
             

Total assets

   $ 148.9    $ 174.7
             

Current liabilities

     28.2      16.5

Long-term debt and other

     7.7      8.4
             

Total liabilities

   $ 35.9    $ 24.9
             

5. GOODWILL AND OTHER INTANGIBLE ASSETS

Goodwill

The following table summarizes the changes in the carrying amount of goodwill by segment for the six months ended December 31, 2009:

 

(in millions)

   Pharmaceutical    Medical    Total

Balance at June 30, 2009

   $ 1,232.8    $ 963.7    $ 2,196.5

Goodwill acquired—net of purchase price adjustments, foreign currency translation adjustments and other

     32.5      10.4      42.9
                    

Balance at December 31, 2009

   $ 1,265.3    $ 974.1    $ 2,239.4
                    

Due to the Spin-Off and reorganization of the reporting units, goodwill was tested for impairment in the first quarter of fiscal 2010. Based on this analysis, there was no impairment. The Company’s determination of estimated fair value of the reporting units is based on a combination of a discounted cash flow analysis, a multiple of earnings before interest, taxes, depreciation and amortization (“EBITDA”) and, if available, a review of the price/earnings ratio for publicly traded companies similar in nature, scope and size of the respective reporting units. The discount rates used for impairment testing are based on the risk-free rate plus an adjustment for risk factors. The EBITDA multiples used for impairment testing are judgmentally selected based on factors such as the nature, scope and size of the applicable reporting unit. The use of alternative estimates, peer groups or changes in the industry, or adjusting the discount rate, EBITDA multiples or price earnings ratios used could affect the estimated fair value of the reporting units and potentially result in goodwill impairment.

The allocations of the purchase price related to certain small acquisitions are not yet finalized and are subject to adjustment as the Company completes the valuation analyses for these acquisitions.

 

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Intangible Assets

Intangible assets with definite lives are amortized over their useful lives which range from three to twenty years. The detail of other intangible assets by class as of June 30, 2009 and December 31, 2009 is as follows:

 

(in millions)

   Gross
Intangible
   Accumulated
Amortization
   Net
Intangible

June 30, 2009

        

Unamortized intangibles:

        

Trademarks and patents

   $ 11.4    $ —      $ 11.4
                    

Total unamortized intangibles

     11.4      —        11.4

Amortized intangibles:

        

Trademarks and patents

     30.2      12.9      17.3

Non-compete agreements

     3.9      2.5      1.4

Customer relationships

     46.6      35.1      11.5

Other

     66.2      37.4      28.8
                    

Total amortized intangibles

     146.9      87.9      59.0
                    

Total intangibles

   $ 158.3    $ 87.9    $ 70.4
                    

December 31, 2009

        

Unamortized intangibles:

        

Trademarks and patents

   $ 9.2    $ —      $ 9.2
                    

Total unamortized intangibles

     9.2      —        9.2

Amortized intangibles:

        

Trademarks and patents

     22.1      13.1      9.0

Non-compete agreements

     4.1      2.7      1.4

Customer relationships

     49.7      38.4      11.3

Other

     63.0      38.6      24.4
                    

Total amortized intangibles

     138.9      92.8      46.1
                    

Total intangibles

   $ 148.1    $ 92.8    $ 55.3
                    

There were no significant acquisitions of other intangible assets during the periods presented. Amortization expense for the three and six months ended December 31, 2009 was $2.6 million and $6.0 million, respectively, and $3.3 million and $7.1 million, respectively, during the comparable prior year periods.

Amortization expense for each of the next five fiscal years is estimated to be:

 

(in millions)

   2010    2011    2012    2013    2014

Amortization expense

   $ 11.0    $ 9.1    $ 4.6    $ 3.2    $ 1.7

6. INVESTMENT IN CAREFUSION

The following table provides a summary of the Company’s available-for-sale securities as of December 31, 2009:

 

     Available-for-Sale Securities

(in millions)

   Cost (2)    Gross
Unrealized
Gains
   Gross
Unrealized
Losses
   Estimated
Fair
Value

Equity securities (1)

   $ 748.2    $ 149.2    $ —      $ 897.4
                           

Total

   $ 748.2    $ 149.2    $ —      $ 897.4
                           

 

(1) Equity securities consist of the Company’s ownership of approximately 35.9 million shares of CareFusion common stock retained in connection with the Spin-Off. These securities are stated at fair value, with unrealized gains and losses reported in other comprehensive income. Realized gains and losses, and declines in fair value deemed to be other-than-temporary are recognized in net earnings immediately. During the three months ended December 31, 2009, the Company disposed of approximately 5.5 million shares of CareFusion common stock resulting in proceeds of approximately $135.0 million and a pre-tax realized gain of approximately $20.0 million. The net adjustment to unrealized holding gains on CareFusion common stock included in other comprehensive income totaled $115.2 million during the same period.
(2) Represents the Company’s cost investment in the net book value of CareFusion’s assets immediately following the Spin-Off adjusted for the sale of securities during the three months ended December 31, 2009.

 

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7. LONG-TERM OBLIGATIONS AND OTHER SHORT-TERM BORROWINGS

On September 24, 2009, the Company completed a debt tender announced on August 27, 2009 for an aggregate purchase price, including an early tender premium but excluding accrued interest, fees and expenses, of up to $1.2 billion of the following series of debt securities (listed in order of acceptance priority): (i) 7.80% Debentures due October 15, 2016 of Allegiance Corporation; (ii) 6.75% Notes due February 15, 2011 of the Company; (iii) 6.00% Notes due June 15, 2017 of the Company; (iv) 7.00% Debentures due October 15, 2026 of Allegiance Corporation; (v) 5.85% Notes due December 15, 2017 of the Company; (vi) 5.80% Notes due October 15, 2016 of the Company; (vii) 5.65% Notes due June 15, 2012 of the Company; (viii) 5.50% Notes due June 15, 2013 of the Company; and (ix) 4.00% Notes due June 15, 2015 of the Company. The Company purchased more than $1.1 billion pursuant to the offer using the order of priority set forth above. In connection with the debt tender, the Company incurred a pre-tax loss for the early extinguishment of debt of approximately $39.9 million, which included an early tender premium of $66.4 million, the write-off of $5.3 million of unamortized debt issuance costs, and an offsetting $31.8 million fair value adjustment to the respective debt related to previously terminated interest rate swaps.

Long-term obligations and other short-term borrowings consist of the following as of December 31, 2009 and June 30, 2009:

 

(in millions)

   December 31,
2009
   June 30,
2009

4.00% Notes due 2015

   $ 520.7    $ 523.8

5.50% Notes due 2013

     299.2      300.0

5.65% Notes due 2012

     216.2      317.1

5.80% Notes due 2016

     309.8      526.4

5.85% Notes due 2017

     158.0      500.0

6.00% Notes due 2017

     214.9      350.4

6.75% Notes due 2011

     217.9      494.6

7.80% Debentures due 2016

     44.1      75.7

7.00% Debentures due 2026

     124.5      192.0

Floating Rate Notes due 2009

     —        350.0

Other obligations

     6.6      7.8
             

Total

     2,111.9      3,637.8

Less: current portion and other short-term borrowings

     12.7      366.2
             

Long-term obligations, less current portion and other short-term borrowings

   $ 2,099.2    $ 3,271.6
             

8. INCOME TAXES

Effective July 1, 2007, the Company adopted new accounting guidance regarding the accounting for uncertainty in income taxes recognized in the financial statements, resulting in a $139.3 million reduction of retained earnings. This accounting guidance provides that a tax benefit from an uncertain tax position may be recognized when it is more likely than not that the position will be sustained upon examination, including resolutions of any related appeals or litigation processes, based on the technical merits. The amount recognized is measured as the largest amount of tax benefit that is greater than 50% likely of being realized upon settlement. This interpretation also provides guidance on measurement, derecognition, classification, interest and penalties, accounting in interim periods, disclosure and transition.

The balance of unrecognized tax benefits and the amount of interest and penalties were as follows as of December 31, 2009 and June 30, 2009:

 

(in millions)

   December 31,
2009
   June 30,
2009

Unrecognized tax benefits (1) (2) (3)

   $ 698.5    $ 848.8

Portion that, if recognized, would reduce tax expense and effective tax rate (2)

     333.8      610.9

Accrued penalties and interest (2) (3) (4)

     222.3      247.0

 

(1) The Company includes the full amount of unrecognized tax benefits in deferred income taxes and other liabilities in the condensed consolidated balance sheets.
(2) Due to the anticipated repatriation of certain foreign earnings, taxes associated with a special purpose entity transaction no longer represent uncertain tax benefits and have been classified at December 31, 2009 as deferred tax liabilities.
(3) The December 31, 2009 balance includes unrecognized tax benefits related to CareFusion. In accordance with indemnification provisions of the tax matters agreement entered into between the Company and CareFusion, the Company is entitled to reimbursement from CareFusion. The Company has recorded a long term receivable of approximately $214.5 million from CareFusion for these amounts (net of any tax refund claims).
(4) Balances are gross amounts before any tax benefits and are included in deferred income taxes and other liabilities in the condensed consolidated balance sheets.

 

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Upon completion of the Spin-Off, the Company recorded a tax charge of approximately $171.9 million related to the anticipated repatriation of a portion of cash currently loaned to the Company’s entities within the United States from its international subsidiaries. This charge is included within earnings from continuing operations for the six months ended December 31, 2009.

The Company files income tax returns in the U.S. federal jurisdiction, various U.S. state jurisdictions and various foreign jurisdictions. With few exceptions, the Company is subject to audit by taxing authorities for fiscal years ended June 30, 2001 through the current fiscal year.

The Internal Revenue Service (“IRS”) currently has ongoing audits of fiscal years 2001 through 2007. During the three months ended December 31, 2007, the Company was notified that the IRS transferred jurisdiction over fiscal years 2001 and 2002 from the Office of Appeals back to the Examinations level to reconsider previously-unadjusted specific issues. During the three months ended March 31, 2008, the Company received Notices of Proposed Adjustment (“NPA’s”) from the IRS related to fiscal years 2001 through 2005 challenging deductions arising from the sale of trade receivables to a special purpose accounts receivable and financing entity. The amount of additional tax, excluding penalties and interest, proposed by the IRS in these notices was $178.9 million. The Company anticipates that this transaction could be the subject of proposed adjustments by the IRS in tax audits of fiscal years 2006 to 2009. As discussed above, the Company recorded a charge of $171.9 million during the first quarter of fiscal 2010 to reflect the anticipated repatriation of earnings from the special purpose entity. Due to the anticipated repatriation of the earnings, the tax associated with the transaction, including the tax assessed by the IRS, no longer represents an uncertain tax benefit. Taxes associated with this transaction, including both the charge taken in the first quarter of fiscal 2010 and the amount previously accrued as an unrecognized tax benefit, are classified as deferred tax liabilities or current taxes payable.

During fiscal 2009, the Company received a Revenue Agent’s Report for tax years 2003 through 2005, which included the NPA’s discussed above and new NPA’s related to the Company’s transfer pricing arrangements between foreign and domestic subsidiaries and the transfer of intellectual property among subsidiaries of an acquired entity prior to its acquisition by the Company. The amount of additional tax proposed by the IRS in the new notices total $598.1 million, excluding penalties and interest, but including $462.1 million related to issues for which CareFusion is liable under the tax matters agreement in the event the amount must be paid to the taxing authority. The Company disagrees with these proposed adjustments and intends to vigorously contest them. The Company believes that it is adequately reserved for the uncertain tax position relating to these matters.

It is reasonably possible that there could be a change in the amount of unrecognized tax benefits within the next 12 months due to activities of the IRS or other taxing authorities, including proposed assessments of additional tax, possible settlement of audit issues, or the expiration of applicable statutes of limitations. The Company estimates that the range of the possible change in unrecognized tax benefits within the next 12 months is a decrease of approximately zero to $25 million excluding penalties and interest.

The Company’s provision for income taxes as a percentage of pretax earnings from continuing operations (“effective tax rate”) was 36.9% and 68.8%, respectively, for the three and six months ended December 31, 2009 compared to 37.7% and 35.1%, respectively, for the three and six months ended December 31, 2008. Generally, fluctuations in the effective tax rate are due to changes within international and U.S. state effective tax rates resulting from the Company’s business mix and the impact of restructuring and employee severance, impairments and other discrete items. During the six months ended December 31, 2009 the effective tax rate was impacted by an unfavorable adjustment of $172 million, or 31.8%, attributable to earnings no longer indefinitely invested offshore.

9. CONTINGENT LIABILITIES

Legal Proceedings

In addition to commitments and obligations in the ordinary course of business, the Company is subject to various claims, other pending and potential legal actions for damages, investigations relating to governmental laws and regulations and other matters arising out of the normal conduct of its business. When accruing for contingencies related to litigation, the Company considers the degree of probability and range of possible loss. An estimated loss contingency is accrued in the Company’s consolidated financial statements if it is probable that a liability has been incurred and the amount of the loss can be reasonably estimated. Because litigation is inherently unpredictable and unfavorable resolutions could occur, assessing contingencies is highly subjective and requires judgments about future events. The Company regularly reviews contingencies to determine the adequacy of the accruals and related disclosures. The amount of ultimate loss may differ from these estimates. It is possible that cash flows or results of operations could be materially affected in any particular period by the unfavorable resolution of one or more of these contingencies.

The Company recognizes income from the favorable outcome of legal settlements, judgments or other resolution of legal and regulatory matters when the associated cash or assets are received.

 

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Estimated loss contingencies related to litigation and regulatory matters and income from favorable resolution of legal and regulatory matters are recognized in litigation (credits)/charges, net in the Company’s condensed consolidated statements of earnings.

Insurance Proceeds

In the three months ending December 31, 2009, the Company recognized $27.2 million of income related to insurance proceeds released from escrow following the resolution of securities and derivative litigation against certain of the Company’s directors and officers. This amount is comprised of $25.7 million received from directors and officers’ insurance policies recognized in litigation (credits)/charges, net and $1.5 million of accrued interest income recognized in interest expense, net. For further information regarding this matter, see the Company’s Annual Report on Form 10-K for the fiscal year ended June 30, 2007.

Income Taxes

See Note 8 for discussion of contingencies related to the Company’s income taxes.

Other Matters

The Company also becomes involved from time-to-time in litigation and regulatory matters incidental to its business, including, but not limited to, personal injury claims, employment matters, commercial disputes, intellectual property matters, inclusion as a potentially responsible party for environmental clean-up costs, and litigation in connection with acquisitions and divestitures. The Company intends to vigorously defend itself against such litigation and does not currently believe that the outcome of any such litigation will have a material adverse effect on the Company’s consolidated financial statements.

From time to time, the Company receives subpoenas or requests for information from various government agencies relating to the business, accounting or disclosure practices of customers or suppliers. The responses to these subpoenas and requests for information sometimes require considerable time and effort, and can result in considerable costs being incurred by the Company. The Company expects to incur additional costs in the future in connection with existing and future requests. Such subpoenas and requests also can lead to the assertion of claims or the commencement of legal proceedings against the Company.

Also from time to time, the Company may determine that products marketed, manufactured, or distributed by the Company may not meet Company specifications, published standards or regulatory requirements. In such circumstances, the Company will investigate and take appropriate corrective action. Such actions can lead to costs to repair or replace affected products, temporary interruptions in product sales and action by regulators, and can adversely impact results of operations.

10. GUARANTEES

In the ordinary course of business, the Company, from time to time, agrees to indemnify certain other parties under agreements with the Company, including under acquisition and disposition agreements, customer agreements and intellectual property licensing agreements. Such indemnification obligations vary in scope and, when defined, in duration. In many cases, a maximum obligation is not explicitly stated and therefore the overall maximum amount of the liability under such indemnification obligations cannot be reasonably estimated. Where appropriate, such indemnification obligations are recorded as a liability. Historically, the Company has not, individually or in the aggregate, made payments under these indemnification obligations in any material amounts. In certain circumstances, the Company believes that its existing insurance arrangements, subject to the general deduction and exclusion provisions, would cover portions of the liability that could arise from any of these indemnification obligations. In addition, the Company believes that the likelihood of a material liability being triggered under these indemnification obligations is not significant.

In the ordinary course of business, the Company, from time to time, enters into agreements that obligate the Company to make fixed payments upon the occurrence of certain events. Such obligations primarily relate to obligations arising under acquisition transactions, where the Company has agreed to make payments based upon the achievement of certain financial performance measures by the acquired business. Generally, the obligation is capped at an explicit amount. The Company’s aggregate exposure for these obligations, assuming the achievement of all financial performance measures, is not material.

In the ordinary course of business, the Company, from time to time, extends loans to its customers which are subsequently sold to a bank. The bank services and administers these loans as well as any new loans the Company may direct. In order for the bank to purchase such loans, it requires the absolute and unconditional obligation of the Company to repurchase such loans upon the occurrence of certain events described in the agreement including, but not limited to, borrower payment default that exceeds 90 days, insolvency and bankruptcy. At December 31, 2009 and June 30, 2009, notes in the program subject to the guaranty of the Company totaled $39.6 million and $39.9 million, respectively. These loans are reported in the Company’s condensed consolidated balance sheet.

 

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11. FAIR VALUE MEASUREMENTS

In September 2006, the FASB issued new accounting guidance on fair value measurements. The guidance defines fair value, establishes a framework for measuring fair value in GAAP and expands disclosures about fair value measurements. Additionally, this guidance established a three-level fair value hierarchy that prioritizes the inputs used to measure fair value. This hierarchy requires entities to maximize the use of observable inputs and minimize the use of unobservable inputs. The three levels of inputs used to measure fair values are as follows:

Level 1 – Observable prices in active markets for identical assets and liabilities.

Level 2 – Observable inputs other than quoted prices in active markets for identical assets and liabilities.

Level 3 – Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets and liabilities.

In February 2008, the FASB issued additional guidance permitting a one-year deferral with regard to nonfinancial assets and nonfinancial liabilities that are not recognized or disclosed at fair value in the financial statements on a recurring basis (at least annually). The Company adopted this new accounting guidance on July 1, 2008 with respect to all financial assets and liabilities and on July 1, 2009 with respect to all non-financial assets and liabilities. The adoption of this guidance did not have a material impact on the Company’s financial position or results of operations in either period.

Recurring Fair Value Measurements

The following table presents the fair values for those assets and (liabilities) measured on a recurring basis as of December 31, 2009:

 

     Fair Value Measurements

(in millions)

   Level 1    Level 2    Level 3    Total

Cash Equivalents (1)

   $ 987.5    $ —      $ —      $ 987.5

Equity Securities (2)

     897.4      —        —        897.4

Forward Contracts (3)

     —        82.0      —        82.0

Other Investments (4)

     73.2      —        —        73.2
                           

Total

   $ 1,958.1    $ 82.0    $ —      $ 2,040.1
                           

 

(1) Cash equivalents are comprised of highly liquid investments purchased with a maturity of three months or less. The carrying value of these cash equivalents approximates fair value due to their short-term maturities.
(2) Equity securities consist of the Company’s investment in CareFusion common stock. The fair value of these securities is determined using the quoted market price of the security.
(3) The fair value of the Company’s foreign currency forward contracts and commodity contracts is determined based on the present value of expected future cash flows considering the risks involved, including nonperformance risk, and using discount rates appropriate for the respective maturities.
(4) The other investments balance includes investments in mutual funds, which are used to offset fluctuations in the Company’s deferred compensation liabilities. The fair value of these investments is determined using quoted market prices.

Non-Recurring Fair Value Measurements

The following table presents the fair values for those assets and (liabilities) measured on a nonrecurring basis as of December 31, 2009:

 

     Fair Value Measurements

(in millions)

   Level 1    Level 2    Level 3    Total

Long-lived assets held for sale (1) (2)

   $ —      $ —      $ 7.0    $ 7.0
                           

Total

   $ —      $ —      $ 7.0    $ 7.0
                           

 

(1) During the six months ended December 31, 2009, certain long-lived assets held for sale were written down to their estimated fair value, less cost to sell, resulting in an impairment charge of $20.0 million, which is included in impairments and loss on sale of assets in the condensed consolidated statements of earnings (see Note 3 for further information).
(2) The fair value of long-lived assets held for sale is determined based on the best available information, including quoted market prices when available (level 1), market prices for similar assets (level 2) and internal cash flow estimates discounted at the appropriate interest rate (level 3), as appropriate.

 

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12. EARNINGS PER SHARE AND SHAREHOLDERS’ EQUITY

Earnings per Share

Basic earnings per Common Share (“Basic EPS”) is computed by dividing net earnings (the numerator) by the weighted average number of Common Shares outstanding during each period (the denominator). Diluted earnings per Common Share (“Diluted EPS”) is similar to the computation for Basic EPS, except that the denominator is increased by the dilutive effect of vested and unvested stock options, restricted shares and restricted share units computed using the treasury stock method.

The following table reconciles the number of Common Shares used to compute Basic EPS and Diluted EPS for the three and six months ended December 31, 2009 and 2008:

 

      Three Months Ended
December 31,
   Six Months Ended
December 31,

(in millions)

   2009    2008    2009    2008

Weighted-average Common Shares – basic

   359.0    357.3    359.1    357.0

Effect of dilutive securities:

           

Employee stock options, restricted shares and restricted share units

   2.0    3.0    2.0    4.2
                   

Weighted-average Common Shares – diluted

   361.0    360.3    361.1    361.2
                   

The potentially dilutive securities that were antidilutive for the three months ended December 31, 2009 and 2008 were 24.7 million shares and 32.6 million shares, respectively, and for the six months ended December 31, 2009 and 2008 were 23.0 million shares and 24.7 million shares, respectively.

The total number of Common Shares issued less the Common Shares held in treasury is used to determine the Common Shares outstanding.

Shareholders’ Equity

During the three months ended December 31, 2009, the Company repurchased approximately $50 million of its Common Shares under its existing $500 million share repurchase program announced on August 5, 2009. This repurchase authorization expires on August 31, 2012. At December 31, 2009, approximately $450 million remained from the $500 million repurchase authorization. The Company expects to use this repurchase program to at least offset equity plan issuances.

In connection with the Spin-Off on August 31, 2009, the Company issued a non-cash dividend of approximately $3.7 billion to its shareholders through the pro-rata distribution of approximately 81% of the CareFusion Corporation common shares.

13. COMPREHENSIVE INCOME

The following is a summary of the Company’s comprehensive income for the three and six months ended December 31, 2009 and 2008:

 

     Three Months Ended
December 31,
    Six Months Ended
December 31,
 

(in millions)

   2009    2008     2009     2008  

Net earnings

   $ 234.5    $ 316.5      $ 196.3      $ 565.6   

Foreign currency translation adjustments

     3.6      (85.3     (37.8     (168.6

Net unrealized gain/(loss) on derivative instruments

     2.4      (9.8     15.0        (0.9

Net unrealized gain on investment in CareFusion, net of tax

     117.5      —          141.0        —     
                               

Total comprehensive income

   $ 358.0    $ 221.4      $ 314.5      $ 396.1   
                               

14. SEGMENT INFORMATION

The Company’s operations are principally managed on a products and services basis. In connection with the Spin-Off, the Company reorganized its businesses into two reportable segments - Pharmaceutical and Medical. The factors for determining the reportable segments include the manner in which management evaluates the performance of the Company combined with the nature of the individual business activities.

 

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The Pharmaceutical segment distributes pharmaceutical products, over-the-counter healthcare products and consumer health products and provides support services to retail customers, hospitals and alternate care providers in the United States and Puerto Rico. It also provides services to branded pharmaceutical manufacturers and operates a pharmaceutical repackaging and distribution program. In addition, this segment operates centralized nuclear (radiopharmaceutical) pharmacies, provides third-party logistics support services and distributes therapeutic plasma to hospitals, clinics and other providers located in the United States. It also franchises apothecary-style retail pharmacies through its Medicine Shoppe International, Inc. and Medicap Pharmacies Incorporated franchise systems. Finally, it provides pharmacy management services to hospitals and other healthcare facilities.

The Medical segment develops, manufactures and distributes medical and surgical products including sterile and non-sterile procedure kits to hospitals, surgery centers, laboratories, physician offices and other healthcare providers in the United States, Canada and Puerto Rico. The medical and surgical products manufactured by the business, including single-use surgical drapes, gowns and apparel, exam and surgical gloves and fluid suction and collection systems, are also sold in various regions of the world outside of the United States, including countries in North America, Europe, and Asia.

The following table includes revenue for each reportable segment and reconciling items necessary to agree to amounts reported in the condensed consolidated financial statements:

 

     Three Months Ended
December 31,
    Six Months Ended
December 31,
 

(in millions)

   2009     2008     2009     2008  

Segment revenue:

        

Pharmaceutical (1)

   $ 22,694.7      $ 22,078.7      $ 45,257.0      $ 43,482.8   

Medical (2)

     2,232.4        2,057.3        4,469.4        4,094.0   
                                

Total segment revenue

     24,927.1        24,136.0        49,726.4        47,576.8   

Corporate (3)

     (7.4     (18.2     (26.0     (21.9
                                

Total consolidated revenue

   $ 24,919.7      $ 24,117.8      $ 49,700.4      $ 47,554.9   
                                

 

(1) The Pharmaceutical segment’s revenue is derived from the distribution of pharmaceutical, radiopharmaceutical and over-the-counter healthcare products.
(2) The Medical segment’s revenue is derived from the manufacturing and distribution of medical, surgical and laboratory products and medical procedure kits.
(3) Corporate revenue consists of the elimination of inter-segment revenue.

The Company evaluates the performance of the segments based upon, among other things, segment profit. Segment profit is segment revenue less segment cost of products sold, less segment distribution, selling, general and administrative expense (“SG&A”). Segment SG&A expense includes equity compensation expense as well as allocated corporate expenses for shared functions, including corporate management, corporate finance, financial shared services, human resources, information technology, legal and an integrated hospital sales organization. Corporate expenses are allocated to the segments based upon headcount, level of benefit provided and ratable allocation. Information about interest income and expense and income taxes is not provided at the segment level. In addition, restructuring and employee severance, impairments and loss on sale of assets, litigation (credits)/charges, net and certain investment spending are not allocated to the segments. Investment spending generally includes the first year spend for certain projects which require incremental strategic investments in the form of additional operating expenses. The Company urges its segments to identify investment projects which will encourage innovation and provide future returns. As approval decisions for such projects are dependent upon executive management, the expenses for such projects are retained at Corporate. See Notes 2 and 3, respectively, for further discussion of the Company’s restructuring and employee severance and impairments and loss on sale of assets. The accounting policies of the segments are the same as those described in Note 1.

The following table includes segment profit by reportable segment and reconciling items necessary to agree to amounts reported in the condensed consolidated financial statements:

 

     Three Months Ended
December 31,
   Six Months Ended
December 31,

(in millions)

   2009    2008    2009    2008

Segment profit:

           

Pharmaceutical

   $ 259.6    $ 262.6    $ 468.0    $ 475.9

Medical

     102.5      74.5      217.4      172.4
                           

Total segment profit

     362.1      337.1      685.4      648.3

 

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     Three Months Ended
December 31,
    Six Months Ended
December 31,
 

(in millions)

   2009    2008     2009     2008  

Corporate (1)

     4.7      (24.0     (78.7     (48.6
                               

Total consolidated operating earnings

   $ 366.8    $ 313.1      $ 606.7      $ 599.7   
                               

 

(1) For the three and six months ended December 31, 2009 and 2008, Corporate includes, among other things, restructuring and employee severance, impairments and loss on sale of assets, litigation (credits)/charges, net and certain investment spending which are not allocated to the segments.

The following table includes total assets at December 31, 2009 and June 30, 2009 for each segment as well as reconciling items necessary to agree to the amounts reported in the condensed consolidated financial statements:

 

(in millions)

   December 31,
2009
   June 30,
2009

Segment assets:

     

Pharmaceutical

   $ 13,536.0    $ 12,625.3

Medical

     3,897.6      3,747.9

Corporate (1)

     3,387.9      8,745.6
             

Consolidated assets

   $ 20,821.5    $ 25,118.8
             

 

(1) The Corporate assets primarily consist of cash and equivalents, the Company’s investment in CareFusion, net property and equipment, and the Company’s contractual tax indemnification receivable from CareFusion (see Note 8 for further information regarding this receivable). Additionally, the Corporate assets as of June 30, 3009 include CareFusion assets and other assets held for sale and discontinued operations.

15. EMPLOYEE EQUITY PLANS

Employee Equity Plans

The Company maintains several stock incentive plans (collectively, the “Plans”) for the benefit of certain of its officers, directors and employees. Employee options granted under the Plans during fiscal 2008 through fiscal 2010 generally vest in equal annual installments over three years and are exercisable for periods up to seven years from the date of grant at a price equal to the fair market value of the Common Shares underlying the option at the date of grant. Employee options granted under the Plans during fiscal 2007 generally vest in equal annual installments over four years and are exercisable for periods up to seven years from the date of grant at a price equal to the fair market value of the Common Shares underlying the option at the date of grant. Employee restricted shares and restricted share units granted under the Plans during fiscal 2007 through fiscal 2010 generally vest in equal installments over three years and entitle holders to dividends or cash dividend equivalents. Restricted shares and restricted share units that were awarded after August 1, 2006 accrue dividends or cash dividend equivalents that are payable upon vesting of the awards.

The compensation expense recognized for all share-based payment awards is net of estimated forfeitures and is recognized using the straight-line method over the applicable service period. The Company classifies share-based payment compensation within SG&A expenses to correspond with the same line item as the majority of the cash compensation paid to employees.

The following table illustrates the impact of share-based payment compensation on reported amounts for the three and six months ended December 31, 2009 and 2008:

 

     Three Months Ended
December 31,
    Six Months Ended
December 31,
 

(in millions, except per share amounts)

   2009     2008     2009     2008  

Operating earnings (1) (2)

   $ (20.1   $ (29.2   $ (42.1   $ (50.2

Earnings from continuing operations

   $ (12.8   $ (19.6   $ (27.0   $ (33.8

Net earnings (3) (4)

   $ (12.8   $ (23.1   $ (29.3   $ (39.4

Net basic earnings per Common Share

   $ (0.04   $ (0.06   $ (0.08   $ (0.11

Net diluted earnings per Common Share

   $ (0.04   $ (0.06   $ (0.08   $ (0.11

 

(1) The total share-based payment compensation expense for the three months ended December 31, 2009 and 2008 includes gross restricted share and restricted share unit expense of approximately $11.5 million and $17.6 million, respectively, gross employee stock option expense of approximately $8.2 million and $10.6 million, respectively, gross employee stock purchase plan expense of approximately $0.0 million and $2.7 million, respectively and gross stock appreciation right (income)/expense of $0.4 million and $(1.7) million, respectively.
(2) The total share-based payment compensation expense for the six months ended December 31, 2009 and 2008 includes gross restricted share and restricted share unit expense of approximately $22.8 million and $29.1 million, respectively, gross employee stock option expense of approximately $17.6 million and $16.8 million, respectively, gross employee stock purchase plan expense of approximately $1.1 million and $6.1 million, respectively and gross stock appreciation right (income)/expense of $0.6 million and $(1.8) million, respectively.
(3) Share-based payment compensation expense charged to discontinued operations was approximately $3.5 million, net of tax benefits of $2.1 million, during the three months ended December 31, 2008.
(4) Share-based payment compensation expense charged to discontinued operations was approximately $2.3 million and $5.6 million, net of tax benefits of $1.5 million and $3.4 million, during the six months ended December 31, 2009 and 2008, respectively.

 

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Stock Options

The fair value of the Company’s stock options is determined using a lattice valuation model. The Company believes the lattice model provides for better estimates because it has the ability to take into account employee exercise patterns based on changes in the Company’s stock price and other variables and it provides for a range of input assumptions.

The following summarizes all stock option transactions for the Company under the Plans from July 1, 2009 through December 31, 2009:

 

(in millions, except per share amounts)

   Options
Outstanding (1)
    Weighted
Average
Exercise Price
per Common
Share (2)
   Weighted
Average
Remaining
Contractual
Life in
Years
   Aggregate
Intrinsic
Value

Balance at June 30, 2009

   29.4      $ 59.25    3.9    $ 1.8

Granted

   7.2      $ 28.08      

Exercised

   (0.8   $ 24.31      

Forfeited and cancelled

   (10.7   $ 63.37      
              

Balance at December 31, 2009

   25.1      $ 37.71    4.3    $ 43.2
              

Exercisable at December 31, 2009

   16.3      $ 41.98    3.5    $ 2.5

 

(1) Included within the options granted and forfeited and cancelled activity for the six months ended December 31, 2009 is the impact of the Company’s stock option exchange program and the adjustments to stock incentive plans as discussed below.
(2) Exercise prices related to stock options granted prior to the date of the Spin-Off have not been adjusted to reflect the impact of the Spin-Off.

Restricted Shares and Restricted Share Units

The fair value of restricted shares and restricted share units is determined by the number of shares granted and the grant date market price of the Company’s Common Shares.

The following table summarizes all activity related to restricted shares and restricted share units from July 1, 2009 through December 31, 2009:

 

(in millions, except per share amounts)

   Shares (1)     Weighted
Average Grant
Date Fair Value
Per Share (2)

Nonvested at June 30, 2009

   3.1      $ 57.10

Granted

   2.1      $ 27.35

Vested

   (1.1   $ 59.70

Forfeited and cancelled

   (0.2   $ 47.82
        

Nonvested at December 31, 2009

   3.9      $ 33.63
        

 

(1) Included within the restricted shares and restricted share units forfeited and cancelled activity for the six months ended December 31, 2009 is the impact of the adjustments to stock incentive plans as discussed below.
(2) Grant date fair values per share of awards granted prior to the date of the Spin-Off have not been adjusted to reflect the impact of the Spin-Off.

 

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Stock Option Exchange Program

On May 6, 2009, the Company’s Board of Directors authorized, and on June 23, 2009, the Company’s shareholders approved, a program that permitted certain current employees to exchange certain outstanding stock options with exercise prices substantially above the current market price of Cardinal Health Common Shares for a lesser number of stock options that have a fair value that is lower than the fair value of the “out of the money” options. The program began on June 19, 2009 and was completed on July 17, 2009. The Company believes that this program was necessary to more closely align employee and shareholder interests through equity compensation programs. The program was designed to motivate and retain key employees and to reinforce the alignment of the Company’s employees’ interests with those of its shareholders. As a result of this program, 9.8 million outstanding eligible stock options were exchanged for 1.4 million new options at an exercise price of $31.27. These new options have a new minimum vesting condition of an additional 12 months, and the term of each new option is the longer of three years from the grant date and the remaining term of the eligible stock option for which it was exchanged. The new options were treated as a probable-to-probable modification under the accounting guidance for share-based payment compensation. The Company did not incur incremental expense associated with the modification.

Adjustments to Stock Incentive Plans

In connection with the Spin-Off, on August 31, 2009, the Company adjusted its existing stock incentive plans to provide for the conversion and adjustment of share-based payment compensation awards granted under its Plans into awards based on the Company’s common shares and/or CareFusion common stock, as applicable. For purposes of the vesting of these equity awards, continued employment or service with the Company or with CareFusion is treated as continued employment for purposes of both the Company’s and CareFusion’s equity awards.

Each Cardinal Health stock option granted on or prior to September 26, 2007 was converted into an adjusted Company stock option and a CareFusion stock option. The exercise prices of the CareFusion stock option and the adjusted Company stock option and the number of shares subject to each such stock option reflects a mechanism that is intended to preserve the intrinsic value of the original Company stock option. A Company stock option granted after September 26, 2007 to current or former employees of the Company or to directors of the Company continues to be exercisable only for the Company’s common shares and was adjusted in a manner intended to preserve the intrinsic value of such stock option. A Company stock option granted after September 26, 2007 to CareFusion employees or directors was replaced with a CareFusion stock option, subject to an adjustment mechanism intended to preserve the intrinsic value of such stock option. The resulting Company stock options and CareFusion stock options are subject to substantially the same terms, vesting conditions and other restrictions, if any, that were applicable to the Company stock option immediately prior to the distribution.

A holder of the Company’s restricted shares granted on or prior to September 26, 2007 received 0.5 restricted shares of CareFusion common stock in respect of each of such holder’s restricted shares of the Company. The underlying Company restricted shares will remain outstanding and unadjusted. Unvested Company restricted shares granted after September 26, 2007 to current or former employees of the Company were cancelled and replaced with newly issued restricted shares of the Company. Such newly issued Company restricted shares were determined in a manner that is intended to preserve the fair market value of the cancelled awards and the holders of such Company restricted shares received no CareFusion common stock with respect to such restricted shares. Unvested Company restricted shares granted after September 26, 2007 to CareFusion employees were cancelled and replaced with restricted shares of CareFusion common stock in a manner that is intended to preserve the fair market value of the cancelled awards. The Company restricted shares and the CareFusion restricted shares are subject to substantially the same terms (including entitlement to any cash dividends, accrued but unpaid at the distribution date), vesting conditions and other restrictions, if any, that were applicable to the cancelled Company restricted shares.

Following the Spin-Off, if any of the Company’s restricted shares that are held by one of CareFusion’s employees fail to become vested, such Company restricted shares will be forfeited to the Company and if any CareFusion restricted shares that are held by an employee of the Company fail to become vested, such CareFusion restricted shares will be forfeited to CareFusion.

 

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A holder of the Company’s restricted share units granted prior to September 26, 2007 or granted in connection with the Spin-Off, or issued in exchange for an option initially granted prior to September 26, 2007, received, in connection with the Spin-Off, CareFusion restricted stock units representing the right to receive 0.5 shares of CareFusion common stock for each Company common share subject to the award. The underlying Company restricted share units will remain in effect unadjusted. An employee or director of the Company who holds unvested Company restricted share units, other than those described in the first sentence of this paragraph, did not receive any CareFusion restricted stock units in connection with the Spin-Off, but such Company restricted share units were adjusted in a manner intended to preserve the fair market value of such awards. The unvested Company’s restricted share units, other than those described in the first sentence of this paragraph, granted to CareFusion employees or directors were replaced with a number of CareFusion restricted stock units intended to preserve the fair market value of the awards. The adjusted Company restricted share units or the replacement CareFusion restricted stock units that a holder received in connection with the Spin-Off will be subject to substantially the same terms (including entitlement to any cash dividend equivalents, accrued but unpaid at the distribution date), vesting conditions and other restrictions, if any, that were applicable to the Company’s restricted share units prior to the distribution.

The adjustments to the Company’s stock incentive plans were treated as a modification in accordance with stock based compensation accounting guidance and resulted in a total incremental compensation cost of $0.6 million.

The following table summaries the share-based payment awards outstanding as of December 31, 2009:

 

     Cardinal Health Awards    CareFusion Awards

(in millions)

   Stock
Options
   Restricted
Shares and
Share Units
   Stock
Options
   Restricted
Shares and
Share Units

Held by Cardinal Health employees and former employees

   22.5    3.7    7.4    0.3

Held by CareFusion employees

   2.6    0.2      
               

Total

   25.1    3.9      
               

 

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Item 2: Management’s Discussion and Analysis of Financial Condition and Results of Operations

The discussion and analysis presented below is concerned with material changes in financial condition and results of operations for the Company’s condensed consolidated balance sheets as of December 31, 2009 and June 30, 2009, and for the condensed consolidated statements of earnings for the three and six month periods ended December 31, 2009 and 2008. This discussion and analysis should be read in conjunction with “Management’s Discussion and Analysis of Financial Condition and Results of Operations” included in the FY2009 Financial Statements.

Portions of this Form 10-Q (including information incorporated by reference) include “forward-looking statements.” The words “believe,” “expect,” “anticipate,” “project,” and similar expressions, among others, generally identify “forward-looking statements,” which speak only as of the date the statements were made. The matters discussed in these forward-looking statements are subject to risks, uncertainties and other factors that could cause actual results to differ materially from those made, projected or implied in the forward-looking statements. The most significant of these risks, uncertainties and other factors are described in Exhibit 99.1 to this Form 10-Q and in Part II, Item 1A of this Form 10-Q. Except to the extent required by applicable law, the Company undertakes no obligation to update or revise any forward-looking statements, whether as a result of new information, future events, or otherwise.

Overview

Cardinal Health, Inc. (the “Company”) is a leading provider of products and services that help improve the cost-effectiveness of healthcare. The Company helps pharmacies, hospitals and ambulatory care sites focus on patient care while helping reduce costs, improve efficiency and quality, and increase profitability. As one of the largest healthcare companies in the world, Cardinal Health is an essential link in the healthcare supply chain, providing pharmaceuticals and medical products to more than 40,000 locations each day.

Demand for the Company’s products and services during the three and six months ended December 31, 2009 led to revenue of $24.9 billion and $49.7 billion, up 3% and 5%, respectively, from the same periods in the prior year. Operating earnings were approximately $367 million and $607 million, up 17% and 1%, respectively, from the same periods in the prior year. Operating earnings were positively impacted by increased gross margin ($43 million and $50 million, respectively) and negatively impacted by increased distribution, selling, general and administrative expenses (“SG&A”) ($27 million and $23 million, respectively). Net earnings for the three and six months ended December 31, 2009 were $235 million and $196 million, respectively, and net diluted earnings per Common Share were $0.65 and $0.54, respectively. See Note 12 of “Notes to the Condensed Consolidated Financial Statements” for a reconciliation of Basic EPS to Diluted EPS.

The CareFusion spin-off described below impacted the results for the three and six months ended December 31, 2009. Operating earnings for the six months ended December 31, 2009 were adversely impacted by severance and restructuring costs in connection with the spin-off ($56 million). Net earnings for the three months ended December 31, 2009 were positively impacted by $20 million related to gains from the sale of shares of CareFusion common stock. Also in connection with the spin-off, net earnings for the six months ended December 31, 2009 were adversely impacted by a tax charge of approximately $172 million related to the anticipated repatriation of certain foreign earnings and a $40 million net loss on the extinguishment of debt. Finally, net earnings for both periods were adversely affected by a significant reduction in earnings from discontinued operations as a result of the spin-off. In addition, operating earning for the three and six months ended December 31, 2009 were positively impacted by $(26) million in litigation (credits) for insurance proceeds released from escrow and operating earnings for the six months ended December 31, 2009 were negatively impacted by a $20 million impairment charge related to SpecialtyScripts, LLC (“SpecialtyScripts”), a business within the Pharmaceutical segment.

Cash provided by operating activities totaled $931 million during the six months ended December 31, 2009, primarily due to operating earnings and changes in working capital. Cash provided by investing activities was $18 million primarily due to proceeds from the sale of CareFusion common stock ($135 million) partially offset by capital spending ($80 million). Cash used in financing activities was $423 million primarily due to the Company’s repayment of long-term obligations ($1.6 billion which includes $66 million early tender premium) offset by permanent financing obtained by CareFusion prior to the Spin-Off ($1.4 billion). Also during the six months ended December 31, 2009, the Company paid $127 million in dividends and repurchased $50 million of outstanding common shares.

Spin-Off of CareFusion Corporation

Effective August 31, 2009, the Company completed the spin-off of CareFusion through a pro rata distribution to its shareholders of approximately 81% of the then outstanding shares of CareFusion common stock (the “Spin-Off”). The Company first announced on September 29, 2008 that it intended to separate its clinical and medical products business from its other businesses. The Company has retained certain surgical and exam gloves, surgical drapes and apparel and fluid management businesses that were previously part of its Clinical and Medical Products segment. As explained else where in this Form 10-Q, the Spin-Off had a significant impact on the results of operations and financial condition of the Company.

 

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During the three months ended December 31, 2009, the Company sold approximately 5.5 million shares of the 41.4 million shares of CareFusion common stock that it held immediately after the Spin-Off, which resulted in a gross realized gain of approximately $20 million. As of December 31, 2009, the Company’s ownership of approximately 35.9 million shares of CareFusion common stock had an estimated fair value of $897 million. See Note 6 of “Notes to the Condensed Consolidated Financial Statements” for additional details regarding the Company’s investment in CareFusion. The Company expects to sell its remaining CareFusion stock within the next 18 months and is assessing the method and timing based on market conditions and other factors.

CareFusion net assets are presented separately as assets from businesses held for sale and discontinued operations and the operating results of this business are presented within discontinued operations for all reporting periods through the date of the Spin-Off.

Relationship between the Company and CareFusion

On July 22, 2009, the Company and CareFusion entered into a separation agreement to effect the Spin-Off and provide a framework for the relationship between the Company and CareFusion after the Spin-Off. In addition, on August 31, 2009, the Company and CareFusion entered into a transition services agreement, a tax matters agreement, an employee matters agreement, intellectual property agreements and certain other commercial agreements. These agreements, including the separation agreement, provide for allocation between the Company and CareFusion of the Company’s assets, employees, liabilities and obligations (including its investments, property and employee benefits and tax-related assets and liabilities) attributable to periods prior to, at and after the Spin-Off and govern certain relationships between the Company and CareFusion after the Spin-Off. The Company and CareFusion also entered into a stockholder’s and registration rights agreement pursuant to which, among other things, CareFusion agrees that, upon the request of the Company, CareFusion will use its commercially reasonable efforts to effect the registration under applicable federal and state securities laws of any shares of CareFusion common stock retained by Cardinal Health.

Pursuant to the transition services agreement, for the three months ended December 31, 2009, the Company recognized approximately $43 million in transition service fee income which approximately offsets the costs associated with providing the transition services. The Company has recognized $55 million in transition service fee income year-to-date since the Spin-Off. Additionally, the Company purchased $167 million of CareFusion trade receivables pursuant to an accounts receivable factoring arrangement between the Company and CareFusion during the three months ended December 31, 2009. The Company has purchased $274 million of CareFusion trade receivables year-to-date since the Spin-Off.

Consolidated Results of Operations

The following summarizes the Company’s consolidated results of operations for the three and six months ended December 31, 2009 and 2008:

 

     Three Months Ended
December 31,
    Six Months Ended
December 31,
 

(in millions, except per common share amounts)

   Change (1)     2009     2008     Change (1)     2009     2008  

Revenue

   3   $ 24,919.7      $ 24,117.8      5   $ 49,700.4      $ 47,554.9   

Cost of products sold

   3     23,962.0        23,202.7      5     47,833.9        45,738.6   
                                    

Gross margin

   5     957.7        915.1      3     1,866.5        1,816.3   

Distribution, selling, general and administrative expenses

   5     605.2        578.5      2     1,191.3        1,168.8   

Restructuring and employee severance

   N.M.        10.7        16.9      N.M.        70.4        37.6   

Impairments and loss on sale of assets

   N.M.        0.4        6.9      N.M.        24.0        10.5   

Litigation (credits)/charges, net

   N.M.        (25.4     (0.3   N.M.        (25.9     (0.3
                                    

Operating earnings

   17     366.8        313.1      1     606.7        599.7   

Other (income)/expense, net

   N.M.        (25.6     19.7      N.M.        (34.5     22.2   

Interest expense, net

   24     27.4        22.2      19     61.3        51.4   

Loss on extinguishment of debt

   N.M.        —          —        N.M.        39.9        —     
                                    

Earnings before income taxes and discontinued operations

   35     365.0        271.2      3     540.0        526.1   

Provision for income taxes

   32     134.8        102.2      N.M.        371.6        184.9   
                                    

Earnings from continuing operations

   36     230.2        169.0      (51 )%      168.4        341.2   

Earnings from discontinued operations, net of tax

   N.M.        4.3        147.5      N.M.        27.9        224.4   
                                    

Net earnings

   (26 )%    $ 234.5      $ 316.5      (65 )%    $ 196.3      $ 565.6   
                                    

 

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     Three Months Ended
December 31,
   Six Months Ended
December 31,

(in millions, except per common share amounts)

   Change (1)     2009    2008    Change (1)     2009    2008

Diluted earnings per Common Share:

               

Continuing operations

   36   $ 0.64    $ 0.47    (51 )%    $ 0.47    $ 0.95

Discontinued operations

   N.M.        0.01      0.41    N.M.        0.07      0.62
                               

Net diluted earnings per Common Share

   (26 )%    $  0.65    $  0.88    (66 )%    $  0.54    $  1.57
                               

 

N.M. Not meaningful

(1) Change is calculated as the percentage increase or (decrease) for the three and six months ended December 31, 2009 compared to the same periods in the prior year.

Revenue

Revenue for the three and six months ended December 31, 2009 increased $802 million or 3% and $2.1 billion or 5%, respectively, compared to the same periods in the prior year. The increase was due to pharmaceutical price appreciation and increased volume from existing customers (with a combined impact of $1.2 billion and $2.5 billion, respectively) and the addition of new customers ($75 million and $229 million, respectively). The Company uses the internal metric “pharmaceutical price appreciation index” to evaluate the impact of pharmaceutical and consumer product price appreciation on revenue from the pharmaceutical distribution business. This metric is calculated using the change in the manufacturer’s published price at the beginning of the period as compared to the end of the period weighted by the units sold by the pharmaceutical distribution business during the period. The pharmaceutical price appreciation index was 8.2% for the trailing twelve months ended December 31, 2009. Revenue was negatively impacted during the three and six months ended December 31, 2009 by the loss of customers ($552 million and $835 million, respectively). Refer to “Segment Results of Operations” below for further discussion of the specific factors affecting revenue in each of the Company’s reportable segments.

Cost of Products Sold

Cost of products sold for the three and six months ended December 31, 2009 increased $759 million or 3% and $2.1 billion or 5%, respectively, compared to the same periods in the prior year. The increase in cost of products sold was mainly due to the 3% and 5% increase in revenue for the three and six months ended December 31, 2009, respectively, compared to the same periods in the prior year. See the “Gross Margin” discussion below for further discussion of additional factors impacting cost of products sold.

Gross Margin

Gross margin for the three and six months ended December 31, 2009 increased $43 million or 5% and $50 million or 3%, respectively, compared to the same periods in the prior year. Gross margin was favorably impacted by increased distribution service agreement fees and pharmaceutical price appreciation under branded manufacturer agreements (combined impact of $24 million and $46 million, respectively), increased manufacturer cash discounts ($17 million and $46 million, respectively), a generic transition within the nuclear pharmacy business within the Pharmaceutical segment ($12 million and $42 million, respectively) and a decrease in raw materials costs within the Medical segment ($19 million and $32 million, respectively). During the six months ended December 31, 2009, gross margin was also favorably impacted by the previously deferred intercompany revenue for sales to CareFusion ($14 million). Prior to the Spin-Off, the Company deferred revenue for products sold to CareFusion businesses until the products were sold to the end customers. In connection with the Spin-Off, the previously deferred revenue was recognized. Gross margin was negatively impacted for the three and six months ended December 31, 2009 by an increase in customer discounts ($24 million and $69 million, respectively) as a result of customer repricings and increased sales volume. Also negatively impacting gross margin were the timing and reduction in new generic launches ($27 million and $45 million, respectively). Refer to the “Segment Results of Operations” below for further discussion of the specific factors affecting gross margin in each of the Company’s reportable segments.

Due to the competitive markets in which the Company’s businesses operate, the Company expects competitive pricing pressures to continue. In addition, the Company expects certain factors to negatively impact fiscal 2010 including the timing of generic launches and price deflation, the effects of repricing of certain customer contracts and strategic positioning moves (such as repositioning Medicine Shoppe and transitioning a significant vendor relationship in the pharmaceutical distribution business to a distribution service agreement).

Distribution, Selling, General and Administrative Expenses

        SG&A expenses for the three and six months ended December 31, 2009 increased $27 million or 5% and $23 million or 2%, respectively, compared to the same periods in the prior year. SG&A expenses were negatively impacted during the three and six months ended December 31, 2009 by an increase in incentive compensation expenses ($32 million and $35 million, respectively). Incentive compensation expense includes the Company’s annual performance-based management incentive plan and performance-based funding of its 401(k) Savings Plan. Beginning in fiscal 2010, the Company replaced the 401(k) Saving Plan employer fixed rate contribution with a new variable rate contribution which is dependent upon the Company’s financial performance; this is applicable to all U.S. employees. Also negatively impacting SG&A expenses during the three and six months ended December 31, 2009 were increases in incremental strategic project investments ($17 million and $31 million, respectively) and expenses related to the performance of the Company’s deferred compensation plan ($8 million and $21 million, respectively). The expense related to the performance of the Company’s deferred compensation plan is offset by income presented within other (income)/expense, net.

 

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During the second half of fiscal 2009, the Company implemented several cost control measures, which have favorably impacted SG&A expense for the three and six months ended December 31, 2009 as compared to the prior year period. Refer to “Segment Results of Operations” below for further discussion of the specific factors affecting SG&A expenses in each of the Company’s reportable segments.

Impairments and Loss on Sale of Assets

The Company recognized impairments and loss on sale of assets of less than $1 million and $24 million, respectively, for the three and six months ended December 31, 2009 compared to $7 million and $11 million for the three and six months ended December 31, 2008. During the six months ended December 31, 2009, the Company recognized an impairment charge of $20 million related to the write-down of SpecialtyScripts, a business within the pharmaceutical segment, to net expected fair value less costs to sell. See Note 4 of “Notes to Condensed Consolidated Financial Statements” for further information regarding the anticipated sale of SpecialtyScripts.

Restructuring and Employee Severance

The following is a summary of the Company’s restructuring and employee severance for the three and six months ended December 31, 2009 and 2008:

 

     Three Months Ended
December 31,
   Six Months Ended
December 31,

(in millions)

   2009    2008    2009    2008

Employee related costs

   $ 2.1    $ 0.1    $ 29.2    $ 21.1

Facility exit and other costs

     8.6      16.8      41.2      16.5
                           

Total restructuring and employee severance

   $ 10.7    $ 16.9    $ 70.4    $ 37.6
                           

During the three and six months ended December 31, 2009, the Company recognized restructuring and employee severance of $11 million and $70 million, respectively, primarily related to the Spin-Off ($6 million and $56 million, respectively). Included within the six months amount is approximately $19 million of costs related to the retirement of the Company’s former Chairman and Chief Executive Officer upon completion of the Spin-Off. During the six months ended December 31, 2008, the Company recognized restructuring and employee severance of $38 million primarily related to the restructuring of its segment operating structure. See Note 2 of “Notes to Condensed Consolidated Financial Statements” for additional detail of the Company’s restructuring and employee severance during the three and six months ended December 31, 2009 and 2008.

The Company estimates it will incur additional costs in future periods associated with various existing restructuring activities totaling approximately $43 million. These estimated costs are primarily comprised of costs associated with the Spin-Off.

Litigation (Credits)/Charges, Net

Litigation (credits)/charges, net were $(25) million and $(26) million, respectively, during the three and six months ended December 31, 2009. During the three months ended December 31, 2009, the Company recognized $(26) million in litigation (credits)/charges, net for insurance proceeds released from escrow following the resolution of securities and derivative litigation against certain of the Company’s directors and officers. For further information, see the Company’s Annual Report on Form 10-K for the fiscal year ended June 30, 2007.

Operating Earnings

Operating earnings increased $54 million or 17% and $7 million or 1%, respectively, during the three and six months ended December 31, 2009 compared to the same periods in the prior year. The increase during the three and six months ended December 31, 2009 was primarily due to increased gross margin ($43 million and $50 million, respectively) partially offset by increases in SG&A expenses ($27 million and $23 million, respectively). Operating earnings were also positively impacted by litigation (credits)/charges, net ($(25) million and $(26) million, respectively). Increased impairments and loss on sale of assets ($14 million) and an increase in restructuring and employee severance ($33 million) negatively impacted operating earnings for the six months ended December 31, 2009.

Other (Income)/Expense, Net

Other (income)/expense, net decreased $45 million and $57 million, respectively, during the three and six months ended December 31, 2009 compared to the same periods in the prior year. The decrease was primarily due to the recognition of income related to realized gains from the sale of shares of CareFusion common stock ($20 million), income related to the performance of the Company’s deferred compensation plan assets ($8 million and $21 million, respectively) and the impact of foreign exchange ($7 million and $9 million, respectively). The income related to the performance of the Company’s deferred compensation plan assets is offset by expense presented within SG&A.

 

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Interest Expense, Net

Interest expense, net increased $5 million and $10 million, respectively, during the three and six months ended December 31, 2009 compared to the same periods in the prior year primarily due to increased fees relating to the Company’s amended revolving credit facility and accounts receivable securitization agreement. The increase was also due to less income received from interest rate swaps compared to the same periods in the prior year.

Loss on Extinguishment of Debt

On September 24, 2009, the Company completed a debt tender. In connection with the debt tender, the Company incurred a pre-tax loss for the early retirement of debt of approximately $40 million, which included an early tender premium of $67 million, the write-off of $5 million of unamortized debt issuance costs, and an offsetting $32 million fair value adjustment to the respective debt related to previously terminated interest rate swaps. See Note 7 of “Notes to Condensed Consolidated Financial Statements” for additional information on the debt tender.

Provision for Income Taxes

The Company files income tax returns in the U.S. federal jurisdiction, various U.S. state jurisdictions and various foreign jurisdictions. With few exceptions, the Company is subject to audit by taxing authorities for fiscal years ended June 30, 2001 through the current fiscal year.

The Internal Revenue Service (“IRS”) currently has ongoing audits of fiscal years 2001 through 2007. During the three months ended December 31, 2007, the Company was notified that the IRS transferred jurisdiction over fiscal years 2001 and 2002 from the Office of Appeals back to the Examinations level to reconsider previously-unadjusted specific issues. During the three months ended March 31, 2008, the Company received Notices of Proposed Adjustment (“NPA’s”) from the IRS related to fiscal years 2001 through 2005 challenging deductions arising from the sale of trade receivables to a special purpose accounts receivable and financing entity. The amount of additional tax, excluding penalties and interest, proposed by the IRS in these notices was $179 million. The Company anticipates that this transaction could be the subject of proposed adjustments by the IRS in tax audits of fiscal years 2006 to 2009. As discussed in Note 8 of “Notes to Condensed Consolidated Financial Statements,” the Company recorded a charge of $172 million during the first quarter of fiscal 2010 to reflect the anticipated repatriation of earnings from the special purpose entity. Due to the anticipated repatriation of the earnings, the tax associated with the transaction, including the tax assessed by the IRS, no longer represents an uncertain tax benefit. Taxes associated with this transaction, including both the charge taken in the prior quarter and the amount previously accrued as an unrecognized tax benefit, are classified as deferred tax liabilities or current taxes payable.

During fiscal 2009, the Company received a Revenue Agent’s Report for tax years 2003 through 2005, which included the NPA’s discussed above and new NPA’s related to the Company’s transfer pricing arrangements between foreign and domestic subsidiaries and the transfer of intellectual property among subsidiaries of an acquired entity prior to its acquisition by the Company. The amount of additional tax proposed by the IRS in the new notices total $598 million, excluding penalties and interest, but including $462 million related to issues for which CareFusion is liable under the tax matters agreement in the event the amount must be paid to the taxing authority. The Company disagrees with these proposed adjustments and intends to vigorously contest them. The Company believes that it is adequately reserved for the uncertain tax position relating to these matters.

It is reasonably possible that there could be a change in the amount of unrecognized tax benefits within the next 12 months due to activities of the IRS or other taxing authorities, including proposed assessments of additional tax, possible settlement of audit issues, or the expiration of applicable statutes of limitations. The Company estimates that the range of the possible change in unrecognized tax benefits within the next 12 months is a decrease of approximately zero to $25 million excluding penalties and interest.

The Company’s provision for income taxes as a percentage of pretax earnings from continuing operations (“effective tax rate”) was 36.9% and 68.8%, respectively, for the three and six months ended December 31, 2009 compared to 37.7% and 35.1%, respectively, for the three and six months ended December 31, 2008. Generally, fluctuations in the effective tax rate are due to changes within international and U.S. state effective tax rates resulting from the Company’s business mix and the impact of restructuring and employee severance, impairments and other discrete items. During the six months ended December 31, 2009 the effective tax rate was impacted by an unfavorable adjustment of $172 million, or 31.8%, attributable to earnings no longer indefinitely invested offshore.

 

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The effective tax rates for the three and six months ended December 31, 2008 were unfavorably impacted by $2 million and favorably impacted by $10 million, respectively, as the result of discrete tax adjustments. During the three and six months ended December 31, 2008 there were favorable tax adjustments of $3 million and $23 million, respectively, as the result of the release of a valuation allowance that had previously been established for capital losses for which the Company’s ability to utilize were uncertain. The remaining unfavorable tax adjustments relate primarily to adjustments to the Company’s state deferred tax rates.

See Note 8 of “Notes to Condensed Consolidated Financial Statements” for additional information on the Company’s provision for income taxes and unrecognized tax benefits.

Earnings from Discontinued Operations

Earnings from discontinued operations were $4 million and $28 million, respectively, for the three and six months ended December 31, 2009 compared to $148 million and $224 million for the same periods in the prior year. CareFusion operating results are included within earnings from discontinued operations for all periods through the date of the Spin-Off. See Note 4 of “Notes to Condensed Consolidated Financial Statements” for information on the Company’s discontinued operations.

Segment Results of Operations

Reportable Segments

In connection with the Spin-Off, during the first quarter of fiscal 2010, the Company reorganized its businesses into two reportable segments — Pharmaceutical and Medical. The Company evaluates the performance of the individual segments based upon, among other things, segment profit. Segment profit is segment revenue less segment cost of products sold, less segment SG&A expenses. Segment SG&A expense includes equity compensation expense as well as allocated corporate expenses for shared functions, including corporate management, corporate finance, financial shared services, human resources, information technology, legal and an integrated hospital sales organization. Information about interest income and expense and income taxes is not provided at the segment level. In addition, restructuring and employee severance, impairments and loss on sale of assets, litigation (credits)/charges, net and certain investment spending are not allocated to the segments. Investment spending generally includes the first year spend for certain projects which require incremental strategic investments in the form of additional operating expenses. The Company urges its segments to identify investment projects which will encourage innovation and provide future returns. As approval decisions for such projects are dependent upon executive management, the expenses for such projects are retained at Corporate. See Note 14 of “Notes to Condensed Consolidated Financial Statements” for additional information on the Company’s reportable segments.

The following table summarizes segment revenue for the three and six months ended December 31, 2009 and 2008:

 

     Three Months Ended
December 31,
    Six Months Ended
December 31,
 

(in millions, except growth rates)

   Change (1)     2009     2008     Change (1)     2009     2008  

Pharmaceutical

   3   $ 22,694.7      $ 22,078.7      4   $ 45,257.0      $ 43,482.8   

Medical

   9     2,232.4        2,057.3      9     4,469.4        4,094.0   
                                    

Total segment revenue

   3     24,927.1        24,136.0      5     49,726.4        47,576.8   

Corporate (2)

   N.M.        (7.4     (18.2   N.M.        (26.0     (21.9
                                    

Total consolidated revenue

   3   $ 24,919.7      $ 24,117.8      5   $ 49,700.4      $ 47,554.9   
                                    

 

(1) Change is calculated as the percentage increase or (decrease) for the three and six months ended December 31, 2009 as compared to the same periods in the prior year.
(2) Corporate revenue primarily consists of the elimination of inter-segment revenue.

The following table summarizes segment profit for the three and six months ended December 31, 2009 and 2008:

 

     Three Months Ended
December 31,
    Six Months Ended
December 31,
 

(in millions, except growth rates)

   Change (1)     2009    2008     Change (1)     2009     2008  

Pharmaceutical

   (1 )%    $ 259.6    $ 262.6      (2 )%    $ 468.0      $ 475.9   

Medical

   38     102.5      74.5      26     217.4        172.4   
                                   

Total segment profit

   7     362.1      337.1      6     685.4        648.3   

Corporate (2)

   N.M.        4.7      (24.0   N.M.        (78.7     (48.6
                                   

Total consolidated operating earnings

   17   $ 366.8    $ 313.1      1   $ 606.7      $ 599.7   
                                   

 

(1) Change is calculated as the percentage increase or (decrease) for the three and six months ended December 31, 2009 as compared to the same periods in the prior year.
(2) Corporate includes, among other things, restructuring and employee severance, impairments and loss on sale of assets, litigation (credits)/charges, net and certain investment spending which are not allocated to the segments.

 

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Pharmaceutical Segment Performance

The Pharmaceutical segment revenue growth of $616 million or 3% and $1.8 billion or 4%, respectively, during the three and six months ended December 31, 2009 as compared to the prior year periods was primarily due to pharmaceutical price appreciation and additional volume from existing customers (the combined impact was $1.0 billion and $2.2 billion, respectively). The pharmaceutical price appreciation index was 8.2% for the trailing twelve months ended December 31, 2009. Revenue was also positively impacted by the addition of new customers ($36 million and $144 million, respectively) and negatively impacted by the loss of customers ($468 million and $663 million, respectively).

Pharmaceutical segment profit decreased $3 million or 1% and $8 million or 2%, respectively, during the three and six months ended December 31, 2009 as compared to the prior year periods. Segment profit was negatively impacted by a decrease in gross margin of $16 million and $30 million for the three and six months ended December 31, 2009, respectively, partially offset by a decrease in SG&A of $13 million and $22 million for the three and six months ended December 31, 2009, respectively. The decline in gross margin was primarily due to increased customer discounts ($24 million and $69 million, respectively) as a result of customer repricings and increased sales volume and the timing and reduction in new generic launches ($27 million and $45 million, respectively). The decline in gross margin was also due to the repositioning of Medicine Shoppe ($26 million and $41 million, respectively) which was partially offset by efficiencies gained within SG&A. The decline in gross margin was partially offset by increased distribution service agreement fees and pharmaceutical price appreciation under branded manufacturer agreements (combined impact of $24 million and $46 million, respectively). Also offsetting the decline in gross margin were increased manufacturer cash discounts ($17 million and $46 million, respectively), the favorable impact of a generic transition within the nuclear pharmacy business ($12 million and $42 million, respectively) and various initiatives focused on generic products. The increased distribution service agreement fees and manufacturer cash discounts were primarily the result of increased sales volume. The Company expects a certain level of continued pricing pressure due to the competitive market in which it operates. The decline in SG&A expenses was primarily due to company-wide cost control initiatives.

The Company’s results could be adversely affected if sales of pharmaceutical products decline, competitive pricing pressure intensifies, the frequency of new generic pharmaceutical launches decreases, generic price deflation increases, or pharmaceutical price appreciation on branded products decreases. Alternatively, the Company’s results could benefit if sales of pharmaceutical products increase, the frequency of new generic pharmaceutical launches increases, generic price deflation decreases, or pharmaceutical price appreciation on branded products increases.

The Pharmaceutical segment’s nuclear pharmacy services business dispenses several products prepared using a particular radioisotope. The supply of that radioisotope is currently adversely affected by a continued and prolonged shortage of the raw material used to derive that radioisotope. The Company is working closely with manufacturers to build long-term solutions to this supply challenge.

Bulk and Non-Bulk Customers. The Pharmaceutical segment differentiates between bulk and non-bulk customers because bulk customers generate significantly lower segment profit as a percentage of revenue than that generated by non-bulk customers. Bulk customers consist of retail chain customers’ centralized warehouse operations and customers’ mail order businesses. All other customers are classified as non-bulk customers (for example, retail stores, pharmacies, hospitals and alternate care sites). Bulk customers include the warehouse operations of retail chains whose retail stores are classified as non-bulk customers. A single retail chain pharmacy customer may be both a bulk customer with respect to its warehouse operations and a non-bulk customer with respect to its retail stores. Bulk customers have the ability to process large quantities of products in central locations and self-distribute these products to their individual retail stores or customers. Substantially all deliveries to bulk customers consist of product shipped in the same form as the product is received from the manufacturer, but a small portion of deliveries to bulk customers are broken down into smaller units prior to shipping. Non-bulk customers, on the other hand, require more complex servicing by the Company. These services, all of which are performed by the Company, include receiving inventory in large or full case quantities and breaking it down into smaller quantities, warehousing the product for a longer period of time, picking individual products specific to a customer’s order and delivering that smaller order to a customer location.

 

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The Company tracks revenue by bulk and non-bulk customers in its financial systems. An internal analysis has been prepared to estimate segment profit from bulk and non-bulk customers by allocating segment expenses (total of segment cost of products sold and segment SG&A expenses) separately for bulk and non-bulk customers. The following table shows the allocation of segment expenses, segment profit and segment profit as a percentage of revenue for bulk and non-bulk customers for the three and six months ended December 31, 2009 and 2008 (prior period amounts differ from those previously disclosed as they have been updated to remove Martindale which has been reclassified to discontinued operations):

 

     Three Months Ended
December 31,
    Six Months Ended
December 31,
 

(in millions, except percentage of revenue)

   2009     2008     2009     2008  

Non-bulk customers:

        

Revenue from non-bulk customers

   $ 11,670.1      $ 10,954.3      $ 22,906.0      $ 21,629.5   

Segment expenses allocated to non-bulk customers (1)

   $ 11,434.3      $ 10,725.9      $ 22,467.0      $ 21,215.9   

Segment profit from non-bulk customers (1)

   $ 235.8      $ 228.4      $ 439.0      $ 413.6   

Segment profit from non-bulk customers as a percentage of revenue from non-bulk customers (1)

     2.02     2.08     1.92     1.91

Bulk customers:

        

Revenue from bulk customers

   $ 11,024.6      $ 11,124.4      $ 22,351.0      $ 21,853.3   

Segment expenses allocated to bulk customers (1)

   $ 11,000.8      $ 11,090.2      $ 22,322.0      $ 21,791.0   

Segment profit from bulk customers (1)

   $ 23.8      $ 34.2      $ 29.0      $ 62.3   

Segment profit from bulk customers as a percentage of revenue from bulk customers (1)

     0.22     0.31     0.13     0.29

 

(1) Amounts shown are estimates based upon the internal analysis described above. The preparation of this internal analysis required the use of complex and subjective estimates and allocations based upon assumptions, past experience and judgment that the Company believes are reasonable. The core pharmaceutical distribution operation (“Distribution”) services both bulk and non-bulk customers. Therefore, expenses associated with this operation were allocated between bulk and non-bulk customers as described below. The brokerage operation (“Brokerage”) only services bulk customers, therefore, expenses associated with Brokerage are allocated to bulk customers. The remaining operations (i.e., excluding Distribution) service non-bulk customers, therefore, expenses associated with these operations were allocated to non-bulk customers.

The following describes the allocation of the major components of cost of products sold for Distribution between bulk and non-bulk customers:

 

   

Cost of products sold for pharmaceutical products is determined by specifically tracking the manufacturer’s designated price of products, at the time the products are sold, by bulk and non-bulk customers. The manufacturer’s designated price is then reduced by other components impacting cost of products sold, including distribution service agreement fees, pharmaceutical price appreciation, manufacturer cash discounts and manufacturer rebates and incentives. In addition, other inventory charges and credits are added or subtracted, as appropriate, to arrive at cost of products sold. The Company used the following methods that it believes provide a reasonable correlation to allocate the remaining components of cost of products sold between bulk and non-bulk customers:

 

   

Distribution service agreement fees and pharmaceutical price appreciation are tracked by manufacturer. Therefore, the Company allocated the distribution service agreement fees and pharmaceutical price appreciation associated with each manufacturer among their products in proportion to sales of each product between bulk and non-bulk customers.

 

   

Manufacturer cash discounts are recognized as a reduction to cost of products sold when the related inventory is sold and were allocated in proportion to the manufacturer’s published price of the product sold to bulk and non-bulk customers.

 

   

Manufacturers’ rebates and incentives are based on the individual agreements entered into with manufacturers related to specific products. Rebates and incentives were grouped by contract terms and then allocated in proportion to sales to bulk and non-bulk customers.

 

   

Other inventory charges and credits include charges for outdated and returned inventory items and fluctuation in inventory reserves. The Company estimated the portion of these inventory charges and credits attributable to each product and then allocated them to bulk and non-bulk customers in proportion to the sales of these products.

The Company used methods that it believes provide a reasonable correlation to allocate the SG&A expenses for Distribution between bulk and non-bulk customers as follows:

 

   

Warehouse expense includes labor-related expenses associated with receiving, shipping and handling the inventory as well as warehouse storage costs including insurance, taxes, supplies and other facility costs. Warehouse expense was allocated in proportion to the number of invoice line items filled for each bulk or non-bulk customer because the Company believes that there is a correlation between the number of different products ordered as reflected in invoice lines and the level of effort associated with receiving, shipping and handling that order (bulk customers typically order substantially larger quantities of products and therefore generate substantially fewer invoice lines which results in substantially less warehouse expense being allocated to bulk customers);

 

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Delivery expense includes transportation costs associated with physically moving the product from the warehouse to the customer’s designated location. Delivery expense was allocated in proportion to the number of invoices generated for each bulk or non-bulk customer on the assumption that each invoice generates a delivery;

 

   

Sales expense includes personnel-related costs associated with sales and customer service activities (such activities are the same for both bulk and non-bulk customers). Sales expense was allocated in proportion to the number of invoices generated for each bulk or non-bulk customer because customer invoices are a reasonable estimate of the amount of customer service calls and sales effort; and

 

   

General and administrative expenses were allocated in proportion to the units of products sold to bulk or non-bulk customers. These expenses were allocated on the assumption that general and administrative expenses increase or decrease in direct relation to the volume of sales.

The internal analysis indicated segment expenses as a percentage of revenue were higher for bulk customers than for non-bulk customers because of lower pricing on sales for bulk customers and higher segment cost of products sold partially offset by lower segment SG&A expenses. Bulk customers receive lower pricing on sales of the same products than non-bulk customers due to volume pricing in a competitive market and the lower costs related to the services provided by the Company. In addition, sales to bulk customers in aggregate generate higher segment cost of products sold as a percentage of revenue than sales to non-bulk customers because bulk customers’ orders consist almost entirely of higher cost branded products. The higher segment cost of products sold as a percentage of revenue for bulk customers is also driven by lower manufacturer distribution service agreement fees and branded pharmaceutical price appreciation and lower manufacturer cash discounts. Manufacturer distribution service agreement fees and manufacturer cash discounts are recognized as a reduction to segment cost of products sold and are lower as a percentage of revenue due to the mix of products sold. Pharmaceutical price appreciation increases customer pricing which, in turn, results in higher segment gross margin for sales of inventory that was on-hand at the time of the manufacturer’s price increase. Since products sold to bulk customers are generally held in inventory for a shorter time than products sold to non-bulk customers, there is less opportunity to realize the benefit of pharmaceutical price appreciation. Consequently, segment cost of products sold as a percentage of revenue for bulk customers is higher than for non-bulk customers and segment gross margin as a percentage of revenue is substantially lower for bulk customers than for non-bulk customers. Deliveries to bulk customers require substantially less services by the Company than deliveries to non-bulk customers. As such, segment SG&A expenses as a percentage of revenue from bulk customers are substantially lower than from non-bulk customers. However, the lower SG&A expenses do not offset the higher cost of products sold and as a result, segment profit as a percentage of revenue is significantly lower for bulk customers than for non-bulk customers.

The Company defines bulk and non-bulk customers based on the way in which the Company operates its business and the services it performs for its customers. The Company is not aware of an industry standard regarding the definition of bulk customers and based solely on a review of the Annual Reports on Form 10-K of other national pharmaceutical wholesalers, the Company notes that other companies in comparable businesses may, or may not, use a different definition of bulk customers.

During the three and six months ended December 31, 2009, revenue from non-bulk customers increased $716 million and $1.3 billion, respectively, compared to the same periods in the prior year due to increased revenue from existing customers. Segment profit from non-bulk customers increased $7 million and $25 million, respectively, during the three and six months ended December 31, 2009 compared to the same periods in the prior year due to increased distribution service agreement fees and pharmaceutical price appreciation and a decrease in SG&A expenses, partially offset by customer discounts, reduction in generic launches and the repositioning of Medicine Shoppe.

During the three months ended December 31, 2009, revenue from bulk customers decreased $100 million compared to the same period in the prior year due to the timing of purchases by certain customers and the loss of a customer. During the six months ended December 31, 2009, revenue from bulk customers increased $498 million compared to the same period in the prior year due to increased volume from existing customers. Segment profit from bulk customers decreased $10 million and $33 million, respectively, for the three and six months ended December 31, 2009 compared to the same period in the prior year primarily due to increased customer discounts as a result of customer repricings.

Medical Segment Performance

The Medical segment revenue growth of $175 million or 9% and $375 million or 9%, respectively, during the three and six months ended December 31, 2009 as compared to the prior year periods was primarily due to additional volume from existing customers ($155 million and $310 million, respectively). The additional volume was partially driven by strong demand for flu-related products. Revenue was also positively impacted by the addition of new customers ($39 million and $85 million, respectively) and new products ($16 million and $38 million, respectively). Revenue growth was negatively impacted by the loss of customers ($84 million and $172 million, respectively). Revenue for the six months ended December 31, 2009 was also positively impacted by the recognition of previously deferred intercompany revenue for sales to CareFusion ($51 million). Prior to the Spin-Off, the Company deferred revenue for products sold to CareFusion businesses until the products were sold to the end customers. In connection with the Spin-Off, the previously deferred revenue was recognized.

 

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The Medical segment profit increased $28 million or 38% and $45 million or 26%, respectively, during the three and six months ended December 31, 2009 as compared to the same periods in the prior year. Segment profit was positively impacted by an increase in gross margin of $54 million and $76 million, respectively. The increase in gross margin was primarily due to a decrease in raw materials costs ($19 million and $32 million, respectively) and increased revenue. Gross margin for the six months ended December 31, 2009 was also positively impacted by the recognition of the deferred revenue for sales to CareFusion discussed above ($14 million). SG&A expenses for the three and six months ended December 31, 2009 increased $26 million and $31 million, respectively, compared to the same periods in the prior year primarily due to incremental strategic project investments ($13 million and $24 million, respectively) and in support of the 9% revenue growth. The increase in SG&A was partially offset by company-wide cost control initiatives.

Liquidity and Capital Resources

Sources and Uses of Cash

The following table summarizes the Company’s Condensed Consolidated Statements of Cash Flows for the six months ended December 31, 2009 and 2008:

 

      Six Months Ended
December 31,
 

(in millions)

   2009     2008  

Net cash provided by/(used in) - continuing operations:

    

Operating activities

   $ 783.8      $ (506.4

Investing activities

     27.4        (124.4

Financing activities

     (1,706.7     (259.0

Net cash provided by/(used in) - discontinued operations:

    

Operating activities

   $ 146.8      $ 717.6   

Investing activities

     (9.9     (51.7

Financing activities

     1,283.8        (2.3

Operating activities. Net cash provided by operating activities from continuing operations during the six months ended December 31, 2009 totaled $784 million, which was driven by earnings and changes in working capital. The most significant changes in working capital were increased accounts payable ($1.5 billion) offset by increased inventories ($1.1 billion) during the regular course of business. Cash flows from operations can be significantly impacted by factors such as the timing of inventory purchases, customer payments of accounts receivable and payments to vendors during the regular course of business.

Net cash provided by operating activities from discontinued operations for the six months ended December 31, 2009 totaled $147 million primarily related to the earnings and changes in working capital for CareFusion.

Net cash used in operating activities from continuing operations during the six months ended December 31, 2008 totaled $506 million primarily related to increased inventories ($1.8 billion) offset by increased accounts payable ($1.3 billion). These increases were due primarily to timing of inventory purchases, receipts and payments to vendors.

Net cash provided by operating activities from discontinued operations for the six months ended December 31, 2008 totaled $718 million primarily related to the earnings and changes in working capital for CareFusion.

Investing activities. Net cash provided by investing activities from continuing operations of $27 million during the six months ended December 31, 2009 primarily reflected proceeds from the sale of CareFusion common stock ($135 million) partially offset by capital spending ($80 million). The Company expects to sell its remaining CareFusion stock within the next 18 months and is assessing the method and timing based on market conditions and other factors.

Net cash used in investing activities from continuing operations for the six months ended December 31, 2008 of $124 million primarily reflected capital spending ($131 million).

Financing activities. Net cash used in financing activities from continuing operations for the six months ended December 31, 2009 of $1.7 billion primarily reflected the Company’s repayment of long-term obligations ($1.6 billion which includes a $66 million early tender premium) and payment of dividends ($127 million).

Net cash provided by financing activities from discontinued operations for the six months ended December 31, 2009 of $1.3 billion primarily reflected permanent financing obtained by CareFusion prior to the Spin-Off offset by $90 million cash funding provided by the Company to CareFusion pursuant to the Spin-Off separation agreement.

 

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Net cash used in financing activities from continuing operations for the six months ended December 31, 2008 of $259 million reflected Company’s repayment of long term obligations ($305 million).

Share Repurchase Program

During the three and six months ended December 31, 2009, the Company repurchased $50 million of its Common Shares pursuant to the $500 million share repurchase program announced on August 5, 2009. This repurchase authorization expires on August 31, 2012. As of December 31, 2009, $450 million remained from the $500 million repurchase authorization. The Company expects to use this repurchase program to at least offset equity plan issuances.

See the table under “Part II, Item 2” of this Form 10-Q for more information regarding Company repurchases of Common Shares during the three months ended December 31, 2009.

Capital Resources

The Company’s cash and equivalents balance was $1.7 billion at December 31, 2009 compared to $1.2 billion at June 30, 2009. The cash balance at December 31, 2009 was affected by net cash provided by operating activities of $931 million, which was driven by earnings and changes in working capital as described above.

The Company’s cash and equivalents balance as of December 31, 2009 included $406 million of cash held by its subsidiaries outside of the United States. Although the vast majority of cash held outside the United States is available for repatriation, doing so could subject it to U.S. federal, state and local income tax. The Company, as a U.S. parent of foreign subsidiaries, may temporarily access cash held by its foreign subsidiaries without subjecting the Company to U.S. federal income tax through intercompany loans. Not included in the previously disclosed cash held by subsidiaries outside of the United States, is an intercompany loan of $873 million from the Company’s international Accounts Receivable and Financing Entity (see below for discussion of this entity), which is due by fiscal 2012.

In addition to cash, the Company’s sources of liquidity include a $1.5 billion commercial paper program backed by a $1.5 billion revolving credit facility and a committed receivables sales facility program with the capacity to sell $950 million in receivables. The Company had no outstanding borrowings from the commercial paper program at December 31, 2009 and had no outstanding balance under the committed receivables sales facility program at December 31, 2009.

During fiscal 2001, the Company entered into an agreement to periodically sell trade receivables to a special purpose accounts receivable and financing entity (the “Accounts Receivable and Financing Entity”), which was exclusively engaged in purchasing trade receivables from, and making loans to, the Company. The Accounts Receivable and Financing Entity, which was consolidated by the Company as it was the primary beneficiary of the variable interest entity, issued preferred variable debt securities to parties not affiliated with the Company. On October 3, 2008, the Company repaid the remaining balance of $149 million for the preferred debt securities and the agreement was terminated. On November 10, 2009, the Company amended its existing committed receivables sales facility program to extend the program for an additional 364 days.

On July 14, 2009 CareFusion obtained permanent financing of $1.4 billion in the form of fixed rate senior notes, and in connection with the Spin-Off, CareFusion distributed $1.4 billion of cash to the Company immediately prior to the Spin-Off.

On September 24, 2009, the Company completed a debt tender announced on August 27, 2009 for an aggregate purchase price, including an early tender premium but excluding accrued interest, fees and expenses, of up to $1.2 billion of the following series of debt securities (listed in order of acceptance priority): (i) 7.80% Debentures due October 15, 2016 of Allegiance Corporation; (ii) 6.75% Notes due February 15, 2011 of the Company; (iii) 6.00% Notes due June 15, 2017 of the Company; (iv) 7.00% Debentures due October 15, 2026 of Allegiance Corporation; (v) 5.85% Notes due December 15, 2017 of the Company; (vi) 5.80% Notes due October 15, 2016 of the Company; (vii) 5.65% Notes due June 15, 2012 of the Company; (viii) 5.50% Notes due June 15, 2013 of the Company; and (ix) 4.00% Notes due June 15, 2015 of the Company. The Company purchased more than $1.1 billion pursuant to the offer using the order of priority set forth above. In connection with the debt tender, the Company incurred a pre-tax loss for the early extinguishment of debt of approximately $40 million, which included an early tender premium of $66 million, the write-off of $5 million of unamortized debt issuance costs, and an offsetting $32 million fair value adjustment to the respective debt related to previously terminated interest rate swaps. See Note 7 of “Notes to Condensed Consolidated Financial Statements” for additional information on the debt tender and the Company’s remaining long-term obligations at December 31, 3009.

On October 2, 2009, the Company repaid its $350 million floating rate notes that had reached their maturity.

The Company’s capital resources are more fully described in “Liquidity and Capital Resources” within “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and Notes 4, 9 and 19 of the “Notes to Consolidated Financial Statements” from the FY2009 Financial Statements.

 

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The Company currently believes that, based upon existing cash, operating cash flow, available capital resources (as discussed above) and other available market transactions, it has adequate capital resources at its disposal to fund currently anticipated capital expenditures, business growth and expansion, working capital needs, contractual obligations and current and projected debt service requirements, including those related to business combinations.

From time to time, the Company considers and engages in acquisition transactions in order to expand its role as a leading provider of products and services that improve the cost-effectiveness of healthcare. If additional transactions are entered into or consummated, the Company may need to enter into funding arrangements for such acquisitions.

Debt Ratings/Covenants

The Company’s senior debt credit ratings from Standard & Poor’s Rating Services (“S&P”), Moody’s Investors Service (“Moody’s”) and Fitch Ratings (“Fitch”) are BBB+, Baa3 and BBB, respectively, and the commercial paper ratings are A-2, P-3 and F2, respectively. The S&P and Fitch ratings outlooks are “stable.” The Moody’s outlook is “negative”. The senior debt credit ratings and short-term ratings limit the Company’s ability to gain access to the commercial paper market, but the Company believes that it will be able to utilize alternative sources of credit that are available to the Company.

On April 16, 2009, in connection with the Spin-Off, the Company amended its $1.5 billion revolving credit facility to, among other things, replace a minimum net worth covenant with covenants that require the Company to maintain a consolidated interest coverage ratio as of the end of any fiscal quarter of at least 4-to-1 and to maintain a consolidated leverage ratio of no more than 3.25-to-1. The new covenants became effective on September 1, 2009 following consummation of the Spin-Off and completion of the cash distribution from CareFusion to the Company.

On May 1, 2009, the Company amended its committed receivables sales facility program to replace a minimum net worth covenant in the Performance Guaranty with covenants that require the Company to maintain a consolidated interest coverage ratio as of the end of any fiscal quarter of at least 4-to-1 and to maintain a consolidated leverage ratio of no more than 3.25-to-1. The new covenants became effective on September 1, 2009.

As of December 31, 2009, the Company was in compliance with these financial covenants.

Contractual Obligations

Except as disclosed in the Company’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2009, there have been no material changes, outside of the ordinary course of business, in the Company’s outstanding contractual obligations since the end of the 2009 fiscal year.

Off-Balance Sheet Arrangements

See “Liquidity and Capital Resources—Capital Resources” and Note 19 of “Notes to Consolidated Financial Statements” in the FY2009 Financial Statements, which is incorporated herein by reference, for a discussion of off-balance sheet arrangements.

Recent Financial Accounting Standards

See Note 1 of “Notes to Condensed Consolidated Financial Statements” for a discussion of recent financial accounting standards.

 

Item 3: Quantitative and Qualitative Disclosures about Market Risk

The Company believes that there has been no material change in the quantitative and qualitative market risks since the end of the Company’s 2009 fiscal year end.

 

Item 4: Controls and Procedures

Evaluation of Disclosure Controls and Procedures. The Company carried out an evaluation, as required by Rule 13a-15(e) under the Exchange Act, with the participation of the Company’s principal executive officer and principal financial officer, of the effectiveness of the Company’s disclosure controls and procedures as of December 31, 2009. Based on this evaluation, the Company’s principal executive officer and principal financial officer have concluded that the Company’s disclosure controls and procedures were effective as of December 31, 2009 to provide reasonable assurance that information required to be disclosed in the Company’s reports under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC rules and forms and to provide that such information is accumulated and communicated to management to allow timely decisions regarding required disclosure.

 

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Changes in Internal Control Over Financial Reporting. There were no changes in the Company’s internal control over financial reporting during the quarter ended December 31, 2009 that have materially affected, or are reasonably likely to materially affect, its internal control over financial reporting.

Inherent Limitations on Effectiveness of Controls. The Company’s management, including its principal executive officer and the principal financial officer, does not expect that the Company’s disclosure controls or its internal control over financial reporting will prevent or detect all error and all fraud. A control system, no matter how well designed and operated, can provide only reasonable, not absolute, assurance that the control system’s objectives will be met. The design of a control system must reflect the fact that there are resource constraints, and the benefits of controls must be considered relative to their costs. Further, because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that misstatements due to error or fraud will not occur or that all control issues and instances of fraud, if any, have been detected. These inherent limitations include the realities that judgments in decision-making can be faulty and that breakdowns can occur because of simple error or mistake. Controls can also be circumvented by the individual acts of some persons, by collusion of two or more people, or by management override of the controls. The design of any system of controls is based in part on certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions. Projections of any evaluation of controls effectiveness to future periods are subject to risks. Over time, controls may become inadequate because of changes in conditions or deterioration in the degree of compliance with policies or procedures.

PART II. OTHER INFORMATION

 

Item 1: Legal Proceedings

The legal proceedings described in Note 9 of “Notes to Condensed Consolidated Financial Statements” are incorporated by reference into this Part II, Item 1.

 

Item 1A: Risk Factors

The risk factors in the Company’s Annual Report on Form 10-K for the fiscal year ended June 30, 2009 (the “2009 Form 10-K”) included risks that were specific to CareFusion. The Company completed the Spin-Off of CareFusion on August 31, 2009 and as such the risk factors in the 2009 Form 10-K were superseded by the risk factors set forth in “Part II, Item 1A—Risk Factors” of the Company’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2009 (the “September 30, 2009 Form 10-Q”). In addition to the other information set forth in this Form 10-Q, you should carefully consider the risks discussed in “Part II, Item 1A—Risk Factors” in the September 30, 2009 Form 10-Q, which could materially and adversely affect the Company’s results of operations, financial condition, liquidity, cash flows and/or future business prospects.

The risks described in the September 30, 2009 Form 10-Q and in this Form 10-Q are not the only risks that the Company faces. The information in this Form 10-Q and the risks described in the September 30, 2009 Form 10-Q should be read in conjunction with the 2009 Form 10-K and the Company’s filings with the SEC since June 30, 2009. The Company’s results of operations, financial condition, liquidity, cash flows and/or future business prospects could also be affected by additional risks and uncertainties not known to the Company at the time of the filing of this Form 10-Q or that the Company currently considers to be immaterial.

 

Item 2: Unregistered Sales of Equity Securities and Use of Proceeds

The following table provides information about purchases the Company made of its Common Shares during the quarter ended December 31, 2009:

Issuer Purchases of Equity Securities

 

Period

   Total Number
of Shares
Purchased (1)
   Average Price
Paid per Share
   Total Number of
Shares Purchased
as Part of
Publicly
Announced
Program (2)
   Approximate Dollar
Value of Shares that
May Yet Be
Purchased Under the
Program (2)

October 1-31, 2009

   668    $ 27.60    —      $ 500,000,000

November 1-30, 2009

   1,625,626      30.76    1,625,415      450,000,023

December 1-31, 2009

   925      32.67    —        450,000,023
                       

Total

   1,627,219    $ 30.76    1,625,415    $ 450,000,023
                       

 

(1) Includes 134, 113 and 170 Common Shares purchased in October, November and December 2009, respectively, through a rabbi trust as investments of participants in the Company’s Deferred Compensation Plan. Also includes 534, 98 and 755 restricted shares surrendered in October, November and December 2009, respectively, by employees upon vesting to meet tax withholding.
(2) During the three months ended December 31, 2009, the Company repurchased approximately $50 million of its Common Shares under its existing $500 million share repurchase program announced on August 5, 2009. This repurchase authorization expires on August 31, 2012. At December 31, 2009, approximately $450 million remained from the $500 million repurchase authorization. The Company expects to use this repurchase program to at least offset equity plan issuances.

 

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Item 4: Submission of Matters to a Vote of Security Holders

The Company’s 2009 Annual Meeting of Shareholders was held on November 4, 2009. Matters voted upon at the meeting and the votes tabulated with respect to such matters are as follows:

Election of Directors

 

Director

  

Votes For

  

Votes Against

  

Abstentions

Colleen F. Arnold

   319,507,610    8,226,597    924,484

George S. Barrett

   318,071,760    9,796,633    790,298

Glenn A. Britt

   319,170,660    8,547,602    940,429

Calvin Darden

   307,569,601    20,116,004    973,086

Bruce L. Downey

   322,384,101    5,315,484    959,106

John F. Finn

   317,182,334    10,611,817    864,540

Gregory B. Kenny

   304,480,904    23,217,188    960,599

Richard C. Notebaert

   307,736,902    19,993,486    928,303

David W. Raisbeck

   318,861,618    8,873,658    923,415

Jean G. Spaulding

   307,656,716    20,148,811    853,164

Management and Shareholder Proposals

 

     Votes Cast         Broker
Non-Votes
     For    Against    Abstain   

Ratification of the selection of the Company’s independent registered accounting firm for fiscal 2010

   324,017,904    4,358,800    281,987    —  

Re-approval of the material terms of the performance criteria under Cardinal Health’s Amended and Restated Management Incentive Plan

   317,281,419    9,695,421    1,681,851    —  

Shareholder proposal regarding performance-based stock options

   124,305,405    171,238,610    3,127,285    29,987,391

Shareholder proposal regarding an amendment to the Company’s Restated Code of Regulations to require that the Chairman of the Board be an independent director

   47,623,612    250,190,818    856,870    29,987,391

 

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Item 6: Exhibits

 

Exhibit
Number
  

Exhibit Description

    3.1    Amended and Restated Articles of Incorporation of Cardinal Health, Inc., as amended (incorporated by reference to Exhibit 3.1 to the Company’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2008, File No. 1-11373)
    3.2    Cardinal Health, Inc. Restated Code of Regulations, as amended (incorporated by reference to Exhibit 3.2 to the Company’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2008, File No. 1-11373)
  10.1    Second Amendment to Cardinal Health, Inc. 2005 Long-Term Incentive Plan (as amended and restated as of November 5, 2008) (incorporated by reference to exhibit 10.1.2 to the Company’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2009, File No. 1-11373)
  10.2    First Amendment to Cardinal Health, Inc. 2007 Nonemployee Directors Equity Incentive Plan (incorporated by reference to exhibit 10.2.1 to the Company’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2009, File No. 1-11373)
  10.3    Form of amended and restated Aircraft Time Sharing Agreement between Cardinal Health, Inc. and George S. Barrett (incorporated by reference to exhibit 10.4.2 to the Company’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2009, File No. 1-11373)
  10.4    Third Amendment, dated as of November 10, 2009, to the Third Amendment and Restated Receivables Purchase Agreement, dated as of November 19, 2007 (incorporated by reference to exhibit 10.1 to the Company’s Current Report on Form 8-K filed on November 16, 2009, File No. 1-11373)
  10.5    Third Amendment to the Cardinal Health, Inc. Broadly-based Equity Incentive Plan, as amended
  10.6    Fourth Amendment to Cardinal Health, Inc. Amended and Restated Equity Incentive Plan, as amended
  12.1    Computation of Ratio of Earnings to Fixed Charges
  31.1    Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
  31.2    Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
  32.1    Certification of Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
  32.2    Certification of Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
  99.1    Statement regarding Forward-Looking Information
101.INS*    XBRL Instance Document
101.SCH*    XBRL Taxonomy Extension Schema Document
101.CAL*    XBRL Taxonomy Extension Calculation Linkbase Document
101.DEF*    XBRL Taxonomy Definition Linkbase Document
101.LAB*    XBRL Taxonomy Extension Label Linkbase Document
101.PRE*    XBRL Taxonomy Extension Presentation Linkbase Document

 

* XBRL (Extensible Business Reporting Language) information is furnished and not filed or a part of a registration statement or prospectus for purposes of Sections 11 or 12 of the Securities Act of 1933, is deemed not filed for purposes of Section 18 of the Securities Exchange Act of 1934, and otherwise is not subject to liability under these sections.

Cardinal Health Website

The Company uses its website as a channel of distribution for material company information. Important information, including news releases, analyst presentations and financial information regarding the Company, is routinely posted and accessible on the Investors page at www.cardinalhealth.com. In addition, the Company’s website allows investors and other interested persons to sign up to automatically receive email alerts when the Company posts news releases, SEC filings and certain other information on its website.

 

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

 

 

CARDINAL HEALTH, INC.

Date: February 5, 2010   /S/    GEORGE S. BARRETT        
  George S. Barrett
  Chairman and Chief Executive Officer
    /S/    JEFFREY W. HENDERSON        
  Jeffrey W. Henderson
  Chief Financial Officer

 

38

EX-10.5 2 dex105.htm 3RD AMENDMENT TO THE CAH BROADLY-BASED EQUITY INCENTIVE PLAN, AS AMENDED 3rd Amendment to the CAH Broadly-based Equity Incentive Plan, as amended

Exhibit 10.5

 

THIRD AMENDMENT TO

CARDINAL HEALTH, INC.

BROADLY-BASED EQUITY INCENTIVE PLAN, AS AMENDED

This Third Amendment (“Third Amendment”) to the Cardinal Health, Inc. Broadly-based Equity Incentive Plan, as last amended by the Second Amendment thereto dated August 8, 2007 (the “Plan”), is effective as of the date on which the separation of CareFusion Corporation, a Delaware corporation, from Cardinal Health, Inc., an Ohio corporation (the “Company”), is effective, pursuant to resolutions of the Board of Directors of the Company, adopted by unanimous written consent dated August 27, 2009.

1. The first paragraph of Section 2 of the Plan is hereby deleted in its entirety and in replacement thereof shall be the following:

“The Plan shall be administered by the Human Resources and Compensation Committee (the “Committee”) of the Board which shall have the power and authority to grant to eligible employees Stock Options and Restricted Shares. In particular, the Committee shall have the authority to: (i) select employees of the Company as recipients of awards; (ii) determine the number and type of awards to be granted; (iii) determine the terms and conditions, not inconsistent with the terms hereof, of any award; (iv) adopt, alter and repeal such administrative rules, guidelines and practices governing the Plan as it shall, from time to time, deem advisable; (v) interpret the terms and provisions of the Plan and any award granted and any agreements relating thereto; and (vi) take any other actions the Committee considers appropriate in connection with, and otherwise supervise the administration of, the Plan. All decisions made by the Committee pursuant to the provisions hereof shall be made in the Committee’s sole discretion and shall be final and binding on all persons.”

2. Subsection (h) of Section 5 of the Plan is hereby deleted in its entirety and in replacement thereof shall be the following:

“(h) Other Termination of Employment. If an optionee’s employment by or service to the Company terminates for any reason other than death or retirement, or disability, any Stock Option held by such optionee which has not vested on such date of termination will automatically terminate on the date of such termination. Unless otherwise determined by the Committee at or after grant or termination, the optionee (or a transferee) will have ninety (90) days (or such other period as the Committee may specify at or after grant or termination) from the date of termination to exercise any and all Stock Options that are then exercisable on the date of termination; provided, however, that if the termination was for Cause, any and all Stock Options held by that optionee may be immediately canceled by the Committee. For purposes of the Plan, “Cause” means on account of any act of fraud or intentional misrepresentation or embezzlement, misappropriation or conversion of assets of the Company or any subsidiary, or the intentional and repeated violation of the written policies or procedures of the Company. For purposes of this Section 5(h), if a participant continues employment or service with CareFusion Corporation, a Delaware corporation (“CareFusion”), or any of its affiliates after the effective time of the distribution of the common stock of CareFusion to the holders of Shares, which is expected to be 11:59 P.M., New York City time, on August 31, 2009 (the “Distribution Effective Time”), then such participant’s employment shall not be deemed to have been terminated until such participant ceases to be a full-time employee of CareFusion or any of its affiliates.”


3. The following subsection 5(k) is hereby inserted immediately after subsection 5(j):

“(k) Effect of Spin-Off. Other than with respect to those Options or employment or severance arrangements that may provide for terms more beneficial to the grantee, if (i) the termination of employment of the grantee as a result of, and within fifteen (15) months after, the separation of the Company’s Clinical and Medical Products businesses by means of a spin-off of those businesses to the Company’s shareholders, and (ii) the grantee was classified as an executive-level employee in accordance with the Company’s human resources system at termination of employment or had at least ten (10) years of continuous service with the Company and its affiliates, including service with an affiliate of the Company prior to the time that such affiliate became an affiliate of the Company, then the vested Options shall remain exercisable until the earlier of the second (2nd) anniversary of such termination of employment (or any later date until which it would remain exercisable by its terms) or the expiration of its original term.”

4. Subsection (c) of Section 6 of the Plan is hereby deleted in its entirety and in replacement thereof shall be the following:

“(c) Share Restrictions. Subject to the provisions of this Plan and the applicable Restricted Share or Restricted Share Unit Award Agreement, during a period set by the Committee commencing with the date of such award and ending on such date as determined by the Committee at grant (the “Restriction Period”), the participant shall not be permitted to sell, transfer, pledge, assign or otherwise encumber Restricted Shares or Restricted Share Units awarded under the Plan. In no event shall more than an aggregate of ten percent (10%) of the Shares authorized for issuance under this Plan (as adjusted as provided in Section 4) be granted in the form of Restricted Shares or Restricted Share Units having a restriction period of less than three (3) years. The Committee shall have the authority, in its absolute discretion, to accelerate the time at which any or all of the restrictions shall lapse with respect to any Restricted Shares or Restricted Share Units or to remove any or all restrictions after the grant of such Restricted Shares or Restricted Share Units, provided, however, that such discretion shall be exercised subject to the limitations set forth in the preceding sentence, excluding discretion exercised in connection with a Grantee’s termination of employment from the Company. Unless otherwise determined by the Committee at or after grant or termination, if a participant’s employment by or service to the Company terminates during the Restriction Period, all Restricted Shares or Restricted Share Units held by such participant still subject to restriction shall be forfeited by the participant. For purposes of this Section 6(c), if a participant continues employment or service with CareFusion or any of its affiliates after the Distribution Effective Time, then such participant’s employment shall not be deemed to have been terminated until such participant ceases to be a full-time employee of CareFusion or any of its affiliates.”

5. The following paragraph is hereby inserted immediately after Section 7(a)(iii):

“Notwithstanding anything in this Plan or any award agreement evidencing an award granted under this Plan to the contrary, after the Distribution Effective Time, this Section 7(a) shall not apply to any award granted under this Plan to an employee who, after the Distribution Effective Time, is employed by CareFusion or any of its affiliates.”

6. Section 8 of the Plan is hereby deleted in its entirety and in replacement thereof shall be the following:

“The Board or the Committee may amend, alter or discontinue the Plan; provided, however, no amendment, alteration or discontinuation shall be made (i) which would impair the rights of an optionee, participant or transferee pursuant to Section 5(e) under any award theretofore granted, without the optionee’s, participant’s or transferee’s consent, except for amendments made to cause the Plan or such award to comply with applicable law, stock exchange rules or accounting rules, or (ii) without the approval of CAH’s shareholders to the extent such approval is required by applicable law, regulation or stock exchange rule.

 

2


The Committee may amend the terms of any award theretofore granted prospectively or retroactively; provided no such amendment shall impair the rights of any holder without the holder’s consent, unless it is made to cause the Plan or such award to comply with applicable law, stock exchange rules or accounting rules; provided, further, no Stock Option may be amended so as to decrease the exercise price of such Stock Option to reflect a decrease in the fair market value of the underlying stock.

Subject to the above provisions, the Board or the Committee shall have authority to amend the Plan to take into account changes in applicable tax and securities laws and accounting rules, as well as other developments.”

 

3

EX-10.6 3 dex106.htm 4TH AMENDMENT TO CAH AMENDED AND RESTATED EQUITY INCENTIVE PLAN, AS AMENDED 4th Amendment to CAH Amended and Restated Equity Incentive Plan, as amended

Exhibit 10.6

 

FOURTH AMENDMENT TO

CARDINAL HEALTH, INC.

AMENDED AND RESTATED EQUITY INCENTIVE PLAN, AS AMENDED

This Fourth Amendment (the “Fourth Amendment”) to the Cardinal Health, Inc. Amended and Restated Equity Incentive Plan, as last amended by the Third Amendment thereto dated August 8, 2007 (the “Plan”), is effective as of the date on which the separation of CareFusion Corporation, a Delaware corporation, from Cardinal Health, Inc., an Ohio corporation (the “Company”), is effective, pursuant to resolutions of the Board of Directors of the Company, adopted by unanimous written consent dated August 27, 2009.

1. The first paragraph of Section 2 of the Plan is hereby deleted in its entirety and in replacement thereof shall be the following:

“The Plan shall be administered by the Human Resources and Compensation Committee (the “Committee”) of the Board which shall have the power and authority to grant to eligible employees Stock Options, Restricted Shares, Performance Shares, Performance Share Units and Incentive Compensation Restricted Shares. In particular, the Committee shall have the authority to: (i) select employees of the Company as recipients of awards; (ii) determine the number and type of awards to be granted; (iii) determine the terms and conditions, not inconsistent with the terms hereof, of any award; (iv) adopt, alter and repeal such administrative rules, guidelines and practices governing the Plan as it shall, from time to time, deem advisable; (v) interpret the terms and provisions of the Plan and any award granted and any agreements relating thereto; and (vi) take any other actions the Committee considers appropriate in connection with, and otherwise supervise the administration of, the Plan. All decisions made by the Committee pursuant to the provisions hereof shall be made in the Committee’s sole discretion and shall be final and binding on all persons.”

2. Subsection (h) of Section 5 of the Plan is hereby deleted in its entirety and in replacement thereof shall be the following:

“(h) Other Termination of Employment. If an optionee’s employment by or service to the Company terminates for any reason other than death or retirement, or disability, any Stock Option held by such optionee which has not vested on such date of termination will automatically terminate on the date of such termination. Unless otherwise determined by the Committee at or after grant or termination, the optionee (or a transferee) will have ninety (90) days (or such other period as the Committee may specify at or after grant or termination) from the date of termination to exercise any and all Stock Options that are then exercisable on the date of termination; provided, however, that if the termination was for Cause, any and all Stock Options held by that optionee may be immediately canceled by the Committee. For purposes of the Plan, “Cause” means on account of any act of fraud or intentional misrepresentation or embezzlement, misappropriation or conversion of assets of the Company or any subsidiary, or the intentional and repeated violation of the written policies or procedures of the Company. For purposes of this Section 5(h), if a participant continues employment or service with CareFusion Corporation, a Delaware corporation (“CareFusion”), or any of its affiliates after the effective time of the distribution of the common stock of CareFusion to the holders of Shares, which is expected to be 11:59 P.M., New York City time, on August 31, 2009 (the “Distribution Effective Time”), then such participant’s employment shall not be deemed to have been terminated until such participant ceases to be a full-time employee of CareFusion or any of its affiliates.”


3. The following subsection 5(k) is hereby inserted immediately after subsection 5(j):

“(k) Effect of Spin-Off. Other than with respect to those Options or employment or severance arrangements that may provide for terms more beneficial to the grantee, if (i) the termination of employment of the grantee as a result of, and within fifteen (15) months after, the separation of the Company’s Clinical and Medical Products businesses by means of a spin-off of those businesses to the Company’s shareholders, and (ii) the grantee was classified as an executive-level employee in accordance with the Company’s human resources system at termination of employment or had at least ten (10) years of continuous service with the Company and its affiliates, including service with an affiliate of the Company prior to the time that such affiliate became an affiliate of the Company, then the vested Options shall remain exercisable until the earlier of the second (2nd) anniversary of such termination of employment (or any later date until which it would remain exercisable by its terms) or the expiration of its original term.”

4. Subsection (c) of Section 6 of the Plan is hereby deleted in its entirety and in replacement thereof shall be the following:

“(c) Share Restrictions. Subject to the provisions of this Plan and the applicable Restricted Share or Restricted Share Unit Award Agreement, during a period set by the Committee commencing with the date of such award and ending on such date as determined by the Committee at grant (the “Restriction Period”), the participant shall not be permitted to sell, transfer, pledge, assign or otherwise encumber Restricted Shares or Restricted Share Units awarded under the Plan. In no event shall more than an aggregate of ten percent (10%) of the Shares authorized for issuance under this Plan (as adjusted as provided in Section 4) be granted in the form of Restricted Shares or Restricted Share Units having a restriction period of less than three (3) years. The Committee shall have the authority, in its absolute discretion, to accelerate the time at which any or all of the restrictions shall lapse with respect to any Restricted Shares or Restricted Share Units or to remove any or all restrictions after the grant of such Restricted Shares or Restricted Share Units, provided, however, that such discretion shall be exercised subject to the limitations set forth in the preceding sentence, excluding discretion exercised in connection with a Grantee’s termination of employment from the Company. Unless otherwise determined by the Committee at or after grant or termination, if a participant’s employment by or service to the Company terminates during the Restriction Period, all Restricted Shares or Restricted Share Units held by such participant still subject to restriction shall be forfeited by the participant. For purposes of this Section 6(c), if a participant continues employment or service with CareFusion or any of its affiliates after the Distribution Effective Time, then such participant’s employment shall not be deemed to have been terminated until such participant ceases to be a full-time employee of CareFusion or any of its affiliates.”

5. The following paragraph is hereby inserted immediately after Section 10(a)(iii):

“Notwithstanding anything in this Plan or any award agreement evidencing an award granted under this Plan to the contrary, after the Distribution Effective Time, this Section 10(a) shall not apply to any award granted under this Plan to an employee who, after the Distribution Effective Time, is employed by CareFusion or any of its affiliates.”

6. Section 11 of the Plan is hereby deleted in its entirety and in replacement thereof shall be the following:

“The Board or the Committee may amend, alter or discontinue the Plan; provided, however, no amendment, alteration or discontinuation shall be made (i) which would impair the rights of an optionee, participant or transferee pursuant to Section 5(e) under any award theretofore granted, without the optionee’s, participant’s or transferee’s consent, except for amendments made to cause the Plan or such award to comply with applicable law, stock exchange rules or accounting rules, or (ii) without the approval of CAH’s shareholders to the extent such approval is required by applicable law, regulation or stock exchange rule.

 

2


The Committee may amend the terms of any award theretofore granted (except an Outside Director Option), prospectively or retroactively; provided no such amendment shall impair the rights of any holder without the holder’s consent, unless it is made to cause the Plan or such award to comply with applicable law, stock exchange rules or accounting rules; provided, further, no Stock Option may be amended so as to decrease the exercise price of such Stock Option to reflect a decrease in the fair market value of the underlying stock.

Subject to the above provisions, the Board or the Committee shall have authority to amend the Plan to take into account changes in applicable tax and securities laws and accounting rules, as well as other developments.”

 

3

EX-12.1 4 dex121.htm COMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES Computation of Ratio of Earnings to Fixed Charges

Exhibit 12.1

CARDINAL HEALTH, INC.

COMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES

 

(in millions, except for ratios)

   Fiscal Year Ended June 30,     For the Six Months
Ended,
 
   2005     2006     2007     2008     2009     December 31, 2009  

Earnings before income taxes and discontinued operations

   $ 1,374.4      $ 1,316.3      $ 815.3      $ 1,295.1      $ 1,159.8      $ 540.0   

Plus fixed charges:

            

Interest expense

     87.2        102.5        108.2        143.4        118.4        62.1   

Capitalized interest

     4.8        4.1        10.5        13.5        5.1        1.1   

Amortization of debt offering costs

     3.4        3.4        7.4        3.5        3.8        6.6   

Interest portion of rent expense

     19.7        16.8        15.6        12.2        11.1        3.4   
                                                

Fixed charges

     115.1        126.8        141.7        172.6        138.4        73.2   

Plus amortization of capitalized interest

     3.2        2.9        1.3        1.5        2.5        3.3   

Less capitalized interest

     (4.8     (4.1     (10.5     (13.5     (5.1     (1.1
                                                

Earnings

   $ 1,487.9      $ 1,441.9      $ 947.8      $ 1,455.7      $ 1,295.6      $ 615.4   
                                                

Ratio of earnings to fixed charges(1)

     12.9        11.4        6.7        8.4        9.4        8.4   

 

(1)

The ratio of earnings to fixed charges is computed by dividing fixed charges into earnings before income taxes and discontinued operations plus fixed charges and capitalized interest. Fixed charges include interest expense, amortization of debt offering costs and the portion of rent expense which is deemed to be representative of the interest factor. Interest expense recorded on tax exposures has been recorded in income tax expense and has therefore been excluded from the calculation.

EX-31.1 5 dex311.htm SECTION 302 CEO CERTIFICATION Section 302 CEO Certification

Exhibit 31.1

 

I, George S. Barrett, certify that:

 

  1. I have reviewed this Form 10-Q of Cardinal Health, Inc.;

 

  2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

 

  3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

 

  4. The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

 

  a. Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

 

  b. Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

 

  c. Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

 

  d. Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

 

  5. The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

 

  a. All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

 

  b. Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Dated: February 5, 2010

 

 

/s/ George S. Barrett  
   
George S. Barrett  
Chairman and Chief Executive Officer  
EX-31.2 6 dex312.htm SECTION 302 CFO CERTIFICATION Section 302 CFO Certification

Exhibit 31.2

I, Jeffrey W. Henderson, certify that:

 

  1. I have reviewed this Form 10-Q of Cardinal Health, Inc.;

 

  2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

 

  3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

 

  4. The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

 

  a. Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

 

  b. Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

 

  c. Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

 

  d. Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

 

  5. The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

 

  a. All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

 

  b. Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

 

Dated: February 5, 2010

 

 

/s/ Jeffrey W. Henderson  
   

Jeffrey W. Henderson

Chief Financial Officer

 
EX-32.1 7 dex321.htm SECTION 906 CEO CERTIFICATION Section 906 CEO Certification

Exhibit 32.1

 

Certification by the Chief Executive Officer Pursuant to 18 U.S.C. Section 1350, as Adopted

Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

I, George S. Barrett, Chairman and Chief Executive Officer of Cardinal Health, Inc. (the “Company”), certify, pursuant to 18 U.S.C. Section 1350, that:

 

(1) the Quarterly Report on Form 10-Q for the quarter ended December 31, 2009 containing the financial statements of the Company (the “Periodic Report”), which this statement accompanies, fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934 (15 U.S.C. 78m or 78o(d)); and

 

(2) the information contained in the Periodic Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

 

Dated: February 5, 2010

 

 

/s/ George S. Barrett
 

George S. Barrett

Chairman and

Chief Executive Officer

 

EX-32.2 8 dex322.htm SECTION 906 CFO CERTIFICATION Section 906 CFO Certification

Exhibit 32.2

 

Certification by the Chief Financial Officer Pursuant to 18 U.S.C. Section 1350, as Adopted

Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

I, Jeffrey W. Henderson, Chief Financial Officer of Cardinal Health, Inc. (the “Company”), certify, pursuant to 18 U.S.C. Section 1350, that:

 

(1) the Quarterly Report on Form 10-Q for the quarter ended December 31, 2009 containing the financial statements of the Company (the “Periodic Report”), which this statement accompanies, fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934 (15 U.S.C. 78m or 78o(d)); and

 

(2) the information contained in the Periodic Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

 

Dated: February 5, 2010

 

 

/s/ Jeffrey W. Henderson
 

Jeffrey W. Henderson

Chief Financial Officer

 

EX-99.1 9 dex991.htm STATEMENT REGARDING FORWARD-LOOKING INFORMATION Statement regarding Forward-Looking Information

Exhibit 99.1

STATEMENT REGARDING FORWARD-LOOKING INFORMATION

Cardinal Health Inc.’s (“Cardinal Health” or the “Company”) filings with the Securities and Exchange Commission (the “SEC”), including Cardinal Health’s Annual Report on Form 10-K for the fiscal year ended June 30, 2009, Cardinal Health’s Annual Report to Shareholders, any quarterly report on Form 10-Q or any current report on Form 8-K of Cardinal Health (along with any exhibits to such reports as well as any amendments to such reports), our press releases, or any other written or oral statements made by or on behalf of Cardinal Health, may include directly or by incorporation by reference forward-looking statements which reflect Cardinal Health’s current view (as of the date such forward-looking statement is first made) with respect to future events, prospects, projections or financial performance. The matters discussed in these forward-looking statements are subject to certain risks and uncertainties and other factors that could cause actual results to differ materially from those made, implied or projected in or by such statements. These uncertainties and other factors include, but are not limited to:

 

   

competitive pressures in the markets in which the company operates, including pricing pressures;

 

   

increasing consolidation in the healthcare industry, which could give the resulting enterprises greater bargaining power and may increase pressure on prices for the company’s products and services;

 

   

uncertainties regarding the proposed federal healthcare reform legislation and other government healthcare reform initiatives and their enactment and implementation;

 

   

the loss of or material reduction in the purchase or default by one or more key customers;

 

   

the loss of, or default by, one or more key suppliers for which alternative suppliers may not be readily available;

 

   

unfavorable changes to the terms of key customer or supplier relationships, or changes in customer mix;

 

   

changes in manufacturers’ pricing, selling, inventory, distribution or supply policies or practices, including policies concerning price appreciation;

 

   

changes in hospital buying groups or hospital buying practices;

 

   

changes in the frequency or magnitude of branded pharmaceutical price appreciation or generic pharmaceutical price deflation, restrictions in the amount of inventory available to the company, or changes in the timing of generic launches or the introduction of branded pharmaceuticals;

 

   

uncertainties relating to market conditions for pharmaceuticals;

 

   

changes in the distribution or outsourcing pattern for pharmaceutical and medical/surgical products and services, including an increase in direct distribution;

 

   

the costs, difficulties and uncertainties related to the integration of acquired businesses, including liabilities related to the operations or activities of such businesses prior to their acquisition;

 

   

uncertainties related to the company’s divestiture strategy, including difficulties in finding buyers or alternative exit strategies at acceptable prices and terms and in a timely manner;

 

   

the company’s ability to introduce and market new products and its ability to keep pace with advances in technology;

 

   

changes in laws and regulations or in the interpretation or application of laws or regulations, as well as possible failures to comply with applicable laws or regulations as a result of possible misinterpretations or misapplications;

 

   

legislative changes to the prescription drug reimbursement formula and related reporting requirements for generic pharmaceuticals under Medicaid;

 

   

uncertainties related to disruptions in the financial markets, including uncertainties related to the availability and/or cost of credit;

 

   

the continued financial viability and success of our customers, suppliers and franchisees and the potential impact on our customers, suppliers and franchisees of declining economic conditions;

 

   

actions of regulatory bodies and other governmental authorities, including the U.S. Drug Enforcement Administration, the U.S. Food and Drug Administration, the U.S. Nuclear Regulatory Commission, the U.S. Department of Health and Human Services, various state boards of pharmacy and state health departments that could delay, limit or suspend product development, manufacturing, distribution or sales or result in warning letters, recalls, seizures, injunctions and monetary sanctions;

 

   

costs or claims resulting from potential errors or defects in our manufacturing, compounding, repackaging, information systems or pharmacy management services that may injure persons or damage property or operations, including costs from remediation efforts or recalls;

 

   

the results, costs, effects or timing of any commercial disputes, patent infringement claims, or other legal proceedings;


   

the costs, effects, timing or success of restructuring programs or plans;

 

   

increased costs for the components, compounds, raw materials or energy used by our businesses, including radioisotopes, oil and gas, or shortages in these inputs;

 

   

the risks of counterfeit products in the supply chain;

 

   

risks associated with global operations, including the effect of local economic environments, inflation, recession, currency volatility and global competition, in addition to risks associated with compliance with U.S and international laws relating to global operations;

 

   

difficulties or delays in the development, production, manufacturing and marketing of new or existing products and services, including difficulties or delays associated with obtaining requisite regulatory consents or approvals associated with those activities;

 

   

disruption or damage to or failure of our information or controls systems;

 

   

uncertainties relating to general economic, political, business, industry, regulatory and market conditions;

 

   

risks associated with the spin-off of CareFusion Corporation (“CareFusion”) including risks of not obtaining the intended benefits from the spin-off, risks of non-performance under spin-off agreements, risks relating to less diversification, and risks relating to adverse tax consequences to the Company and/or the Company’s shareholders;

 

   

risks associated with the Company’s minority investment in CareFusion such as, risks relating to CareFusion’s business, and risks relating to the disposition of the retained shares of CareFusion common stock; and

 

   

other factors described in the Form 10-Q for the period ended December 31, 2009, and “Item 1A: Risk Factors” of the Form 10-Q for the period ended September 30, 2009.

The words “believe,” “expect,” “anticipate,” “project,” “estimate,” “target,” “intend,” “seek,” and similar expressions generally identify “forward-looking statements,” which speak only as of the date the statement was made. We undertake no obligation to publicly update or revise any forward-looking statements, except to the extent required under applicable law.

EX-101.INS 10 cah-20091231.xml XBRL INSTANCE DOCUMENT 361459464 582600000 1746800000 10543100000 1682700000 200400000 897400000 20821500000 15458300000 148900000 0 755000000 363600000 2893000000 12700000 7961000000 20821500000 12203000000 37300000 2099200000 1609900000 747900000 0 500000 0 0 674100000 3105900000 1423200000 4927500000 2306500000 5226100000 2300000 173800000 2294700000 1293200000 808800000 1221600000 9041900000 1675100000 82200000 0 25118800000 20981700000 7189400000 0 755000000 363700000 3031600000 366200000 6832800000 25118800000 12275200000 1370900000 3271600000 1496200000 405700000 0 500000 0 0 523000000 3139600000 1464500000 5214900000 5953900000 8724700000 3700000 343000000 2266900000 847300000 -226200000 -2300000 -51700000 717600000 0.280 45738600000 116100000 88700000 1.58 1.57 2300000 300000 0 1816300000 341200000 526100000 0.96 0.95 224400000 0.62 0.62 184900000 1299100000 1820300000 286400000 238600000 51400000 0 -261300000 -259000000 -176100000 -124400000 211200000 -506400000 565600000 599700000 -22200000 6200000 0 100000000 130500000 20700000 21400000 101100000 0 12300000 21800000 304500000 37600000 47554900000 1168800000 50200000 361200000 357000000 -10500000 0 0 0 --06-30 CAH CARDINAL HEALTH INC 2009-12-31 10-Q 0000721371 Large Accelerated Filer false 525200000 <div> <p style="MARGIN-TOP: 18px; MARGIN-BOTTOM: 0px"><font style="FONT-FAMILY: Times New Roman" size="2"><b>6. INVESTMENT IN CAREFUSION</b></font></p> <p style="MARGIN-TOP: 6px; MARGIN-BOTTOM: 0px; TEXT-INDENT: 4%"> <font style="FONT-FAMILY: Times New Roman" size="2">The following table provides a summary of the Company&#x2019;s available-for-sale securities as of December&#xA0;31, 2009:</font></p> <p style="MARGIN-TOP: 0px; FONT-SIZE: 12px; MARGIN-BOTTOM: 0px"> &#xA0;</p> <table cellspacing="0" cellpadding="0" width="92%" align="center" border="0"> <tr> <td width="65%"></td> <td valign="bottom" width="5%"></td> <td></td> <td></td> <td valign="bottom" width="5%"></td> <td></td> <td></td> <td valign="bottom" width="5%"></td> <td></td> <td></td> <td valign="bottom" width="5%"></td> <td></td> <td></td> </tr> <tr> <td valign="bottom"><font size="1">&#xA0;</font></td> <td valign="bottom"><font size="1">&#xA0;&#xA0;</font></td> <td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" align="center" colspan="11"><font style="FONT-FAMILY: Times New Roman" size="1"><b>Available-for-Sale Securities</b></font></td> </tr> <tr> <td valign="bottom" nowrap="nowrap"> <p style="WIDTH: 40pt; BORDER-BOTTOM: #000000 1px solid"> <font style="FONT-FAMILY: Times New Roman" size="1"><b>(in millions)</b></font></p> </td> <td valign="bottom"><font size="1">&#xA0;&#xA0;</font></td> <td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" align="center" colspan="2"><font style="FONT-FAMILY: Times New Roman" size="1"><b>Cost (2)</b></font></td> <td valign="bottom"><font size="1">&#xA0;&#xA0;</font></td> <td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" align="center" colspan="2"><font style="FONT-FAMILY: Times New Roman" size="1"><b>Gross<br /> Unrealized<br /> Gains</b></font></td> <td valign="bottom"><font size="1">&#xA0;&#xA0;</font></td> <td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" align="center" colspan="2"><font style="FONT-FAMILY: Times New Roman" size="1"><b>Gross<br /> Unrealized<br /> Losses</b></font></td> <td valign="bottom"><font size="1">&#xA0;&#xA0;</font></td> <td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" align="center" colspan="2"><font style="FONT-FAMILY: Times New Roman" size="1"><b>Estimated<br /> Fair<br /> Value</b></font></td> </tr> <tr bgcolor="#CCEEFF"> <td valign="top"> <p style="MARGIN-LEFT: 1em; TEXT-INDENT: -1em"><font style="FONT-FAMILY: Times New Roman" size="2">Equity securities (1)</font></p> </td> <td valign="bottom"><font size="1">&#xA0;&#xA0;</font></td> <td valign="bottom"><font style="FONT-FAMILY: Times New Roman" size="2">$</font></td> <td valign="bottom" align="right"><font style="FONT-FAMILY: Times New Roman" size="2">748.2</font></td> <td valign="bottom"><font size="1">&#xA0;&#xA0;</font></td> <td valign="bottom"><font style="FONT-FAMILY: Times New Roman" size="2">$</font></td> <td valign="bottom" align="right"><font style="FONT-FAMILY: Times New Roman" size="2">149.2</font></td> <td valign="bottom"><font size="1">&#xA0;&#xA0;</font></td> <td valign="bottom"><font style="FONT-FAMILY: Times New Roman" size="2">$</font></td> <td valign="bottom" align="right"><font style="FONT-FAMILY: Times New Roman" size="2">&#x2014;&#xA0;&#xA0;</font></td> <td valign="bottom"><font size="1">&#xA0;&#xA0;</font></td> <td valign="bottom"><font style="FONT-FAMILY: Times New Roman" size="2">$</font></td> <td valign="bottom" align="right"><font style="FONT-FAMILY: Times New Roman" size="2">897.4</font></td> </tr> <tr style="FONT-SIZE: 1px"> <td valign="bottom"></td> <td valign="bottom">&#xA0;&#xA0;</td> <td style="BORDER-TOP: #000000 1px solid" valign="bottom"> &#xA0;</td> <td style="BORDER-TOP: #000000 1px solid" valign="bottom"> &#xA0;</td> <td valign="bottom">&#xA0;&#xA0;</td> <td style="BORDER-TOP: #000000 1px solid" valign="bottom"> &#xA0;</td> <td style="BORDER-TOP: #000000 1px solid" valign="bottom"> &#xA0;</td> <td valign="bottom">&#xA0;&#xA0;</td> <td style="BORDER-TOP: #000000 1px solid" valign="bottom"> &#xA0;</td> <td style="BORDER-TOP: #000000 1px solid" valign="bottom"> &#xA0;</td> <td valign="bottom">&#xA0;&#xA0;</td> <td style="BORDER-TOP: #000000 1px solid" valign="bottom"> &#xA0;</td> <td style="BORDER-TOP: #000000 1px solid" valign="bottom"> &#xA0;</td> </tr> <tr> <td valign="top"> <p style="MARGIN-LEFT: 1em; TEXT-INDENT: -1em"><font style="FONT-FAMILY: Times New Roman" size="2">Total</font></p> </td> <td valign="bottom"><font size="1">&#xA0;&#xA0;</font></td> <td valign="bottom"><font style="FONT-FAMILY: Times New Roman" size="2">$</font></td> <td valign="bottom" align="right"><font style="FONT-FAMILY: Times New Roman" size="2">748.2</font></td> <td valign="bottom"><font size="1">&#xA0;&#xA0;</font></td> <td valign="bottom"><font style="FONT-FAMILY: Times New Roman" size="2">$</font></td> <td valign="bottom" align="right"><font style="FONT-FAMILY: Times New Roman" size="2">149.2</font></td> <td valign="bottom"><font size="1">&#xA0;&#xA0;</font></td> <td valign="bottom"><font style="FONT-FAMILY: Times New Roman" size="2">$</font></td> <td valign="bottom" align="right"><font style="FONT-FAMILY: Times New Roman" size="2">&#x2014;&#xA0;&#xA0;</font></td> <td valign="bottom"><font size="1">&#xA0;&#xA0;</font></td> <td valign="bottom"><font style="FONT-FAMILY: Times New Roman" size="2">$</font></td> <td valign="bottom" align="right"><font style="FONT-FAMILY: Times New Roman" size="2">897.4</font></td> </tr> <tr style="FONT-SIZE: 1px"> <td valign="bottom"></td> <td valign="bottom">&#xA0;&#xA0;</td> <td style="BORDER-TOP: #000000 3px double" valign="bottom"> &#xA0;</td> <td style="BORDER-TOP: #000000 3px double" valign="bottom"> &#xA0;</td> <td valign="bottom">&#xA0;&#xA0;</td> <td style="BORDER-TOP: #000000 3px double" valign="bottom"> &#xA0;</td> <td style="BORDER-TOP: #000000 3px double" valign="bottom"> &#xA0;</td> <td valign="bottom">&#xA0;&#xA0;</td> <td style="BORDER-TOP: #000000 3px double" valign="bottom"> &#xA0;</td> <td style="BORDER-TOP: #000000 3px double" valign="bottom"> &#xA0;</td> <td valign="bottom">&#xA0;&#xA0;</td> <td style="BORDER-TOP: #000000 3px double" valign="bottom"> &#xA0;</td> <td style="BORDER-TOP: #000000 3px double" valign="bottom"> &#xA0;</td> </tr> </table> <p style="MARGIN-TOP: 0px; MARGIN-BOTTOM: 2px; WIDTH: 10%; LINE-HEIGHT: 8px; BORDER-BOTTOM: #000000 0.5pt solid"> &#xA0;</p> <table style="BORDER-COLLAPSE: collapse" cellspacing="0" cellpadding="0" width="100%" border="0"> <tr> <td valign="top" align="left" width="4%"><font style="FONT-FAMILY: Times New Roman" size="2">(1)</font></td> <td valign="top" align="left"><font style="FONT-FAMILY: Times New Roman" size="2">Equity securities consist of the Company&#x2019;s ownership of approximately 35.9&#xA0;million shares of CareFusion common stock retained in connection with the Spin-Off. These securities are stated at fair value, with unrealized gains and losses reported in other comprehensive income. Realized gains and losses, and declines in fair value deemed to be other-than-temporary are recognized in net earnings immediately. During the three months ended December&#xA0;31, 2009, the Company disposed of approximately 5.5&#xA0;million shares of CareFusion common stock resulting in proceeds of approximately $135.0 million and a pre-tax realized gain of approximately $20.0 million. The net adjustment to unrealized holding gains on CareFusion common stock included in other comprehensive income totaled $115.2 million during the same period.</font></td> </tr> </table> <table style="BORDER-COLLAPSE: collapse" cellspacing="0" cellpadding="0" width="100%" border="0"> <tr> <td valign="top" align="left" width="4%"><font style="FONT-FAMILY: Times New Roman" size="2">(2)</font></td> <td valign="top" align="left"><font style="FONT-FAMILY: Times New Roman" size="2">Represents the Company&#x2019;s cost investment in the net book value of CareFusion&#x2019;s assets immediately following the Spin-Off adjusted for the sale of securities during the three months ended December&#xA0;31, 2009.</font></td> </tr> </table> <p style="MARGIN-TOP: 0px; MARGIN-BOTTOM: 0px"><font size="1">&#xA0;</font></p> </div> 1283800000 -9900000 146800000 0.350 <div> <p style="MARGIN-TOP: 12px; MARGIN-BOTTOM: 0px; TEXT-INDENT: 4%"> </p> <p style="MARGIN-TOP: 18px; MARGIN-BOTTOM: 0px"><font style="FONT-FAMILY: Times New Roman" size="2"><b>13. COMPREHENSIVE INCOME</b></font></p> <p style="MARGIN-TOP: 6px; MARGIN-BOTTOM: 0px; TEXT-INDENT: 4%"> <font style="FONT-FAMILY: Times New Roman" size="2">The following is a summary of the Company&#x2019;s comprehensive income for the three and six months ended December&#xA0;31, 2009 and 2008:</font></p> <p style="MARGIN-TOP: 0px; FONT-SIZE: 12px; MARGIN-BOTTOM: 0px"> &#xA0;</p> <table cellspacing="0" cellpadding="0" width="92%" align="center" border="0"> <tr> <td width="72%"></td> <td valign="bottom" width="3%"></td> <td></td> <td></td> <td valign="bottom" width="3%"></td> <td></td> <td></td> <td></td> <td valign="bottom" width="3%"></td> <td></td> <td></td> <td></td> <td valign="bottom" width="3%"></td> <td></td> <td></td> <td></td> </tr> <tr> <td valign="bottom"><font size="1">&#xA0;</font></td> <td valign="bottom"><font size="1">&#xA0;&#xA0;</font></td> <td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" align="center" colspan="5"><font style="FONT-FAMILY: Times New Roman" size="1"><b>Three&#xA0;Months&#xA0;Ended<br /> December&#xA0;31,</b></font></td> <td valign="bottom"><font size="1">&#xA0;</font></td> <td valign="bottom"><font size="1">&#xA0;</font></td> <td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" align="center" colspan="6"><font style="FONT-FAMILY: Times New Roman" size="1"><b>Six&#xA0;Months&#xA0;Ended<br /> December&#xA0;31,</b></font></td> <td valign="bottom"><font size="1">&#xA0;</font></td> </tr> <tr> <td valign="bottom" nowrap="nowrap"> <p style="WIDTH: 40pt; BORDER-BOTTOM: #000000 1px solid"> <font style="FONT-FAMILY: Times New Roman" size="1"><b>(in millions)</b></font></p> </td> <td valign="bottom"><font size="1">&#xA0;&#xA0;</font></td> <td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" align="center" colspan="2"><font style="FONT-FAMILY: Times New Roman" size="1"><b>2009</b></font></td> <td valign="bottom"><font size="1">&#xA0;&#xA0;</font></td> <td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" align="center" colspan="2"><font style="FONT-FAMILY: Times New Roman" size="1"><b>2008</b></font></td> <td valign="bottom"><font size="1">&#xA0;</font></td> <td valign="bottom"><font size="1">&#xA0;</font></td> <td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" align="center" colspan="2"><font style="FONT-FAMILY: Times New Roman" size="1"><b>2009</b></font></td> <td valign="bottom"><font size="1">&#xA0;</font></td> <td valign="bottom"><font size="1">&#xA0;</font></td> <td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" align="center" colspan="2"><font style="FONT-FAMILY: Times New Roman" size="1"><b>2008</b></font></td> <td valign="bottom"><font size="1">&#xA0;</font></td> </tr> <tr bgcolor="#CCEEFF"> <td valign="top"> <p style="MARGIN-LEFT: 1em; TEXT-INDENT: -1em"><font style="FONT-FAMILY: Times New Roman" size="2">Net earnings</font></p> </td> <td valign="bottom"><font size="1">&#xA0;&#xA0;</font></td> <td valign="bottom"><font style="FONT-FAMILY: Times New Roman" size="2">$</font></td> <td valign="bottom" align="right"><font style="FONT-FAMILY: Times New Roman" size="2">234.5</font></td> <td valign="bottom"><font size="1">&#xA0;&#xA0;</font></td> <td valign="bottom"><font style="FONT-FAMILY: Times New Roman" size="2">$</font></td> <td valign="bottom" align="right"><font style="FONT-FAMILY: Times New Roman" size="2">316.5</font></td> <td valign="bottom" nowrap="nowrap"><font style="FONT-FAMILY: Times New Roman" size="2">&#xA0;&#xA0;</font></td> <td valign="bottom"><font size="1">&#xA0;</font></td> <td valign="bottom"><font style="FONT-FAMILY: Times New Roman" size="2">$</font></td> <td valign="bottom" align="right"><font style="FONT-FAMILY: Times New Roman" size="2">196.3</font></td> <td valign="bottom" nowrap="nowrap"><font style="FONT-FAMILY: Times New Roman" size="2">&#xA0;&#xA0;</font></td> <td valign="bottom"><font size="1">&#xA0;</font></td> <td valign="bottom"><font style="FONT-FAMILY: Times New Roman" size="2">$</font></td> <td valign="bottom" align="right"><font style="FONT-FAMILY: Times New Roman" size="2">565.6</font></td> <td valign="bottom" nowrap="nowrap"><font style="FONT-FAMILY: Times New Roman" size="2">&#xA0;&#xA0;</font></td> </tr> <tr> <td valign="top"> <p style="MARGIN-LEFT: 1em; TEXT-INDENT: -1em"><font style="FONT-FAMILY: Times New Roman" size="2">Foreign currency translation adjustments</font></p> </td> <td valign="bottom"><font size="1">&#xA0;&#xA0;</font></td> <td valign="bottom"><font style="FONT-FAMILY: Times New Roman" size="2">&#xA0;</font></td> <td valign="bottom" align="right"><font style="FONT-FAMILY: Times New Roman" size="2">3.6</font></td> <td valign="bottom"><font size="1">&#xA0;&#xA0;</font></td> <td valign="bottom"><font style="FONT-FAMILY: Times New Roman" size="2">&#xA0;</font></td> <td valign="bottom" align="right"><font style="FONT-FAMILY: Times New Roman" size="2">(85.3</font></td> <td valign="bottom" nowrap="nowrap"><font style="FONT-FAMILY: Times New Roman" size="2">)&#xA0;</font></td> <td valign="bottom"><font size="1">&#xA0;</font></td> <td valign="bottom"><font style="FONT-FAMILY: Times New Roman" size="2">&#xA0;</font></td> <td valign="bottom" align="right"><font style="FONT-FAMILY: Times New Roman" size="2">(37.8</font></td> <td valign="bottom" nowrap="nowrap"><font style="FONT-FAMILY: Times New Roman" size="2">)&#xA0;</font></td> <td valign="bottom"><font size="1">&#xA0;</font></td> <td valign="bottom"><font style="FONT-FAMILY: Times New Roman" size="2">&#xA0;</font></td> <td valign="bottom" align="right"><font style="FONT-FAMILY: Times New Roman" size="2">(168.6</font></td> <td valign="bottom" nowrap="nowrap"><font style="FONT-FAMILY: Times New Roman" size="2">)&#xA0;</font></td> </tr> <tr bgcolor="#CCEEFF"> <td valign="top"> <p style="MARGIN-LEFT: 1em; TEXT-INDENT: -1em"><font style="FONT-FAMILY: Times New Roman" size="2">Net unrealized gain/(loss) on derivative instruments</font></p> </td> <td valign="bottom"><font size="1">&#xA0;&#xA0;</font></td> <td valign="bottom"><font style="FONT-FAMILY: Times New Roman" size="2">&#xA0;</font></td> <td valign="bottom" align="right"><font style="FONT-FAMILY: Times New Roman" size="2">2.4</font></td> <td valign="bottom"><font size="1">&#xA0;&#xA0;</font></td> <td valign="bottom"><font style="FONT-FAMILY: Times New Roman" size="2">&#xA0;</font></td> <td valign="bottom" align="right"><font style="FONT-FAMILY: Times New Roman" size="2">(9.8</font></td> <td valign="bottom" nowrap="nowrap"><font style="FONT-FAMILY: Times New Roman" size="2">)&#xA0;</font></td> <td valign="bottom"><font size="1">&#xA0;</font></td> <td valign="bottom"><font style="FONT-FAMILY: Times New Roman" size="2">&#xA0;</font></td> <td valign="bottom" align="right"><font style="FONT-FAMILY: Times New Roman" size="2">15.0</font></td> <td valign="bottom" nowrap="nowrap"><font style="FONT-FAMILY: Times New Roman" size="2">&#xA0;&#xA0;</font></td> <td valign="bottom"><font size="1">&#xA0;</font></td> <td valign="bottom"><font style="FONT-FAMILY: Times New Roman" size="2">&#xA0;</font></td> <td valign="bottom" align="right"><font style="FONT-FAMILY: Times New Roman" size="2">(0.9</font></td> <td valign="bottom" nowrap="nowrap"><font style="FONT-FAMILY: Times New Roman" size="2">)&#xA0;</font></td> </tr> <tr> <td valign="top"> <p style="MARGIN-LEFT: 1em; TEXT-INDENT: -1em"><font style="FONT-FAMILY: Times New Roman" size="2">Net unrealized gain on investment in CareFusion, net of tax</font></p> </td> <td valign="bottom"><font size="1">&#xA0;&#xA0;</font></td> <td valign="bottom"><font style="FONT-FAMILY: Times New Roman" size="2">&#xA0;</font></td> <td valign="bottom" align="right"><font style="FONT-FAMILY: Times New Roman" size="2">117.5</font></td> <td valign="bottom"><font size="1">&#xA0;&#xA0;</font></td> <td valign="bottom"><font style="FONT-FAMILY: Times New Roman" size="2">&#xA0;</font></td> <td valign="bottom" align="right"><font style="FONT-FAMILY: Times New Roman" size="2">&#x2014;&#xA0;&#xA0;</font></td> <td valign="bottom" nowrap="nowrap"><font style="FONT-FAMILY: Times New Roman" size="2">&#xA0;&#xA0;</font></td> <td valign="bottom"><font size="1">&#xA0;</font></td> <td valign="bottom"><font style="FONT-FAMILY: Times New Roman" size="2">&#xA0;</font></td> <td valign="bottom" align="right"><font style="FONT-FAMILY: Times New Roman" size="2">141.0</font></td> <td valign="bottom" nowrap="nowrap"><font style="FONT-FAMILY: Times New Roman" size="2">&#xA0;&#xA0;</font></td> <td valign="bottom"><font size="1">&#xA0;</font></td> <td valign="bottom"><font style="FONT-FAMILY: Times New Roman" size="2">&#xA0;</font></td> <td valign="bottom" align="right"><font style="FONT-FAMILY: Times New Roman" size="2">&#x2014;&#xA0;&#xA0;</font></td> <td valign="bottom" nowrap="nowrap"><font style="FONT-FAMILY: Times New Roman" size="2">&#xA0;&#xA0;</font></td> </tr> <tr style="FONT-SIZE: 1px"> <td valign="bottom"></td> <td valign="bottom">&#xA0;&#xA0;</td> <td style="BORDER-TOP: #000000 1px solid" valign="bottom"> &#xA0;</td> <td style="BORDER-TOP: #000000 1px solid" valign="bottom"> &#xA0;</td> <td valign="bottom">&#xA0;&#xA0;</td> <td style="BORDER-TOP: #000000 1px solid" valign="bottom"> &#xA0;</td> <td style="BORDER-TOP: #000000 1px solid" valign="bottom"> &#xA0;</td> <td>&#xA0;</td> <td valign="bottom">&#xA0;</td> <td style="BORDER-TOP: #000000 1px solid" valign="bottom"> &#xA0;</td> <td style="BORDER-TOP: #000000 1px solid" valign="bottom"> &#xA0;</td> <td>&#xA0;</td> <td valign="bottom">&#xA0;</td> <td style="BORDER-TOP: #000000 1px solid" valign="bottom"> &#xA0;</td> <td style="BORDER-TOP: #000000 1px solid" valign="bottom"> &#xA0;</td> <td>&#xA0;</td> </tr> <tr bgcolor="#CCEEFF"> <td valign="top"> <p style="MARGIN-LEFT: 1em; TEXT-INDENT: -1em"><font style="FONT-FAMILY: Times New Roman" size="2">Total comprehensive income</font></p> </td> <td valign="bottom"><font size="1">&#xA0;&#xA0;</font></td> <td valign="bottom"><font style="FONT-FAMILY: Times New Roman" size="2">$</font></td> <td valign="bottom" align="right"><font style="FONT-FAMILY: Times New Roman" size="2">358.0</font></td> <td valign="bottom"><font size="1">&#xA0;&#xA0;</font></td> <td valign="bottom"><font style="FONT-FAMILY: Times New Roman" size="2">$</font></td> <td valign="bottom" align="right"><font style="FONT-FAMILY: Times New Roman" size="2">221.4</font></td> <td valign="bottom" nowrap="nowrap"><font style="FONT-FAMILY: Times New Roman" size="2">&#xA0;&#xA0;</font></td> <td valign="bottom"><font size="1">&#xA0;</font></td> <td valign="bottom"><font style="FONT-FAMILY: Times New Roman" size="2">$</font></td> <td valign="bottom" align="right"><font style="FONT-FAMILY: Times New Roman" size="2">314.5</font></td> <td valign="bottom" nowrap="nowrap"><font style="FONT-FAMILY: Times New Roman" size="2">&#xA0;&#xA0;</font></td> <td valign="bottom"><font size="1">&#xA0;</font></td> <td valign="bottom"><font style="FONT-FAMILY: Times New Roman" size="2">$</font></td> <td valign="bottom" align="right"><font style="FONT-FAMILY: Times New Roman" size="2">396.1</font></td> <td valign="bottom" nowrap="nowrap"><font style="FONT-FAMILY: Times New Roman" size="2">&#xA0;&#xA0;</font></td> </tr> <tr style="FONT-SIZE: 1px"> <td valign="bottom"></td> <td valign="bottom">&#xA0;&#xA0;</td> <td style="BORDER-TOP: #000000 3px double" valign="bottom"> &#xA0;</td> <td style="BORDER-TOP: #000000 3px double" valign="bottom"> &#xA0;</td> <td valign="bottom">&#xA0;&#xA0;</td> <td style="BORDER-TOP: #000000 3px double" valign="bottom"> &#xA0;</td> <td style="BORDER-TOP: #000000 3px double" valign="bottom"> &#xA0;</td> <td>&#xA0;</td> <td valign="bottom">&#xA0;</td> <td style="BORDER-TOP: #000000 3px double" valign="bottom"> &#xA0;</td> <td style="BORDER-TOP: #000000 3px double" valign="bottom"> &#xA0;</td> <td>&#xA0;</td> <td valign="bottom">&#xA0;</td> <td style="BORDER-TOP: #000000 3px double" valign="bottom"> &#xA0;</td> <td style="BORDER-TOP: #000000 3px double" valign="bottom"> &#xA0;</td> <td>&#xA0;</td> </tr> </table> </div> 47833900000 <div> <p style="MARGIN-TOP: 0px; MARGIN-BOTTOM: 0px"></p> <p style="MARGIN-TOP: 0px; MARGIN-BOTTOM: 0px"><font style="FONT-FAMILY: Times New Roman" size="2"><b>7. LONG-TERM OBLIGATIONS AND OTHER SHORT-TERM BORROWINGS</b></font></p> <p style="MARGIN-TOP: 6px; MARGIN-BOTTOM: 0px; TEXT-INDENT: 4%"> <font style="FONT-FAMILY: Times New Roman" size="2">On September&#xA0;24, 2009, the Company completed a debt tender announced on August&#xA0;27, 2009 for an aggregate purchase price, including an early tender premium but excluding accrued interest, fees and expenses, of up to $1.2 billion of the following series of debt securities (listed in order of acceptance priority): (i)&#xA0;7.80% Debentures due October&#xA0;15, 2016 of Allegiance Corporation; (ii)&#xA0;6.75% Notes due February&#xA0;15, 2011 of the Company; (iii)&#xA0;6.00% Notes due June&#xA0;15, 2017 of the Company; (iv)&#xA0;7.00% Debentures due October&#xA0;15, 2026 of Allegiance Corporation; (v)&#xA0;5.85% Notes due December&#xA0;15, 2017 of the Company; (vi)&#xA0;5.80% Notes due October&#xA0;15, 2016 of the Company; (vii)&#xA0;5.65% Notes due June&#xA0;15, 2012 of the Company; (viii)&#xA0;5.50% Notes due June&#xA0;15, 2013 of the Company; and (ix)&#xA0;4.00% Notes due June&#xA0;15, 2015 of the Company. The Company purchased more than $1.1 billion pursuant to the offer using the order of priority set forth above. In connection with the debt tender, the Company incurred a pre-tax loss for the early extinguishment of debt of approximately $39.9 million, which included an early tender premium of $66.4 million, the write-off of $5.3 million of unamortized debt issuance costs, and an offsetting $31.8 million fair value adjustment to the respective debt related to previously terminated interest rate swaps.</font></p> <p style="MARGIN-TOP: 12px; MARGIN-BOTTOM: 0px; TEXT-INDENT: 4%"> <font style="FONT-FAMILY: Times New Roman" size="2">Long-term obligations and other short-term borrowings consist of the following as of December&#xA0;31, 2009 and June&#xA0;30, 2009:</font></p> <p style="MARGIN-TOP: 0px; FONT-SIZE: 12px; MARGIN-BOTTOM: 0px"> &#xA0;</p> <table cellspacing="0" cellpadding="0" width="76%" align="center" border="0"> <tr> <td width="76%"></td> <td valign="bottom" width="6%"></td> <td></td> <td></td> <td valign="bottom" width="6%"></td> <td></td> <td></td> </tr> <tr> <td valign="bottom" nowrap="nowrap"> <p style="WIDTH: 40pt; BORDER-BOTTOM: #000000 1px solid"> <font style="FONT-FAMILY: Times New Roman" size="1"><b>(in millions)</b></font></p> </td> <td valign="bottom"><font size="1">&#xA0;&#xA0;</font></td> <td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" align="center" colspan="2"><font style="FONT-FAMILY: Times New Roman" size="1"><b>December&#xA0;31,<br /> 2009</b></font></td> <td valign="bottom"><font size="1">&#xA0;&#xA0;</font></td> <td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" align="center" colspan="2"><font style="FONT-FAMILY: Times New Roman" size="1"><b>June&#xA0;30,<br /> 2009</b></font></td> </tr> <tr bgcolor="#CCEEFF"> <td valign="top"> <p style="MARGIN-LEFT: 1em; TEXT-INDENT: -1em"><font style="FONT-FAMILY: Times New Roman" size="2">4.00%&#xA0;Notes due 2015</font></p> </td> <td valign="bottom"><font size="1">&#xA0;&#xA0;</font></td> <td valign="bottom"><font style="FONT-FAMILY: Times New Roman" size="2">$</font></td> <td valign="bottom" align="right"><font style="FONT-FAMILY: Times New Roman" size="2">520.7</font></td> <td valign="bottom"><font size="1">&#xA0;&#xA0;</font></td> <td valign="bottom"><font style="FONT-FAMILY: Times New Roman" size="2">$</font></td> <td valign="bottom" align="right"><font style="FONT-FAMILY: Times New Roman" size="2">523.8</font></td> </tr> <tr> <td valign="top"> <p style="MARGIN-LEFT: 1em; TEXT-INDENT: -1em"><font style="FONT-FAMILY: Times New Roman" size="2">5.50% Notes due 2013</font></p> </td> <td valign="bottom"><font size="1">&#xA0;&#xA0;</font></td> <td valign="bottom"><font style="FONT-FAMILY: Times New Roman" size="2">&#xA0;</font></td> <td valign="bottom" align="right"><font style="FONT-FAMILY: Times New Roman" size="2">299.2</font></td> <td valign="bottom"><font size="1">&#xA0;&#xA0;</font></td> <td valign="bottom"><font style="FONT-FAMILY: Times New Roman" size="2">&#xA0;</font></td> <td valign="bottom" align="right"><font style="FONT-FAMILY: Times New Roman" size="2">300.0</font></td> </tr> <tr bgcolor="#CCEEFF"> <td valign="top"> <p style="MARGIN-LEFT: 1em; TEXT-INDENT: -1em"><font style="FONT-FAMILY: Times New Roman" size="2">5.65%&#xA0;Notes due 2012</font></p> </td> <td valign="bottom"><font size="1">&#xA0;&#xA0;</font></td> <td valign="bottom"><font style="FONT-FAMILY: Times New Roman" size="2">&#xA0;</font></td> <td valign="bottom" align="right"><font style="FONT-FAMILY: Times New Roman" size="2">216.2</font></td> <td valign="bottom"><font size="1">&#xA0;&#xA0;</font></td> <td valign="bottom"><font style="FONT-FAMILY: Times New Roman" size="2">&#xA0;</font></td> <td valign="bottom" align="right"><font style="FONT-FAMILY: Times New Roman" size="2">317.1</font></td> </tr> <tr> <td valign="top"> <p style="MARGIN-LEFT: 1em; TEXT-INDENT: -1em"><font style="FONT-FAMILY: Times New Roman" size="2">5.80%&#xA0;Notes due 2016</font></p> </td> <td valign="bottom"><font size="1">&#xA0;&#xA0;</font></td> <td valign="bottom"><font style="FONT-FAMILY: Times New Roman" size="2">&#xA0;</font></td> <td valign="bottom" align="right"><font style="FONT-FAMILY: Times New Roman" size="2">309.8</font></td> <td valign="bottom"><font size="1">&#xA0;&#xA0;</font></td> <td valign="bottom"><font style="FONT-FAMILY: Times New Roman" size="2">&#xA0;</font></td> <td valign="bottom" align="right"><font style="FONT-FAMILY: Times New Roman" size="2">526.4</font></td> </tr> <tr bgcolor="#CCEEFF"> <td valign="top"> <p style="MARGIN-LEFT: 1em; TEXT-INDENT: -1em"><font style="FONT-FAMILY: Times New Roman" size="2">5.85%&#xA0;Notes due 2017</font></p> </td> <td valign="bottom"><font size="1">&#xA0;&#xA0;</font></td> <td valign="bottom"><font style="FONT-FAMILY: Times New Roman" size="2">&#xA0;</font></td> <td valign="bottom" align="right"><font style="FONT-FAMILY: Times New Roman" size="2">158.0</font></td> <td valign="bottom"><font size="1">&#xA0;&#xA0;</font></td> <td valign="bottom"><font style="FONT-FAMILY: Times New Roman" size="2">&#xA0;</font></td> <td valign="bottom" align="right"><font style="FONT-FAMILY: Times New Roman" size="2">500.0</font></td> </tr> <tr> <td valign="top"> <p style="MARGIN-LEFT: 1em; TEXT-INDENT: -1em"><font style="FONT-FAMILY: Times New Roman" size="2">6.00%&#xA0;Notes due 2017</font></p> </td> <td valign="bottom"><font size="1">&#xA0;&#xA0;</font></td> <td valign="bottom"><font style="FONT-FAMILY: Times New Roman" size="2">&#xA0;</font></td> <td valign="bottom" align="right"><font style="FONT-FAMILY: Times New Roman" size="2">214.9</font></td> <td valign="bottom"><font size="1">&#xA0;&#xA0;</font></td> <td valign="bottom"><font style="FONT-FAMILY: Times New Roman" size="2">&#xA0;</font></td> <td valign="bottom" align="right"><font style="FONT-FAMILY: Times New Roman" size="2">350.4</font></td> </tr> <tr bgcolor="#CCEEFF"> <td valign="top"> <p style="MARGIN-LEFT: 1em; TEXT-INDENT: -1em"><font style="FONT-FAMILY: Times New Roman" size="2">6.75%&#xA0;Notes due 2011</font></p> </td> <td valign="bottom"><font size="1">&#xA0;&#xA0;</font></td> <td valign="bottom"><font style="FONT-FAMILY: Times New Roman" size="2">&#xA0;</font></td> <td valign="bottom" align="right"><font style="FONT-FAMILY: Times New Roman" size="2">217.9</font></td> <td valign="bottom"><font size="1">&#xA0;&#xA0;</font></td> <td valign="bottom"><font style="FONT-FAMILY: Times New Roman" size="2">&#xA0;</font></td> <td valign="bottom" align="right"><font style="FONT-FAMILY: Times New Roman" size="2">494.6</font></td> </tr> <tr> <td valign="top"> <p style="MARGIN-LEFT: 1em; TEXT-INDENT: -1em"><font style="FONT-FAMILY: Times New Roman" size="2">7.80%&#xA0;Debentures due 2016</font></p> </td> <td valign="bottom"><font size="1">&#xA0;&#xA0;</font></td> <td valign="bottom"><font style="FONT-FAMILY: Times New Roman" size="2">&#xA0;</font></td> <td valign="bottom" align="right"><font style="FONT-FAMILY: Times New Roman" size="2">44.1</font></td> <td valign="bottom"><font size="1">&#xA0;&#xA0;</font></td> <td valign="bottom"><font style="FONT-FAMILY: Times New Roman" size="2">&#xA0;</font></td> <td valign="bottom" align="right"><font style="FONT-FAMILY: Times New Roman" size="2">75.7</font></td> </tr> <tr bgcolor="#CCEEFF"> <td valign="top"> <p style="MARGIN-LEFT: 1em; TEXT-INDENT: -1em"><font style="FONT-FAMILY: Times New Roman" size="2">7.00%&#xA0;Debentures due 2026</font></p> </td> <td valign="bottom"><font size="1">&#xA0;&#xA0;</font></td> <td valign="bottom"><font style="FONT-FAMILY: Times New Roman" size="2">&#xA0;</font></td> <td valign="bottom" align="right"><font style="FONT-FAMILY: Times New Roman" size="2">124.5</font></td> <td valign="bottom"><font size="1">&#xA0;&#xA0;</font></td> <td valign="bottom"><font style="FONT-FAMILY: Times New Roman" size="2">&#xA0;</font></td> <td valign="bottom" align="right"><font style="FONT-FAMILY: Times New Roman" size="2">192.0</font></td> </tr> <tr> <td valign="top"> <p style="MARGIN-LEFT: 1em; TEXT-INDENT: -1em"><font style="FONT-FAMILY: Times New Roman" size="2">Floating Rate Notes due 2009</font></p> </td> <td valign="bottom"><font size="1">&#xA0;&#xA0;</font></td> <td valign="bottom"><font style="FONT-FAMILY: Times New Roman" size="2">&#xA0;</font></td> <td valign="bottom" align="right"><font style="FONT-FAMILY: Times New Roman" size="2">&#x2014;&#xA0;&#xA0;</font></td> <td valign="bottom"><font size="1">&#xA0;&#xA0;</font></td> <td valign="bottom"><font style="FONT-FAMILY: Times New Roman" size="2">&#xA0;</font></td> <td valign="bottom" align="right"><font style="FONT-FAMILY: Times New Roman" size="2">350.0</font></td> </tr> <tr bgcolor="#CCEEFF"> <td valign="top"> <p style="MARGIN-LEFT: 1em; TEXT-INDENT: -1em"><font style="FONT-FAMILY: Times New Roman" size="2">Other obligations</font></p> </td> <td valign="bottom"><font size="1">&#xA0;&#xA0;</font></td> <td valign="bottom"><font style="FONT-FAMILY: Times New Roman" size="2">&#xA0;</font></td> <td valign="bottom" align="right"><font style="FONT-FAMILY: Times New Roman" size="2">6.6</font></td> <td valign="bottom"><font size="1">&#xA0;&#xA0;</font></td> <td valign="bottom"><font style="FONT-FAMILY: Times New Roman" size="2">&#xA0;</font></td> <td valign="bottom" align="right"><font style="FONT-FAMILY: Times New Roman" size="2">7.8</font></td> </tr> <tr style="FONT-SIZE: 1px"> <td valign="bottom"></td> <td valign="bottom">&#xA0;&#xA0;</td> <td style="BORDER-TOP: #000000 1px solid" valign="bottom"> &#xA0;</td> <td style="BORDER-TOP: #000000 1px solid" valign="bottom"> &#xA0;</td> <td valign="bottom">&#xA0;&#xA0;</td> <td style="BORDER-TOP: #000000 1px solid" valign="bottom"> &#xA0;</td> <td style="BORDER-TOP: #000000 1px solid" valign="bottom"> &#xA0;</td> </tr> <tr> <td valign="top"> <p style="MARGIN-LEFT: 1em; TEXT-INDENT: -1em"><font style="FONT-FAMILY: Times New Roman" size="2">Total</font></p> </td> <td valign="bottom"><font size="1">&#xA0;&#xA0;</font></td> <td valign="bottom"><font style="FONT-FAMILY: Times New Roman" size="2">&#xA0;</font></td> <td valign="bottom" align="right"><font style="FONT-FAMILY: Times New Roman" size="2">2,111.9</font></td> <td valign="bottom"><font size="1">&#xA0;&#xA0;</font></td> <td valign="bottom"><font style="FONT-FAMILY: Times New Roman" size="2">&#xA0;</font></td> <td valign="bottom" align="right"><font style="FONT-FAMILY: Times New Roman" size="2">3,637.8</font></td> </tr> <tr bgcolor="#CCEEFF"> <td valign="top"> <p style="MARGIN-LEFT: 1em; TEXT-INDENT: -1em"><font style="FONT-FAMILY: Times New Roman" size="2">Less: current portion and other short-term borrowings</font></p> </td> <td valign="bottom"><font size="1">&#xA0;&#xA0;</font></td> <td valign="bottom"><font style="FONT-FAMILY: Times New Roman" size="2">&#xA0;</font></td> <td valign="bottom" align="right"><font style="FONT-FAMILY: Times New Roman" size="2">12.7</font></td> <td valign="bottom"><font size="1">&#xA0;&#xA0;</font></td> <td valign="bottom"><font style="FONT-FAMILY: Times New Roman" size="2">&#xA0;</font></td> <td valign="bottom" align="right"><font style="FONT-FAMILY: Times New Roman" size="2">366.2</font></td> </tr> <tr style="FONT-SIZE: 1px"> <td valign="bottom"></td> <td valign="bottom">&#xA0;&#xA0;</td> <td style="BORDER-TOP: #000000 1px solid" valign="bottom"> &#xA0;</td> <td style="BORDER-TOP: #000000 1px solid" valign="bottom"> &#xA0;</td> <td valign="bottom">&#xA0;&#xA0;</td> <td style="BORDER-TOP: #000000 1px solid" valign="bottom"> &#xA0;</td> <td style="BORDER-TOP: #000000 1px solid" valign="bottom"> &#xA0;</td> </tr> <tr> <td valign="top"> <p style="MARGIN-LEFT: 1em; TEXT-INDENT: -1em"><font style="FONT-FAMILY: Times New Roman" size="2">Long-term obligations, less current portion and other short-term borrowings</font></p> </td> <td valign="bottom"><font size="1">&#xA0;&#xA0;</font></td> <td valign="bottom"><font style="FONT-FAMILY: Times New Roman" size="2">$</font></td> <td valign="bottom" align="right"><font style="FONT-FAMILY: Times New Roman" size="2">2,099.2</font></td> <td valign="bottom"><font size="1">&#xA0;&#xA0;</font></td> <td valign="bottom"><font style="FONT-FAMILY: Times New Roman" size="2">$</font></td> <td valign="bottom" align="right"><font style="FONT-FAMILY: Times New Roman" size="2">3,271.6</font></td> </tr> <tr style="FONT-SIZE: 1px"> <td valign="bottom"></td> <td valign="bottom">&#xA0;&#xA0;</td> <td style="BORDER-TOP: #000000 3px double" valign="bottom"> &#xA0;</td> <td style="BORDER-TOP: #000000 3px double" valign="bottom"> &#xA0;</td> <td valign="bottom">&#xA0;&#xA0;</td> <td style="BORDER-TOP: #000000 3px double" valign="bottom"> &#xA0;</td> <td style="BORDER-TOP: #000000 3px double" valign="bottom"> &#xA0;</td> </tr> </table> </div> 125800000 <div> <p style="MARGIN-TOP: 18px; MARGIN-BOTTOM: 0px"><font style="FONT-FAMILY: Times New Roman" size="2"><b>15. EMPLOYEE EQUITY PLANS</b></font></p> <p style="MARGIN-TOP: 6px; MARGIN-BOTTOM: 0px; MARGIN-LEFT: 2%"> <font style="FONT-FAMILY: Times New Roman" size="2"><b><i>Employee Equity Plans</i></b></font></p> <p style="MARGIN-TOP: 6px; MARGIN-BOTTOM: 0px; TEXT-INDENT: 4%"> <font style="FONT-FAMILY: Times New Roman" size="2">The Company maintains several stock incentive plans (collectively, the &#x201C;Plans&#x201D;) for the benefit of certain of its officers, directors and employees. Employee options granted under the Plans during fiscal 2008 through fiscal 2010 generally vest in equal annual installments over three years and are exercisable for periods up to seven years from the date of grant at a price equal to the fair market value of the Common Shares underlying the option at the date of grant. Employee options granted under the Plans during fiscal 2007 generally vest in equal annual installments over four years and are exercisable for periods up to seven years from the date of grant at a price equal to the fair market value of the Common Shares underlying the option at the date of grant. Employee restricted shares and restricted share units granted under the Plans during fiscal 2007 through fiscal 2010 generally vest in equal installments over three years and entitle holders to dividends or cash dividend equivalents. Restricted shares and restricted share units that were awarded after August&#xA0;1, 2006 accrue dividends or cash dividend equivalents that are payable upon vesting of the awards.</font></p> <p style="MARGIN-TOP: 12px; MARGIN-BOTTOM: 0px; TEXT-INDENT: 4%"> <font style="FONT-FAMILY: Times New Roman" size="2">The compensation expense recognized for all share-based payment awards is net of estimated forfeitures and is recognized using the straight-line method over the applicable service period. The Company classifies share-based payment compensation within SG&amp;A expenses to correspond with the same line item as the majority of the cash compensation paid to employees.</font></p> <p style="MARGIN-TOP: 12px; MARGIN-BOTTOM: 0px; TEXT-INDENT: 4%"> <font style="FONT-FAMILY: Times New Roman" size="2">The following table illustrates the impact of share-based payment compensation on reported amounts for the three and six months ended December&#xA0;31, 2009 and 2008:</font></p> <p style="MARGIN-TOP: 0px; FONT-SIZE: 12px; MARGIN-BOTTOM: 0px"> &#xA0;</p> <table cellspacing="0" cellpadding="0" width="84%" align="center" border="0"> <tr> <td width="68%"></td> <td valign="bottom" width="4%"></td> <td></td> <td></td> <td></td> <td valign="bottom" width="4%"></td> <td></td> <td></td> <td></td> <td valign="bottom" width="4%"></td> <td></td> <td></td> <td></td> <td valign="bottom" width="4%"></td> <td></td> <td></td> <td></td> </tr> <tr> <td valign="bottom"><font size="1">&#xA0;</font></td> <td valign="bottom"><font size="1">&#xA0;&#xA0;</font></td> <td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" align="center" colspan="6"><font style="FONT-FAMILY: Times New Roman" size="1"><b>Three&#xA0;Months&#xA0;Ended<br /> December&#xA0;31,</b></font></td> <td valign="bottom"><font size="1">&#xA0;</font></td> <td valign="bottom"><font size="1">&#xA0;</font></td> <td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" align="center" colspan="6"><font style="FONT-FAMILY: Times New Roman" size="1"><b>Six Months Ended<br /> December&#xA0;31,</b></font></td> <td valign="bottom"><font size="1">&#xA0;</font></td> </tr> <tr> <td valign="bottom" nowrap="nowrap"> <p style="WIDTH: 132pt; BORDER-BOTTOM: #000000 1px solid"> <font style="FONT-FAMILY: Times New Roman" size="1"><b>(in millions, except per share amounts)</b></font></p> </td> <td valign="bottom"><font size="1">&#xA0;&#xA0;</font></td> <td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" align="center" colspan="2"><font style="FONT-FAMILY: Times New Roman" size="1"><b>2009</b></font></td> <td valign="bottom"><font size="1">&#xA0;</font></td> <td valign="bottom"><font size="1">&#xA0;</font></td> <td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" align="center" colspan="2"><font style="FONT-FAMILY: Times New Roman" size="1"><b>2008</b></font></td> <td valign="bottom"><font size="1">&#xA0;</font></td> <td valign="bottom"><font size="1">&#xA0;</font></td> <td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" align="center" colspan="2"><font style="FONT-FAMILY: Times New Roman" size="1"><b>2009</b></font></td> <td valign="bottom"><font size="1">&#xA0;</font></td> <td valign="bottom"><font size="1">&#xA0;</font></td> <td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" align="center" colspan="2"><font style="FONT-FAMILY: Times New Roman" size="1"><b>2008</b></font></td> <td valign="bottom"><font size="1">&#xA0;</font></td> </tr> <tr bgcolor="#CCEEFF"> <td valign="top"> <p style="MARGIN-LEFT: 1em; TEXT-INDENT: -1em"><font style="FONT-FAMILY: Times New Roman" size="2">Operating earnings (1)&#xA0;(2)</font></p> </td> <td valign="bottom"><font size="1">&#xA0;&#xA0;</font></td> <td valign="bottom"><font style="FONT-FAMILY: Times New Roman" size="2">$</font></td> <td valign="bottom" align="right"><font style="FONT-FAMILY: Times New Roman" size="2">(20.1</font></td> <td valign="bottom" nowrap="nowrap"><font style="FONT-FAMILY: Times New Roman" size="2">)&#xA0;</font></td> <td valign="bottom"><font size="1">&#xA0;</font></td> <td valign="bottom"><font style="FONT-FAMILY: Times New Roman" size="2">$</font></td> <td valign="bottom" align="right"><font style="FONT-FAMILY: Times New Roman" size="2">(29.2</font></td> <td valign="bottom" nowrap="nowrap"><font style="FONT-FAMILY: Times New Roman" size="2">)&#xA0;</font></td> <td valign="bottom"><font size="1">&#xA0;</font></td> <td valign="bottom"><font style="FONT-FAMILY: Times New Roman" size="2">$</font></td> <td valign="bottom" align="right"><font style="FONT-FAMILY: Times New Roman" size="2">(42.1</font></td> <td valign="bottom" nowrap="nowrap"><font style="FONT-FAMILY: Times New Roman" size="2">)&#xA0;</font></td> <td valign="bottom"><font size="1">&#xA0;</font></td> <td valign="bottom"><font style="FONT-FAMILY: Times New Roman" size="2">$</font></td> <td valign="bottom" align="right"><font style="FONT-FAMILY: Times New Roman" size="2">(50.2</font></td> <td valign="bottom" nowrap="nowrap"><font style="FONT-FAMILY: Times New Roman" size="2">)&#xA0;</font></td> </tr> <tr> <td valign="top"> <p style="MARGIN-LEFT: 1em; TEXT-INDENT: -1em"><font style="FONT-FAMILY: Times New Roman" size="2">Earnings from continuing operations</font></p> </td> <td valign="bottom"><font size="1">&#xA0;&#xA0;</font></td> <td valign="bottom"><font style="FONT-FAMILY: Times New Roman" size="2">$</font></td> <td valign="bottom" align="right"><font style="FONT-FAMILY: Times New Roman" size="2">(12.8</font></td> <td valign="bottom" nowrap="nowrap"><font style="FONT-FAMILY: Times New Roman" size="2">)&#xA0;</font></td> <td valign="bottom"><font size="1">&#xA0;</font></td> <td valign="bottom"><font style="FONT-FAMILY: Times New Roman" size="2">$</font></td> <td valign="bottom" align="right"><font style="FONT-FAMILY: Times New Roman" size="2">(19.6</font></td> <td valign="bottom" nowrap="nowrap"><font style="FONT-FAMILY: Times New Roman" size="2">)&#xA0;</font></td> <td valign="bottom"><font size="1">&#xA0;</font></td> <td valign="bottom"><font style="FONT-FAMILY: Times New Roman" size="2">$</font></td> <td valign="bottom" align="right"><font style="FONT-FAMILY: Times New Roman" size="2">(27.0</font></td> <td valign="bottom" nowrap="nowrap"><font style="FONT-FAMILY: Times New Roman" size="2">)&#xA0;</font></td> <td valign="bottom"><font size="1">&#xA0;</font></td> <td valign="bottom"><font style="FONT-FAMILY: Times New Roman" size="2">$</font></td> <td valign="bottom" align="right"><font style="FONT-FAMILY: Times New Roman" size="2">(33.8</font></td> <td valign="bottom" nowrap="nowrap"><font style="FONT-FAMILY: Times New Roman" size="2">)&#xA0;</font></td> </tr> <tr bgcolor="#CCEEFF"> <td valign="top"> <p style="MARGIN-LEFT: 1em; TEXT-INDENT: -1em"><font style="FONT-FAMILY: Times New Roman" size="2">Net earnings&#xA0;(3) (4)</font></p> </td> <td valign="bottom"><font size="1">&#xA0;&#xA0;</font></td> <td valign="bottom"><font style="FONT-FAMILY: Times New Roman" size="2">$</font></td> <td valign="bottom" align="right"><font style="FONT-FAMILY: Times New Roman" size="2">(12.8</font></td> <td valign="bottom" nowrap="nowrap"><font style="FONT-FAMILY: Times New Roman" size="2">)&#xA0;</font></td> <td valign="bottom"><font size="1">&#xA0;</font></td> <td valign="bottom"><font style="FONT-FAMILY: Times New Roman" size="2">$</font></td> <td valign="bottom" align="right"><font style="FONT-FAMILY: Times New Roman" size="2">(23.1</font></td> <td valign="bottom" nowrap="nowrap"><font style="FONT-FAMILY: Times New Roman" size="2">)&#xA0;</font></td> <td valign="bottom"><font size="1">&#xA0;</font></td> <td valign="bottom"><font style="FONT-FAMILY: Times New Roman" size="2">$</font></td> <td valign="bottom" align="right"><font style="FONT-FAMILY: Times New Roman" size="2">(29.3</font></td> <td valign="bottom" nowrap="nowrap"><font style="FONT-FAMILY: Times New Roman" size="2">)&#xA0;</font></td> <td valign="bottom"><font size="1">&#xA0;</font></td> <td valign="bottom"><font style="FONT-FAMILY: Times New Roman" size="2">$</font></td> <td valign="bottom" align="right"><font style="FONT-FAMILY: Times New Roman" size="2">(39.4</font></td> <td valign="bottom" nowrap="nowrap"><font style="FONT-FAMILY: Times New Roman" size="2">)&#xA0;</font></td> </tr> <tr> <td valign="top"> <p style="MARGIN-LEFT: 1em; TEXT-INDENT: -1em"><font style="FONT-FAMILY: Times New Roman" size="2">Net basic earnings per Common Share</font></p> </td> <td valign="bottom"><font size="1">&#xA0;&#xA0;</font></td> <td valign="bottom"><font style="FONT-FAMILY: Times New Roman" size="2">$</font></td> <td valign="bottom" align="right"><font style="FONT-FAMILY: Times New Roman" size="2">(0.04</font></td> <td valign="bottom" nowrap="nowrap"><font style="FONT-FAMILY: Times New Roman" size="2">)&#xA0;</font></td> <td valign="bottom"><font size="1">&#xA0;</font></td> <td valign="bottom"><font style="FONT-FAMILY: Times New Roman" size="2">$</font></td> <td valign="bottom" align="right"><font style="FONT-FAMILY: Times New Roman" size="2">(0.06</font></td> <td valign="bottom" nowrap="nowrap"><font style="FONT-FAMILY: Times New Roman" size="2">)&#xA0;</font></td> <td valign="bottom"><font size="1">&#xA0;</font></td> <td valign="bottom"><font style="FONT-FAMILY: Times New Roman" size="2">$</font></td> <td valign="bottom" align="right"><font style="FONT-FAMILY: Times New Roman" size="2">(0.08</font></td> <td valign="bottom" nowrap="nowrap"><font style="FONT-FAMILY: Times New Roman" size="2">)&#xA0;</font></td> <td valign="bottom"><font size="1">&#xA0;</font></td> <td valign="bottom"><font style="FONT-FAMILY: Times New Roman" size="2">$</font></td> <td valign="bottom" align="right"><font style="FONT-FAMILY: Times New Roman" size="2">(0.11</font></td> <td valign="bottom" nowrap="nowrap"><font style="FONT-FAMILY: Times New Roman" size="2">)&#xA0;</font></td> </tr> <tr bgcolor="#CCEEFF"> <td valign="top"> <p style="MARGIN-LEFT: 1em; TEXT-INDENT: -1em"><font style="FONT-FAMILY: Times New Roman" size="2">Net diluted earnings per Common Share</font></p> </td> <td valign="bottom"><font size="1">&#xA0;&#xA0;</font></td> <td valign="bottom"><font style="FONT-FAMILY: Times New Roman" size="2">$</font></td> <td valign="bottom" align="right"><font style="FONT-FAMILY: Times New Roman" size="2">(0.04</font></td> <td valign="bottom" nowrap="nowrap"><font style="FONT-FAMILY: Times New Roman" size="2">)&#xA0;</font></td> <td valign="bottom"><font size="1">&#xA0;</font></td> <td valign="bottom"><font style="FONT-FAMILY: Times New Roman" size="2">$</font></td> <td valign="bottom" align="right"><font style="FONT-FAMILY: Times New Roman" size="2">(0.06</font></td> <td valign="bottom" nowrap="nowrap"><font style="FONT-FAMILY: Times New Roman" size="2">)&#xA0;</font></td> <td valign="bottom"><font size="1">&#xA0;</font></td> <td valign="bottom"><font style="FONT-FAMILY: Times New Roman" size="2">$</font></td> <td valign="bottom" align="right"><font style="FONT-FAMILY: Times New Roman" size="2">(0.08</font></td> <td valign="bottom" nowrap="nowrap"><font style="FONT-FAMILY: Times New Roman" size="2">)&#xA0;</font></td> <td valign="bottom"><font size="1">&#xA0;</font></td> <td valign="bottom"><font style="FONT-FAMILY: Times New Roman" size="2">$</font></td> <td valign="bottom" align="right"><font style="FONT-FAMILY: Times New Roman" size="2">(0.11</font></td> <td valign="bottom" nowrap="nowrap"><font style="FONT-FAMILY: Times New Roman" size="2">)&#xA0;</font></td> </tr> </table> <p style="MARGIN-TOP: 0px; FONT-SIZE: 12px; MARGIN-BOTTOM: 0px"> &#xA0;</p> <table style="BORDER-COLLAPSE: collapse" cellspacing="0" cellpadding="0" width="100%" border="0"> <tr> <td valign="top" align="left" width="4%"><font style="FONT-FAMILY: Times New Roman" size="2">(1)</font></td> <td valign="top" align="left"><font style="FONT-FAMILY: Times New Roman" size="2">The total share-based payment compensation expense for the three months ended December&#xA0;31, 2009 and 2008 includes gross restricted share and restricted share unit expense of approximately $11.5 million and $17.6 million, respectively, gross employee stock option expense of approximately $8.2 million and $10.6 million, respectively, gross employee stock purchase plan expense of approximately $0.0 million and $2.7 million, respectively and gross stock appreciation right (income)/expense of $0.4 million and $(1.7) million, respectively.</font></td> </tr> </table> <table style="BORDER-COLLAPSE: collapse" cellspacing="0" cellpadding="0" width="100%" border="0"> <tr> <td valign="top" align="left" width="4%"><font style="FONT-FAMILY: Times New Roman" size="2">(2)</font></td> <td valign="top" align="left"><font style="FONT-FAMILY: Times New Roman" size="2">The total share-based payment compensation expense for the six months ended December&#xA0;31, 2009 and 2008 includes gross restricted share and restricted share unit expense of approximately $22.8 million and $29.1 million, respectively, gross employee stock option expense of approximately $17.6 million and $16.8 million, respectively, gross employee stock purchase plan expense of approximately $1.1 million and $6.1 million, respectively and gross stock appreciation right (income)/expense of $0.6 million and $(1.8) million, respectively.</font></td> </tr> </table> <table style="BORDER-COLLAPSE: collapse" cellspacing="0" cellpadding="0" width="100%" border="0"> <tr> <td valign="top" align="left" width="4%"><font style="FONT-FAMILY: Times New Roman" size="2">(3)</font></td> <td valign="top" align="left"><font style="FONT-FAMILY: Times New Roman" size="2">Share-based payment compensation expense charged to discontinued operations was approximately $3.5 million, net of tax benefits of $2.1&#xA0;million, during the three months ended December&#xA0;31, 2008.</font></td> </tr> </table> <table style="BORDER-COLLAPSE: collapse" cellspacing="0" cellpadding="0" width="100%" border="0"> <tr> <td valign="top" align="left" width="4%"><font style="FONT-FAMILY: Times New Roman" size="2">(4)</font></td> <td valign="top" align="left"><font style="FONT-FAMILY: Times New Roman" size="2">Share-based payment compensation expense charged to discontinued operations was approximately $2.3 million and $5.6 million, net of tax benefits of $1.5&#xA0;million and $3.4&#xA0;million, during the six months ended December&#xA0;31, 2009 and 2008, respectively.</font></td> </tr> </table> <p style="MARGIN-TOP: 0px; MARGIN-BOTTOM: 0px"><font size="1">&#xA0;</font></p> <p style="MARGIN-TOP: 0px; MARGIN-BOTTOM: 0px; MARGIN-LEFT: 2%"> <font style="FONT-FAMILY: Times New Roman" size="2"><b><i>Stock Options</i></b></font></p> <p style="MARGIN-TOP: 6px; MARGIN-BOTTOM: 0px; TEXT-INDENT: 4%"> <font style="FONT-FAMILY: Times New Roman" size="2">The fair value of the Company&#x2019;s stock options is determined using a lattice valuation model. The Company believes the lattice model provides for better estimates because it has the ability to take into account employee exercise patterns based on changes in the Company&#x2019;s stock price and other variables and it provides for a range of input assumptions.</font></p> <p style="MARGIN-TOP: 12px; MARGIN-BOTTOM: 0px; TEXT-INDENT: 4%"> <font style="FONT-FAMILY: Times New Roman" size="2">The following summarizes all stock option transactions for the Company under the Plans from July&#xA0;1, 2009 through December&#xA0;31, 2009:</font></p> <p style="MARGIN-TOP: 0px; FONT-SIZE: 12px; MARGIN-BOTTOM: 0px"> &#xA0;</p> <table cellspacing="0" cellpadding="0" width="92%" align="center" border="0"> <tr> <td width="59%"></td> <td valign="bottom" width="7%"></td> <td></td> <td></td> <td valign="bottom" width="7%"></td> <td></td> <td></td> <td valign="bottom" width="7%"></td> <td></td> <td valign="bottom" width="7%"></td> <td></td> <td></td> </tr> <tr> <td valign="bottom" nowrap="nowrap"> <p style="WIDTH: 132pt; BORDER-BOTTOM: #000000 1px solid"> <font style="FONT-FAMILY: Times New Roman" size="1"><b>(in millions, except per share amounts)</b></font></p> </td> <td valign="bottom"><font size="1">&#xA0;&#xA0;</font></td> <td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" align="center"><font style="FONT-FAMILY: Times New Roman" size="1"><b>Options<br /> Outstanding&#xA0;(1)</b></font></td> <td valign="bottom"><font size="1">&#xA0;</font></td> <td valign="bottom"><font size="1">&#xA0;</font></td> <td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" align="center" colspan="2"><font style="FONT-FAMILY: Times New Roman" size="1"><b>Weighted<br /> Average<br /> Exercise&#xA0;Price<br /> per&#xA0;Common<br /> Share (2)</b></font></td> <td valign="bottom"><font size="1">&#xA0;&#xA0;</font></td> <td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" align="center"><font style="FONT-FAMILY: Times New Roman" size="1"><b>Weighted<br /> Average<br /> Remaining<br /> Contractual<br /> Life in<br /> Years</b></font></td> <td valign="bottom"><font size="1">&#xA0;&#xA0;</font></td> <td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" align="center" colspan="2"><font style="FONT-FAMILY: Times New Roman" size="1"><b>Aggregate<br /> Intrinsic<br /> Value</b></font></td> </tr> <tr bgcolor="#CCEEFF"> <td valign="top"> <p style="MARGIN-LEFT: 1em; TEXT-INDENT: -1em"><font style="FONT-FAMILY: Times New Roman" size="2">Balance at June&#xA0;30, 2009</font></p> </td> <td valign="bottom"><font size="1">&#xA0;&#xA0;</font></td> <td valign="bottom" align="right"><font style="FONT-FAMILY: Times New Roman" size="2">29.4</font></td> <td valign="bottom" nowrap="nowrap"><font style="FONT-FAMILY: Times New Roman" size="2">&#xA0;&#xA0;</font></td> <td valign="bottom"><font size="1">&#xA0;</font></td> <td valign="bottom"><font style="FONT-FAMILY: Times New Roman" size="2">$</font></td> <td valign="bottom" align="right"><font style="FONT-FAMILY: Times New Roman" size="2">59.25</font></td> <td valign="bottom"><font size="1">&#xA0;&#xA0;</font></td> <td valign="bottom" align="right"><font style="FONT-FAMILY: Times New Roman" size="2">3.9</font></td> <td valign="bottom"><font size="1">&#xA0;&#xA0;</font></td> <td valign="bottom"><font style="FONT-FAMILY: Times New Roman" size="2">$</font></td> <td valign="bottom" align="right"><font style="FONT-FAMILY: Times New Roman" size="2">1.8</font></td> </tr> <tr> <td valign="top"> <p style="MARGIN-LEFT: 1em; TEXT-INDENT: -1em"><font style="FONT-FAMILY: Times New Roman" size="2">Granted</font></p> </td> <td valign="bottom"><font size="1">&#xA0;&#xA0;</font></td> <td valign="bottom" align="right"><font style="FONT-FAMILY: Times New Roman" size="2">7.2</font></td> <td valign="bottom" nowrap="nowrap"><font style="FONT-FAMILY: Times New Roman" size="2">&#xA0;&#xA0;</font></td> <td valign="bottom"><font size="1">&#xA0;</font></td> <td valign="bottom"><font style="FONT-FAMILY: Times New Roman" size="2">$</font></td> <td valign="bottom" align="right"><font style="FONT-FAMILY: Times New Roman" size="2">28.08</font></td> <td valign="bottom"><font size="1">&#xA0;&#xA0;</font></td> <td valign="bottom"></td> <td valign="bottom"><font size="1">&#xA0;&#xA0;</font></td> <td valign="bottom"></td> <td valign="bottom"></td> </tr> <tr bgcolor="#CCEEFF"> <td valign="top"> <p style="MARGIN-LEFT: 1em; TEXT-INDENT: -1em"><font style="FONT-FAMILY: Times New Roman" size="2">Exercised</font></p> </td> <td valign="bottom"><font size="1">&#xA0;&#xA0;</font></td> <td valign="bottom" align="right"><font style="FONT-FAMILY: Times New Roman" size="2">(0.8</font></td> <td valign="bottom" nowrap="nowrap"><font style="FONT-FAMILY: Times New Roman" size="2">)&#xA0;</font></td> <td valign="bottom"><font size="1">&#xA0;</font></td> <td valign="bottom"><font style="FONT-FAMILY: Times New Roman" size="2">$</font></td> <td valign="bottom" align="right"><font style="FONT-FAMILY: Times New Roman" size="2">24.31</font></td> <td valign="bottom"><font size="1">&#xA0;&#xA0;</font></td> <td valign="bottom"></td> <td valign="bottom"><font size="1">&#xA0;&#xA0;</font></td> <td valign="bottom"></td> <td valign="bottom"></td> </tr> <tr> <td valign="top"> <p style="MARGIN-LEFT: 1em; TEXT-INDENT: -1em"><font style="FONT-FAMILY: Times New Roman" size="2">Forfeited and cancelled</font></p> </td> <td valign="bottom"><font size="1">&#xA0;&#xA0;</font></td> <td valign="bottom" align="right"><font style="FONT-FAMILY: Times New Roman" size="2">(10.7</font></td> <td valign="bottom" nowrap="nowrap"><font style="FONT-FAMILY: Times New Roman" size="2">)&#xA0;</font></td> <td valign="bottom"><font size="1">&#xA0;</font></td> <td valign="bottom"><font style="FONT-FAMILY: Times New Roman" size="2">$</font></td> <td valign="bottom" align="right"><font style="FONT-FAMILY: Times New Roman" size="2">63.37</font></td> <td valign="bottom"><font size="1">&#xA0;&#xA0;</font></td> <td valign="bottom"></td> <td valign="bottom"><font size="1">&#xA0;&#xA0;</font></td> <td valign="bottom"></td> <td valign="bottom"></td> </tr> <tr style="FONT-SIZE: 1px"> <td valign="bottom"></td> <td valign="bottom">&#xA0;&#xA0;</td> <td style="BORDER-TOP: #000000 1px solid" valign="bottom"> &#xA0;</td> <td>&#xA0;</td> <td valign="bottom">&#xA0;</td> <td valign="bottom"></td> <td valign="bottom"></td> <td valign="bottom">&#xA0;&#xA0;</td> <td valign="bottom"></td> <td valign="bottom">&#xA0;&#xA0;</td> <td valign="bottom"></td> <td valign="bottom"></td> </tr> <tr bgcolor="#CCEEFF"> <td valign="top"> <p style="MARGIN-LEFT: 1em; TEXT-INDENT: -1em"><font style="FONT-FAMILY: Times New Roman" size="2">Balance at December&#xA0;31, 2009</font></p> </td> <td valign="bottom"><font size="1">&#xA0;&#xA0;</font></td> <td valign="bottom" align="right"><font style="FONT-FAMILY: Times New Roman" size="2">25.1</font></td> <td valign="bottom" nowrap="nowrap"><font style="FONT-FAMILY: Times New Roman" size="2">&#xA0;&#xA0;</font></td> <td valign="bottom"><font size="1">&#xA0;</font></td> <td valign="bottom"><font style="FONT-FAMILY: Times New Roman" size="2">$</font></td> <td valign="bottom" align="right"><font style="FONT-FAMILY: Times New Roman" size="2">37.71</font></td> <td valign="bottom"><font size="1">&#xA0;&#xA0;</font></td> <td valign="bottom" align="right"><font style="FONT-FAMILY: Times New Roman" size="2">4.3</font></td> <td valign="bottom"><font size="1">&#xA0;&#xA0;</font></td> <td valign="bottom"><font style="FONT-FAMILY: Times New Roman" size="2">$</font></td> <td valign="bottom" align="right"><font style="FONT-FAMILY: Times New Roman" size="2">43.2</font></td> </tr> <tr style="FONT-SIZE: 1px"> <td valign="bottom"></td> <td valign="bottom">&#xA0;&#xA0;</td> <td style="BORDER-TOP: #000000 3px double" valign="bottom"> &#xA0;</td> <td>&#xA0;</td> <td valign="bottom">&#xA0;</td> <td valign="bottom"></td> <td valign="bottom"></td> <td valign="bottom">&#xA0;&#xA0;</td> <td valign="bottom"></td> <td valign="bottom">&#xA0;&#xA0;</td> <td valign="bottom"></td> <td valign="bottom"></td> </tr> <tr> <td valign="top"> <p style="MARGIN-LEFT: 1em; TEXT-INDENT: -1em"><font style="FONT-FAMILY: Times New Roman" size="2">Exercisable at December&#xA0;31, 2009</font></p> </td> <td valign="bottom"><font size="1">&#xA0;&#xA0;</font></td> <td valign="bottom" align="right"><font style="FONT-FAMILY: Times New Roman" size="2">16.3</font></td> <td valign="bottom" nowrap="nowrap"><font style="FONT-FAMILY: Times New Roman" size="2">&#xA0;&#xA0;</font></td> <td valign="bottom"><font size="1">&#xA0;</font></td> <td valign="bottom"><font style="FONT-FAMILY: Times New Roman" size="2">$</font></td> <td valign="bottom" align="right"><font style="FONT-FAMILY: Times New Roman" size="2">41.98</font></td> <td valign="bottom"><font size="1">&#xA0;&#xA0;</font></td> <td valign="bottom" align="right"><font style="FONT-FAMILY: Times New Roman" size="2">3.5</font></td> <td valign="bottom"><font size="1">&#xA0;&#xA0;</font></td> <td valign="bottom"><font style="FONT-FAMILY: Times New Roman" size="2">$</font></td> <td valign="bottom" align="right"><font style="FONT-FAMILY: Times New Roman" size="2">2.5</font></td> </tr> </table> <p style="MARGIN-TOP: 0px; MARGIN-BOTTOM: 2px; WIDTH: 10%; LINE-HEIGHT: 8px; BORDER-BOTTOM: #000000 0.5pt solid"> &#xA0;</p> <table style="BORDER-COLLAPSE: collapse" cellspacing="0" cellpadding="0" width="100%" border="0"> <tr> <td valign="top" align="left" width="4%"><font style="FONT-FAMILY: Times New Roman" size="2">(1)</font></td> <td valign="top" align="left"><font style="FONT-FAMILY: Times New Roman" size="2">Included within the options granted and forfeited and cancelled activity for the six months ended December&#xA0;31, 2009 is the impact of the Company&#x2019;s stock option exchange program and the adjustments to stock incentive plans as discussed below.</font></td> </tr> </table> <table style="BORDER-COLLAPSE: collapse" cellspacing="0" cellpadding="0" width="100%" border="0"> <tr> <td valign="top" align="left" width="4%"><font style="FONT-FAMILY: Times New Roman" size="2">(2)</font></td> <td valign="top" align="left"><font style="FONT-FAMILY: Times New Roman" size="2">Exercise prices related to stock options granted prior to the date of the Spin-Off have not been adjusted to reflect the impact of the Spin-Off.</font></td> </tr> </table> <p style="MARGIN-TOP: 18px; MARGIN-BOTTOM: 0px; MARGIN-LEFT: 2%"> <font style="FONT-FAMILY: Times New Roman" size="2"><b><i>Restricted Shares and Restricted Share Units</i></b></font></p> <p style="MARGIN-TOP: 6px; MARGIN-BOTTOM: 0px; TEXT-INDENT: 4%"> <font style="FONT-FAMILY: Times New Roman" size="2">The fair value of restricted shares and restricted share units is determined by the number of shares granted and the grant date market price of the Company&#x2019;s Common Shares.</font></p> <p style="MARGIN-TOP: 12px; MARGIN-BOTTOM: 0px; TEXT-INDENT: 4%"> <font style="FONT-FAMILY: Times New Roman" size="2">The following table summarizes all activity related to restricted shares and restricted share units from July&#xA0;1, 2009 through December&#xA0;31, 2009:</font></p> <p style="MARGIN-TOP: 0px; FONT-SIZE: 12px; MARGIN-BOTTOM: 0px"> &#xA0;</p> <table cellspacing="0" cellpadding="0" width="76%" align="center" border="0"> <tr> <td width="74%"></td> <td valign="bottom" width="9%"></td> <td></td> <td></td> <td valign="bottom" width="9%"></td> <td></td> <td></td> </tr> <tr> <td valign="bottom" nowrap="nowrap"> <p style="WIDTH: 132pt; BORDER-BOTTOM: #000000 1px solid"> <font style="FONT-FAMILY: Times New Roman" size="1"><b>(in millions, except per share amounts)</b></font></p> </td> <td valign="bottom"><font size="1">&#xA0;&#xA0;</font></td> <td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" align="center"><font style="FONT-FAMILY: Times New Roman" size="1"><b>Shares&#xA0;(1)</b></font></td> <td valign="bottom"><font size="1">&#xA0;</font></td> <td valign="bottom"><font size="1">&#xA0;</font></td> <td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" align="center" colspan="2"><font style="FONT-FAMILY: Times New Roman" size="1"><b>Weighted<br /> Average&#xA0;Grant<br /> Date&#xA0;Fair&#xA0;Value<br /> Per Share (2)</b></font></td> </tr> <tr bgcolor="#CCEEFF"> <td valign="top"> <p style="MARGIN-LEFT: 1em; TEXT-INDENT: -1em"><font style="FONT-FAMILY: Times New Roman" size="2">Nonvested at June&#xA0;30, 2009</font></p> </td> <td valign="bottom"><font size="1">&#xA0;&#xA0;</font></td> <td valign="bottom" align="right"><font style="FONT-FAMILY: Times New Roman" size="2">3.1</font></td> <td valign="bottom" nowrap="nowrap"><font style="FONT-FAMILY: Times New Roman" size="2">&#xA0;&#xA0;</font></td> <td valign="bottom"><font size="1">&#xA0;</font></td> <td valign="bottom"><font style="FONT-FAMILY: Times New Roman" size="2">$</font></td> <td valign="bottom" align="right"><font style="FONT-FAMILY: Times New Roman" size="2">57.10</font></td> </tr> <tr> <td valign="top"> <p style="MARGIN-LEFT: 1em; TEXT-INDENT: -1em"><font style="FONT-FAMILY: Times New Roman" size="2">Granted</font></p> </td> <td valign="bottom"><font size="1">&#xA0;&#xA0;</font></td> <td valign="bottom" align="right"><font style="FONT-FAMILY: Times New Roman" size="2">2.1</font></td> <td valign="bottom" nowrap="nowrap"><font style="FONT-FAMILY: Times New Roman" size="2">&#xA0;&#xA0;</font></td> <td valign="bottom"><font size="1">&#xA0;</font></td> <td valign="bottom"><font style="FONT-FAMILY: Times New Roman" size="2">$</font></td> <td valign="bottom" align="right"><font style="FONT-FAMILY: Times New Roman" size="2">27.35</font></td> </tr> <tr bgcolor="#CCEEFF"> <td valign="top"> <p style="MARGIN-LEFT: 1em; TEXT-INDENT: -1em"><font style="FONT-FAMILY: Times New Roman" size="2">Vested</font></p> </td> <td valign="bottom"><font size="1">&#xA0;&#xA0;</font></td> <td valign="bottom" align="right"><font style="FONT-FAMILY: Times New Roman" size="2">(1.1</font></td> <td valign="bottom" nowrap="nowrap"><font style="FONT-FAMILY: Times New Roman" size="2">)&#xA0;</font></td> <td valign="bottom"><font size="1">&#xA0;</font></td> <td valign="bottom"><font style="FONT-FAMILY: Times New Roman" size="2">$</font></td> <td valign="bottom" align="right"><font style="FONT-FAMILY: Times New Roman" size="2">59.70</font></td> </tr> <tr> <td valign="top"> <p style="MARGIN-LEFT: 1em; TEXT-INDENT: -1em"><font style="FONT-FAMILY: Times New Roman" size="2">Forfeited and cancelled</font></p> </td> <td valign="bottom"><font size="1">&#xA0;&#xA0;</font></td> <td valign="bottom" align="right"><font style="FONT-FAMILY: Times New Roman" size="2">(0.2</font></td> <td valign="bottom" nowrap="nowrap"><font style="FONT-FAMILY: Times New Roman" size="2">)&#xA0;</font></td> <td valign="bottom"><font size="1">&#xA0;</font></td> <td valign="bottom"><font style="FONT-FAMILY: Times New Roman" size="2">$</font></td> <td valign="bottom" align="right"><font style="FONT-FAMILY: Times New Roman" size="2">47.82</font></td> </tr> <tr style="FONT-SIZE: 1px"> <td valign="bottom"></td> <td valign="bottom">&#xA0;&#xA0;</td> <td style="BORDER-TOP: #000000 1px solid" valign="bottom"> &#xA0;</td> <td>&#xA0;</td> <td valign="bottom">&#xA0;</td> <td valign="bottom"></td> <td valign="bottom"></td> </tr> <tr bgcolor="#CCEEFF"> <td valign="top"> <p style="MARGIN-LEFT: 1em; TEXT-INDENT: -1em"><font style="FONT-FAMILY: Times New Roman" size="2">Nonvested at December&#xA0;31, 2009</font></p> </td> <td valign="bottom"><font size="1">&#xA0;&#xA0;</font></td> <td valign="bottom" align="right"><font style="FONT-FAMILY: Times New Roman" size="2">3.9</font></td> <td valign="bottom" nowrap="nowrap"><font style="FONT-FAMILY: Times New Roman" size="2">&#xA0;&#xA0;</font></td> <td valign="bottom"><font size="1">&#xA0;</font></td> <td valign="bottom"><font style="FONT-FAMILY: Times New Roman" size="2">$</font></td> <td valign="bottom" align="right"><font style="FONT-FAMILY: Times New Roman" size="2">33.63</font></td> </tr> <tr style="FONT-SIZE: 1px"> <td valign="bottom"></td> <td valign="bottom">&#xA0;&#xA0;</td> <td style="BORDER-TOP: #000000 1px solid" valign="bottom"> &#xA0;</td> <td>&#xA0;</td> <td valign="bottom">&#xA0;</td> <td valign="bottom"></td> <td valign="bottom"></td> </tr> </table> <p style="MARGIN-TOP: 0px; MARGIN-BOTTOM: 2px; WIDTH: 10%; LINE-HEIGHT: 8px; BORDER-BOTTOM: #000000 0.5pt solid"> &#xA0;</p> <table style="BORDER-COLLAPSE: collapse" cellspacing="0" cellpadding="0" width="100%" border="0"> <tr> <td valign="top" align="left" width="4%"><font style="FONT-FAMILY: Times New Roman" size="2">(1)</font></td> <td valign="top" align="left"><font style="FONT-FAMILY: Times New Roman" size="2">Included within the restricted shares and restricted share units forfeited and cancelled activity for the six months ended December&#xA0;31, 2009 is the impact of the adjustments to stock incentive plans as discussed below.</font></td> </tr> </table> <table style="BORDER-COLLAPSE: collapse" cellspacing="0" cellpadding="0" width="100%" border="0"> <tr> <td valign="top" align="left" width="4%"><font style="FONT-FAMILY: Times New Roman" size="2">(2)</font></td> <td valign="top" align="left"><font style="FONT-FAMILY: Times New Roman" size="2">Grant date fair values per share of awards granted prior to the date of the Spin-Off have not been adjusted to reflect the impact of the Spin-Off.</font></td> </tr> </table> <p style="MARGIN-TOP: 0px; MARGIN-BOTTOM: 0px"><font size="1">&#xA0;</font></p> <p style="MARGIN-TOP: 0px; MARGIN-BOTTOM: 0px"><font style="FONT-FAMILY: Times New Roman" size="2"><b><i>Stock Option Exchange Program</i></b></font></p> <p style="MARGIN-TOP: 6px; MARGIN-BOTTOM: 0px; TEXT-INDENT: 4%"> <font style="FONT-FAMILY: Times New Roman" size="2">On May&#xA0;6, 2009, the Company&#x2019;s Board of Directors authorized, and on June&#xA0;23, 2009, the Company&#x2019;s shareholders approved, a program that permitted certain current employees to exchange certain outstanding stock options with exercise prices substantially above the current market price of Cardinal Health Common Shares for a lesser number of stock options that have a fair value that is lower than the fair value of the &#x201C;out of the money&#x201D; options. The program began on June&#xA0;19, 2009 and was completed on July&#xA0;17, 2009. The Company believes that this program was necessary to more closely align employee and shareholder interests through equity compensation programs. The program was designed to motivate and retain key employees and to reinforce the alignment of the Company&#x2019;s employees&#x2019; interests with those of its shareholders. As a result of this program, 9.8&#xA0;million outstanding eligible stock options were exchanged for 1.4&#xA0;million new options at an exercise price of $31.27. These new options have a new minimum vesting condition of an additional 12 months, and the term of each new option is the longer of three years from the grant date and the remaining term of the eligible stock option for which it was exchanged.&#xA0;The new options were treated as a probable-to-probable modification under the accounting guidance for share-based payment compensation.&#xA0;The Company did not incur incremental expense associated with the modification.</font></p> <p style="MARGIN-TOP: 18px; MARGIN-BOTTOM: 0px"><font style="FONT-FAMILY: Times New Roman" size="2"><b><i>Adjustments to Stock Incentive Plans</i></b></font></p> <p style="MARGIN-TOP: 6px; MARGIN-BOTTOM: 0px; TEXT-INDENT: 4%"> <font style="FONT-FAMILY: Times New Roman" size="2">In connection with the Spin-Off, on August&#xA0;31, 2009, the Company adjusted its existing stock incentive plans to provide for the conversion and adjustment of share-based payment compensation awards granted under its Plans into awards based on the Company&#x2019;s common shares and/or CareFusion common stock, as applicable. For purposes of the vesting of these equity awards, continued employment or service with the Company or with CareFusion is treated as continued employment for purposes of both the Company&#x2019;s and CareFusion&#x2019;s equity awards.</font></p> <p style="MARGIN-TOP: 12px; MARGIN-BOTTOM: 0px; TEXT-INDENT: 4%"> <font style="FONT-FAMILY: Times New Roman" size="2">Each Cardinal Health stock option granted on or prior to September&#xA0;26, 2007 was converted into an adjusted Company stock option and a CareFusion stock option. The exercise prices of the CareFusion stock option and the adjusted Company stock option and the number of shares subject to each such stock option reflects a mechanism that is intended to preserve the intrinsic value of the original Company stock option. A Company stock option granted after September&#xA0;26, 2007 to current or former employees of the Company or to directors of the Company continues to be exercisable only for the Company&#x2019;s common shares and was adjusted in a manner intended to preserve the intrinsic value of such stock option. A Company stock option granted after September&#xA0;26, 2007 to CareFusion employees or directors was replaced with a CareFusion stock option, subject to an adjustment mechanism intended to preserve the intrinsic value of such stock option. The resulting Company stock options and CareFusion stock options are subject to substantially the same terms, vesting conditions and other restrictions, if any, that were applicable to the Company stock option immediately prior to the distribution.</font></p> <p style="MARGIN-TOP: 12px; MARGIN-BOTTOM: 0px; TEXT-INDENT: 4%"> <font style="FONT-FAMILY: Times New Roman" size="2">A holder of the Company&#x2019;s restricted shares granted on or prior to September&#xA0;26, 2007 received 0.5&#xA0;restricted shares of CareFusion common stock in respect of each of such holder&#x2019;s restricted shares of the Company. The underlying Company restricted shares will remain outstanding and unadjusted. Unvested Company restricted shares granted after September&#xA0;26, 2007 to current or former employees of the Company were cancelled and replaced with newly issued restricted shares of the Company. Such newly issued Company restricted shares were determined in a manner that is intended to preserve the fair market value of the cancelled awards and the holders of such Company restricted shares received no CareFusion common stock with respect to such restricted shares. Unvested Company restricted shares granted after September&#xA0;26, 2007 to CareFusion employees were cancelled and replaced with restricted shares of CareFusion common stock in a manner that is intended to preserve the fair market value of the cancelled awards. The Company restricted shares and the CareFusion restricted shares are subject to substantially the same terms (including entitlement to any cash dividends, accrued but unpaid at the distribution date), vesting conditions and other restrictions, if any, that were applicable to the cancelled Company restricted shares.</font></p> <p style="MARGIN-TOP: 12px; MARGIN-BOTTOM: 0px; TEXT-INDENT: 4%"> <font style="FONT-FAMILY: Times New Roman" size="2">Following the Spin-Off, if any of the Company&#x2019;s restricted shares that are held by one of CareFusion&#x2019;s employees fail to become vested, such Company restricted shares will be forfeited to the Company and if any CareFusion restricted shares that are held by an employee of the Company fail to become vested, such CareFusion restricted shares will be forfeited to CareFusion.</font></p> <p style="MARGIN-TOP: 0px; MARGIN-BOTTOM: 0px"><font size="1">&#xA0;</font></p> <p style="MARGIN-TOP: 0px; MARGIN-BOTTOM: 0px; TEXT-INDENT: 4%"> <font style="FONT-FAMILY: Times New Roman" size="2">A holder of the Company&#x2019;s restricted share units granted prior to September&#xA0;26, 2007 or granted in connection with the Spin-Off, or issued in exchange for an option initially granted prior to September&#xA0;26, 2007, received, in connection with the Spin-Off, CareFusion restricted stock units representing the right to receive 0.5 shares of CareFusion common stock for each Company common share subject to the award. The underlying Company restricted share units will remain in effect unadjusted. An employee or director of the Company who holds unvested Company restricted share units, other than those described in the first sentence of this paragraph, did not receive any CareFusion restricted stock units in connection with the Spin-Off, but such Company restricted share units were adjusted in a manner intended to preserve the fair market value of such awards. The unvested Company&#x2019;s restricted share units, other than those described in the first sentence of this paragraph, granted to CareFusion employees or directors were replaced with a number of CareFusion restricted stock units intended to preserve the fair market value of the awards. The adjusted Company restricted share units or the replacement CareFusion restricted stock units that a holder received in connection with the Spin-Off will be subject to substantially the same terms (including entitlement to any cash dividend equivalents, accrued but unpaid at the distribution date), vesting conditions and other restrictions, if any, that were applicable to the Company&#x2019;s restricted share units prior to the distribution.</font></p> <p style="MARGIN-TOP: 12px; MARGIN-BOTTOM: 0px; TEXT-INDENT: 4%"> <font style="FONT-FAMILY: Times New Roman" size="2">The adjustments to the Company&#x2019;s stock incentive plans were treated as a modification in accordance with stock based compensation accounting guidance and resulted in a total incremental compensation cost of $0.6 million.</font></p> <p style="MARGIN-TOP: 12px; MARGIN-BOTTOM: 0px; TEXT-INDENT: 4%"> <font style="FONT-FAMILY: Times New Roman" size="2">The following table summaries the share-based payment awards outstanding as of December&#xA0;31, 2009:</font></p> <p style="MARGIN-TOP: 0px; FONT-SIZE: 12px; MARGIN-BOTTOM: 0px"> &#xA0;</p> <table cellspacing="0" cellpadding="0" width="92%" align="center" border="0"> <tr> <td width="67%"></td> <td valign="bottom" width="6%"></td> <td></td> <td valign="bottom" width="6%"></td> <td></td> <td valign="bottom" width="6%"></td> <td></td> <td valign="bottom" width="6%"></td> <td></td> </tr> <tr> <td valign="bottom"><font size="1">&#xA0;</font></td> <td valign="bottom"><font size="1">&#xA0;&#xA0;</font></td> <td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" align="center" colspan="3"><font style="FONT-FAMILY: Times New Roman" size="1"><b>Cardinal&#xA0;Health&#xA0;Awards</b></font></td> <td valign="bottom"><font size="1">&#xA0;&#xA0;</font></td> <td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" align="center" colspan="3"><font style="FONT-FAMILY: Times New Roman" size="1"><b>CareFusion Awards</b></font></td> </tr> <tr> <td valign="bottom" nowrap="nowrap"> <p style="WIDTH: 40pt; BORDER-BOTTOM: #000000 1px solid"> <font style="FONT-FAMILY: Times New Roman" size="1"><b>(in millions)</b></font></p> </td> <td valign="bottom"><font size="1">&#xA0;&#xA0;</font></td> <td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" align="center"><font style="FONT-FAMILY: Times New Roman" size="1"><b>Stock</b></font><br /> <font style="FONT-FAMILY: Times New Roman" size="1"><b>Options</b></font></td> <td valign="bottom"><font size="1">&#xA0;&#xA0;</font></td> <td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" align="center"><font style="FONT-FAMILY: Times New Roman" size="1"><b>Restricted</b></font><br /> <font style="FONT-FAMILY: Times New Roman" size="1"><b>Shares and</b></font><br /> <font style="FONT-FAMILY: Times New Roman" size="1"><b>Share&#xA0;Units</b></font></td> <td valign="bottom"><font size="1">&#xA0;&#xA0;</font></td> <td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" align="center"><font style="FONT-FAMILY: Times New Roman" size="1"><b>Stock</b></font><br /> <font style="FONT-FAMILY: Times New Roman" size="1"><b>Options</b></font></td> <td valign="bottom"><font size="1">&#xA0;&#xA0;</font></td> <td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" align="center"><font style="FONT-FAMILY: Times New Roman" size="1"><b>Restricted</b></font><br /> <font style="FONT-FAMILY: Times New Roman" size="1"><b>Shares and</b></font><br /> <font style="FONT-FAMILY: Times New Roman" size="1"><b>Share&#xA0;Units</b></font></td> </tr> <tr bgcolor="#CCEEFF"> <td valign="top"> <p style="MARGIN-LEFT: 1em; TEXT-INDENT: -1em"><font style="FONT-FAMILY: Times New Roman" size="2">Held by Cardinal Health employees and former employees</font></p> </td> <td valign="bottom"><font size="1">&#xA0;&#xA0;</font></td> <td valign="bottom" align="right"><font style="FONT-FAMILY: Times New Roman" size="2">22.5</font></td> <td valign="bottom"><font size="1">&#xA0;&#xA0;</font></td> <td valign="bottom" align="right"><font style="FONT-FAMILY: Times New Roman" size="2">3.7</font></td> <td valign="bottom"><font size="1">&#xA0;&#xA0;</font></td> <td valign="bottom" align="right"><font style="FONT-FAMILY: Times New Roman" size="2">7.4</font></td> <td valign="bottom"><font size="1">&#xA0;&#xA0;</font></td> <td valign="bottom" align="right"><font style="FONT-FAMILY: Times New Roman" size="2">0.3</font></td> </tr> <tr> <td valign="top"> <p style="MARGIN-LEFT: 1em; TEXT-INDENT: -1em"><font style="FONT-FAMILY: Times New Roman" size="2">Held by CareFusion employees</font></p> </td> <td valign="bottom"><font size="1">&#xA0;&#xA0;</font></td> <td valign="bottom" align="right"><font style="FONT-FAMILY: Times New Roman" size="2">2.6</font></td> <td valign="bottom"><font size="1">&#xA0;&#xA0;</font></td> <td valign="bottom" align="right"><font style="FONT-FAMILY: Times New Roman" size="2">0.2</font></td> <td valign="bottom"><font size="1">&#xA0;&#xA0;</font></td> <td valign="bottom"></td> <td valign="bottom"><font size="1">&#xA0;&#xA0;</font></td> <td valign="bottom"></td> </tr> <tr style="FONT-SIZE: 1px"> <td valign="bottom"></td> <td valign="bottom">&#xA0;&#xA0;</td> <td style="BORDER-TOP: #000000 1px solid" valign="bottom"> &#xA0;</td> <td valign="bottom">&#xA0;&#xA0;</td> <td style="BORDER-TOP: #000000 1px solid" valign="bottom"> &#xA0;</td> <td valign="bottom">&#xA0;&#xA0;</td> <td valign="bottom"></td> <td valign="bottom">&#xA0;&#xA0;</td> <td valign="bottom"></td> </tr> <tr bgcolor="#CCEEFF"> <td valign="top"> <p style="MARGIN-LEFT: 1em; TEXT-INDENT: -1em"><font style="FONT-FAMILY: Times New Roman" size="2">Total</font></p> </td> <td valign="bottom"><font size="1">&#xA0;&#xA0;</font></td> <td valign="bottom" align="right"><font style="FONT-FAMILY: Times New Roman" size="2">25.1</font></td> <td valign="bottom"><font size="1">&#xA0;&#xA0;</font></td> <td valign="bottom" align="right"><font style="FONT-FAMILY: Times New Roman" size="2">3.9</font></td> <td valign="bottom"><font size="1">&#xA0;&#xA0;</font></td> <td valign="bottom"></td> <td valign="bottom"><font size="1">&#xA0;&#xA0;</font></td> <td valign="bottom"></td> </tr> <tr style="FONT-SIZE: 1px"> <td valign="bottom"></td> <td valign="bottom">&#xA0;&#xA0;</td> <td style="BORDER-TOP: #000000 3px double" valign="bottom"> &#xA0;</td> <td valign="bottom">&#xA0;&#xA0;</td> <td style="BORDER-TOP: #000000 3px double" valign="bottom"> &#xA0;</td> <td valign="bottom">&#xA0;&#xA0;</td> <td valign="bottom"></td> <td valign="bottom">&#xA0;&#xA0;</td> <td valign="bottom"></td> </tr> </table> </div> 28400000 <div> <p style="MARGIN-TOP: 6px; MARGIN-BOTTOM: 0px; TEXT-INDENT: 4%"> </p> <p style="MARGIN-TOP: 18px; MARGIN-BOTTOM: 0px"><font style="FONT-FAMILY: Times New Roman" size="2"><b>4. DISCONTINUED OPERATIONS AND ASSETS HELD FOR SALE</b></font></p> <p style="MARGIN-TOP: 6px; MARGIN-BOTTOM: 0px; MARGIN-LEFT: 2%"> <font style="FONT-FAMILY: Times New Roman" size="2"><b><i>CareFusion</i></b></font></p> <p style="MARGIN-TOP: 6px; MARGIN-BOTTOM: 0px; TEXT-INDENT: 4%"> <font style="FONT-FAMILY: Times New Roman" size="2">Effective August&#xA0;31, 2009, the Company completed the distribution to its shareholders of approximately 81% of the then outstanding common stock of CareFusion, with the Company retaining 41.4&#xA0;million shares of CareFusion common stock, and met the criteria for classification as discontinued operations in the Company&#x2019;s financial statements. During the second quarter of fiscal 2010, the Company disposed of approximately 5.5&#xA0;million shares of CareFusion common stock. The Company&#x2019;s investment in CareFusion common stock does not provide the Company the ability to influence the operating or financial policies of CareFusion and accordingly does not constitute significant continuing involvement. Furthermore, while the Company is a party to a separation agreement and various other agreements relating to the separation, including a transition services agreement, a tax matters agreement, an employee matters agreement, intellectual property agreements and certain other commercial agreements, the Company has determined that the continuing cash flows generated by these agreements, which are expected to be eliminated within 5 years, and its investment in CareFusion common stock, do not constitute significant continuing involvement in the operations of CareFusion. Accordingly, the net assets of CareFusion are presented separately as discontinued operations and the operating results are presented within discontinued operations for all periods presented through the date of the Spin-Off.</font></p> <p style="MARGIN-TOP: 0px; MARGIN-BOTTOM: 0px"><font size="1">&#xA0;</font></p> <p style="MARGIN-TOP: 0px; MARGIN-BOTTOM: 0px; TEXT-INDENT: 4%"> <font style="FONT-FAMILY: Times New Roman" size="2">The results of CareFusion included in discontinued operations for the three and six months ended December&#xA0;31, 2009 and 2008 are summarized as follows:</font></p> <p style="MARGIN-TOP: 0px; FONT-SIZE: 12px; MARGIN-BOTTOM: 0px"> &#xA0;</p> <table cellspacing="0" cellpadding="0" width="92%" align="center" border="0"> <tr> <td width="72%"></td> <td valign="bottom" width="3%"></td> <td></td> <td></td> <td valign="bottom" width="3%"></td> <td></td> <td></td> <td></td> <td valign="bottom" width="3%"></td> <td></td> <td></td> <td></td> <td valign="bottom" width="3%"></td> <td></td> <td></td> <td></td> </tr> <tr> <td valign="bottom"><font size="1">&#xA0;</font></td> <td valign="bottom"><font size="1">&#xA0;&#xA0;</font></td> <td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" align="center" colspan="5"><font style="FONT-FAMILY: Times New Roman" size="1"><b>Three&#xA0;Months&#xA0;Ended<br /> December&#xA0;31,</b></font></td> <td valign="bottom"><font size="1">&#xA0;</font></td> <td valign="bottom"><font size="1">&#xA0;</font></td> <td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" align="center" colspan="6"><font style="FONT-FAMILY: Times New Roman" size="1"><b>Six&#xA0;Months&#xA0;Ended<br /> December&#xA0;31,</b></font></td> <td valign="bottom"><font size="1">&#xA0;</font></td> </tr> <tr> <td valign="bottom" nowrap="nowrap"> <p style="WIDTH: 40pt; BORDER-BOTTOM: #000000 1px solid"> <font style="FONT-FAMILY: Times New Roman" size="1"><b>(in millions)</b></font></p> </td> <td valign="bottom"><font size="1">&#xA0;&#xA0;</font></td> <td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" align="center" colspan="2"><font style="FONT-FAMILY: Times New Roman" size="1"><b>2009</b></font></td> <td valign="bottom"><font size="1">&#xA0;&#xA0;</font></td> <td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" align="center" colspan="2"><font style="FONT-FAMILY: Times New Roman" size="1"><b>2008</b></font></td> <td valign="bottom"><font size="1">&#xA0;</font></td> <td valign="bottom"><font size="1">&#xA0;</font></td> <td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" align="center" colspan="2"><font style="FONT-FAMILY: Times New Roman" size="1"><b>2009 (1)</b></font></td> <td valign="bottom"><font size="1">&#xA0;</font></td> <td valign="bottom"><font size="1">&#xA0;</font></td> <td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" align="center" colspan="2"><font style="FONT-FAMILY: Times New Roman" size="1"><b>2008</b></font></td> <td valign="bottom"><font size="1">&#xA0;</font></td> </tr> <tr bgcolor="#CCEEFF"> <td valign="top"> <p style="MARGIN-LEFT: 1em; TEXT-INDENT: -1em"><font style="FONT-FAMILY: Times New Roman" size="2">Revenue</font></p> </td> <td valign="bottom"><font size="1">&#xA0;&#xA0;</font></td> <td valign="bottom"><font style="FONT-FAMILY: Times New Roman" size="2">$</font></td> <td valign="bottom" align="right"><font style="FONT-FAMILY: Times New Roman" size="2">&#x2014;&#xA0;&#xA0;</font></td> <td valign="bottom"><font size="1">&#xA0;&#xA0;</font></td> <td valign="bottom"><font style="FONT-FAMILY: Times New Roman" size="2">$</font></td> <td valign="bottom" align="right"><font style="FONT-FAMILY: Times New Roman" size="2">957.0</font></td> <td valign="bottom" nowrap="nowrap"><font style="FONT-FAMILY: Times New Roman" size="2">&#xA0;&#xA0;</font></td> <td valign="bottom"><font size="1">&#xA0;</font></td> <td valign="bottom"><font style="FONT-FAMILY: Times New Roman" size="2">$</font></td> <td valign="bottom" align="right"><font style="FONT-FAMILY: Times New Roman" size="2">592.1</font></td> <td valign="bottom" nowrap="nowrap"><font style="FONT-FAMILY: Times New Roman" size="2">&#xA0;&#xA0;</font></td> <td valign="bottom"><font size="1">&#xA0;</font></td> <td valign="bottom"><font style="FONT-FAMILY: Times New Roman" size="2">$</font></td> <td valign="bottom" align="right"><font style="FONT-FAMILY: Times New Roman" size="2">1,840.9</font></td> <td valign="bottom" nowrap="nowrap"><font style="FONT-FAMILY: Times New Roman" size="2">&#xA0;&#xA0;</font></td> </tr> <tr> <td valign="top"> <p style="MARGIN-LEFT: 1em; TEXT-INDENT: -1em"><font style="FONT-FAMILY: Times New Roman" size="2">Earnings before income taxes and discontinued operations</font></p> </td> <td valign="bottom"><font size="1">&#xA0;&#xA0;</font></td> <td valign="bottom"><font style="FONT-FAMILY: Times New Roman" size="2">&#xA0;</font></td> <td valign="bottom" align="right"><font style="FONT-FAMILY: Times New Roman" size="2">&#x2014;&#xA0;&#xA0;</font></td> <td valign="bottom"><font size="1">&#xA0;&#xA0;</font></td> <td valign="bottom"><font style="FONT-FAMILY: Times New Roman" size="2">&#xA0;</font></td> <td valign="bottom" align="right"><font style="FONT-FAMILY: Times New Roman" size="2">200.2</font></td> <td valign="bottom" nowrap="nowrap"><font style="FONT-FAMILY: Times New Roman" size="2">&#xA0;&#xA0;</font></td> <td valign="bottom"><font size="1">&#xA0;</font></td> <td valign="bottom"><font style="FONT-FAMILY: Times New Roman" size="2">&#xA0;</font></td> <td valign="bottom" align="right"><font style="FONT-FAMILY: Times New Roman" size="2">43.7</font></td> <td valign="bottom" nowrap="nowrap"><font style="FONT-FAMILY: Times New Roman" size="2">&#xA0;&#xA0;</font></td> <td valign="bottom"><font size="1">&#xA0;</font></td> <td valign="bottom"><font style="FONT-FAMILY: Times New Roman" size="2">&#xA0;</font></td> <td valign="bottom" align="right"><font style="FONT-FAMILY: Times New Roman" size="2">304.1</font></td> <td valign="bottom" nowrap="nowrap"><font style="FONT-FAMILY: Times New Roman" size="2">&#xA0;&#xA0;</font></td> </tr> <tr bgcolor="#CCEEFF"> <td valign="top"> <p style="MARGIN-LEFT: 1em; TEXT-INDENT: -1em"><font style="FONT-FAMILY: Times New Roman" size="2">Income tax expense</font></p> </td> <td valign="bottom"><font size="1">&#xA0;&#xA0;</font></td> <td valign="bottom"><font style="FONT-FAMILY: Times New Roman" size="2">&#xA0;</font></td> <td valign="bottom" align="right"><font style="FONT-FAMILY: Times New Roman" size="2">&#x2014;&#xA0;&#xA0;</font></td> <td valign="bottom"><font size="1">&#xA0;&#xA0;</font></td> <td valign="bottom"><font style="FONT-FAMILY: Times New Roman" size="2">&#xA0;</font></td> <td valign="bottom" align="right"><font style="FONT-FAMILY: Times New Roman" size="2">(53.2</font></td> <td valign="bottom" nowrap="nowrap"><font style="FONT-FAMILY: Times New Roman" size="2">)&#xA0;</font></td> <td valign="bottom"><font size="1">&#xA0;</font></td> <td valign="bottom"><font style="FONT-FAMILY: Times New Roman" size="2">&#xA0;</font></td> <td valign="bottom" align="right"><font style="FONT-FAMILY: Times New Roman" size="2">(23.6</font></td> <td valign="bottom" nowrap="nowrap"><font style="FONT-FAMILY: Times New Roman" size="2">)&#xA0;</font></td> <td valign="bottom"><font size="1">&#xA0;</font></td> <td valign="bottom"><font style="FONT-FAMILY: Times New Roman" size="2">&#xA0;</font></td> <td valign="bottom" align="right"><font style="FONT-FAMILY: Times New Roman" size="2">(83.1</font></td> <td valign="bottom" nowrap="nowrap"><font style="FONT-FAMILY: Times New Roman" size="2">)&#xA0;</font></td> </tr> <tr> <td valign="top"> <p style="MARGIN-LEFT: 1em; TEXT-INDENT: -1em"><font style="FONT-FAMILY: Times New Roman" size="2">Earnings from discontinued operations</font></p> </td> <td valign="bottom"><font size="1">&#xA0;&#xA0;</font></td> <td valign="bottom"><font style="FONT-FAMILY: Times New Roman" size="2">&#xA0;</font></td> <td valign="bottom" align="right"><font style="FONT-FAMILY: Times New Roman" size="2">&#x2014;&#xA0;&#xA0;</font></td> <td valign="bottom"><font size="1">&#xA0;&#xA0;</font></td> <td valign="bottom"><font style="FONT-FAMILY: Times New Roman" size="2">&#xA0;</font></td> <td valign="bottom" align="right"><font style="FONT-FAMILY: Times New Roman" size="2">147.0</font></td> <td valign="bottom" nowrap="nowrap"><font style="FONT-FAMILY: Times New Roman" size="2">&#xA0;&#xA0;</font></td> <td valign="bottom"><font size="1">&#xA0;</font></td> <td valign="bottom"><font style="FONT-FAMILY: Times New Roman" size="2">&#xA0;</font></td> <td valign="bottom" align="right"><font style="FONT-FAMILY: Times New Roman" size="2">20.1</font></td> <td valign="bottom" nowrap="nowrap"><font style="FONT-FAMILY: Times New Roman" size="2">&#xA0;&#xA0;</font></td> <td valign="bottom"><font size="1">&#xA0;</font></td> <td valign="bottom"><font style="FONT-FAMILY: Times New Roman" size="2">&#xA0;</font></td> <td valign="bottom" align="right"><font style="FONT-FAMILY: Times New Roman" size="2">221.0</font></td> <td valign="bottom" nowrap="nowrap"><font style="FONT-FAMILY: Times New Roman" size="2">&#xA0;&#xA0;</font></td> </tr> </table> <p style="MARGIN-TOP: 0px; MARGIN-BOTTOM: 2px; WIDTH: 10%; LINE-HEIGHT: 8px; BORDER-BOTTOM: #000000 0.5pt solid"> &#xA0;</p> <table style="BORDER-COLLAPSE: collapse" cellspacing="0" cellpadding="0" width="100%" border="0"> <tr> <td valign="top" align="left" width="4%"><font style="FONT-FAMILY: Times New Roman" size="2">(1)</font></td> <td valign="top" align="left"><font style="FONT-FAMILY: Times New Roman" size="2">Reflects the results of CareFusion through August&#xA0;31, 2009, the effective date of the Spin-Off.</font></td> </tr> </table> <p style="MARGIN-TOP: 12px; MARGIN-BOTTOM: 0px; TEXT-INDENT: 4%"> <font style="FONT-FAMILY: Times New Roman" size="2">Interest expense allocated to discontinued operations for CareFusion was $16.5 million for the three months ended December&#xA0;31, 2008 and $12.8 million and $38.1 million for the six months ended December&#xA0;31, 2009 and 2008, respectively. Interest expense was allocated considering the debt issued by CareFusion in connection with the Spin-Off and the overall debt balance of the Company. In addition, a portion of the corporate costs previously allocated to CareFusion have been reclassified to the remaining two segments.</font></p> <p style="MARGIN-TOP: 12px; MARGIN-BOTTOM: 0px; TEXT-INDENT: 4%"> <font style="FONT-FAMILY: Times New Roman" size="2">There were no assets and liabilities from businesses held for sale for CareFusion at December&#xA0;31, 2009. At June&#xA0;30, 2009, the major components of assets and liabilities from businesses held for sale for CareFusion were as follows:</font></p> <p style="MARGIN-TOP: 0px; FONT-SIZE: 12px; MARGIN-BOTTOM: 0px"> &#xA0;</p> <table cellspacing="0" cellpadding="0" width="68%" align="center" border="0"> <tr> <td width="87%"></td> <td valign="bottom" width="6%"></td> <td></td> <td></td> </tr> <tr> <td valign="bottom" nowrap="nowrap"> <p style="WIDTH: 40pt; BORDER-BOTTOM: #000000 1px solid"> <font style="FONT-FAMILY: Times New Roman" size="1"><b>(in millions)</b></font></p> </td> <td valign="bottom"><font size="1">&#xA0;&#xA0;</font></td> <td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" align="center" colspan="2"><font style="FONT-FAMILY: Times New Roman" size="1"><b>June&#xA0;30,<br /> 2009</b></font></td> </tr> <tr bgcolor="#CCEEFF"> <td valign="top"> <p style="MARGIN-LEFT: 1em; TEXT-INDENT: -1em"><font style="FONT-FAMILY: Times New Roman" size="2">Current assets</font></p> </td> <td valign="bottom"><font size="1">&#xA0;&#xA0;</font></td> <td valign="bottom"><font style="FONT-FAMILY: Times New Roman" size="2">$</font></td> <td valign="bottom" align="right"><font style="FONT-FAMILY: Times New Roman" size="2">1,832.0</font></td> </tr> <tr> <td valign="top"> <p style="MARGIN-LEFT: 1em; TEXT-INDENT: -1em"><font style="FONT-FAMILY: Times New Roman" size="2">Property and equipment</font></p> </td> <td valign="bottom"><font size="1">&#xA0;&#xA0;</font></td> <td valign="bottom"><font style="FONT-FAMILY: Times New Roman" size="2">&#xA0;</font></td> <td valign="bottom" align="right"><font style="FONT-FAMILY: Times New Roman" size="2">408.5</font></td> </tr> <tr bgcolor="#CCEEFF"> <td valign="top"> <p style="MARGIN-LEFT: 1em; TEXT-INDENT: -1em"><font style="FONT-FAMILY: Times New Roman" size="2">Other assets</font></p> </td> <td valign="bottom"><font size="1">&#xA0;&#xA0;</font></td> <td valign="bottom"><font style="FONT-FAMILY: Times New Roman" size="2">&#xA0;</font></td> <td valign="bottom" align="right"><font style="FONT-FAMILY: Times New Roman" size="2">4,774.2</font></td> </tr> <tr style="FONT-SIZE: 1px"> <td valign="bottom"></td> <td valign="bottom">&#xA0;&#xA0;</td> <td style="BORDER-TOP: #000000 1px solid" valign="bottom"> &#xA0;</td> <td style="BORDER-TOP: #000000 1px solid" valign="bottom"> &#xA0;</td> </tr> <tr> <td valign="top"> <p style="MARGIN-LEFT: 3em; TEXT-INDENT: -1em"><font style="FONT-FAMILY: Times New Roman" size="2">Total assets</font></p> </td> <td valign="bottom"><font size="1">&#xA0;&#xA0;</font></td> <td valign="bottom"><font style="FONT-FAMILY: Times New Roman" size="2">$</font></td> <td valign="bottom" align="right"><font style="FONT-FAMILY: Times New Roman" size="2">7,014.7</font></td> </tr> <tr style="FONT-SIZE: 1px"> <td valign="bottom"></td> <td valign="bottom">&#xA0;&#xA0;</td> <td style="BORDER-TOP: #000000 1px solid" valign="bottom"> &#xA0;</td> <td style="BORDER-TOP: #000000 1px solid" valign="bottom"> &#xA0;</td> </tr> <tr bgcolor="#CCEEFF"> <td valign="top"> <p style="MARGIN-LEFT: 1em; TEXT-INDENT: -1em"><font style="FONT-FAMILY: Times New Roman" size="2">Current liabilities</font></p> </td> <td valign="bottom"><font size="1">&#xA0;&#xA0;</font></td> <td valign="bottom"><font style="FONT-FAMILY: Times New Roman" size="2">&#xA0;</font></td> <td valign="bottom" align="right"><font style="FONT-FAMILY: Times New Roman" size="2">469.2</font></td> </tr> <tr> <td valign="top"> <p style="MARGIN-LEFT: 1em; TEXT-INDENT: -1em"><font style="FONT-FAMILY: Times New Roman" size="2">Long-term debt and other</font></p> </td> <td valign="bottom"><font size="1">&#xA0;&#xA0;</font></td> <td valign="bottom"><font style="FONT-FAMILY: Times New Roman" size="2">&#xA0;</font></td> <td valign="bottom" align="right"><font style="FONT-FAMILY: Times New Roman" size="2">875.4</font></td> </tr> <tr style="FONT-SIZE: 1px"> <td valign="bottom"></td> <td valign="bottom">&#xA0;&#xA0;</td> <td style="BORDER-TOP: #000000 1px solid" valign="bottom"> &#xA0;</td> <td style="BORDER-TOP: #000000 1px solid" valign="bottom"> &#xA0;</td> </tr> <tr bgcolor="#CCEEFF"> <td valign="top"> <p style="MARGIN-LEFT: 3em; TEXT-INDENT: -1em"><font style="FONT-FAMILY: Times New Roman" size="2">Total liabilities</font></p> </td> <td valign="bottom"><font size="1">&#xA0;&#xA0;</font></td> <td valign="bottom"><font style="FONT-FAMILY: Times New Roman" size="2">$</font></td> <td valign="bottom" align="right"><font style="FONT-FAMILY: Times New Roman" size="2">1,344.6</font></td> </tr> <tr style="FONT-SIZE: 1px"> <td valign="bottom"></td> <td valign="bottom">&#xA0;&#xA0;</td> <td style="BORDER-TOP: #000000 1px solid" valign="bottom"> &#xA0;</td> <td style="BORDER-TOP: #000000 1px solid" valign="bottom"> &#xA0;</td> </tr> </table> <p style="MARGIN-TOP: 12px; MARGIN-BOTTOM: 0px; TEXT-INDENT: 4%"> <font style="FONT-FAMILY: Times New Roman" size="2">Cash flows from discontinued operations are presented separately on the Company&#x2019;s condensed consolidated statements of cash flows.</font></p> <p style="MARGIN-TOP: 18px; MARGIN-BOTTOM: 0px"><font style="FONT-FAMILY: Times New Roman" size="2"><b>PTS Business</b></font></p> <p style="MARGIN-TOP: 6px; MARGIN-BOTTOM: 0px; TEXT-INDENT: 4%"> <font style="FONT-FAMILY: Times New Roman" size="2">See Note 7 of the &#x201C;Notes to Consolidated Financial Statements&#x201D; from the FY2009 Financial Statements, for information regarding the sale of the former Pharmaceutical Technologies and Services segment, other than certain generic-focused businesses (the &#x201C;PTS Business&#x201D;), during the fourth quarter of fiscal 2007.</font></p> <p style="MARGIN-TOP: 12px; MARGIN-BOTTOM: 0px; TEXT-INDENT: 4%"> <font style="FONT-FAMILY: Times New Roman" size="2">The Company incurred minor amounts of activity related to the PTS Business during the three and six months ended December&#xA0;31, 2008 as a result of changes in certain estimates made at the time of the sale, activity under a transition services agreement and other adjustments. The loss related to the PTS Business included in discontinued operations was $0.2 million and $0.8 million for the three and six months ended December&#xA0;31, 2009, respectively. The loss related to the PTS Business included in discontinued operations was $2.4 million and $3.1 million for the three and six months ended December&#xA0;31, 2008, respectively.</font></p> <p style="MARGIN-TOP: 12px; MARGIN-BOTTOM: 0px; TEXT-INDENT: 4%"> <font style="FONT-FAMILY: Times New Roman" size="2">The liabilities of the PTS Business included in liabilities held for sale were $1.4 million as of December&#xA0;31, 2009 and June&#xA0;30, 2009.</font></p> <p style="MARGIN-TOP: 12px; MARGIN-BOTTOM: 0px; TEXT-INDENT: 4%"> <font style="FONT-FAMILY: Times New Roman" size="2">Cash flows from discontinued operations are presented separately on the Company&#x2019;s condensed consolidated statements of cash flows.</font></p> <p style="MARGIN-TOP: 18px; MARGIN-BOTTOM: 0px"><font style="FONT-FAMILY: Times New Roman" size="2"><b>Other</b></font></p> <p style="MARGIN-TOP: 6px; MARGIN-BOTTOM: 0px; TEXT-INDENT: 4%"> <font style="FONT-FAMILY: Times New Roman" size="2">During the fourth quarter of fiscal 2009, the Company committed to plans to sell its United Kingdom-based Martindale injectable manufacturing business (&#x201C;Martindale&#x201D;) within its Pharmaceutical segment, and met the criteria for classification as assets held for sale in the Company&#x2019;s financial statements. Accordingly, the net assets of Martindale are presented separately as held for sale and discontinued operations and the operating results are presented within discontinued operations for all periods presented. During the fourth quarter of fiscal 2009, the Company also committed to plans to sell SpecialtyScripts within its Pharmaceutical segment, and met the criteria for classification as held for sale in the Company&#x2019;s financial statements. Accordingly, the net assets of this business are presented separately as assets held for sale on the Company&#x2019;s condensed consolidated balance sheet at December&#xA0;31, 2009 and June&#xA0;30, 2009. The results of SpecialtyScripts are reported within earnings from continuing operations on the Company&#x2019;s condensed consolidated statements of earnings because it did not satisfy the criteria for classification as discontinued operations. Additionally, the net assets held for sale of SpecialtyScripts were recorded at the net expected fair value less costs to sell, as this amount was lower than its net carrying value (see Note 3 for further information).</font></p> <p style="MARGIN-TOP: 0px; MARGIN-BOTTOM: 0px"><font size="1">&#xA0;</font></p> <p style="MARGIN-TOP: 0px; MARGIN-BOTTOM: 0px; TEXT-INDENT: 4%"> <font style="FONT-FAMILY: Times New Roman" size="2">The results of Martindale included in discontinued operations for the three and six months ended December&#xA0;31, 2009 and 2008 are summarized as follows:</font></p> <p style="MARGIN-TOP: 0px; FONT-SIZE: 12px; MARGIN-BOTTOM: 0px"> &#xA0;</p> <table cellspacing="0" cellpadding="0" width="92%" align="center" border="0"> <tr> <td width="76%"></td> <td valign="bottom" width="3%"></td> <td></td> <td></td> <td></td> <td valign="bottom" width="3%"></td> <td></td> <td></td> <td></td> <td valign="bottom" width="3%"></td> <td></td> <td></td> <td></td> <td valign="bottom" width="3%"></td> <td></td> <td></td> <td></td> </tr> <tr> <td valign="bottom"><font size="1">&#xA0;</font></td> <td valign="bottom"><font size="1">&#xA0;&#xA0;</font></td> <td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" align="center" colspan="6"><font style="FONT-FAMILY: Times New Roman" size="1"><b>Three&#xA0;Months&#xA0;Ended<br /> December&#xA0;31,</b></font></td> <td valign="bottom"><font size="1">&#xA0;</font></td> <td valign="bottom"><font size="1">&#xA0;</font></td> <td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" align="center" colspan="6"><font style="FONT-FAMILY: Times New Roman" size="1"><b>Six&#xA0;Months&#xA0;Ended<br /> December&#xA0;31,</b></font></td> <td valign="bottom"><font size="1">&#xA0;</font></td> </tr> <tr> <td valign="bottom" nowrap="nowrap"> <p style="WIDTH: 40pt; BORDER-BOTTOM: #000000 1px solid"> <font style="FONT-FAMILY: Times New Roman" size="1"><b>(in millions)</b></font></p> </td> <td valign="bottom"><font size="1">&#xA0;&#xA0;</font></td> <td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" align="center" colspan="2"><font style="FONT-FAMILY: Times New Roman" size="1"><b>2009</b></font></td> <td valign="bottom"><font size="1">&#xA0;</font></td> <td valign="bottom"><font size="1">&#xA0;</font></td> <td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" align="center" colspan="2"><font style="FONT-FAMILY: Times New Roman" size="1"><b>2008</b></font></td> <td valign="bottom"><font size="1">&#xA0;</font></td> <td valign="bottom"><font size="1">&#xA0;</font></td> <td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" align="center" colspan="2"><font style="FONT-FAMILY: Times New Roman" size="1"><b>2009</b></font></td> <td valign="bottom"><font size="1">&#xA0;</font></td> <td valign="bottom"><font size="1">&#xA0;</font></td> <td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" align="center" colspan="2"><font style="FONT-FAMILY: Times New Roman" size="1"><b>2008</b></font></td> <td valign="bottom"><font size="1">&#xA0;</font></td> </tr> <tr bgcolor="#CCEEFF"> <td valign="top"> <p style="MARGIN-LEFT: 1em; TEXT-INDENT: -1em"><font style="FONT-FAMILY: Times New Roman" size="2">Revenue</font></p> </td> <td valign="bottom"><font size="1">&#xA0;&#xA0;</font></td> <td valign="bottom"><font style="FONT-FAMILY: Times New Roman" size="2">$</font></td> <td valign="bottom" align="right"><font style="FONT-FAMILY: Times New Roman" size="2">30.6</font></td> <td valign="bottom" nowrap="nowrap"><font style="FONT-FAMILY: Times New Roman" size="2">&#xA0;&#xA0;</font></td> <td valign="bottom"><font size="1">&#xA0;</font></td> <td valign="bottom"><font style="FONT-FAMILY: Times New Roman" size="2">$</font></td> <td valign="bottom" align="right"><font style="FONT-FAMILY: Times New Roman" size="2">24.6</font></td> <td valign="bottom" nowrap="nowrap"><font style="FONT-FAMILY: Times New Roman" size="2">&#xA0;&#xA0;</font></td> <td valign="bottom"><font size="1">&#xA0;</font></td> <td valign="bottom"><font style="FONT-FAMILY: Times New Roman" size="2">$</font></td> <td valign="bottom" align="right"><font style="FONT-FAMILY: Times New Roman" size="2">59.6</font></td> <td valign="bottom" nowrap="nowrap"><font style="FONT-FAMILY: Times New Roman" size="2">&#xA0;&#xA0;</font></td> <td valign="bottom"><font size="1">&#xA0;</font></td> <td valign="bottom"><font style="FONT-FAMILY: Times New Roman" size="2">$</font></td> <td valign="bottom" align="right"><font style="FONT-FAMILY: Times New Roman" size="2">50.9</font></td> <td valign="bottom" nowrap="nowrap"><font style="FONT-FAMILY: Times New Roman" size="2">&#xA0;&#xA0;</font></td> </tr> <tr> <td valign="top"> <p style="MARGIN-LEFT: 1em; TEXT-INDENT: -1em"><font style="FONT-FAMILY: Times New Roman" size="2">Earnings before income taxes and discontinued operations</font></p> </td> <td valign="bottom"><font size="1">&#xA0;&#xA0;</font></td> <td valign="bottom"><font style="FONT-FAMILY: Times New Roman" size="2">&#xA0;</font></td> <td valign="bottom" align="right"><font style="FONT-FAMILY: Times New Roman" size="2">6.4</font></td> <td valign="bottom" nowrap="nowrap"><font style="FONT-FAMILY: Times New Roman" size="2">&#xA0;&#xA0;</font></td> <td valign="bottom"><font size="1">&#xA0;</font></td> <td valign="bottom"><font style="FONT-FAMILY: Times New Roman" size="2">&#xA0;</font></td> <td valign="bottom" align="right"><font style="FONT-FAMILY: Times New Roman" size="2">4.0</font></td> <td valign="bottom" nowrap="nowrap"><font style="FONT-FAMILY: Times New Roman" size="2">&#xA0;&#xA0;</font></td> <td valign="bottom"><font size="1">&#xA0;</font></td> <td valign="bottom"><font style="FONT-FAMILY: Times New Roman" size="2">&#xA0;</font></td> <td valign="bottom" align="right"><font style="FONT-FAMILY: Times New Roman" size="2">12.3</font></td> <td valign="bottom" nowrap="nowrap"><font style="FONT-FAMILY: Times New Roman" size="2">&#xA0;&#xA0;</font></td> <td valign="bottom"><font size="1">&#xA0;</font></td> <td valign="bottom"><font style="FONT-FAMILY: Times New Roman" size="2">&#xA0;</font></td> <td valign="bottom" align="right"><font style="FONT-FAMILY: Times New Roman" size="2">9.1</font></td> <td valign="bottom" nowrap="nowrap"><font style="FONT-FAMILY: Times New Roman" size="2">&#xA0;&#xA0;</font></td> </tr> <tr bgcolor="#CCEEFF"> <td valign="top"> <p style="MARGIN-LEFT: 1em; TEXT-INDENT: -1em"><font style="FONT-FAMILY: Times New Roman" size="2">Income tax expense</font></p> </td> <td valign="bottom"><font size="1">&#xA0;&#xA0;</font></td> <td valign="bottom"><font style="FONT-FAMILY: Times New Roman" size="2">&#xA0;</font></td> <td valign="bottom" align="right"><font style="FONT-FAMILY: Times New Roman" size="2">(1.9</font></td> <td valign="bottom" nowrap="nowrap"><font style="FONT-FAMILY: Times New Roman" size="2">)&#xA0;</font></td> <td valign="bottom"><font size="1">&#xA0;</font></td> <td valign="bottom"><font style="FONT-FAMILY: Times New Roman" size="2">&#xA0;</font></td> <td valign="bottom" align="right"><font style="FONT-FAMILY: Times New Roman" size="2">(1.1</font></td> <td valign="bottom" nowrap="nowrap"><font style="FONT-FAMILY: Times New Roman" size="2">)&#xA0;</font></td> <td valign="bottom"><font size="1">&#xA0;</font></td> <td valign="bottom"><font style="FONT-FAMILY: Times New Roman" size="2">&#xA0;</font></td> <td valign="bottom" align="right"><font style="FONT-FAMILY: Times New Roman" size="2">(3.7</font></td> <td valign="bottom" nowrap="nowrap"><font style="FONT-FAMILY: Times New Roman" size="2">)&#xA0;</font></td> <td valign="bottom"><font size="1">&#xA0;</font></td> <td valign="bottom"><font style="FONT-FAMILY: Times New Roman" size="2">&#xA0;</font></td> <td valign="bottom" align="right"><font style="FONT-FAMILY: Times New Roman" size="2">(2.6</font></td> <td valign="bottom" nowrap="nowrap"><font style="FONT-FAMILY: Times New Roman" size="2">)&#xA0;</font></td> </tr> <tr> <td valign="top"> <p style="MARGIN-LEFT: 1em; TEXT-INDENT: -1em"><font style="FONT-FAMILY: Times New Roman" size="2">Earnings from discontinued operations</font></p> </td> <td valign="bottom"><font size="1">&#xA0;&#xA0;</font></td> <td valign="bottom"><font style="FONT-FAMILY: Times New Roman" size="2">&#xA0;</font></td> <td valign="bottom" align="right"><font style="FONT-FAMILY: Times New Roman" size="2">4.5</font></td> <td valign="bottom" nowrap="nowrap"><font style="FONT-FAMILY: Times New Roman" size="2">&#xA0;&#xA0;</font></td> <td valign="bottom"><font size="1">&#xA0;</font></td> <td valign="bottom"><font style="FONT-FAMILY: Times New Roman" size="2">&#xA0;</font></td> <td valign="bottom" align="right"><font style="FONT-FAMILY: Times New Roman" size="2">2.9</font></td> <td valign="bottom" nowrap="nowrap"><font style="FONT-FAMILY: Times New Roman" size="2">&#xA0;&#xA0;</font></td> <td valign="bottom"><font size="1">&#xA0;</font></td> <td valign="bottom"><font style="FONT-FAMILY: Times New Roman" size="2">&#xA0;</font></td> <td valign="bottom" align="right"><font style="FONT-FAMILY: Times New Roman" size="2">8.6</font></td> <td valign="bottom" nowrap="nowrap"><font style="FONT-FAMILY: Times New Roman" size="2">&#xA0;&#xA0;</font></td> <td valign="bottom"><font size="1">&#xA0;</font></td> <td valign="bottom"><font style="FONT-FAMILY: Times New Roman" size="2">&#xA0;</font></td> <td valign="bottom" align="right"><font style="FONT-FAMILY: Times New Roman" size="2">6.5</font></td> <td valign="bottom" nowrap="nowrap"><font style="FONT-FAMILY: Times New Roman" size="2">&#xA0;&#xA0;</font></td> </tr> </table> <p style="MARGIN-TOP: 12px; MARGIN-BOTTOM: 0px; TEXT-INDENT: 4%"> <font style="FONT-FAMILY: Times New Roman" size="2">Cash flows from discontinued operations are presented separately on the Company&#x2019;s condensed consolidated statements of cash flows.</font></p> <p style="MARGIN-TOP: 12px; MARGIN-BOTTOM: 0px; TEXT-INDENT: 4%"> <font style="FONT-FAMILY: Times New Roman" size="2">At December&#xA0;31, 2009 and June&#xA0;30, 2009, the major components of assets and liabilities from businesses held for sale related to Martindale and SpecialtyScripts were as follows:</font></p> <p style="MARGIN-TOP: 0px; FONT-SIZE: 12px; MARGIN-BOTTOM: 0px"> &#xA0;</p> <table cellspacing="0" cellpadding="0" width="76%" align="center" border="0"> <tr> <td width="76%"></td> <td valign="bottom" width="7%"></td> <td></td> <td></td> <td valign="bottom" width="7%"></td> <td></td> <td></td> </tr> <tr> <td valign="bottom" nowrap="nowrap"> <p style="WIDTH: 40pt; BORDER-BOTTOM: #000000 1px solid"> <font style="FONT-FAMILY: Times New Roman" size="1"><b>(in millions)</b></font></p> </td> <td valign="bottom"><font size="1">&#xA0;&#xA0;</font></td> <td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" align="center" colspan="2"><font style="FONT-FAMILY: Times New Roman" size="1"><b>December&#xA0;31,<br /> 2009</b></font></td> <td valign="bottom"><font size="1">&#xA0;&#xA0;</font></td> <td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" align="center" colspan="2"><font style="FONT-FAMILY: Times New Roman" size="1"><b>June&#xA0;30,<br /> 2009</b></font></td> </tr> <tr bgcolor="#CCEEFF"> <td valign="top"> <p style="MARGIN-LEFT: 1em; TEXT-INDENT: -1em"><font style="FONT-FAMILY: Times New Roman" size="2">Current assets</font></p> </td> <td valign="bottom"><font size="1">&#xA0;&#xA0;</font></td> <td valign="bottom"><font style="FONT-FAMILY: Times New Roman" size="2">$</font></td> <td valign="bottom" align="right"><font style="FONT-FAMILY: Times New Roman" size="2">59.1</font></td> <td valign="bottom"><font size="1">&#xA0;&#xA0;</font></td> <td valign="bottom"><font style="FONT-FAMILY: Times New Roman" size="2">$</font></td> <td valign="bottom" align="right"><font style="FONT-FAMILY: Times New Roman" size="2">74.2</font></td> </tr> <tr> <td valign="top"> <p style="MARGIN-LEFT: 1em; TEXT-INDENT: -1em"><font style="FONT-FAMILY: Times New Roman" size="2">Property and equipment</font></p> </td> <td valign="bottom"><font size="1">&#xA0;&#xA0;</font></td> <td valign="bottom"><font style="FONT-FAMILY: Times New Roman" size="2">&#xA0;</font></td> <td valign="bottom" align="right"><font style="FONT-FAMILY: Times New Roman" size="2">22.8</font></td> <td valign="bottom"><font size="1">&#xA0;&#xA0;</font></td> <td valign="bottom"><font style="FONT-FAMILY: Times New Roman" size="2">&#xA0;</font></td> <td valign="bottom" align="right"><font style="FONT-FAMILY: Times New Roman" size="2">19.3</font></td> </tr> <tr bgcolor="#CCEEFF"> <td valign="top"> <p style="MARGIN-LEFT: 1em; TEXT-INDENT: -1em"><font style="FONT-FAMILY: Times New Roman" size="2">Other assets</font></p> </td> <td valign="bottom"><font size="1">&#xA0;&#xA0;</font></td> <td valign="bottom"><font style="FONT-FAMILY: Times New Roman" size="2">&#xA0;</font></td> <td valign="bottom" align="right"><font style="FONT-FAMILY: Times New Roman" size="2">67.0</font></td> <td valign="bottom"><font size="1">&#xA0;&#xA0;</font></td> <td valign="bottom"><font style="FONT-FAMILY: Times New Roman" size="2">&#xA0;</font></td> <td valign="bottom" align="right"><font style="FONT-FAMILY: Times New Roman" size="2">81.2</font></td> </tr> <tr style="FONT-SIZE: 1px"> <td valign="bottom"></td> <td valign="bottom">&#xA0;&#xA0;</td> <td style="BORDER-TOP: #000000 1px solid" valign="bottom"> &#xA0;</td> <td style="BORDER-TOP: #000000 1px solid" valign="bottom"> &#xA0;</td> <td valign="bottom">&#xA0;&#xA0;</td> <td style="BORDER-TOP: #000000 1px solid" valign="bottom"> &#xA0;</td> <td style="BORDER-TOP: #000000 1px solid" valign="bottom"> &#xA0;</td> </tr> <tr> <td valign="top"> <p style="MARGIN-LEFT: 3em; TEXT-INDENT: -1em"><font style="FONT-FAMILY: Times New Roman" size="2">Total assets</font></p> </td> <td valign="bottom"><font size="1">&#xA0;&#xA0;</font></td> <td valign="bottom"><font style="FONT-FAMILY: Times New Roman" size="2">$</font></td> <td valign="bottom" align="right"><font style="FONT-FAMILY: Times New Roman" size="2">148.9</font></td> <td valign="bottom"><font size="1">&#xA0;&#xA0;</font></td> <td valign="bottom"><font style="FONT-FAMILY: Times New Roman" size="2">$</font></td> <td valign="bottom" align="right"><font style="FONT-FAMILY: Times New Roman" size="2">174.7</font></td> </tr> <tr style="FONT-SIZE: 1px"> <td valign="bottom"></td> <td valign="bottom">&#xA0;&#xA0;</td> <td style="BORDER-TOP: #000000 1px solid" valign="bottom"> &#xA0;</td> <td style="BORDER-TOP: #000000 1px solid" valign="bottom"> &#xA0;</td> <td valign="bottom">&#xA0;&#xA0;</td> <td style="BORDER-TOP: #000000 1px solid" valign="bottom"> &#xA0;</td> <td style="BORDER-TOP: #000000 1px solid" valign="bottom"> &#xA0;</td> </tr> <tr bgcolor="#CCEEFF"> <td valign="top"> <p style="MARGIN-LEFT: 1em; TEXT-INDENT: -1em"><font style="FONT-FAMILY: Times New Roman" size="2">Current liabilities</font></p> </td> <td valign="bottom"><font size="1">&#xA0;&#xA0;</font></td> <td valign="bottom"><font style="FONT-FAMILY: Times New Roman" size="2">&#xA0;</font></td> <td valign="bottom" align="right"><font style="FONT-FAMILY: Times New Roman" size="2">28.2</font></td> <td valign="bottom"><font size="1">&#xA0;&#xA0;</font></td> <td valign="bottom"><font style="FONT-FAMILY: Times New Roman" size="2">&#xA0;</font></td> <td valign="bottom" align="right"><font style="FONT-FAMILY: Times New Roman" size="2">16.5</font></td> </tr> <tr> <td valign="top"> <p style="MARGIN-LEFT: 1em; TEXT-INDENT: -1em"><font style="FONT-FAMILY: Times New Roman" size="2">Long-term debt and other</font></p> </td> <td valign="bottom"><font size="1">&#xA0;&#xA0;</font></td> <td valign="bottom"><font style="FONT-FAMILY: Times New Roman" size="2">&#xA0;</font></td> <td valign="bottom" align="right"><font style="FONT-FAMILY: Times New Roman" size="2">7.7</font></td> <td valign="bottom"><font size="1">&#xA0;&#xA0;</font></td> <td valign="bottom"><font style="FONT-FAMILY: Times New Roman" size="2">&#xA0;</font></td> <td valign="bottom" align="right"><font style="FONT-FAMILY: Times New Roman" size="2">8.4</font></td> </tr> <tr style="FONT-SIZE: 1px"> <td valign="bottom"></td> <td valign="bottom">&#xA0;&#xA0;</td> <td style="BORDER-TOP: #000000 1px solid" valign="bottom"> &#xA0;</td> <td style="BORDER-TOP: #000000 1px solid" valign="bottom"> &#xA0;</td> <td valign="bottom">&#xA0;&#xA0;</td> <td style="BORDER-TOP: #000000 1px solid" valign="bottom"> &#xA0;</td> <td style="BORDER-TOP: #000000 1px solid" valign="bottom"> &#xA0;</td> </tr> <tr bgcolor="#CCEEFF"> <td valign="top"> <p style="MARGIN-LEFT: 3em; TEXT-INDENT: -1em"><font style="FONT-FAMILY: Times New Roman" size="2">Total liabilities</font></p> </td> <td valign="bottom"><font size="1">&#xA0;&#xA0;</font></td> <td valign="bottom"><font style="FONT-FAMILY: Times New Roman" size="2">$</font></td> <td valign="bottom" align="right"><font style="FONT-FAMILY: Times New Roman" size="2">35.9</font></td> <td valign="bottom"><font size="1">&#xA0;&#xA0;</font></td> <td valign="bottom"><font style="FONT-FAMILY: Times New Roman" size="2">$</font></td> <td valign="bottom" align="right"><font style="FONT-FAMILY: Times New Roman" size="2">24.9</font></td> </tr> <tr style="FONT-SIZE: 1px"> <td valign="bottom"></td> <td valign="bottom">&#xA0;&#xA0;</td> <td style="BORDER-TOP: #000000 1px solid" valign="bottom"> &#xA0;</td> <td style="BORDER-TOP: #000000 1px solid" valign="bottom"> &#xA0;</td> <td valign="bottom">&#xA0;&#xA0;</td> <td style="BORDER-TOP: #000000 1px solid" valign="bottom"> &#xA0;</td> <td style="BORDER-TOP: #000000 1px solid" valign="bottom"> &#xA0;</td> </tr> </table> </div> 0.55 0.54 -6100000 <div> <p style="MARGIN-TOP: 0px; MARGIN-BOTTOM: 0px"></p> <p style="MARGIN-TOP: 0px; MARGIN-BOTTOM: 0px"><font style="FONT-FAMILY: Times New Roman" size="2"><b>11. FAIR VALUE MEASUREMENTS</b></font></p> <p style="MARGIN-TOP: 6px; MARGIN-BOTTOM: 0px; TEXT-INDENT: 4%"> <font style="FONT-FAMILY: Times New Roman" size="2">In September 2006, the FASB issued new accounting guidance on fair value measurements. The guidance defines fair value, establishes a framework for measuring fair value in GAAP and expands disclosures about fair value measurements. Additionally, this guidance established a three-level fair value hierarchy that prioritizes the inputs used to measure fair value. This hierarchy requires entities to maximize the use of observable inputs and minimize the use of unobservable inputs. The three levels of inputs used to measure fair values are as follows:</font></p> <p style="MARGIN-TOP: 6px; MARGIN-BOTTOM: 0px"><font style="FONT-FAMILY: Times New Roman" size="2">Level&#xA0;1&#xA0;&#x2013; Observable prices in active markets for identical assets and liabilities.</font></p> <p style="MARGIN-TOP: 12px; MARGIN-BOTTOM: 0px"><font style="FONT-FAMILY: Times New Roman" size="2">Level&#xA0;2&#xA0;&#x2013; Observable inputs other than quoted prices in active markets for identical assets and liabilities.</font></p> <p style="MARGIN-TOP: 12px; MARGIN-BOTTOM: 0px"><font style="FONT-FAMILY: Times New Roman" size="2">Level&#xA0;3&#xA0;&#x2013; Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets and liabilities.</font></p> <p style="MARGIN-TOP: 12px; MARGIN-BOTTOM: 0px; TEXT-INDENT: 4%"> <font style="FONT-FAMILY: Times New Roman" size="2">In February 2008, the FASB issued additional guidance permitting a one-year deferral with regard to nonfinancial assets and nonfinancial liabilities that are not recognized or disclosed at fair value in the financial statements on a recurring basis (at least annually).&#xA0;The Company adopted this new accounting guidance on July&#xA0;1, 2008 with respect to all financial assets and liabilities and on July&#xA0;1, 2009 with respect to all non-financial assets and liabilities. The adoption of this guidance did not have a material impact on the Company&#x2019;s financial position or results of operations in either period.</font></p> <p style="MARGIN-TOP: 18px; MARGIN-BOTTOM: 0px; MARGIN-LEFT: 2%"> <font style="FONT-FAMILY: Times New Roman" size="2"><b><i>Recurring Fair Value Measurements</i></b></font></p> <p style="MARGIN-TOP: 6px; MARGIN-BOTTOM: 0px; TEXT-INDENT: 4%"> <font style="FONT-FAMILY: Times New Roman" size="2">The following table presents the fair values for those assets and (liabilities) measured on a recurring basis as of December&#xA0;31, 2009:</font></p> <p style="MARGIN-TOP: 0px; FONT-SIZE: 12px; MARGIN-BOTTOM: 0px"> &#xA0;</p> <table cellspacing="0" cellpadding="0" width="92%" align="center" border="0"> <tr> <td width="70%"></td> <td valign="bottom" width="3%"></td> <td></td> <td></td> <td valign="bottom" width="3%"></td> <td></td> <td></td> <td valign="bottom" width="3%"></td> <td></td> <td></td> <td valign="bottom" width="3%"></td> <td></td> <td></td> </tr> <tr> <td valign="bottom"><font size="1">&#xA0;</font></td> <td valign="bottom"><font size="1">&#xA0;&#xA0;</font></td> <td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" align="center" colspan="11"><font style="FONT-FAMILY: Times New Roman" size="1"><b>Fair Value Measurements</b></font></td> </tr> <tr> <td valign="bottom" nowrap="nowrap"> <p style="WIDTH: 40pt; BORDER-BOTTOM: #000000 1px solid"> <font style="FONT-FAMILY: Times New Roman" size="1"><b>(in millions)</b></font></p> </td> <td valign="bottom"><font size="1">&#xA0;&#xA0;</font></td> <td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" align="center" colspan="2"><font style="FONT-FAMILY: Times New Roman" size="1"><b>Level&#xA0;1</b></font></td> <td valign="bottom"><font size="1">&#xA0;&#xA0;</font></td> <td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" align="center" colspan="2"><font style="FONT-FAMILY: Times New Roman" size="1"><b>Level&#xA0;2</b></font></td> <td valign="bottom"><font size="1">&#xA0;&#xA0;</font></td> <td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" align="center" colspan="2"><font style="FONT-FAMILY: Times New Roman" size="1"><b>Level&#xA0;3</b></font></td> <td valign="bottom"><font size="1">&#xA0;&#xA0;</font></td> <td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" align="center" colspan="2"><font style="FONT-FAMILY: Times New Roman" size="1"><b>Total</b></font></td> </tr> <tr bgcolor="#CCEEFF"> <td valign="top"> <p style="MARGIN-LEFT: 1em; TEXT-INDENT: -1em"><font style="FONT-FAMILY: Times New Roman" size="2">Cash Equivalents (1)</font></p> </td> <td valign="bottom"><font size="1">&#xA0;&#xA0;</font></td> <td valign="bottom"><font style="FONT-FAMILY: Times New Roman" size="2">$</font></td> <td valign="bottom" align="right"><font style="FONT-FAMILY: Times New Roman" size="2">987.5</font></td> <td valign="bottom"><font size="1">&#xA0;&#xA0;</font></td> <td valign="bottom"><font style="FONT-FAMILY: Times New Roman" size="2">$</font></td> <td valign="bottom" align="right"><font style="FONT-FAMILY: Times New Roman" size="2">&#x2014;&#xA0;&#xA0;</font></td> <td valign="bottom"><font size="1">&#xA0;&#xA0;</font></td> <td valign="bottom"><font style="FONT-FAMILY: Times New Roman" size="2">$</font></td> <td valign="bottom" align="right"><font style="FONT-FAMILY: Times New Roman" size="2">&#x2014;&#xA0;&#xA0;</font></td> <td valign="bottom"><font size="1">&#xA0;&#xA0;</font></td> <td valign="bottom"><font style="FONT-FAMILY: Times New Roman" size="2">$</font></td> <td valign="bottom" align="right"><font style="FONT-FAMILY: Times New Roman" size="2">987.5</font></td> </tr> <tr> <td valign="top"> <p style="MARGIN-LEFT: 1em; TEXT-INDENT: -1em"><font style="FONT-FAMILY: Times New Roman" size="2">Equity Securities (2)</font></p> </td> <td valign="bottom"><font size="1">&#xA0;&#xA0;</font></td> <td valign="bottom"><font style="FONT-FAMILY: Times New Roman" size="2">&#xA0;</font></td> <td valign="bottom" align="right"><font style="FONT-FAMILY: Times New Roman" size="2">897.4</font></td> <td valign="bottom"><font size="1">&#xA0;&#xA0;</font></td> <td valign="bottom"><font style="FONT-FAMILY: Times New Roman" size="2">&#xA0;</font></td> <td valign="bottom" align="right"><font style="FONT-FAMILY: Times New Roman" size="2">&#x2014;&#xA0;&#xA0;</font></td> <td valign="bottom"><font size="1">&#xA0;&#xA0;</font></td> <td valign="bottom"><font style="FONT-FAMILY: Times New Roman" size="2">&#xA0;</font></td> <td valign="bottom" align="right"><font style="FONT-FAMILY: Times New Roman" size="2">&#x2014;&#xA0;&#xA0;</font></td> <td valign="bottom"><font size="1">&#xA0;&#xA0;</font></td> <td valign="bottom"><font style="FONT-FAMILY: Times New Roman" size="2">&#xA0;</font></td> <td valign="bottom" align="right"><font style="FONT-FAMILY: Times New Roman" size="2">897.4</font></td> </tr> <tr bgcolor="#CCEEFF"> <td valign="top"> <p style="MARGIN-LEFT: 1em; TEXT-INDENT: -1em"><font style="FONT-FAMILY: Times New Roman" size="2">Forward Contracts (3)</font></p> </td> <td valign="bottom"><font size="1">&#xA0;&#xA0;</font></td> <td valign="bottom"><font style="FONT-FAMILY: Times New Roman" size="2">&#xA0;</font></td> <td valign="bottom" align="right"><font style="FONT-FAMILY: Times New Roman" size="2">&#x2014;&#xA0;&#xA0;</font></td> <td valign="bottom"><font size="1">&#xA0;&#xA0;</font></td> <td valign="bottom"><font style="FONT-FAMILY: Times New Roman" size="2">&#xA0;</font></td> <td valign="bottom" align="right"><font style="FONT-FAMILY: Times New Roman" size="2">82.0</font></td> <td valign="bottom"><font size="1">&#xA0;&#xA0;</font></td> <td valign="bottom"><font style="FONT-FAMILY: Times New Roman" size="2">&#xA0;</font></td> <td valign="bottom" align="right"><font style="FONT-FAMILY: Times New Roman" size="2">&#x2014;&#xA0;&#xA0;</font></td> <td valign="bottom"><font size="1">&#xA0;&#xA0;</font></td> <td valign="bottom"><font style="FONT-FAMILY: Times New Roman" size="2">&#xA0;</font></td> <td valign="bottom" align="right"><font style="FONT-FAMILY: Times New Roman" size="2">82.0</font></td> </tr> <tr> <td valign="top"> <p style="MARGIN-LEFT: 1em; TEXT-INDENT: -1em"><font style="FONT-FAMILY: Times New Roman" size="2">Other Investments (4)</font></p> </td> <td valign="bottom"><font size="1">&#xA0;&#xA0;</font></td> <td valign="bottom"><font style="FONT-FAMILY: Times New Roman" size="2">&#xA0;</font></td> <td valign="bottom" align="right"><font style="FONT-FAMILY: Times New Roman" size="2">73.2</font></td> <td valign="bottom"><font size="1">&#xA0;&#xA0;</font></td> <td valign="bottom"><font style="FONT-FAMILY: Times New Roman" size="2">&#xA0;</font></td> <td valign="bottom" align="right"><font style="FONT-FAMILY: Times New Roman" size="2">&#x2014;&#xA0;&#xA0;</font></td> <td valign="bottom"><font size="1">&#xA0;&#xA0;</font></td> <td valign="bottom"><font style="FONT-FAMILY: Times New Roman" size="2">&#xA0;</font></td> <td valign="bottom" align="right"><font style="FONT-FAMILY: Times New Roman" size="2">&#x2014;&#xA0;&#xA0;</font></td> <td valign="bottom"><font size="1">&#xA0;&#xA0;</font></td> <td valign="bottom"><font style="FONT-FAMILY: Times New Roman" size="2">&#xA0;</font></td> <td valign="bottom" align="right"><font style="FONT-FAMILY: Times New Roman" size="2">73.2</font></td> </tr> <tr style="FONT-SIZE: 1px"> <td valign="bottom"></td> <td valign="bottom">&#xA0;&#xA0;</td> <td style="BORDER-TOP: #000000 1px solid" valign="bottom"> &#xA0;</td> <td style="BORDER-TOP: #000000 1px solid" valign="bottom"> &#xA0;</td> <td valign="bottom">&#xA0;&#xA0;</td> <td style="BORDER-TOP: #000000 1px solid" valign="bottom"> &#xA0;</td> <td style="BORDER-TOP: #000000 1px solid" valign="bottom"> &#xA0;</td> <td valign="bottom">&#xA0;&#xA0;</td> <td style="BORDER-TOP: #000000 1px solid" valign="bottom"> &#xA0;</td> <td style="BORDER-TOP: #000000 1px solid" valign="bottom"> &#xA0;</td> <td valign="bottom">&#xA0;&#xA0;</td> <td style="BORDER-TOP: #000000 1px solid" valign="bottom"> &#xA0;</td> <td style="BORDER-TOP: #000000 1px solid" valign="bottom"> &#xA0;</td> </tr> <tr bgcolor="#CCEEFF"> <td valign="top"> <p style="MARGIN-LEFT: 1em; TEXT-INDENT: -1em"><font style="FONT-FAMILY: Times New Roman" size="2">Total</font></p> </td> <td valign="bottom"><font size="1">&#xA0;&#xA0;</font></td> <td valign="bottom"><font style="FONT-FAMILY: Times New Roman" size="2">$</font></td> <td valign="bottom" align="right"><font style="FONT-FAMILY: Times New Roman" size="2">1,958.1</font></td> <td valign="bottom"><font size="1">&#xA0;&#xA0;</font></td> <td valign="bottom"><font style="FONT-FAMILY: Times New Roman" size="2">$</font></td> <td valign="bottom" align="right"><font style="FONT-FAMILY: Times New Roman" size="2">82.0</font></td> <td valign="bottom"><font size="1">&#xA0;&#xA0;</font></td> <td valign="bottom"><font style="FONT-FAMILY: Times New Roman" size="2">$</font></td> <td valign="bottom" align="right"><font style="FONT-FAMILY: Times New Roman" size="2">&#x2014;&#xA0;&#xA0;</font></td> <td valign="bottom"><font size="1">&#xA0;&#xA0;</font></td> <td valign="bottom"><font style="FONT-FAMILY: Times New Roman" size="2">$</font></td> <td valign="bottom" align="right"><font style="FONT-FAMILY: Times New Roman" size="2">2,040.1</font></td> </tr> <tr style="FONT-SIZE: 1px"> <td valign="bottom"></td> <td valign="bottom">&#xA0;&#xA0;</td> <td style="BORDER-TOP: #000000 3px double" valign="bottom"> &#xA0;</td> <td style="BORDER-TOP: #000000 3px double" valign="bottom"> &#xA0;</td> <td valign="bottom">&#xA0;&#xA0;</td> <td style="BORDER-TOP: #000000 3px double" valign="bottom"> &#xA0;</td> <td style="BORDER-TOP: #000000 3px double" valign="bottom"> &#xA0;</td> <td valign="bottom">&#xA0;&#xA0;</td> <td style="BORDER-TOP: #000000 3px double" valign="bottom"> &#xA0;</td> <td style="BORDER-TOP: #000000 3px double" valign="bottom"> &#xA0;</td> <td valign="bottom">&#xA0;&#xA0;</td> <td style="BORDER-TOP: #000000 3px double" valign="bottom"> &#xA0;</td> <td style="BORDER-TOP: #000000 3px double" valign="bottom"> &#xA0;</td> </tr> </table> <p style="MARGIN-TOP: 0px; MARGIN-BOTTOM: 2px; WIDTH: 10%; LINE-HEIGHT: 8px; BORDER-BOTTOM: #000000 0.5pt solid"> &#xA0;</p> <table style="BORDER-COLLAPSE: collapse" cellspacing="0" cellpadding="0" width="100%" border="0"> <tr> <td valign="top" align="left" width="4%"><font style="FONT-FAMILY: Times New Roman" size="2">(1)</font></td> <td valign="top" align="left"><font style="FONT-FAMILY: Times New Roman" size="2">Cash equivalents are comprised of highly liquid investments purchased with a maturity of three months or less. The carrying value of these cash equivalents approximates fair value due to their short-term maturities.</font></td> </tr> </table> <table style="BORDER-COLLAPSE: collapse" cellspacing="0" cellpadding="0" width="100%" border="0"> <tr> <td valign="top" align="left" width="4%"><font style="FONT-FAMILY: Times New Roman" size="2">(2)</font></td> <td valign="top" align="left"><font style="FONT-FAMILY: Times New Roman" size="2">Equity securities consist of the Company&#x2019;s investment in CareFusion common stock. The fair value of these securities is determined using the quoted market price of the security.</font></td> </tr> </table> <table style="BORDER-COLLAPSE: collapse" cellspacing="0" cellpadding="0" width="100%" border="0"> <tr> <td valign="top" align="left" width="4%"><font style="FONT-FAMILY: Times New Roman" size="2">(3)</font></td> <td valign="top" align="left"><font style="FONT-FAMILY: Times New Roman" size="2">The fair value of the Company&#x2019;s foreign currency forward contracts and commodity contracts is determined based on the present value of expected future cash flows considering the risks involved, including nonperformance risk, and using discount rates appropriate for the respective maturities.</font></td> </tr> </table> <table style="BORDER-COLLAPSE: collapse" cellspacing="0" cellpadding="0" width="100%" border="0"> <tr> <td valign="top" align="left" width="4%"><font style="FONT-FAMILY: Times New Roman" size="2">(4)</font></td> <td valign="top" align="left"><font style="FONT-FAMILY: Times New Roman" size="2">The other investments balance includes investments in mutual funds, which are used to offset fluctuations in the Company&#x2019;s deferred compensation liabilities. The fair value of these investments is determined using quoted market prices.</font></td> </tr> </table> <p style="MARGIN-TOP: 18px; MARGIN-BOTTOM: 0px; MARGIN-LEFT: 2%"> <font style="FONT-FAMILY: Times New Roman" size="2"><b><i>Non-Recurring Fair Value Measurements</i></b></font></p> <p style="MARGIN-TOP: 6px; MARGIN-BOTTOM: 0px; TEXT-INDENT: 4%"> <font style="FONT-FAMILY: Times New Roman" size="2">The following table presents the fair values for those assets and (liabilities) measured on a nonrecurring basis as of December&#xA0;31, 2009:</font></p> <p style="MARGIN-TOP: 0px; FONT-SIZE: 12px; MARGIN-BOTTOM: 0px"> &#xA0;</p> <table cellspacing="0" cellpadding="0" width="92%" align="center" border="0"> <tr> <td width="74%"></td> <td valign="bottom" width="4%"></td> <td></td> <td></td> <td valign="bottom" width="4%"></td> <td></td> <td></td> <td valign="bottom" width="4%"></td> <td></td> <td></td> <td valign="bottom" width="4%"></td> <td></td> <td></td> </tr> <tr> <td valign="bottom"><font size="1">&#xA0;</font></td> <td valign="bottom"><font size="1">&#xA0;&#xA0;</font></td> <td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" align="center" colspan="11"><font style="FONT-FAMILY: Times New Roman" size="1"><b>Fair Value Measurements</b></font></td> </tr> <tr> <td valign="bottom" nowrap="nowrap"> <p style="WIDTH: 40pt; BORDER-BOTTOM: #000000 1px solid"> <font style="FONT-FAMILY: Times New Roman" size="1"><b>(in millions)</b></font></p> </td> <td valign="bottom"><font size="1">&#xA0;&#xA0;</font></td> <td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" align="center" colspan="2"><font style="FONT-FAMILY: Times New Roman" size="1"><b>Level&#xA0;1</b></font></td> <td valign="bottom"><font size="1">&#xA0;&#xA0;</font></td> <td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" align="center" colspan="2"><font style="FONT-FAMILY: Times New Roman" size="1"><b>Level&#xA0;2</b></font></td> <td valign="bottom"><font size="1">&#xA0;&#xA0;</font></td> <td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" align="center" colspan="2"><font style="FONT-FAMILY: Times New Roman" size="1"><b>Level&#xA0;3</b></font></td> <td valign="bottom"><font size="1">&#xA0;&#xA0;</font></td> <td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" align="center" colspan="2"><font style="FONT-FAMILY: Times New Roman" size="1"><b>Total</b></font></td> </tr> <tr bgcolor="#CCEEFF"> <td valign="top"> <p style="MARGIN-LEFT: 1em; TEXT-INDENT: -1em"><font style="FONT-FAMILY: Times New Roman" size="2">Long-lived assets held for sale (1)&#xA0;(2)</font></p> </td> <td valign="bottom"><font size="1">&#xA0;&#xA0;</font></td> <td valign="bottom"><font style="FONT-FAMILY: Times New Roman" size="2">$</font></td> <td valign="bottom" align="right"><font style="FONT-FAMILY: Times New Roman" size="2">&#x2014;&#xA0;&#xA0;</font></td> <td valign="bottom"><font size="1">&#xA0;&#xA0;</font></td> <td valign="bottom"><font style="FONT-FAMILY: Times New Roman" size="2">$</font></td> <td valign="bottom" align="right"><font style="FONT-FAMILY: Times New Roman" size="2">&#x2014;&#xA0;&#xA0;</font></td> <td valign="bottom"><font size="1">&#xA0;&#xA0;</font></td> <td valign="bottom"><font style="FONT-FAMILY: Times New Roman" size="2">$</font></td> <td valign="bottom" align="right"><font style="FONT-FAMILY: Times New Roman" size="2">7.0</font></td> <td valign="bottom"><font size="1">&#xA0;&#xA0;</font></td> <td valign="bottom"><font style="FONT-FAMILY: Times New Roman" size="2">$</font></td> <td valign="bottom" align="right"><font style="FONT-FAMILY: Times New Roman" size="2">7.0</font></td> </tr> <tr style="FONT-SIZE: 1px"> <td valign="bottom"></td> <td valign="bottom">&#xA0;&#xA0;</td> <td style="BORDER-TOP: #000000 1px solid" valign="bottom"> &#xA0;</td> <td style="BORDER-TOP: #000000 1px solid" valign="bottom"> &#xA0;</td> <td valign="bottom">&#xA0;&#xA0;</td> <td style="BORDER-TOP: #000000 1px solid" valign="bottom"> &#xA0;</td> <td style="BORDER-TOP: #000000 1px solid" valign="bottom"> &#xA0;</td> <td valign="bottom">&#xA0;&#xA0;</td> <td style="BORDER-TOP: #000000 1px solid" valign="bottom"> &#xA0;</td> <td style="BORDER-TOP: #000000 1px solid" valign="bottom"> &#xA0;</td> <td valign="bottom">&#xA0;&#xA0;</td> <td style="BORDER-TOP: #000000 1px solid" valign="bottom"> &#xA0;</td> <td style="BORDER-TOP: #000000 1px solid" valign="bottom"> &#xA0;</td> </tr> <tr> <td valign="top"> <p style="MARGIN-LEFT: 1em; TEXT-INDENT: -1em"><font style="FONT-FAMILY: Times New Roman" size="2">Total</font></p> </td> <td valign="bottom"><font size="1">&#xA0;&#xA0;</font></td> <td valign="bottom"><font style="FONT-FAMILY: Times New Roman" size="2">$</font></td> <td valign="bottom" align="right"><font style="FONT-FAMILY: Times New Roman" size="2">&#x2014;&#xA0;&#xA0;</font></td> <td valign="bottom"><font size="1">&#xA0;&#xA0;</font></td> <td valign="bottom"><font style="FONT-FAMILY: Times New Roman" size="2">$</font></td> <td valign="bottom" align="right"><font style="FONT-FAMILY: Times New Roman" size="2">&#x2014;&#xA0;&#xA0;</font></td> <td valign="bottom"><font size="1">&#xA0;&#xA0;</font></td> <td valign="bottom"><font style="FONT-FAMILY: Times New Roman" size="2">$</font></td> <td valign="bottom" align="right"><font style="FONT-FAMILY: Times New Roman" size="2">7.0</font></td> <td valign="bottom"><font size="1">&#xA0;&#xA0;</font></td> <td valign="bottom"><font style="FONT-FAMILY: Times New Roman" size="2">$</font></td> <td valign="bottom" align="right"><font style="FONT-FAMILY: Times New Roman" size="2">7.0</font></td> </tr> <tr style="FONT-SIZE: 1px"> <td valign="bottom"></td> <td valign="bottom">&#xA0;&#xA0;</td> <td style="BORDER-TOP: #000000 3px double" valign="bottom"> &#xA0;</td> <td style="BORDER-TOP: #000000 3px double" valign="bottom"> &#xA0;</td> <td valign="bottom">&#xA0;&#xA0;</td> <td style="BORDER-TOP: #000000 3px double" valign="bottom"> &#xA0;</td> <td style="BORDER-TOP: #000000 3px double" valign="bottom"> &#xA0;</td> <td valign="bottom">&#xA0;&#xA0;</td> <td style="BORDER-TOP: #000000 3px double" valign="bottom"> &#xA0;</td> <td style="BORDER-TOP: #000000 3px double" valign="bottom"> &#xA0;</td> <td valign="bottom">&#xA0;&#xA0;</td> <td style="BORDER-TOP: #000000 3px double" valign="bottom"> &#xA0;</td> <td style="BORDER-TOP: #000000 3px double" valign="bottom"> &#xA0;</td> </tr> </table> <p style="MARGIN-TOP: 0px; MARGIN-BOTTOM: 2px; WIDTH: 10%; LINE-HEIGHT: 8px; BORDER-BOTTOM: #000000 0.5pt solid"> &#xA0;</p> <table style="BORDER-COLLAPSE: collapse" cellspacing="0" cellpadding="0" width="100%" border="0"> <tr> <td valign="top" align="left" width="4%"><font style="FONT-FAMILY: Times New Roman" size="2">(1)</font></td> <td valign="top" align="left"><font style="FONT-FAMILY: Times New Roman" size="2">During the six months ended December&#xA0;31, 2009, certain long-lived assets held for sale were written down to their estimated fair value, less cost to sell, resulting in an impairment charge of $20.0 million, which is included in impairments and loss on sale of assets in the condensed consolidated statements of earnings (see Note 3 for further information).</font></td> </tr> </table> <table style="BORDER-COLLAPSE: collapse" cellspacing="0" cellpadding="0" width="100%" border="0"> <tr> <td valign="top" align="left" width="4%"><font style="FONT-FAMILY: Times New Roman" size="2">(2)</font></td> <td valign="top" align="left"><font style="FONT-FAMILY: Times New Roman" size="2">The fair value of long-lived assets held for sale is determined based on the best available information, including quoted market prices when available (level 1), market prices for similar assets (level 2) and internal cash flow estimates discounted at the appropriate interest rate (level 3), as appropriate.</font></td> </tr> </table> </div> 25900000 -39900000 <div> <p style="MARGIN-TOP: 18px; MARGIN-BOTTOM: 0px"><font style="FONT-FAMILY: Times New Roman" size="2"><b>5. GOODWILL AND OTHER INTANGIBLE ASSETS</b></font></p> <p style="MARGIN-TOP: 6px; MARGIN-BOTTOM: 0px; MARGIN-LEFT: 2%"> <font style="FONT-FAMILY: Times New Roman" size="2"><b><i>Goodwill</i></b></font></p> <p style="MARGIN-TOP: 6px; MARGIN-BOTTOM: 0px; TEXT-INDENT: 4%"> <font style="FONT-FAMILY: Times New Roman" size="2">The following table summarizes the changes in the carrying amount of goodwill by segment for the six months ended December&#xA0;31, 2009:</font></p> <p style="MARGIN-TOP: 0px; FONT-SIZE: 12px; MARGIN-BOTTOM: 0px"> &#xA0;</p> <table cellspacing="0" cellpadding="0" width="84%" align="center" border="0"> <tr> <td width="69%"></td> <td valign="bottom" width="5%"></td> <td></td> <td></td> <td valign="bottom" width="5%"></td> <td></td> <td></td> <td valign="bottom" width="5%"></td> <td></td> <td></td> </tr> <tr> <td valign="bottom" nowrap="nowrap"> <p style="WIDTH: 40pt; BORDER-BOTTOM: #000000 1px solid"> <font style="FONT-FAMILY: Times New Roman" size="1"><b>(in millions)</b></font></p> </td> <td valign="bottom"><font size="1">&#xA0;&#xA0;</font></td> <td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" align="center" colspan="2"><font style="FONT-FAMILY: Times New Roman" size="1"><b>Pharmaceutical</b></font></td> <td valign="bottom"><font size="1">&#xA0;&#xA0;</font></td> <td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" align="center" colspan="2"><font style="FONT-FAMILY: Times New Roman" size="1"><b>Medical</b></font></td> <td valign="bottom"><font size="1">&#xA0;&#xA0;</font></td> <td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" align="center" colspan="2"><font style="FONT-FAMILY: Times New Roman" size="1"><b>Total</b></font></td> </tr> <tr bgcolor="#CCEEFF"> <td valign="top"> <p style="MARGIN-LEFT: 1em; TEXT-INDENT: -1em"><font style="FONT-FAMILY: Times New Roman" size="2">Balance at June&#xA0;30, 2009</font></p> </td> <td valign="bottom"><font size="1">&#xA0;&#xA0;</font></td> <td valign="bottom"><font style="FONT-FAMILY: Times New Roman" size="2">$</font></td> <td valign="bottom" align="right"><font style="FONT-FAMILY: Times New Roman" size="2">1,232.8</font></td> <td valign="bottom"><font size="1">&#xA0;&#xA0;</font></td> <td valign="bottom"><font style="FONT-FAMILY: Times New Roman" size="2">$</font></td> <td valign="bottom" align="right"><font style="FONT-FAMILY: Times New Roman" size="2">963.7</font></td> <td valign="bottom"><font size="1">&#xA0;&#xA0;</font></td> <td valign="bottom"><font style="FONT-FAMILY: Times New Roman" size="2">$</font></td> <td valign="bottom" align="right"><font style="FONT-FAMILY: Times New Roman" size="2">2,196.5</font></td> </tr> <tr> <td valign="top"> <p style="MARGIN-LEFT: 1em; TEXT-INDENT: -1em"><font style="FONT-FAMILY: Times New Roman" size="2">Goodwill acquired&#x2014;net of purchase price adjustments, foreign currency translation adjustments and other</font></p> </td> <td valign="bottom"><font size="1">&#xA0;&#xA0;</font></td> <td valign="bottom"><font style="FONT-FAMILY: Times New Roman" size="2">&#xA0;</font></td> <td valign="bottom" align="right"><font style="FONT-FAMILY: Times New Roman" size="2">32.5</font></td> <td valign="bottom"><font size="1">&#xA0;&#xA0;</font></td> <td valign="bottom"><font style="FONT-FAMILY: Times New Roman" size="2">&#xA0;</font></td> <td valign="bottom" align="right"><font style="FONT-FAMILY: Times New Roman" size="2">10.4</font></td> <td valign="bottom"><font size="1">&#xA0;&#xA0;</font></td> <td valign="bottom"><font style="FONT-FAMILY: Times New Roman" size="2">&#xA0;</font></td> <td valign="bottom" align="right"><font style="FONT-FAMILY: Times New Roman" size="2">42.9</font></td> </tr> <tr style="FONT-SIZE: 1px"> <td valign="bottom"></td> <td valign="bottom">&#xA0;&#xA0;</td> <td style="BORDER-TOP: #000000 1px solid" valign="bottom"> &#xA0;</td> <td style="BORDER-TOP: #000000 1px solid" valign="bottom"> &#xA0;</td> <td valign="bottom">&#xA0;&#xA0;</td> <td style="BORDER-TOP: #000000 1px solid" valign="bottom"> &#xA0;</td> <td style="BORDER-TOP: #000000 1px solid" valign="bottom"> &#xA0;</td> <td valign="bottom">&#xA0;&#xA0;</td> <td style="BORDER-TOP: #000000 1px solid" valign="bottom"> &#xA0;</td> <td style="BORDER-TOP: #000000 1px solid" valign="bottom"> &#xA0;</td> </tr> <tr bgcolor="#CCEEFF"> <td valign="top"> <p style="MARGIN-LEFT: 1em; TEXT-INDENT: -1em"><font style="FONT-FAMILY: Times New Roman" size="2">Balance at December&#xA0;31, 2009</font></p> </td> <td valign="bottom"><font size="1">&#xA0;&#xA0;</font></td> <td valign="bottom"><font style="FONT-FAMILY: Times New Roman" size="2">$</font></td> <td valign="bottom" align="right"><font style="FONT-FAMILY: Times New Roman" size="2">1,265.3</font></td> <td valign="bottom"><font size="1">&#xA0;&#xA0;</font></td> <td valign="bottom"><font style="FONT-FAMILY: Times New Roman" size="2">$</font></td> <td valign="bottom" align="right"><font style="FONT-FAMILY: Times New Roman" size="2">974.1</font></td> <td valign="bottom"><font size="1">&#xA0;&#xA0;</font></td> <td valign="bottom"><font style="FONT-FAMILY: Times New Roman" size="2">$</font></td> <td valign="bottom" align="right"><font style="FONT-FAMILY: Times New Roman" size="2">2,239.4</font></td> </tr> <tr style="FONT-SIZE: 1px"> <td valign="bottom"></td> <td valign="bottom">&#xA0;&#xA0;</td> <td style="BORDER-TOP: #000000 3px double" valign="bottom"> &#xA0;</td> <td style="BORDER-TOP: #000000 3px double" valign="bottom"> &#xA0;</td> <td valign="bottom">&#xA0;&#xA0;</td> <td style="BORDER-TOP: #000000 3px double" valign="bottom"> &#xA0;</td> <td style="BORDER-TOP: #000000 3px double" valign="bottom"> &#xA0;</td> <td valign="bottom">&#xA0;&#xA0;</td> <td style="BORDER-TOP: #000000 3px double" valign="bottom"> &#xA0;</td> <td style="BORDER-TOP: #000000 3px double" valign="bottom"> &#xA0;</td> </tr> </table> <p style="MARGIN-TOP: 12px; MARGIN-BOTTOM: 0px; TEXT-INDENT: 4%"> <font style="FONT-FAMILY: Times New Roman" size="2">Due to the Spin-Off and reorganization of the reporting units, goodwill was tested for impairment in the first quarter of fiscal 2010. Based on this analysis, there was no impairment. The Company&#x2019;s determination of estimated fair value of the reporting units is based on a combination of a discounted cash flow analysis, a multiple of earnings before interest, taxes, depreciation and amortization (&#x201C;EBITDA&#x201D;) and, if available, a review of the price/earnings ratio for publicly traded companies similar in nature, scope and size of the respective reporting units. The discount rates used for impairment testing are based on the risk-free rate plus an adjustment for risk factors. The EBITDA multiples used for impairment testing are judgmentally selected based on factors such as the nature, scope and size of the applicable reporting unit. The use of alternative estimates, peer groups or changes in the industry, or adjusting the discount rate, EBITDA multiples or price earnings ratios used could affect the estimated fair value of the reporting units and potentially result in goodwill impairment.</font></p> <p style="MARGIN-TOP: 12px; MARGIN-BOTTOM: 0px; TEXT-INDENT: 4%"> <font style="FONT-FAMILY: Times New Roman" size="2">The allocations of the purchase price related to certain small acquisitions are not yet finalized and are subject to adjustment as the Company completes the valuation analyses for these acquisitions.</font></p> <p style="MARGIN-TOP: 0px; MARGIN-BOTTOM: 0px"><font size="1">&#xA0;</font></p> <p style="MARGIN-TOP: 0px; MARGIN-BOTTOM: 0px; MARGIN-LEFT: 2%"> <font style="FONT-FAMILY: Times New Roman" size="2"><b><i>Intangible Assets</i></b></font></p> <p style="MARGIN-TOP: 6px; MARGIN-BOTTOM: 0px; TEXT-INDENT: 4%"> <font style="FONT-FAMILY: Times New Roman" size="2">Intangible assets with definite lives are amortized over their useful lives which range from three to twenty years. The detail of other intangible assets by class as of June&#xA0;30, 2009 and December&#xA0;31, 2009 is as follows:</font></p> <p style="MARGIN-TOP: 0px; FONT-SIZE: 12px; MARGIN-BOTTOM: 0px"> &#xA0;</p> <table cellspacing="0" cellpadding="0" width="84%" align="center" border="0"> <tr> <td width="69%"></td> <td valign="bottom" width="7%"></td> <td></td> <td></td> <td valign="bottom" width="7%"></td> <td></td> <td></td> <td valign="bottom" width="7%"></td> <td></td> <td></td> </tr> <tr> <td valign="bottom" nowrap="nowrap"> <p style="WIDTH: 40pt; BORDER-BOTTOM: #000000 1px solid"> <font style="FONT-FAMILY: Times New Roman" size="1"><b>(in millions)</b></font></p> </td> <td valign="bottom"><font size="1">&#xA0;&#xA0;</font></td> <td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" align="center" colspan="2"><font style="FONT-FAMILY: Times New Roman" size="1"><b>Gross<br /> Intangible</b></font></td> <td valign="bottom"><font size="1">&#xA0;&#xA0;</font></td> <td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" align="center" colspan="2"><font style="FONT-FAMILY: Times New Roman" size="1"><b>Accumulated<br /> Amortization</b></font></td> <td valign="bottom"><font size="1">&#xA0;&#xA0;</font></td> <td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" align="center" colspan="2"><font style="FONT-FAMILY: Times New Roman" size="1"><b>Net<br /> Intangible</b></font></td> </tr> <tr bgcolor="#CCEEFF"> <td valign="top"> <p style="MARGIN-LEFT: 1em; TEXT-INDENT: -1em"><font style="FONT-FAMILY: Times New Roman" size="2">June&#xA0;30, 2009</font></p> </td> <td valign="bottom"><font size="1">&#xA0;&#xA0;</font></td> <td valign="bottom"></td> <td valign="bottom"></td> <td valign="bottom"><font size="1">&#xA0;&#xA0;</font></td> <td valign="bottom"></td> <td valign="bottom"></td> <td valign="bottom"><font size="1">&#xA0;&#xA0;</font></td> <td valign="bottom"></td> <td valign="bottom"></td> </tr> <tr> <td valign="top"> <p style="MARGIN-LEFT: 3em; TEXT-INDENT: -1em"><font style="FONT-FAMILY: Times New Roman" size="2">Unamortized intangibles:</font></p> </td> <td valign="bottom"><font size="1">&#xA0;&#xA0;</font></td> <td valign="bottom"></td> <td valign="bottom"></td> <td valign="bottom"><font size="1">&#xA0;&#xA0;</font></td> <td valign="bottom"></td> <td valign="bottom"></td> <td valign="bottom"><font size="1">&#xA0;&#xA0;</font></td> <td valign="bottom"></td> <td valign="bottom"></td> </tr> <tr bgcolor="#CCEEFF"> <td valign="top"> <p style="MARGIN-LEFT: 5em; TEXT-INDENT: -1em"><font style="FONT-FAMILY: Times New Roman" size="2">Trademarks and patents</font></p> </td> <td valign="bottom"><font size="1">&#xA0;&#xA0;</font></td> <td valign="bottom"><font style="FONT-FAMILY: Times New Roman" size="2">$</font></td> <td valign="bottom" align="right"><font style="FONT-FAMILY: Times New Roman" size="2">11.4</font></td> <td valign="bottom"><font size="1">&#xA0;&#xA0;</font></td> <td valign="bottom"><font style="FONT-FAMILY: Times New Roman" size="2">$</font></td> <td valign="bottom" align="right"><font style="FONT-FAMILY: Times New Roman" size="2">&#x2014;&#xA0;&#xA0;</font></td> <td valign="bottom"><font size="1">&#xA0;&#xA0;</font></td> <td valign="bottom"><font style="FONT-FAMILY: Times New Roman" size="2">$</font></td> <td valign="bottom" align="right"><font style="FONT-FAMILY: Times New Roman" size="2">11.4</font></td> </tr> <tr style="FONT-SIZE: 1px"> <td valign="bottom"></td> <td valign="bottom">&#xA0;&#xA0;</td> <td style="BORDER-TOP: #000000 1px solid" valign="bottom"> &#xA0;</td> <td style="BORDER-TOP: #000000 1px solid" valign="bottom"> &#xA0;</td> <td valign="bottom">&#xA0;&#xA0;</td> <td style="BORDER-TOP: #000000 1px solid" valign="bottom"> &#xA0;</td> <td style="BORDER-TOP: #000000 1px solid" valign="bottom"> &#xA0;</td> <td valign="bottom">&#xA0;&#xA0;</td> <td style="BORDER-TOP: #000000 1px solid" valign="bottom"> &#xA0;</td> <td style="BORDER-TOP: #000000 1px solid" valign="bottom"> &#xA0;</td> </tr> <tr> <td valign="top"> <p style="MARGIN-LEFT: 3em; TEXT-INDENT: -1em"><font style="FONT-FAMILY: Times New Roman" size="2">Total unamortized intangibles</font></p> </td> <td valign="bottom"><font size="1">&#xA0;&#xA0;</font></td> <td valign="bottom"><font style="FONT-FAMILY: Times New Roman" size="2">&#xA0;</font></td> <td valign="bottom" align="right"><font style="FONT-FAMILY: Times New Roman" size="2">11.4</font></td> <td valign="bottom"><font size="1">&#xA0;&#xA0;</font></td> <td valign="bottom"><font style="FONT-FAMILY: Times New Roman" size="2">&#xA0;</font></td> <td valign="bottom" align="right"><font style="FONT-FAMILY: Times New Roman" size="2">&#x2014;&#xA0;&#xA0;</font></td> <td valign="bottom"><font size="1">&#xA0;&#xA0;</font></td> <td valign="bottom"><font style="FONT-FAMILY: Times New Roman" size="2">&#xA0;</font></td> <td valign="bottom" align="right"><font style="FONT-FAMILY: Times New Roman" size="2">11.4</font></td> </tr> <tr bgcolor="#CCEEFF"> <td valign="top"> <p style="MARGIN-LEFT: 3em; TEXT-INDENT: -1em"><font style="FONT-FAMILY: Times New Roman" size="2">Amortized intangibles:</font></p> </td> <td valign="bottom"><font size="1">&#xA0;&#xA0;</font></td> <td valign="bottom"></td> <td valign="bottom"></td> <td valign="bottom"><font size="1">&#xA0;&#xA0;</font></td> <td valign="bottom"></td> <td valign="bottom"></td> <td valign="bottom"><font size="1">&#xA0;&#xA0;</font></td> <td valign="bottom"></td> <td valign="bottom"></td> </tr> <tr> <td valign="top"> <p style="MARGIN-LEFT: 5em; TEXT-INDENT: -1em"><font style="FONT-FAMILY: Times New Roman" size="2">Trademarks and patents</font></p> </td> <td valign="bottom"><font size="1">&#xA0;&#xA0;</font></td> <td valign="bottom"><font style="FONT-FAMILY: Times New Roman" size="2">&#xA0;</font></td> <td valign="bottom" align="right"><font style="FONT-FAMILY: Times New Roman" size="2">30.2</font></td> <td valign="bottom"><font size="1">&#xA0;&#xA0;</font></td> <td valign="bottom"><font style="FONT-FAMILY: Times New Roman" size="2">&#xA0;</font></td> <td valign="bottom" align="right"><font style="FONT-FAMILY: Times New Roman" size="2">12.9</font></td> <td valign="bottom"><font size="1">&#xA0;&#xA0;</font></td> <td valign="bottom"><font style="FONT-FAMILY: Times New Roman" size="2">&#xA0;</font></td> <td valign="bottom" align="right"><font style="FONT-FAMILY: Times New Roman" size="2">17.3</font></td> </tr> <tr bgcolor="#CCEEFF"> <td valign="top"> <p style="MARGIN-LEFT: 5em; TEXT-INDENT: -1em"><font style="FONT-FAMILY: Times New Roman" size="2">Non-compete agreements</font></p> </td> <td valign="bottom"><font size="1">&#xA0;&#xA0;</font></td> <td valign="bottom"><font style="FONT-FAMILY: Times New Roman" size="2">&#xA0;</font></td> <td valign="bottom" align="right"><font style="FONT-FAMILY: Times New Roman" size="2">3.9</font></td> <td valign="bottom"><font size="1">&#xA0;&#xA0;</font></td> <td valign="bottom"><font style="FONT-FAMILY: Times New Roman" size="2">&#xA0;</font></td> <td valign="bottom" align="right"><font style="FONT-FAMILY: Times New Roman" size="2">2.5</font></td> <td valign="bottom"><font size="1">&#xA0;&#xA0;</font></td> <td valign="bottom"><font style="FONT-FAMILY: Times New Roman" size="2">&#xA0;</font></td> <td valign="bottom" align="right"><font style="FONT-FAMILY: Times New Roman" size="2">1.4</font></td> </tr> <tr> <td valign="top"> <p style="MARGIN-LEFT: 5em; TEXT-INDENT: -1em"><font style="FONT-FAMILY: Times New Roman" size="2">Customer relationships</font></p> </td> <td valign="bottom"><font size="1">&#xA0;&#xA0;</font></td> <td valign="bottom"><font style="FONT-FAMILY: Times New Roman" size="2">&#xA0;</font></td> <td valign="bottom" align="right"><font style="FONT-FAMILY: Times New Roman" size="2">46.6</font></td> <td valign="bottom"><font size="1">&#xA0;&#xA0;</font></td> <td valign="bottom"><font style="FONT-FAMILY: Times New Roman" size="2">&#xA0;</font></td> <td valign="bottom" align="right"><font style="FONT-FAMILY: Times New Roman" size="2">35.1</font></td> <td valign="bottom"><font size="1">&#xA0;&#xA0;</font></td> <td valign="bottom"><font style="FONT-FAMILY: Times New Roman" size="2">&#xA0;</font></td> <td valign="bottom" align="right"><font style="FONT-FAMILY: Times New Roman" size="2">11.5</font></td> </tr> <tr bgcolor="#CCEEFF"> <td valign="top"> <p style="MARGIN-LEFT: 5em; TEXT-INDENT: -1em"><font style="FONT-FAMILY: Times New Roman" size="2">Other</font></p> </td> <td valign="bottom"><font size="1">&#xA0;&#xA0;</font></td> <td valign="bottom"><font style="FONT-FAMILY: Times New Roman" size="2">&#xA0;</font></td> <td valign="bottom" align="right"><font style="FONT-FAMILY: Times New Roman" size="2">66.2</font></td> <td valign="bottom"><font size="1">&#xA0;&#xA0;</font></td> <td valign="bottom"><font style="FONT-FAMILY: Times New Roman" size="2">&#xA0;</font></td> <td valign="bottom" align="right"><font style="FONT-FAMILY: Times New Roman" size="2">37.4</font></td> <td valign="bottom"><font size="1">&#xA0;&#xA0;</font></td> <td valign="bottom"><font style="FONT-FAMILY: Times New Roman" size="2">&#xA0;</font></td> <td valign="bottom" align="right"><font style="FONT-FAMILY: Times New Roman" size="2">28.8</font></td> </tr> <tr style="FONT-SIZE: 1px"> <td valign="bottom"></td> <td valign="bottom">&#xA0;&#xA0;</td> <td style="BORDER-TOP: #000000 1px solid" valign="bottom"> &#xA0;</td> <td style="BORDER-TOP: #000000 1px solid" valign="bottom"> &#xA0;</td> <td valign="bottom">&#xA0;&#xA0;</td> <td style="BORDER-TOP: #000000 1px solid" valign="bottom"> &#xA0;</td> <td style="BORDER-TOP: #000000 1px solid" valign="bottom"> &#xA0;</td> <td valign="bottom">&#xA0;&#xA0;</td> <td style="BORDER-TOP: #000000 1px solid" valign="bottom"> &#xA0;</td> <td style="BORDER-TOP: #000000 1px solid" valign="bottom"> &#xA0;</td> </tr> <tr> <td valign="top"> <p style="MARGIN-LEFT: 3em; TEXT-INDENT: -1em"><font style="FONT-FAMILY: Times New Roman" size="2">Total amortized intangibles</font></p> </td> <td valign="bottom"><font size="1">&#xA0;&#xA0;</font></td> <td valign="bottom"><font style="FONT-FAMILY: Times New Roman" size="2">&#xA0;</font></td> <td valign="bottom" align="right"><font style="FONT-FAMILY: Times New Roman" size="2">146.9</font></td> <td valign="bottom"><font size="1">&#xA0;&#xA0;</font></td> <td valign="bottom"><font style="FONT-FAMILY: Times New Roman" size="2">&#xA0;</font></td> <td valign="bottom" align="right"><font style="FONT-FAMILY: Times New Roman" size="2">87.9</font></td> <td valign="bottom"><font size="1">&#xA0;&#xA0;</font></td> <td valign="bottom"><font style="FONT-FAMILY: Times New Roman" size="2">&#xA0;</font></td> <td valign="bottom" align="right"><font style="FONT-FAMILY: Times New Roman" size="2">59.0</font></td> </tr> <tr style="FONT-SIZE: 1px"> <td valign="bottom"></td> <td valign="bottom">&#xA0;&#xA0;</td> <td style="BORDER-TOP: #000000 1px solid" valign="bottom"> &#xA0;</td> <td style="BORDER-TOP: #000000 1px solid" valign="bottom"> &#xA0;</td> <td valign="bottom">&#xA0;&#xA0;</td> <td style="BORDER-TOP: #000000 1px solid" valign="bottom"> &#xA0;</td> <td style="BORDER-TOP: #000000 1px solid" valign="bottom"> &#xA0;</td> <td valign="bottom">&#xA0;&#xA0;</td> <td style="BORDER-TOP: #000000 1px solid" valign="bottom"> &#xA0;</td> <td style="BORDER-TOP: #000000 1px solid" valign="bottom"> &#xA0;</td> </tr> <tr bgcolor="#CCEEFF"> <td valign="top"> <p style="MARGIN-LEFT: 7em; TEXT-INDENT: -1em"><font style="FONT-FAMILY: Times New Roman" size="2">Total intangibles</font></p> </td> <td valign="bottom"><font size="1">&#xA0;&#xA0;</font></td> <td valign="bottom"><font style="FONT-FAMILY: Times New Roman" size="2">$</font></td> <td valign="bottom" align="right"><font style="FONT-FAMILY: Times New Roman" size="2">158.3</font></td> <td valign="bottom"><font size="1">&#xA0;&#xA0;</font></td> <td valign="bottom"><font style="FONT-FAMILY: Times New Roman" size="2">$</font></td> <td valign="bottom" align="right"><font style="FONT-FAMILY: Times New Roman" size="2">87.9</font></td> <td valign="bottom"><font size="1">&#xA0;&#xA0;</font></td> <td valign="bottom"><font style="FONT-FAMILY: Times New Roman" size="2">$</font></td> <td valign="bottom" align="right"><font style="FONT-FAMILY: Times New Roman" size="2">70.4</font></td> </tr> <tr style="FONT-SIZE: 1px"> <td valign="bottom"></td> <td valign="bottom">&#xA0;&#xA0;</td> <td style="BORDER-TOP: #000000 1px solid" valign="bottom"> &#xA0;</td> <td style="BORDER-TOP: #000000 1px solid" valign="bottom"> &#xA0;</td> <td valign="bottom">&#xA0;&#xA0;</td> <td style="BORDER-TOP: #000000 1px solid" valign="bottom"> &#xA0;</td> <td style="BORDER-TOP: #000000 1px solid" valign="bottom"> &#xA0;</td> <td valign="bottom">&#xA0;&#xA0;</td> <td style="BORDER-TOP: #000000 1px solid" valign="bottom"> &#xA0;</td> <td style="BORDER-TOP: #000000 1px solid" valign="bottom"> &#xA0;</td> </tr> <tr> <td height="8"></td> <td colspan="3" height="8"></td> <td colspan="3" height="8"></td> <td colspan="3" height="8"></td> </tr> <tr> <td valign="top"> <p style="MARGIN-LEFT: 1em; TEXT-INDENT: -1em"><font style="FONT-FAMILY: Times New Roman" size="2">December&#xA0;31, 2009</font></p> </td> <td valign="bottom"><font size="1">&#xA0;&#xA0;</font></td> <td valign="bottom"></td> <td valign="bottom"></td> <td valign="bottom"><font size="1">&#xA0;&#xA0;</font></td> <td valign="bottom"></td> <td valign="bottom"></td> <td valign="bottom"><font size="1">&#xA0;&#xA0;</font></td> <td valign="bottom"></td> <td valign="bottom"></td> </tr> <tr bgcolor="#CCEEFF"> <td valign="top"> <p style="MARGIN-LEFT: 3em; TEXT-INDENT: -1em"><font style="FONT-FAMILY: Times New Roman" size="2">Unamortized intangibles:</font></p> </td> <td valign="bottom"><font size="1">&#xA0;&#xA0;</font></td> <td valign="bottom"></td> <td valign="bottom"></td> <td valign="bottom"><font size="1">&#xA0;&#xA0;</font></td> <td valign="bottom"></td> <td valign="bottom"></td> <td valign="bottom"><font size="1">&#xA0;&#xA0;</font></td> <td valign="bottom"></td> <td valign="bottom"></td> </tr> <tr> <td valign="top"> <p style="MARGIN-LEFT: 5em; TEXT-INDENT: -1em"><font style="FONT-FAMILY: Times New Roman" size="2">Trademarks and patents</font></p> </td> <td valign="bottom"><font size="1">&#xA0;&#xA0;</font></td> <td valign="bottom"><font style="FONT-FAMILY: Times New Roman" size="2">$</font></td> <td valign="bottom" align="right"><font style="FONT-FAMILY: Times New Roman" size="2">9.2</font></td> <td valign="bottom"><font size="1">&#xA0;&#xA0;</font></td> <td valign="bottom"><font style="FONT-FAMILY: Times New Roman" size="2">$</font></td> <td valign="bottom" align="right"><font style="FONT-FAMILY: Times New Roman" size="2">&#x2014;&#xA0;&#xA0;</font></td> <td valign="bottom"><font size="1">&#xA0;&#xA0;</font></td> <td valign="bottom"><font style="FONT-FAMILY: Times New Roman" size="2">$</font></td> <td valign="bottom" align="right"><font style="FONT-FAMILY: Times New Roman" size="2">9.2</font></td> </tr> <tr style="FONT-SIZE: 1px"> <td valign="bottom"></td> <td valign="bottom">&#xA0;&#xA0;</td> <td style="BORDER-TOP: #000000 1px solid" valign="bottom"> &#xA0;</td> <td style="BORDER-TOP: #000000 1px solid" valign="bottom"> &#xA0;</td> <td valign="bottom">&#xA0;&#xA0;</td> <td style="BORDER-TOP: #000000 1px solid" valign="bottom"> &#xA0;</td> <td style="BORDER-TOP: #000000 1px solid" valign="bottom"> &#xA0;</td> <td valign="bottom">&#xA0;&#xA0;</td> <td style="BORDER-TOP: #000000 1px solid" valign="bottom"> &#xA0;</td> <td style="BORDER-TOP: #000000 1px solid" valign="bottom"> &#xA0;</td> </tr> <tr bgcolor="#CCEEFF"> <td valign="top"> <p style="MARGIN-LEFT: 3em; TEXT-INDENT: -1em"><font style="FONT-FAMILY: Times New Roman" size="2">Total unamortized intangibles</font></p> </td> <td valign="bottom"><font size="1">&#xA0;&#xA0;</font></td> <td valign="bottom"><font style="FONT-FAMILY: Times New Roman" size="2">&#xA0;</font></td> <td valign="bottom" align="right"><font style="FONT-FAMILY: Times New Roman" size="2">9.2</font></td> <td valign="bottom"><font size="1">&#xA0;&#xA0;</font></td> <td valign="bottom"><font style="FONT-FAMILY: Times New Roman" size="2">&#xA0;</font></td> <td valign="bottom" align="right"><font style="FONT-FAMILY: Times New Roman" size="2">&#x2014;&#xA0;&#xA0;</font></td> <td valign="bottom"><font size="1">&#xA0;&#xA0;</font></td> <td valign="bottom"><font style="FONT-FAMILY: Times New Roman" size="2">&#xA0;</font></td> <td valign="bottom" align="right"><font style="FONT-FAMILY: Times New Roman" size="2">9.2</font></td> </tr> <tr> <td valign="top"> <p style="MARGIN-LEFT: 3em; TEXT-INDENT: -1em"><font style="FONT-FAMILY: Times New Roman" size="2">Amortized intangibles:</font></p> </td> <td valign="bottom"><font size="1">&#xA0;&#xA0;</font></td> <td valign="bottom"></td> <td valign="bottom"></td> <td valign="bottom"><font size="1">&#xA0;&#xA0;</font></td> <td valign="bottom"></td> <td valign="bottom"></td> <td valign="bottom"><font size="1">&#xA0;&#xA0;</font></td> <td valign="bottom"></td> <td valign="bottom"></td> </tr> <tr bgcolor="#CCEEFF"> <td valign="top"> <p style="MARGIN-LEFT: 5em; TEXT-INDENT: -1em"><font style="FONT-FAMILY: Times New Roman" size="2">Trademarks and patents</font></p> </td> <td valign="bottom"><font size="1">&#xA0;&#xA0;</font></td> <td valign="bottom"><font style="FONT-FAMILY: Times New Roman" size="2">&#xA0;</font></td> <td valign="bottom" align="right"><font style="FONT-FAMILY: Times New Roman" size="2">22.1</font></td> <td valign="bottom"><font size="1">&#xA0;&#xA0;</font></td> <td valign="bottom"><font style="FONT-FAMILY: Times New Roman" size="2">&#xA0;</font></td> <td valign="bottom" align="right"><font style="FONT-FAMILY: Times New Roman" size="2">13.1</font></td> <td valign="bottom"><font size="1">&#xA0;&#xA0;</font></td> <td valign="bottom"><font style="FONT-FAMILY: Times New Roman" size="2">&#xA0;</font></td> <td valign="bottom" align="right"><font style="FONT-FAMILY: Times New Roman" size="2">9.0</font></td> </tr> <tr> <td valign="top"> <p style="MARGIN-LEFT: 5em; TEXT-INDENT: -1em"><font style="FONT-FAMILY: Times New Roman" size="2">Non-compete agreements</font></p> </td> <td valign="bottom"><font size="1">&#xA0;&#xA0;</font></td> <td valign="bottom"><font style="FONT-FAMILY: Times New Roman" size="2">&#xA0;</font></td> <td valign="bottom" align="right"><font style="FONT-FAMILY: Times New Roman" size="2">4.1</font></td> <td valign="bottom"><font size="1">&#xA0;&#xA0;</font></td> <td valign="bottom"><font style="FONT-FAMILY: Times New Roman" size="2">&#xA0;</font></td> <td valign="bottom" align="right"><font style="FONT-FAMILY: Times New Roman" size="2">2.7</font></td> <td valign="bottom"><font size="1">&#xA0;&#xA0;</font></td> <td valign="bottom"><font style="FONT-FAMILY: Times New Roman" size="2">&#xA0;</font></td> <td valign="bottom" align="right"><font style="FONT-FAMILY: Times New Roman" size="2">1.4</font></td> </tr> <tr bgcolor="#CCEEFF"> <td valign="top"> <p style="MARGIN-LEFT: 5em; TEXT-INDENT: -1em"><font style="FONT-FAMILY: Times New Roman" size="2">Customer relationships</font></p> </td> <td valign="bottom"><font size="1">&#xA0;&#xA0;</font></td> <td valign="bottom"><font style="FONT-FAMILY: Times New Roman" size="2">&#xA0;</font></td> <td valign="bottom" align="right"><font style="FONT-FAMILY: Times New Roman" size="2">49.7</font></td> <td valign="bottom"><font size="1">&#xA0;&#xA0;</font></td> <td valign="bottom"><font style="FONT-FAMILY: Times New Roman" size="2">&#xA0;</font></td> <td valign="bottom" align="right"><font style="FONT-FAMILY: Times New Roman" size="2">38.4</font></td> <td valign="bottom"><font size="1">&#xA0;&#xA0;</font></td> <td valign="bottom"><font style="FONT-FAMILY: Times New Roman" size="2">&#xA0;</font></td> <td valign="bottom" align="right"><font style="FONT-FAMILY: Times New Roman" size="2">11.3</font></td> </tr> <tr> <td valign="top"> <p style="MARGIN-LEFT: 5em; TEXT-INDENT: -1em"><font style="FONT-FAMILY: Times New Roman" size="2">Other</font></p> </td> <td valign="bottom"><font size="1">&#xA0;&#xA0;</font></td> <td valign="bottom"><font style="FONT-FAMILY: Times New Roman" size="2">&#xA0;</font></td> <td valign="bottom" align="right"><font style="FONT-FAMILY: Times New Roman" size="2">63.0</font></td> <td valign="bottom"><font size="1">&#xA0;&#xA0;</font></td> <td valign="bottom"><font style="FONT-FAMILY: Times New Roman" size="2">&#xA0;</font></td> <td valign="bottom" align="right"><font style="FONT-FAMILY: Times New Roman" size="2">38.6</font></td> <td valign="bottom"><font size="1">&#xA0;&#xA0;</font></td> <td valign="bottom"><font style="FONT-FAMILY: Times New Roman" size="2">&#xA0;</font></td> <td valign="bottom" align="right"><font style="FONT-FAMILY: Times New Roman" size="2">24.4</font></td> </tr> <tr style="FONT-SIZE: 1px"> <td valign="bottom"></td> <td valign="bottom">&#xA0;&#xA0;</td> <td style="BORDER-TOP: #000000 1px solid" valign="bottom"> &#xA0;</td> <td style="BORDER-TOP: #000000 1px solid" valign="bottom"> &#xA0;</td> <td valign="bottom">&#xA0;&#xA0;</td> <td style="BORDER-TOP: #000000 1px solid" valign="bottom"> &#xA0;</td> <td style="BORDER-TOP: #000000 1px solid" valign="bottom"> &#xA0;</td> <td valign="bottom">&#xA0;&#xA0;</td> <td style="BORDER-TOP: #000000 1px solid" valign="bottom"> &#xA0;</td> <td style="BORDER-TOP: #000000 1px solid" valign="bottom"> &#xA0;</td> </tr> <tr bgcolor="#CCEEFF"> <td valign="top"> <p style="MARGIN-LEFT: 3em; TEXT-INDENT: -1em"><font style="FONT-FAMILY: Times New Roman" size="2">Total amortized intangibles</font></p> </td> <td valign="bottom"><font size="1">&#xA0;&#xA0;</font></td> <td valign="bottom"><font style="FONT-FAMILY: Times New Roman" size="2">&#xA0;</font></td> <td valign="bottom" align="right"><font style="FONT-FAMILY: Times New Roman" size="2">138.9</font></td> <td valign="bottom"><font size="1">&#xA0;&#xA0;</font></td> <td valign="bottom"><font style="FONT-FAMILY: Times New Roman" size="2">&#xA0;</font></td> <td valign="bottom" align="right"><font style="FONT-FAMILY: Times New Roman" size="2">92.8</font></td> <td valign="bottom"><font size="1">&#xA0;&#xA0;</font></td> <td valign="bottom"><font style="FONT-FAMILY: Times New Roman" size="2">&#xA0;</font></td> <td valign="bottom" align="right"><font style="FONT-FAMILY: Times New Roman" size="2">46.1</font></td> </tr> <tr style="FONT-SIZE: 1px"> <td valign="bottom"></td> <td valign="bottom">&#xA0;&#xA0;</td> <td style="BORDER-TOP: #000000 1px solid" valign="bottom"> &#xA0;</td> <td style="BORDER-TOP: #000000 1px solid" valign="bottom"> &#xA0;</td> <td valign="bottom">&#xA0;&#xA0;</td> <td style="BORDER-TOP: #000000 1px solid" valign="bottom"> &#xA0;</td> <td style="BORDER-TOP: #000000 1px solid" valign="bottom"> &#xA0;</td> <td valign="bottom">&#xA0;&#xA0;</td> <td style="BORDER-TOP: #000000 1px solid" valign="bottom"> &#xA0;</td> <td style="BORDER-TOP: #000000 1px solid" valign="bottom"> &#xA0;</td> </tr> <tr> <td valign="top"> <p style="MARGIN-LEFT: 7em; TEXT-INDENT: -1em"><font style="FONT-FAMILY: Times New Roman" size="2">Total intangibles</font></p> </td> <td valign="bottom"><font size="1">&#xA0;&#xA0;</font></td> <td valign="bottom"><font style="FONT-FAMILY: Times New Roman" size="2">$</font></td> <td valign="bottom" align="right"><font style="FONT-FAMILY: Times New Roman" size="2">148.1</font></td> <td valign="bottom"><font size="1">&#xA0;&#xA0;</font></td> <td valign="bottom"><font style="FONT-FAMILY: Times New Roman" size="2">$</font></td> <td valign="bottom" align="right"><font style="FONT-FAMILY: Times New Roman" size="2">92.8</font></td> <td valign="bottom"><font size="1">&#xA0;&#xA0;</font></td> <td valign="bottom"><font style="FONT-FAMILY: Times New Roman" size="2">$</font></td> <td valign="bottom" align="right"><font style="FONT-FAMILY: Times New Roman" size="2">55.3</font></td> </tr> <tr style="FONT-SIZE: 1px"> <td valign="bottom"></td> <td valign="bottom">&#xA0;&#xA0;</td> <td style="BORDER-TOP: #000000 3px double" valign="bottom"> &#xA0;</td> <td style="BORDER-TOP: #000000 3px double" valign="bottom"> &#xA0;</td> <td valign="bottom">&#xA0;&#xA0;</td> <td style="BORDER-TOP: #000000 3px double" valign="bottom"> &#xA0;</td> <td style="BORDER-TOP: #000000 3px double" valign="bottom"> &#xA0;</td> <td valign="bottom">&#xA0;&#xA0;</td> <td style="BORDER-TOP: #000000 3px double" valign="bottom"> &#xA0;</td> <td style="BORDER-TOP: #000000 3px double" valign="bottom"> &#xA0;</td> </tr> </table> <p style="MARGIN-TOP: 12px; MARGIN-BOTTOM: 0px; TEXT-INDENT: 4%"> <font style="FONT-FAMILY: Times New Roman" size="2">There were no significant acquisitions of other intangible assets during the periods presented. Amortization expense for the three and six months ended December&#xA0;31, 2009 was $2.6 million and $6.0 million, respectively, and $3.3 million and $7.1 million, respectively, during the comparable prior year periods.</font></p> <p style="MARGIN-TOP: 12px; MARGIN-BOTTOM: 0px; TEXT-INDENT: 4%"> <font style="FONT-FAMILY: Times New Roman" size="2">Amortization expense for each of the next five fiscal years is estimated to be:</font></p> <p style="MARGIN-TOP: 0px; FONT-SIZE: 12px; MARGIN-BOTTOM: 0px"> &#xA0;</p> <table cellspacing="0" cellpadding="0" width="100%" align="center" border="0"> <tr> <td width="79%"></td> <td valign="bottom" width="2%"></td> <td></td> <td></td> <td valign="bottom" width="2%"></td> <td></td> <td></td> <td valign="bottom" width="2%"></td> <td></td> <td></td> <td valign="bottom" width="2%"></td> <td></td> <td></td> <td valign="bottom" width="2%"></td> <td></td> <td></td> </tr> <tr> <td valign="bottom" nowrap="nowrap"> <p style="WIDTH: 40pt; BORDER-BOTTOM: #000000 1px solid"> <font style="FONT-FAMILY: Times New Roman" size="1"><b>(in millions)</b></font></p> </td> <td valign="bottom"><font size="1">&#xA0;&#xA0;</font></td> <td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" align="center" colspan="2"><font style="FONT-FAMILY: Times New Roman" size="1"><b>2010</b></font></td> <td valign="bottom"><font size="1">&#xA0;&#xA0;</font></td> <td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" align="center" colspan="2"><font style="FONT-FAMILY: Times New Roman" size="1"><b>2011</b></font></td> <td valign="bottom"><font size="1">&#xA0;&#xA0;</font></td> <td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" align="center" colspan="2"><font style="FONT-FAMILY: Times New Roman" size="1"><b>2012</b></font></td> <td valign="bottom"><font size="1">&#xA0;&#xA0;</font></td> <td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" align="center" colspan="2"><font style="FONT-FAMILY: Times New Roman" size="1"><b>2013</b></font></td> <td valign="bottom"><font size="1">&#xA0;&#xA0;</font></td> <td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" align="center" colspan="2"><font style="FONT-FAMILY: Times New Roman" size="1"><b>2014</b></font></td> </tr> <tr bgcolor="#CCEEFF"> <td valign="top"> <p style="MARGIN-LEFT: 1em; TEXT-INDENT: -1em"><font style="FONT-FAMILY: Times New Roman" size="2">Amortization expense</font></p> </td> <td valign="bottom"><font size="1">&#xA0;&#xA0;</font></td> <td valign="bottom"><font style="FONT-FAMILY: Times New Roman" size="2">$</font></td> <td valign="bottom" align="right"><font style="FONT-FAMILY: Times New Roman" size="2">11.0</font></td> <td valign="bottom"><font size="1">&#xA0;&#xA0;</font></td> <td valign="bottom"><font style="FONT-FAMILY: Times New Roman" size="2">$</font></td> <td valign="bottom" align="right"><font style="FONT-FAMILY: Times New Roman" size="2">9.1</font></td> <td valign="bottom"><font size="1">&#xA0;&#xA0;</font></td> <td valign="bottom"><font style="FONT-FAMILY: Times New Roman" size="2">$</font></td> <td valign="bottom" align="right"><font style="FONT-FAMILY: Times New Roman" size="2">4.6</font></td> <td valign="bottom"><font size="1">&#xA0;&#xA0;</font></td> <td valign="bottom"><font style="FONT-FAMILY: Times New Roman" size="2">$</font></td> <td valign="bottom" align="right"><font style="FONT-FAMILY: Times New Roman" size="2">3.2</font></td> <td valign="bottom"><font size="1">&#xA0;&#xA0;</font></td> <td valign="bottom"><font style="FONT-FAMILY: Times New Roman" size="2">$</font></td> <td valign="bottom" align="right"><font style="FONT-FAMILY: Times New Roman" size="2">1.7</font></td> </tr> </table> </div> 1866500000 168400000 540000000 0.47 0.47 27900000 0.08 0.07 <div> <p style="MARGIN-TOP: 18px; MARGIN-BOTTOM: 0px"><font style="FONT-FAMILY: Times New Roman" size="2"><b>8. INCOME TAXES</b></font></p> <p style="MARGIN-TOP: 6px; MARGIN-BOTTOM: 0px; TEXT-INDENT: 4%"> <font style="FONT-FAMILY: Times New Roman" size="2">Effective July&#xA0;1, 2007, the Company adopted new accounting guidance regarding the accounting for uncertainty in income taxes recognized in the financial statements, resulting in a $139.3 million reduction of retained earnings. This accounting guidance provides that a tax benefit from an uncertain tax position may be recognized when it is more likely than not that the position will be sustained upon examination, including resolutions of any related appeals or litigation processes, based on the technical merits. The amount recognized is measured as the largest amount of tax benefit that is greater than 50% likely of being realized upon settlement. This interpretation also provides guidance on measurement, derecognition, classification, interest and penalties, accounting in interim periods, disclosure and transition.</font></p> <p style="MARGIN-TOP: 12px; MARGIN-BOTTOM: 0px; TEXT-INDENT: 4%"> <font style="FONT-FAMILY: Times New Roman" size="2">The balance of unrecognized tax benefits and the amount of interest and penalties were as follows as of December&#xA0;31, 2009 and June&#xA0;30, 2009:</font></p> <p style="MARGIN-TOP: 0px; FONT-SIZE: 12px; MARGIN-BOTTOM: 0px"> &#xA0;</p> <table cellspacing="0" cellpadding="0" width="76%" align="center" border="0"> <tr> <td width="76%"></td> <td valign="bottom" width="7%"></td> <td></td> <td></td> <td valign="bottom" width="7%"></td> <td></td> <td></td> </tr> <tr> <td valign="bottom" nowrap="nowrap"> <p style="WIDTH: 40pt; BORDER-BOTTOM: #000000 1px solid"> <font style="FONT-FAMILY: Times New Roman" size="1"><b>(in millions)</b></font></p> </td> <td valign="bottom"><font size="1">&#xA0;&#xA0;</font></td> <td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" align="center" colspan="2"><font style="FONT-FAMILY: Times New Roman" size="1"><b>December&#xA0;31,<br /> 2009</b></font></td> <td valign="bottom"><font size="1">&#xA0;&#xA0;</font></td> <td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" align="center" colspan="2"><font style="FONT-FAMILY: Times New Roman" size="1"><b>June&#xA0;30,<br /> 2009</b></font></td> </tr> <tr bgcolor="#CCEEFF"> <td valign="top"> <p style="MARGIN-LEFT: 1em; TEXT-INDENT: -1em"><font style="FONT-FAMILY: Times New Roman" size="2">Unrecognized tax benefits (1)&#xA0;(2)&#xA0;(3)</font></p> </td> <td valign="bottom"><font size="1">&#xA0;&#xA0;</font></td> <td valign="bottom"><font style="FONT-FAMILY: Times New Roman" size="2">$</font></td> <td valign="bottom" align="right"><font style="FONT-FAMILY: Times New Roman" size="2">698.5</font></td> <td valign="bottom"><font size="1">&#xA0;&#xA0;</font></td> <td valign="bottom"><font style="FONT-FAMILY: Times New Roman" size="2">$</font></td> <td valign="bottom" align="right"><font style="FONT-FAMILY: Times New Roman" size="2">848.8</font></td> </tr> <tr> <td valign="top"> <p style="MARGIN-LEFT: 3em; TEXT-INDENT: -1em"><font style="FONT-FAMILY: Times New Roman" size="2">Portion that, if recognized, would reduce tax expense and effective tax rate&#xA0;(2)</font></p> </td> <td valign="bottom"><font size="1">&#xA0;&#xA0;</font></td> <td valign="bottom"><font style="FONT-FAMILY: Times New Roman" size="2">&#xA0;</font></td> <td valign="bottom" align="right"><font style="FONT-FAMILY: Times New Roman" size="2">333.8</font></td> <td valign="bottom"><font size="1">&#xA0;&#xA0;</font></td> <td valign="bottom"><font style="FONT-FAMILY: Times New Roman" size="2">&#xA0;</font></td> <td valign="bottom" align="right"><font style="FONT-FAMILY: Times New Roman" size="2">610.9</font></td> </tr> <tr bgcolor="#CCEEFF"> <td valign="top"> <p style="MARGIN-LEFT: 1em; TEXT-INDENT: -1em"><font style="FONT-FAMILY: Times New Roman" size="2">Accrued penalties and interest (2)&#xA0;(3)&#xA0;(4)</font></p> </td> <td valign="bottom"><font size="1">&#xA0;&#xA0;</font></td> <td valign="bottom"><font style="FONT-FAMILY: Times New Roman" size="2">&#xA0;</font></td> <td valign="bottom" align="right"><font style="FONT-FAMILY: Times New Roman" size="2">222.3</font></td> <td valign="bottom"><font size="1">&#xA0;&#xA0;</font></td> <td valign="bottom"><font style="FONT-FAMILY: Times New Roman" size="2">&#xA0;</font></td> <td valign="bottom" align="right"><font style="FONT-FAMILY: Times New Roman" size="2">247.0</font></td> </tr> </table> <p style="MARGIN-TOP: 0px; FONT-SIZE: 12px; MARGIN-BOTTOM: 0px"> &#xA0;</p> <table style="BORDER-COLLAPSE: collapse" cellspacing="0" cellpadding="0" width="100%" border="0"> <tr> <td valign="top" align="left" width="4%"><font style="FONT-FAMILY: Times New Roman" size="2">(1)</font></td> <td valign="top" align="left"><font style="FONT-FAMILY: Times New Roman" size="2">The Company includes the full amount of unrecognized tax benefits in deferred income taxes and other liabilities in the condensed consolidated balance sheets.</font></td> </tr> </table> <table style="BORDER-COLLAPSE: collapse" cellspacing="0" cellpadding="0" width="100%" border="0"> <tr> <td valign="top" align="left" width="4%"><font style="FONT-FAMILY: Times New Roman" size="2">(2)</font></td> <td valign="top" align="left"><font style="FONT-FAMILY: Times New Roman" size="2">Due to the anticipated repatriation of certain foreign earnings, taxes associated with a special purpose entity transaction no longer represent uncertain tax benefits and have been classified at December&#xA0;31, 2009 as deferred tax liabilities.</font></td> </tr> </table> <table style="BORDER-COLLAPSE: collapse" cellspacing="0" cellpadding="0" width="100%" border="0"> <tr> <td valign="top" align="left" width="4%"><font style="FONT-FAMILY: Times New Roman" size="2">(3)</font></td> <td valign="top" align="left"><font style="FONT-FAMILY: Times New Roman" size="2">The December&#xA0;31, 2009 balance includes unrecognized tax benefits related to CareFusion. In accordance with indemnification provisions of the tax matters agreement entered into between the Company and CareFusion, the Company is entitled to reimbursement from CareFusion. The Company has recorded a long term receivable of approximately $214.5 million from CareFusion for these amounts (net of any tax refund claims).</font></td> </tr> </table> <table style="BORDER-COLLAPSE: collapse" cellspacing="0" cellpadding="0" width="100%" border="0"> <tr> <td valign="top" align="left" width="4%"><font style="FONT-FAMILY: Times New Roman" size="2">(4)</font></td> <td valign="top" align="left"><font style="FONT-FAMILY: Times New Roman" size="2">Balances are gross amounts before any tax benefits and are included in deferred income taxes and other liabilities in the condensed consolidated balance sheets.</font></td> </tr> </table> <p style="MARGIN-TOP: 0px; MARGIN-BOTTOM: 0px"><font size="1">&#xA0;</font></p> <p style="MARGIN-TOP: 0px; MARGIN-BOTTOM: 0px; TEXT-INDENT: 4%"> <font style="FONT-FAMILY: Times New Roman" size="2">Upon completion of the Spin-Off, the Company recorded a tax charge of approximately $171.9 million related to the anticipated repatriation of a portion of cash currently loaned to the Company&#x2019;s entities within the United States from its international subsidiaries. This charge is included within earnings from continuing operations for the six months ended December&#xA0;31, 2009.</font></p> <p style="MARGIN-TOP: 12px; MARGIN-BOTTOM: 0px; TEXT-INDENT: 4%"> <font style="FONT-FAMILY: Times New Roman" size="2">The Company files income tax returns in the U.S. federal jurisdiction, various U.S. state jurisdictions and various foreign jurisdictions. With few exceptions, the Company is subject to audit by taxing authorities for fiscal years ended June&#xA0;30, 2001 through the current fiscal year.</font></p> <p style="MARGIN-TOP: 12px; MARGIN-BOTTOM: 0px; TEXT-INDENT: 4%"> <font style="FONT-FAMILY: Times New Roman" size="2">The Internal Revenue Service (&#x201C;IRS&#x201D;) currently has ongoing audits of fiscal years 2001 through 2007. During the three months ended December&#xA0;31, 2007, the Company was notified that the IRS transferred jurisdiction over fiscal years 2001 and 2002 from the Office of Appeals back to the Examinations level to reconsider previously-unadjusted specific issues. During the three months ended March&#xA0;31, 2008, the Company received Notices of Proposed Adjustment (&#x201C;NPA&#x2019;s&#x201D;) from the IRS related to fiscal years 2001 through 2005 challenging deductions arising from the sale of trade receivables to a special purpose accounts receivable and financing entity. The amount of additional tax, excluding penalties and interest, proposed by the IRS in these notices was $178.9 million. The Company anticipates that this transaction could be the subject of proposed adjustments by the IRS in tax audits of fiscal years 2006 to 2009. As discussed above, the Company recorded a charge of $171.9 million during the first quarter of fiscal 2010 to reflect the anticipated repatriation of earnings from the special purpose entity. Due to the anticipated repatriation of the earnings, the tax associated with the transaction, including the tax assessed by the IRS, no longer represents an uncertain tax benefit. Taxes associated with this transaction, including both the charge taken in the first quarter of fiscal 2010 and the amount previously accrued as an unrecognized tax benefit, are classified as deferred tax liabilities or current taxes payable.</font></p> <p style="MARGIN-TOP: 12px; MARGIN-BOTTOM: 0px; TEXT-INDENT: 4%"> <font style="FONT-FAMILY: Times New Roman" size="2">During fiscal 2009, the Company received a Revenue Agent&#x2019;s Report for tax years 2003 through 2005, which included the NPA&#x2019;s discussed above and new NPA&#x2019;s related to the Company&#x2019;s transfer pricing arrangements between foreign and domestic subsidiaries and the transfer of intellectual property among subsidiaries of an acquired entity prior to its acquisition by the Company. The amount of additional tax proposed by the IRS in the new notices total $598.1 million, excluding penalties and interest, but including $462.1 million related to issues for which CareFusion is liable under the tax matters agreement in the event the amount must be paid to the taxing authority. The Company disagrees with these proposed adjustments and intends to vigorously contest them. The Company believes that it is adequately reserved for the uncertain tax position relating to these matters.</font></p> <p style="MARGIN-TOP: 12px; MARGIN-BOTTOM: 0px; TEXT-INDENT: 4%"> <font style="FONT-FAMILY: Times New Roman" size="2">It is reasonably possible that there could be a change in the amount of unrecognized tax benefits within the next 12 months due to activities of the IRS or other taxing authorities, including proposed assessments of additional tax, possible settlement of audit issues, or the expiration of applicable statutes of limitations. The Company estimates that the range of the possible change in unrecognized tax benefits within the next 12 months is a decrease of approximately zero to $25 million excluding penalties and interest.</font></p> <p style="MARGIN-TOP: 12px; MARGIN-BOTTOM: 0px; TEXT-INDENT: 4%"> <font style="FONT-FAMILY: Times New Roman" size="2">The Company&#x2019;s provision for income taxes as a percentage of pretax earnings from continuing operations (&#x201C;effective tax rate&#x201D;) was 36.9% and 68.8%, respectively, for the three and six months ended December 31, 2009 compared to 37.7% and 35.1%, respectively, for the three and six months ended December 31, 2008. Generally, fluctuations in the effective tax rate are due to changes within international and U.S. state effective tax rates resulting from the Company&#x2019;s business mix and the impact of restructuring and employee severance, impairments and other discrete items. During the six months ended December 31, 2009 the effective tax rate was impacted by an unfavorable adjustment of $172 million, or 31.8%, attributable to earnings no longer indefinitely invested offshore.</font></p> </div> 371600000 1499200000 1127200000 259000000 -269200000 61300000 20000000 -422900000 -1706700000 17500000 27400000 930600000 783800000 196300000 606700000 34500000 32000000 50000000 127200000 79900000 27900000 0 0 135000000 4300000 21400000 1484900000 70400000 49700400000 <div> <p style="MARGIN-TOP: 12px; MARGIN-BOTTOM: 0px; TEXT-INDENT: 4%"> </p> <p style="MARGIN-TOP: 18px; MARGIN-BOTTOM: 0px"><font style="FONT-FAMILY: Times New Roman" size="2"><b>10. GUARANTEES</b></font></p> <p style="MARGIN-TOP: 6px; MARGIN-BOTTOM: 0px; TEXT-INDENT: 4%"> <font style="FONT-FAMILY: Times New Roman" size="2">In the ordinary course of business, the Company, from time to time, agrees to indemnify certain other parties under agreements with the Company, including under acquisition and disposition agreements, customer agreements and intellectual property licensing agreements. Such indemnification obligations vary in scope and, when defined, in duration. In many cases, a maximum obligation is not explicitly stated and therefore the overall maximum amount of the liability under such indemnification obligations cannot be reasonably estimated. Where appropriate, such indemnification obligations are recorded as a liability. Historically, the Company has not, individually or in the aggregate, made payments under these indemnification obligations in any material amounts. In certain circumstances, the Company believes that its existing insurance arrangements, subject to the general deduction and exclusion provisions, would cover portions of the liability that could arise from any of these indemnification obligations. In addition, the Company believes that the likelihood of a material liability being triggered under these indemnification obligations is not significant.</font></p> <p style="MARGIN-TOP: 12px; MARGIN-BOTTOM: 0px; TEXT-INDENT: 4%"> <font style="FONT-FAMILY: Times New Roman" size="2">In the ordinary course of business, the Company, from time to time, enters into agreements that obligate the Company to make fixed payments upon the occurrence of certain events. Such obligations primarily relate to obligations arising under acquisition transactions, where the Company has agreed to make payments based upon the achievement of certain financial performance measures by the acquired business. Generally, the obligation is capped at an explicit amount. The Company&#x2019;s aggregate exposure for these obligations, assuming the achievement of all financial performance measures, is not material.</font></p> <p style="MARGIN-TOP: 12px; MARGIN-BOTTOM: 0px; TEXT-INDENT: 4%"> <font style="FONT-FAMILY: Times New Roman" size="2">In the ordinary course of business, the Company, from time to time, extends loans to its customers which are subsequently sold to a bank. The bank services and administers these loans as well as any new loans the Company may direct. In order for the bank to purchase such loans, it requires the absolute and unconditional obligation of the Company to repurchase such loans upon the occurrence of certain events described in the agreement including, but not limited to, borrower payment default that exceeds 90 days, insolvency and bankruptcy. At December&#xA0;31, 2009 and June&#xA0;30, 2009, notes in the program subject to the guaranty of the Company totaled $39.6 million and $39.9 million, respectively. These loans are reported in the Company&#x2019;s condensed consolidated balance sheet.</font></p> </div> <div> <p style="MARGIN-TOP: 12px; MARGIN-BOTTOM: 0px; TEXT-INDENT: 4%"> </p> <p style="MARGIN-TOP: 18px; MARGIN-BOTTOM: 0px"><font style="FONT-FAMILY: Times New Roman" size="2"><b>9. CONTINGENT LIABILITIES</b></font></p> <p style="MARGIN-TOP: 6px; MARGIN-BOTTOM: 0px; MARGIN-LEFT: 2%"> <font style="FONT-FAMILY: Times New Roman" size="2"><b><i>Legal Proceedings</i></b></font></p> <p style="MARGIN-TOP: 6px; MARGIN-BOTTOM: 0px; TEXT-INDENT: 4%"> <font style="FONT-FAMILY: Times New Roman" size="2">In addition to commitments and obligations in the ordinary course of business, the Company is subject to various claims, other pending and potential legal actions for damages, investigations relating to governmental laws and regulations and other matters arising out of the normal conduct of its business. When accruing for contingencies related to litigation, the Company considers the degree of probability and range of possible loss. An estimated loss contingency is accrued in the Company&#x2019;s consolidated financial statements if it is probable that a liability has been incurred and the amount of the loss can be reasonably estimated. Because litigation is inherently unpredictable and unfavorable resolutions could occur, assessing contingencies is highly subjective and requires judgments about future events. The Company regularly reviews contingencies to determine the adequacy of the accruals and related disclosures. The amount of ultimate loss may differ from these estimates. It is possible that cash flows or results of operations could be materially affected in any particular period by the unfavorable resolution of one or more of these contingencies.</font></p> <p style="MARGIN-TOP: 12px; MARGIN-BOTTOM: 0px; TEXT-INDENT: 4%"> <font style="FONT-FAMILY: Times New Roman" size="2">The Company recognizes income from the favorable outcome of legal settlements, judgments or other resolution of legal and regulatory matters when the associated cash or assets are received.</font></p> <p style="MARGIN-TOP: 0px; MARGIN-BOTTOM: 0px"><font size="1">&#xA0;</font></p> <p style="MARGIN-TOP: 0px; MARGIN-BOTTOM: 0px; TEXT-INDENT: 4%"> <font style="FONT-FAMILY: Times New Roman" size="2">Estimated loss contingencies related to litigation and regulatory matters and income from favorable resolution of legal and regulatory matters are recognized in litigation (credits)/charges, net in the Company&#x2019;s condensed consolidated statements of earnings.</font></p> <p style="MARGIN-TOP: 18px; MARGIN-BOTTOM: 0px; MARGIN-LEFT: 2%"> <font style="FONT-FAMILY: Times New Roman" size="2"><b><i>Insurance Proceeds</i></b></font></p> <p style="MARGIN-TOP: 6px; MARGIN-BOTTOM: 0px; TEXT-INDENT: 4%"> <font style="FONT-FAMILY: Times New Roman" size="2">In the three months ending December&#xA0;31, 2009, the Company recognized $27.2 million of income related to insurance proceeds released from escrow following the resolution of securities and derivative litigation against certain of the Company&#x2019;s directors and officers. This amount is comprised of $25.7 million received from directors and officers&#x2019; insurance policies recognized in litigation (credits)/charges, net and $1.5 million of accrued interest income recognized in interest expense, net.&#xA0;For further information regarding this matter, see the Company&#x2019;s Annual Report on Form 10-K for the fiscal year ended June&#xA0;30, 2007.</font></p> <p style="MARGIN-TOP: 18px; MARGIN-BOTTOM: 0px; MARGIN-LEFT: 2%"> <font style="FONT-FAMILY: Times New Roman" size="2"><b><i>Income Taxes</i></b></font></p> <p style="MARGIN-TOP: 6px; MARGIN-BOTTOM: 0px; TEXT-INDENT: 4%"> <font style="FONT-FAMILY: Times New Roman" size="2">See Note 8 for discussion of contingencies related to the Company&#x2019;s income taxes.</font></p> <p style="MARGIN-TOP: 18px; MARGIN-BOTTOM: 0px; MARGIN-LEFT: 2%"> <font style="FONT-FAMILY: Times New Roman" size="2"><b><i>Other Matters</i></b></font></p> <p style="MARGIN-TOP: 6px; MARGIN-BOTTOM: 0px; TEXT-INDENT: 4%"> <font style="FONT-FAMILY: Times New Roman" size="2">The Company also becomes involved from time-to-time in litigation and regulatory matters incidental to its business, including, but not limited to, personal injury claims, employment matters, commercial disputes, intellectual property matters, inclusion as a potentially responsible party for environmental clean-up costs, and litigation in connection with acquisitions and divestitures. The Company intends to vigorously defend itself against such litigation and does not currently believe that the outcome of any such litigation will have a material adverse effect on the Company&#x2019;s consolidated financial statements.</font></p> <p style="MARGIN-TOP: 12px; MARGIN-BOTTOM: 0px; TEXT-INDENT: 4%"> <font style="FONT-FAMILY: Times New Roman" size="2">From time to time, the Company receives subpoenas or requests for information from various government agencies relating to the business, accounting or disclosure practices of customers or suppliers. The responses to these subpoenas and requests for information sometimes require considerable time and effort, and can result in considerable costs being incurred by the Company. The Company expects to incur additional costs in the future in connection with existing and future requests. Such subpoenas and requests also can lead to the assertion of claims or the commencement of legal proceedings against the Company.</font></p> <p style="MARGIN-TOP: 12px; MARGIN-BOTTOM: 0px; TEXT-INDENT: 4%"> <font style="FONT-FAMILY: Times New Roman" size="2">Also from time to time, the Company may determine that products marketed, manufactured, or distributed by the Company may not meet Company specifications, published standards or regulatory requirements. In such circumstances, the Company will investigate and take appropriate corrective action. Such actions can lead to costs to repair or replace affected products, temporary interruptions in product sales and action by regulators, and can adversely impact results of operations.</font></p> </div> <div> <p style="MARGIN-TOP: 12px; MARGIN-BOTTOM: 0px; TEXT-INDENT: 4%"> </p> <p style="MARGIN-TOP: 18px; MARGIN-BOTTOM: 0px"><font style="FONT-FAMILY: Times New Roman" size="2"><b>2. RESTRUCTURING AND EMPLOYEE SEVERANCE</b></font></p> <p style="MARGIN-TOP: 6px; MARGIN-BOTTOM: 0px; MARGIN-LEFT: 2%"> <font style="FONT-FAMILY: Times New Roman" size="2"><b><i>Restructuring Policy</i></b></font></p> <p style="MARGIN-TOP: 6px; MARGIN-BOTTOM: 0px; TEXT-INDENT: 4%"> <font style="FONT-FAMILY: Times New Roman" size="2">The Company classifies a restructuring activity as a program whereby the Company fundamentally changes its operations such as closing facilities, moving manufacturing of a product to another location or outsourcing the production of a product. Restructuring activities may also involve substantial re-alignment of the management structure of a business unit in response to changing market conditions. A liability for a cost associated with an exit or disposal activity is recognized and measured initially at its fair value in the period in which it is incurred except for a liability for a one-time termination benefit which is recognized over its future service period.</font></p> <p style="MARGIN-TOP: 18px; MARGIN-BOTTOM: 0px; MARGIN-LEFT: 2%"> <font style="FONT-FAMILY: Times New Roman" size="2"><b><i>Restructuring and Employee Severance</i></b></font></p> <p style="MARGIN-TOP: 6px; MARGIN-BOTTOM: 0px; TEXT-INDENT: 4%"> <font style="FONT-FAMILY: Times New Roman" size="2">Effective July&#xA0;1, 2008, the Company consolidated its businesses into two primary operating and reportable segments to reduce costs and align resources with the needs of each segment. The costs incurred related to this consolidation during the three months ended December&#xA0;31, 2008 were $(0.9) million and for the six months ended December&#xA0;31, 2009 and 2008 were $1.0 million and $17.2 million, respectively. In connection with the Spin-Off, these reportable segments have since been reorganized. Refer to Notes 1 and 14 for additional information regarding the Company&#x2019;s current reportable segments.</font></p> <p style="MARGIN-TOP: 12px; MARGIN-BOTTOM: 0px; TEXT-INDENT: 4%"> <font style="FONT-FAMILY: Times New Roman" size="2">Also, during fiscal 2009 and the first half of fiscal 2010, the Company incurred restructuring expenses related to the Spin-Off consisting of employee-related costs, costs to evaluate and execute the transaction, costs to separate certain functions and information technology systems and other one-time transaction related costs. The costs incurred related to this restructuring during the three months ended December&#xA0;31, 2009 and 2008 were $6.6 million and $12.7 million, respectively, and for the six months ended December&#xA0;31, 2009 and 2008 were $56.1 million and $13.0 million, respectively.</font></p> <p style="MARGIN-TOP: 12px; MARGIN-BOTTOM: 0px; TEXT-INDENT: 4%"> <font style="FONT-FAMILY: Times New Roman" size="2">In addition to the restructuring programs discussed above, from time to time the Company incurs costs to implement smaller restructuring efforts for specific operations within its segments. These restructuring plans focus on various aspects of operations, including closing and consolidating certain manufacturing and distribution operations, rationalizing headcount, and aligning operations in the most strategic and cost-efficient structure.</font></p> <p style="MARGIN-TOP: 0px; MARGIN-BOTTOM: 0px"><font size="1">&#xA0;</font></p> <p style="MARGIN-TOP: 0px; MARGIN-BOTTOM: 0px; TEXT-INDENT: 4%"> <font style="FONT-FAMILY: Times New Roman" size="2">The following table summarizes activity related to the Company&#x2019;s restructuring and employee severance costs during the three and six months ended December&#xA0;31, 2009 and 2008:</font></p> <p style="MARGIN-TOP: 0px; FONT-SIZE: 12px; MARGIN-BOTTOM: 0px"> &#xA0;</p> <table cellspacing="0" cellpadding="0" width="92%" align="center" border="0"> <tr> <td width="76%"></td> <td valign="bottom" width="3%"></td> <td></td> <td></td> <td valign="bottom" width="3%"></td> <td></td> <td></td> <td valign="bottom" width="3%"></td> <td></td> <td></td> <td valign="bottom" width="3%"></td> <td></td> <td></td> </tr> <tr> <td valign="bottom"><font size="1">&#xA0;</font></td> <td valign="bottom"><font size="1">&#xA0;&#xA0;</font></td> <td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" align="center" colspan="5"><font style="FONT-FAMILY: Times New Roman" size="1"><b>Three&#xA0;Months&#xA0;Ended<br /> December&#xA0;31,</b></font></td> <td valign="bottom"><font size="1">&#xA0;&#xA0;</font></td> <td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" align="center" colspan="5"><font style="FONT-FAMILY: Times New Roman" size="1"><b>Six&#xA0;Months&#xA0;Ended<br /> December&#xA0;31,</b></font></td> </tr> <tr> <td valign="bottom" nowrap="nowrap"> <p style="WIDTH: 40pt; BORDER-BOTTOM: #000000 1px solid"> <font style="FONT-FAMILY: Times New Roman" size="1"><b>(in millions)</b></font></p> </td> <td valign="bottom"><font size="1">&#xA0;&#xA0;</font></td> <td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" align="center" colspan="2"><font style="FONT-FAMILY: Times New Roman" size="1"><b>2009</b></font></td> <td valign="bottom"><font size="1">&#xA0;&#xA0;</font></td> <td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" align="center" colspan="2"><font style="FONT-FAMILY: Times New Roman" size="1"><b>2008</b></font></td> <td valign="bottom"><font size="1">&#xA0;&#xA0;</font></td> <td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" align="center" colspan="2"><font style="FONT-FAMILY: Times New Roman" size="1"><b>2009</b></font></td> <td valign="bottom"><font size="1">&#xA0;&#xA0;</font></td> <td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" align="center" colspan="2"><font style="FONT-FAMILY: Times New Roman" size="1"><b>2008</b></font></td> </tr> <tr bgcolor="#CCEEFF"> <td valign="top"> <p style="MARGIN-LEFT: 1em; TEXT-INDENT: -1em"><font style="FONT-FAMILY: Times New Roman" size="2">Employee related costs (1)</font></p> </td> <td valign="bottom"><font size="1">&#xA0;&#xA0;</font></td> <td valign="bottom"><font style="FONT-FAMILY: Times New Roman" size="2">$</font></td> <td valign="bottom" align="right"><font style="FONT-FAMILY: Times New Roman" size="2">2.1</font></td> <td valign="bottom"><font size="1">&#xA0;&#xA0;</font></td> <td valign="bottom"><font style="FONT-FAMILY: Times New Roman" size="2">$</font></td> <td valign="bottom" align="right"><font style="FONT-FAMILY: Times New Roman" size="2">0.1</font></td> <td valign="bottom"><font size="1">&#xA0;&#xA0;</font></td> <td valign="bottom"><font style="FONT-FAMILY: Times New Roman" size="2">$</font></td> <td valign="bottom" align="right"><font style="FONT-FAMILY: Times New Roman" size="2">29.2</font></td> <td valign="bottom"><font size="1">&#xA0;&#xA0;</font></td> <td valign="bottom"><font style="FONT-FAMILY: Times New Roman" size="2">$</font></td> <td valign="bottom" align="right"><font style="FONT-FAMILY: Times New Roman" size="2">21.1</font></td> </tr> <tr> <td valign="top"> <p style="MARGIN-LEFT: 1em; TEXT-INDENT: -1em"><font style="FONT-FAMILY: Times New Roman" size="2">Facility exit and other costs (2)</font></p> </td> <td valign="bottom"><font size="1">&#xA0;&#xA0;</font></td> <td valign="bottom"><font style="FONT-FAMILY: Times New Roman" size="2">&#xA0;</font></td> <td valign="bottom" align="right"><font style="FONT-FAMILY: Times New Roman" size="2">8.6</font></td> <td valign="bottom"><font size="1">&#xA0;&#xA0;</font></td> <td valign="bottom"><font style="FONT-FAMILY: Times New Roman" size="2">&#xA0;</font></td> <td valign="bottom" align="right"><font style="FONT-FAMILY: Times New Roman" size="2">16.8</font></td> <td valign="bottom"><font size="1">&#xA0;&#xA0;</font></td> <td valign="bottom"><font style="FONT-FAMILY: Times New Roman" size="2">&#xA0;</font></td> <td valign="bottom" align="right"><font style="FONT-FAMILY: Times New Roman" size="2">41.2</font></td> <td valign="bottom"><font size="1">&#xA0;&#xA0;</font></td> <td valign="bottom"><font style="FONT-FAMILY: Times New Roman" size="2">&#xA0;</font></td> <td valign="bottom" align="right"><font style="FONT-FAMILY: Times New Roman" size="2">16.5</font></td> </tr> <tr style="FONT-SIZE: 1px"> <td valign="bottom"></td> <td valign="bottom">&#xA0;&#xA0;</td> <td style="BORDER-TOP: #000000 1px solid" valign="bottom"> &#xA0;</td> <td style="BORDER-TOP: #000000 1px solid" valign="bottom"> &#xA0;</td> <td valign="bottom">&#xA0;&#xA0;</td> <td style="BORDER-TOP: #000000 1px solid" valign="bottom"> &#xA0;</td> <td style="BORDER-TOP: #000000 1px solid" valign="bottom"> &#xA0;</td> <td valign="bottom">&#xA0;&#xA0;</td> <td style="BORDER-TOP: #000000 1px solid" valign="bottom"> &#xA0;</td> <td style="BORDER-TOP: #000000 1px solid" valign="bottom"> &#xA0;</td> <td valign="bottom">&#xA0;&#xA0;</td> <td style="BORDER-TOP: #000000 1px solid" valign="bottom"> &#xA0;</td> <td style="BORDER-TOP: #000000 1px solid" valign="bottom"> &#xA0;</td> </tr> <tr bgcolor="#CCEEFF"> <td valign="top"> <p style="MARGIN-LEFT: 1em; TEXT-INDENT: -1em"><font style="FONT-FAMILY: Times New Roman" size="2">Total restructuring and employee severance</font></p> </td> <td valign="bottom"><font size="1">&#xA0;&#xA0;</font></td> <td valign="bottom"><font style="FONT-FAMILY: Times New Roman" size="2">$</font></td> <td valign="bottom" align="right"><font style="FONT-FAMILY: Times New Roman" size="2">10.7</font></td> <td valign="bottom"><font size="1">&#xA0;&#xA0;</font></td> <td valign="bottom"><font style="FONT-FAMILY: Times New Roman" size="2">$</font></td> <td valign="bottom" align="right"><font style="FONT-FAMILY: Times New Roman" size="2">16.9</font></td> <td valign="bottom"><font size="1">&#xA0;&#xA0;</font></td> <td valign="bottom"><font style="FONT-FAMILY: Times New Roman" size="2">$</font></td> <td valign="bottom" align="right"><font style="FONT-FAMILY: Times New Roman" size="2">70.4</font></td> <td valign="bottom"><font size="1">&#xA0;&#xA0;</font></td> <td valign="bottom"><font style="FONT-FAMILY: Times New Roman" size="2">$</font></td> <td valign="bottom" align="right"><font style="FONT-FAMILY: Times New Roman" size="2">37.6</font></td> </tr> <tr style="FONT-SIZE: 1px"> <td valign="bottom"></td> <td valign="bottom">&#xA0;&#xA0;</td> <td style="BORDER-TOP: #000000 1px solid" valign="bottom"> &#xA0;</td> <td style="BORDER-TOP: #000000 1px solid" valign="bottom"> &#xA0;</td> <td valign="bottom">&#xA0;&#xA0;</td> <td style="BORDER-TOP: #000000 1px solid" valign="bottom"> &#xA0;</td> <td style="BORDER-TOP: #000000 1px solid" valign="bottom"> &#xA0;</td> <td valign="bottom">&#xA0;&#xA0;</td> <td style="BORDER-TOP: #000000 1px solid" valign="bottom"> &#xA0;</td> <td style="BORDER-TOP: #000000 1px solid" valign="bottom"> &#xA0;</td> <td valign="bottom">&#xA0;&#xA0;</td> <td style="BORDER-TOP: #000000 1px solid" valign="bottom"> &#xA0;</td> <td style="BORDER-TOP: #000000 1px solid" valign="bottom"> &#xA0;</td> </tr> </table> <p style="MARGIN-TOP: 0px; MARGIN-BOTTOM: 2px; WIDTH: 10%; LINE-HEIGHT: 8px; BORDER-BOTTOM: #000000 0.5pt solid"> &#xA0;</p> <table style="BORDER-COLLAPSE: collapse" cellspacing="0" cellpadding="0" width="100%" border="0"> <tr> <td valign="top" align="left" width="4%"><font style="FONT-FAMILY: Times New Roman" size="2">(1)</font></td> <td valign="top" align="left"><font style="FONT-FAMILY: Times New Roman" size="2"><i><u>Employee-Related Costs</u>.</i>&#xA0;These costs primarily consist of one-time termination benefits provided to employees who have been involuntarily terminated and duplicate payroll costs during transition periods. In addition, during the six months ended December&#xA0;31, 2009, the Company incurred $18.6 million of costs related to the retirement of its former Chairman and Chief Executive Officer upon completion of the Spin-Off.</font></td> </tr> </table> <table style="BORDER-COLLAPSE: collapse" cellspacing="0" cellpadding="0" width="100%" border="0"> <tr> <td valign="top" align="left" width="4%"><font style="FONT-FAMILY: Times New Roman" size="2">(2)</font></td> <td valign="top" align="left"><font style="FONT-FAMILY: Times New Roman" size="2"><i><u>Facility Exit and Other Costs</u>.&#xA0;</i>Facility exit and other costs consist of accelerated depreciation, equipment relocation costs, project consulting fees and costs associated with restructuring the Company&#x2019;s delivery of information technology infrastructure services. In addition, facility exit and other costs include certain costs related to the Spin-Off such as costs to evaluate and execute the transaction, costs to separate certain functions and information technology systems and other one-time transaction related costs.</font></td> </tr> </table> <p style="MARGIN-TOP: 18px; MARGIN-BOTTOM: 0px; MARGIN-LEFT: 2%"> <font style="FONT-FAMILY: Times New Roman" size="2"><b><i>Restructuring and Employee Severance Accrual Rollforward</i></b></font></p> <p style="MARGIN-TOP: 6px; MARGIN-BOTTOM: 0px; TEXT-INDENT: 4%"> <font style="FONT-FAMILY: Times New Roman" size="2">The following table summarizes activity related to liabilities associated with the Company&#x2019;s restructuring and employee severance activities during the six months ended December&#xA0;31, 2009:</font></p> <p style="MARGIN-TOP: 0px; FONT-SIZE: 12px; MARGIN-BOTTOM: 0px"> &#xA0;</p> <table cellspacing="0" cellpadding="0" width="84%" align="center" border="0"> <tr> <td width="61%"></td> <td valign="bottom" width="10%"></td> <td></td> <td></td> <td></td> <td valign="bottom" width="10%"></td> <td></td> <td></td> <td></td> <td valign="bottom" width="10%"></td> <td></td> <td></td> <td></td> </tr> <tr> <td valign="bottom" nowrap="nowrap"> <p style="WIDTH: 40pt; BORDER-BOTTOM: #000000 1px solid"> <font style="FONT-FAMILY: Times New Roman" size="1"><b>(in millions)</b></font></p> </td> <td valign="bottom"><font size="1">&#xA0;&#xA0;</font></td> <td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" align="center" colspan="2"><font style="FONT-FAMILY: Times New Roman" size="1"><b>Employee&#xA0;Related<br /> Costs</b></font></td> <td valign="bottom"><font size="1">&#xA0;</font></td> <td valign="bottom"><font size="1">&#xA0;</font></td> <td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" align="center" colspan="2"><font style="FONT-FAMILY: Times New Roman" size="1"><b>Facility&#xA0;Exit&#xA0;and<br /> Other Costs</b></font></td> <td valign="bottom"><font size="1">&#xA0;</font></td> <td valign="bottom"><font size="1">&#xA0;</font></td> <td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" align="center" colspan="2"><font style="FONT-FAMILY: Times New Roman" size="1"><b>Total</b></font></td> <td valign="bottom"><font size="1">&#xA0;</font></td> </tr> <tr bgcolor="#CCEEFF"> <td valign="top"> <p style="MARGIN-LEFT: 1em; TEXT-INDENT: -1em"><font style="FONT-FAMILY: Times New Roman" size="2">Balance at June&#xA0;30, 2009 (1)</font></p> </td> <td valign="bottom"><font size="1">&#xA0;&#xA0;</font></td> <td valign="bottom"><font style="FONT-FAMILY: Times New Roman" size="2">$</font></td> <td valign="bottom" align="right"><font style="FONT-FAMILY: Times New Roman" size="2">14.0</font></td> <td valign="bottom" nowrap="nowrap"><font style="FONT-FAMILY: Times New Roman" size="2">&#xA0;&#xA0;</font></td> <td valign="bottom"><font size="1">&#xA0;</font></td> <td valign="bottom"><font style="FONT-FAMILY: Times New Roman" size="2">$</font></td> <td valign="bottom" align="right"><font style="FONT-FAMILY: Times New Roman" size="2">17.2</font></td> <td valign="bottom" nowrap="nowrap"><font style="FONT-FAMILY: Times New Roman" size="2">&#xA0;&#xA0;</font></td> <td valign="bottom"><font size="1">&#xA0;</font></td> <td valign="bottom"><font style="FONT-FAMILY: Times New Roman" size="2">$</font></td> <td valign="bottom" align="right"><font style="FONT-FAMILY: Times New Roman" size="2">31.2</font></td> <td valign="bottom" nowrap="nowrap"><font style="FONT-FAMILY: Times New Roman" size="2">&#xA0;&#xA0;</font></td> </tr> <tr> <td valign="top"> <p style="MARGIN-LEFT: 1em; TEXT-INDENT: -1em"><font style="FONT-FAMILY: Times New Roman" size="2">Additions</font></p> </td> <td valign="bottom"><font size="1">&#xA0;&#xA0;</font></td> <td valign="bottom"><font style="FONT-FAMILY: Times New Roman" size="2">&#xA0;</font></td> <td valign="bottom" align="right"><font style="FONT-FAMILY: Times New Roman" size="2">29.2</font></td> <td valign="bottom" nowrap="nowrap"><font style="FONT-FAMILY: Times New Roman" size="2">&#xA0;&#xA0;</font></td> <td valign="bottom"><font size="1">&#xA0;</font></td> <td valign="bottom"><font style="FONT-FAMILY: Times New Roman" size="2">&#xA0;</font></td> <td valign="bottom" align="right"><font style="FONT-FAMILY: Times New Roman" size="2">41.2</font></td> <td valign="bottom" nowrap="nowrap"><font style="FONT-FAMILY: Times New Roman" size="2">&#xA0;&#xA0;</font></td> <td valign="bottom"><font size="1">&#xA0;</font></td> <td valign="bottom"><font style="FONT-FAMILY: Times New Roman" size="2">&#xA0;</font></td> <td valign="bottom" align="right"><font style="FONT-FAMILY: Times New Roman" size="2">70.4</font></td> <td valign="bottom" nowrap="nowrap"><font style="FONT-FAMILY: Times New Roman" size="2">&#xA0;&#xA0;</font></td> </tr> <tr bgcolor="#CCEEFF"> <td valign="top"> <p style="MARGIN-LEFT: 1em; TEXT-INDENT: -1em"><font style="FONT-FAMILY: Times New Roman" size="2">Payments and other adjustments</font></p> </td> <td valign="bottom"><font size="1">&#xA0;&#xA0;</font></td> <td valign="bottom"><font style="FONT-FAMILY: Times New Roman" size="2">&#xA0;</font></td> <td valign="bottom" align="right"><font style="FONT-FAMILY: Times New Roman" size="2">(25.8</font></td> <td valign="bottom" nowrap="nowrap"><font style="FONT-FAMILY: Times New Roman" size="2">)&#xA0;</font></td> <td valign="bottom"><font size="1">&#xA0;</font></td> <td valign="bottom"><font style="FONT-FAMILY: Times New Roman" size="2">&#xA0;</font></td> <td valign="bottom" align="right"><font style="FONT-FAMILY: Times New Roman" size="2">(44.7</font></td> <td valign="bottom" nowrap="nowrap"><font style="FONT-FAMILY: Times New Roman" size="2">)&#xA0;</font></td> <td valign="bottom"><font size="1">&#xA0;</font></td> <td valign="bottom"><font style="FONT-FAMILY: Times New Roman" size="2">&#xA0;</font></td> <td valign="bottom" align="right"><font style="FONT-FAMILY: Times New Roman" size="2">(70.5</font></td> <td valign="bottom" nowrap="nowrap"><font style="FONT-FAMILY: Times New Roman" size="2">)&#xA0;</font></td> </tr> <tr style="FONT-SIZE: 1px"> <td valign="bottom"></td> <td valign="bottom">&#xA0;&#xA0;</td> <td style="BORDER-TOP: #000000 1px solid" valign="bottom"> &#xA0;</td> <td style="BORDER-TOP: #000000 1px solid" valign="bottom"> &#xA0;</td> <td>&#xA0;</td> <td valign="bottom">&#xA0;</td> <td style="BORDER-TOP: #000000 1px solid" valign="bottom"> &#xA0;</td> <td style="BORDER-TOP: #000000 1px solid" valign="bottom"> &#xA0;</td> <td>&#xA0;</td> <td valign="bottom">&#xA0;</td> <td style="BORDER-TOP: #000000 1px solid" valign="bottom"> &#xA0;</td> <td style="BORDER-TOP: #000000 1px solid" valign="bottom"> &#xA0;</td> <td>&#xA0;</td> </tr> <tr> <td valign="top"> <p style="MARGIN-LEFT: 1em; TEXT-INDENT: -1em"><font style="FONT-FAMILY: Times New Roman" size="2">Balance at December&#xA0;31, 2009 (1)</font></p> </td> <td valign="bottom"><font size="1">&#xA0;&#xA0;</font></td> <td valign="bottom"><font style="FONT-FAMILY: Times New Roman" size="2">$</font></td> <td valign="bottom" align="right"><font style="FONT-FAMILY: Times New Roman" size="2">17.4</font></td> <td valign="bottom" nowrap="nowrap"><font style="FONT-FAMILY: Times New Roman" size="2">&#xA0;&#xA0;</font></td> <td valign="bottom"><font size="1">&#xA0;</font></td> <td valign="bottom"><font style="FONT-FAMILY: Times New Roman" size="2">$</font></td> <td valign="bottom" align="right"><font style="FONT-FAMILY: Times New Roman" size="2">13.7</font></td> <td valign="bottom" nowrap="nowrap"><font style="FONT-FAMILY: Times New Roman" size="2">&#xA0;&#xA0;</font></td> <td valign="bottom"><font size="1">&#xA0;</font></td> <td valign="bottom"><font style="FONT-FAMILY: Times New Roman" size="2">$</font></td> <td valign="bottom" align="right"><font style="FONT-FAMILY: Times New Roman" size="2">31.1</font></td> <td valign="bottom" nowrap="nowrap"><font style="FONT-FAMILY: Times New Roman" size="2">&#xA0;&#xA0;</font></td> </tr> <tr style="FONT-SIZE: 1px"> <td valign="bottom"></td> <td valign="bottom">&#xA0;&#xA0;</td> <td style="BORDER-TOP: #000000 1px solid" valign="bottom"> &#xA0;</td> <td style="BORDER-TOP: #000000 1px solid" valign="bottom"> &#xA0;</td> <td>&#xA0;</td> <td valign="bottom">&#xA0;</td> <td style="BORDER-TOP: #000000 1px solid" valign="bottom"> &#xA0;</td> <td style="BORDER-TOP: #000000 1px solid" valign="bottom"> &#xA0;</td> <td>&#xA0;</td> <td valign="bottom">&#xA0;</td> <td style="BORDER-TOP: #000000 1px solid" valign="bottom"> &#xA0;</td> <td style="BORDER-TOP: #000000 1px solid" valign="bottom"> &#xA0;</td> <td>&#xA0;</td> </tr> </table> <p style="MARGIN-TOP: 0px; MARGIN-BOTTOM: 2px; WIDTH: 10%; LINE-HEIGHT: 8px; BORDER-BOTTOM: #000000 0.5pt solid"> &#xA0;</p> <table style="BORDER-COLLAPSE: collapse" cellspacing="0" cellpadding="0" width="100%" border="0"> <tr> <td valign="top" align="left" width="4%"><font style="FONT-FAMILY: Times New Roman" size="2">(1)</font></td> <td valign="top" align="left"><font style="FONT-FAMILY: Times New Roman" size="2">Included within employee related costs are accruals of $6.3 million and $10.6 million at June&#xA0;30, 2009 and December&#xA0;31, 2009, respectively, related to the Spin-Off. Included within facility exit and other costs are accruals of $11.7 million and $5.9 million at June 30, 2009 and December 31, 2009, respectively, related to the Spin-Off.</font></td> </tr> </table> </div> <div> <p style="MARGIN-TOP: 18px; MARGIN-BOTTOM: 0px"><font style="FONT-FAMILY: Times New Roman" size="2"><b>14. SEGMENT INFORMATION</b></font></p> <p style="MARGIN-TOP: 6px; MARGIN-BOTTOM: 0px; TEXT-INDENT: 4%"> <font style="FONT-FAMILY: Times New Roman" size="2">The Company&#x2019;s operations are principally managed on a products and services basis. In connection with the Spin-Off, the Company reorganized its businesses into two reportable segments - Pharmaceutical and Medical. The factors for determining the reportable segments include the manner in which management evaluates the performance of the Company combined with the nature of the individual business activities.</font></p> <p style="MARGIN-TOP: 0px; MARGIN-BOTTOM: 0px"><font size="1">&#xA0;</font></p> <p style="MARGIN-TOP: 0px; MARGIN-BOTTOM: 0px; TEXT-INDENT: 4%"> <font style="FONT-FAMILY: Times New Roman" size="2">The Pharmaceutical segment distributes pharmaceutical products, over-the-counter healthcare products and consumer health products and provides support services to retail customers, hospitals and alternate care providers in the United States and Puerto Rico. It also provides services to branded pharmaceutical manufacturers and operates a pharmaceutical repackaging and distribution program. In addition, this segment operates centralized nuclear (radiopharmaceutical) pharmacies, provides third-party logistics support services and distributes therapeutic plasma to hospitals, clinics and other providers located in the United States. It also franchises apothecary-style retail pharmacies through its Medicine Shoppe International, Inc. and Medicap Pharmacies Incorporated franchise systems. Finally, it provides pharmacy management services to hospitals and other healthcare facilities.</font></p> <p style="MARGIN-TOP: 12px; MARGIN-BOTTOM: 0px; TEXT-INDENT: 4%"> <font style="FONT-FAMILY: Times New Roman" size="2">The Medical segment develops, manufactures and distributes medical and surgical products including sterile and non-sterile procedure kits to hospitals, surgery centers, laboratories, physician offices and other healthcare providers in the United States, Canada and Puerto Rico. The medical and surgical products manufactured by the business, including single-use surgical drapes, gowns and apparel, exam and surgical gloves and fluid suction and collection systems, are also sold in various regions of the world outside of the United States, including countries in North America, Europe, and Asia.</font></p> <p style="MARGIN-TOP: 12px; MARGIN-BOTTOM: 0px; TEXT-INDENT: 4%"> <font style="FONT-FAMILY: Times New Roman" size="2">The following table includes revenue for each reportable segment and reconciling items necessary to agree to amounts reported in the condensed consolidated financial statements:</font></p> <p style="MARGIN-TOP: 0px; FONT-SIZE: 12px; MARGIN-BOTTOM: 0px"> &#xA0;</p> <table cellspacing="0" cellpadding="0" width="92%" align="center" border="0"> <tr> <td width="60%"></td> <td valign="bottom" width="4%"></td> <td></td> <td></td> <td></td> <td valign="bottom" width="4%"></td> <td></td> <td></td> <td></td> <td valign="bottom" width="4%"></td> <td></td> <td></td> <td></td> <td valign="bottom" width="4%"></td> <td></td> <td></td> <td></td> </tr> <tr> <td valign="bottom"><font size="1">&#xA0;</font></td> <td valign="bottom"><font size="1">&#xA0;&#xA0;</font></td> <td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" align="center" colspan="6"><font style="FONT-FAMILY: Times New Roman" size="1"><b>Three Months Ended<br /> December&#xA0;31,</b></font></td> <td valign="bottom"><font size="1">&#xA0;</font></td> <td valign="bottom"><font size="1">&#xA0;</font></td> <td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" align="center" colspan="6"><font style="FONT-FAMILY: Times New Roman" size="1"><b>Six Months Ended<br /> December&#xA0;31,</b></font></td> <td valign="bottom"><font size="1">&#xA0;</font></td> </tr> <tr> <td valign="bottom" nowrap="nowrap"> <p style="WIDTH: 40pt; BORDER-BOTTOM: #000000 1px solid"> <font style="FONT-FAMILY: Times New Roman" size="1"><b>(in millions)</b></font></p> </td> <td valign="bottom"><font size="1">&#xA0;&#xA0;</font></td> <td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" align="center" colspan="2"><font style="FONT-FAMILY: Times New Roman" size="1"><b>2009</b></font></td> <td valign="bottom"><font size="1">&#xA0;</font></td> <td valign="bottom"><font size="1">&#xA0;</font></td> <td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" align="center" colspan="2"><font style="FONT-FAMILY: Times New Roman" size="1"><b>2008</b></font></td> <td valign="bottom"><font size="1">&#xA0;</font></td> <td valign="bottom"><font size="1">&#xA0;</font></td> <td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" align="center" colspan="2"><font style="FONT-FAMILY: Times New Roman" size="1"><b>2009</b></font></td> <td valign="bottom"><font size="1">&#xA0;</font></td> <td valign="bottom"><font size="1">&#xA0;</font></td> <td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" align="center" colspan="2"><font style="FONT-FAMILY: Times New Roman" size="1"><b>2008</b></font></td> <td valign="bottom"><font size="1">&#xA0;</font></td> </tr> <tr bgcolor="#CCEEFF"> <td valign="top"> <p style="MARGIN-LEFT: 1em; TEXT-INDENT: -1em"><font style="FONT-FAMILY: Times New Roman" size="2">Segment revenue:</font></p> </td> <td valign="bottom"><font size="1">&#xA0;&#xA0;</font></td> <td valign="bottom"></td> <td valign="bottom"></td> <td valign="bottom"></td> <td valign="bottom"><font size="1">&#xA0;</font></td> <td valign="bottom"></td> <td valign="bottom"></td> <td valign="bottom"></td> <td valign="bottom"><font size="1">&#xA0;</font></td> <td valign="bottom"></td> <td valign="bottom"></td> <td valign="bottom"></td> <td valign="bottom"><font size="1">&#xA0;</font></td> <td valign="bottom"></td> <td valign="bottom"></td> <td valign="bottom"></td> </tr> <tr> <td valign="top"> <p style="MARGIN-LEFT: 3em; TEXT-INDENT: -1em"><font style="FONT-FAMILY: Times New Roman" size="2">Pharmaceutical (1)</font></p> </td> <td valign="bottom"><font size="1">&#xA0;&#xA0;</font></td> <td valign="bottom"><font style="FONT-FAMILY: Times New Roman" size="2">$</font></td> <td valign="bottom" align="right"><font style="FONT-FAMILY: Times New Roman" size="2">22,694.7</font></td> <td valign="bottom" nowrap="nowrap"><font style="FONT-FAMILY: Times New Roman" size="2">&#xA0;&#xA0;</font></td> <td valign="bottom"><font size="1">&#xA0;</font></td> <td valign="bottom"><font style="FONT-FAMILY: Times New Roman" size="2">$</font></td> <td valign="bottom" align="right"><font style="FONT-FAMILY: Times New Roman" size="2">22,078.7</font></td> <td valign="bottom" nowrap="nowrap"><font style="FONT-FAMILY: Times New Roman" size="2">&#xA0;&#xA0;</font></td> <td valign="bottom"><font size="1">&#xA0;</font></td> <td valign="bottom"><font style="FONT-FAMILY: Times New Roman" size="2">$</font></td> <td valign="bottom" align="right"><font style="FONT-FAMILY: Times New Roman" size="2">45,257.0</font></td> <td valign="bottom" nowrap="nowrap"><font style="FONT-FAMILY: Times New Roman" size="2">&#xA0;&#xA0;</font></td> <td valign="bottom"><font size="1">&#xA0;</font></td> <td valign="bottom"><font style="FONT-FAMILY: Times New Roman" size="2">$</font></td> <td valign="bottom" align="right"><font style="FONT-FAMILY: Times New Roman" size="2">43,482.8</font></td> <td valign="bottom" nowrap="nowrap"><font style="FONT-FAMILY: Times New Roman" size="2">&#xA0;&#xA0;</font></td> </tr> <tr bgcolor="#CCEEFF"> <td valign="top"> <p style="MARGIN-LEFT: 3em; TEXT-INDENT: -1em"><font style="FONT-FAMILY: Times New Roman" size="2">Medical (2)</font></p> </td> <td valign="bottom"><font size="1">&#xA0;&#xA0;</font></td> <td valign="bottom"><font style="FONT-FAMILY: Times New Roman" size="2">&#xA0;</font></td> <td valign="bottom" align="right"><font style="FONT-FAMILY: Times New Roman" size="2">2,232.4</font></td> <td valign="bottom" nowrap="nowrap"><font style="FONT-FAMILY: Times New Roman" size="2">&#xA0;&#xA0;</font></td> <td valign="bottom"><font size="1">&#xA0;</font></td> <td valign="bottom"><font style="FONT-FAMILY: Times New Roman" size="2">&#xA0;</font></td> <td valign="bottom" align="right"><font style="FONT-FAMILY: Times New Roman" size="2">2,057.3</font></td> <td valign="bottom" nowrap="nowrap"><font style="FONT-FAMILY: Times New Roman" size="2">&#xA0;&#xA0;</font></td> <td valign="bottom"><font size="1">&#xA0;</font></td> <td valign="bottom"><font style="FONT-FAMILY: Times New Roman" size="2">&#xA0;</font></td> <td valign="bottom" align="right"><font style="FONT-FAMILY: Times New Roman" size="2">4,469.4</font></td> <td valign="bottom" nowrap="nowrap"><font style="FONT-FAMILY: Times New Roman" size="2">&#xA0;&#xA0;</font></td> <td valign="bottom"><font size="1">&#xA0;</font></td> <td valign="bottom"><font style="FONT-FAMILY: Times New Roman" size="2">&#xA0;</font></td> <td valign="bottom" align="right"><font style="FONT-FAMILY: Times New Roman" size="2">4,094.0</font></td> <td valign="bottom" nowrap="nowrap"><font style="FONT-FAMILY: Times New Roman" size="2">&#xA0;&#xA0;</font></td> </tr> <tr style="FONT-SIZE: 1px"> <td valign="bottom"></td> <td valign="bottom">&#xA0;&#xA0;</td> <td style="BORDER-TOP: #000000 1px solid" valign="bottom"> &#xA0;</td> <td style="BORDER-TOP: #000000 1px solid" valign="bottom"> &#xA0;</td> <td>&#xA0;</td> <td valign="bottom">&#xA0;</td> <td style="BORDER-TOP: #000000 1px solid" valign="bottom"> &#xA0;</td> <td style="BORDER-TOP: #000000 1px solid" valign="bottom"> &#xA0;</td> <td>&#xA0;</td> <td valign="bottom">&#xA0;</td> <td style="BORDER-TOP: #000000 1px solid" valign="bottom"> &#xA0;</td> <td style="BORDER-TOP: #000000 1px solid" valign="bottom"> &#xA0;</td> <td>&#xA0;</td> <td valign="bottom">&#xA0;</td> <td style="BORDER-TOP: #000000 1px solid" valign="bottom"> &#xA0;</td> <td style="BORDER-TOP: #000000 1px solid" valign="bottom"> &#xA0;</td> <td>&#xA0;</td> </tr> <tr> <td valign="top"> <p style="MARGIN-LEFT: 5em; TEXT-INDENT: -1em"><font style="FONT-FAMILY: Times New Roman" size="2">Total segment revenue</font></p> </td> <td valign="bottom"><font size="1">&#xA0;&#xA0;</font></td> <td valign="bottom"><font style="FONT-FAMILY: Times New Roman" size="2">&#xA0;</font></td> <td valign="bottom" align="right"><font style="FONT-FAMILY: Times New Roman" size="2">24,927.1</font></td> <td valign="bottom" nowrap="nowrap"><font style="FONT-FAMILY: Times New Roman" size="2">&#xA0;&#xA0;</font></td> <td valign="bottom"><font size="1">&#xA0;</font></td> <td valign="bottom"><font style="FONT-FAMILY: Times New Roman" size="2">&#xA0;</font></td> <td valign="bottom" align="right"><font style="FONT-FAMILY: Times New Roman" size="2">24,136.0</font></td> <td valign="bottom" nowrap="nowrap"><font style="FONT-FAMILY: Times New Roman" size="2">&#xA0;&#xA0;</font></td> <td valign="bottom"><font size="1">&#xA0;</font></td> <td valign="bottom"><font style="FONT-FAMILY: Times New Roman" size="2">&#xA0;</font></td> <td valign="bottom" align="right"><font style="FONT-FAMILY: Times New Roman" size="2">49,726.4</font></td> <td valign="bottom" nowrap="nowrap"><font style="FONT-FAMILY: Times New Roman" size="2">&#xA0;&#xA0;</font></td> <td valign="bottom"><font size="1">&#xA0;</font></td> <td valign="bottom"><font style="FONT-FAMILY: Times New Roman" size="2">&#xA0;</font></td> <td valign="bottom" align="right"><font style="FONT-FAMILY: Times New Roman" size="2">47,576.8</font></td> <td valign="bottom" nowrap="nowrap"><font style="FONT-FAMILY: Times New Roman" size="2">&#xA0;&#xA0;</font></td> </tr> <tr bgcolor="#CCEEFF"> <td valign="top"> <p style="MARGIN-LEFT: 3em; TEXT-INDENT: -1em"><font style="FONT-FAMILY: Times New Roman" size="2">Corporate (3)</font></p> </td> <td valign="bottom"><font size="1">&#xA0;&#xA0;</font></td> <td valign="bottom"><font style="FONT-FAMILY: Times New Roman" size="2">&#xA0;</font></td> <td valign="bottom" align="right"><font style="FONT-FAMILY: Times New Roman" size="2">(7.4</font></td> <td valign="bottom" nowrap="nowrap"><font style="FONT-FAMILY: Times New Roman" size="2">)&#xA0;</font></td> <td valign="bottom"><font size="1">&#xA0;</font></td> <td valign="bottom"><font style="FONT-FAMILY: Times New Roman" size="2">&#xA0;</font></td> <td valign="bottom" align="right"><font style="FONT-FAMILY: Times New Roman" size="2">(18.2</font></td> <td valign="bottom" nowrap="nowrap"><font style="FONT-FAMILY: Times New Roman" size="2">)&#xA0;</font></td> <td valign="bottom"><font size="1">&#xA0;</font></td> <td valign="bottom"><font style="FONT-FAMILY: Times New Roman" size="2">&#xA0;</font></td> <td valign="bottom" align="right"><font style="FONT-FAMILY: Times New Roman" size="2">(26.0</font></td> <td valign="bottom" nowrap="nowrap"><font style="FONT-FAMILY: Times New Roman" size="2">)&#xA0;</font></td> <td valign="bottom"><font size="1">&#xA0;</font></td> <td valign="bottom"><font style="FONT-FAMILY: Times New Roman" size="2">&#xA0;</font></td> <td valign="bottom" align="right"><font style="FONT-FAMILY: Times New Roman" size="2">(21.9</font></td> <td valign="bottom" nowrap="nowrap"><font style="FONT-FAMILY: Times New Roman" size="2">)&#xA0;</font></td> </tr> <tr style="FONT-SIZE: 1px"> <td valign="bottom"></td> <td valign="bottom">&#xA0;&#xA0;</td> <td style="BORDER-TOP: #000000 1px solid" valign="bottom"> &#xA0;</td> <td style="BORDER-TOP: #000000 1px solid" valign="bottom"> &#xA0;</td> <td>&#xA0;</td> <td valign="bottom">&#xA0;</td> <td style="BORDER-TOP: #000000 1px solid" valign="bottom"> &#xA0;</td> <td style="BORDER-TOP: #000000 1px solid" valign="bottom"> &#xA0;</td> <td>&#xA0;</td> <td valign="bottom">&#xA0;</td> <td style="BORDER-TOP: #000000 1px solid" valign="bottom"> &#xA0;</td> <td style="BORDER-TOP: #000000 1px solid" valign="bottom"> &#xA0;</td> <td>&#xA0;</td> <td valign="bottom">&#xA0;</td> <td style="BORDER-TOP: #000000 1px solid" valign="bottom"> &#xA0;</td> <td style="BORDER-TOP: #000000 1px solid" valign="bottom"> &#xA0;</td> <td>&#xA0;</td> </tr> <tr> <td valign="top"> <p style="MARGIN-LEFT: 1em; TEXT-INDENT: -1em"><font style="FONT-FAMILY: Times New Roman" size="2">Total consolidated revenue</font></p> </td> <td valign="bottom"><font size="1">&#xA0;&#xA0;</font></td> <td valign="bottom"><font style="FONT-FAMILY: Times New Roman" size="2">$</font></td> <td valign="bottom" align="right"><font style="FONT-FAMILY: Times New Roman" size="2">24,919.7</font></td> <td valign="bottom" nowrap="nowrap"><font style="FONT-FAMILY: Times New Roman" size="2">&#xA0;&#xA0;</font></td> <td valign="bottom"><font size="1">&#xA0;</font></td> <td valign="bottom"><font style="FONT-FAMILY: Times New Roman" size="2">$</font></td> <td valign="bottom" align="right"><font style="FONT-FAMILY: Times New Roman" size="2">24,117.8</font></td> <td valign="bottom" nowrap="nowrap"><font style="FONT-FAMILY: Times New Roman" size="2">&#xA0;&#xA0;</font></td> <td valign="bottom"><font size="1">&#xA0;</font></td> <td valign="bottom"><font style="FONT-FAMILY: Times New Roman" size="2">$</font></td> <td valign="bottom" align="right"><font style="FONT-FAMILY: Times New Roman" size="2">49,700.4</font></td> <td valign="bottom" nowrap="nowrap"><font style="FONT-FAMILY: Times New Roman" size="2">&#xA0;&#xA0;</font></td> <td valign="bottom"><font size="1">&#xA0;</font></td> <td valign="bottom"><font style="FONT-FAMILY: Times New Roman" size="2">$</font></td> <td valign="bottom" align="right"><font style="FONT-FAMILY: Times New Roman" size="2">47,554.9</font></td> <td valign="bottom" nowrap="nowrap"><font style="FONT-FAMILY: Times New Roman" size="2">&#xA0;&#xA0;</font></td> </tr> <tr style="FONT-SIZE: 1px"> <td valign="bottom"></td> <td valign="bottom">&#xA0;&#xA0;</td> <td style="BORDER-TOP: #000000 3px double" valign="bottom"> &#xA0;</td> <td style="BORDER-TOP: #000000 3px double" valign="bottom"> &#xA0;</td> <td>&#xA0;</td> <td valign="bottom">&#xA0;</td> <td style="BORDER-TOP: #000000 3px double" valign="bottom"> &#xA0;</td> <td style="BORDER-TOP: #000000 3px double" valign="bottom"> &#xA0;</td> <td>&#xA0;</td> <td valign="bottom">&#xA0;</td> <td style="BORDER-TOP: #000000 3px double" valign="bottom"> &#xA0;</td> <td style="BORDER-TOP: #000000 3px double" valign="bottom"> &#xA0;</td> <td>&#xA0;</td> <td valign="bottom">&#xA0;</td> <td style="BORDER-TOP: #000000 3px double" valign="bottom"> &#xA0;</td> <td style="BORDER-TOP: #000000 3px double" valign="bottom"> &#xA0;</td> <td>&#xA0;</td> </tr> </table> <p style="MARGIN-TOP: 0px; MARGIN-BOTTOM: 2px; WIDTH: 10%; LINE-HEIGHT: 8px; BORDER-BOTTOM: #000000 0.5pt solid"> &#xA0;</p> <table style="BORDER-COLLAPSE: collapse" cellspacing="0" cellpadding="0" width="100%" border="0"> <tr> <td valign="top" align="left" width="4%"><font style="FONT-FAMILY: Times New Roman" size="2">(1)</font></td> <td valign="top" align="left"><font style="FONT-FAMILY: Times New Roman" size="2">The Pharmaceutical segment&#x2019;s revenue is derived from the distribution of pharmaceutical, radiopharmaceutical and over-the-counter healthcare products.</font></td> </tr> </table> <table style="BORDER-COLLAPSE: collapse" cellspacing="0" cellpadding="0" width="100%" border="0"> <tr> <td valign="top" align="left" width="4%"><font style="FONT-FAMILY: Times New Roman" size="2">(2)</font></td> <td valign="top" align="left"><font style="FONT-FAMILY: Times New Roman" size="2">The Medical segment&#x2019;s revenue is derived from the manufacturing and distribution of medical, surgical and laboratory products and medical procedure kits.</font></td> </tr> </table> <table style="BORDER-COLLAPSE: collapse" cellspacing="0" cellpadding="0" width="100%" border="0"> <tr> <td valign="top" align="left" width="4%"><font style="FONT-FAMILY: Times New Roman" size="2">(3)</font></td> <td valign="top" align="left"><font style="FONT-FAMILY: Times New Roman" size="2">Corporate revenue consists of the elimination of inter-segment revenue.</font></td> </tr> </table> <p style="MARGIN-TOP: 12px; MARGIN-BOTTOM: 0px; TEXT-INDENT: 4%"> <font style="FONT-FAMILY: Times New Roman" size="2">The Company evaluates the performance of the segments based upon, among other things, segment profit. Segment profit is segment revenue less segment cost of products sold, less segment distribution, selling, general and administrative expense (&#x201C;SG&amp;A&#x201D;). Segment SG&amp;A expense includes equity compensation expense as well as allocated corporate expenses for shared functions, including corporate management, corporate finance, financial shared services, human resources, information technology, legal and an integrated hospital sales organization. Corporate expenses are allocated to the segments based upon headcount, level of benefit provided and ratable allocation. Information about interest income and expense and income taxes is not provided at the segment level. In addition, restructuring and employee severance, impairments and loss on sale of assets, litigation (credits)/charges, net and certain investment spending are not allocated to the segments. Investment spending generally includes the first year spend for certain projects which require incremental strategic investments in the form of additional operating expenses. The Company urges its segments to identify investment projects which will encourage innovation and provide future returns. As approval decisions for such projects are dependent upon executive management, the expenses for such projects are retained at Corporate. See Notes&#xA0;2 and 3, respectively, for further discussion of the Company&#x2019;s restructuring and employee severance and impairments and loss on sale of assets. The accounting policies of the segments are the same as those described in Note 1.</font></p> <p style="MARGIN-TOP: 12px; MARGIN-BOTTOM: 0px; TEXT-INDENT: 4%"> <font style="FONT-FAMILY: Times New Roman" size="2">The following table includes segment profit by reportable segment and reconciling items necessary to agree to amounts reported in the condensed consolidated financial statements:</font></p> <p style="MARGIN-TOP: 0px; FONT-SIZE: 12px; MARGIN-BOTTOM: 0px"> &#xA0;</p> <table cellspacing="0" cellpadding="0" width="92%" align="center" border="0"> <tr> <td width="72%"></td> <td valign="bottom" width="3%"></td> <td></td> <td></td> <td valign="bottom" width="3%"></td> <td></td> <td></td> <td valign="bottom" width="3%"></td> <td></td> <td></td> <td valign="bottom" width="3%"></td> <td></td> <td></td> </tr> <tr> <td valign="bottom"><font size="1">&#xA0;</font></td> <td valign="bottom"><font size="1">&#xA0;&#xA0;</font></td> <td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" align="center" colspan="5"><font style="FONT-FAMILY: Times New Roman" size="1"><b>Three&#xA0;Months&#xA0;Ended<br /> December&#xA0;31,</b></font></td> <td valign="bottom"><font size="1">&#xA0;&#xA0;</font></td> <td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" align="center" colspan="5"><font style="FONT-FAMILY: Times New Roman" size="1"><b>Six&#xA0;Months&#xA0;Ended<br /> December&#xA0;31,</b></font></td> </tr> <tr> <td valign="bottom" nowrap="nowrap"> <p style="WIDTH: 40pt; BORDER-BOTTOM: #000000 1px solid"> <font style="FONT-FAMILY: Times New Roman" size="1"><b>(in millions)</b></font></p> </td> <td valign="bottom"><font size="1">&#xA0;&#xA0;</font></td> <td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" align="center" colspan="2"><font style="FONT-FAMILY: Times New Roman" size="1"><b>2009</b></font></td> <td valign="bottom"><font size="1">&#xA0;&#xA0;</font></td> <td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" align="center" colspan="2"><font style="FONT-FAMILY: Times New Roman" size="1"><b>2008</b></font></td> <td valign="bottom"><font size="1">&#xA0;&#xA0;</font></td> <td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" align="center" colspan="2"><font style="FONT-FAMILY: Times New Roman" size="1"><b>2009</b></font></td> <td valign="bottom"><font size="1">&#xA0;&#xA0;</font></td> <td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" align="center" colspan="2"><font style="FONT-FAMILY: Times New Roman" size="1"><b>2008</b></font></td> </tr> <tr bgcolor="#CCEEFF"> <td valign="top"> <p style="MARGIN-LEFT: 1em; TEXT-INDENT: -1em"><font style="FONT-FAMILY: Times New Roman" size="2">Segment profit:</font></p> </td> <td valign="bottom"><font size="1">&#xA0;&#xA0;</font></td> <td valign="bottom"></td> <td valign="bottom"></td> <td valign="bottom"><font size="1">&#xA0;&#xA0;</font></td> <td valign="bottom"></td> <td valign="bottom"></td> <td valign="bottom"><font size="1">&#xA0;&#xA0;</font></td> <td valign="bottom"></td> <td valign="bottom"></td> <td valign="bottom"><font size="1">&#xA0;&#xA0;</font></td> <td valign="bottom"></td> <td valign="bottom"></td> </tr> <tr> <td valign="top"> <p style="MARGIN-LEFT: 3em; TEXT-INDENT: -1em"><font style="FONT-FAMILY: Times New Roman" size="2">Pharmaceutical</font></p> </td> <td valign="bottom"><font size="1">&#xA0;&#xA0;</font></td> <td valign="bottom"><font style="FONT-FAMILY: Times New Roman" size="2">$</font></td> <td valign="bottom" align="right"><font style="FONT-FAMILY: Times New Roman" size="2">259.6</font></td> <td valign="bottom"><font size="1">&#xA0;&#xA0;</font></td> <td valign="bottom"><font style="FONT-FAMILY: Times New Roman" size="2">$</font></td> <td valign="bottom" align="right"><font style="FONT-FAMILY: Times New Roman" size="2">262.6</font></td> <td valign="bottom"><font size="1">&#xA0;&#xA0;</font></td> <td valign="bottom"><font style="FONT-FAMILY: Times New Roman" size="2">$</font></td> <td valign="bottom" align="right"><font style="FONT-FAMILY: Times New Roman" size="2">468.0</font></td> <td valign="bottom"><font size="1">&#xA0;&#xA0;</font></td> <td valign="bottom"><font style="FONT-FAMILY: Times New Roman" size="2">$</font></td> <td valign="bottom" align="right"><font style="FONT-FAMILY: Times New Roman" size="2">475.9</font></td> </tr> <tr bgcolor="#CCEEFF"> <td valign="top"> <p style="MARGIN-LEFT: 3em; TEXT-INDENT: -1em"><font style="FONT-FAMILY: Times New Roman" size="2">Medical</font></p> </td> <td valign="bottom"><font size="1">&#xA0;&#xA0;</font></td> <td valign="bottom"><font style="FONT-FAMILY: Times New Roman" size="2">&#xA0;</font></td> <td valign="bottom" align="right"><font style="FONT-FAMILY: Times New Roman" size="2">102.5</font></td> <td valign="bottom"><font size="1">&#xA0;&#xA0;</font></td> <td valign="bottom"><font style="FONT-FAMILY: Times New Roman" size="2">&#xA0;</font></td> <td valign="bottom" align="right"><font style="FONT-FAMILY: Times New Roman" size="2">74.5</font></td> <td valign="bottom"><font size="1">&#xA0;&#xA0;</font></td> <td valign="bottom"><font style="FONT-FAMILY: Times New Roman" size="2">&#xA0;</font></td> <td valign="bottom" align="right"><font style="FONT-FAMILY: Times New Roman" size="2">217.4</font></td> <td valign="bottom"><font size="1">&#xA0;&#xA0;</font></td> <td valign="bottom"><font style="FONT-FAMILY: Times New Roman" size="2">&#xA0;</font></td> <td valign="bottom" align="right"><font style="FONT-FAMILY: Times New Roman" size="2">172.4</font></td> </tr> <tr style="FONT-SIZE: 1px"> <td valign="bottom"></td> <td valign="bottom">&#xA0;&#xA0;</td> <td style="BORDER-TOP: #000000 1px solid" valign="bottom"> &#xA0;</td> <td style="BORDER-TOP: #000000 1px solid" valign="bottom"> &#xA0;</td> <td valign="bottom">&#xA0;&#xA0;</td> <td style="BORDER-TOP: #000000 1px solid" valign="bottom"> &#xA0;</td> <td style="BORDER-TOP: #000000 1px solid" valign="bottom"> &#xA0;</td> <td valign="bottom">&#xA0;&#xA0;</td> <td style="BORDER-TOP: #000000 1px solid" valign="bottom"> &#xA0;</td> <td style="BORDER-TOP: #000000 1px solid" valign="bottom"> &#xA0;</td> <td valign="bottom">&#xA0;&#xA0;</td> <td style="BORDER-TOP: #000000 1px solid" valign="bottom"> &#xA0;</td> <td style="BORDER-TOP: #000000 1px solid" valign="bottom"> &#xA0;</td> </tr> <tr> <td valign="top"> <p style="MARGIN-LEFT: 5em; TEXT-INDENT: -1em"><font style="FONT-FAMILY: Times New Roman" size="2">Total segment profit</font></p> </td> <td valign="bottom"><font size="1">&#xA0;&#xA0;</font></td> <td valign="bottom"><font style="FONT-FAMILY: Times New Roman" size="2">&#xA0;</font></td> <td valign="bottom" align="right"><font style="FONT-FAMILY: Times New Roman" size="2">362.1</font></td> <td valign="bottom"><font size="1">&#xA0;&#xA0;</font></td> <td valign="bottom"><font style="FONT-FAMILY: Times New Roman" size="2">&#xA0;</font></td> <td valign="bottom" align="right"><font style="FONT-FAMILY: Times New Roman" size="2">337.1</font></td> <td valign="bottom"><font size="1">&#xA0;&#xA0;</font></td> <td valign="bottom"><font style="FONT-FAMILY: Times New Roman" size="2">&#xA0;</font></td> <td valign="bottom" align="right"><font style="FONT-FAMILY: Times New Roman" size="2">685.4</font></td> <td valign="bottom"><font size="1">&#xA0;&#xA0;</font></td> <td valign="bottom"><font style="FONT-FAMILY: Times New Roman" size="2">&#xA0;</font></td> <td valign="bottom" align="right"><font style="FONT-FAMILY: Times New Roman" size="2">648.3</font></td> </tr> </table> <p style="MARGIN-TOP: 0px; MARGIN-BOTTOM: 0px"><font size="1">&#xA0;</font></p> <table cellspacing="0" cellpadding="0" width="92%" align="center" border="0"> <tr> <td width="72%"></td> <td valign="bottom" width="3%"></td> <td></td> <td></td> <td valign="bottom" width="3%"></td> <td></td> <td></td> <td></td> <td valign="bottom" width="3%"></td> <td></td> <td></td> <td></td> <td valign="bottom" width="3%"></td> <td></td> <td></td> <td></td> </tr> <tr> <td valign="bottom"><font size="1">&#xA0;</font></td> <td valign="bottom"><font size="1">&#xA0;&#xA0;</font></td> <td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" align="center" colspan="5"><font style="FONT-FAMILY: Times New Roman" size="1"><b>Three&#xA0;Months&#xA0;Ended<br /> December&#xA0;31,</b></font></td> <td valign="bottom"><font size="1">&#xA0;</font></td> <td valign="bottom"><font size="1">&#xA0;</font></td> <td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" align="center" colspan="6"><font style="FONT-FAMILY: Times New Roman" size="1"><b>Six&#xA0;Months&#xA0;Ended<br /> December&#xA0;31,</b></font></td> <td valign="bottom"><font size="1">&#xA0;</font></td> </tr> <tr> <td valign="bottom" nowrap="nowrap"> <p style="WIDTH: 40pt; BORDER-BOTTOM: #000000 1px solid"> <font style="FONT-FAMILY: Times New Roman" size="1"><b>(in millions)</b></font></p> </td> <td valign="bottom"><font size="1">&#xA0;&#xA0;</font></td> <td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" align="center" colspan="2"><font style="FONT-FAMILY: Times New Roman" size="1"><b>2009</b></font></td> <td valign="bottom"><font size="1">&#xA0;&#xA0;</font></td> <td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" align="center" colspan="2"><font style="FONT-FAMILY: Times New Roman" size="1"><b>2008</b></font></td> <td valign="bottom"><font size="1">&#xA0;</font></td> <td valign="bottom"><font size="1">&#xA0;</font></td> <td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" align="center" colspan="2"><font style="FONT-FAMILY: Times New Roman" size="1"><b>2009</b></font></td> <td valign="bottom"><font size="1">&#xA0;</font></td> <td valign="bottom"><font size="1">&#xA0;</font></td> <td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" align="center" colspan="2"><font style="FONT-FAMILY: Times New Roman" size="1"><b>2008</b></font></td> <td valign="bottom"><font size="1">&#xA0;</font></td> </tr> <tr bgcolor="#CCEEFF"> <td valign="top"> <p style="MARGIN-LEFT: 3em; TEXT-INDENT: -1em"><font style="FONT-FAMILY: Times New Roman" size="2">Corporate (1)</font></p> </td> <td valign="bottom"><font size="1">&#xA0;&#xA0;</font></td> <td valign="bottom"><font style="FONT-FAMILY: Times New Roman" size="2">&#xA0;</font></td> <td valign="bottom" align="right"><font style="FONT-FAMILY: Times New Roman" size="2">4.7</font></td> <td valign="bottom"><font size="1">&#xA0;&#xA0;</font></td> <td valign="bottom"><font style="FONT-FAMILY: Times New Roman" size="2">&#xA0;</font></td> <td valign="bottom" align="right"><font style="FONT-FAMILY: Times New Roman" size="2">(24.0</font></td> <td valign="bottom" nowrap="nowrap"><font style="FONT-FAMILY: Times New Roman" size="2">)&#xA0;</font></td> <td valign="bottom"><font size="1">&#xA0;</font></td> <td valign="bottom"><font style="FONT-FAMILY: Times New Roman" size="2">&#xA0;</font></td> <td valign="bottom" align="right"><font style="FONT-FAMILY: Times New Roman" size="2">(78.7</font></td> <td valign="bottom" nowrap="nowrap"><font style="FONT-FAMILY: Times New Roman" size="2">)&#xA0;</font></td> <td valign="bottom"><font size="1">&#xA0;</font></td> <td valign="bottom"><font style="FONT-FAMILY: Times New Roman" size="2">&#xA0;</font></td> <td valign="bottom" align="right"><font style="FONT-FAMILY: Times New Roman" size="2">(48.6</font></td> <td valign="bottom" nowrap="nowrap"><font style="FONT-FAMILY: Times New Roman" size="2">)&#xA0;</font></td> </tr> <tr style="FONT-SIZE: 1px"> <td valign="bottom"></td> <td valign="bottom">&#xA0;&#xA0;</td> <td style="BORDER-TOP: #000000 1px solid" valign="bottom"> &#xA0;</td> <td style="BORDER-TOP: #000000 1px solid" valign="bottom"> &#xA0;</td> <td valign="bottom">&#xA0;&#xA0;</td> <td style="BORDER-TOP: #000000 1px solid" valign="bottom"> &#xA0;</td> <td style="BORDER-TOP: #000000 1px solid" valign="bottom"> &#xA0;</td> <td>&#xA0;</td> <td valign="bottom">&#xA0;</td> <td style="BORDER-TOP: #000000 1px solid" valign="bottom"> &#xA0;</td> <td style="BORDER-TOP: #000000 1px solid" valign="bottom"> &#xA0;</td> <td>&#xA0;</td> <td valign="bottom">&#xA0;</td> <td style="BORDER-TOP: #000000 1px solid" valign="bottom"> &#xA0;</td> <td style="BORDER-TOP: #000000 1px solid" valign="bottom"> &#xA0;</td> <td>&#xA0;</td> </tr> <tr> <td valign="top"> <p style="MARGIN-LEFT: 1em; TEXT-INDENT: -1em"><font style="FONT-FAMILY: Times New Roman" size="2">Total consolidated operating earnings</font></p> </td> <td valign="bottom"><font size="1">&#xA0;&#xA0;</font></td> <td valign="bottom"><font style="FONT-FAMILY: Times New Roman" size="2">$</font></td> <td valign="bottom" align="right"><font style="FONT-FAMILY: Times New Roman" size="2">366.8</font></td> <td valign="bottom"><font size="1">&#xA0;&#xA0;</font></td> <td valign="bottom"><font style="FONT-FAMILY: Times New Roman" size="2">$</font></td> <td valign="bottom" align="right"><font style="FONT-FAMILY: Times New Roman" size="2">313.1</font></td> <td valign="bottom" nowrap="nowrap"><font style="FONT-FAMILY: Times New Roman" size="2">&#xA0;&#xA0;</font></td> <td valign="bottom"><font size="1">&#xA0;</font></td> <td valign="bottom"><font style="FONT-FAMILY: Times New Roman" size="2">$</font></td> <td valign="bottom" align="right"><font style="FONT-FAMILY: Times New Roman" size="2">606.7</font></td> <td valign="bottom" nowrap="nowrap"><font style="FONT-FAMILY: Times New Roman" size="2">&#xA0;&#xA0;</font></td> <td valign="bottom"><font size="1">&#xA0;</font></td> <td valign="bottom"><font style="FONT-FAMILY: Times New Roman" size="2">$</font></td> <td valign="bottom" align="right"><font style="FONT-FAMILY: Times New Roman" size="2">599.7</font></td> <td valign="bottom" nowrap="nowrap"><font style="FONT-FAMILY: Times New Roman" size="2">&#xA0;&#xA0;</font></td> </tr> <tr style="FONT-SIZE: 1px"> <td valign="bottom"></td> <td valign="bottom">&#xA0;&#xA0;</td> <td style="BORDER-TOP: #000000 3px double" valign="bottom"> &#xA0;</td> <td style="BORDER-TOP: #000000 3px double" valign="bottom"> &#xA0;</td> <td valign="bottom">&#xA0;&#xA0;</td> <td style="BORDER-TOP: #000000 3px double" valign="bottom"> &#xA0;</td> <td style="BORDER-TOP: #000000 3px double" valign="bottom"> &#xA0;</td> <td>&#xA0;</td> <td valign="bottom">&#xA0;</td> <td style="BORDER-TOP: #000000 3px double" valign="bottom"> &#xA0;</td> <td style="BORDER-TOP: #000000 3px double" valign="bottom"> &#xA0;</td> <td>&#xA0;</td> <td valign="bottom">&#xA0;</td> <td style="BORDER-TOP: #000000 3px double" valign="bottom"> &#xA0;</td> <td style="BORDER-TOP: #000000 3px double" valign="bottom"> &#xA0;</td> <td>&#xA0;</td> </tr> </table> <p style="MARGIN-TOP: 0px; MARGIN-BOTTOM: 2px; WIDTH: 10%; LINE-HEIGHT: 8px; BORDER-BOTTOM: #000000 0.5pt solid"> &#xA0;</p> <table style="BORDER-COLLAPSE: collapse" cellspacing="0" cellpadding="0" width="100%" border="0"> <tr> <td valign="top" align="left" width="4%"><font style="FONT-FAMILY: Times New Roman" size="2">(1)</font></td> <td valign="top" align="left"><font style="FONT-FAMILY: Times New Roman" size="2">For the three and six months ended December&#xA0;31, 2009 and 2008, Corporate includes, among other things, restructuring and employee severance, impairments and loss on sale of assets, litigation (credits)/charges, net and certain investment spending which are not allocated to the segments.</font></td> </tr> </table> <p style="MARGIN-TOP: 12px; MARGIN-BOTTOM: 0px; TEXT-INDENT: 4%"> <font style="FONT-FAMILY: Times New Roman" size="2">The following table includes total assets at December&#xA0;31, 2009 and June&#xA0;30, 2009 for each segment as well as reconciling items necessary to agree to the amounts reported in the condensed consolidated financial statements:</font></p> <p style="MARGIN-TOP: 0px; FONT-SIZE: 12px; MARGIN-BOTTOM: 0px"> &#xA0;</p> <table cellspacing="0" cellpadding="0" width="76%" align="center" border="0"> <tr> <td width="74%"></td> <td valign="bottom" width="5%"></td> <td></td> <td></td> <td valign="bottom" width="5%"></td> <td></td> <td></td> </tr> <tr> <td valign="bottom" nowrap="nowrap"> <p style="WIDTH: 40pt; BORDER-BOTTOM: #000000 1px solid"> <font style="FONT-FAMILY: Times New Roman" size="1"><b>(in millions)</b></font></p> </td> <td valign="bottom"><font size="1">&#xA0;&#xA0;</font></td> <td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" align="center" colspan="2"><font style="FONT-FAMILY: Times New Roman" size="1"><b>December&#xA0;31,<br /> 2009</b></font></td> <td valign="bottom"><font size="1">&#xA0;&#xA0;</font></td> <td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" align="center" colspan="2"><font style="FONT-FAMILY: Times New Roman" size="1"><b>June&#xA0;30,<br /> 2009</b></font></td> </tr> <tr bgcolor="#CCEEFF"> <td valign="top"> <p style="MARGIN-LEFT: 1em; TEXT-INDENT: -1em"><font style="FONT-FAMILY: Times New Roman" size="2">Segment assets:</font></p> </td> <td valign="bottom"><font size="1">&#xA0;&#xA0;</font></td> <td valign="bottom"></td> <td valign="bottom"></td> <td valign="bottom"><font size="1">&#xA0;&#xA0;</font></td> <td valign="bottom"></td> <td valign="bottom"></td> </tr> <tr> <td valign="top"> <p style="MARGIN-LEFT: 1em; TEXT-INDENT: -1em"><font style="FONT-FAMILY: Times New Roman" size="2">Pharmaceutical</font></p> </td> <td valign="bottom"><font size="1">&#xA0;&#xA0;</font></td> <td valign="bottom"><font style="FONT-FAMILY: Times New Roman" size="2">$</font></td> <td valign="bottom" align="right"><font style="FONT-FAMILY: Times New Roman" size="2">13,536.0</font></td> <td valign="bottom"><font size="1">&#xA0;&#xA0;</font></td> <td valign="bottom"><font style="FONT-FAMILY: Times New Roman" size="2">$</font></td> <td valign="bottom" align="right"><font style="FONT-FAMILY: Times New Roman" size="2">12,625.3</font></td> </tr> <tr bgcolor="#CCEEFF"> <td valign="top"> <p style="MARGIN-LEFT: 1em; TEXT-INDENT: -1em"><font style="FONT-FAMILY: Times New Roman" size="2">Medical</font></p> </td> <td valign="bottom"><font size="1">&#xA0;&#xA0;</font></td> <td valign="bottom"><font style="FONT-FAMILY: Times New Roman" size="2">&#xA0;</font></td> <td valign="bottom" align="right"><font style="FONT-FAMILY: Times New Roman" size="2">3,897.6</font></td> <td valign="bottom"><font size="1">&#xA0;&#xA0;</font></td> <td valign="bottom"><font style="FONT-FAMILY: Times New Roman" size="2">&#xA0;</font></td> <td valign="bottom" align="right"><font style="FONT-FAMILY: Times New Roman" size="2">3,747.9</font></td> </tr> <tr> <td valign="top"> <p style="MARGIN-LEFT: 1em; TEXT-INDENT: -1em"><font style="FONT-FAMILY: Times New Roman" size="2">Corporate (1)</font></p> </td> <td valign="bottom"><font size="1">&#xA0;&#xA0;</font></td> <td valign="bottom"><font style="FONT-FAMILY: Times New Roman" size="2">&#xA0;</font></td> <td valign="bottom" align="right"><font style="FONT-FAMILY: Times New Roman" size="2">3,387.9</font></td> <td valign="bottom"><font size="1">&#xA0;&#xA0;</font></td> <td valign="bottom"><font style="FONT-FAMILY: Times New Roman" size="2">&#xA0;</font></td> <td valign="bottom" align="right"><font style="FONT-FAMILY: Times New Roman" size="2">8,745.6</font></td> </tr> <tr style="FONT-SIZE: 1px"> <td valign="bottom"></td> <td valign="bottom">&#xA0;&#xA0;</td> <td style="BORDER-TOP: #000000 1px solid" valign="bottom"> &#xA0;</td> <td style="BORDER-TOP: #000000 1px solid" valign="bottom"> &#xA0;</td> <td valign="bottom">&#xA0;&#xA0;</td> <td style="BORDER-TOP: #000000 1px solid" valign="bottom"> &#xA0;</td> <td style="BORDER-TOP: #000000 1px solid" valign="bottom"> &#xA0;</td> </tr> <tr bgcolor="#CCEEFF"> <td valign="top"> <p style="MARGIN-LEFT: 1em; TEXT-INDENT: -1em"><font style="FONT-FAMILY: Times New Roman" size="2">Consolidated assets</font></p> </td> <td valign="bottom"><font size="1">&#xA0;&#xA0;</font></td> <td valign="bottom"><font style="FONT-FAMILY: Times New Roman" size="2">$</font></td> <td valign="bottom" align="right"><font style="FONT-FAMILY: Times New Roman" size="2">20,821.5</font></td> <td valign="bottom"><font size="1">&#xA0;&#xA0;</font></td> <td valign="bottom"><font style="FONT-FAMILY: Times New Roman" size="2">$</font></td> <td valign="bottom" align="right"><font style="FONT-FAMILY: Times New Roman" size="2">25,118.8</font></td> </tr> <tr style="FONT-SIZE: 1px"> <td valign="bottom"></td> <td valign="bottom">&#xA0;&#xA0;</td> <td style="BORDER-TOP: #000000 3px double" valign="bottom"> &#xA0;</td> <td style="BORDER-TOP: #000000 3px double" valign="bottom"> &#xA0;</td> <td valign="bottom">&#xA0;&#xA0;</td> <td style="BORDER-TOP: #000000 3px double" valign="bottom"> &#xA0;</td> <td style="BORDER-TOP: #000000 3px double" valign="bottom"> &#xA0;</td> </tr> </table> <p style="MARGIN-TOP: 0px; MARGIN-BOTTOM: 2px; WIDTH: 10%; LINE-HEIGHT: 8px; BORDER-BOTTOM: #000000 0.5pt solid"> &#xA0;</p> <table style="BORDER-COLLAPSE: collapse" cellspacing="0" cellpadding="0" width="100%" border="0"> <tr> <td valign="top" align="left" width="4%"><font style="FONT-FAMILY: Times New Roman" size="2">(1)</font></td> <td valign="top" align="left"><font style="FONT-FAMILY: Times New Roman" size="2">The Corporate assets primarily consist of cash and equivalents, the Company&#x2019;s investment in CareFusion, net property and equipment, and the Company&#x2019;s contractual tax indemnification receivable from CareFusion (see Note 8 for further information regarding this receivable). Additionally, the Corporate assets as of June&#xA0;30, 3009 include CareFusion assets and other assets held for sale and discontinued operations.</font></td> </tr> </table> </div> 1191300000 42100000 <div> <p style="MARGIN-TOP: 0px; MARGIN-BOTTOM: 0px" align="center"></p> <p style="MARGIN-TOP: 12px; MARGIN-BOTTOM: 0px"><font style="FONT-FAMILY: Times New Roman" size="2"><b>1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES</b></font></p> <p style="MARGIN-TOP: 6px; MARGIN-BOTTOM: 0px; MARGIN-LEFT: 2%"> <font style="FONT-FAMILY: Times New Roman" size="2"><b><i>Spin-Off of CareFusion Corporation</i></b></font></p> <p style="MARGIN-TOP: 6px; MARGIN-BOTTOM: 0px; TEXT-INDENT: 4%"> <font style="FONT-FAMILY: Times New Roman" size="2">Effective August&#xA0;31, 2009, Cardinal Health, Inc. (the &#x201C;Company&#x201D;) completed the distribution to its shareholders of approximately 81% of the then outstanding common stock of CareFusion Corporation (&#x201C;CareFusion&#x201D;), with the Company retaining 41.4&#xA0;million shares of CareFusion common stock (the &#x201C;Spin-Off&#x201D;). Under the requirements of the Private Letter Ruling obtained from the Internal Revenue Service, the Company is required to dispose of the retained shares of CareFusion common stock within five years of the Spin-Off. During the second quarter of fiscal 2010, the Company disposed of approximately 5.5&#xA0;million shares of CareFusion common stock. Refer to Note 6 for additional information. While Cardinal Health is a party to a separation agreement and various other agreements relating to the separation, including a transition services agreement, a tax matters agreement, an employee matters agreement, intellectual property agreements and certain other commercial agreements, the Company has determined that it has no significant continuing involvement in the operations of CareFusion. Accordingly, the net assets of CareFusion are presented separately in these condensed consolidated financial statements as assets from businesses held for sale and discontinued operations and the operating results of CareFusion are presented within discontinued operations for all periods presented through the date of the Spin-Off. The Company retained certain surgical and exam gloves, surgical drapes and apparel and fluid management businesses previously within the Clinical and Medical Products segment following the Spin-Off.</font></p> <p style="MARGIN-TOP: 12px; MARGIN-BOTTOM: 0px; TEXT-INDENT: 4%"> <font style="FONT-FAMILY: Times New Roman" size="2">For fiscal 2009, the Company had three reportable segments &#x2014; Healthcare Supply Chain Services, Clinical and Medical Products and All Other. Effective July&#xA0;1, 2009, the Company changed its reportable segments to: Pharmaceutical, Medical and CareFusion. The Pharmaceutical segment encompasses the businesses previously within the Healthcare Supply Chain Services segment that distributed pharmaceutical, radiopharmaceutical and over-the-counter healthcare products as well as the businesses previously within the All Other segment.&#xA0;The Medical segment encompasses the remaining businesses within the Healthcare Supply Chain Services segment as well as certain surgical and exam gloves, surgical drapes and apparel and fluid management businesses previously within the Clinical and Medical Products segment.&#xA0;The CareFusion segment encompasses the businesses previously within the Clinical and Medical Products segment excluding the above-referenced surgical and exam gloves, surgical drapes and apparel and fluid management businesses and includes all businesses included in the Spin-Off.</font></p> <p style="MARGIN-TOP: 12px; MARGIN-BOTTOM: 0px; TEXT-INDENT: 4%"> <font style="FONT-FAMILY: Times New Roman" size="2">In connection with the Spin-Off, the Company reorganized its reportable segments into two segments: Pharmaceutical and Medical. See Note 14 for information about these segments.</font></p> <p style="MARGIN-TOP: 18px; MARGIN-BOTTOM: 0px; MARGIN-LEFT: 2%"> <font style="FONT-FAMILY: Times New Roman" size="2"><b><i>Relationship between the Company and CareFusion</i></b></font></p> <p style="MARGIN-TOP: 6px; MARGIN-BOTTOM: 0px; TEXT-INDENT: 4%"> <font style="FONT-FAMILY: Times New Roman" size="2">On July&#xA0;22, 2009, the Company and CareFusion entered into a separation agreement to effect the Spin-Off and provide a framework for the relationship between the Company and CareFusion after the Spin-Off. In addition, on August&#xA0;31, 2009, the Company and CareFusion entered into a transition services agreement, a tax matters agreement, an employee matters agreement, intellectual property agreements and certain other commercial agreements. These agreements, including the separation agreement, provide for allocation between the Company and CareFusion of the Company&#x2019;s assets, employees, liabilities and obligations (including its investments, property and employee benefits and tax-related assets and liabilities) attributable to periods prior to, at and after the Spin-Off and govern certain relationships between the Company and CareFusion after the Spin-Off. The Company and CareFusion also entered into a stockholder&#x2019;s and registration rights agreement pursuant to which, among other things, CareFusion agrees that, upon the request of the Company, CareFusion will use its commercially reasonable efforts to effect the registration under applicable federal and state securities laws of any shares of CareFusion common stock retained by Cardinal Health.</font></p> <p style="MARGIN-TOP: 12px; MARGIN-BOTTOM: 0px; TEXT-INDENT: 4%"> <font style="FONT-FAMILY: Times New Roman" size="2">Pursuant to the transition services agreement, for the three months ended December&#xA0;31, 2009, the Company recognized approximately $42.5 million in transition service fee income which approximately offsets the costs associated with providing the transition services. The Company has recognized $55.2 million in transition service fee income year-to-date since the Spin-Off. Additionally, the Company purchased $167.2 million of CareFusion trade receivables pursuant to an accounts receivable factoring arrangement between the Company and CareFusion during the three months ended December&#xA0;31, 2009. The Company has purchased $273.5 million of CareFusion trade receivables year-to-date since the Spin-Off.</font></p> <p style="MARGIN-TOP: 18px; MARGIN-BOTTOM: 0px; MARGIN-LEFT: 2%"> <font style="FONT-FAMILY: Times New Roman" size="2"><b><i>Basis of Presentation</i></b></font></p> <p style="MARGIN-TOP: 6px; MARGIN-BOTTOM: 0px; TEXT-INDENT: 4%"> <font style="FONT-FAMILY: Times New Roman" size="2">The condensed consolidated financial statements of the Company include the accounts of all majority-owned subsidiaries and all significant intercompany amounts have been eliminated. References to the &#x201C;Company&#x201D; or &#x201C;Cardinal Health&#x201D; in these condensed consolidated financial statements shall be deemed to be references to Cardinal Health, Inc. and its majority-owned subsidiaries unless the context otherwise requires.</font></p> <p style="MARGIN-TOP: 0px; MARGIN-BOTTOM: 0px"><font size="1">&#xA0;</font></p> <p style="MARGIN-TOP: 0px; MARGIN-BOTTOM: 0px; TEXT-INDENT: 4%"> <font style="FONT-FAMILY: Times New Roman" size="2">The condensed consolidated financial statements have been prepared in accordance with the U.S. Securities and Exchange Commission (&#x201C;SEC&#x201D;) instructions to Quarterly Reports on Form 10-Q and include all of the information and disclosures required by accounting principles generally accepted in the United States (&#x201C;GAAP&#x201D;) for interim financial reporting. The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect amounts reported in the condensed consolidated financial statements and accompanying notes. Actual amounts may differ from these estimated amounts. In addition, operating results presented for this fiscal 2010 interim period are not necessarily indicative of the results that may be expected for the full fiscal year ending June&#xA0;30, 2010. Beginning in the first quarter of fiscal 2010, the Company changed the presentation of certain items on the condensed consolidated statements of earnings. Prior periods have been adjusted to conform with this new presentation. The Company has disclosed all material subsequent events through February 5, 2010, the date the financial statements were issued.</font></p> <p style="MARGIN-TOP: 12px; MARGIN-BOTTOM: 0px; TEXT-INDENT: 4%"> <font style="FONT-FAMILY: Times New Roman" size="2">These condensed consolidated financial statements are unaudited and are presented pursuant to the rules and regulations of the SEC. Accordingly, the condensed consolidated financial statements included in this Quarterly Report on Form 10-Q (this &#x201C;Form 10-Q&#x201D;) should be read in conjunction with the audited consolidated financial statements and related notes contained in the Company&#x2019;s Annual Report on Form 10-K for the fiscal year ended June&#xA0;30, 2009, as updated by the Company&#x2019;s Form 8-K filed on November&#xA0;16, 2009 (&#x201C;FY2009 Financial Statements&#x201D;). Note 1 of the &#x201C;Notes to Consolidated Financial Statements&#x201D; from the FY2009 Financial Statements is specifically incorporated in this Form 10-Q by reference. In the opinion of management, all adjustments necessary for a fair presentation of the condensed consolidated financial statements have been included. Except as disclosed elsewhere in this Form 10-Q, all such adjustments are of a normal and recurring nature.</font></p> <p style="MARGIN-TOP: 12px; MARGIN-BOTTOM: 0px; TEXT-INDENT: 4%"> <font style="FONT-FAMILY: Times New Roman" size="2"><i>Revenue Recognition.</i> The Company recognizes revenue when persuasive evidence of an arrangement exists, product delivery has occurred or the services have been rendered, the price is fixed or determinable and collectability is reasonably assured. Revenue is recognized net of sales returns and allowances.</font></p> <p style="MARGIN-TOP: 12px; MARGIN-BOTTOM: 0px; TEXT-INDENT: 4%"> <font style="FONT-FAMILY: Times New Roman" size="2"><u>Pharmaceutical</u>. This segment recognizes distribution revenue when title transfers to its customers and the business has no further obligation to provide services related to such merchandise.</font></p> <p style="MARGIN-TOP: 12px; MARGIN-BOTTOM: 0px; TEXT-INDENT: 4%"> <font style="FONT-FAMILY: Times New Roman" size="2">Revenue within this segment includes revenue from bulk customers. Most deliveries to bulk customers consist of product shipped in the same form as the product is received from the manufacturer. Bulk customers have the ability to process large quantities of products in central locations and self distribute these products to their individual retail stores or customers. Revenue from bulk customers is recorded when title transfers to the customer and the Company has no further obligation to provide services related to such merchandise.</font></p> <p style="MARGIN-TOP: 12px; MARGIN-BOTTOM: 0px; TEXT-INDENT: 4%"> <font style="FONT-FAMILY: Times New Roman" size="2">Revenue for deliveries that are directly shipped to customer warehouses from the manufacturer whereby the Company acts as an intermediary in the ordering and delivery of products is recorded gross in accordance with accounting standards addressing reporting revenue on a gross basis as a principal versus on a net basis as an agent. This revenue is recorded on a gross basis since the Company incurs credit risk from the customer, bears the risk of loss for incomplete shipments and does not receive a separate fee or commission for the transaction and, as such, is the primary obligor.</font></p> <p style="MARGIN-TOP: 12px; MARGIN-BOTTOM: 0px; TEXT-INDENT: 4%"> <font style="FONT-FAMILY: Times New Roman" size="2">Radiopharmaceutical revenue is recognized upon delivery of the product to the customer. Service-related revenue, including fees received for analytical services or sales and marketing services, is recognized upon the completion of such services.</font></p> <p style="MARGIN-TOP: 12px; MARGIN-BOTTOM: 0px; TEXT-INDENT: 4%"> <font style="FONT-FAMILY: Times New Roman" size="2">Pharmacy management and other service revenue is recognized as the services are rendered according to the contracts established. A fee is charged under such contracts through a capitation fee, a dispensing fee, a monthly management fee or an actual costs-incurred arrangement. Under certain contracts, fees for services are guaranteed by the Company not to exceed stipulated amounts or have other risk-sharing provisions. Revenue is adjusted to reflect the estimated effects of such contractual guarantees and risk-sharing provisions.</font></p> <p style="MARGIN-TOP: 12px; MARGIN-BOTTOM: 0px; TEXT-INDENT: 4%"> <font style="FONT-FAMILY: Times New Roman" size="2">Through its Medicine Shoppe International, Inc. and Medicap Pharmacies Incorporated franchise operations (collectively, &#x201C;Medicine Shoppe&#x201D;), the Company has apothecary-style pharmacy franchisees from which it earns franchise and origination fees. Franchise fees represent monthly fees that are either fixed or based upon franchisees&#x2019; sales and are recognized as revenue when they are earned. Origination fees from signing new franchise agreements are recognized as revenue when the new franchise store is opened.</font></p> <p style="MARGIN-TOP: 12px; MARGIN-BOTTOM: 0px; TEXT-INDENT: 4%"> <font style="FONT-FAMILY: Times New Roman" size="2"><u>Medical</u>. This segment recognizes distribution revenue when title transfers to its customers and the business has no further obligation to provide services related to such merchandise. Revenue from the sale of medical products and supplies is recognized when title and risk of loss transfers to its customers, which is typically upon delivery.</font></p> <p style="MARGIN-TOP: 12px; MARGIN-BOTTOM: 0px; TEXT-INDENT: 4%"> <font style="FONT-FAMILY: Times New Roman" size="2"><u>Multiple Segments or Business Units</u>. Arrangements involving multiple segments or business units containing no software or software which is incidental to the functionality of the product or service are accounted for as revenue arrangements with multiple deliverables. If the deliverable meets the criterion of a separate unit of accounting, the arrangement revenue is allocated to each element based upon its relative fair value and recognized in accordance with the applicable revenue recognition criteria for each element.</font></p> <p style="MARGIN-TOP: 0px; MARGIN-BOTTOM: 0px"><font size="1">&#xA0;</font></p> <p style="MARGIN-TOP: 0px; MARGIN-BOTTOM: 0px; MARGIN-LEFT: 2%"> <font style="FONT-FAMILY: Times New Roman" size="2"><b><i>Recent Financial Accounting Standards</i></b></font></p> <p style="MARGIN-TOP: 6px; MARGIN-BOTTOM: 0px; TEXT-INDENT: 4%"> <font style="FONT-FAMILY: Times New Roman" size="2">In December 2007, the FASB issued new accounting guidance on the accounting and reporting for business combinations and minority interests in consolidated financial statements. This guidance is effective for fiscal years beginning after December&#xA0;15, 2008. The adoption of this new accounting guidance in the first quarter of fiscal 2010 did not have a material impact on the Company&#x2019;s financial position or results of operations; however, it may have an impact on the Company&#x2019;s accounting and disclosure practices for future business combinations.</font></p> <p style="MARGIN-TOP: 12px; MARGIN-BOTTOM: 0px; TEXT-INDENT: 4%"> <font style="FONT-FAMILY: Times New Roman" size="2">In June 2008, the FASB issued new accounting guidance addressing whether instruments granted in share-based payment transactions are participating securities prior to vesting and, therefore, need to be included in the computation of earnings per share. This guidance is effective for fiscal years beginning after December&#xA0;15, 2008, and interim periods within those fiscal years. The adoption of this new accounting guidance in the first quarter of fiscal 2010 did not have a material impact on the Company&#x2019;s financial position or results of operations.</font></p> <p style="MARGIN-TOP: 12px; MARGIN-BOTTOM: 0px; TEXT-INDENT: 4%"> <font style="FONT-FAMILY: Times New Roman" size="2">In June 2009, the FASB issued new accounting guidance on the accounting for transfers of financial assets. This guidance improves the relevance, representational faithfulness and comparability of information provided about a transfer of financial assets, the effects of a transfer of financial assets on an entity&#x2019;s financial statements, and a transferor&#x2019;s continuing involvement, if any, in financial assets transferred. This guidance is effective for fiscal years beginning after November&#xA0;15, 2009. The Company is in the process of determining the impact of adopting this new accounting guidance.</font></p> <p style="MARGIN-TOP: 12px; MARGIN-BOTTOM: 0px; TEXT-INDENT: 4%"> <font style="FONT-FAMILY: Times New Roman" size="2">In June 2009, the FASB issued new accounting guidance regarding the consolidation of variable interest entities. This guidance improves the financial reporting by enterprises involved with variable interest entities. This guidance is effective for fiscal years beginning after November&#xA0;15, 2009. The Company is in the process of determining the impact of adopting this new accounting guidance.</font></p> <p style="MARGIN-TOP: 12px; MARGIN-BOTTOM: 0px; TEXT-INDENT: 4%"> <font style="FONT-FAMILY: Times New Roman" size="2">In June&#xA0;2009, the FASB issued the Accounting Standards Codification (the &#x201C;Codification&#x201D;), which became the source of authoritative GAAP recognized by the FASB to be applied by nongovernmental entities effective July&#xA0;1, 2009. Rules and interpretive releases of the SEC under authority of federal securities laws are also sources of authoritative GAAP for SEC registrants. Effective July&#xA0;1, 2009, the Codification superseded all then-existing non-SEC accounting and reporting standards. The adoption of this new accounting guidance in the first quarter of fiscal 2010 did not have an impact on the Company&#x2019;s financial position or results of operations. The Company has updated its disclosures in the notes to the financial statements to reflect the updated accounting guidance.</font></p> </div> 361100000 359100000 <div> <p style="MARGIN-TOP: 0px; MARGIN-BOTTOM: 0px"></p> <p style="MARGIN-TOP: 0px; MARGIN-BOTTOM: 0px"><font style="FONT-FAMILY: Times New Roman" size="2"><b>12. EARNINGS PER SHARE AND SHAREHOLDERS&#x2019; EQUITY</b></font></p> <p style="MARGIN-TOP: 6px; MARGIN-BOTTOM: 0px; MARGIN-LEFT: 2%"> <font style="FONT-FAMILY: Times New Roman" size="2"><b><i>Earnings per Share</i></b></font></p> <p style="MARGIN-TOP: 6px; MARGIN-BOTTOM: 0px; TEXT-INDENT: 4%"> <font style="FONT-FAMILY: Times New Roman" size="2">Basic earnings per Common Share (&#x201C;Basic EPS&#x201D;) is computed by dividing net earnings (the numerator) by the weighted average number of Common Shares outstanding during each period (the denominator). 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TEXT-INDENT: -1em"><font style="FONT-FAMILY: Times New Roman" size="2">Weighted-average Common Shares &#x2013; basic</font></p> </td> <td valign="bottom"><font size="1">&#xA0;&#xA0;</font></td> <td valign="bottom" align="right"><font style="FONT-FAMILY: Times New Roman" size="2">359.0</font></td> <td valign="bottom"><font size="1">&#xA0;&#xA0;</font></td> <td valign="bottom" align="right"><font style="FONT-FAMILY: Times New Roman" size="2">357.3</font></td> <td valign="bottom"><font size="1">&#xA0;&#xA0;</font></td> <td valign="bottom" align="right"><font style="FONT-FAMILY: Times New Roman" size="2">359.1</font></td> <td valign="bottom"><font size="1">&#xA0;&#xA0;</font></td> <td valign="bottom" align="right"><font style="FONT-FAMILY: Times New Roman" size="2">357.0</font></td> </tr> <tr> <td valign="top"> <p style="MARGIN-LEFT: 1em; TEXT-INDENT: -1em"><font style="FONT-FAMILY: Times New Roman" size="2">Effect of dilutive securities:</font></p> </td> <td valign="bottom"><font size="1">&#xA0;&#xA0;</font></td> <td valign="bottom"></td> <td valign="bottom"><font size="1">&#xA0;&#xA0;</font></td> <td valign="bottom"></td> <td valign="bottom"><font size="1">&#xA0;&#xA0;</font></td> <td valign="bottom"></td> <td valign="bottom"><font size="1">&#xA0;&#xA0;</font></td> <td valign="bottom"></td> </tr> <tr bgcolor="#CCEEFF"> <td valign="top"> <p style="MARGIN-LEFT: 3em; TEXT-INDENT: -1em"><font style="FONT-FAMILY: Times New Roman" size="2">Employee stock options, restricted shares and restricted share units</font></p> </td> <td valign="bottom"><font size="1">&#xA0;&#xA0;</font></td> <td valign="bottom" align="right"><font style="FONT-FAMILY: Times New Roman" size="2">2.0</font></td> <td valign="bottom"><font size="1">&#xA0;&#xA0;</font></td> <td valign="bottom" align="right"><font style="FONT-FAMILY: Times New Roman" size="2">3.0</font></td> <td valign="bottom"><font size="1">&#xA0;&#xA0;</font></td> <td valign="bottom" align="right"><font style="FONT-FAMILY: Times New Roman" size="2">2.0</font></td> <td valign="bottom"><font size="1">&#xA0;&#xA0;</font></td> <td valign="bottom" align="right"><font style="FONT-FAMILY: Times New Roman" size="2">4.2</font></td> </tr> <tr style="FONT-SIZE: 1px"> <td valign="bottom"></td> <td valign="bottom">&#xA0;&#xA0;</td> <td style="BORDER-TOP: #000000 1px solid" valign="bottom"> &#xA0;</td> <td valign="bottom">&#xA0;&#xA0;</td> <td style="BORDER-TOP: #000000 1px solid" valign="bottom"> &#xA0;</td> <td valign="bottom">&#xA0;&#xA0;</td> <td style="BORDER-TOP: #000000 1px solid" valign="bottom"> &#xA0;</td> <td valign="bottom">&#xA0;&#xA0;</td> <td style="BORDER-TOP: #000000 1px solid" valign="bottom"> &#xA0;</td> </tr> <tr> <td valign="top"> <p style="MARGIN-LEFT: 1em; TEXT-INDENT: -1em"><font style="FONT-FAMILY: Times New Roman" size="2">Weighted-average Common Shares &#x2013; diluted</font></p> </td> <td valign="bottom"><font size="1">&#xA0;&#xA0;</font></td> <td valign="bottom" align="right"><font style="FONT-FAMILY: Times New Roman" size="2">361.0</font></td> <td valign="bottom"><font size="1">&#xA0;&#xA0;</font></td> <td valign="bottom" align="right"><font style="FONT-FAMILY: Times New Roman" size="2">360.3</font></td> <td valign="bottom"><font size="1">&#xA0;&#xA0;</font></td> <td valign="bottom" align="right"><font style="FONT-FAMILY: Times New Roman" size="2">361.1</font></td> <td valign="bottom"><font size="1">&#xA0;&#xA0;</font></td> <td valign="bottom" align="right"><font style="FONT-FAMILY: Times New Roman" size="2">361.2</font></td> </tr> <tr style="FONT-SIZE: 1px"> <td valign="bottom"></td> <td valign="bottom">&#xA0;&#xA0;</td> <td style="BORDER-TOP: #000000 3px double" valign="bottom"> &#xA0;</td> <td valign="bottom">&#xA0;&#xA0;</td> <td style="BORDER-TOP: #000000 3px double" valign="bottom"> &#xA0;</td> <td valign="bottom">&#xA0;&#xA0;</td> <td style="BORDER-TOP: #000000 3px double" valign="bottom"> &#xA0;</td> <td valign="bottom">&#xA0;&#xA0;</td> <td style="BORDER-TOP: #000000 3px double" valign="bottom"> &#xA0;</td> </tr> </table> <p style="MARGIN-TOP: 12px; MARGIN-BOTTOM: 0px; TEXT-INDENT: 4%"> <font style="FONT-FAMILY: Times New Roman" size="2">The potentially dilutive securities that were antidilutive for the three months ended December&#xA0;31, 2009 and 2008 were 24.7&#xA0;million shares and 32.6&#xA0;million shares, respectively, and for the six months ended December&#xA0;31, 2009 and 2008 were 23.0&#xA0;million shares and 24.7&#xA0;million shares, respectively.</font></p> <p style="MARGIN-TOP: 12px; MARGIN-BOTTOM: 0px; TEXT-INDENT: 4%"> <font style="FONT-FAMILY: Times New Roman" size="2">The total number of Common Shares issued less the Common Shares held in treasury is used to determine the Common Shares outstanding.</font></p> <p style="MARGIN-TOP: 18px; MARGIN-BOTTOM: 0px"><font style="FONT-FAMILY: Times New Roman" size="2"><b>Shareholders&#x2019; Equity</b></font></p> <p style="MARGIN-TOP: 6px; MARGIN-BOTTOM: 0px; TEXT-INDENT: 4%"> <font style="FONT-FAMILY: Times New Roman" size="2">During the three months ended December&#xA0;31, 2009, the Company repurchased approximately $50 million of its Common Shares under its existing $500 million share repurchase program announced on August&#xA0;5, 2009. This repurchase authorization expires on August&#xA0;31, 2012. At December&#xA0;31, 2009, approximately $450 million remained from the $500 million repurchase authorization. The Company expects to use this repurchase program to at least offset equity plan issuances.</font></p> <p style="MARGIN-TOP: 12px; MARGIN-BOTTOM: 0px; TEXT-INDENT: 4%"> <font style="FONT-FAMILY: Times New Roman" size="2">In connection with the Spin-Off on August&#xA0;31, 2009, the Company issued a non-cash dividend of approximately $3.7 billion to its shareholders through the pro-rata distribution of approximately 81% of the CareFusion Corporation common shares.</font></p> </div> -24000000 66400000 3728400000 <div> <p style="MARGIN-TOP: 18px; MARGIN-BOTTOM: 0px"><font style="FONT-FAMILY: Times New Roman" size="2"><b>3. 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SEGMENT INFORMATION</b></font></p> <p style="MARGIN-TOP: 6px; MARGIN-BOTTOM: 0px; TEXT-INDENT: 4%"> <font style="FONT-FAMILY: Times New Roman" size="2">The Company&#x2019;s operations are principally managed on a products and services basis. In connection with the Spin-Off, the Company reorganized its businesses into two reportable segments - Pharmaceutical and Medical. The factors for determining the reportable segments include the manner in which management evaluates the performance of the Company combined with the nature of the individual business activities.</font></p> <p style="MARGIN-TOP: 0px; MARGIN-BOTTOM: 0px"><font size="1">&#xA0;</font></p> <p style="MARGIN-TOP: 0px; MARGIN-BOTTOM: 0px; TEXT-INDENT: 4%"> <font style="FONT-FAMILY: Times New Roman" size="2">The Pharmaceutical segment distributes pharmaceutical products, over-the-counter healthcare products and consumer health products and provides support services to retail customers, hospitals and alternate care providers in the United States and Puerto Rico. It also provides services to branded pharmaceutical manufacturers and operates a pharmaceutical repackaging and distribution program. In addition, this segment operates centralized nuclear (radiopharmaceutical) pharmacies, provides third-party logistics support services and distributes therapeutic plasma to hospitals, clinics and other providers located in the United States. It also franchises apothecary-style retail pharmacies through its Medicine Shoppe International, Inc. and Medicap Pharmacies Incorporated franchise systems. Finally, it provides pharmacy management services to hospitals and other healthcare facilities.</font></p> <p style="MARGIN-TOP: 12px; MARGIN-BOTTOM: 0px; TEXT-INDENT: 4%"> <font style="FONT-FAMILY: Times New Roman" size="2">The Medical segment develops, manufactures and distributes medical and surgical products including sterile and non-sterile procedure kits to hospitals, surgery centers, laboratories, physician offices and other healthcare providers in the United States, Canada and Puerto Rico. The medical and surgical products manufactured by the business, including single-use surgical drapes, gowns and apparel, exam and surgical gloves and fluid suction and collection systems, are also sold in various regions of the world outside of the United States, including countries in North America, Europe, and Asia.</font></p> <p style="MARGIN-TOP: 12px; MARGIN-BOTTOM: 0px; TEXT-INDENT: 4%"> <font style="FONT-FAMILY: Times New Roman" size="2">The following table includes revenue for each reportable segment and reconciling items necessary to agree to amounts reported in the condensed consolidated financial statements:</font></p> <p style="MARGIN-TOP: 0px; FONT-SIZE: 12px; MARGIN-BOTTOM: 0px"> &#xA0;</p> <table cellspacing="0" cellpadding="0" width="92%" align="center" border="0"> <tr> <td width="60%"></td> <td valign="bottom" width="4%"></td> <td></td> <td></td> <td></td> <td valign="bottom" width="4%"></td> <td></td> <td></td> <td></td> <td valign="bottom" width="4%"></td> <td></td> <td></td> <td></td> <td valign="bottom" width="4%"></td> <td></td> <td></td> <td></td> </tr> <tr> <td valign="bottom"><font size="1">&#xA0;</font></td> <td valign="bottom"><font size="1">&#xA0;&#xA0;</font></td> <td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" align="center" colspan="6"><font style="FONT-FAMILY: Times New Roman" size="1"><b>Three Months Ended<br /> December&#xA0;31,</b></font></td> <td valign="bottom"><font size="1">&#xA0;</font></td> <td valign="bottom"><font size="1">&#xA0;</font></td> <td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" align="center" colspan="6"><font style="FONT-FAMILY: Times New Roman" size="1"><b>Six Months Ended<br /> December&#xA0;31,</b></font></td> <td valign="bottom"><font size="1">&#xA0;</font></td> </tr> <tr> <td valign="bottom" nowrap="nowrap"> <p style="WIDTH: 40pt; BORDER-BOTTOM: #000000 1px solid"> <font style="FONT-FAMILY: Times New Roman" size="1"><b>(in millions)</b></font></p> </td> <td valign="bottom"><font size="1">&#xA0;&#xA0;</font></td> <td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" align="center" colspan="2"><font style="FONT-FAMILY: Times New Roman" size="1"><b>2009</b></font></td> <td valign="bottom"><font size="1">&#xA0;</font></td> <td valign="bottom"><font size="1">&#xA0;</font></td> <td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" align="center" colspan="2"><font style="FONT-FAMILY: Times New Roman" size="1"><b>2008</b></font></td> <td valign="bottom"><font size="1">&#xA0;</font></td> <td valign="bottom"><font size="1">&#xA0;</font></td> <td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" align="center" colspan="2"><font style="FONT-FAMILY: Times New Roman" size="1"><b>2009</b></font></td> <td valign="bottom"><font size="1">&#xA0;</font></td> <td valign="bottom"><font size="1">&#xA0;</font></td> <td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" align="center" colspan="2"><font style="FONT-FAMILY: Times New Roman" size="1"><b>2008</b></font></td> <td valign="bottom"><font size="1">&#xA0;</font></td> </tr> <tr bgcolor="#CCEEFF"> <td valign="top"> <p style="MARGIN-LEFT: 1em; TEXT-INDENT: -1em"><font style="FONT-FAMILY: Times New Roman" size="2">Segment revenue:</font></p> </td> <td valign="bottom"><font size="1">&#xA0;&#xA0;</font></td> <td valign="bottom"></td> <td valign="bottom"></td> <td valign="bottom"></td> <td valign="bottom"><font size="1">&#xA0;</font></td> <td valign="bottom"></td> <td valign="bottom"></td> <td valign="bottom"></td> <td valign="bottom"><font size="1">&#xA0;</font></td> <td valign="bottom"></td> <td valign="bottom"></td> <td valign="bottom"></td> <td valign="bottom"><font size="1">&#xA0;</font></td> <td valign="bottom"></td> <td valign="bottom"></td> <td valign="bottom"></td> </tr> <tr> <td valign="top"> <p style="MARGIN-LEFT: 3em; TEXT-INDENT: -1em"><font style="FONT-FAMILY: Times New Roman" size="2">Pharmaceutical (1)</font></p> </td> <td valign="bottom"><font size="1">&#xA0;&#xA0;</font></td> <td valign="bottom"><font style="FONT-FAMILY: Times New Roman" size="2">$</font></td> <td valign="bottom" align="right"><font style="FONT-FAMILY: Times New Roman" size="2">22,694.7</font></td> <td valign="bottom" nowrap="nowrap"><font style="FONT-FAMILY: Times New Roman" size="2">&#xA0;&#xA0;</font></td> <td valign="bottom"><font size="1">&#xA0;</font></td> <td valign="bottom"><font style="FONT-FAMILY: Times New Roman" size="2">$</font></td> <td valign="bottom" align="right"><font style="FONT-FAMILY: Times New Roman" size="2">22,078.7</font></td> <td valign="bottom" nowrap="nowrap"><font style="FONT-FAMILY: Times New Roman" size="2">&#xA0;&#xA0;</font></td> <td valign="bottom"><font size="1">&#xA0;</font></td> <td valign="bottom"><font style="FONT-FAMILY: Times New Roman" size="2">$</font></td> <td valign="bottom" align="right"><font style="FONT-FAMILY: Times New Roman" size="2">45,257.0</font></td> <td valign="bottom" nowrap="nowrap"><font style="FONT-FAMILY: Times New Roman" size="2">&#xA0;&#xA0;</font></td> <td valign="bottom"><font size="1">&#xA0;</font></td> <td valign="bottom"><font style="FONT-FAMILY: Times New Roman" size="2">$</font></td> <td valign="bottom" align="right"><font style="FONT-FAMILY: Times New Roman" size="2">43,482.8</font></td> <td valign="bottom" nowrap="nowrap"><font style="FONT-FAMILY: Times New Roman" size="2">&#xA0;&#xA0;</font></td> </tr> <tr bgcolor="#CCEEFF"> <td valign="top"> <p style="MARGIN-LEFT: 3em; TEXT-INDENT: -1em"><font style="FONT-FAMILY: Times New Roman" size="2">Medical (2)</font></p> </td> <td valign="bottom"><font size="1">&#xA0;&#xA0;</font></td> <td valign="bottom"><font style="FONT-FAMILY: Times New Roman" size="2">&#xA0;</font></td> <td valign="bottom" align="right"><font style="FONT-FAMILY: Times New Roman" size="2">2,232.4</font></td> <td valign="bottom" nowrap="nowrap"><font style="FONT-FAMILY: Times New Roman" size="2">&#xA0;&#xA0;</font></td> <td valign="bottom"><font size="1">&#xA0;</font></td> <td valign="bottom"><font style="FONT-FAMILY: Times New Roman" size="2">&#xA0;</font></td> <td valign="bottom" align="right"><font style="FONT-FAMILY: Times New Roman" size="2">2,057.3</font></td> <td valign="bottom" nowrap="nowrap"><font style="FONT-FAMILY: Times New Roman" size="2">&#xA0;&#xA0;</font></td> <td valign="bottom"><font size="1">&#xA0;</font></td> <td valign="bottom"><font style="FONT-FAMILY: Times New Roman" size="2">&#xA0;</font></td> <td valign="bottom" align="right"><font style="FONT-FAMILY: Times New Roman" size="2">4,469.4</font></td> <td valign="bottom" nowrap="nowrap"><font style="FONT-FAMILY: Times New Roman" size="2">&#xA0;&#xA0;</font></td> <td valign="bottom"><font size="1">&#xA0;</font></td> <td valign="bottom"><font style="FONT-FAMILY: Times New Roman" size="2">&#xA0;</font></td> <td valign="bottom" align="right"><font style="FONT-FAMILY: Times New Roman" size="2">4,094.0</font></td> <td valign="bottom" nowrap="nowrap"><font style="FONT-FAMILY: Times New Roman" size="2">&#xA0;&#xA0;</font></td> </tr> <tr style="FONT-SIZE: 1px"> <td valign="bottom"></td> <td valign="bottom">&#xA0;&#xA0;</td> <td style="BORDER-TOP: #000000 1px solid" valign="bottom"> &#xA0;</td> <td style="BORDER-TOP: #000000 1px solid" valign="bottom"> &#xA0;</td> <td>&#xA0;</td> <td valign="bottom">&#xA0;</td> <td style="BORDER-TOP: #000000 1px solid" valign="bottom"> &#xA0;</td> <td style="BORDER-TOP: #000000 1px solid" valign="bottom"> &#xA0;</td> <td>&#xA0;</td> <td valign="bottom">&#xA0;</td> <td style="BORDER-TOP: #000000 1px solid" valign="bottom"> &#xA0;</td> <td style="BORDER-TOP: #000000 1px solid" valign="bottom"> &#xA0;</td> <td>&#xA0;</td> <td valign="bottom">&#xA0;</td> <td style="BORDER-TOP: #000000 1px solid" valign="bottom"> &#xA0;</td> <td style="BORDER-TOP: #000000 1px solid" valign="bottom"> &#xA0;</td> <td>&#xA0;</td> </tr> <tr> <td valign="top"> <p style="MARGIN-LEFT: 5em; TEXT-INDENT: -1em"><font style="FONT-FAMILY: Times New Roman" size="2">Total segment revenue</font></p> </td> <td valign="bottom"><font size="1">&#xA0;&#xA0;</font></td> <td valign="bottom"><font style="FONT-FAMILY: Times New Roman" size="2">&#xA0;</font></td> <td valign="bottom" align="right"><font style="FONT-FAMILY: Times New Roman" size="2">24,927.1</font></td> <td valign="bottom" nowrap="nowrap"><font style="FONT-FAMILY: Times New Roman" size="2">&#xA0;&#xA0;</font></td> <td valign="bottom"><font size="1">&#xA0;</font></td> <td valign="bottom"><font style="FONT-FAMILY: Times New Roman" size="2">&#xA0;</font></td> <td valign="bottom" align="right"><font style="FONT-FAMILY: Times New Roman" size="2">24,136.0</font></td> <td valign="bottom" nowrap="nowrap"><font style="FONT-FAMILY: Times New Roman" size="2">&#xA0;&#xA0;</font></td> <td valign="bottom"><font size="1">&#xA0;</font></td> <td valign="bottom"><font style="FONT-FAMILY: Times New Roman" size="2">&#xA0;</font></td> <td valign="bottom" align="right"><font style="FONT-FAMILY: Times New Roman" size="2">49,726.4</font></td> <td valign="bottom" nowrap="nowrap"><font style="FONT-FAMILY: Times New Roman" size="2">&#xA0;&#xA0;</font></td> <td valign="bottom"><font size="1">&#xA0;</font></td> <td valign="bottom"><font style="FONT-FAMILY: Times New Roman" size="2">&#xA0;</font></td> <td valign="bottom" align="right"><font style="FONT-FAMILY: Times New Roman" size="2">47,576.8</font></td> <td valign="bottom" nowrap="nowrap"><font style="FONT-FAMILY: Times New Roman" size="2">&#xA0;&#xA0;</font></td> </tr> <tr bgcolor="#CCEEFF"> <td valign="top"> <p style="MARGIN-LEFT: 3em; TEXT-INDENT: -1em"><font style="FONT-FAMILY: Times New Roman" size="2">Corporate (3)</font></p> </td> <td valign="bottom"><font size="1">&#xA0;&#xA0;</font></td> <td valign="bottom"><font style="FONT-FAMILY: Times New Roman" size="2">&#xA0;</font></td> <td valign="bottom" align="right"><font style="FONT-FAMILY: Times New Roman" size="2">(7.4</font></td> <td valign="bottom" nowrap="nowrap"><font style="FONT-FAMILY: Times New Roman" size="2">)&#xA0;</font></td> <td valign="bottom"><font size="1">&#xA0;</font></td> <td valign="bottom"><font style="FONT-FAMILY: Times New Roman" size="2">&#xA0;</font></td> <td valign="bottom" align="right"><font style="FONT-FAMILY: Times New Roman" size="2">(18.2</font></td> <td valign="bottom" nowrap="nowrap"><font style="FONT-FAMILY: Times New Roman" size="2">)&#xA0;</font></td> <td valign="bottom"><font size="1">&#xA0;</font></td> <td valign="bottom"><font style="FONT-FAMILY: Times New Roman" size="2">&#xA0;</font></td> <td valign="bottom" align="right"><font style="FONT-FAMILY: Times New Roman" size="2">(26.0</font></td> <td valign="bottom" nowrap="nowrap"><font style="FONT-FAMILY: Times New Roman" size="2">)&#xA0;</font></td> <td valign="bottom"><font size="1">&#xA0;</font></td> <td valign="bottom"><font style="FONT-FAMILY: Times New Roman" size="2">&#xA0;</font></td> <td valign="bottom" align="right"><font style="FONT-FAMILY: Times New Roman" size="2">(21.9</font></td> <td valign="bottom" nowrap="nowrap"><font style="FONT-FAMILY: Times New Roman" size="2">)&#xA0;</font></td> </tr> <tr style="FONT-SIZE: 1px"> <td valign="bottom"></td> <td valign="bottom">&#xA0;&#xA0;</td> <td style="BORDER-TOP: #000000 1px solid" valign="bottom"> &#xA0;</td> <td style="BORDER-TOP: #000000 1px solid" valign="bottom"> &#xA0;</td> <td>&#xA0;</td> <td valign="bottom">&#xA0;</td> <td style="BORDER-TOP: #000000 1px solid" valign="bottom"> &#xA0;</td> <td style="BORDER-TOP: #000000 1px solid" valign="bottom"> &#xA0;</td> <td>&#xA0;</td> <td valign="bottom">&#xA0;</td> <td style="BORDER-TOP: #000000 1px solid" valign="bottom"> &#xA0;</td> <td style="BORDER-TOP: #000000 1px solid" valign="bottom"> &#xA0;</td> <td>&#xA0;</td> <td valign="bottom">&#xA0;</td> <td style="BORDER-TOP: #000000 1px solid" valign="bottom"> &#xA0;</td> <td style="BORDER-TOP: #000000 1px solid" valign="bottom"> &#xA0;</td> <td>&#xA0;</td> </tr> <tr> <td valign="top"> <p style="MARGIN-LEFT: 1em; TEXT-INDENT: -1em"><font style="FONT-FAMILY: Times New Roman" size="2">Total consolidated revenue</font></p> </td> <td valign="bottom"><font size="1">&#xA0;&#xA0;</font></td> <td valign="bottom"><font style="FONT-FAMILY: Times New Roman" size="2">$</font></td> <td valign="bottom" align="right"><font style="FONT-FAMILY: Times New Roman" size="2">24,919.7</font></td> <td valign="bottom" nowrap="nowrap"><font style="FONT-FAMILY: Times New Roman" size="2">&#xA0;&#xA0;</font></td> <td valign="bottom"><font size="1">&#xA0;</font></td> <td valign="bottom"><font style="FONT-FAMILY: Times New Roman" size="2">$</font></td> <td valign="bottom" align="right"><font style="FONT-FAMILY: Times New Roman" size="2">24,117.8</font></td> <td valign="bottom" nowrap="nowrap"><font style="FONT-FAMILY: Times New Roman" size="2">&#xA0;&#xA0;</font></td> <td valign="bottom"><font size="1">&#xA0;</font></td> <td valign="bottom"><font style="FONT-FAMILY: Times New Roman" size="2">$</font></td> <td valign="bottom" align="right"><font style="FONT-FAMILY: Times New Roman" size="2">49,700.4</font></td> <td valign="bottom" nowrap="nowrap"><font style="FONT-FAMILY: Times New Roman" size="2">&#xA0;&#xA0;</font></td> <td valign="bottom"><font size="1">&#xA0;</font></td> <td valign="bottom"><font style="FONT-FAMILY: Times New Roman" size="2">$</font></td> <td valign="bottom" align="right"><font style="FONT-FAMILY: Times New Roman" size="2">47,554.9</font></td> <td valign="bottom" nowrap="nowrap"><font style="FONT-FAMILY: Times New Roman" size="2">&#xA0;&#xA0;</font></td> </tr> <tr style="FONT-SIZE: 1px"> <td valign="bottom"></td> <td valign="bottom">&#xA0;&#xA0;</td> <td style="BORDER-TOP: #000000 3px double" valign="bottom"> &#xA0;</td> <td style="BORDER-TOP: #000000 3px double" valign="bottom"> &#xA0;</td> <td>&#xA0;</td> <td valign="bottom">&#xA0;</td> <td style="BORDER-TOP: #000000 3px double" valign="bottom"> &#xA0;</td> <td style="BORDER-TOP: #000000 3px double" valign="bottom"> &#xA0;</td> <td>&#xA0;</td> <td valign="bottom">&#xA0;</td> <td style="BORDER-TOP: #000000 3px double" valign="bottom"> &#xA0;</td> <td style="BORDER-TOP: #000000 3px double" valign="bottom"> &#xA0;</td> <td>&#xA0;</td> <td valign="bottom">&#xA0;</td> <td style="BORDER-TOP: #000000 3px double" valign="bottom"> &#xA0;</td> <td style="BORDER-TOP: #000000 3px double" valign="bottom"> &#xA0;</td> <td>&#xA0;</td> </tr> </table> <p style="MARGIN-TOP: 0px; MARGIN-BOTTOM: 2px; WIDTH: 10%; LINE-HEIGHT: 8px; BORDER-BOTTOM: #000000 0.5pt solid"> &#xA0;</p> <table style="BORDER-COLLAPSE: collapse" cellspacing="0" cellpadding="0" width="100%" border="0"> <tr> <td valign="top" align="left" width="4%"><font style="FONT-FAMILY: Times New Roman" size="2">(1)</font></td> <td valign="top" align="left"><font style="FONT-FAMILY: Times New Roman" size="2">The Pharmaceutical segment&#x2019;s revenue is derived from the distribution of pharmaceutical, radiopharmaceutical and over-the-counter healthcare products.</font></td> </tr> </table> <table style="BORDER-COLLAPSE: collapse" cellspacing="0" cellpadding="0" width="100%" border="0"> <tr> <td valign="top" align="left" width="4%"><font style="FONT-FAMILY: Times New Roman" size="2">(2)</font></td> <td valign="top" align="left"><font style="FONT-FAMILY: Times New Roman" size="2">The Medical segment&#x2019;s revenue is derived from the manufacturing and distribution of medical, surgical and laboratory products and medical procedure kits.</font></td> </tr> </table> <table style="BORDER-COLLAPSE: collapse" cellspacing="0" cellpadding="0" width="100%" border="0"> <tr> <td valign="top" align="left" width="4%"><font style="FONT-FAMILY: Times New Roman" size="2">(3)</font></td> <td valign="top" align="left"><font style="FONT-FAMILY: Times New Roman" size="2">Corporate revenue consists of the elimination of inter-segment revenue.</font></td> </tr> </table> <p style="MARGIN-TOP: 12px; MARGIN-BOTTOM: 0px; TEXT-INDENT: 4%"> <font style="FONT-FAMILY: Times New Roman" size="2">The Company evaluates the performance of the segments based upon, among other things, segment profit. Segment profit is segment revenue less segment cost of products sold, less segment distribution, selling, general and administrative expense (&#x201C;SG&amp;A&#x201D;). Segment SG&amp;A expense includes equity compensation expense as well as allocated corporate expenses for shared functions, including corporate management, corporate finance, financial shared services, human resources, information technology, legal and an integrated hospital sales organization. Corporate expenses are allocated to the segments based upon headcount, level of benefit provided and ratable allocation. Information about interest income and expense and income taxes is not provided at the segment level. In addition, restructuring and employee severance, impairments and loss on sale of assets, litigation (credits)/charges, net and certain investment spending are not allocated to the segments. Investment spending generally includes the first year spend for certain projects which require incremental strategic investments in the form of additional operating expenses. The Company urges its segments to identify investment projects which will encourage innovation and provide future returns. As approval decisions for such projects are dependent upon executive management, the expenses for such projects are retained at Corporate. See Notes&#xA0;2 and 3, respectively, for further discussion of the Company&#x2019;s restructuring and employee severance and impairments and loss on sale of assets. The accounting policies of the segments are the same as those described in Note 1.</font></p> <p style="MARGIN-TOP: 12px; MARGIN-BOTTOM: 0px; TEXT-INDENT: 4%"> <font style="FONT-FAMILY: Times New Roman" size="2">The following table includes segment profit by reportable segment and reconciling items necessary to agree to amounts reported in the condensed consolidated financial statements:</font></p> <p style="MARGIN-TOP: 0px; FONT-SIZE: 12px; MARGIN-BOTTOM: 0px"> &#xA0;</p> <table cellspacing="0" cellpadding="0" width="92%" align="center" border="0"> <tr> <td width="72%"></td> <td valign="bottom" width="3%"></td> <td></td> <td></td> <td valign="bottom" width="3%"></td> <td></td> <td></td> <td valign="bottom" width="3%"></td> <td></td> <td></td> <td valign="bottom" width="3%"></td> <td></td> <td></td> </tr> <tr> <td valign="bottom"><font size="1">&#xA0;</font></td> <td valign="bottom"><font size="1">&#xA0;&#xA0;</font></td> <td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" align="center" colspan="5"><font style="FONT-FAMILY: Times New Roman" size="1"><b>Three&#xA0;Months&#xA0;Ended<br /> December&#xA0;31,</b></font></td> <td valign="bottom"><font size="1">&#xA0;&#xA0;</font></td> <td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" align="center" colspan="5"><font style="FONT-FAMILY: Times New Roman" size="1"><b>Six&#xA0;Months&#xA0;Ended<br /> December&#xA0;31,</b></font></td> </tr> <tr> <td valign="bottom" nowrap="nowrap"> <p style="WIDTH: 40pt; BORDER-BOTTOM: #000000 1px solid"> <font style="FONT-FAMILY: Times New Roman" size="1"><b>(in millions)</b></font></p> </td> <td valign="bottom"><font size="1">&#xA0;&#xA0;</font></td> <td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" align="center" colspan="2"><font style="FONT-FAMILY: Times New Roman" size="1"><b>2009</b></font></td> <td valign="bottom"><font size="1">&#xA0;&#xA0;</font></td> <td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" align="center" colspan="2"><font style="FONT-FAMILY: Times New Roman" size="1"><b>2008</b></font></td> <td valign="bottom"><font size="1">&#xA0;&#xA0;</font></td> <td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" align="center" colspan="2"><font style="FONT-FAMILY: Times New Roman" size="1"><b>2009</b></font></td> <td valign="bottom"><font size="1">&#xA0;&#xA0;</font></td> <td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" align="center" colspan="2"><font style="FONT-FAMILY: Times New Roman" size="1"><b>2008</b></font></td> </tr> <tr bgcolor="#CCEEFF"> <td valign="top"> <p style="MARGIN-LEFT: 1em; TEXT-INDENT: -1em"><font style="FONT-FAMILY: Times New Roman" size="2">Segment profit:</font></p> </td> <td valign="bottom"><font size="1">&#xA0;&#xA0;</font></td> <td valign="bottom"></td> <td valign="bottom"></td> <td valign="bottom"><font size="1">&#xA0;&#xA0;</font></td> <td valign="bottom"></td> <td valign="bottom"></td> <td valign="bottom"><font size="1">&#xA0;&#xA0;</font></td> <td valign="bottom"></td> <td valign="bottom"></td> <td valign="bottom"><font size="1">&#xA0;&#xA0;</font></td> <td valign="bottom"></td> <td valign="bottom"></td> </tr> <tr> <td valign="top"> <p style="MARGIN-LEFT: 3em; TEXT-INDENT: -1em"><font style="FONT-FAMILY: Times New Roman" size="2">Pharmaceutical</font></p> </td> <td valign="bottom"><font size="1">&#xA0;&#xA0;</font></td> <td valign="bottom"><font style="FONT-FAMILY: Times New Roman" size="2">$</font></td> <td valign="bottom" align="right"><font style="FONT-FAMILY: Times New Roman" size="2">259.6</font></td> <td valign="bottom"><font size="1">&#xA0;&#xA0;</font></td> <td valign="bottom"><font style="FONT-FAMILY: Times New Roman" size="2">$</font></td> <td valign="bottom" align="right"><font style="FONT-FAMILY: Times New Roman" size="2">262.6</font></td> <td valign="bottom"><font size="1">&#xA0;&#xA0;</font></td> <td valign="bottom"><font style="FONT-FAMILY: Times New Roman" size="2">$</font></td> <td valign="bottom" align="right"><font style="FONT-FAMILY: Times New Roman" size="2">468.0</font></td> <td valign="bottom"><font size="1">&#xA0;&#xA0;</font></td> <td valign="bottom"><font style="FONT-FAMILY: Times New Roman" size="2">$</font></td> <td valign="bottom" align="right"><font style="FONT-FAMILY: Times New Roman" size="2">475.9</font></td> </tr> <tr bgcolor="#CCEEFF"> <td valign="top"> <p style="MARGIN-LEFT: 3em; TEXT-INDENT: -1em"><font style="FONT-FAMILY: Times New Roman" size="2">Medical</font></p> </td> <td valign="bottom"><font size="1">&#xA0;&#xA0;</font></td> <td valign="bottom"><font style="FONT-FAMILY: Times New Roman" size="2">&#xA0;</font></td> <td valign="bottom" align="right"><font style="FONT-FAMILY: Times New Roman" size="2">102.5</font></td> <td valign="bottom"><font size="1">&#xA0;&#xA0;</font></td> <td valign="bottom"><font style="FONT-FAMILY: Times New Roman" size="2">&#xA0;</font></td> <td valign="bottom" align="right"><font style="FONT-FAMILY: Times New Roman" size="2">74.5</font></td> <td valign="bottom"><font size="1">&#xA0;&#xA0;</font></td> <td valign="bottom"><font style="FONT-FAMILY: Times New Roman" size="2">&#xA0;</font></td> <td valign="bottom" align="right"><font style="FONT-FAMILY: Times New Roman" size="2">217.4</font></td> <td valign="bottom"><font size="1">&#xA0;&#xA0;</font></td> <td valign="bottom"><font style="FONT-FAMILY: Times New Roman" size="2">&#xA0;</font></td> <td valign="bottom" align="right"><font style="FONT-FAMILY: Times New Roman" size="2">172.4</font></td> </tr> <tr style="FONT-SIZE: 1px"> <td valign="bottom"></td> <td valign="bottom">&#xA0;&#xA0;</td> <td style="BORDER-TOP: #000000 1px solid" valign="bottom"> &#xA0;</td> <td style="BORDER-TOP: #000000 1px solid" valign="bottom"> &#xA0;</td> <td valign="bottom">&#xA0;&#xA0;</td> <td style="BORDER-TOP: #000000 1px solid" valign="bottom"> &#xA0;</td> <td style="BORDER-TOP: #000000 1px solid" valign="bottom"> &#xA0;</td> <td valign="bottom">&#xA0;&#xA0;</td> <td style="BORDER-TOP: #000000 1px solid" valign="bottom"> &#xA0;</td> <td style="BORDER-TOP: #000000 1px solid" valign="bottom"> &#xA0;</td> <td valign="bottom">&#xA0;&#xA0;</td> <td style="BORDER-TOP: #000000 1px solid" valign="bottom"> &#xA0;</td> <td style="BORDER-TOP: #000000 1px solid" valign="bottom"> &#xA0;</td> </tr> <tr> <td valign="top"> <p style="MARGIN-LEFT: 5em; TEXT-INDENT: -1em"><font style="FONT-FAMILY: Times New Roman" size="2">Total segment profit</font></p> </td> <td valign="bottom"><font size="1">&#xA0;&#xA0;</font></td> <td valign="bottom"><font style="FONT-FAMILY: Times New Roman" size="2">&#xA0;</font></td> <td valign="bottom" align="right"><font style="FONT-FAMILY: Times New Roman" size="2">362.1</font></td> <td valign="bottom"><font size="1">&#xA0;&#xA0;</font></td> <td valign="bottom"><font style="FONT-FAMILY: Times New Roman" size="2">&#xA0;</font></td> <td valign="bottom" align="right"><font style="FONT-FAMILY: Times New Roman" size="2">337.1</font></td> <td valign="bottom"><font size="1">&#xA0;&#xA0;</font></td> <td valign="bottom"><font style="FONT-FAMILY: Times New Roman" size="2">&#xA0;</font></td> <td valign="bottom" align="right"><font style="FONT-FAMILY: Times New Roman" size="2">685.4</font></td> <td valign="bottom"><font size="1">&#xA0;&#xA0;</font></td> <td valign="bottom"><font style="FONT-FAMILY: Times New Roman" size="2">&#xA0;</font></td> <td valign="bottom" align="right"><font style="FONT-FAMILY: Times New Roman" size="2">648.3</font></td> </tr> </table> <p style="MARGIN-TOP: 0px; MARGIN-BOTTOM: 0px"><font size="1">&#xA0;</font></p> <table cellspacing="0" cellpadding="0" width="92%" align="center" border="0"> <tr> <td width="72%"></td> <td valign="bottom" width="3%"></td> <td></td> <td></td> <td valign="bottom" width="3%"></td> <td></td> <td></td> <td></td> <td valign="bottom" width="3%"></td> <td></td> <td></td> <td></td> <td valign="bottom" width="3%"></td> <td></td> <td></td> <td></td> </tr> <tr> <td valign="bottom"><font size="1">&#xA0;</font></td> <td valign="bottom"><font size="1">&#xA0;&#xA0;</font></td> <td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" align="center" colspan="5"><font style="FONT-FAMILY: Times New Roman" size="1"><b>Three&#xA0;Months&#xA0;Ended<br /> December&#xA0;31,</b></font></td> <td valign="bottom"><font size="1">&#xA0;</font></td> <td valign="bottom"><font size="1">&#xA0;</font></td> <td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" align="center" colspan="6"><font style="FONT-FAMILY: Times New Roman" size="1"><b>Six&#xA0;Months&#xA0;Ended<br /> December&#xA0;31,</b></font></td> <td valign="bottom"><font size="1">&#xA0;</font></td> </tr> <tr> <td valign="bottom" nowrap="nowrap"> <p style="WIDTH: 40pt; BORDER-BOTTOM: #000000 1px solid"> <font style="FONT-FAMILY: Times New Roman" size="1"><b>(in millions)</b></font></p> </td> <td valign="bottom"><font size="1">&#xA0;&#xA0;</font></td> <td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" align="center" colspan="2"><font style="FONT-FAMILY: Times New Roman" size="1"><b>2009</b></font></td> <td valign="bottom"><font size="1">&#xA0;&#xA0;</font></td> <td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" align="center" colspan="2"><font style="FONT-FAMILY: Times New Roman" size="1"><b>2008</b></font></td> <td valign="bottom"><font size="1">&#xA0;</font></td> <td valign="bottom"><font size="1">&#xA0;</font></td> <td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" align="center" colspan="2"><font style="FONT-FAMILY: Times New Roman" size="1"><b>2009</b></font></td> <td valign="bottom"><font size="1">&#xA0;</font></td> <td valign="bottom"><font size="1">&#xA0;</font></td> <td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" align="center" colspan="2"><font style="FONT-FAMILY: Times New Roman" size="1"><b>2008</b></font></td> <td valign="bottom"><font size="1">&#xA0;</font></td> </tr> <tr bgcolor="#CCEEFF"> <td valign="top"> <p style="MARGIN-LEFT: 3em; TEXT-INDENT: -1em"><font style="FONT-FAMILY: Times New Roman" size="2">Corporate (1)</font></p> </td> <td valign="bottom"><font size="1">&#xA0;&#xA0;</font></td> <td valign="bottom"><font style="FONT-FAMILY: Times New Roman" size="2">&#xA0;</font></td> <td valign="bottom" align="right"><font style="FONT-FAMILY: Times New Roman" size="2">4.7</font></td> <td valign="bottom"><font size="1">&#xA0;&#xA0;</font></td> <td valign="bottom"><font style="FONT-FAMILY: Times New Roman" size="2">&#xA0;</font></td> <td valign="bottom" align="right"><font style="FONT-FAMILY: Times New Roman" size="2">(24.0</font></td> <td valign="bottom" nowrap="nowrap"><font style="FONT-FAMILY: Times New Roman" size="2">)&#xA0;</font></td> <td valign="bottom"><font size="1">&#xA0;</font></td> <td valign="bottom"><font style="FONT-FAMILY: Times New Roman" size="2">&#xA0;</font></td> <td valign="bottom" align="right"><font style="FONT-FAMILY: Times New Roman" size="2">(78.7</font></td> <td valign="bottom" nowrap="nowrap"><font style="FONT-FAMILY: Times New Roman" size="2">)&#xA0;</font></td> <td valign="bottom"><font size="1">&#xA0;</font></td> <td valign="bottom"><font style="FONT-FAMILY: Times New Roman" size="2">&#xA0;</font></td> <td valign="bottom" align="right"><font style="FONT-FAMILY: Times New Roman" size="2">(48.6</font></td> <td valign="bottom" nowrap="nowrap"><font style="FONT-FAMILY: Times New Roman" size="2">)&#xA0;</font></td> </tr> <tr style="FONT-SIZE: 1px"> <td valign="bottom"></td> <td valign="bottom">&#xA0;&#xA0;</td> <td style="BORDER-TOP: #000000 1px solid" valign="bottom"> &#xA0;</td> <td style="BORDER-TOP: #000000 1px solid" valign="bottom"> &#xA0;</td> <td valign="bottom">&#xA0;&#xA0;</td> <td style="BORDER-TOP: #000000 1px solid" valign="bottom"> &#xA0;</td> <td style="BORDER-TOP: #000000 1px solid" valign="bottom"> &#xA0;</td> <td>&#xA0;</td> <td valign="bottom">&#xA0;</td> <td style="BORDER-TOP: #000000 1px solid" valign="bottom"> &#xA0;</td> <td style="BORDER-TOP: #000000 1px solid" valign="bottom"> &#xA0;</td> <td>&#xA0;</td> <td valign="bottom">&#xA0;</td> <td style="BORDER-TOP: #000000 1px solid" valign="bottom"> &#xA0;</td> <td style="BORDER-TOP: #000000 1px solid" valign="bottom"> &#xA0;</td> <td>&#xA0;</td> </tr> <tr> <td valign="top"> <p style="MARGIN-LEFT: 1em; TEXT-INDENT: -1em"><font style="FONT-FAMILY: Times New Roman" size="2">Total consolidated operating earnings</font></p> </td> <td valign="bottom"><font size="1">&#xA0;&#xA0;</font></td> <td valign="bottom"><font style="FONT-FAMILY: Times New Roman" size="2">$</font></td> <td valign="bottom" align="right"><font style="FONT-FAMILY: Times New Roman" size="2">366.8</font></td> <td valign="bottom"><font size="1">&#xA0;&#xA0;</font></td> <td valign="bottom"><font style="FONT-FAMILY: Times New Roman" size="2">$</font></td> <td valign="bottom" align="right"><font style="FONT-FAMILY: Times New Roman" size="2">313.1</font></td> <td valign="bottom" nowrap="nowrap"><font style="FONT-FAMILY: Times New Roman" size="2">&#xA0;&#xA0;</font></td> <td valign="bottom"><font size="1">&#xA0;</font></td> <td valign="bottom"><font style="FONT-FAMILY: Times New Roman" size="2">$</font></td> <td valign="bottom" align="right"><font style="FONT-FAMILY: Times New Roman" size="2">606.7</font></td> <td valign="bottom" nowrap="nowrap"><font style="FONT-FAMILY: Times New Roman" size="2">&#xA0;&#xA0;</font></td> <td valign="bottom"><font size="1">&#xA0;</font></td> <td valign="bottom"><font style="FONT-FAMILY: Times New Roman" size="2">$</font></td> <td valign="bottom" align="right"><font style="FONT-FAMILY: Times New Roman" size="2">599.7</font></td> <td valign="bottom" nowrap="nowrap"><font style="FONT-FAMILY: Times New Roman" size="2">&#xA0;&#xA0;</font></td> </tr> <tr style="FONT-SIZE: 1px"> <td valign="bottom"></td> <td valign="bottom">&#xA0;&#xA0;</td> <td style="BORDER-TOP: #000000 3px double" valign="bottom"> &#xA0;</td> <td style="BORDER-TOP: #000000 3px double" valign="bottom"> &#xA0;</td> <td valign="bottom">&#xA0;&#xA0;</td> <td style="BORDER-TOP: #000000 3px double" valign="bottom"> &#xA0;</td> <td style="BORDER-TOP: #000000 3px double" valign="bottom"> &#xA0;</td> <td>&#xA0;</td> <td valign="bottom">&#xA0;</td> <td style="BORDER-TOP: #000000 3px double" valign="bottom"> &#xA0;</td> <td style="BORDER-TOP: #000000 3px double" valign="bottom"> &#xA0;</td> <td>&#xA0;</td> <td valign="bottom">&#xA0;</td> <td style="BORDER-TOP: #000000 3px double" valign="bottom"> &#xA0;</td> <td style="BORDER-TOP: #000000 3px double" valign="bottom"> &#xA0;</td> <td>&#xA0;</td> </tr> </table> <p style="MARGIN-TOP: 0px; MARGIN-BOTTOM: 2px; WIDTH: 10%; LINE-HEIGHT: 8px; BORDER-BOTTOM: #000000 0.5pt solid"> &#xA0;</p> <table style="BORDER-COLLAPSE: collapse" cellspacing="0" cellpadding="0" width="100%" border="0"> <tr> <td valign="top" align="left" width="4%"><font style="FONT-FAMILY: Times New Roman" size="2">(1)</font></td> <td valign="top" align="left"><font style="FONT-FAMILY: Times New Roman" size="2">For the three and six months ended December&#xA0;31, 2009 and 2008, Corporate includes, among other things, restructuring and employee severance, impairments and loss on sale of assets, litigation (credits)/charges, net and certain investment spending which are not allocated to the segments.</font></td> </tr> </table> <p style="MARGIN-TOP: 12px; MARGIN-BOTTOM: 0px; TEXT-INDENT: 4%"> <font style="FONT-FAMILY: Times New Roman" size="2">The following table includes total assets at December&#xA0;31, 2009 and June&#xA0;30, 2009 for each segment as well as reconciling items necessary to agree to the amounts reported in the condensed consolidated financial statements:</font></p> <p style="MARGIN-TOP: 0px; FONT-SIZE: 12px; MARGIN-BOTTOM: 0px"> &#xA0;</p> <table cellspacing="0" cellpadding="0" width="76%" align="center" border="0"> <tr> <td width="74%"></td> <td valign="bottom" width="5%"></td> <td></td> <td></td> <td valign="bottom" width="5%"></td> <td></td> <td></td> </tr> <tr> <td valign="bottom" nowrap="nowrap"> <p style="WIDTH: 40pt; BORDER-BOTTOM: #000000 1px solid"> <font style="FONT-FAMILY: Times New Roman" size="1"><b>(in millions)</b></font></p> </td> <td valign="bottom"><font size="1">&#xA0;&#xA0;</font></td> <td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" align="center" colspan="2"><font style="FONT-FAMILY: Times New Roman" size="1"><b>December&#xA0;31,<br /> 2009</b></font></td> <td valign="bottom"><font size="1">&#xA0;&#xA0;</font></td> <td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" align="center" colspan="2"><font style="FONT-FAMILY: Times New Roman" size="1"><b>June&#xA0;30,<br /> 2009</b></font></td> </tr> <tr bgcolor="#CCEEFF"> <td valign="top"> <p style="MARGIN-LEFT: 1em; TEXT-INDENT: -1em"><font style="FONT-FAMILY: Times New Roman" size="2">Segment assets:</font></p> </td> <td valign="bottom"><font size="1">&#xA0;&#xA0;</font></td> <td valign="bottom"></td> <td valign="bottom"></td> <td valign="bottom"><font size="1">&#xA0;&#xA0;</font></td> <td valign="bottom"></td> <td valign="bottom"></td> </tr> <tr> <td valign="top"> <p style="MARGIN-LEFT: 1em; TEXT-INDENT: -1em"><font style="FONT-FAMILY: Times New Roman" size="2">Pharmaceutical</font></p> </td> <td valign="bottom"><font size="1">&#xA0;&#xA0;</font></td> <td valign="bottom"><font style="FONT-FAMILY: Times New Roman" size="2">$</font></td> <td valign="bottom" align="right"><font style="FONT-FAMILY: Times New Roman" size="2">13,536.0</font></td> <td valign="bottom"><font size="1">&#xA0;&#xA0;</font></td> <td valign="bottom"><font style="FONT-FAMILY: Times New Roman" size="2">$</font></td> <td valign="bottom" align="right"><font style="FONT-FAMILY: Times New Roman" size="2">12,625.3</font></td> </tr> <tr bgcolor="#CCEEFF"> <td valign="top"> <p style="MARGIN-LEFT: 1em; TEXT-INDENT: -1em"><font style="FONT-FAMILY: Times New Roman" size="2">Medical</font></p> </td> <td valign="bottom"><font size="1">&#xA0;&#xA0;</font></td> <td valign="bottom"><font style="FONT-FAMILY: Times New Roman" size="2">&#xA0;</font></td> <td valign="bottom" align="right"><font style="FONT-FAMILY: Times New Roman" size="2">3,897.6</font></td> <td valign="bottom"><font size="1">&#xA0;&#xA0;</font></td> <td valign="bottom"><font style="FONT-FAMILY: Times New Roman" size="2">&#xA0;</font></td> <td valign="bottom" align="right"><font style="FONT-FAMILY: Times New Roman" size="2">3,747.9</font></td> </tr> <tr> <td valign="top"> <p style="MARGIN-LEFT: 1em; TEXT-INDENT: -1em"><font style="FONT-FAMILY: Times New Roman" size="2">Corporate (1)</font></p> </td> <td valign="bottom"><font size="1">&#xA0;&#xA0;</font></td> <td valign="bottom"><font style="FONT-FAMILY: Times New Roman" size="2">&#xA0;</font></td> <td valign="bottom" align="right"><font style="FONT-FAMILY: Times New Roman" size="2">3,387.9</font></td> <td valign="bottom"><font size="1">&#xA0;&#xA0;</font></td> <td valign="bottom"><font style="FONT-FAMILY: Times New Roman" size="2">&#xA0;</font></td> <td valign="bottom" align="right"><font style="FONT-FAMILY: Times New Roman" size="2">8,745.6</font></td> </tr> <tr style="FONT-SIZE: 1px"> <td valign="bottom"></td> <td valign="bottom">&#xA0;&#xA0;</td> <td style="BORDER-TOP: #000000 1px solid" valign="bottom"> &#xA0;</td> <td style="BORDER-TOP: #000000 1px solid" valign="bottom"> &#xA0;</td> <td valign="bottom">&#xA0;&#xA0;</td> <td style="BORDER-TOP: #000000 1px solid" valign="bottom"> &#xA0;</td> <td style="BORDER-TOP: #000000 1px solid" valign="bottom"> &#xA0;</td> </tr> <tr bgcolor="#CCEEFF"> <td valign="top"> <p style="MARGIN-LEFT: 1em; TEXT-INDENT: -1em"><font style="FONT-FAMILY: Times New Roman" size="2">Consolidated assets</font></p> </td> <td valign="bottom"><font size="1">&#xA0;&#xA0;</font></td> <td valign="bottom"><font style="FONT-FAMILY: Times New Roman" size="2">$</font></td> <td valign="bottom" align="right"><font style="FONT-FAMILY: Times New Roman" size="2">20,821.5</font></td> <td valign="bottom"><font size="1">&#xA0;&#xA0;</font></td> <td valign="bottom"><font style="FONT-FAMILY: Times New Roman" size="2">$</font></td> <td valign="bottom" align="right"><font style="FONT-FAMILY: Times New Roman" size="2">25,118.8</font></td> </tr> <tr style="FONT-SIZE: 1px"> <td valign="bottom"></td> <td valign="bottom">&#xA0;&#xA0;</td> <td style="BORDER-TOP: #000000 3px double" valign="bottom"> &#xA0;</td> <td style="BORDER-TOP: #000000 3px double" valign="bottom"> &#xA0;</td> <td valign="bottom">&#xA0;&#xA0;</td> <td style="BORDER-TOP: #000000 3px double" valign="bottom"> &#xA0;</td> <td style="BORDER-TOP: #000000 3px double" valign="bottom"> &#xA0;</td> </tr> </table> <p style="MARGIN-TOP: 0px; MARGIN-BOTTOM: 2px; WIDTH: 10%; LINE-HEIGHT: 8px; BORDER-BOTTOM: #000000 0.5pt solid"> &#xA0;</p> <table style="BORDER-COLLAPSE: collapse" cellspacing="0" cellpadding="0" width="100%" border="0"> <tr> <td valign="top" align="left" width="4%"><font style="FONT-FAMILY: Times New Roman" size="2">(1)</font></td> <td valign="top" align="left"><font style="FONT-FAMILY: Times New Roman" size="2">The Corporate assets primarily consist of cash and equivalents, the Company&#x2019;s investment in CareFusion, net property and equipment, and the Company&#x2019;s contractual tax indemnification receivable from CareFusion (see Note 8 for further information regarding this receivable). Additionally, the Corporate assets as of June&#xA0;30, 3009 include CareFusion assets and other assets held for sale and discontinued operations.</font></td> </tr> </table> </div> 14. SEGMENT INFORMATION The Company&#x2019;s operations are principally managed on a products and services basis. In connection with the Spin-Off, the false false No definition available. No authoritative reference available. false false 1 1 false UnKnown UnKnown UnKnown false true XML 18 R11.xml IDEA: INVESTMENT IN CAREFUSION 1.0.0.3 false INVESTMENT IN CAREFUSION false 1 $ false false iso4217_USD Standard http://www.xbrl.org/2003/iso4217 USD iso4217 0 iso4217_USD_per_shares Divide http://www.xbrl.org/2003/iso4217 USD iso4217 http://www.xbrl.org/2003/instance shares 0 shares Standard http://www.xbrl.org/2003/instance shares 0 5 3 us-gaap_AvailableForSaleSecuritiesTextBlock us-gaap true na duration string No definition available. false false false false false false false false false 1 false false 0 0 <div> <p style="MARGIN-TOP: 18px; MARGIN-BOTTOM: 0px"><font style="FONT-FAMILY: Times New Roman" size="2"><b>6. INVESTMENT IN CAREFUSION</b></font></p> <p style="MARGIN-TOP: 6px; MARGIN-BOTTOM: 0px; TEXT-INDENT: 4%"> <font style="FONT-FAMILY: Times New Roman" size="2">The following table provides a summary of the Company&#x2019;s available-for-sale securities as of December&#xA0;31, 2009:</font></p> <p style="MARGIN-TOP: 0px; FONT-SIZE: 12px; MARGIN-BOTTOM: 0px"> &#xA0;</p> <table cellspacing="0" cellpadding="0" width="92%" align="center" border="0"> <tr> <td width="65%"></td> <td valign="bottom" width="5%"></td> <td></td> <td></td> <td valign="bottom" width="5%"></td> <td></td> <td></td> <td valign="bottom" width="5%"></td> <td></td> <td></td> <td valign="bottom" width="5%"></td> <td></td> <td></td> </tr> <tr> <td valign="bottom"><font size="1">&#xA0;</font></td> <td valign="bottom"><font size="1">&#xA0;&#xA0;</font></td> <td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" align="center" colspan="11"><font style="FONT-FAMILY: Times New Roman" size="1"><b>Available-for-Sale Securities</b></font></td> </tr> <tr> <td valign="bottom" nowrap="nowrap"> <p style="WIDTH: 40pt; BORDER-BOTTOM: #000000 1px solid"> <font style="FONT-FAMILY: Times New Roman" size="1"><b>(in millions)</b></font></p> </td> <td valign="bottom"><font size="1">&#xA0;&#xA0;</font></td> <td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" align="center" colspan="2"><font style="FONT-FAMILY: Times New Roman" size="1"><b>Cost (2)</b></font></td> <td valign="bottom"><font size="1">&#xA0;&#xA0;</font></td> <td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" align="center" colspan="2"><font style="FONT-FAMILY: Times New Roman" size="1"><b>Gross<br /> Unrealized<br /> Gains</b></font></td> <td valign="bottom"><font size="1">&#xA0;&#xA0;</font></td> <td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" align="center" colspan="2"><font style="FONT-FAMILY: Times New Roman" size="1"><b>Gross<br /> Unrealized<br /> Losses</b></font></td> <td valign="bottom"><font size="1">&#xA0;&#xA0;</font></td> <td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" align="center" colspan="2"><font style="FONT-FAMILY: Times New Roman" size="1"><b>Estimated<br /> Fair<br /> Value</b></font></td> </tr> <tr bgcolor="#CCEEFF"> <td valign="top"> <p style="MARGIN-LEFT: 1em; TEXT-INDENT: -1em"><font style="FONT-FAMILY: Times New Roman" size="2">Equity securities (1)</font></p> </td> <td valign="bottom"><font size="1">&#xA0;&#xA0;</font></td> <td valign="bottom"><font style="FONT-FAMILY: Times New Roman" size="2">$</font></td> <td valign="bottom" align="right"><font style="FONT-FAMILY: Times New Roman" size="2">748.2</font></td> <td valign="bottom"><font size="1">&#xA0;&#xA0;</font></td> <td valign="bottom"><font style="FONT-FAMILY: Times New Roman" size="2">$</font></td> <td valign="bottom" align="right"><font style="FONT-FAMILY: Times New Roman" size="2">149.2</font></td> <td valign="bottom"><font size="1">&#xA0;&#xA0;</font></td> <td valign="bottom"><font style="FONT-FAMILY: Times New Roman" size="2">$</font></td> <td valign="bottom" align="right"><font style="FONT-FAMILY: Times New Roman" size="2">&#x2014;&#xA0;&#xA0;</font></td> <td valign="bottom"><font size="1">&#xA0;&#xA0;</font></td> <td valign="bottom"><font style="FONT-FAMILY: Times New Roman" size="2">$</font></td> <td valign="bottom" align="right"><font style="FONT-FAMILY: Times New Roman" size="2">897.4</font></td> </tr> <tr style="FONT-SIZE: 1px"> <td valign="bottom"></td> <td valign="bottom">&#xA0;&#xA0;</td> <td style="BORDER-TOP: #000000 1px solid" valign="bottom"> &#xA0;</td> <td style="BORDER-TOP: #000000 1px solid" valign="bottom"> &#xA0;</td> <td valign="bottom">&#xA0;&#xA0;</td> <td style="BORDER-TOP: #000000 1px solid" valign="bottom"> &#xA0;</td> <td style="BORDER-TOP: #000000 1px solid" valign="bottom"> &#xA0;</td> <td valign="bottom">&#xA0;&#xA0;</td> <td style="BORDER-TOP: #000000 1px solid" valign="bottom"> &#xA0;</td> <td style="BORDER-TOP: #000000 1px solid" valign="bottom"> &#xA0;</td> <td valign="bottom">&#xA0;&#xA0;</td> <td style="BORDER-TOP: #000000 1px solid" valign="bottom"> &#xA0;</td> <td style="BORDER-TOP: #000000 1px solid" valign="bottom"> &#xA0;</td> </tr> <tr> <td valign="top"> <p style="MARGIN-LEFT: 1em; TEXT-INDENT: -1em"><font style="FONT-FAMILY: Times New Roman" size="2">Total</font></p> </td> <td valign="bottom"><font size="1">&#xA0;&#xA0;</font></td> <td valign="bottom"><font style="FONT-FAMILY: Times New Roman" size="2">$</font></td> <td valign="bottom" align="right"><font style="FONT-FAMILY: Times New Roman" size="2">748.2</font></td> <td valign="bottom"><font size="1">&#xA0;&#xA0;</font></td> <td valign="bottom"><font style="FONT-FAMILY: Times New Roman" size="2">$</font></td> <td valign="bottom" align="right"><font style="FONT-FAMILY: Times New Roman" size="2">149.2</font></td> <td valign="bottom"><font size="1">&#xA0;&#xA0;</font></td> <td valign="bottom"><font style="FONT-FAMILY: Times New Roman" size="2">$</font></td> <td valign="bottom" align="right"><font style="FONT-FAMILY: Times New Roman" size="2">&#x2014;&#xA0;&#xA0;</font></td> <td valign="bottom"><font size="1">&#xA0;&#xA0;</font></td> <td valign="bottom"><font style="FONT-FAMILY: Times New Roman" size="2">$</font></td> <td valign="bottom" align="right"><font style="FONT-FAMILY: Times New Roman" size="2">897.4</font></td> </tr> <tr style="FONT-SIZE: 1px"> <td valign="bottom"></td> <td valign="bottom">&#xA0;&#xA0;</td> <td style="BORDER-TOP: #000000 3px double" valign="bottom"> &#xA0;</td> <td style="BORDER-TOP: #000000 3px double" valign="bottom"> &#xA0;</td> <td valign="bottom">&#xA0;&#xA0;</td> <td style="BORDER-TOP: #000000 3px double" valign="bottom"> &#xA0;</td> <td style="BORDER-TOP: #000000 3px double" valign="bottom"> &#xA0;</td> <td valign="bottom">&#xA0;&#xA0;</td> <td style="BORDER-TOP: #000000 3px double" valign="bottom"> &#xA0;</td> <td style="BORDER-TOP: #000000 3px double" valign="bottom"> &#xA0;</td> <td valign="bottom">&#xA0;&#xA0;</td> <td style="BORDER-TOP: #000000 3px double" valign="bottom"> &#xA0;</td> <td style="BORDER-TOP: #000000 3px double" valign="bottom"> &#xA0;</td> </tr> </table> <p style="MARGIN-TOP: 0px; MARGIN-BOTTOM: 2px; WIDTH: 10%; LINE-HEIGHT: 8px; BORDER-BOTTOM: #000000 0.5pt solid"> &#xA0;</p> <table style="BORDER-COLLAPSE: collapse" cellspacing="0" cellpadding="0" width="100%" border="0"> <tr> <td valign="top" align="left" width="4%"><font style="FONT-FAMILY: Times New Roman" size="2">(1)</font></td> <td valign="top" align="left"><font style="FONT-FAMILY: Times New Roman" size="2">Equity securities consist of the Company&#x2019;s ownership of approximately 35.9&#xA0;million shares of CareFusion common stock retained in connection with the Spin-Off. These securities are stated at fair value, with unrealized gains and losses reported in other comprehensive income. Realized gains and losses, and declines in fair value deemed to be other-than-temporary are recognized in net earnings immediately. During the three months ended December&#xA0;31, 2009, the Company disposed of approximately 5.5&#xA0;million shares of CareFusion common stock resulting in proceeds of approximately $135.0 million and a pre-tax realized gain of approximately $20.0 million. The net adjustment to unrealized holding gains on CareFusion common stock included in other comprehensive income totaled $115.2 million during the same period.</font></td> </tr> </table> <table style="BORDER-COLLAPSE: collapse" cellspacing="0" cellpadding="0" width="100%" border="0"> <tr> <td valign="top" align="left" width="4%"><font style="FONT-FAMILY: Times New Roman" size="2">(2)</font></td> <td valign="top" align="left"><font style="FONT-FAMILY: Times New Roman" size="2">Represents the Company&#x2019;s cost investment in the net book value of CareFusion&#x2019;s assets immediately following the Spin-Off adjusted for the sale of securities during the three months ended December&#xA0;31, 2009.</font></td> </tr> </table> <p style="MARGIN-TOP: 0px; MARGIN-BOTTOM: 0px"><font size="1">&#xA0;</font></p> </div> 6. INVESTMENT IN CAREFUSION The following table provides a summary of the Company&#x2019;s available-for-sale securities as of December&#xA0;31, false false No definition available. No authoritative reference available. false false 1 1 false UnKnown UnKnown UnKnown false true XML 19 R10.xml IDEA: GOODWILL AND OTHER INTANGIBLE ASSETS 1.0.0.3 false GOODWILL AND OTHER INTANGIBLE ASSETS false 1 $ false false iso4217_USD Standard http://www.xbrl.org/2003/iso4217 USD iso4217 0 iso4217_USD_per_shares Divide http://www.xbrl.org/2003/iso4217 USD iso4217 http://www.xbrl.org/2003/instance shares 0 shares Standard http://www.xbrl.org/2003/instance shares 0 5 3 us-gaap_GoodwillAndIntangibleAssetsDisclosureTextBlock us-gaap true na duration string No definition available. false false false false false false false false false 1 false false 0 0 <div> <p style="MARGIN-TOP: 18px; MARGIN-BOTTOM: 0px"><font style="FONT-FAMILY: Times New Roman" size="2"><b>5. GOODWILL AND OTHER INTANGIBLE ASSETS</b></font></p> <p style="MARGIN-TOP: 6px; MARGIN-BOTTOM: 0px; MARGIN-LEFT: 2%"> <font style="FONT-FAMILY: Times New Roman" size="2"><b><i>Goodwill</i></b></font></p> <p style="MARGIN-TOP: 6px; MARGIN-BOTTOM: 0px; TEXT-INDENT: 4%"> <font style="FONT-FAMILY: Times New Roman" size="2">The following table summarizes the changes in the carrying amount of goodwill by segment for the six months ended December&#xA0;31, 2009:</font></p> <p style="MARGIN-TOP: 0px; FONT-SIZE: 12px; MARGIN-BOTTOM: 0px"> &#xA0;</p> <table cellspacing="0" cellpadding="0" width="84%" align="center" border="0"> <tr> <td width="69%"></td> <td valign="bottom" width="5%"></td> <td></td> <td></td> <td valign="bottom" width="5%"></td> <td></td> <td></td> <td valign="bottom" width="5%"></td> <td></td> <td></td> </tr> <tr> <td valign="bottom" nowrap="nowrap"> <p style="WIDTH: 40pt; BORDER-BOTTOM: #000000 1px solid"> <font style="FONT-FAMILY: Times New Roman" size="1"><b>(in millions)</b></font></p> </td> <td valign="bottom"><font size="1">&#xA0;&#xA0;</font></td> <td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" align="center" colspan="2"><font style="FONT-FAMILY: Times New Roman" size="1"><b>Pharmaceutical</b></font></td> <td valign="bottom"><font size="1">&#xA0;&#xA0;</font></td> <td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" align="center" colspan="2"><font style="FONT-FAMILY: Times New Roman" size="1"><b>Medical</b></font></td> <td valign="bottom"><font size="1">&#xA0;&#xA0;</font></td> <td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" align="center" colspan="2"><font style="FONT-FAMILY: Times New Roman" size="1"><b>Total</b></font></td> </tr> <tr bgcolor="#CCEEFF"> <td valign="top"> <p style="MARGIN-LEFT: 1em; TEXT-INDENT: -1em"><font style="FONT-FAMILY: Times New Roman" size="2">Balance at June&#xA0;30, 2009</font></p> </td> <td valign="bottom"><font size="1">&#xA0;&#xA0;</font></td> <td valign="bottom"><font style="FONT-FAMILY: Times New Roman" size="2">$</font></td> <td valign="bottom" align="right"><font style="FONT-FAMILY: Times New Roman" size="2">1,232.8</font></td> <td valign="bottom"><font size="1">&#xA0;&#xA0;</font></td> <td valign="bottom"><font style="FONT-FAMILY: Times New Roman" size="2">$</font></td> <td valign="bottom" align="right"><font style="FONT-FAMILY: Times New Roman" size="2">963.7</font></td> <td valign="bottom"><font size="1">&#xA0;&#xA0;</font></td> <td valign="bottom"><font style="FONT-FAMILY: Times New Roman" size="2">$</font></td> <td valign="bottom" align="right"><font style="FONT-FAMILY: Times New Roman" size="2">2,196.5</font></td> </tr> <tr> <td valign="top"> <p style="MARGIN-LEFT: 1em; TEXT-INDENT: -1em"><font style="FONT-FAMILY: Times New Roman" size="2">Goodwill acquired&#x2014;net of purchase price adjustments, foreign currency translation adjustments and other</font></p> </td> <td valign="bottom"><font size="1">&#xA0;&#xA0;</font></td> <td valign="bottom"><font style="FONT-FAMILY: Times New Roman" size="2">&#xA0;</font></td> <td valign="bottom" align="right"><font style="FONT-FAMILY: Times New Roman" size="2">32.5</font></td> <td valign="bottom"><font size="1">&#xA0;&#xA0;</font></td> <td valign="bottom"><font style="FONT-FAMILY: Times New Roman" size="2">&#xA0;</font></td> <td valign="bottom" align="right"><font style="FONT-FAMILY: Times New Roman" size="2">10.4</font></td> <td valign="bottom"><font size="1">&#xA0;&#xA0;</font></td> <td valign="bottom"><font style="FONT-FAMILY: Times New Roman" size="2">&#xA0;</font></td> <td valign="bottom" align="right"><font style="FONT-FAMILY: Times New Roman" size="2">42.9</font></td> </tr> <tr style="FONT-SIZE: 1px"> <td valign="bottom"></td> <td valign="bottom">&#xA0;&#xA0;</td> <td style="BORDER-TOP: #000000 1px solid" valign="bottom"> &#xA0;</td> <td style="BORDER-TOP: #000000 1px solid" valign="bottom"> &#xA0;</td> <td valign="bottom">&#xA0;&#xA0;</td> <td style="BORDER-TOP: #000000 1px solid" valign="bottom"> &#xA0;</td> <td style="BORDER-TOP: #000000 1px solid" valign="bottom"> &#xA0;</td> <td valign="bottom">&#xA0;&#xA0;</td> <td style="BORDER-TOP: #000000 1px solid" valign="bottom"> &#xA0;</td> <td style="BORDER-TOP: #000000 1px solid" valign="bottom"> &#xA0;</td> </tr> <tr bgcolor="#CCEEFF"> <td valign="top"> <p style="MARGIN-LEFT: 1em; TEXT-INDENT: -1em"><font style="FONT-FAMILY: Times New Roman" size="2">Balance at December&#xA0;31, 2009</font></p> </td> <td valign="bottom"><font size="1">&#xA0;&#xA0;</font></td> <td valign="bottom"><font style="FONT-FAMILY: Times New Roman" size="2">$</font></td> <td valign="bottom" align="right"><font style="FONT-FAMILY: Times New Roman" size="2">1,265.3</font></td> <td valign="bottom"><font size="1">&#xA0;&#xA0;</font></td> <td valign="bottom"><font style="FONT-FAMILY: Times New Roman" size="2">$</font></td> <td valign="bottom" align="right"><font style="FONT-FAMILY: Times New Roman" size="2">974.1</font></td> <td valign="bottom"><font size="1">&#xA0;&#xA0;</font></td> <td valign="bottom"><font style="FONT-FAMILY: Times New Roman" size="2">$</font></td> <td valign="bottom" align="right"><font style="FONT-FAMILY: Times New Roman" size="2">2,239.4</font></td> </tr> <tr style="FONT-SIZE: 1px"> <td valign="bottom"></td> <td valign="bottom">&#xA0;&#xA0;</td> <td style="BORDER-TOP: #000000 3px double" valign="bottom"> &#xA0;</td> <td style="BORDER-TOP: #000000 3px double" valign="bottom"> &#xA0;</td> <td valign="bottom">&#xA0;&#xA0;</td> <td style="BORDER-TOP: #000000 3px double" valign="bottom"> &#xA0;</td> <td style="BORDER-TOP: #000000 3px double" valign="bottom"> &#xA0;</td> <td valign="bottom">&#xA0;&#xA0;</td> <td style="BORDER-TOP: #000000 3px double" valign="bottom"> &#xA0;</td> <td style="BORDER-TOP: #000000 3px double" valign="bottom"> &#xA0;</td> </tr> </table> <p style="MARGIN-TOP: 12px; MARGIN-BOTTOM: 0px; TEXT-INDENT: 4%"> <font style="FONT-FAMILY: Times New Roman" size="2">Due to the Spin-Off and reorganization of the reporting units, goodwill was tested for impairment in the first quarter of fiscal 2010. Based on this analysis, there was no impairment. The Company&#x2019;s determination of estimated fair value of the reporting units is based on a combination of a discounted cash flow analysis, a multiple of earnings before interest, taxes, depreciation and amortization (&#x201C;EBITDA&#x201D;) and, if available, a review of the price/earnings ratio for publicly traded companies similar in nature, scope and size of the respective reporting units. The discount rates used for impairment testing are based on the risk-free rate plus an adjustment for risk factors. The EBITDA multiples used for impairment testing are judgmentally selected based on factors such as the nature, scope and size of the applicable reporting unit. The use of alternative estimates, peer groups or changes in the industry, or adjusting the discount rate, EBITDA multiples or price earnings ratios used could affect the estimated fair value of the reporting units and potentially result in goodwill impairment.</font></p> <p style="MARGIN-TOP: 12px; MARGIN-BOTTOM: 0px; TEXT-INDENT: 4%"> <font style="FONT-FAMILY: Times New Roman" size="2">The allocations of the purchase price related to certain small acquisitions are not yet finalized and are subject to adjustment as the Company completes the valuation analyses for these acquisitions.</font></p> <p style="MARGIN-TOP: 0px; MARGIN-BOTTOM: 0px"><font size="1">&#xA0;</font></p> <p style="MARGIN-TOP: 0px; MARGIN-BOTTOM: 0px; MARGIN-LEFT: 2%"> <font style="FONT-FAMILY: Times New Roman" size="2"><b><i>Intangible Assets</i></b></font></p> <p style="MARGIN-TOP: 6px; MARGIN-BOTTOM: 0px; TEXT-INDENT: 4%"> <font style="FONT-FAMILY: Times New Roman" size="2">Intangible assets with definite lives are amortized over their useful lives which range from three to twenty years. The detail of other intangible assets by class as of June&#xA0;30, 2009 and December&#xA0;31, 2009 is as follows:</font></p> <p style="MARGIN-TOP: 0px; FONT-SIZE: 12px; MARGIN-BOTTOM: 0px"> &#xA0;</p> <table cellspacing="0" cellpadding="0" width="84%" align="center" border="0"> <tr> <td width="69%"></td> <td valign="bottom" width="7%"></td> <td></td> <td></td> <td valign="bottom" width="7%"></td> <td></td> <td></td> <td valign="bottom" width="7%"></td> <td></td> <td></td> </tr> <tr> <td valign="bottom" nowrap="nowrap"> <p style="WIDTH: 40pt; BORDER-BOTTOM: #000000 1px solid"> <font style="FONT-FAMILY: Times New Roman" size="1"><b>(in millions)</b></font></p> </td> <td valign="bottom"><font size="1">&#xA0;&#xA0;</font></td> <td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" align="center" colspan="2"><font style="FONT-FAMILY: Times New Roman" size="1"><b>Gross<br /> Intangible</b></font></td> <td valign="bottom"><font size="1">&#xA0;&#xA0;</font></td> <td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" align="center" colspan="2"><font style="FONT-FAMILY: Times New Roman" size="1"><b>Accumulated<br /> Amortization</b></font></td> <td valign="bottom"><font size="1">&#xA0;&#xA0;</font></td> <td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" align="center" colspan="2"><font style="FONT-FAMILY: Times New Roman" size="1"><b>Net<br /> Intangible</b></font></td> </tr> <tr bgcolor="#CCEEFF"> <td valign="top"> <p style="MARGIN-LEFT: 1em; TEXT-INDENT: -1em"><font style="FONT-FAMILY: Times New Roman" size="2">June&#xA0;30, 2009</font></p> </td> <td valign="bottom"><font size="1">&#xA0;&#xA0;</font></td> <td valign="bottom"></td> <td valign="bottom"></td> <td valign="bottom"><font size="1">&#xA0;&#xA0;</font></td> <td valign="bottom"></td> <td valign="bottom"></td> <td valign="bottom"><font size="1">&#xA0;&#xA0;</font></td> <td valign="bottom"></td> <td valign="bottom"></td> </tr> <tr> <td valign="top"> <p style="MARGIN-LEFT: 3em; TEXT-INDENT: -1em"><font style="FONT-FAMILY: Times New Roman" size="2">Unamortized intangibles:</font></p> </td> <td valign="bottom"><font size="1">&#xA0;&#xA0;</font></td> <td valign="bottom"></td> <td valign="bottom"></td> <td valign="bottom"><font size="1">&#xA0;&#xA0;</font></td> <td valign="bottom"></td> <td valign="bottom"></td> <td valign="bottom"><font size="1">&#xA0;&#xA0;</font></td> <td valign="bottom"></td> <td valign="bottom"></td> </tr> <tr bgcolor="#CCEEFF"> <td valign="top"> <p style="MARGIN-LEFT: 5em; TEXT-INDENT: -1em"><font style="FONT-FAMILY: Times New Roman" size="2">Trademarks and patents</font></p> </td> <td valign="bottom"><font size="1">&#xA0;&#xA0;</font></td> <td valign="bottom"><font style="FONT-FAMILY: Times New Roman" size="2">$</font></td> <td valign="bottom" align="right"><font style="FONT-FAMILY: Times New Roman" size="2">11.4</font></td> <td valign="bottom"><font size="1">&#xA0;&#xA0;</font></td> <td valign="bottom"><font style="FONT-FAMILY: Times New Roman" size="2">$</font></td> <td valign="bottom" align="right"><font style="FONT-FAMILY: Times New Roman" size="2">&#x2014;&#xA0;&#xA0;</font></td> <td valign="bottom"><font size="1">&#xA0;&#xA0;</font></td> <td valign="bottom"><font style="FONT-FAMILY: Times New Roman" size="2">$</font></td> <td valign="bottom" align="right"><font style="FONT-FAMILY: Times New Roman" size="2">11.4</font></td> </tr> <tr style="FONT-SIZE: 1px"> <td valign="bottom"></td> <td valign="bottom">&#xA0;&#xA0;</td> <td style="BORDER-TOP: #000000 1px solid" valign="bottom"> &#xA0;</td> <td style="BORDER-TOP: #000000 1px solid" valign="bottom"> &#xA0;</td> <td valign="bottom">&#xA0;&#xA0;</td> <td style="BORDER-TOP: #000000 1px solid" valign="bottom"> &#xA0;</td> <td style="BORDER-TOP: #000000 1px solid" valign="bottom"> &#xA0;</td> <td valign="bottom">&#xA0;&#xA0;</td> <td style="BORDER-TOP: #000000 1px solid" valign="bottom"> &#xA0;</td> <td style="BORDER-TOP: #000000 1px solid" valign="bottom"> &#xA0;</td> </tr> <tr> <td valign="top"> <p style="MARGIN-LEFT: 3em; TEXT-INDENT: -1em"><font style="FONT-FAMILY: Times New Roman" size="2">Total unamortized intangibles</font></p> </td> <td valign="bottom"><font size="1">&#xA0;&#xA0;</font></td> <td valign="bottom"><font style="FONT-FAMILY: Times New Roman" size="2">&#xA0;</font></td> <td valign="bottom" align="right"><font style="FONT-FAMILY: Times New Roman" size="2">11.4</font></td> <td valign="bottom"><font size="1">&#xA0;&#xA0;</font></td> <td valign="bottom"><font style="FONT-FAMILY: Times New Roman" size="2">&#xA0;</font></td> <td valign="bottom" align="right"><font style="FONT-FAMILY: Times New Roman" size="2">&#x2014;&#xA0;&#xA0;</font></td> <td valign="bottom"><font size="1">&#xA0;&#xA0;</font></td> <td valign="bottom"><font style="FONT-FAMILY: Times New Roman" size="2">&#xA0;</font></td> <td valign="bottom" align="right"><font style="FONT-FAMILY: Times New Roman" size="2">11.4</font></td> </tr> <tr bgcolor="#CCEEFF"> <td valign="top"> <p style="MARGIN-LEFT: 3em; TEXT-INDENT: -1em"><font style="FONT-FAMILY: Times New Roman" size="2">Amortized intangibles:</font></p> </td> <td valign="bottom"><font size="1">&#xA0;&#xA0;</font></td> <td valign="bottom"></td> <td valign="bottom"></td> <td valign="bottom"><font size="1">&#xA0;&#xA0;</font></td> <td valign="bottom"></td> <td valign="bottom"></td> <td valign="bottom"><font size="1">&#xA0;&#xA0;</font></td> <td valign="bottom"></td> <td valign="bottom"></td> </tr> <tr> <td valign="top"> <p style="MARGIN-LEFT: 5em; TEXT-INDENT: -1em"><font style="FONT-FAMILY: Times New Roman" size="2">Trademarks and patents</font></p> </td> <td valign="bottom"><font size="1">&#xA0;&#xA0;</font></td> <td valign="bottom"><font style="FONT-FAMILY: Times New Roman" size="2">&#xA0;</font></td> <td valign="bottom" align="right"><font style="FONT-FAMILY: Times New Roman" size="2">30.2</font></td> <td valign="bottom"><font size="1">&#xA0;&#xA0;</font></td> <td valign="bottom"><font style="FONT-FAMILY: Times New Roman" size="2">&#xA0;</font></td> <td valign="bottom" align="right"><font style="FONT-FAMILY: Times New Roman" size="2">12.9</font></td> <td valign="bottom"><font size="1">&#xA0;&#xA0;</font></td> <td valign="bottom"><font style="FONT-FAMILY: Times New Roman" size="2">&#xA0;</font></td> <td valign="bottom" align="right"><font style="FONT-FAMILY: Times New Roman" size="2">17.3</font></td> </tr> <tr bgcolor="#CCEEFF"> <td valign="top"> <p style="MARGIN-LEFT: 5em; TEXT-INDENT: -1em"><font style="FONT-FAMILY: Times New Roman" size="2">Non-compete agreements</font></p> </td> <td valign="bottom"><font size="1">&#xA0;&#xA0;</font></td> <td valign="bottom"><font style="FONT-FAMILY: Times New Roman" size="2">&#xA0;</font></td> <td valign="bottom" align="right"><font style="FONT-FAMILY: Times New Roman" size="2">3.9</font></td> <td valign="bottom"><font size="1">&#xA0;&#xA0;</font></td> <td valign="bottom"><font style="FONT-FAMILY: Times New Roman" size="2">&#xA0;</font></td> <td valign="bottom" align="right"><font style="FONT-FAMILY: Times New Roman" size="2">2.5</font></td> <td valign="bottom"><font size="1">&#xA0;&#xA0;</font></td> <td valign="bottom"><font style="FONT-FAMILY: Times New Roman" size="2">&#xA0;</font></td> <td valign="bottom" align="right"><font style="FONT-FAMILY: Times New Roman" size="2">1.4</font></td> </tr> <tr> <td valign="top"> <p style="MARGIN-LEFT: 5em; TEXT-INDENT: -1em"><font style="FONT-FAMILY: Times New Roman" size="2">Customer relationships</font></p> </td> <td valign="bottom"><font size="1">&#xA0;&#xA0;</font></td> <td valign="bottom"><font style="FONT-FAMILY: Times New Roman" size="2">&#xA0;</font></td> <td valign="bottom" align="right"><font style="FONT-FAMILY: Times New Roman" size="2">46.6</font></td> <td valign="bottom"><font size="1">&#xA0;&#xA0;</font></td> <td valign="bottom"><font style="FONT-FAMILY: Times New Roman" size="2">&#xA0;</font></td> <td valign="bottom" align="right"><font style="FONT-FAMILY: Times New Roman" size="2">35.1</font></td> <td valign="bottom"><font size="1">&#xA0;&#xA0;</font></td> <td valign="bottom"><font style="FONT-FAMILY: Times New Roman" size="2">&#xA0;</font></td> <td valign="bottom" align="right"><font style="FONT-FAMILY: Times New Roman" size="2">11.5</font></td> </tr> <tr bgcolor="#CCEEFF"> <td valign="top"> <p style="MARGIN-LEFT: 5em; TEXT-INDENT: -1em"><font style="FONT-FAMILY: Times New Roman" size="2">Other</font></p> </td> <td valign="bottom"><font size="1">&#xA0;&#xA0;</font></td> <td valign="bottom"><font style="FONT-FAMILY: Times New Roman" size="2">&#xA0;</font></td> <td valign="bottom" align="right"><font style="FONT-FAMILY: Times New Roman" size="2">66.2</font></td> <td valign="bottom"><font size="1">&#xA0;&#xA0;</font></td> <td valign="bottom"><font style="FONT-FAMILY: Times New Roman" size="2">&#xA0;</font></td> <td valign="bottom" align="right"><font style="FONT-FAMILY: Times New Roman" size="2">37.4</font></td> <td valign="bottom"><font size="1">&#xA0;&#xA0;</font></td> <td valign="bottom"><font style="FONT-FAMILY: Times New Roman" size="2">&#xA0;</font></td> <td valign="bottom" align="right"><font style="FONT-FAMILY: Times New Roman" size="2">28.8</font></td> </tr> <tr style="FONT-SIZE: 1px"> <td valign="bottom"></td> <td valign="bottom">&#xA0;&#xA0;</td> <td style="BORDER-TOP: #000000 1px solid" valign="bottom"> &#xA0;</td> <td style="BORDER-TOP: #000000 1px solid" valign="bottom"> &#xA0;</td> <td valign="bottom">&#xA0;&#xA0;</td> <td style="BORDER-TOP: #000000 1px solid" valign="bottom"> &#xA0;</td> <td style="BORDER-TOP: #000000 1px solid" valign="bottom"> &#xA0;</td> <td valign="bottom">&#xA0;&#xA0;</td> <td style="BORDER-TOP: #000000 1px solid" valign="bottom"> &#xA0;</td> <td style="BORDER-TOP: #000000 1px solid" valign="bottom"> &#xA0;</td> </tr> <tr> <td valign="top"> <p style="MARGIN-LEFT: 3em; TEXT-INDENT: -1em"><font style="FONT-FAMILY: Times New Roman" size="2">Total amortized intangibles</font></p> </td> <td valign="bottom"><font size="1">&#xA0;&#xA0;</font></td> <td valign="bottom"><font style="FONT-FAMILY: Times New Roman" size="2">&#xA0;</font></td> <td valign="bottom" align="right"><font style="FONT-FAMILY: Times New Roman" size="2">146.9</font></td> <td valign="bottom"><font size="1">&#xA0;&#xA0;</font></td> <td valign="bottom"><font style="FONT-FAMILY: Times New Roman" size="2">&#xA0;</font></td> <td valign="bottom" align="right"><font style="FONT-FAMILY: Times New Roman" size="2">87.9</font></td> <td valign="bottom"><font size="1">&#xA0;&#xA0;</font></td> <td valign="bottom"><font style="FONT-FAMILY: Times New Roman" size="2">&#xA0;</font></td> <td valign="bottom" align="right"><font style="FONT-FAMILY: Times New Roman" size="2">59.0</font></td> </tr> <tr style="FONT-SIZE: 1px"> <td valign="bottom"></td> <td valign="bottom">&#xA0;&#xA0;</td> <td style="BORDER-TOP: #000000 1px solid" valign="bottom"> &#xA0;</td> <td style="BORDER-TOP: #000000 1px solid" valign="bottom"> &#xA0;</td> <td valign="bottom">&#xA0;&#xA0;</td> <td style="BORDER-TOP: #000000 1px solid" valign="bottom"> &#xA0;</td> <td style="BORDER-TOP: #000000 1px solid" valign="bottom"> &#xA0;</td> <td valign="bottom">&#xA0;&#xA0;</td> <td style="BORDER-TOP: #000000 1px solid" valign="bottom"> &#xA0;</td> <td style="BORDER-TOP: #000000 1px solid" valign="bottom"> &#xA0;</td> </tr> <tr bgcolor="#CCEEFF"> <td valign="top"> <p style="MARGIN-LEFT: 7em; TEXT-INDENT: -1em"><font style="FONT-FAMILY: Times New Roman" size="2">Total intangibles</font></p> </td> <td valign="bottom"><font size="1">&#xA0;&#xA0;</font></td> <td valign="bottom"><font style="FONT-FAMILY: Times New Roman" size="2">$</font></td> <td valign="bottom" align="right"><font style="FONT-FAMILY: Times New Roman" size="2">158.3</font></td> <td valign="bottom"><font size="1">&#xA0;&#xA0;</font></td> <td valign="bottom"><font style="FONT-FAMILY: Times New Roman" size="2">$</font></td> <td valign="bottom" align="right"><font style="FONT-FAMILY: Times New Roman" size="2">87.9</font></td> <td valign="bottom"><font size="1">&#xA0;&#xA0;</font></td> <td valign="bottom"><font style="FONT-FAMILY: Times New Roman" size="2">$</font></td> <td valign="bottom" align="right"><font style="FONT-FAMILY: Times New Roman" size="2">70.4</font></td> </tr> <tr style="FONT-SIZE: 1px"> <td valign="bottom"></td> <td valign="bottom">&#xA0;&#xA0;</td> <td style="BORDER-TOP: #000000 1px solid" valign="bottom"> &#xA0;</td> <td style="BORDER-TOP: #000000 1px solid" valign="bottom"> &#xA0;</td> <td valign="bottom">&#xA0;&#xA0;</td> <td style="BORDER-TOP: #000000 1px solid" valign="bottom"> &#xA0;</td> <td style="BORDER-TOP: #000000 1px solid" valign="bottom"> &#xA0;</td> <td valign="bottom">&#xA0;&#xA0;</td> <td style="BORDER-TOP: #000000 1px solid" valign="bottom"> &#xA0;</td> <td style="BORDER-TOP: #000000 1px solid" valign="bottom"> &#xA0;</td> </tr> <tr> <td height="8"></td> <td colspan="3" height="8"></td> <td colspan="3" height="8"></td> <td colspan="3" height="8"></td> </tr> <tr> <td valign="top"> <p style="MARGIN-LEFT: 1em; TEXT-INDENT: -1em"><font style="FONT-FAMILY: Times New Roman" size="2">December&#xA0;31, 2009</font></p> </td> <td valign="bottom"><font size="1">&#xA0;&#xA0;</font></td> <td valign="bottom"></td> <td valign="bottom"></td> <td valign="bottom"><font size="1">&#xA0;&#xA0;</font></td> <td valign="bottom"></td> <td valign="bottom"></td> <td valign="bottom"><font size="1">&#xA0;&#xA0;</font></td> <td valign="bottom"></td> <td valign="bottom"></td> </tr> <tr bgcolor="#CCEEFF"> <td valign="top"> <p style="MARGIN-LEFT: 3em; TEXT-INDENT: -1em"><font style="FONT-FAMILY: Times New Roman" size="2">Unamortized intangibles:</font></p> </td> <td valign="bottom"><font size="1">&#xA0;&#xA0;</font></td> <td valign="bottom"></td> <td valign="bottom"></td> <td valign="bottom"><font size="1">&#xA0;&#xA0;</font></td> <td valign="bottom"></td> <td valign="bottom"></td> <td valign="bottom"><font size="1">&#xA0;&#xA0;</font></td> <td valign="bottom"></td> <td valign="bottom"></td> </tr> <tr> <td valign="top"> <p style="MARGIN-LEFT: 5em; TEXT-INDENT: -1em"><font style="FONT-FAMILY: Times New Roman" size="2">Trademarks and patents</font></p> </td> <td valign="bottom"><font size="1">&#xA0;&#xA0;</font></td> <td valign="bottom"><font style="FONT-FAMILY: Times New Roman" size="2">$</font></td> <td valign="bottom" align="right"><font style="FONT-FAMILY: Times New Roman" size="2">9.2</font></td> <td valign="bottom"><font size="1">&#xA0;&#xA0;</font></td> <td valign="bottom"><font style="FONT-FAMILY: Times New Roman" size="2">$</font></td> <td valign="bottom" align="right"><font style="FONT-FAMILY: Times New Roman" size="2">&#x2014;&#xA0;&#xA0;</font></td> <td valign="bottom"><font size="1">&#xA0;&#xA0;</font></td> <td valign="bottom"><font style="FONT-FAMILY: Times New Roman" size="2">$</font></td> <td valign="bottom" align="right"><font style="FONT-FAMILY: Times New Roman" size="2">9.2</font></td> </tr> <tr style="FONT-SIZE: 1px"> <td valign="bottom"></td> <td valign="bottom">&#xA0;&#xA0;</td> <td style="BORDER-TOP: #000000 1px solid" valign="bottom"> &#xA0;</td> <td style="BORDER-TOP: #000000 1px solid" valign="bottom"> &#xA0;</td> <td valign="bottom">&#xA0;&#xA0;</td> <td style="BORDER-TOP: #000000 1px solid" valign="bottom"> &#xA0;</td> <td style="BORDER-TOP: #000000 1px solid" valign="bottom"> &#xA0;</td> <td valign="bottom">&#xA0;&#xA0;</td> <td style="BORDER-TOP: #000000 1px solid" valign="bottom"> &#xA0;</td> <td style="BORDER-TOP: #000000 1px solid" valign="bottom"> &#xA0;</td> </tr> <tr bgcolor="#CCEEFF"> <td valign="top"> <p style="MARGIN-LEFT: 3em; TEXT-INDENT: -1em"><font style="FONT-FAMILY: Times New Roman" size="2">Total unamortized intangibles</font></p> </td> <td valign="bottom"><font size="1">&#xA0;&#xA0;</font></td> <td valign="bottom"><font style="FONT-FAMILY: Times New Roman" size="2">&#xA0;</font></td> <td valign="bottom" align="right"><font style="FONT-FAMILY: Times New Roman" size="2">9.2</font></td> <td valign="bottom"><font size="1">&#xA0;&#xA0;</font></td> <td valign="bottom"><font style="FONT-FAMILY: Times New Roman" size="2">&#xA0;</font></td> <td valign="bottom" align="right"><font style="FONT-FAMILY: Times New Roman" size="2">&#x2014;&#xA0;&#xA0;</font></td> <td valign="bottom"><font size="1">&#xA0;&#xA0;</font></td> <td valign="bottom"><font style="FONT-FAMILY: Times New Roman" size="2">&#xA0;</font></td> <td valign="bottom" align="right"><font style="FONT-FAMILY: Times New Roman" size="2">9.2</font></td> </tr> <tr> <td valign="top"> <p style="MARGIN-LEFT: 3em; TEXT-INDENT: -1em"><font style="FONT-FAMILY: Times New Roman" size="2">Amortized intangibles:</font></p> </td> <td valign="bottom"><font size="1">&#xA0;&#xA0;</font></td> <td valign="bottom"></td> <td valign="bottom"></td> <td valign="bottom"><font size="1">&#xA0;&#xA0;</font></td> <td valign="bottom"></td> <td valign="bottom"></td> <td valign="bottom"><font size="1">&#xA0;&#xA0;</font></td> <td valign="bottom"></td> <td valign="bottom"></td> </tr> <tr bgcolor="#CCEEFF"> <td valign="top"> <p style="MARGIN-LEFT: 5em; TEXT-INDENT: -1em"><font style="FONT-FAMILY: Times New Roman" size="2">Trademarks and patents</font></p> </td> <td valign="bottom"><font size="1">&#xA0;&#xA0;</font></td> <td valign="bottom"><font style="FONT-FAMILY: Times New Roman" size="2">&#xA0;</font></td> <td valign="bottom" align="right"><font style="FONT-FAMILY: Times New Roman" size="2">22.1</font></td> <td valign="bottom"><font size="1">&#xA0;&#xA0;</font></td> <td valign="bottom"><font style="FONT-FAMILY: Times New Roman" size="2">&#xA0;</font></td> <td valign="bottom" align="right"><font style="FONT-FAMILY: Times New Roman" size="2">13.1</font></td> <td valign="bottom"><font size="1">&#xA0;&#xA0;</font></td> <td valign="bottom"><font style="FONT-FAMILY: Times New Roman" size="2">&#xA0;</font></td> <td valign="bottom" align="right"><font style="FONT-FAMILY: Times New Roman" size="2">9.0</font></td> </tr> <tr> <td valign="top"> <p style="MARGIN-LEFT: 5em; TEXT-INDENT: -1em"><font style="FONT-FAMILY: Times New Roman" size="2">Non-compete agreements</font></p> </td> <td valign="bottom"><font size="1">&#xA0;&#xA0;</font></td> <td valign="bottom"><font style="FONT-FAMILY: Times New Roman" size="2">&#xA0;</font></td> <td valign="bottom" align="right"><font style="FONT-FAMILY: Times New Roman" size="2">4.1</font></td> <td valign="bottom"><font size="1">&#xA0;&#xA0;</font></td> <td valign="bottom"><font style="FONT-FAMILY: Times New Roman" size="2">&#xA0;</font></td> <td valign="bottom" align="right"><font style="FONT-FAMILY: Times New Roman" size="2">2.7</font></td> <td valign="bottom"><font size="1">&#xA0;&#xA0;</font></td> <td valign="bottom"><font style="FONT-FAMILY: Times New Roman" size="2">&#xA0;</font></td> <td valign="bottom" align="right"><font style="FONT-FAMILY: Times New Roman" size="2">1.4</font></td> </tr> <tr bgcolor="#CCEEFF"> <td valign="top"> <p style="MARGIN-LEFT: 5em; TEXT-INDENT: -1em"><font style="FONT-FAMILY: Times New Roman" size="2">Customer relationships</font></p> </td> <td valign="bottom"><font size="1">&#xA0;&#xA0;</font></td> <td valign="bottom"><font style="FONT-FAMILY: Times New Roman" size="2">&#xA0;</font></td> <td valign="bottom" align="right"><font style="FONT-FAMILY: Times New Roman" size="2">49.7</font></td> <td valign="bottom"><font size="1">&#xA0;&#xA0;</font></td> <td valign="bottom"><font style="FONT-FAMILY: Times New Roman" size="2">&#xA0;</font></td> <td valign="bottom" align="right"><font style="FONT-FAMILY: Times New Roman" size="2">38.4</font></td> <td valign="bottom"><font size="1">&#xA0;&#xA0;</font></td> <td valign="bottom"><font style="FONT-FAMILY: Times New Roman" size="2">&#xA0;</font></td> <td valign="bottom" align="right"><font style="FONT-FAMILY: Times New Roman" size="2">11.3</font></td> </tr> <tr> <td valign="top"> <p style="MARGIN-LEFT: 5em; TEXT-INDENT: -1em"><font style="FONT-FAMILY: Times New Roman" size="2">Other</font></p> </td> <td valign="bottom"><font size="1">&#xA0;&#xA0;</font></td> <td valign="bottom"><font style="FONT-FAMILY: Times New Roman" size="2">&#xA0;</font></td> <td valign="bottom" align="right"><font style="FONT-FAMILY: Times New Roman" size="2">63.0</font></td> <td valign="bottom"><font size="1">&#xA0;&#xA0;</font></td> <td valign="bottom"><font style="FONT-FAMILY: Times New Roman" size="2">&#xA0;</font></td> <td valign="bottom" align="right"><font style="FONT-FAMILY: Times New Roman" size="2">38.6</font></td> <td valign="bottom"><font size="1">&#xA0;&#xA0;</font></td> <td valign="bottom"><font style="FONT-FAMILY: Times New Roman" size="2">&#xA0;</font></td> <td valign="bottom" align="right"><font style="FONT-FAMILY: Times New Roman" size="2">24.4</font></td> </tr> <tr style="FONT-SIZE: 1px"> <td valign="bottom"></td> <td valign="bottom">&#xA0;&#xA0;</td> <td style="BORDER-TOP: #000000 1px solid" valign="bottom"> &#xA0;</td> <td style="BORDER-TOP: #000000 1px solid" valign="bottom"> &#xA0;</td> <td valign="bottom">&#xA0;&#xA0;</td> <td style="BORDER-TOP: #000000 1px solid" valign="bottom"> &#xA0;</td> <td style="BORDER-TOP: #000000 1px solid" valign="bottom"> &#xA0;</td> <td valign="bottom">&#xA0;&#xA0;</td> <td style="BORDER-TOP: #000000 1px solid" valign="bottom"> &#xA0;</td> <td style="BORDER-TOP: #000000 1px solid" valign="bottom"> &#xA0;</td> </tr> <tr bgcolor="#CCEEFF"> <td valign="top"> <p style="MARGIN-LEFT: 3em; TEXT-INDENT: -1em"><font style="FONT-FAMILY: Times New Roman" size="2">Total amortized intangibles</font></p> </td> <td valign="bottom"><font size="1">&#xA0;&#xA0;</font></td> <td valign="bottom"><font style="FONT-FAMILY: Times New Roman" size="2">&#xA0;</font></td> <td valign="bottom" align="right"><font style="FONT-FAMILY: Times New Roman" size="2">138.9</font></td> <td valign="bottom"><font size="1">&#xA0;&#xA0;</font></td> <td valign="bottom"><font style="FONT-FAMILY: Times New Roman" size="2">&#xA0;</font></td> <td valign="bottom" align="right"><font style="FONT-FAMILY: Times New Roman" size="2">92.8</font></td> <td valign="bottom"><font size="1">&#xA0;&#xA0;</font></td> <td valign="bottom"><font style="FONT-FAMILY: Times New Roman" size="2">&#xA0;</font></td> <td valign="bottom" align="right"><font style="FONT-FAMILY: Times New Roman" size="2">46.1</font></td> </tr> <tr style="FONT-SIZE: 1px"> <td valign="bottom"></td> <td valign="bottom">&#xA0;&#xA0;</td> <td style="BORDER-TOP: #000000 1px solid" valign="bottom"> &#xA0;</td> <td style="BORDER-TOP: #000000 1px solid" valign="bottom"> &#xA0;</td> <td valign="bottom">&#xA0;&#xA0;</td> <td style="BORDER-TOP: #000000 1px solid" valign="bottom"> &#xA0;</td> <td style="BORDER-TOP: #000000 1px solid" valign="bottom"> &#xA0;</td> <td valign="bottom">&#xA0;&#xA0;</td> <td style="BORDER-TOP: #000000 1px solid" valign="bottom"> &#xA0;</td> <td style="BORDER-TOP: #000000 1px solid" valign="bottom"> &#xA0;</td> </tr> <tr> <td valign="top"> <p style="MARGIN-LEFT: 7em; TEXT-INDENT: -1em"><font style="FONT-FAMILY: Times New Roman" size="2">Total intangibles</font></p> </td> <td valign="bottom"><font size="1">&#xA0;&#xA0;</font></td> <td valign="bottom"><font style="FONT-FAMILY: Times New Roman" size="2">$</font></td> <td valign="bottom" align="right"><font style="FONT-FAMILY: Times New Roman" size="2">148.1</font></td> <td valign="bottom"><font size="1">&#xA0;&#xA0;</font></td> <td valign="bottom"><font style="FONT-FAMILY: Times New Roman" size="2">$</font></td> <td valign="bottom" align="right"><font style="FONT-FAMILY: Times New Roman" size="2">92.8</font></td> <td valign="bottom"><font size="1">&#xA0;&#xA0;</font></td> <td valign="bottom"><font style="FONT-FAMILY: Times New Roman" size="2">$</font></td> <td valign="bottom" align="right"><font style="FONT-FAMILY: Times New Roman" size="2">55.3</font></td> </tr> <tr style="FONT-SIZE: 1px"> <td valign="bottom"></td> <td valign="bottom">&#xA0;&#xA0;</td> <td style="BORDER-TOP: #000000 3px double" valign="bottom"> &#xA0;</td> <td style="BORDER-TOP: #000000 3px double" valign="bottom"> &#xA0;</td> <td valign="bottom">&#xA0;&#xA0;</td> <td style="BORDER-TOP: #000000 3px double" valign="bottom"> &#xA0;</td> <td style="BORDER-TOP: #000000 3px double" valign="bottom"> &#xA0;</td> <td valign="bottom">&#xA0;&#xA0;</td> <td style="BORDER-TOP: #000000 3px double" valign="bottom"> &#xA0;</td> <td style="BORDER-TOP: #000000 3px double" valign="bottom"> &#xA0;</td> </tr> </table> <p style="MARGIN-TOP: 12px; MARGIN-BOTTOM: 0px; TEXT-INDENT: 4%"> <font style="FONT-FAMILY: Times New Roman" size="2">There were no significant acquisitions of other intangible assets during the periods presented. Amortization expense for the three and six months ended December&#xA0;31, 2009 was $2.6 million and $6.0 million, respectively, and $3.3 million and $7.1 million, respectively, during the comparable prior year periods.</font></p> <p style="MARGIN-TOP: 12px; MARGIN-BOTTOM: 0px; TEXT-INDENT: 4%"> <font style="FONT-FAMILY: Times New Roman" size="2">Amortization expense for each of the next five fiscal years is estimated to be:</font></p> <p style="MARGIN-TOP: 0px; FONT-SIZE: 12px; MARGIN-BOTTOM: 0px"> &#xA0;</p> <table cellspacing="0" cellpadding="0" width="100%" align="center" border="0"> <tr> <td width="79%"></td> <td valign="bottom" width="2%"></td> <td></td> <td></td> <td valign="bottom" width="2%"></td> <td></td> <td></td> <td valign="bottom" width="2%"></td> <td></td> <td></td> <td valign="bottom" width="2%"></td> <td></td> <td></td> <td valign="bottom" width="2%"></td> <td></td> <td></td> </tr> <tr> <td valign="bottom" nowrap="nowrap"> <p style="WIDTH: 40pt; BORDER-BOTTOM: #000000 1px solid"> <font style="FONT-FAMILY: Times New Roman" size="1"><b>(in millions)</b></font></p> </td> <td valign="bottom"><font size="1">&#xA0;&#xA0;</font></td> <td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" align="center" colspan="2"><font style="FONT-FAMILY: Times New Roman" size="1"><b>2010</b></font></td> <td valign="bottom"><font size="1">&#xA0;&#xA0;</font></td> <td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" align="center" colspan="2"><font style="FONT-FAMILY: Times New Roman" size="1"><b>2011</b></font></td> <td valign="bottom"><font size="1">&#xA0;&#xA0;</font></td> <td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" align="center" colspan="2"><font style="FONT-FAMILY: Times New Roman" size="1"><b>2012</b></font></td> <td valign="bottom"><font size="1">&#xA0;&#xA0;</font></td> <td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" align="center" colspan="2"><font style="FONT-FAMILY: Times New Roman" size="1"><b>2013</b></font></td> <td valign="bottom"><font size="1">&#xA0;&#xA0;</font></td> <td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" align="center" colspan="2"><font style="FONT-FAMILY: Times New Roman" size="1"><b>2014</b></font></td> </tr> <tr bgcolor="#CCEEFF"> <td valign="top"> <p style="MARGIN-LEFT: 1em; TEXT-INDENT: -1em"><font style="FONT-FAMILY: Times New Roman" size="2">Amortization expense</font></p> </td> <td valign="bottom"><font size="1">&#xA0;&#xA0;</font></td> <td valign="bottom"><font style="FONT-FAMILY: Times New Roman" size="2">$</font></td> <td valign="bottom" align="right"><font style="FONT-FAMILY: Times New Roman" size="2">11.0</font></td> <td valign="bottom"><font size="1">&#xA0;&#xA0;</font></td> <td valign="bottom"><font style="FONT-FAMILY: Times New Roman" size="2">$</font></td> <td valign="bottom" align="right"><font style="FONT-FAMILY: Times New Roman" size="2">9.1</font></td> <td valign="bottom"><font size="1">&#xA0;&#xA0;</font></td> <td valign="bottom"><font style="FONT-FAMILY: Times New Roman" size="2">$</font></td> <td valign="bottom" align="right"><font style="FONT-FAMILY: Times New Roman" size="2">4.6</font></td> <td valign="bottom"><font size="1">&#xA0;&#xA0;</font></td> <td valign="bottom"><font style="FONT-FAMILY: Times New Roman" size="2">$</font></td> <td valign="bottom" align="right"><font style="FONT-FAMILY: Times New Roman" size="2">3.2</font></td> <td valign="bottom"><font size="1">&#xA0;&#xA0;</font></td> <td valign="bottom"><font style="FONT-FAMILY: Times New Roman" size="2">$</font></td> <td valign="bottom" align="right"><font style="FONT-FAMILY: Times New Roman" size="2">1.7</font></td> </tr> </table> </div> 5. GOODWILL AND OTHER INTANGIBLE ASSETS Goodwill The following table summarizes the changes in the carrying amount of goodwill by segment for the six months false false No definition available. No authoritative reference available. false false 1 1 false UnKnown UnKnown UnKnown false true XML 20 R8.xml IDEA: IMPAIRMENTS AND LOSS ON SALE OF ASSETS 1.0.0.3 false IMPAIRMENTS AND LOSS ON SALE OF ASSETS false 1 $ false false iso4217_USD Standard http://www.xbrl.org/2003/iso4217 USD iso4217 0 iso4217_USD_per_shares Divide http://www.xbrl.org/2003/iso4217 USD iso4217 http://www.xbrl.org/2003/instance shares 0 shares Standard http://www.xbrl.org/2003/instance shares 0 5 3 cah_ImpairmentAndLossOnSaleOfAssetsTextBlock cah false na duration string Disclosure relating to the charge against earnings resulting from the disposal of assets as well as the aggregate write down... false false false false false false false false false 1 false false 0 0 <div> <p style="MARGIN-TOP: 18px; MARGIN-BOTTOM: 0px"><font style="FONT-FAMILY: Times New Roman" size="2"><b>3. 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No authoritative reference available. false false 2 6 false UnKnown NoRounding UnKnown false true XML 22 R18.xml IDEA: COMPREHENSIVE INCOME 1.0.0.3 false COMPREHENSIVE INCOME false 1 $ false false iso4217_USD Standard http://www.xbrl.org/2003/iso4217 USD iso4217 0 iso4217_USD_per_shares Divide http://www.xbrl.org/2003/iso4217 USD iso4217 http://www.xbrl.org/2003/instance shares 0 shares Standard http://www.xbrl.org/2003/instance shares 0 5 3 us-gaap_ComprehensiveIncomeNoteTextBlock us-gaap true na duration string No definition available. false false false false false false false false false 1 false false 0 0 <div> <p style="MARGIN-TOP: 12px; MARGIN-BOTTOM: 0px; TEXT-INDENT: 4%"> </p> <p style="MARGIN-TOP: 18px; MARGIN-BOTTOM: 0px"><font style="FONT-FAMILY: Times New Roman" size="2"><b>13. COMPREHENSIVE INCOME</b></font></p> <p style="MARGIN-TOP: 6px; MARGIN-BOTTOM: 0px; TEXT-INDENT: 4%"> <font style="FONT-FAMILY: Times New Roman" size="2">The following is a summary of the Company&#x2019;s comprehensive income for the three and six months ended December&#xA0;31, 2009 and 2008:</font></p> <p style="MARGIN-TOP: 0px; FONT-SIZE: 12px; MARGIN-BOTTOM: 0px"> &#xA0;</p> <table cellspacing="0" cellpadding="0" width="92%" align="center" border="0"> <tr> <td width="72%"></td> <td valign="bottom" width="3%"></td> <td></td> <td></td> <td valign="bottom" width="3%"></td> <td></td> <td></td> <td></td> <td valign="bottom" width="3%"></td> <td></td> <td></td> <td></td> <td valign="bottom" width="3%"></td> <td></td> <td></td> <td></td> </tr> <tr> <td valign="bottom"><font size="1">&#xA0;</font></td> <td valign="bottom"><font size="1">&#xA0;&#xA0;</font></td> <td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" align="center" colspan="5"><font style="FONT-FAMILY: Times New Roman" size="1"><b>Three&#xA0;Months&#xA0;Ended<br /> December&#xA0;31,</b></font></td> <td valign="bottom"><font size="1">&#xA0;</font></td> <td valign="bottom"><font size="1">&#xA0;</font></td> <td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" align="center" colspan="6"><font style="FONT-FAMILY: Times New Roman" size="1"><b>Six&#xA0;Months&#xA0;Ended<br /> December&#xA0;31,</b></font></td> <td valign="bottom"><font size="1">&#xA0;</font></td> </tr> <tr> <td valign="bottom" nowrap="nowrap"> <p style="WIDTH: 40pt; BORDER-BOTTOM: #000000 1px solid"> <font style="FONT-FAMILY: Times New Roman" size="1"><b>(in millions)</b></font></p> </td> <td valign="bottom"><font size="1">&#xA0;&#xA0;</font></td> <td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" align="center" colspan="2"><font style="FONT-FAMILY: Times New Roman" size="1"><b>2009</b></font></td> <td valign="bottom"><font size="1">&#xA0;&#xA0;</font></td> <td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" align="center" colspan="2"><font style="FONT-FAMILY: Times New Roman" size="1"><b>2008</b></font></td> <td valign="bottom"><font size="1">&#xA0;</font></td> <td valign="bottom"><font size="1">&#xA0;</font></td> <td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" align="center" colspan="2"><font style="FONT-FAMILY: Times New Roman" size="1"><b>2009</b></font></td> <td valign="bottom"><font size="1">&#xA0;</font></td> <td valign="bottom"><font size="1">&#xA0;</font></td> <td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" align="center" colspan="2"><font style="FONT-FAMILY: Times New Roman" size="1"><b>2008</b></font></td> <td valign="bottom"><font size="1">&#xA0;</font></td> </tr> <tr bgcolor="#CCEEFF"> <td valign="top"> <p style="MARGIN-LEFT: 1em; TEXT-INDENT: -1em"><font style="FONT-FAMILY: Times New Roman" size="2">Net earnings</font></p> </td> <td valign="bottom"><font size="1">&#xA0;&#xA0;</font></td> <td valign="bottom"><font style="FONT-FAMILY: Times New Roman" size="2">$</font></td> <td valign="bottom" align="right"><font style="FONT-FAMILY: Times New Roman" size="2">234.5</font></td> <td valign="bottom"><font size="1">&#xA0;&#xA0;</font></td> <td valign="bottom"><font style="FONT-FAMILY: Times New Roman" size="2">$</font></td> <td valign="bottom" align="right"><font style="FONT-FAMILY: Times New Roman" size="2">316.5</font></td> <td valign="bottom" nowrap="nowrap"><font style="FONT-FAMILY: Times New Roman" size="2">&#xA0;&#xA0;</font></td> <td valign="bottom"><font size="1">&#xA0;</font></td> <td valign="bottom"><font style="FONT-FAMILY: Times New Roman" size="2">$</font></td> <td valign="bottom" align="right"><font style="FONT-FAMILY: Times New Roman" size="2">196.3</font></td> <td valign="bottom" nowrap="nowrap"><font style="FONT-FAMILY: Times New Roman" size="2">&#xA0;&#xA0;</font></td> <td valign="bottom"><font size="1">&#xA0;</font></td> <td valign="bottom"><font style="FONT-FAMILY: Times New Roman" size="2">$</font></td> <td valign="bottom" align="right"><font style="FONT-FAMILY: Times New Roman" size="2">565.6</font></td> <td valign="bottom" nowrap="nowrap"><font style="FONT-FAMILY: Times New Roman" size="2">&#xA0;&#xA0;</font></td> </tr> <tr> <td valign="top"> <p style="MARGIN-LEFT: 1em; TEXT-INDENT: -1em"><font style="FONT-FAMILY: Times New Roman" size="2">Foreign currency translation adjustments</font></p> </td> <td valign="bottom"><font size="1">&#xA0;&#xA0;</font></td> <td valign="bottom"><font style="FONT-FAMILY: Times New Roman" size="2">&#xA0;</font></td> <td valign="bottom" align="right"><font style="FONT-FAMILY: Times New Roman" size="2">3.6</font></td> <td valign="bottom"><font size="1">&#xA0;&#xA0;</font></td> <td valign="bottom"><font style="FONT-FAMILY: Times New Roman" size="2">&#xA0;</font></td> <td valign="bottom" align="right"><font style="FONT-FAMILY: Times New Roman" size="2">(85.3</font></td> <td valign="bottom" nowrap="nowrap"><font style="FONT-FAMILY: Times New Roman" size="2">)&#xA0;</font></td> <td valign="bottom"><font size="1">&#xA0;</font></td> <td valign="bottom"><font style="FONT-FAMILY: Times New Roman" size="2">&#xA0;</font></td> <td valign="bottom" align="right"><font style="FONT-FAMILY: Times New Roman" size="2">(37.8</font></td> <td valign="bottom" nowrap="nowrap"><font style="FONT-FAMILY: Times New Roman" size="2">)&#xA0;</font></td> <td valign="bottom"><font size="1">&#xA0;</font></td> <td valign="bottom"><font style="FONT-FAMILY: Times New Roman" size="2">&#xA0;</font></td> <td valign="bottom" align="right"><font style="FONT-FAMILY: Times New Roman" size="2">(168.6</font></td> <td valign="bottom" nowrap="nowrap"><font style="FONT-FAMILY: Times New Roman" size="2">)&#xA0;</font></td> </tr> <tr bgcolor="#CCEEFF"> <td valign="top"> <p style="MARGIN-LEFT: 1em; TEXT-INDENT: -1em"><font style="FONT-FAMILY: Times New Roman" size="2">Net unrealized gain/(loss) on derivative instruments</font></p> </td> <td valign="bottom"><font size="1">&#xA0;&#xA0;</font></td> <td valign="bottom"><font style="FONT-FAMILY: Times New Roman" size="2">&#xA0;</font></td> <td valign="bottom" align="right"><font style="FONT-FAMILY: Times New Roman" size="2">2.4</font></td> <td valign="bottom"><font size="1">&#xA0;&#xA0;</font></td> <td valign="bottom"><font style="FONT-FAMILY: Times New Roman" size="2">&#xA0;</font></td> <td valign="bottom" align="right"><font style="FONT-FAMILY: Times New Roman" size="2">(9.8</font></td> <td valign="bottom" nowrap="nowrap"><font style="FONT-FAMILY: Times New Roman" size="2">)&#xA0;</font></td> <td valign="bottom"><font size="1">&#xA0;</font></td> <td valign="bottom"><font style="FONT-FAMILY: Times New Roman" size="2">&#xA0;</font></td> <td valign="bottom" align="right"><font style="FONT-FAMILY: Times New Roman" size="2">15.0</font></td> <td valign="bottom" nowrap="nowrap"><font style="FONT-FAMILY: Times New Roman" size="2">&#xA0;&#xA0;</font></td> <td valign="bottom"><font size="1">&#xA0;</font></td> <td valign="bottom"><font style="FONT-FAMILY: Times New Roman" size="2">&#xA0;</font></td> <td valign="bottom" align="right"><font style="FONT-FAMILY: Times New Roman" size="2">(0.9</font></td> <td valign="bottom" nowrap="nowrap"><font style="FONT-FAMILY: Times New Roman" size="2">)&#xA0;</font></td> </tr> <tr> <td valign="top"> <p style="MARGIN-LEFT: 1em; TEXT-INDENT: -1em"><font style="FONT-FAMILY: Times New Roman" size="2">Net unrealized gain on investment in CareFusion, net of tax</font></p> </td> <td valign="bottom"><font size="1">&#xA0;&#xA0;</font></td> <td valign="bottom"><font style="FONT-FAMILY: Times New Roman" size="2">&#xA0;</font></td> <td valign="bottom" align="right"><font style="FONT-FAMILY: Times New Roman" size="2">117.5</font></td> <td valign="bottom"><font size="1">&#xA0;&#xA0;</font></td> <td valign="bottom"><font style="FONT-FAMILY: Times New Roman" size="2">&#xA0;</font></td> <td valign="bottom" align="right"><font style="FONT-FAMILY: Times New Roman" size="2">&#x2014;&#xA0;&#xA0;</font></td> <td valign="bottom" nowrap="nowrap"><font style="FONT-FAMILY: Times New Roman" size="2">&#xA0;&#xA0;</font></td> <td valign="bottom"><font size="1">&#xA0;</font></td> <td valign="bottom"><font style="FONT-FAMILY: Times New Roman" size="2">&#xA0;</font></td> <td valign="bottom" align="right"><font style="FONT-FAMILY: Times New Roman" size="2">141.0</font></td> <td valign="bottom" nowrap="nowrap"><font style="FONT-FAMILY: Times New Roman" size="2">&#xA0;&#xA0;</font></td> <td valign="bottom"><font size="1">&#xA0;</font></td> <td valign="bottom"><font style="FONT-FAMILY: Times New Roman" size="2">&#xA0;</font></td> <td valign="bottom" align="right"><font style="FONT-FAMILY: Times New Roman" size="2">&#x2014;&#xA0;&#xA0;</font></td> <td valign="bottom" nowrap="nowrap"><font style="FONT-FAMILY: Times New Roman" size="2">&#xA0;&#xA0;</font></td> </tr> <tr style="FONT-SIZE: 1px"> <td valign="bottom"></td> <td valign="bottom">&#xA0;&#xA0;</td> <td style="BORDER-TOP: #000000 1px solid" valign="bottom"> &#xA0;</td> <td style="BORDER-TOP: #000000 1px solid" valign="bottom"> &#xA0;</td> <td valign="bottom">&#xA0;&#xA0;</td> <td style="BORDER-TOP: #000000 1px solid" valign="bottom"> &#xA0;</td> <td style="BORDER-TOP: #000000 1px solid" valign="bottom"> &#xA0;</td> <td>&#xA0;</td> <td valign="bottom">&#xA0;</td> <td style="BORDER-TOP: #000000 1px solid" valign="bottom"> &#xA0;</td> <td style="BORDER-TOP: #000000 1px solid" valign="bottom"> &#xA0;</td> <td>&#xA0;</td> <td valign="bottom">&#xA0;</td> <td style="BORDER-TOP: #000000 1px solid" valign="bottom"> &#xA0;</td> <td style="BORDER-TOP: #000000 1px solid" valign="bottom"> &#xA0;</td> <td>&#xA0;</td> </tr> <tr bgcolor="#CCEEFF"> <td valign="top"> <p style="MARGIN-LEFT: 1em; TEXT-INDENT: -1em"><font style="FONT-FAMILY: Times New Roman" size="2">Total comprehensive income</font></p> </td> <td valign="bottom"><font size="1">&#xA0;&#xA0;</font></td> <td valign="bottom"><font style="FONT-FAMILY: Times New Roman" size="2">$</font></td> <td valign="bottom" align="right"><font style="FONT-FAMILY: Times New Roman" size="2">358.0</font></td> <td valign="bottom"><font size="1">&#xA0;&#xA0;</font></td> <td valign="bottom"><font style="FONT-FAMILY: Times New Roman" size="2">$</font></td> <td valign="bottom" align="right"><font style="FONT-FAMILY: Times New Roman" size="2">221.4</font></td> <td valign="bottom" nowrap="nowrap"><font style="FONT-FAMILY: Times New Roman" size="2">&#xA0;&#xA0;</font></td> <td valign="bottom"><font size="1">&#xA0;</font></td> <td valign="bottom"><font style="FONT-FAMILY: Times New Roman" size="2">$</font></td> <td valign="bottom" align="right"><font style="FONT-FAMILY: Times New Roman" size="2">314.5</font></td> <td valign="bottom" nowrap="nowrap"><font style="FONT-FAMILY: Times New Roman" size="2">&#xA0;&#xA0;</font></td> <td valign="bottom"><font size="1">&#xA0;</font></td> <td valign="bottom"><font style="FONT-FAMILY: Times New Roman" size="2">$</font></td> <td valign="bottom" align="right"><font style="FONT-FAMILY: Times New Roman" size="2">396.1</font></td> <td valign="bottom" nowrap="nowrap"><font style="FONT-FAMILY: Times New Roman" size="2">&#xA0;&#xA0;</font></td> </tr> <tr style="FONT-SIZE: 1px"> <td valign="bottom"></td> <td valign="bottom">&#xA0;&#xA0;</td> <td style="BORDER-TOP: #000000 3px double" valign="bottom"> &#xA0;</td> <td style="BORDER-TOP: #000000 3px double" valign="bottom"> &#xA0;</td> <td valign="bottom">&#xA0;&#xA0;</td> <td style="BORDER-TOP: #000000 3px double" valign="bottom"> &#xA0;</td> <td style="BORDER-TOP: #000000 3px double" valign="bottom"> &#xA0;</td> <td>&#xA0;</td> <td valign="bottom">&#xA0;</td> <td style="BORDER-TOP: #000000 3px double" valign="bottom"> &#xA0;</td> <td style="BORDER-TOP: #000000 3px double" valign="bottom"> &#xA0;</td> <td>&#xA0;</td> <td valign="bottom">&#xA0;</td> <td style="BORDER-TOP: #000000 3px double" valign="bottom"> &#xA0;</td> <td style="BORDER-TOP: #000000 3px double" valign="bottom"> &#xA0;</td> <td>&#xA0;</td> </tr> </table> </div> 13. COMPREHENSIVE INCOME The following is a summary of the Company&#x2019;s comprehensive income for the three and six months ended December&#xA0;31, 2009 false false No definition available. No authoritative reference available. false false 1 1 false UnKnown UnKnown UnKnown false true XML 23 R12.xml IDEA: LONG-TERM OBLIGATIONS AND OTHER SHORT-TERM BORROWINGS 1.0.0.3 false LONG-TERM OBLIGATIONS AND OTHER SHORT-TERM BORROWINGS false 1 $ false false iso4217_USD Standard http://www.xbrl.org/2003/iso4217 USD iso4217 0 iso4217_USD_per_shares Divide http://www.xbrl.org/2003/iso4217 USD iso4217 http://www.xbrl.org/2003/instance shares 0 shares Standard http://www.xbrl.org/2003/instance shares 0 5 3 us-gaap_DebtDisclosureTextBlock us-gaap true na duration string No definition available. false false false false false false false false false 1 false false 0 0 <div> <p style="MARGIN-TOP: 0px; MARGIN-BOTTOM: 0px"></p> <p style="MARGIN-TOP: 0px; MARGIN-BOTTOM: 0px"><font style="FONT-FAMILY: Times New Roman" size="2"><b>7. LONG-TERM OBLIGATIONS AND OTHER SHORT-TERM BORROWINGS</b></font></p> <p style="MARGIN-TOP: 6px; MARGIN-BOTTOM: 0px; TEXT-INDENT: 4%"> <font style="FONT-FAMILY: Times New Roman" size="2">On September&#xA0;24, 2009, the Company completed a debt tender announced on August&#xA0;27, 2009 for an aggregate purchase price, including an early tender premium but excluding accrued interest, fees and expenses, of up to $1.2 billion of the following series of debt securities (listed in order of acceptance priority): (i)&#xA0;7.80% Debentures due October&#xA0;15, 2016 of Allegiance Corporation; (ii)&#xA0;6.75% Notes due February&#xA0;15, 2011 of the Company; (iii)&#xA0;6.00% Notes due June&#xA0;15, 2017 of the Company; (iv)&#xA0;7.00% Debentures due October&#xA0;15, 2026 of Allegiance Corporation; (v)&#xA0;5.85% Notes due December&#xA0;15, 2017 of the Company; (vi)&#xA0;5.80% Notes due October&#xA0;15, 2016 of the Company; (vii)&#xA0;5.65% Notes due June&#xA0;15, 2012 of the Company; (viii)&#xA0;5.50% Notes due June&#xA0;15, 2013 of the Company; and (ix)&#xA0;4.00% Notes due June&#xA0;15, 2015 of the Company. The Company purchased more than $1.1 billion pursuant to the offer using the order of priority set forth above. In connection with the debt tender, the Company incurred a pre-tax loss for the early extinguishment of debt of approximately $39.9 million, which included an early tender premium of $66.4 million, the write-off of $5.3 million of unamortized debt issuance costs, and an offsetting $31.8 million fair value adjustment to the respective debt related to previously terminated interest rate swaps.</font></p> <p style="MARGIN-TOP: 12px; MARGIN-BOTTOM: 0px; TEXT-INDENT: 4%"> <font style="FONT-FAMILY: Times New Roman" size="2">Long-term obligations and other short-term borrowings consist of the following as of December&#xA0;31, 2009 and June&#xA0;30, 2009:</font></p> <p style="MARGIN-TOP: 0px; FONT-SIZE: 12px; MARGIN-BOTTOM: 0px"> &#xA0;</p> <table cellspacing="0" cellpadding="0" width="76%" align="center" border="0"> <tr> <td width="76%"></td> <td valign="bottom" width="6%"></td> <td></td> <td></td> <td valign="bottom" width="6%"></td> <td></td> <td></td> </tr> <tr> <td valign="bottom" nowrap="nowrap"> <p style="WIDTH: 40pt; BORDER-BOTTOM: #000000 1px solid"> <font style="FONT-FAMILY: Times New Roman" size="1"><b>(in millions)</b></font></p> </td> <td valign="bottom"><font size="1">&#xA0;&#xA0;</font></td> <td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" align="center" colspan="2"><font style="FONT-FAMILY: Times New Roman" size="1"><b>December&#xA0;31,<br /> 2009</b></font></td> <td valign="bottom"><font size="1">&#xA0;&#xA0;</font></td> <td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" align="center" colspan="2"><font style="FONT-FAMILY: Times New Roman" size="1"><b>June&#xA0;30,<br /> 2009</b></font></td> </tr> <tr bgcolor="#CCEEFF"> <td valign="top"> <p style="MARGIN-LEFT: 1em; TEXT-INDENT: -1em"><font style="FONT-FAMILY: Times New Roman" size="2">4.00%&#xA0;Notes due 2015</font></p> </td> <td valign="bottom"><font size="1">&#xA0;&#xA0;</font></td> <td valign="bottom"><font style="FONT-FAMILY: Times New Roman" size="2">$</font></td> <td valign="bottom" align="right"><font style="FONT-FAMILY: Times New Roman" size="2">520.7</font></td> <td valign="bottom"><font size="1">&#xA0;&#xA0;</font></td> <td valign="bottom"><font style="FONT-FAMILY: Times New Roman" size="2">$</font></td> <td valign="bottom" align="right"><font style="FONT-FAMILY: Times New Roman" size="2">523.8</font></td> </tr> <tr> <td valign="top"> <p style="MARGIN-LEFT: 1em; TEXT-INDENT: -1em"><font style="FONT-FAMILY: Times New Roman" size="2">5.50% Notes due 2013</font></p> </td> <td valign="bottom"><font size="1">&#xA0;&#xA0;</font></td> <td valign="bottom"><font style="FONT-FAMILY: Times New Roman" size="2">&#xA0;</font></td> <td valign="bottom" align="right"><font style="FONT-FAMILY: Times New Roman" size="2">299.2</font></td> <td valign="bottom"><font size="1">&#xA0;&#xA0;</font></td> <td valign="bottom"><font style="FONT-FAMILY: Times New Roman" size="2">&#xA0;</font></td> <td valign="bottom" align="right"><font style="FONT-FAMILY: Times New Roman" size="2">300.0</font></td> </tr> <tr bgcolor="#CCEEFF"> <td valign="top"> <p style="MARGIN-LEFT: 1em; TEXT-INDENT: -1em"><font style="FONT-FAMILY: Times New Roman" size="2">5.65%&#xA0;Notes due 2012</font></p> </td> <td valign="bottom"><font size="1">&#xA0;&#xA0;</font></td> <td valign="bottom"><font style="FONT-FAMILY: Times New Roman" size="2">&#xA0;</font></td> <td valign="bottom" align="right"><font style="FONT-FAMILY: Times New Roman" size="2">216.2</font></td> <td valign="bottom"><font size="1">&#xA0;&#xA0;</font></td> <td valign="bottom"><font style="FONT-FAMILY: Times New Roman" size="2">&#xA0;</font></td> <td valign="bottom" align="right"><font style="FONT-FAMILY: Times New Roman" size="2">317.1</font></td> </tr> <tr> <td valign="top"> <p style="MARGIN-LEFT: 1em; TEXT-INDENT: -1em"><font style="FONT-FAMILY: Times New Roman" size="2">5.80%&#xA0;Notes due 2016</font></p> </td> <td valign="bottom"><font size="1">&#xA0;&#xA0;</font></td> <td valign="bottom"><font style="FONT-FAMILY: Times New Roman" size="2">&#xA0;</font></td> <td valign="bottom" align="right"><font style="FONT-FAMILY: Times New Roman" size="2">309.8</font></td> <td valign="bottom"><font size="1">&#xA0;&#xA0;</font></td> <td valign="bottom"><font style="FONT-FAMILY: Times New Roman" size="2">&#xA0;</font></td> <td valign="bottom" align="right"><font style="FONT-FAMILY: Times New Roman" size="2">526.4</font></td> </tr> <tr bgcolor="#CCEEFF"> <td valign="top"> <p style="MARGIN-LEFT: 1em; TEXT-INDENT: -1em"><font style="FONT-FAMILY: Times New Roman" size="2">5.85%&#xA0;Notes due 2017</font></p> </td> <td valign="bottom"><font size="1">&#xA0;&#xA0;</font></td> <td valign="bottom"><font style="FONT-FAMILY: Times New Roman" size="2">&#xA0;</font></td> <td valign="bottom" align="right"><font style="FONT-FAMILY: Times New Roman" size="2">158.0</font></td> <td valign="bottom"><font size="1">&#xA0;&#xA0;</font></td> <td valign="bottom"><font style="FONT-FAMILY: Times New Roman" size="2">&#xA0;</font></td> <td valign="bottom" align="right"><font style="FONT-FAMILY: Times New Roman" size="2">500.0</font></td> </tr> <tr> <td valign="top"> <p style="MARGIN-LEFT: 1em; TEXT-INDENT: -1em"><font style="FONT-FAMILY: Times New Roman" size="2">6.00%&#xA0;Notes due 2017</font></p> </td> <td valign="bottom"><font size="1">&#xA0;&#xA0;</font></td> <td valign="bottom"><font style="FONT-FAMILY: Times New Roman" size="2">&#xA0;</font></td> <td valign="bottom" align="right"><font style="FONT-FAMILY: Times New Roman" size="2">214.9</font></td> <td valign="bottom"><font size="1">&#xA0;&#xA0;</font></td> <td valign="bottom"><font style="FONT-FAMILY: Times New Roman" size="2">&#xA0;</font></td> <td valign="bottom" align="right"><font style="FONT-FAMILY: Times New Roman" size="2">350.4</font></td> </tr> <tr bgcolor="#CCEEFF"> <td valign="top"> <p style="MARGIN-LEFT: 1em; TEXT-INDENT: -1em"><font style="FONT-FAMILY: Times New Roman" size="2">6.75%&#xA0;Notes due 2011</font></p> </td> <td valign="bottom"><font size="1">&#xA0;&#xA0;</font></td> <td valign="bottom"><font style="FONT-FAMILY: Times New Roman" size="2">&#xA0;</font></td> <td valign="bottom" align="right"><font style="FONT-FAMILY: Times New Roman" size="2">217.9</font></td> <td valign="bottom"><font size="1">&#xA0;&#xA0;</font></td> <td valign="bottom"><font style="FONT-FAMILY: Times New Roman" size="2">&#xA0;</font></td> <td valign="bottom" align="right"><font style="FONT-FAMILY: Times New Roman" size="2">494.6</font></td> </tr> <tr> <td valign="top"> <p style="MARGIN-LEFT: 1em; TEXT-INDENT: -1em"><font style="FONT-FAMILY: Times New Roman" size="2">7.80%&#xA0;Debentures due 2016</font></p> </td> <td valign="bottom"><font size="1">&#xA0;&#xA0;</font></td> <td valign="bottom"><font style="FONT-FAMILY: Times New Roman" size="2">&#xA0;</font></td> <td valign="bottom" align="right"><font style="FONT-FAMILY: Times New Roman" size="2">44.1</font></td> <td valign="bottom"><font size="1">&#xA0;&#xA0;</font></td> <td valign="bottom"><font style="FONT-FAMILY: Times New Roman" size="2">&#xA0;</font></td> <td valign="bottom" align="right"><font style="FONT-FAMILY: Times New Roman" size="2">75.7</font></td> </tr> <tr bgcolor="#CCEEFF"> <td valign="top"> <p style="MARGIN-LEFT: 1em; TEXT-INDENT: -1em"><font style="FONT-FAMILY: Times New Roman" size="2">7.00%&#xA0;Debentures due 2026</font></p> </td> <td valign="bottom"><font size="1">&#xA0;&#xA0;</font></td> <td valign="bottom"><font style="FONT-FAMILY: Times New Roman" size="2">&#xA0;</font></td> <td valign="bottom" align="right"><font style="FONT-FAMILY: Times New Roman" size="2">124.5</font></td> <td valign="bottom"><font size="1">&#xA0;&#xA0;</font></td> <td valign="bottom"><font style="FONT-FAMILY: Times New Roman" size="2">&#xA0;</font></td> <td valign="bottom" align="right"><font style="FONT-FAMILY: Times New Roman" size="2">192.0</font></td> </tr> <tr> <td valign="top"> <p style="MARGIN-LEFT: 1em; TEXT-INDENT: -1em"><font style="FONT-FAMILY: Times New Roman" size="2">Floating Rate Notes due 2009</font></p> </td> <td valign="bottom"><font size="1">&#xA0;&#xA0;</font></td> <td valign="bottom"><font style="FONT-FAMILY: Times New Roman" size="2">&#xA0;</font></td> <td valign="bottom" align="right"><font style="FONT-FAMILY: Times New Roman" size="2">&#x2014;&#xA0;&#xA0;</font></td> <td valign="bottom"><font size="1">&#xA0;&#xA0;</font></td> <td valign="bottom"><font style="FONT-FAMILY: Times New Roman" size="2">&#xA0;</font></td> <td valign="bottom" align="right"><font style="FONT-FAMILY: Times New Roman" size="2">350.0</font></td> </tr> <tr bgcolor="#CCEEFF"> <td valign="top"> <p style="MARGIN-LEFT: 1em; TEXT-INDENT: -1em"><font style="FONT-FAMILY: Times New Roman" size="2">Other obligations</font></p> </td> <td valign="bottom"><font size="1">&#xA0;&#xA0;</font></td> <td valign="bottom"><font style="FONT-FAMILY: Times New Roman" size="2">&#xA0;</font></td> <td valign="bottom" align="right"><font style="FONT-FAMILY: Times New Roman" size="2">6.6</font></td> <td valign="bottom"><font size="1">&#xA0;&#xA0;</font></td> <td valign="bottom"><font style="FONT-FAMILY: Times New Roman" size="2">&#xA0;</font></td> <td valign="bottom" align="right"><font style="FONT-FAMILY: Times New Roman" size="2">7.8</font></td> </tr> <tr style="FONT-SIZE: 1px"> <td valign="bottom"></td> <td valign="bottom">&#xA0;&#xA0;</td> <td style="BORDER-TOP: #000000 1px solid" valign="bottom"> &#xA0;</td> <td style="BORDER-TOP: #000000 1px solid" valign="bottom"> &#xA0;</td> <td valign="bottom">&#xA0;&#xA0;</td> <td style="BORDER-TOP: #000000 1px solid" valign="bottom"> &#xA0;</td> <td style="BORDER-TOP: #000000 1px solid" valign="bottom"> &#xA0;</td> </tr> <tr> <td valign="top"> <p style="MARGIN-LEFT: 1em; TEXT-INDENT: -1em"><font style="FONT-FAMILY: Times New Roman" size="2">Total</font></p> </td> <td valign="bottom"><font size="1">&#xA0;&#xA0;</font></td> <td valign="bottom"><font style="FONT-FAMILY: Times New Roman" size="2">&#xA0;</font></td> <td valign="bottom" align="right"><font style="FONT-FAMILY: Times New Roman" size="2">2,111.9</font></td> <td valign="bottom"><font size="1">&#xA0;&#xA0;</font></td> <td valign="bottom"><font style="FONT-FAMILY: Times New Roman" size="2">&#xA0;</font></td> <td valign="bottom" align="right"><font style="FONT-FAMILY: Times New Roman" size="2">3,637.8</font></td> </tr> <tr bgcolor="#CCEEFF"> <td valign="top"> <p style="MARGIN-LEFT: 1em; TEXT-INDENT: -1em"><font style="FONT-FAMILY: Times New Roman" size="2">Less: current portion and other short-term borrowings</font></p> </td> <td valign="bottom"><font size="1">&#xA0;&#xA0;</font></td> <td valign="bottom"><font style="FONT-FAMILY: Times New Roman" size="2">&#xA0;</font></td> <td valign="bottom" align="right"><font style="FONT-FAMILY: Times New Roman" size="2">12.7</font></td> <td valign="bottom"><font size="1">&#xA0;&#xA0;</font></td> <td valign="bottom"><font style="FONT-FAMILY: Times New Roman" size="2">&#xA0;</font></td> <td valign="bottom" align="right"><font style="FONT-FAMILY: Times New Roman" size="2">366.2</font></td> </tr> <tr style="FONT-SIZE: 1px"> <td valign="bottom"></td> <td valign="bottom">&#xA0;&#xA0;</td> <td style="BORDER-TOP: #000000 1px solid" valign="bottom"> &#xA0;</td> <td style="BORDER-TOP: #000000 1px solid" valign="bottom"> &#xA0;</td> <td valign="bottom">&#xA0;&#xA0;</td> <td style="BORDER-TOP: #000000 1px solid" valign="bottom"> &#xA0;</td> <td style="BORDER-TOP: #000000 1px solid" valign="bottom"> &#xA0;</td> </tr> <tr> <td valign="top"> <p style="MARGIN-LEFT: 1em; TEXT-INDENT: -1em"><font style="FONT-FAMILY: Times New Roman" size="2">Long-term obligations, less current portion and other short-term borrowings</font></p> </td> <td valign="bottom"><font size="1">&#xA0;&#xA0;</font></td> <td valign="bottom"><font style="FONT-FAMILY: Times New Roman" size="2">$</font></td> <td valign="bottom" align="right"><font style="FONT-FAMILY: Times New Roman" size="2">2,099.2</font></td> <td valign="bottom"><font size="1">&#xA0;&#xA0;</font></td> <td valign="bottom"><font style="FONT-FAMILY: Times New Roman" size="2">$</font></td> <td valign="bottom" align="right"><font style="FONT-FAMILY: Times New Roman" size="2">3,271.6</font></td> </tr> <tr style="FONT-SIZE: 1px"> <td valign="bottom"></td> <td valign="bottom">&#xA0;&#xA0;</td> <td style="BORDER-TOP: #000000 3px double" valign="bottom"> &#xA0;</td> <td style="BORDER-TOP: #000000 3px double" valign="bottom"> &#xA0;</td> <td valign="bottom">&#xA0;&#xA0;</td> <td style="BORDER-TOP: #000000 3px double" valign="bottom"> &#xA0;</td> <td style="BORDER-TOP: #000000 3px double" valign="bottom"> &#xA0;</td> </tr> </table> </div> 7. 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No authoritative reference available. true false 2 31 false HundredThousands UnKnown UnKnown false true XML 25 R14.xml IDEA: CONTINGENT LIABILITIES 1.0.0.3 false CONTINGENT LIABILITIES false 1 $ false false iso4217_USD Standard http://www.xbrl.org/2003/iso4217 USD iso4217 0 iso4217_USD_per_shares Divide http://www.xbrl.org/2003/iso4217 USD iso4217 http://www.xbrl.org/2003/instance shares 0 shares Standard http://www.xbrl.org/2003/instance shares 0 5 3 us-gaap_ScheduleOfLossContingenciesByContingencyTextBlock us-gaap true na duration string No definition available. false false false false false false false false false 1 false false 0 0 <div> <p style="MARGIN-TOP: 12px; MARGIN-BOTTOM: 0px; TEXT-INDENT: 4%"> </p> <p style="MARGIN-TOP: 18px; MARGIN-BOTTOM: 0px"><font style="FONT-FAMILY: Times New Roman" size="2"><b>9. CONTINGENT LIABILITIES</b></font></p> <p style="MARGIN-TOP: 6px; MARGIN-BOTTOM: 0px; MARGIN-LEFT: 2%"> <font style="FONT-FAMILY: Times New Roman" size="2"><b><i>Legal Proceedings</i></b></font></p> <p style="MARGIN-TOP: 6px; MARGIN-BOTTOM: 0px; TEXT-INDENT: 4%"> <font style="FONT-FAMILY: Times New Roman" size="2">In addition to commitments and obligations in the ordinary course of business, the Company is subject to various claims, other pending and potential legal actions for damages, investigations relating to governmental laws and regulations and other matters arising out of the normal conduct of its business. When accruing for contingencies related to litigation, the Company considers the degree of probability and range of possible loss. An estimated loss contingency is accrued in the Company&#x2019;s consolidated financial statements if it is probable that a liability has been incurred and the amount of the loss can be reasonably estimated. Because litigation is inherently unpredictable and unfavorable resolutions could occur, assessing contingencies is highly subjective and requires judgments about future events. The Company regularly reviews contingencies to determine the adequacy of the accruals and related disclosures. The amount of ultimate loss may differ from these estimates. It is possible that cash flows or results of operations could be materially affected in any particular period by the unfavorable resolution of one or more of these contingencies.</font></p> <p style="MARGIN-TOP: 12px; MARGIN-BOTTOM: 0px; TEXT-INDENT: 4%"> <font style="FONT-FAMILY: Times New Roman" size="2">The Company recognizes income from the favorable outcome of legal settlements, judgments or other resolution of legal and regulatory matters when the associated cash or assets are received.</font></p> <p style="MARGIN-TOP: 0px; MARGIN-BOTTOM: 0px"><font size="1">&#xA0;</font></p> <p style="MARGIN-TOP: 0px; MARGIN-BOTTOM: 0px; TEXT-INDENT: 4%"> <font style="FONT-FAMILY: Times New Roman" size="2">Estimated loss contingencies related to litigation and regulatory matters and income from favorable resolution of legal and regulatory matters are recognized in litigation (credits)/charges, net in the Company&#x2019;s condensed consolidated statements of earnings.</font></p> <p style="MARGIN-TOP: 18px; MARGIN-BOTTOM: 0px; MARGIN-LEFT: 2%"> <font style="FONT-FAMILY: Times New Roman" size="2"><b><i>Insurance Proceeds</i></b></font></p> <p style="MARGIN-TOP: 6px; MARGIN-BOTTOM: 0px; TEXT-INDENT: 4%"> <font style="FONT-FAMILY: Times New Roman" size="2">In the three months ending December&#xA0;31, 2009, the Company recognized $27.2 million of income related to insurance proceeds released from escrow following the resolution of securities and derivative litigation against certain of the Company&#x2019;s directors and officers. This amount is comprised of $25.7 million received from directors and officers&#x2019; insurance policies recognized in litigation (credits)/charges, net and $1.5 million of accrued interest income recognized in interest expense, net.&#xA0;For further information regarding this matter, see the Company&#x2019;s Annual Report on Form 10-K for the fiscal year ended June&#xA0;30, 2007.</font></p> <p style="MARGIN-TOP: 18px; MARGIN-BOTTOM: 0px; MARGIN-LEFT: 2%"> <font style="FONT-FAMILY: Times New Roman" size="2"><b><i>Income Taxes</i></b></font></p> <p style="MARGIN-TOP: 6px; MARGIN-BOTTOM: 0px; TEXT-INDENT: 4%"> <font style="FONT-FAMILY: Times New Roman" size="2">See Note 8 for discussion of contingencies related to the Company&#x2019;s income taxes.</font></p> <p style="MARGIN-TOP: 18px; MARGIN-BOTTOM: 0px; MARGIN-LEFT: 2%"> <font style="FONT-FAMILY: Times New Roman" size="2"><b><i>Other Matters</i></b></font></p> <p style="MARGIN-TOP: 6px; MARGIN-BOTTOM: 0px; TEXT-INDENT: 4%"> <font style="FONT-FAMILY: Times New Roman" size="2">The Company also becomes involved from time-to-time in litigation and regulatory matters incidental to its business, including, but not limited to, personal injury claims, employment matters, commercial disputes, intellectual property matters, inclusion as a potentially responsible party for environmental clean-up costs, and litigation in connection with acquisitions and divestitures. The Company intends to vigorously defend itself against such litigation and does not currently believe that the outcome of any such litigation will have a material adverse effect on the Company&#x2019;s consolidated financial statements.</font></p> <p style="MARGIN-TOP: 12px; MARGIN-BOTTOM: 0px; TEXT-INDENT: 4%"> <font style="FONT-FAMILY: Times New Roman" size="2">From time to time, the Company receives subpoenas or requests for information from various government agencies relating to the business, accounting or disclosure practices of customers or suppliers. The responses to these subpoenas and requests for information sometimes require considerable time and effort, and can result in considerable costs being incurred by the Company. The Company expects to incur additional costs in the future in connection with existing and future requests. Such subpoenas and requests also can lead to the assertion of claims or the commencement of legal proceedings against the Company.</font></p> <p style="MARGIN-TOP: 12px; MARGIN-BOTTOM: 0px; TEXT-INDENT: 4%"> <font style="FONT-FAMILY: Times New Roman" size="2">Also from time to time, the Company may determine that products marketed, manufactured, or distributed by the Company may not meet Company specifications, published standards or regulatory requirements. In such circumstances, the Company will investigate and take appropriate corrective action. Such actions can lead to costs to repair or replace affected products, temporary interruptions in product sales and action by regulators, and can adversely impact results of operations.</font></p> </div> 9. CONTINGENT LIABILITIES Legal Proceedings In addition to commitments and obligations in the ordinary course of business, the Company is subject to various false false No definition available. No authoritative reference available. false false 1 1 false UnKnown UnKnown UnKnown false true XML 26 R15.xml IDEA: GUARANTEES 1.0.0.3 false GUARANTEES false 1 $ false false iso4217_USD Standard http://www.xbrl.org/2003/iso4217 USD iso4217 0 iso4217_USD_per_shares Divide http://www.xbrl.org/2003/iso4217 USD iso4217 http://www.xbrl.org/2003/instance shares 0 shares Standard http://www.xbrl.org/2003/instance shares 0 5 3 us-gaap_ScheduleOfGuaranteeObligationsTextBlock us-gaap true na duration string No definition available. false false false false false false false false false 1 false false 0 0 <div> <p style="MARGIN-TOP: 12px; MARGIN-BOTTOM: 0px; TEXT-INDENT: 4%"> </p> <p style="MARGIN-TOP: 18px; MARGIN-BOTTOM: 0px"><font style="FONT-FAMILY: Times New Roman" size="2"><b>10. GUARANTEES</b></font></p> <p style="MARGIN-TOP: 6px; MARGIN-BOTTOM: 0px; TEXT-INDENT: 4%"> <font style="FONT-FAMILY: Times New Roman" size="2">In the ordinary course of business, the Company, from time to time, agrees to indemnify certain other parties under agreements with the Company, including under acquisition and disposition agreements, customer agreements and intellectual property licensing agreements. Such indemnification obligations vary in scope and, when defined, in duration. In many cases, a maximum obligation is not explicitly stated and therefore the overall maximum amount of the liability under such indemnification obligations cannot be reasonably estimated. Where appropriate, such indemnification obligations are recorded as a liability. Historically, the Company has not, individually or in the aggregate, made payments under these indemnification obligations in any material amounts. In certain circumstances, the Company believes that its existing insurance arrangements, subject to the general deduction and exclusion provisions, would cover portions of the liability that could arise from any of these indemnification obligations. In addition, the Company believes that the likelihood of a material liability being triggered under these indemnification obligations is not significant.</font></p> <p style="MARGIN-TOP: 12px; MARGIN-BOTTOM: 0px; TEXT-INDENT: 4%"> <font style="FONT-FAMILY: Times New Roman" size="2">In the ordinary course of business, the Company, from time to time, enters into agreements that obligate the Company to make fixed payments upon the occurrence of certain events. Such obligations primarily relate to obligations arising under acquisition transactions, where the Company has agreed to make payments based upon the achievement of certain financial performance measures by the acquired business. Generally, the obligation is capped at an explicit amount. The Company&#x2019;s aggregate exposure for these obligations, assuming the achievement of all financial performance measures, is not material.</font></p> <p style="MARGIN-TOP: 12px; MARGIN-BOTTOM: 0px; TEXT-INDENT: 4%"> <font style="FONT-FAMILY: Times New Roman" size="2">In the ordinary course of business, the Company, from time to time, extends loans to its customers which are subsequently sold to a bank. The bank services and administers these loans as well as any new loans the Company may direct. In order for the bank to purchase such loans, it requires the absolute and unconditional obligation of the Company to repurchase such loans upon the occurrence of certain events described in the agreement including, but not limited to, borrower payment default that exceeds 90 days, insolvency and bankruptcy. At December&#xA0;31, 2009 and June&#xA0;30, 2009, notes in the program subject to the guaranty of the Company totaled $39.6 million and $39.9 million, respectively. These loans are reported in the Company&#x2019;s condensed consolidated balance sheet.</font></p> </div> 10. GUARANTEES In the ordinary course of business, the Company, from time to time, agrees to indemnify certain other parties under agreements with the false false No definition available. No authoritative reference available. false false 1 1 false UnKnown UnKnown UnKnown false true XML 27 R20.xml IDEA: EMPLOYEE EQUITY PLANS 1.0.0.3 false EMPLOYEE EQUITY PLANS false 1 $ false false iso4217_USD Standard http://www.xbrl.org/2003/iso4217 USD iso4217 0 iso4217_USD_per_shares Divide http://www.xbrl.org/2003/iso4217 USD iso4217 http://www.xbrl.org/2003/instance shares 0 shares Standard http://www.xbrl.org/2003/instance shares 0 5 3 us-gaap_DisclosureOfCompensationRelatedCostsShareBasedPaymentsTextBlock us-gaap true na duration string No definition available. false false false false false false false false false 1 false false 0 0 <div> <p style="MARGIN-TOP: 18px; MARGIN-BOTTOM: 0px"><font style="FONT-FAMILY: Times New Roman" size="2"><b>15. EMPLOYEE EQUITY PLANS</b></font></p> <p style="MARGIN-TOP: 6px; MARGIN-BOTTOM: 0px; MARGIN-LEFT: 2%"> <font style="FONT-FAMILY: Times New Roman" size="2"><b><i>Employee Equity Plans</i></b></font></p> <p style="MARGIN-TOP: 6px; MARGIN-BOTTOM: 0px; TEXT-INDENT: 4%"> <font style="FONT-FAMILY: Times New Roman" size="2">The Company maintains several stock incentive plans (collectively, the &#x201C;Plans&#x201D;) for the benefit of certain of its officers, directors and employees. Employee options granted under the Plans during fiscal 2008 through fiscal 2010 generally vest in equal annual installments over three years and are exercisable for periods up to seven years from the date of grant at a price equal to the fair market value of the Common Shares underlying the option at the date of grant. Employee options granted under the Plans during fiscal 2007 generally vest in equal annual installments over four years and are exercisable for periods up to seven years from the date of grant at a price equal to the fair market value of the Common Shares underlying the option at the date of grant. Employee restricted shares and restricted share units granted under the Plans during fiscal 2007 through fiscal 2010 generally vest in equal installments over three years and entitle holders to dividends or cash dividend equivalents. Restricted shares and restricted share units that were awarded after August&#xA0;1, 2006 accrue dividends or cash dividend equivalents that are payable upon vesting of the awards.</font></p> <p style="MARGIN-TOP: 12px; MARGIN-BOTTOM: 0px; TEXT-INDENT: 4%"> <font style="FONT-FAMILY: Times New Roman" size="2">The compensation expense recognized for all share-based payment awards is net of estimated forfeitures and is recognized using the straight-line method over the applicable service period. The Company classifies share-based payment compensation within SG&amp;A expenses to correspond with the same line item as the majority of the cash compensation paid to employees.</font></p> <p style="MARGIN-TOP: 12px; MARGIN-BOTTOM: 0px; TEXT-INDENT: 4%"> <font style="FONT-FAMILY: Times New Roman" size="2">The following table illustrates the impact of share-based payment compensation on reported amounts for the three and six months ended December&#xA0;31, 2009 and 2008:</font></p> <p style="MARGIN-TOP: 0px; FONT-SIZE: 12px; MARGIN-BOTTOM: 0px"> &#xA0;</p> <table cellspacing="0" cellpadding="0" width="84%" align="center" border="0"> <tr> <td width="68%"></td> <td valign="bottom" width="4%"></td> <td></td> <td></td> <td></td> <td valign="bottom" width="4%"></td> <td></td> <td></td> <td></td> <td valign="bottom" width="4%"></td> <td></td> <td></td> <td></td> <td valign="bottom" width="4%"></td> <td></td> <td></td> <td></td> </tr> <tr> <td valign="bottom"><font size="1">&#xA0;</font></td> <td valign="bottom"><font size="1">&#xA0;&#xA0;</font></td> <td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" align="center" colspan="6"><font style="FONT-FAMILY: Times New Roman" size="1"><b>Three&#xA0;Months&#xA0;Ended<br /> December&#xA0;31,</b></font></td> <td valign="bottom"><font size="1">&#xA0;</font></td> <td valign="bottom"><font size="1">&#xA0;</font></td> <td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" align="center" colspan="6"><font style="FONT-FAMILY: Times New Roman" size="1"><b>Six Months Ended<br /> December&#xA0;31,</b></font></td> <td valign="bottom"><font size="1">&#xA0;</font></td> </tr> <tr> <td valign="bottom" nowrap="nowrap"> <p style="WIDTH: 132pt; BORDER-BOTTOM: #000000 1px solid"> <font style="FONT-FAMILY: Times New Roman" size="1"><b>(in millions, except per share amounts)</b></font></p> </td> <td valign="bottom"><font size="1">&#xA0;&#xA0;</font></td> <td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" align="center" colspan="2"><font style="FONT-FAMILY: Times New Roman" size="1"><b>2009</b></font></td> <td valign="bottom"><font size="1">&#xA0;</font></td> <td valign="bottom"><font size="1">&#xA0;</font></td> <td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" align="center" colspan="2"><font style="FONT-FAMILY: Times New Roman" size="1"><b>2008</b></font></td> <td valign="bottom"><font size="1">&#xA0;</font></td> <td valign="bottom"><font size="1">&#xA0;</font></td> <td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" align="center" colspan="2"><font style="FONT-FAMILY: Times New Roman" size="1"><b>2009</b></font></td> <td valign="bottom"><font size="1">&#xA0;</font></td> <td valign="bottom"><font size="1">&#xA0;</font></td> <td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" align="center" colspan="2"><font style="FONT-FAMILY: Times New Roman" size="1"><b>2008</b></font></td> <td valign="bottom"><font size="1">&#xA0;</font></td> </tr> <tr bgcolor="#CCEEFF"> <td valign="top"> <p style="MARGIN-LEFT: 1em; TEXT-INDENT: -1em"><font style="FONT-FAMILY: Times New Roman" size="2">Operating earnings (1)&#xA0;(2)</font></p> </td> <td valign="bottom"><font size="1">&#xA0;&#xA0;</font></td> <td valign="bottom"><font style="FONT-FAMILY: Times New Roman" size="2">$</font></td> <td valign="bottom" align="right"><font style="FONT-FAMILY: Times New Roman" size="2">(20.1</font></td> <td valign="bottom" nowrap="nowrap"><font style="FONT-FAMILY: Times New Roman" size="2">)&#xA0;</font></td> <td valign="bottom"><font size="1">&#xA0;</font></td> <td valign="bottom"><font style="FONT-FAMILY: Times New Roman" size="2">$</font></td> <td valign="bottom" align="right"><font style="FONT-FAMILY: Times New Roman" size="2">(29.2</font></td> <td valign="bottom" nowrap="nowrap"><font style="FONT-FAMILY: Times New Roman" size="2">)&#xA0;</font></td> <td valign="bottom"><font size="1">&#xA0;</font></td> <td valign="bottom"><font style="FONT-FAMILY: Times New Roman" size="2">$</font></td> <td valign="bottom" align="right"><font style="FONT-FAMILY: Times New Roman" size="2">(42.1</font></td> <td valign="bottom" nowrap="nowrap"><font style="FONT-FAMILY: Times New Roman" size="2">)&#xA0;</font></td> <td valign="bottom"><font size="1">&#xA0;</font></td> <td valign="bottom"><font style="FONT-FAMILY: Times New Roman" size="2">$</font></td> <td valign="bottom" align="right"><font style="FONT-FAMILY: Times New Roman" size="2">(50.2</font></td> <td valign="bottom" nowrap="nowrap"><font style="FONT-FAMILY: Times New Roman" size="2">)&#xA0;</font></td> </tr> <tr> <td valign="top"> <p style="MARGIN-LEFT: 1em; TEXT-INDENT: -1em"><font style="FONT-FAMILY: Times New Roman" size="2">Earnings from continuing operations</font></p> </td> <td valign="bottom"><font size="1">&#xA0;&#xA0;</font></td> <td valign="bottom"><font style="FONT-FAMILY: Times New Roman" size="2">$</font></td> <td valign="bottom" align="right"><font style="FONT-FAMILY: Times New Roman" size="2">(12.8</font></td> <td valign="bottom" nowrap="nowrap"><font style="FONT-FAMILY: Times New Roman" size="2">)&#xA0;</font></td> <td valign="bottom"><font size="1">&#xA0;</font></td> <td valign="bottom"><font style="FONT-FAMILY: Times New Roman" size="2">$</font></td> <td valign="bottom" align="right"><font style="FONT-FAMILY: Times New Roman" size="2">(19.6</font></td> <td valign="bottom" nowrap="nowrap"><font style="FONT-FAMILY: Times New Roman" size="2">)&#xA0;</font></td> <td valign="bottom"><font size="1">&#xA0;</font></td> <td valign="bottom"><font style="FONT-FAMILY: Times New Roman" size="2">$</font></td> <td valign="bottom" align="right"><font style="FONT-FAMILY: Times New Roman" size="2">(27.0</font></td> <td valign="bottom" nowrap="nowrap"><font style="FONT-FAMILY: Times New Roman" size="2">)&#xA0;</font></td> <td valign="bottom"><font size="1">&#xA0;</font></td> <td valign="bottom"><font style="FONT-FAMILY: Times New Roman" size="2">$</font></td> <td valign="bottom" align="right"><font style="FONT-FAMILY: Times New Roman" size="2">(33.8</font></td> <td valign="bottom" nowrap="nowrap"><font style="FONT-FAMILY: Times New Roman" size="2">)&#xA0;</font></td> </tr> <tr bgcolor="#CCEEFF"> <td valign="top"> <p style="MARGIN-LEFT: 1em; TEXT-INDENT: -1em"><font style="FONT-FAMILY: Times New Roman" size="2">Net earnings&#xA0;(3) (4)</font></p> </td> <td valign="bottom"><font size="1">&#xA0;&#xA0;</font></td> <td valign="bottom"><font style="FONT-FAMILY: Times New Roman" size="2">$</font></td> <td valign="bottom" align="right"><font style="FONT-FAMILY: Times New Roman" size="2">(12.8</font></td> <td valign="bottom" nowrap="nowrap"><font style="FONT-FAMILY: Times New Roman" size="2">)&#xA0;</font></td> <td valign="bottom"><font size="1">&#xA0;</font></td> <td valign="bottom"><font style="FONT-FAMILY: Times New Roman" size="2">$</font></td> <td valign="bottom" align="right"><font style="FONT-FAMILY: Times New Roman" size="2">(23.1</font></td> <td valign="bottom" nowrap="nowrap"><font style="FONT-FAMILY: Times New Roman" size="2">)&#xA0;</font></td> <td valign="bottom"><font size="1">&#xA0;</font></td> <td valign="bottom"><font style="FONT-FAMILY: Times New Roman" size="2">$</font></td> <td valign="bottom" align="right"><font style="FONT-FAMILY: Times New Roman" size="2">(29.3</font></td> <td valign="bottom" nowrap="nowrap"><font style="FONT-FAMILY: Times New Roman" size="2">)&#xA0;</font></td> <td valign="bottom"><font size="1">&#xA0;</font></td> <td valign="bottom"><font style="FONT-FAMILY: Times New Roman" size="2">$</font></td> <td valign="bottom" align="right"><font style="FONT-FAMILY: Times New Roman" size="2">(39.4</font></td> <td valign="bottom" nowrap="nowrap"><font style="FONT-FAMILY: Times New Roman" size="2">)&#xA0;</font></td> </tr> <tr> <td valign="top"> <p style="MARGIN-LEFT: 1em; TEXT-INDENT: -1em"><font style="FONT-FAMILY: Times New Roman" size="2">Net basic earnings per Common Share</font></p> </td> <td valign="bottom"><font size="1">&#xA0;&#xA0;</font></td> <td valign="bottom"><font style="FONT-FAMILY: Times New Roman" size="2">$</font></td> <td valign="bottom" align="right"><font style="FONT-FAMILY: Times New Roman" size="2">(0.04</font></td> <td valign="bottom" nowrap="nowrap"><font style="FONT-FAMILY: Times New Roman" size="2">)&#xA0;</font></td> <td valign="bottom"><font size="1">&#xA0;</font></td> <td valign="bottom"><font style="FONT-FAMILY: Times New Roman" size="2">$</font></td> <td valign="bottom" align="right"><font style="FONT-FAMILY: Times New Roman" size="2">(0.06</font></td> <td valign="bottom" nowrap="nowrap"><font style="FONT-FAMILY: Times New Roman" size="2">)&#xA0;</font></td> <td valign="bottom"><font size="1">&#xA0;</font></td> <td valign="bottom"><font style="FONT-FAMILY: Times New Roman" size="2">$</font></td> <td valign="bottom" align="right"><font style="FONT-FAMILY: Times New Roman" size="2">(0.08</font></td> <td valign="bottom" nowrap="nowrap"><font style="FONT-FAMILY: Times New Roman" size="2">)&#xA0;</font></td> <td valign="bottom"><font size="1">&#xA0;</font></td> <td valign="bottom"><font style="FONT-FAMILY: Times New Roman" size="2">$</font></td> <td valign="bottom" align="right"><font style="FONT-FAMILY: Times New Roman" size="2">(0.11</font></td> <td valign="bottom" nowrap="nowrap"><font style="FONT-FAMILY: Times New Roman" size="2">)&#xA0;</font></td> </tr> <tr bgcolor="#CCEEFF"> <td valign="top"> <p style="MARGIN-LEFT: 1em; TEXT-INDENT: -1em"><font style="FONT-FAMILY: Times New Roman" size="2">Net diluted earnings per Common Share</font></p> </td> <td valign="bottom"><font size="1">&#xA0;&#xA0;</font></td> <td valign="bottom"><font style="FONT-FAMILY: Times New Roman" size="2">$</font></td> <td valign="bottom" align="right"><font style="FONT-FAMILY: Times New Roman" size="2">(0.04</font></td> <td valign="bottom" nowrap="nowrap"><font style="FONT-FAMILY: Times New Roman" size="2">)&#xA0;</font></td> <td valign="bottom"><font size="1">&#xA0;</font></td> <td valign="bottom"><font style="FONT-FAMILY: Times New Roman" size="2">$</font></td> <td valign="bottom" align="right"><font style="FONT-FAMILY: Times New Roman" size="2">(0.06</font></td> <td valign="bottom" nowrap="nowrap"><font style="FONT-FAMILY: Times New Roman" size="2">)&#xA0;</font></td> <td valign="bottom"><font size="1">&#xA0;</font></td> <td valign="bottom"><font style="FONT-FAMILY: Times New Roman" size="2">$</font></td> <td valign="bottom" align="right"><font style="FONT-FAMILY: Times New Roman" size="2">(0.08</font></td> <td valign="bottom" nowrap="nowrap"><font style="FONT-FAMILY: Times New Roman" size="2">)&#xA0;</font></td> <td valign="bottom"><font size="1">&#xA0;</font></td> <td valign="bottom"><font style="FONT-FAMILY: Times New Roman" size="2">$</font></td> <td valign="bottom" align="right"><font style="FONT-FAMILY: Times New Roman" size="2">(0.11</font></td> <td valign="bottom" nowrap="nowrap"><font style="FONT-FAMILY: Times New Roman" size="2">)&#xA0;</font></td> </tr> </table> <p style="MARGIN-TOP: 0px; FONT-SIZE: 12px; MARGIN-BOTTOM: 0px"> &#xA0;</p> <table style="BORDER-COLLAPSE: collapse" cellspacing="0" cellpadding="0" width="100%" border="0"> <tr> <td valign="top" align="left" width="4%"><font style="FONT-FAMILY: Times New Roman" size="2">(1)</font></td> <td valign="top" align="left"><font style="FONT-FAMILY: Times New Roman" size="2">The total share-based payment compensation expense for the three months ended December&#xA0;31, 2009 and 2008 includes gross restricted share and restricted share unit expense of approximately $11.5 million and $17.6 million, respectively, gross employee stock option expense of approximately $8.2 million and $10.6 million, respectively, gross employee stock purchase plan expense of approximately $0.0 million and $2.7 million, respectively and gross stock appreciation right (income)/expense of $0.4 million and $(1.7) million, respectively.</font></td> </tr> </table> <table style="BORDER-COLLAPSE: collapse" cellspacing="0" cellpadding="0" width="100%" border="0"> <tr> <td valign="top" align="left" width="4%"><font style="FONT-FAMILY: Times New Roman" size="2">(2)</font></td> <td valign="top" align="left"><font style="FONT-FAMILY: Times New Roman" size="2">The total share-based payment compensation expense for the six months ended December&#xA0;31, 2009 and 2008 includes gross restricted share and restricted share unit expense of approximately $22.8 million and $29.1 million, respectively, gross employee stock option expense of approximately $17.6 million and $16.8 million, respectively, gross employee stock purchase plan expense of approximately $1.1 million and $6.1 million, respectively and gross stock appreciation right (income)/expense of $0.6 million and $(1.8) million, respectively.</font></td> </tr> </table> <table style="BORDER-COLLAPSE: collapse" cellspacing="0" cellpadding="0" width="100%" border="0"> <tr> <td valign="top" align="left" width="4%"><font style="FONT-FAMILY: Times New Roman" size="2">(3)</font></td> <td valign="top" align="left"><font style="FONT-FAMILY: Times New Roman" size="2">Share-based payment compensation expense charged to discontinued operations was approximately $3.5 million, net of tax benefits of $2.1&#xA0;million, during the three months ended December&#xA0;31, 2008.</font></td> </tr> </table> <table style="BORDER-COLLAPSE: collapse" cellspacing="0" cellpadding="0" width="100%" border="0"> <tr> <td valign="top" align="left" width="4%"><font style="FONT-FAMILY: Times New Roman" size="2">(4)</font></td> <td valign="top" align="left"><font style="FONT-FAMILY: Times New Roman" size="2">Share-based payment compensation expense charged to discontinued operations was approximately $2.3 million and $5.6 million, net of tax benefits of $1.5&#xA0;million and $3.4&#xA0;million, during the six months ended December&#xA0;31, 2009 and 2008, respectively.</font></td> </tr> </table> <p style="MARGIN-TOP: 0px; MARGIN-BOTTOM: 0px"><font size="1">&#xA0;</font></p> <p style="MARGIN-TOP: 0px; MARGIN-BOTTOM: 0px; MARGIN-LEFT: 2%"> <font style="FONT-FAMILY: Times New Roman" size="2"><b><i>Stock Options</i></b></font></p> <p style="MARGIN-TOP: 6px; MARGIN-BOTTOM: 0px; TEXT-INDENT: 4%"> <font style="FONT-FAMILY: Times New Roman" size="2">The fair value of the Company&#x2019;s stock options is determined using a lattice valuation model. The Company believes the lattice model provides for better estimates because it has the ability to take into account employee exercise patterns based on changes in the Company&#x2019;s stock price and other variables and it provides for a range of input assumptions.</font></p> <p style="MARGIN-TOP: 12px; MARGIN-BOTTOM: 0px; TEXT-INDENT: 4%"> <font style="FONT-FAMILY: Times New Roman" size="2">The following summarizes all stock option transactions for the Company under the Plans from July&#xA0;1, 2009 through December&#xA0;31, 2009:</font></p> <p style="MARGIN-TOP: 0px; FONT-SIZE: 12px; MARGIN-BOTTOM: 0px"> &#xA0;</p> <table cellspacing="0" cellpadding="0" width="92%" align="center" border="0"> <tr> <td width="59%"></td> <td valign="bottom" width="7%"></td> <td></td> <td></td> <td valign="bottom" width="7%"></td> <td></td> <td></td> <td valign="bottom" width="7%"></td> <td></td> <td valign="bottom" width="7%"></td> <td></td> <td></td> </tr> <tr> <td valign="bottom" nowrap="nowrap"> <p style="WIDTH: 132pt; BORDER-BOTTOM: #000000 1px solid"> <font style="FONT-FAMILY: Times New Roman" size="1"><b>(in millions, except per share amounts)</b></font></p> </td> <td valign="bottom"><font size="1">&#xA0;&#xA0;</font></td> <td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" align="center"><font style="FONT-FAMILY: Times New Roman" size="1"><b>Options<br /> Outstanding&#xA0;(1)</b></font></td> <td valign="bottom"><font size="1">&#xA0;</font></td> <td valign="bottom"><font size="1">&#xA0;</font></td> <td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" align="center" colspan="2"><font style="FONT-FAMILY: Times New Roman" size="1"><b>Weighted<br /> Average<br /> Exercise&#xA0;Price<br /> per&#xA0;Common<br /> Share (2)</b></font></td> <td valign="bottom"><font size="1">&#xA0;&#xA0;</font></td> <td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" align="center"><font style="FONT-FAMILY: Times New Roman" size="1"><b>Weighted<br /> Average<br /> Remaining<br /> Contractual<br /> Life in<br /> Years</b></font></td> <td valign="bottom"><font size="1">&#xA0;&#xA0;</font></td> <td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" align="center" colspan="2"><font style="FONT-FAMILY: Times New Roman" size="1"><b>Aggregate<br /> Intrinsic<br /> Value</b></font></td> </tr> <tr bgcolor="#CCEEFF"> <td valign="top"> <p style="MARGIN-LEFT: 1em; TEXT-INDENT: -1em"><font style="FONT-FAMILY: Times New Roman" size="2">Balance at June&#xA0;30, 2009</font></p> </td> <td valign="bottom"><font size="1">&#xA0;&#xA0;</font></td> <td valign="bottom" align="right"><font style="FONT-FAMILY: Times New Roman" size="2">29.4</font></td> <td valign="bottom" nowrap="nowrap"><font style="FONT-FAMILY: Times New Roman" size="2">&#xA0;&#xA0;</font></td> <td valign="bottom"><font size="1">&#xA0;</font></td> <td valign="bottom"><font style="FONT-FAMILY: Times New Roman" size="2">$</font></td> <td valign="bottom" align="right"><font style="FONT-FAMILY: Times New Roman" size="2">59.25</font></td> <td valign="bottom"><font size="1">&#xA0;&#xA0;</font></td> <td valign="bottom" align="right"><font style="FONT-FAMILY: Times New Roman" size="2">3.9</font></td> <td valign="bottom"><font size="1">&#xA0;&#xA0;</font></td> <td valign="bottom"><font style="FONT-FAMILY: Times New Roman" size="2">$</font></td> <td valign="bottom" align="right"><font style="FONT-FAMILY: Times New Roman" size="2">1.8</font></td> </tr> <tr> <td valign="top"> <p style="MARGIN-LEFT: 1em; TEXT-INDENT: -1em"><font style="FONT-FAMILY: Times New Roman" size="2">Granted</font></p> </td> <td valign="bottom"><font size="1">&#xA0;&#xA0;</font></td> <td valign="bottom" align="right"><font style="FONT-FAMILY: Times New Roman" size="2">7.2</font></td> <td valign="bottom" nowrap="nowrap"><font style="FONT-FAMILY: Times New Roman" size="2">&#xA0;&#xA0;</font></td> <td valign="bottom"><font size="1">&#xA0;</font></td> <td valign="bottom"><font style="FONT-FAMILY: Times New Roman" size="2">$</font></td> <td valign="bottom" align="right"><font style="FONT-FAMILY: Times New Roman" size="2">28.08</font></td> <td valign="bottom"><font size="1">&#xA0;&#xA0;</font></td> <td valign="bottom"></td> <td valign="bottom"><font size="1">&#xA0;&#xA0;</font></td> <td valign="bottom"></td> <td valign="bottom"></td> </tr> <tr bgcolor="#CCEEFF"> <td valign="top"> <p style="MARGIN-LEFT: 1em; TEXT-INDENT: -1em"><font style="FONT-FAMILY: Times New Roman" size="2">Exercised</font></p> </td> <td valign="bottom"><font size="1">&#xA0;&#xA0;</font></td> <td valign="bottom" align="right"><font style="FONT-FAMILY: Times New Roman" size="2">(0.8</font></td> <td valign="bottom" nowrap="nowrap"><font style="FONT-FAMILY: Times New Roman" size="2">)&#xA0;</font></td> <td valign="bottom"><font size="1">&#xA0;</font></td> <td valign="bottom"><font style="FONT-FAMILY: Times New Roman" size="2">$</font></td> <td valign="bottom" align="right"><font style="FONT-FAMILY: Times New Roman" size="2">24.31</font></td> <td valign="bottom"><font size="1">&#xA0;&#xA0;</font></td> <td valign="bottom"></td> <td valign="bottom"><font size="1">&#xA0;&#xA0;</font></td> <td valign="bottom"></td> <td valign="bottom"></td> </tr> <tr> <td valign="top"> <p style="MARGIN-LEFT: 1em; TEXT-INDENT: -1em"><font style="FONT-FAMILY: Times New Roman" size="2">Forfeited and cancelled</font></p> </td> <td valign="bottom"><font size="1">&#xA0;&#xA0;</font></td> <td valign="bottom" align="right"><font style="FONT-FAMILY: Times New Roman" size="2">(10.7</font></td> <td valign="bottom" nowrap="nowrap"><font style="FONT-FAMILY: Times New Roman" size="2">)&#xA0;</font></td> <td valign="bottom"><font size="1">&#xA0;</font></td> <td valign="bottom"><font style="FONT-FAMILY: Times New Roman" size="2">$</font></td> <td valign="bottom" align="right"><font style="FONT-FAMILY: Times New Roman" size="2">63.37</font></td> <td valign="bottom"><font size="1">&#xA0;&#xA0;</font></td> <td valign="bottom"></td> <td valign="bottom"><font size="1">&#xA0;&#xA0;</font></td> <td valign="bottom"></td> <td valign="bottom"></td> </tr> <tr style="FONT-SIZE: 1px"> <td valign="bottom"></td> <td valign="bottom">&#xA0;&#xA0;</td> <td style="BORDER-TOP: #000000 1px solid" valign="bottom"> &#xA0;</td> <td>&#xA0;</td> <td valign="bottom">&#xA0;</td> <td valign="bottom"></td> <td valign="bottom"></td> <td valign="bottom">&#xA0;&#xA0;</td> <td valign="bottom"></td> <td valign="bottom">&#xA0;&#xA0;</td> <td valign="bottom"></td> <td valign="bottom"></td> </tr> <tr bgcolor="#CCEEFF"> <td valign="top"> <p style="MARGIN-LEFT: 1em; TEXT-INDENT: -1em"><font style="FONT-FAMILY: Times New Roman" size="2">Balance at December&#xA0;31, 2009</font></p> </td> <td valign="bottom"><font size="1">&#xA0;&#xA0;</font></td> <td valign="bottom" align="right"><font style="FONT-FAMILY: Times New Roman" size="2">25.1</font></td> <td valign="bottom" nowrap="nowrap"><font style="FONT-FAMILY: Times New Roman" size="2">&#xA0;&#xA0;</font></td> <td valign="bottom"><font size="1">&#xA0;</font></td> <td valign="bottom"><font style="FONT-FAMILY: Times New Roman" size="2">$</font></td> <td valign="bottom" align="right"><font style="FONT-FAMILY: Times New Roman" size="2">37.71</font></td> <td valign="bottom"><font size="1">&#xA0;&#xA0;</font></td> <td valign="bottom" align="right"><font style="FONT-FAMILY: Times New Roman" size="2">4.3</font></td> <td valign="bottom"><font size="1">&#xA0;&#xA0;</font></td> <td valign="bottom"><font style="FONT-FAMILY: Times New Roman" size="2">$</font></td> <td valign="bottom" align="right"><font style="FONT-FAMILY: Times New Roman" size="2">43.2</font></td> </tr> <tr style="FONT-SIZE: 1px"> <td valign="bottom"></td> <td valign="bottom">&#xA0;&#xA0;</td> <td style="BORDER-TOP: #000000 3px double" valign="bottom"> &#xA0;</td> <td>&#xA0;</td> <td valign="bottom">&#xA0;</td> <td valign="bottom"></td> <td valign="bottom"></td> <td valign="bottom">&#xA0;&#xA0;</td> <td valign="bottom"></td> <td valign="bottom">&#xA0;&#xA0;</td> <td valign="bottom"></td> <td valign="bottom"></td> </tr> <tr> <td valign="top"> <p style="MARGIN-LEFT: 1em; TEXT-INDENT: -1em"><font style="FONT-FAMILY: Times New Roman" size="2">Exercisable at December&#xA0;31, 2009</font></p> </td> <td valign="bottom"><font size="1">&#xA0;&#xA0;</font></td> <td valign="bottom" align="right"><font style="FONT-FAMILY: Times New Roman" size="2">16.3</font></td> <td valign="bottom" nowrap="nowrap"><font style="FONT-FAMILY: Times New Roman" size="2">&#xA0;&#xA0;</font></td> <td valign="bottom"><font size="1">&#xA0;</font></td> <td valign="bottom"><font style="FONT-FAMILY: Times New Roman" size="2">$</font></td> <td valign="bottom" align="right"><font style="FONT-FAMILY: Times New Roman" size="2">41.98</font></td> <td valign="bottom"><font size="1">&#xA0;&#xA0;</font></td> <td valign="bottom" align="right"><font style="FONT-FAMILY: Times New Roman" size="2">3.5</font></td> <td valign="bottom"><font size="1">&#xA0;&#xA0;</font></td> <td valign="bottom"><font style="FONT-FAMILY: Times New Roman" size="2">$</font></td> <td valign="bottom" align="right"><font style="FONT-FAMILY: Times New Roman" size="2">2.5</font></td> </tr> </table> <p style="MARGIN-TOP: 0px; MARGIN-BOTTOM: 2px; WIDTH: 10%; LINE-HEIGHT: 8px; BORDER-BOTTOM: #000000 0.5pt solid"> &#xA0;</p> <table style="BORDER-COLLAPSE: collapse" cellspacing="0" cellpadding="0" width="100%" border="0"> <tr> <td valign="top" align="left" width="4%"><font style="FONT-FAMILY: Times New Roman" size="2">(1)</font></td> <td valign="top" align="left"><font style="FONT-FAMILY: Times New Roman" size="2">Included within the options granted and forfeited and cancelled activity for the six months ended December&#xA0;31, 2009 is the impact of the Company&#x2019;s stock option exchange program and the adjustments to stock incentive plans as discussed below.</font></td> </tr> </table> <table style="BORDER-COLLAPSE: collapse" cellspacing="0" cellpadding="0" width="100%" border="0"> <tr> <td valign="top" align="left" width="4%"><font style="FONT-FAMILY: Times New Roman" size="2">(2)</font></td> <td valign="top" align="left"><font style="FONT-FAMILY: Times New Roman" size="2">Exercise prices related to stock options granted prior to the date of the Spin-Off have not been adjusted to reflect the impact of the Spin-Off.</font></td> </tr> </table> <p style="MARGIN-TOP: 18px; MARGIN-BOTTOM: 0px; MARGIN-LEFT: 2%"> <font style="FONT-FAMILY: Times New Roman" size="2"><b><i>Restricted Shares and Restricted Share Units</i></b></font></p> <p style="MARGIN-TOP: 6px; MARGIN-BOTTOM: 0px; TEXT-INDENT: 4%"> <font style="FONT-FAMILY: Times New Roman" size="2">The fair value of restricted shares and restricted share units is determined by the number of shares granted and the grant date market price of the Company&#x2019;s Common Shares.</font></p> <p style="MARGIN-TOP: 12px; MARGIN-BOTTOM: 0px; TEXT-INDENT: 4%"> <font style="FONT-FAMILY: Times New Roman" size="2">The following table summarizes all activity related to restricted shares and restricted share units from July&#xA0;1, 2009 through December&#xA0;31, 2009:</font></p> <p style="MARGIN-TOP: 0px; FONT-SIZE: 12px; MARGIN-BOTTOM: 0px"> &#xA0;</p> <table cellspacing="0" cellpadding="0" width="76%" align="center" border="0"> <tr> <td width="74%"></td> <td valign="bottom" width="9%"></td> <td></td> <td></td> <td valign="bottom" width="9%"></td> <td></td> <td></td> </tr> <tr> <td valign="bottom" nowrap="nowrap"> <p style="WIDTH: 132pt; BORDER-BOTTOM: #000000 1px solid"> <font style="FONT-FAMILY: Times New Roman" size="1"><b>(in millions, except per share amounts)</b></font></p> </td> <td valign="bottom"><font size="1">&#xA0;&#xA0;</font></td> <td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" align="center"><font style="FONT-FAMILY: Times New Roman" size="1"><b>Shares&#xA0;(1)</b></font></td> <td valign="bottom"><font size="1">&#xA0;</font></td> <td valign="bottom"><font size="1">&#xA0;</font></td> <td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" align="center" colspan="2"><font style="FONT-FAMILY: Times New Roman" size="1"><b>Weighted<br /> Average&#xA0;Grant<br /> Date&#xA0;Fair&#xA0;Value<br /> Per Share (2)</b></font></td> </tr> <tr bgcolor="#CCEEFF"> <td valign="top"> <p style="MARGIN-LEFT: 1em; TEXT-INDENT: -1em"><font style="FONT-FAMILY: Times New Roman" size="2">Nonvested at June&#xA0;30, 2009</font></p> </td> <td valign="bottom"><font size="1">&#xA0;&#xA0;</font></td> <td valign="bottom" align="right"><font style="FONT-FAMILY: Times New Roman" size="2">3.1</font></td> <td valign="bottom" nowrap="nowrap"><font style="FONT-FAMILY: Times New Roman" size="2">&#xA0;&#xA0;</font></td> <td valign="bottom"><font size="1">&#xA0;</font></td> <td valign="bottom"><font style="FONT-FAMILY: Times New Roman" size="2">$</font></td> <td valign="bottom" align="right"><font style="FONT-FAMILY: Times New Roman" size="2">57.10</font></td> </tr> <tr> <td valign="top"> <p style="MARGIN-LEFT: 1em; TEXT-INDENT: -1em"><font style="FONT-FAMILY: Times New Roman" size="2">Granted</font></p> </td> <td valign="bottom"><font size="1">&#xA0;&#xA0;</font></td> <td valign="bottom" align="right"><font style="FONT-FAMILY: Times New Roman" size="2">2.1</font></td> <td valign="bottom" nowrap="nowrap"><font style="FONT-FAMILY: Times New Roman" size="2">&#xA0;&#xA0;</font></td> <td valign="bottom"><font size="1">&#xA0;</font></td> <td valign="bottom"><font style="FONT-FAMILY: Times New Roman" size="2">$</font></td> <td valign="bottom" align="right"><font style="FONT-FAMILY: Times New Roman" size="2">27.35</font></td> </tr> <tr bgcolor="#CCEEFF"> <td valign="top"> <p style="MARGIN-LEFT: 1em; TEXT-INDENT: -1em"><font style="FONT-FAMILY: Times New Roman" size="2">Vested</font></p> </td> <td valign="bottom"><font size="1">&#xA0;&#xA0;</font></td> <td valign="bottom" align="right"><font style="FONT-FAMILY: Times New Roman" size="2">(1.1</font></td> <td valign="bottom" nowrap="nowrap"><font style="FONT-FAMILY: Times New Roman" size="2">)&#xA0;</font></td> <td valign="bottom"><font size="1">&#xA0;</font></td> <td valign="bottom"><font style="FONT-FAMILY: Times New Roman" size="2">$</font></td> <td valign="bottom" align="right"><font style="FONT-FAMILY: Times New Roman" size="2">59.70</font></td> </tr> <tr> <td valign="top"> <p style="MARGIN-LEFT: 1em; TEXT-INDENT: -1em"><font style="FONT-FAMILY: Times New Roman" size="2">Forfeited and cancelled</font></p> </td> <td valign="bottom"><font size="1">&#xA0;&#xA0;</font></td> <td valign="bottom" align="right"><font style="FONT-FAMILY: Times New Roman" size="2">(0.2</font></td> <td valign="bottom" nowrap="nowrap"><font style="FONT-FAMILY: Times New Roman" size="2">)&#xA0;</font></td> <td valign="bottom"><font size="1">&#xA0;</font></td> <td valign="bottom"><font style="FONT-FAMILY: Times New Roman" size="2">$</font></td> <td valign="bottom" align="right"><font style="FONT-FAMILY: Times New Roman" size="2">47.82</font></td> </tr> <tr style="FONT-SIZE: 1px"> <td valign="bottom"></td> <td valign="bottom">&#xA0;&#xA0;</td> <td style="BORDER-TOP: #000000 1px solid" valign="bottom"> &#xA0;</td> <td>&#xA0;</td> <td valign="bottom">&#xA0;</td> <td valign="bottom"></td> <td valign="bottom"></td> </tr> <tr bgcolor="#CCEEFF"> <td valign="top"> <p style="MARGIN-LEFT: 1em; TEXT-INDENT: -1em"><font style="FONT-FAMILY: Times New Roman" size="2">Nonvested at December&#xA0;31, 2009</font></p> </td> <td valign="bottom"><font size="1">&#xA0;&#xA0;</font></td> <td valign="bottom" align="right"><font style="FONT-FAMILY: Times New Roman" size="2">3.9</font></td> <td valign="bottom" nowrap="nowrap"><font style="FONT-FAMILY: Times New Roman" size="2">&#xA0;&#xA0;</font></td> <td valign="bottom"><font size="1">&#xA0;</font></td> <td valign="bottom"><font style="FONT-FAMILY: Times New Roman" size="2">$</font></td> <td valign="bottom" align="right"><font style="FONT-FAMILY: Times New Roman" size="2">33.63</font></td> </tr> <tr style="FONT-SIZE: 1px"> <td valign="bottom"></td> <td valign="bottom">&#xA0;&#xA0;</td> <td style="BORDER-TOP: #000000 1px solid" valign="bottom"> &#xA0;</td> <td>&#xA0;</td> <td valign="bottom">&#xA0;</td> <td valign="bottom"></td> <td valign="bottom"></td> </tr> </table> <p style="MARGIN-TOP: 0px; MARGIN-BOTTOM: 2px; WIDTH: 10%; LINE-HEIGHT: 8px; BORDER-BOTTOM: #000000 0.5pt solid"> &#xA0;</p> <table style="BORDER-COLLAPSE: collapse" cellspacing="0" cellpadding="0" width="100%" border="0"> <tr> <td valign="top" align="left" width="4%"><font style="FONT-FAMILY: Times New Roman" size="2">(1)</font></td> <td valign="top" align="left"><font style="FONT-FAMILY: Times New Roman" size="2">Included within the restricted shares and restricted share units forfeited and cancelled activity for the six months ended December&#xA0;31, 2009 is the impact of the adjustments to stock incentive plans as discussed below.</font></td> </tr> </table> <table style="BORDER-COLLAPSE: collapse" cellspacing="0" cellpadding="0" width="100%" border="0"> <tr> <td valign="top" align="left" width="4%"><font style="FONT-FAMILY: Times New Roman" size="2">(2)</font></td> <td valign="top" align="left"><font style="FONT-FAMILY: Times New Roman" size="2">Grant date fair values per share of awards granted prior to the date of the Spin-Off have not been adjusted to reflect the impact of the Spin-Off.</font></td> </tr> </table> <p style="MARGIN-TOP: 0px; MARGIN-BOTTOM: 0px"><font size="1">&#xA0;</font></p> <p style="MARGIN-TOP: 0px; MARGIN-BOTTOM: 0px"><font style="FONT-FAMILY: Times New Roman" size="2"><b><i>Stock Option Exchange Program</i></b></font></p> <p style="MARGIN-TOP: 6px; MARGIN-BOTTOM: 0px; TEXT-INDENT: 4%"> <font style="FONT-FAMILY: Times New Roman" size="2">On May&#xA0;6, 2009, the Company&#x2019;s Board of Directors authorized, and on June&#xA0;23, 2009, the Company&#x2019;s shareholders approved, a program that permitted certain current employees to exchange certain outstanding stock options with exercise prices substantially above the current market price of Cardinal Health Common Shares for a lesser number of stock options that have a fair value that is lower than the fair value of the &#x201C;out of the money&#x201D; options. The program began on June&#xA0;19, 2009 and was completed on July&#xA0;17, 2009. The Company believes that this program was necessary to more closely align employee and shareholder interests through equity compensation programs. The program was designed to motivate and retain key employees and to reinforce the alignment of the Company&#x2019;s employees&#x2019; interests with those of its shareholders. As a result of this program, 9.8&#xA0;million outstanding eligible stock options were exchanged for 1.4&#xA0;million new options at an exercise price of $31.27. These new options have a new minimum vesting condition of an additional 12 months, and the term of each new option is the longer of three years from the grant date and the remaining term of the eligible stock option for which it was exchanged.&#xA0;The new options were treated as a probable-to-probable modification under the accounting guidance for share-based payment compensation.&#xA0;The Company did not incur incremental expense associated with the modification.</font></p> <p style="MARGIN-TOP: 18px; MARGIN-BOTTOM: 0px"><font style="FONT-FAMILY: Times New Roman" size="2"><b><i>Adjustments to Stock Incentive Plans</i></b></font></p> <p style="MARGIN-TOP: 6px; MARGIN-BOTTOM: 0px; TEXT-INDENT: 4%"> <font style="FONT-FAMILY: Times New Roman" size="2">In connection with the Spin-Off, on August&#xA0;31, 2009, the Company adjusted its existing stock incentive plans to provide for the conversion and adjustment of share-based payment compensation awards granted under its Plans into awards based on the Company&#x2019;s common shares and/or CareFusion common stock, as applicable. For purposes of the vesting of these equity awards, continued employment or service with the Company or with CareFusion is treated as continued employment for purposes of both the Company&#x2019;s and CareFusion&#x2019;s equity awards.</font></p> <p style="MARGIN-TOP: 12px; MARGIN-BOTTOM: 0px; TEXT-INDENT: 4%"> <font style="FONT-FAMILY: Times New Roman" size="2">Each Cardinal Health stock option granted on or prior to September&#xA0;26, 2007 was converted into an adjusted Company stock option and a CareFusion stock option. The exercise prices of the CareFusion stock option and the adjusted Company stock option and the number of shares subject to each such stock option reflects a mechanism that is intended to preserve the intrinsic value of the original Company stock option. A Company stock option granted after September&#xA0;26, 2007 to current or former employees of the Company or to directors of the Company continues to be exercisable only for the Company&#x2019;s common shares and was adjusted in a manner intended to preserve the intrinsic value of such stock option. A Company stock option granted after September&#xA0;26, 2007 to CareFusion employees or directors was replaced with a CareFusion stock option, subject to an adjustment mechanism intended to preserve the intrinsic value of such stock option. The resulting Company stock options and CareFusion stock options are subject to substantially the same terms, vesting conditions and other restrictions, if any, that were applicable to the Company stock option immediately prior to the distribution.</font></p> <p style="MARGIN-TOP: 12px; MARGIN-BOTTOM: 0px; TEXT-INDENT: 4%"> <font style="FONT-FAMILY: Times New Roman" size="2">A holder of the Company&#x2019;s restricted shares granted on or prior to September&#xA0;26, 2007 received 0.5&#xA0;restricted shares of CareFusion common stock in respect of each of such holder&#x2019;s restricted shares of the Company. The underlying Company restricted shares will remain outstanding and unadjusted. Unvested Company restricted shares granted after September&#xA0;26, 2007 to current or former employees of the Company were cancelled and replaced with newly issued restricted shares of the Company. Such newly issued Company restricted shares were determined in a manner that is intended to preserve the fair market value of the cancelled awards and the holders of such Company restricted shares received no CareFusion common stock with respect to such restricted shares. Unvested Company restricted shares granted after September&#xA0;26, 2007 to CareFusion employees were cancelled and replaced with restricted shares of CareFusion common stock in a manner that is intended to preserve the fair market value of the cancelled awards. The Company restricted shares and the CareFusion restricted shares are subject to substantially the same terms (including entitlement to any cash dividends, accrued but unpaid at the distribution date), vesting conditions and other restrictions, if any, that were applicable to the cancelled Company restricted shares.</font></p> <p style="MARGIN-TOP: 12px; MARGIN-BOTTOM: 0px; TEXT-INDENT: 4%"> <font style="FONT-FAMILY: Times New Roman" size="2">Following the Spin-Off, if any of the Company&#x2019;s restricted shares that are held by one of CareFusion&#x2019;s employees fail to become vested, such Company restricted shares will be forfeited to the Company and if any CareFusion restricted shares that are held by an employee of the Company fail to become vested, such CareFusion restricted shares will be forfeited to CareFusion.</font></p> <p style="MARGIN-TOP: 0px; MARGIN-BOTTOM: 0px"><font size="1">&#xA0;</font></p> <p style="MARGIN-TOP: 0px; MARGIN-BOTTOM: 0px; TEXT-INDENT: 4%"> <font style="FONT-FAMILY: Times New Roman" size="2">A holder of the Company&#x2019;s restricted share units granted prior to September&#xA0;26, 2007 or granted in connection with the Spin-Off, or issued in exchange for an option initially granted prior to September&#xA0;26, 2007, received, in connection with the Spin-Off, CareFusion restricted stock units representing the right to receive 0.5 shares of CareFusion common stock for each Company common share subject to the award. The underlying Company restricted share units will remain in effect unadjusted. An employee or director of the Company who holds unvested Company restricted share units, other than those described in the first sentence of this paragraph, did not receive any CareFusion restricted stock units in connection with the Spin-Off, but such Company restricted share units were adjusted in a manner intended to preserve the fair market value of such awards. The unvested Company&#x2019;s restricted share units, other than those described in the first sentence of this paragraph, granted to CareFusion employees or directors were replaced with a number of CareFusion restricted stock units intended to preserve the fair market value of the awards. The adjusted Company restricted share units or the replacement CareFusion restricted stock units that a holder received in connection with the Spin-Off will be subject to substantially the same terms (including entitlement to any cash dividend equivalents, accrued but unpaid at the distribution date), vesting conditions and other restrictions, if any, that were applicable to the Company&#x2019;s restricted share units prior to the distribution.</font></p> <p style="MARGIN-TOP: 12px; MARGIN-BOTTOM: 0px; TEXT-INDENT: 4%"> <font style="FONT-FAMILY: Times New Roman" size="2">The adjustments to the Company&#x2019;s stock incentive plans were treated as a modification in accordance with stock based compensation accounting guidance and resulted in a total incremental compensation cost of $0.6 million.</font></p> <p style="MARGIN-TOP: 12px; MARGIN-BOTTOM: 0px; TEXT-INDENT: 4%"> <font style="FONT-FAMILY: Times New Roman" size="2">The following table summaries the share-based payment awards outstanding as of December&#xA0;31, 2009:</font></p> <p style="MARGIN-TOP: 0px; FONT-SIZE: 12px; MARGIN-BOTTOM: 0px"> &#xA0;</p> <table cellspacing="0" cellpadding="0" width="92%" align="center" border="0"> <tr> <td width="67%"></td> <td valign="bottom" width="6%"></td> <td></td> <td valign="bottom" width="6%"></td> <td></td> <td valign="bottom" width="6%"></td> <td></td> <td valign="bottom" width="6%"></td> <td></td> </tr> <tr> <td valign="bottom"><font size="1">&#xA0;</font></td> <td valign="bottom"><font size="1">&#xA0;&#xA0;</font></td> <td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" align="center" colspan="3"><font style="FONT-FAMILY: Times New Roman" size="1"><b>Cardinal&#xA0;Health&#xA0;Awards</b></font></td> <td valign="bottom"><font size="1">&#xA0;&#xA0;</font></td> <td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" align="center" colspan="3"><font style="FONT-FAMILY: Times New Roman" size="1"><b>CareFusion Awards</b></font></td> </tr> <tr> <td valign="bottom" nowrap="nowrap"> <p style="WIDTH: 40pt; BORDER-BOTTOM: #000000 1px solid"> <font style="FONT-FAMILY: Times New Roman" size="1"><b>(in millions)</b></font></p> </td> <td valign="bottom"><font size="1">&#xA0;&#xA0;</font></td> <td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" align="center"><font style="FONT-FAMILY: Times New Roman" size="1"><b>Stock</b></font><br /> <font style="FONT-FAMILY: Times New Roman" size="1"><b>Options</b></font></td> <td valign="bottom"><font size="1">&#xA0;&#xA0;</font></td> <td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" align="center"><font style="FONT-FAMILY: Times New Roman" size="1"><b>Restricted</b></font><br /> <font style="FONT-FAMILY: Times New Roman" size="1"><b>Shares and</b></font><br /> <font style="FONT-FAMILY: Times New Roman" size="1"><b>Share&#xA0;Units</b></font></td> <td valign="bottom"><font size="1">&#xA0;&#xA0;</font></td> <td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" align="center"><font style="FONT-FAMILY: Times New Roman" size="1"><b>Stock</b></font><br /> <font style="FONT-FAMILY: Times New Roman" size="1"><b>Options</b></font></td> <td valign="bottom"><font size="1">&#xA0;&#xA0;</font></td> <td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" align="center"><font style="FONT-FAMILY: Times New Roman" size="1"><b>Restricted</b></font><br /> <font style="FONT-FAMILY: Times New Roman" size="1"><b>Shares and</b></font><br /> <font style="FONT-FAMILY: Times New Roman" size="1"><b>Share&#xA0;Units</b></font></td> </tr> <tr bgcolor="#CCEEFF"> <td valign="top"> <p style="MARGIN-LEFT: 1em; TEXT-INDENT: -1em"><font style="FONT-FAMILY: Times New Roman" size="2">Held by Cardinal Health employees and former employees</font></p> </td> <td valign="bottom"><font size="1">&#xA0;&#xA0;</font></td> <td valign="bottom" align="right"><font style="FONT-FAMILY: Times New Roman" size="2">22.5</font></td> <td valign="bottom"><font size="1">&#xA0;&#xA0;</font></td> <td valign="bottom" align="right"><font style="FONT-FAMILY: Times New Roman" size="2">3.7</font></td> <td valign="bottom"><font size="1">&#xA0;&#xA0;</font></td> <td valign="bottom" align="right"><font style="FONT-FAMILY: Times New Roman" size="2">7.4</font></td> <td valign="bottom"><font size="1">&#xA0;&#xA0;</font></td> <td valign="bottom" align="right"><font style="FONT-FAMILY: Times New Roman" size="2">0.3</font></td> </tr> <tr> <td valign="top"> <p style="MARGIN-LEFT: 1em; TEXT-INDENT: -1em"><font style="FONT-FAMILY: Times New Roman" size="2">Held by CareFusion employees</font></p> </td> <td valign="bottom"><font size="1">&#xA0;&#xA0;</font></td> <td valign="bottom" align="right"><font style="FONT-FAMILY: Times New Roman" size="2">2.6</font></td> <td valign="bottom"><font size="1">&#xA0;&#xA0;</font></td> <td valign="bottom" align="right"><font style="FONT-FAMILY: Times New Roman" size="2">0.2</font></td> <td valign="bottom"><font size="1">&#xA0;&#xA0;</font></td> <td valign="bottom"></td> <td valign="bottom"><font size="1">&#xA0;&#xA0;</font></td> <td valign="bottom"></td> </tr> <tr style="FONT-SIZE: 1px"> <td valign="bottom"></td> <td valign="bottom">&#xA0;&#xA0;</td> <td style="BORDER-TOP: #000000 1px solid" valign="bottom"> &#xA0;</td> <td valign="bottom">&#xA0;&#xA0;</td> <td style="BORDER-TOP: #000000 1px solid" valign="bottom"> &#xA0;</td> <td valign="bottom">&#xA0;&#xA0;</td> <td valign="bottom"></td> <td valign="bottom">&#xA0;&#xA0;</td> <td valign="bottom"></td> </tr> <tr bgcolor="#CCEEFF"> <td valign="top"> <p style="MARGIN-LEFT: 1em; TEXT-INDENT: -1em"><font style="FONT-FAMILY: Times New Roman" size="2">Total</font></p> </td> <td valign="bottom"><font size="1">&#xA0;&#xA0;</font></td> <td valign="bottom" align="right"><font style="FONT-FAMILY: Times New Roman" size="2">25.1</font></td> <td valign="bottom"><font size="1">&#xA0;&#xA0;</font></td> <td valign="bottom" align="right"><font style="FONT-FAMILY: Times New Roman" size="2">3.9</font></td> <td valign="bottom"><font size="1">&#xA0;&#xA0;</font></td> <td valign="bottom"></td> <td valign="bottom"><font size="1">&#xA0;&#xA0;</font></td> <td valign="bottom"></td> </tr> <tr style="FONT-SIZE: 1px"> <td valign="bottom"></td> <td valign="bottom">&#xA0;&#xA0;</td> <td style="BORDER-TOP: #000000 3px double" valign="bottom"> &#xA0;</td> <td valign="bottom">&#xA0;&#xA0;</td> <td style="BORDER-TOP: #000000 3px double" valign="bottom"> &#xA0;</td> <td valign="bottom">&#xA0;&#xA0;</td> <td valign="bottom"></td> <td valign="bottom">&#xA0;&#xA0;</td> <td valign="bottom"></td> </tr> </table> </div> 15. EMPLOYEE EQUITY PLANS Employee Equity Plans The Company maintains several stock incentive plans (collectively, the &#x201C;Plans&#x201D;) for the benefit false false No definition available. 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No authoritative reference available. false false 2 7 false UnKnown HundredThousands UnKnown false true XML 29 R16.xml IDEA: FAIR VALUE MEASUREMENTS 1.0.0.3 false FAIR VALUE MEASUREMENTS false 1 $ false false iso4217_USD Standard http://www.xbrl.org/2003/iso4217 USD iso4217 0 iso4217_USD_per_shares Divide http://www.xbrl.org/2003/iso4217 USD iso4217 http://www.xbrl.org/2003/instance shares 0 shares Standard http://www.xbrl.org/2003/instance shares 0 5 3 us-gaap_FairValueMeasurementInputsDisclosureTextBlock us-gaap true na duration string No definition available. false false false false false false false false false 1 false false 0 0 <div> <p style="MARGIN-TOP: 0px; MARGIN-BOTTOM: 0px"></p> <p style="MARGIN-TOP: 0px; MARGIN-BOTTOM: 0px"><font style="FONT-FAMILY: Times New Roman" size="2"><b>11. FAIR VALUE MEASUREMENTS</b></font></p> <p style="MARGIN-TOP: 6px; MARGIN-BOTTOM: 0px; TEXT-INDENT: 4%"> <font style="FONT-FAMILY: Times New Roman" size="2">In September 2006, the FASB issued new accounting guidance on fair value measurements. The guidance defines fair value, establishes a framework for measuring fair value in GAAP and expands disclosures about fair value measurements. Additionally, this guidance established a three-level fair value hierarchy that prioritizes the inputs used to measure fair value. This hierarchy requires entities to maximize the use of observable inputs and minimize the use of unobservable inputs. The three levels of inputs used to measure fair values are as follows:</font></p> <p style="MARGIN-TOP: 6px; MARGIN-BOTTOM: 0px"><font style="FONT-FAMILY: Times New Roman" size="2">Level&#xA0;1&#xA0;&#x2013; Observable prices in active markets for identical assets and liabilities.</font></p> <p style="MARGIN-TOP: 12px; MARGIN-BOTTOM: 0px"><font style="FONT-FAMILY: Times New Roman" size="2">Level&#xA0;2&#xA0;&#x2013; Observable inputs other than quoted prices in active markets for identical assets and liabilities.</font></p> <p style="MARGIN-TOP: 12px; MARGIN-BOTTOM: 0px"><font style="FONT-FAMILY: Times New Roman" size="2">Level&#xA0;3&#xA0;&#x2013; Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets and liabilities.</font></p> <p style="MARGIN-TOP: 12px; MARGIN-BOTTOM: 0px; TEXT-INDENT: 4%"> <font style="FONT-FAMILY: Times New Roman" size="2">In February 2008, the FASB issued additional guidance permitting a one-year deferral with regard to nonfinancial assets and nonfinancial liabilities that are not recognized or disclosed at fair value in the financial statements on a recurring basis (at least annually).&#xA0;The Company adopted this new accounting guidance on July&#xA0;1, 2008 with respect to all financial assets and liabilities and on July&#xA0;1, 2009 with respect to all non-financial assets and liabilities. The adoption of this guidance did not have a material impact on the Company&#x2019;s financial position or results of operations in either period.</font></p> <p style="MARGIN-TOP: 18px; MARGIN-BOTTOM: 0px; MARGIN-LEFT: 2%"> <font style="FONT-FAMILY: Times New Roman" size="2"><b><i>Recurring Fair Value Measurements</i></b></font></p> <p style="MARGIN-TOP: 6px; MARGIN-BOTTOM: 0px; TEXT-INDENT: 4%"> <font style="FONT-FAMILY: Times New Roman" size="2">The following table presents the fair values for those assets and (liabilities) measured on a recurring basis as of December&#xA0;31, 2009:</font></p> <p style="MARGIN-TOP: 0px; FONT-SIZE: 12px; MARGIN-BOTTOM: 0px"> &#xA0;</p> <table cellspacing="0" cellpadding="0" width="92%" align="center" border="0"> <tr> <td width="70%"></td> <td valign="bottom" width="3%"></td> <td></td> <td></td> <td valign="bottom" width="3%"></td> <td></td> <td></td> <td valign="bottom" width="3%"></td> <td></td> <td></td> <td valign="bottom" width="3%"></td> <td></td> <td></td> </tr> <tr> <td valign="bottom"><font size="1">&#xA0;</font></td> <td valign="bottom"><font size="1">&#xA0;&#xA0;</font></td> <td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" align="center" colspan="11"><font style="FONT-FAMILY: Times New Roman" size="1"><b>Fair Value Measurements</b></font></td> </tr> <tr> <td valign="bottom" nowrap="nowrap"> <p style="WIDTH: 40pt; BORDER-BOTTOM: #000000 1px solid"> <font style="FONT-FAMILY: Times New Roman" size="1"><b>(in millions)</b></font></p> </td> <td valign="bottom"><font size="1">&#xA0;&#xA0;</font></td> <td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" align="center" colspan="2"><font style="FONT-FAMILY: Times New Roman" size="1"><b>Level&#xA0;1</b></font></td> <td valign="bottom"><font size="1">&#xA0;&#xA0;</font></td> <td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" align="center" colspan="2"><font style="FONT-FAMILY: Times New Roman" size="1"><b>Level&#xA0;2</b></font></td> <td valign="bottom"><font size="1">&#xA0;&#xA0;</font></td> <td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" align="center" colspan="2"><font style="FONT-FAMILY: Times New Roman" size="1"><b>Level&#xA0;3</b></font></td> <td valign="bottom"><font size="1">&#xA0;&#xA0;</font></td> <td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" align="center" colspan="2"><font style="FONT-FAMILY: Times New Roman" size="1"><b>Total</b></font></td> </tr> <tr bgcolor="#CCEEFF"> <td valign="top"> <p style="MARGIN-LEFT: 1em; TEXT-INDENT: -1em"><font style="FONT-FAMILY: Times New Roman" size="2">Cash Equivalents (1)</font></p> </td> <td valign="bottom"><font size="1">&#xA0;&#xA0;</font></td> <td valign="bottom"><font style="FONT-FAMILY: Times New Roman" size="2">$</font></td> <td valign="bottom" align="right"><font style="FONT-FAMILY: Times New Roman" size="2">987.5</font></td> <td valign="bottom"><font size="1">&#xA0;&#xA0;</font></td> <td valign="bottom"><font style="FONT-FAMILY: Times New Roman" size="2">$</font></td> <td valign="bottom" align="right"><font style="FONT-FAMILY: Times New Roman" size="2">&#x2014;&#xA0;&#xA0;</font></td> <td valign="bottom"><font size="1">&#xA0;&#xA0;</font></td> <td valign="bottom"><font style="FONT-FAMILY: Times New Roman" size="2">$</font></td> <td valign="bottom" align="right"><font style="FONT-FAMILY: Times New Roman" size="2">&#x2014;&#xA0;&#xA0;</font></td> <td valign="bottom"><font size="1">&#xA0;&#xA0;</font></td> <td valign="bottom"><font style="FONT-FAMILY: Times New Roman" size="2">$</font></td> <td valign="bottom" align="right"><font style="FONT-FAMILY: Times New Roman" size="2">987.5</font></td> </tr> <tr> <td valign="top"> <p style="MARGIN-LEFT: 1em; TEXT-INDENT: -1em"><font style="FONT-FAMILY: Times New Roman" size="2">Equity Securities (2)</font></p> </td> <td valign="bottom"><font size="1">&#xA0;&#xA0;</font></td> <td valign="bottom"><font style="FONT-FAMILY: Times New Roman" size="2">&#xA0;</font></td> <td valign="bottom" align="right"><font style="FONT-FAMILY: Times New Roman" size="2">897.4</font></td> <td valign="bottom"><font size="1">&#xA0;&#xA0;</font></td> <td valign="bottom"><font style="FONT-FAMILY: Times New Roman" size="2">&#xA0;</font></td> <td valign="bottom" align="right"><font style="FONT-FAMILY: Times New Roman" size="2">&#x2014;&#xA0;&#xA0;</font></td> <td valign="bottom"><font size="1">&#xA0;&#xA0;</font></td> <td valign="bottom"><font style="FONT-FAMILY: Times New Roman" size="2">&#xA0;</font></td> <td valign="bottom" align="right"><font style="FONT-FAMILY: Times New Roman" size="2">&#x2014;&#xA0;&#xA0;</font></td> <td valign="bottom"><font size="1">&#xA0;&#xA0;</font></td> <td valign="bottom"><font style="FONT-FAMILY: Times New Roman" size="2">&#xA0;</font></td> <td valign="bottom" align="right"><font style="FONT-FAMILY: Times New Roman" size="2">897.4</font></td> </tr> <tr bgcolor="#CCEEFF"> <td valign="top"> <p style="MARGIN-LEFT: 1em; TEXT-INDENT: -1em"><font style="FONT-FAMILY: Times New Roman" size="2">Forward Contracts (3)</font></p> </td> <td valign="bottom"><font size="1">&#xA0;&#xA0;</font></td> <td valign="bottom"><font style="FONT-FAMILY: Times New Roman" size="2">&#xA0;</font></td> <td valign="bottom" align="right"><font style="FONT-FAMILY: Times New Roman" size="2">&#x2014;&#xA0;&#xA0;</font></td> <td valign="bottom"><font size="1">&#xA0;&#xA0;</font></td> <td valign="bottom"><font style="FONT-FAMILY: Times New Roman" size="2">&#xA0;</font></td> <td valign="bottom" align="right"><font style="FONT-FAMILY: Times New Roman" size="2">82.0</font></td> <td valign="bottom"><font size="1">&#xA0;&#xA0;</font></td> <td valign="bottom"><font style="FONT-FAMILY: Times New Roman" size="2">&#xA0;</font></td> <td valign="bottom" align="right"><font style="FONT-FAMILY: Times New Roman" size="2">&#x2014;&#xA0;&#xA0;</font></td> <td valign="bottom"><font size="1">&#xA0;&#xA0;</font></td> <td valign="bottom"><font style="FONT-FAMILY: Times New Roman" size="2">&#xA0;</font></td> <td valign="bottom" align="right"><font style="FONT-FAMILY: Times New Roman" size="2">82.0</font></td> </tr> <tr> <td valign="top"> <p style="MARGIN-LEFT: 1em; TEXT-INDENT: -1em"><font style="FONT-FAMILY: Times New Roman" size="2">Other Investments (4)</font></p> </td> <td valign="bottom"><font size="1">&#xA0;&#xA0;</font></td> <td valign="bottom"><font style="FONT-FAMILY: Times New Roman" size="2">&#xA0;</font></td> <td valign="bottom" align="right"><font style="FONT-FAMILY: Times New Roman" size="2">73.2</font></td> <td valign="bottom"><font size="1">&#xA0;&#xA0;</font></td> <td valign="bottom"><font style="FONT-FAMILY: Times New Roman" size="2">&#xA0;</font></td> <td valign="bottom" align="right"><font style="FONT-FAMILY: Times New Roman" size="2">&#x2014;&#xA0;&#xA0;</font></td> <td valign="bottom"><font size="1">&#xA0;&#xA0;</font></td> <td valign="bottom"><font style="FONT-FAMILY: Times New Roman" size="2">&#xA0;</font></td> <td valign="bottom" align="right"><font style="FONT-FAMILY: Times New Roman" size="2">&#x2014;&#xA0;&#xA0;</font></td> <td valign="bottom"><font size="1">&#xA0;&#xA0;</font></td> <td valign="bottom"><font style="FONT-FAMILY: Times New Roman" size="2">&#xA0;</font></td> <td valign="bottom" align="right"><font style="FONT-FAMILY: Times New Roman" size="2">73.2</font></td> </tr> <tr style="FONT-SIZE: 1px"> <td valign="bottom"></td> <td valign="bottom">&#xA0;&#xA0;</td> <td style="BORDER-TOP: #000000 1px solid" valign="bottom"> &#xA0;</td> <td style="BORDER-TOP: #000000 1px solid" valign="bottom"> &#xA0;</td> <td valign="bottom">&#xA0;&#xA0;</td> <td style="BORDER-TOP: #000000 1px solid" valign="bottom"> &#xA0;</td> <td style="BORDER-TOP: #000000 1px solid" valign="bottom"> &#xA0;</td> <td valign="bottom">&#xA0;&#xA0;</td> <td style="BORDER-TOP: #000000 1px solid" valign="bottom"> &#xA0;</td> <td style="BORDER-TOP: #000000 1px solid" valign="bottom"> &#xA0;</td> <td valign="bottom">&#xA0;&#xA0;</td> <td style="BORDER-TOP: #000000 1px solid" valign="bottom"> &#xA0;</td> <td style="BORDER-TOP: #000000 1px solid" valign="bottom"> &#xA0;</td> </tr> <tr bgcolor="#CCEEFF"> <td valign="top"> <p style="MARGIN-LEFT: 1em; TEXT-INDENT: -1em"><font style="FONT-FAMILY: Times New Roman" size="2">Total</font></p> </td> <td valign="bottom"><font size="1">&#xA0;&#xA0;</font></td> <td valign="bottom"><font style="FONT-FAMILY: Times New Roman" size="2">$</font></td> <td valign="bottom" align="right"><font style="FONT-FAMILY: Times New Roman" size="2">1,958.1</font></td> <td valign="bottom"><font size="1">&#xA0;&#xA0;</font></td> <td valign="bottom"><font style="FONT-FAMILY: Times New Roman" size="2">$</font></td> <td valign="bottom" align="right"><font style="FONT-FAMILY: Times New Roman" size="2">82.0</font></td> <td valign="bottom"><font size="1">&#xA0;&#xA0;</font></td> <td valign="bottom"><font style="FONT-FAMILY: Times New Roman" size="2">$</font></td> <td valign="bottom" align="right"><font style="FONT-FAMILY: Times New Roman" size="2">&#x2014;&#xA0;&#xA0;</font></td> <td valign="bottom"><font size="1">&#xA0;&#xA0;</font></td> <td valign="bottom"><font style="FONT-FAMILY: Times New Roman" size="2">$</font></td> <td valign="bottom" align="right"><font style="FONT-FAMILY: Times New Roman" size="2">2,040.1</font></td> </tr> <tr style="FONT-SIZE: 1px"> <td valign="bottom"></td> <td valign="bottom">&#xA0;&#xA0;</td> <td style="BORDER-TOP: #000000 3px double" valign="bottom"> &#xA0;</td> <td style="BORDER-TOP: #000000 3px double" valign="bottom"> &#xA0;</td> <td valign="bottom">&#xA0;&#xA0;</td> <td style="BORDER-TOP: #000000 3px double" valign="bottom"> &#xA0;</td> <td style="BORDER-TOP: #000000 3px double" valign="bottom"> &#xA0;</td> <td valign="bottom">&#xA0;&#xA0;</td> <td style="BORDER-TOP: #000000 3px double" valign="bottom"> &#xA0;</td> <td style="BORDER-TOP: #000000 3px double" valign="bottom"> &#xA0;</td> <td valign="bottom">&#xA0;&#xA0;</td> <td style="BORDER-TOP: #000000 3px double" valign="bottom"> &#xA0;</td> <td style="BORDER-TOP: #000000 3px double" valign="bottom"> &#xA0;</td> </tr> </table> <p style="MARGIN-TOP: 0px; MARGIN-BOTTOM: 2px; WIDTH: 10%; LINE-HEIGHT: 8px; BORDER-BOTTOM: #000000 0.5pt solid"> &#xA0;</p> <table style="BORDER-COLLAPSE: collapse" cellspacing="0" cellpadding="0" width="100%" border="0"> <tr> <td valign="top" align="left" width="4%"><font style="FONT-FAMILY: Times New Roman" size="2">(1)</font></td> <td valign="top" align="left"><font style="FONT-FAMILY: Times New Roman" size="2">Cash equivalents are comprised of highly liquid investments purchased with a maturity of three months or less. The carrying value of these cash equivalents approximates fair value due to their short-term maturities.</font></td> </tr> </table> <table style="BORDER-COLLAPSE: collapse" cellspacing="0" cellpadding="0" width="100%" border="0"> <tr> <td valign="top" align="left" width="4%"><font style="FONT-FAMILY: Times New Roman" size="2">(2)</font></td> <td valign="top" align="left"><font style="FONT-FAMILY: Times New Roman" size="2">Equity securities consist of the Company&#x2019;s investment in CareFusion common stock. The fair value of these securities is determined using the quoted market price of the security.</font></td> </tr> </table> <table style="BORDER-COLLAPSE: collapse" cellspacing="0" cellpadding="0" width="100%" border="0"> <tr> <td valign="top" align="left" width="4%"><font style="FONT-FAMILY: Times New Roman" size="2">(3)</font></td> <td valign="top" align="left"><font style="FONT-FAMILY: Times New Roman" size="2">The fair value of the Company&#x2019;s foreign currency forward contracts and commodity contracts is determined based on the present value of expected future cash flows considering the risks involved, including nonperformance risk, and using discount rates appropriate for the respective maturities.</font></td> </tr> </table> <table style="BORDER-COLLAPSE: collapse" cellspacing="0" cellpadding="0" width="100%" border="0"> <tr> <td valign="top" align="left" width="4%"><font style="FONT-FAMILY: Times New Roman" size="2">(4)</font></td> <td valign="top" align="left"><font style="FONT-FAMILY: Times New Roman" size="2">The other investments balance includes investments in mutual funds, which are used to offset fluctuations in the Company&#x2019;s deferred compensation liabilities. The fair value of these investments is determined using quoted market prices.</font></td> </tr> </table> <p style="MARGIN-TOP: 18px; MARGIN-BOTTOM: 0px; MARGIN-LEFT: 2%"> <font style="FONT-FAMILY: Times New Roman" size="2"><b><i>Non-Recurring Fair Value Measurements</i></b></font></p> <p style="MARGIN-TOP: 6px; MARGIN-BOTTOM: 0px; TEXT-INDENT: 4%"> <font style="FONT-FAMILY: Times New Roman" size="2">The following table presents the fair values for those assets and (liabilities) measured on a nonrecurring basis as of December&#xA0;31, 2009:</font></p> <p style="MARGIN-TOP: 0px; FONT-SIZE: 12px; MARGIN-BOTTOM: 0px"> &#xA0;</p> <table cellspacing="0" cellpadding="0" width="92%" align="center" border="0"> <tr> <td width="74%"></td> <td valign="bottom" width="4%"></td> <td></td> <td></td> <td valign="bottom" width="4%"></td> <td></td> <td></td> <td valign="bottom" width="4%"></td> <td></td> <td></td> <td valign="bottom" width="4%"></td> <td></td> <td></td> </tr> <tr> <td valign="bottom"><font size="1">&#xA0;</font></td> <td valign="bottom"><font size="1">&#xA0;&#xA0;</font></td> <td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" align="center" colspan="11"><font style="FONT-FAMILY: Times New Roman" size="1"><b>Fair Value Measurements</b></font></td> </tr> <tr> <td valign="bottom" nowrap="nowrap"> <p style="WIDTH: 40pt; BORDER-BOTTOM: #000000 1px solid"> <font style="FONT-FAMILY: Times New Roman" size="1"><b>(in millions)</b></font></p> </td> <td valign="bottom"><font size="1">&#xA0;&#xA0;</font></td> <td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" align="center" colspan="2"><font style="FONT-FAMILY: Times New Roman" size="1"><b>Level&#xA0;1</b></font></td> <td valign="bottom"><font size="1">&#xA0;&#xA0;</font></td> <td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" align="center" colspan="2"><font style="FONT-FAMILY: Times New Roman" size="1"><b>Level&#xA0;2</b></font></td> <td valign="bottom"><font size="1">&#xA0;&#xA0;</font></td> <td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" align="center" colspan="2"><font style="FONT-FAMILY: Times New Roman" size="1"><b>Level&#xA0;3</b></font></td> <td valign="bottom"><font size="1">&#xA0;&#xA0;</font></td> <td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" align="center" colspan="2"><font style="FONT-FAMILY: Times New Roman" size="1"><b>Total</b></font></td> </tr> <tr bgcolor="#CCEEFF"> <td valign="top"> <p style="MARGIN-LEFT: 1em; TEXT-INDENT: -1em"><font style="FONT-FAMILY: Times New Roman" size="2">Long-lived assets held for sale (1)&#xA0;(2)</font></p> </td> <td valign="bottom"><font size="1">&#xA0;&#xA0;</font></td> <td valign="bottom"><font style="FONT-FAMILY: Times New Roman" size="2">$</font></td> <td valign="bottom" align="right"><font style="FONT-FAMILY: Times New Roman" size="2">&#x2014;&#xA0;&#xA0;</font></td> <td valign="bottom"><font size="1">&#xA0;&#xA0;</font></td> <td valign="bottom"><font style="FONT-FAMILY: Times New Roman" size="2">$</font></td> <td valign="bottom" align="right"><font style="FONT-FAMILY: Times New Roman" size="2">&#x2014;&#xA0;&#xA0;</font></td> <td valign="bottom"><font size="1">&#xA0;&#xA0;</font></td> <td valign="bottom"><font style="FONT-FAMILY: Times New Roman" size="2">$</font></td> <td valign="bottom" align="right"><font style="FONT-FAMILY: Times New Roman" size="2">7.0</font></td> <td valign="bottom"><font size="1">&#xA0;&#xA0;</font></td> <td valign="bottom"><font style="FONT-FAMILY: Times New Roman" size="2">$</font></td> <td valign="bottom" align="right"><font style="FONT-FAMILY: Times New Roman" size="2">7.0</font></td> </tr> <tr style="FONT-SIZE: 1px"> <td valign="bottom"></td> <td valign="bottom">&#xA0;&#xA0;</td> <td style="BORDER-TOP: #000000 1px solid" valign="bottom"> &#xA0;</td> <td style="BORDER-TOP: #000000 1px solid" valign="bottom"> &#xA0;</td> <td valign="bottom">&#xA0;&#xA0;</td> <td style="BORDER-TOP: #000000 1px solid" valign="bottom"> &#xA0;</td> <td style="BORDER-TOP: #000000 1px solid" valign="bottom"> &#xA0;</td> <td valign="bottom">&#xA0;&#xA0;</td> <td style="BORDER-TOP: #000000 1px solid" valign="bottom"> &#xA0;</td> <td style="BORDER-TOP: #000000 1px solid" valign="bottom"> &#xA0;</td> <td valign="bottom">&#xA0;&#xA0;</td> <td style="BORDER-TOP: #000000 1px solid" valign="bottom"> &#xA0;</td> <td style="BORDER-TOP: #000000 1px solid" valign="bottom"> &#xA0;</td> </tr> <tr> <td valign="top"> <p style="MARGIN-LEFT: 1em; TEXT-INDENT: -1em"><font style="FONT-FAMILY: Times New Roman" size="2">Total</font></p> </td> <td valign="bottom"><font size="1">&#xA0;&#xA0;</font></td> <td valign="bottom"><font style="FONT-FAMILY: Times New Roman" size="2">$</font></td> <td valign="bottom" align="right"><font style="FONT-FAMILY: Times New Roman" size="2">&#x2014;&#xA0;&#xA0;</font></td> <td valign="bottom"><font size="1">&#xA0;&#xA0;</font></td> <td valign="bottom"><font style="FONT-FAMILY: Times New Roman" size="2">$</font></td> <td valign="bottom" align="right"><font style="FONT-FAMILY: Times New Roman" size="2">&#x2014;&#xA0;&#xA0;</font></td> <td valign="bottom"><font size="1">&#xA0;&#xA0;</font></td> <td valign="bottom"><font style="FONT-FAMILY: Times New Roman" size="2">$</font></td> <td valign="bottom" align="right"><font style="FONT-FAMILY: Times New Roman" size="2">7.0</font></td> <td valign="bottom"><font size="1">&#xA0;&#xA0;</font></td> <td valign="bottom"><font style="FONT-FAMILY: Times New Roman" size="2">$</font></td> <td valign="bottom" align="right"><font style="FONT-FAMILY: Times New Roman" size="2">7.0</font></td> </tr> <tr style="FONT-SIZE: 1px"> <td valign="bottom"></td> <td valign="bottom">&#xA0;&#xA0;</td> <td style="BORDER-TOP: #000000 3px double" valign="bottom"> &#xA0;</td> <td style="BORDER-TOP: #000000 3px double" valign="bottom"> &#xA0;</td> <td valign="bottom">&#xA0;&#xA0;</td> <td style="BORDER-TOP: #000000 3px double" valign="bottom"> &#xA0;</td> <td style="BORDER-TOP: #000000 3px double" valign="bottom"> &#xA0;</td> <td valign="bottom">&#xA0;&#xA0;</td> <td style="BORDER-TOP: #000000 3px double" valign="bottom"> &#xA0;</td> <td style="BORDER-TOP: #000000 3px double" valign="bottom"> &#xA0;</td> <td valign="bottom">&#xA0;&#xA0;</td> <td style="BORDER-TOP: #000000 3px double" valign="bottom"> &#xA0;</td> <td style="BORDER-TOP: #000000 3px double" valign="bottom"> &#xA0;</td> </tr> </table> <p style="MARGIN-TOP: 0px; MARGIN-BOTTOM: 2px; WIDTH: 10%; LINE-HEIGHT: 8px; BORDER-BOTTOM: #000000 0.5pt solid"> &#xA0;</p> <table style="BORDER-COLLAPSE: collapse" cellspacing="0" cellpadding="0" width="100%" border="0"> <tr> <td valign="top" align="left" width="4%"><font style="FONT-FAMILY: Times New Roman" size="2">(1)</font></td> <td valign="top" align="left"><font style="FONT-FAMILY: Times New Roman" size="2">During the six months ended December&#xA0;31, 2009, certain long-lived assets held for sale were written down to their estimated fair value, less cost to sell, resulting in an impairment charge of $20.0 million, which is included in impairments and loss on sale of assets in the condensed consolidated statements of earnings (see Note 3 for further information).</font></td> </tr> </table> <table style="BORDER-COLLAPSE: collapse" cellspacing="0" cellpadding="0" width="100%" border="0"> <tr> <td valign="top" align="left" width="4%"><font style="FONT-FAMILY: Times New Roman" size="2">(2)</font></td> <td valign="top" align="left"><font style="FONT-FAMILY: Times New Roman" size="2">The fair value of long-lived assets held for sale is determined based on the best available information, including quoted market prices when available (level 1), market prices for similar assets (level 2) and internal cash flow estimates discounted at the appropriate interest rate (level 3), as appropriate.</font></td> </tr> </table> </div> 11. FAIR VALUE MEASUREMENTS In September 2006, the FASB issued new accounting guidance on fair value measurements. The guidance defines fair value, false false No definition available. No authoritative reference available. false false 1 1 false UnKnown UnKnown UnKnown false true XML 30 R9.xml IDEA: DISCONTINUED OPERATIONS AND ASSETS HELD FOR SALE 1.0.0.3 false DISCONTINUED OPERATIONS AND ASSETS HELD FOR SALE false 1 $ false false iso4217_USD Standard http://www.xbrl.org/2003/iso4217 USD iso4217 0 iso4217_USD_per_shares Divide http://www.xbrl.org/2003/iso4217 USD iso4217 http://www.xbrl.org/2003/instance shares 0 shares Standard http://www.xbrl.org/2003/instance shares 0 5 3 us-gaap_DisposalGroupsIncludingDiscontinuedOperationsDisclosureTextBlock us-gaap true na duration string No definition available. false false false false false false false false false 1 false false 0 0 <div> <p style="MARGIN-TOP: 6px; MARGIN-BOTTOM: 0px; TEXT-INDENT: 4%"> </p> <p style="MARGIN-TOP: 18px; MARGIN-BOTTOM: 0px"><font style="FONT-FAMILY: Times New Roman" size="2"><b>4. DISCONTINUED OPERATIONS AND ASSETS HELD FOR SALE</b></font></p> <p style="MARGIN-TOP: 6px; MARGIN-BOTTOM: 0px; MARGIN-LEFT: 2%"> <font style="FONT-FAMILY: Times New Roman" size="2"><b><i>CareFusion</i></b></font></p> <p style="MARGIN-TOP: 6px; MARGIN-BOTTOM: 0px; TEXT-INDENT: 4%"> <font style="FONT-FAMILY: Times New Roman" size="2">Effective August&#xA0;31, 2009, the Company completed the distribution to its shareholders of approximately 81% of the then outstanding common stock of CareFusion, with the Company retaining 41.4&#xA0;million shares of CareFusion common stock, and met the criteria for classification as discontinued operations in the Company&#x2019;s financial statements. During the second quarter of fiscal 2010, the Company disposed of approximately 5.5&#xA0;million shares of CareFusion common stock. The Company&#x2019;s investment in CareFusion common stock does not provide the Company the ability to influence the operating or financial policies of CareFusion and accordingly does not constitute significant continuing involvement. Furthermore, while the Company is a party to a separation agreement and various other agreements relating to the separation, including a transition services agreement, a tax matters agreement, an employee matters agreement, intellectual property agreements and certain other commercial agreements, the Company has determined that the continuing cash flows generated by these agreements, which are expected to be eliminated within 5 years, and its investment in CareFusion common stock, do not constitute significant continuing involvement in the operations of CareFusion. Accordingly, the net assets of CareFusion are presented separately as discontinued operations and the operating results are presented within discontinued operations for all periods presented through the date of the Spin-Off.</font></p> <p style="MARGIN-TOP: 0px; MARGIN-BOTTOM: 0px"><font size="1">&#xA0;</font></p> <p style="MARGIN-TOP: 0px; MARGIN-BOTTOM: 0px; TEXT-INDENT: 4%"> <font style="FONT-FAMILY: Times New Roman" size="2">The results of CareFusion included in discontinued operations for the three and six months ended December&#xA0;31, 2009 and 2008 are summarized as follows:</font></p> <p style="MARGIN-TOP: 0px; FONT-SIZE: 12px; MARGIN-BOTTOM: 0px"> &#xA0;</p> <table cellspacing="0" cellpadding="0" width="92%" align="center" border="0"> <tr> <td width="72%"></td> <td valign="bottom" width="3%"></td> <td></td> <td></td> <td valign="bottom" width="3%"></td> <td></td> <td></td> <td></td> <td valign="bottom" width="3%"></td> <td></td> <td></td> <td></td> <td valign="bottom" width="3%"></td> <td></td> <td></td> <td></td> </tr> <tr> <td valign="bottom"><font size="1">&#xA0;</font></td> <td valign="bottom"><font size="1">&#xA0;&#xA0;</font></td> <td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" align="center" colspan="5"><font style="FONT-FAMILY: Times New Roman" size="1"><b>Three&#xA0;Months&#xA0;Ended<br /> December&#xA0;31,</b></font></td> <td valign="bottom"><font size="1">&#xA0;</font></td> <td valign="bottom"><font size="1">&#xA0;</font></td> <td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" align="center" colspan="6"><font style="FONT-FAMILY: Times New Roman" size="1"><b>Six&#xA0;Months&#xA0;Ended<br /> December&#xA0;31,</b></font></td> <td valign="bottom"><font size="1">&#xA0;</font></td> </tr> <tr> <td valign="bottom" nowrap="nowrap"> <p style="WIDTH: 40pt; BORDER-BOTTOM: #000000 1px solid"> <font style="FONT-FAMILY: Times New Roman" size="1"><b>(in millions)</b></font></p> </td> <td valign="bottom"><font size="1">&#xA0;&#xA0;</font></td> <td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" align="center" colspan="2"><font style="FONT-FAMILY: Times New Roman" size="1"><b>2009</b></font></td> <td valign="bottom"><font size="1">&#xA0;&#xA0;</font></td> <td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" align="center" colspan="2"><font style="FONT-FAMILY: Times New Roman" size="1"><b>2008</b></font></td> <td valign="bottom"><font size="1">&#xA0;</font></td> <td valign="bottom"><font size="1">&#xA0;</font></td> <td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" align="center" colspan="2"><font style="FONT-FAMILY: Times New Roman" size="1"><b>2009 (1)</b></font></td> <td valign="bottom"><font size="1">&#xA0;</font></td> <td valign="bottom"><font size="1">&#xA0;</font></td> <td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" align="center" colspan="2"><font style="FONT-FAMILY: Times New Roman" size="1"><b>2008</b></font></td> <td valign="bottom"><font size="1">&#xA0;</font></td> </tr> <tr bgcolor="#CCEEFF"> <td valign="top"> <p style="MARGIN-LEFT: 1em; TEXT-INDENT: -1em"><font style="FONT-FAMILY: Times New Roman" size="2">Revenue</font></p> </td> <td valign="bottom"><font size="1">&#xA0;&#xA0;</font></td> <td valign="bottom"><font style="FONT-FAMILY: Times New Roman" size="2">$</font></td> <td valign="bottom" align="right"><font style="FONT-FAMILY: Times New Roman" size="2">&#x2014;&#xA0;&#xA0;</font></td> <td valign="bottom"><font size="1">&#xA0;&#xA0;</font></td> <td valign="bottom"><font style="FONT-FAMILY: Times New Roman" size="2">$</font></td> <td valign="bottom" align="right"><font style="FONT-FAMILY: Times New Roman" size="2">957.0</font></td> <td valign="bottom" nowrap="nowrap"><font style="FONT-FAMILY: Times New Roman" size="2">&#xA0;&#xA0;</font></td> <td valign="bottom"><font size="1">&#xA0;</font></td> <td valign="bottom"><font style="FONT-FAMILY: Times New Roman" size="2">$</font></td> <td valign="bottom" align="right"><font style="FONT-FAMILY: Times New Roman" size="2">592.1</font></td> <td valign="bottom" nowrap="nowrap"><font style="FONT-FAMILY: Times New Roman" size="2">&#xA0;&#xA0;</font></td> <td valign="bottom"><font size="1">&#xA0;</font></td> <td valign="bottom"><font style="FONT-FAMILY: Times New Roman" size="2">$</font></td> <td valign="bottom" align="right"><font style="FONT-FAMILY: Times New Roman" size="2">1,840.9</font></td> <td valign="bottom" nowrap="nowrap"><font style="FONT-FAMILY: Times New Roman" size="2">&#xA0;&#xA0;</font></td> </tr> <tr> <td valign="top"> <p style="MARGIN-LEFT: 1em; TEXT-INDENT: -1em"><font style="FONT-FAMILY: Times New Roman" size="2">Earnings before income taxes and discontinued operations</font></p> </td> <td valign="bottom"><font size="1">&#xA0;&#xA0;</font></td> <td valign="bottom"><font style="FONT-FAMILY: Times New Roman" size="2">&#xA0;</font></td> <td valign="bottom" align="right"><font style="FONT-FAMILY: Times New Roman" size="2">&#x2014;&#xA0;&#xA0;</font></td> <td valign="bottom"><font size="1">&#xA0;&#xA0;</font></td> <td valign="bottom"><font style="FONT-FAMILY: Times New Roman" size="2">&#xA0;</font></td> <td valign="bottom" align="right"><font style="FONT-FAMILY: Times New Roman" size="2">200.2</font></td> <td valign="bottom" nowrap="nowrap"><font style="FONT-FAMILY: Times New Roman" size="2">&#xA0;&#xA0;</font></td> <td valign="bottom"><font size="1">&#xA0;</font></td> <td valign="bottom"><font style="FONT-FAMILY: Times New Roman" size="2">&#xA0;</font></td> <td valign="bottom" align="right"><font style="FONT-FAMILY: Times New Roman" size="2">43.7</font></td> <td valign="bottom" nowrap="nowrap"><font style="FONT-FAMILY: Times New Roman" size="2">&#xA0;&#xA0;</font></td> <td valign="bottom"><font size="1">&#xA0;</font></td> <td valign="bottom"><font style="FONT-FAMILY: Times New Roman" size="2">&#xA0;</font></td> <td valign="bottom" align="right"><font style="FONT-FAMILY: Times New Roman" size="2">304.1</font></td> <td valign="bottom" nowrap="nowrap"><font style="FONT-FAMILY: Times New Roman" size="2">&#xA0;&#xA0;</font></td> </tr> <tr bgcolor="#CCEEFF"> <td valign="top"> <p style="MARGIN-LEFT: 1em; TEXT-INDENT: -1em"><font style="FONT-FAMILY: Times New Roman" size="2">Income tax expense</font></p> </td> <td valign="bottom"><font size="1">&#xA0;&#xA0;</font></td> <td valign="bottom"><font style="FONT-FAMILY: Times New Roman" size="2">&#xA0;</font></td> <td valign="bottom" align="right"><font style="FONT-FAMILY: Times New Roman" size="2">&#x2014;&#xA0;&#xA0;</font></td> <td valign="bottom"><font size="1">&#xA0;&#xA0;</font></td> <td valign="bottom"><font style="FONT-FAMILY: Times New Roman" size="2">&#xA0;</font></td> <td valign="bottom" align="right"><font style="FONT-FAMILY: Times New Roman" size="2">(53.2</font></td> <td valign="bottom" nowrap="nowrap"><font style="FONT-FAMILY: Times New Roman" size="2">)&#xA0;</font></td> <td valign="bottom"><font size="1">&#xA0;</font></td> <td valign="bottom"><font style="FONT-FAMILY: Times New Roman" size="2">&#xA0;</font></td> <td valign="bottom" align="right"><font style="FONT-FAMILY: Times New Roman" size="2">(23.6</font></td> <td valign="bottom" nowrap="nowrap"><font style="FONT-FAMILY: Times New Roman" size="2">)&#xA0;</font></td> <td valign="bottom"><font size="1">&#xA0;</font></td> <td valign="bottom"><font style="FONT-FAMILY: Times New Roman" size="2">&#xA0;</font></td> <td valign="bottom" align="right"><font style="FONT-FAMILY: Times New Roman" size="2">(83.1</font></td> <td valign="bottom" nowrap="nowrap"><font style="FONT-FAMILY: Times New Roman" size="2">)&#xA0;</font></td> </tr> <tr> <td valign="top"> <p style="MARGIN-LEFT: 1em; TEXT-INDENT: -1em"><font style="FONT-FAMILY: Times New Roman" size="2">Earnings from discontinued operations</font></p> </td> <td valign="bottom"><font size="1">&#xA0;&#xA0;</font></td> <td valign="bottom"><font style="FONT-FAMILY: Times New Roman" size="2">&#xA0;</font></td> <td valign="bottom" align="right"><font style="FONT-FAMILY: Times New Roman" size="2">&#x2014;&#xA0;&#xA0;</font></td> <td valign="bottom"><font size="1">&#xA0;&#xA0;</font></td> <td valign="bottom"><font style="FONT-FAMILY: Times New Roman" size="2">&#xA0;</font></td> <td valign="bottom" align="right"><font style="FONT-FAMILY: Times New Roman" size="2">147.0</font></td> <td valign="bottom" nowrap="nowrap"><font style="FONT-FAMILY: Times New Roman" size="2">&#xA0;&#xA0;</font></td> <td valign="bottom"><font size="1">&#xA0;</font></td> <td valign="bottom"><font style="FONT-FAMILY: Times New Roman" size="2">&#xA0;</font></td> <td valign="bottom" align="right"><font style="FONT-FAMILY: Times New Roman" size="2">20.1</font></td> <td valign="bottom" nowrap="nowrap"><font style="FONT-FAMILY: Times New Roman" size="2">&#xA0;&#xA0;</font></td> <td valign="bottom"><font size="1">&#xA0;</font></td> <td valign="bottom"><font style="FONT-FAMILY: Times New Roman" size="2">&#xA0;</font></td> <td valign="bottom" align="right"><font style="FONT-FAMILY: Times New Roman" size="2">221.0</font></td> <td valign="bottom" nowrap="nowrap"><font style="FONT-FAMILY: Times New Roman" size="2">&#xA0;&#xA0;</font></td> </tr> </table> <p style="MARGIN-TOP: 0px; MARGIN-BOTTOM: 2px; WIDTH: 10%; LINE-HEIGHT: 8px; BORDER-BOTTOM: #000000 0.5pt solid"> &#xA0;</p> <table style="BORDER-COLLAPSE: collapse" cellspacing="0" cellpadding="0" width="100%" border="0"> <tr> <td valign="top" align="left" width="4%"><font style="FONT-FAMILY: Times New Roman" size="2">(1)</font></td> <td valign="top" align="left"><font style="FONT-FAMILY: Times New Roman" size="2">Reflects the results of CareFusion through August&#xA0;31, 2009, the effective date of the Spin-Off.</font></td> </tr> </table> <p style="MARGIN-TOP: 12px; MARGIN-BOTTOM: 0px; TEXT-INDENT: 4%"> <font style="FONT-FAMILY: Times New Roman" size="2">Interest expense allocated to discontinued operations for CareFusion was $16.5 million for the three months ended December&#xA0;31, 2008 and $12.8 million and $38.1 million for the six months ended December&#xA0;31, 2009 and 2008, respectively. Interest expense was allocated considering the debt issued by CareFusion in connection with the Spin-Off and the overall debt balance of the Company. In addition, a portion of the corporate costs previously allocated to CareFusion have been reclassified to the remaining two segments.</font></p> <p style="MARGIN-TOP: 12px; MARGIN-BOTTOM: 0px; TEXT-INDENT: 4%"> <font style="FONT-FAMILY: Times New Roman" size="2">There were no assets and liabilities from businesses held for sale for CareFusion at December&#xA0;31, 2009. At June&#xA0;30, 2009, the major components of assets and liabilities from businesses held for sale for CareFusion were as follows:</font></p> <p style="MARGIN-TOP: 0px; FONT-SIZE: 12px; MARGIN-BOTTOM: 0px"> &#xA0;</p> <table cellspacing="0" cellpadding="0" width="68%" align="center" border="0"> <tr> <td width="87%"></td> <td valign="bottom" width="6%"></td> <td></td> <td></td> </tr> <tr> <td valign="bottom" nowrap="nowrap"> <p style="WIDTH: 40pt; BORDER-BOTTOM: #000000 1px solid"> <font style="FONT-FAMILY: Times New Roman" size="1"><b>(in millions)</b></font></p> </td> <td valign="bottom"><font size="1">&#xA0;&#xA0;</font></td> <td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" align="center" colspan="2"><font style="FONT-FAMILY: Times New Roman" size="1"><b>June&#xA0;30,<br /> 2009</b></font></td> </tr> <tr bgcolor="#CCEEFF"> <td valign="top"> <p style="MARGIN-LEFT: 1em; TEXT-INDENT: -1em"><font style="FONT-FAMILY: Times New Roman" size="2">Current assets</font></p> </td> <td valign="bottom"><font size="1">&#xA0;&#xA0;</font></td> <td valign="bottom"><font style="FONT-FAMILY: Times New Roman" size="2">$</font></td> <td valign="bottom" align="right"><font style="FONT-FAMILY: Times New Roman" size="2">1,832.0</font></td> </tr> <tr> <td valign="top"> <p style="MARGIN-LEFT: 1em; TEXT-INDENT: -1em"><font style="FONT-FAMILY: Times New Roman" size="2">Property and equipment</font></p> </td> <td valign="bottom"><font size="1">&#xA0;&#xA0;</font></td> <td valign="bottom"><font style="FONT-FAMILY: Times New Roman" size="2">&#xA0;</font></td> <td valign="bottom" align="right"><font style="FONT-FAMILY: Times New Roman" size="2">408.5</font></td> </tr> <tr bgcolor="#CCEEFF"> <td valign="top"> <p style="MARGIN-LEFT: 1em; TEXT-INDENT: -1em"><font style="FONT-FAMILY: Times New Roman" size="2">Other assets</font></p> </td> <td valign="bottom"><font size="1">&#xA0;&#xA0;</font></td> <td valign="bottom"><font style="FONT-FAMILY: Times New Roman" size="2">&#xA0;</font></td> <td valign="bottom" align="right"><font style="FONT-FAMILY: Times New Roman" size="2">4,774.2</font></td> </tr> <tr style="FONT-SIZE: 1px"> <td valign="bottom"></td> <td valign="bottom">&#xA0;&#xA0;</td> <td style="BORDER-TOP: #000000 1px solid" valign="bottom"> &#xA0;</td> <td style="BORDER-TOP: #000000 1px solid" valign="bottom"> &#xA0;</td> </tr> <tr> <td valign="top"> <p style="MARGIN-LEFT: 3em; TEXT-INDENT: -1em"><font style="FONT-FAMILY: Times New Roman" size="2">Total assets</font></p> </td> <td valign="bottom"><font size="1">&#xA0;&#xA0;</font></td> <td valign="bottom"><font style="FONT-FAMILY: Times New Roman" size="2">$</font></td> <td valign="bottom" align="right"><font style="FONT-FAMILY: Times New Roman" size="2">7,014.7</font></td> </tr> <tr style="FONT-SIZE: 1px"> <td valign="bottom"></td> <td valign="bottom">&#xA0;&#xA0;</td> <td style="BORDER-TOP: #000000 1px solid" valign="bottom"> &#xA0;</td> <td style="BORDER-TOP: #000000 1px solid" valign="bottom"> &#xA0;</td> </tr> <tr bgcolor="#CCEEFF"> <td valign="top"> <p style="MARGIN-LEFT: 1em; TEXT-INDENT: -1em"><font style="FONT-FAMILY: Times New Roman" size="2">Current liabilities</font></p> </td> <td valign="bottom"><font size="1">&#xA0;&#xA0;</font></td> <td valign="bottom"><font style="FONT-FAMILY: Times New Roman" size="2">&#xA0;</font></td> <td valign="bottom" align="right"><font style="FONT-FAMILY: Times New Roman" size="2">469.2</font></td> </tr> <tr> <td valign="top"> <p style="MARGIN-LEFT: 1em; TEXT-INDENT: -1em"><font style="FONT-FAMILY: Times New Roman" size="2">Long-term debt and other</font></p> </td> <td valign="bottom"><font size="1">&#xA0;&#xA0;</font></td> <td valign="bottom"><font style="FONT-FAMILY: Times New Roman" size="2">&#xA0;</font></td> <td valign="bottom" align="right"><font style="FONT-FAMILY: Times New Roman" size="2">875.4</font></td> </tr> <tr style="FONT-SIZE: 1px"> <td valign="bottom"></td> <td valign="bottom">&#xA0;&#xA0;</td> <td style="BORDER-TOP: #000000 1px solid" valign="bottom"> &#xA0;</td> <td style="BORDER-TOP: #000000 1px solid" valign="bottom"> &#xA0;</td> </tr> <tr bgcolor="#CCEEFF"> <td valign="top"> <p style="MARGIN-LEFT: 3em; TEXT-INDENT: -1em"><font style="FONT-FAMILY: Times New Roman" size="2">Total liabilities</font></p> </td> <td valign="bottom"><font size="1">&#xA0;&#xA0;</font></td> <td valign="bottom"><font style="FONT-FAMILY: Times New Roman" size="2">$</font></td> <td valign="bottom" align="right"><font style="FONT-FAMILY: Times New Roman" size="2">1,344.6</font></td> </tr> <tr style="FONT-SIZE: 1px"> <td valign="bottom"></td> <td valign="bottom">&#xA0;&#xA0;</td> <td style="BORDER-TOP: #000000 1px solid" valign="bottom"> &#xA0;</td> <td style="BORDER-TOP: #000000 1px solid" valign="bottom"> &#xA0;</td> </tr> </table> <p style="MARGIN-TOP: 12px; MARGIN-BOTTOM: 0px; TEXT-INDENT: 4%"> <font style="FONT-FAMILY: Times New Roman" size="2">Cash flows from discontinued operations are presented separately on the Company&#x2019;s condensed consolidated statements of cash flows.</font></p> <p style="MARGIN-TOP: 18px; MARGIN-BOTTOM: 0px"><font style="FONT-FAMILY: Times New Roman" size="2"><b>PTS Business</b></font></p> <p style="MARGIN-TOP: 6px; MARGIN-BOTTOM: 0px; TEXT-INDENT: 4%"> <font style="FONT-FAMILY: Times New Roman" size="2">See Note 7 of the &#x201C;Notes to Consolidated Financial Statements&#x201D; from the FY2009 Financial Statements, for information regarding the sale of the former Pharmaceutical Technologies and Services segment, other than certain generic-focused businesses (the &#x201C;PTS Business&#x201D;), during the fourth quarter of fiscal 2007.</font></p> <p style="MARGIN-TOP: 12px; MARGIN-BOTTOM: 0px; TEXT-INDENT: 4%"> <font style="FONT-FAMILY: Times New Roman" size="2">The Company incurred minor amounts of activity related to the PTS Business during the three and six months ended December&#xA0;31, 2008 as a result of changes in certain estimates made at the time of the sale, activity under a transition services agreement and other adjustments. The loss related to the PTS Business included in discontinued operations was $0.2 million and $0.8 million for the three and six months ended December&#xA0;31, 2009, respectively. The loss related to the PTS Business included in discontinued operations was $2.4 million and $3.1 million for the three and six months ended December&#xA0;31, 2008, respectively.</font></p> <p style="MARGIN-TOP: 12px; MARGIN-BOTTOM: 0px; TEXT-INDENT: 4%"> <font style="FONT-FAMILY: Times New Roman" size="2">The liabilities of the PTS Business included in liabilities held for sale were $1.4 million as of December&#xA0;31, 2009 and June&#xA0;30, 2009.</font></p> <p style="MARGIN-TOP: 12px; MARGIN-BOTTOM: 0px; TEXT-INDENT: 4%"> <font style="FONT-FAMILY: Times New Roman" size="2">Cash flows from discontinued operations are presented separately on the Company&#x2019;s condensed consolidated statements of cash flows.</font></p> <p style="MARGIN-TOP: 18px; MARGIN-BOTTOM: 0px"><font style="FONT-FAMILY: Times New Roman" size="2"><b>Other</b></font></p> <p style="MARGIN-TOP: 6px; MARGIN-BOTTOM: 0px; TEXT-INDENT: 4%"> <font style="FONT-FAMILY: Times New Roman" size="2">During the fourth quarter of fiscal 2009, the Company committed to plans to sell its United Kingdom-based Martindale injectable manufacturing business (&#x201C;Martindale&#x201D;) within its Pharmaceutical segment, and met the criteria for classification as assets held for sale in the Company&#x2019;s financial statements. Accordingly, the net assets of Martindale are presented separately as held for sale and discontinued operations and the operating results are presented within discontinued operations for all periods presented. During the fourth quarter of fiscal 2009, the Company also committed to plans to sell SpecialtyScripts within its Pharmaceutical segment, and met the criteria for classification as held for sale in the Company&#x2019;s financial statements. Accordingly, the net assets of this business are presented separately as assets held for sale on the Company&#x2019;s condensed consolidated balance sheet at December&#xA0;31, 2009 and June&#xA0;30, 2009. The results of SpecialtyScripts are reported within earnings from continuing operations on the Company&#x2019;s condensed consolidated statements of earnings because it did not satisfy the criteria for classification as discontinued operations. Additionally, the net assets held for sale of SpecialtyScripts were recorded at the net expected fair value less costs to sell, as this amount was lower than its net carrying value (see Note 3 for further information).</font></p> <p style="MARGIN-TOP: 0px; MARGIN-BOTTOM: 0px"><font size="1">&#xA0;</font></p> <p style="MARGIN-TOP: 0px; MARGIN-BOTTOM: 0px; TEXT-INDENT: 4%"> <font style="FONT-FAMILY: Times New Roman" size="2">The results of Martindale included in discontinued operations for the three and six months ended December&#xA0;31, 2009 and 2008 are summarized as follows:</font></p> <p style="MARGIN-TOP: 0px; FONT-SIZE: 12px; MARGIN-BOTTOM: 0px"> &#xA0;</p> <table cellspacing="0" cellpadding="0" width="92%" align="center" border="0"> <tr> <td width="76%"></td> <td valign="bottom" width="3%"></td> <td></td> <td></td> <td></td> <td valign="bottom" width="3%"></td> <td></td> <td></td> <td></td> <td valign="bottom" width="3%"></td> <td></td> <td></td> <td></td> <td valign="bottom" width="3%"></td> <td></td> <td></td> <td></td> </tr> <tr> <td valign="bottom"><font size="1">&#xA0;</font></td> <td valign="bottom"><font size="1">&#xA0;&#xA0;</font></td> <td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" align="center" colspan="6"><font style="FONT-FAMILY: Times New Roman" size="1"><b>Three&#xA0;Months&#xA0;Ended<br /> December&#xA0;31,</b></font></td> <td valign="bottom"><font size="1">&#xA0;</font></td> <td valign="bottom"><font size="1">&#xA0;</font></td> <td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" align="center" colspan="6"><font style="FONT-FAMILY: Times New Roman" size="1"><b>Six&#xA0;Months&#xA0;Ended<br /> December&#xA0;31,</b></font></td> <td valign="bottom"><font size="1">&#xA0;</font></td> </tr> <tr> <td valign="bottom" nowrap="nowrap"> <p style="WIDTH: 40pt; BORDER-BOTTOM: #000000 1px solid"> <font style="FONT-FAMILY: Times New Roman" size="1"><b>(in millions)</b></font></p> </td> <td valign="bottom"><font size="1">&#xA0;&#xA0;</font></td> <td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" align="center" colspan="2"><font style="FONT-FAMILY: Times New Roman" size="1"><b>2009</b></font></td> <td valign="bottom"><font size="1">&#xA0;</font></td> <td valign="bottom"><font size="1">&#xA0;</font></td> <td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" align="center" colspan="2"><font style="FONT-FAMILY: Times New Roman" size="1"><b>2008</b></font></td> <td valign="bottom"><font size="1">&#xA0;</font></td> <td valign="bottom"><font size="1">&#xA0;</font></td> <td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" align="center" colspan="2"><font style="FONT-FAMILY: Times New Roman" size="1"><b>2009</b></font></td> <td valign="bottom"><font size="1">&#xA0;</font></td> <td valign="bottom"><font size="1">&#xA0;</font></td> <td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" align="center" colspan="2"><font style="FONT-FAMILY: Times New Roman" size="1"><b>2008</b></font></td> <td valign="bottom"><font size="1">&#xA0;</font></td> </tr> <tr bgcolor="#CCEEFF"> <td valign="top"> <p style="MARGIN-LEFT: 1em; TEXT-INDENT: -1em"><font style="FONT-FAMILY: Times New Roman" size="2">Revenue</font></p> </td> <td valign="bottom"><font size="1">&#xA0;&#xA0;</font></td> <td valign="bottom"><font style="FONT-FAMILY: Times New Roman" size="2">$</font></td> <td valign="bottom" align="right"><font style="FONT-FAMILY: Times New Roman" size="2">30.6</font></td> <td valign="bottom" nowrap="nowrap"><font style="FONT-FAMILY: Times New Roman" size="2">&#xA0;&#xA0;</font></td> <td valign="bottom"><font size="1">&#xA0;</font></td> <td valign="bottom"><font style="FONT-FAMILY: Times New Roman" size="2">$</font></td> <td valign="bottom" align="right"><font style="FONT-FAMILY: Times New Roman" size="2">24.6</font></td> <td valign="bottom" nowrap="nowrap"><font style="FONT-FAMILY: Times New Roman" size="2">&#xA0;&#xA0;</font></td> <td valign="bottom"><font size="1">&#xA0;</font></td> <td valign="bottom"><font style="FONT-FAMILY: Times New Roman" size="2">$</font></td> <td valign="bottom" align="right"><font style="FONT-FAMILY: Times New Roman" size="2">59.6</font></td> <td valign="bottom" nowrap="nowrap"><font style="FONT-FAMILY: Times New Roman" size="2">&#xA0;&#xA0;</font></td> <td valign="bottom"><font size="1">&#xA0;</font></td> <td valign="bottom"><font style="FONT-FAMILY: Times New Roman" size="2">$</font></td> <td valign="bottom" align="right"><font style="FONT-FAMILY: Times New Roman" size="2">50.9</font></td> <td valign="bottom" nowrap="nowrap"><font style="FONT-FAMILY: Times New Roman" size="2">&#xA0;&#xA0;</font></td> </tr> <tr> <td valign="top"> <p style="MARGIN-LEFT: 1em; TEXT-INDENT: -1em"><font style="FONT-FAMILY: Times New Roman" size="2">Earnings before income taxes and discontinued operations</font></p> </td> <td valign="bottom"><font size="1">&#xA0;&#xA0;</font></td> <td valign="bottom"><font style="FONT-FAMILY: Times New Roman" size="2">&#xA0;</font></td> <td valign="bottom" align="right"><font style="FONT-FAMILY: Times New Roman" size="2">6.4</font></td> <td valign="bottom" nowrap="nowrap"><font style="FONT-FAMILY: Times New Roman" size="2">&#xA0;&#xA0;</font></td> <td valign="bottom"><font size="1">&#xA0;</font></td> <td valign="bottom"><font style="FONT-FAMILY: Times New Roman" size="2">&#xA0;</font></td> <td valign="bottom" align="right"><font style="FONT-FAMILY: Times New Roman" size="2">4.0</font></td> <td valign="bottom" nowrap="nowrap"><font style="FONT-FAMILY: Times New Roman" size="2">&#xA0;&#xA0;</font></td> <td valign="bottom"><font size="1">&#xA0;</font></td> <td valign="bottom"><font style="FONT-FAMILY: Times New Roman" size="2">&#xA0;</font></td> <td valign="bottom" align="right"><font style="FONT-FAMILY: Times New Roman" size="2">12.3</font></td> <td valign="bottom" nowrap="nowrap"><font style="FONT-FAMILY: Times New Roman" size="2">&#xA0;&#xA0;</font></td> <td valign="bottom"><font size="1">&#xA0;</font></td> <td valign="bottom"><font style="FONT-FAMILY: Times New Roman" size="2">&#xA0;</font></td> <td valign="bottom" align="right"><font style="FONT-FAMILY: Times New Roman" size="2">9.1</font></td> <td valign="bottom" nowrap="nowrap"><font style="FONT-FAMILY: Times New Roman" size="2">&#xA0;&#xA0;</font></td> </tr> <tr bgcolor="#CCEEFF"> <td valign="top"> <p style="MARGIN-LEFT: 1em; TEXT-INDENT: -1em"><font style="FONT-FAMILY: Times New Roman" size="2">Income tax expense</font></p> </td> <td valign="bottom"><font size="1">&#xA0;&#xA0;</font></td> <td valign="bottom"><font style="FONT-FAMILY: Times New Roman" size="2">&#xA0;</font></td> <td valign="bottom" align="right"><font style="FONT-FAMILY: Times New Roman" size="2">(1.9</font></td> <td valign="bottom" nowrap="nowrap"><font style="FONT-FAMILY: Times New Roman" size="2">)&#xA0;</font></td> <td valign="bottom"><font size="1">&#xA0;</font></td> <td valign="bottom"><font style="FONT-FAMILY: Times New Roman" size="2">&#xA0;</font></td> <td valign="bottom" align="right"><font style="FONT-FAMILY: Times New Roman" size="2">(1.1</font></td> <td valign="bottom" nowrap="nowrap"><font style="FONT-FAMILY: Times New Roman" size="2">)&#xA0;</font></td> <td valign="bottom"><font size="1">&#xA0;</font></td> <td valign="bottom"><font style="FONT-FAMILY: Times New Roman" size="2">&#xA0;</font></td> <td valign="bottom" align="right"><font style="FONT-FAMILY: Times New Roman" size="2">(3.7</font></td> <td valign="bottom" nowrap="nowrap"><font style="FONT-FAMILY: Times New Roman" size="2">)&#xA0;</font></td> <td valign="bottom"><font size="1">&#xA0;</font></td> <td valign="bottom"><font style="FONT-FAMILY: Times New Roman" size="2">&#xA0;</font></td> <td valign="bottom" align="right"><font style="FONT-FAMILY: Times New Roman" size="2">(2.6</font></td> <td valign="bottom" nowrap="nowrap"><font style="FONT-FAMILY: Times New Roman" size="2">)&#xA0;</font></td> </tr> <tr> <td valign="top"> <p style="MARGIN-LEFT: 1em; TEXT-INDENT: -1em"><font style="FONT-FAMILY: Times New Roman" size="2">Earnings from discontinued operations</font></p> </td> <td valign="bottom"><font size="1">&#xA0;&#xA0;</font></td> <td valign="bottom"><font style="FONT-FAMILY: Times New Roman" size="2">&#xA0;</font></td> <td valign="bottom" align="right"><font style="FONT-FAMILY: Times New Roman" size="2">4.5</font></td> <td valign="bottom" nowrap="nowrap"><font style="FONT-FAMILY: Times New Roman" size="2">&#xA0;&#xA0;</font></td> <td valign="bottom"><font size="1">&#xA0;</font></td> <td valign="bottom"><font style="FONT-FAMILY: Times New Roman" size="2">&#xA0;</font></td> <td valign="bottom" align="right"><font style="FONT-FAMILY: Times New Roman" size="2">2.9</font></td> <td valign="bottom" nowrap="nowrap"><font style="FONT-FAMILY: Times New Roman" size="2">&#xA0;&#xA0;</font></td> <td valign="bottom"><font size="1">&#xA0;</font></td> <td valign="bottom"><font style="FONT-FAMILY: Times New Roman" size="2">&#xA0;</font></td> <td valign="bottom" align="right"><font style="FONT-FAMILY: Times New Roman" size="2">8.6</font></td> <td valign="bottom" nowrap="nowrap"><font style="FONT-FAMILY: Times New Roman" size="2">&#xA0;&#xA0;</font></td> <td valign="bottom"><font size="1">&#xA0;</font></td> <td valign="bottom"><font style="FONT-FAMILY: Times New Roman" size="2">&#xA0;</font></td> <td valign="bottom" align="right"><font style="FONT-FAMILY: Times New Roman" size="2">6.5</font></td> <td valign="bottom" nowrap="nowrap"><font style="FONT-FAMILY: Times New Roman" size="2">&#xA0;&#xA0;</font></td> </tr> </table> <p style="MARGIN-TOP: 12px; MARGIN-BOTTOM: 0px; TEXT-INDENT: 4%"> <font style="FONT-FAMILY: Times New Roman" size="2">Cash flows from discontinued operations are presented separately on the Company&#x2019;s condensed consolidated statements of cash flows.</font></p> <p style="MARGIN-TOP: 12px; MARGIN-BOTTOM: 0px; TEXT-INDENT: 4%"> <font style="FONT-FAMILY: Times New Roman" size="2">At December&#xA0;31, 2009 and June&#xA0;30, 2009, the major components of assets and liabilities from businesses held for sale related to Martindale and SpecialtyScripts were as follows:</font></p> <p style="MARGIN-TOP: 0px; FONT-SIZE: 12px; MARGIN-BOTTOM: 0px"> &#xA0;</p> <table cellspacing="0" cellpadding="0" width="76%" align="center" border="0"> <tr> <td width="76%"></td> <td valign="bottom" width="7%"></td> <td></td> <td></td> <td valign="bottom" width="7%"></td> <td></td> <td></td> </tr> <tr> <td valign="bottom" nowrap="nowrap"> <p style="WIDTH: 40pt; BORDER-BOTTOM: #000000 1px solid"> <font style="FONT-FAMILY: Times New Roman" size="1"><b>(in millions)</b></font></p> </td> <td valign="bottom"><font size="1">&#xA0;&#xA0;</font></td> <td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" align="center" colspan="2"><font style="FONT-FAMILY: Times New Roman" size="1"><b>December&#xA0;31,<br /> 2009</b></font></td> <td valign="bottom"><font size="1">&#xA0;&#xA0;</font></td> <td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" align="center" colspan="2"><font style="FONT-FAMILY: Times New Roman" size="1"><b>June&#xA0;30,<br /> 2009</b></font></td> </tr> <tr bgcolor="#CCEEFF"> <td valign="top"> <p style="MARGIN-LEFT: 1em; TEXT-INDENT: -1em"><font style="FONT-FAMILY: Times New Roman" size="2">Current assets</font></p> </td> <td valign="bottom"><font size="1">&#xA0;&#xA0;</font></td> <td valign="bottom"><font style="FONT-FAMILY: Times New Roman" size="2">$</font></td> <td valign="bottom" align="right"><font style="FONT-FAMILY: Times New Roman" size="2">59.1</font></td> <td valign="bottom"><font size="1">&#xA0;&#xA0;</font></td> <td valign="bottom"><font style="FONT-FAMILY: Times New Roman" size="2">$</font></td> <td valign="bottom" align="right"><font style="FONT-FAMILY: Times New Roman" size="2">74.2</font></td> </tr> <tr> <td valign="top"> <p style="MARGIN-LEFT: 1em; TEXT-INDENT: -1em"><font style="FONT-FAMILY: Times New Roman" size="2">Property and equipment</font></p> </td> <td valign="bottom"><font size="1">&#xA0;&#xA0;</font></td> <td valign="bottom"><font style="FONT-FAMILY: Times New Roman" size="2">&#xA0;</font></td> <td valign="bottom" align="right"><font style="FONT-FAMILY: Times New Roman" size="2">22.8</font></td> <td valign="bottom"><font size="1">&#xA0;&#xA0;</font></td> <td valign="bottom"><font style="FONT-FAMILY: Times New Roman" size="2">&#xA0;</font></td> <td valign="bottom" align="right"><font style="FONT-FAMILY: Times New Roman" size="2">19.3</font></td> </tr> <tr bgcolor="#CCEEFF"> <td valign="top"> <p style="MARGIN-LEFT: 1em; TEXT-INDENT: -1em"><font style="FONT-FAMILY: Times New Roman" size="2">Other assets</font></p> </td> <td valign="bottom"><font size="1">&#xA0;&#xA0;</font></td> <td valign="bottom"><font style="FONT-FAMILY: Times New Roman" size="2">&#xA0;</font></td> <td valign="bottom" align="right"><font style="FONT-FAMILY: Times New Roman" size="2">67.0</font></td> <td valign="bottom"><font size="1">&#xA0;&#xA0;</font></td> <td valign="bottom"><font style="FONT-FAMILY: Times New Roman" size="2">&#xA0;</font></td> <td valign="bottom" align="right"><font style="FONT-FAMILY: Times New Roman" size="2">81.2</font></td> </tr> <tr style="FONT-SIZE: 1px"> <td valign="bottom"></td> <td valign="bottom">&#xA0;&#xA0;</td> <td style="BORDER-TOP: #000000 1px solid" valign="bottom"> &#xA0;</td> <td style="BORDER-TOP: #000000 1px solid" valign="bottom"> &#xA0;</td> <td valign="bottom">&#xA0;&#xA0;</td> <td style="BORDER-TOP: #000000 1px solid" valign="bottom"> &#xA0;</td> <td style="BORDER-TOP: #000000 1px solid" valign="bottom"> &#xA0;</td> </tr> <tr> <td valign="top"> <p style="MARGIN-LEFT: 3em; TEXT-INDENT: -1em"><font style="FONT-FAMILY: Times New Roman" size="2">Total assets</font></p> </td> <td valign="bottom"><font size="1">&#xA0;&#xA0;</font></td> <td valign="bottom"><font style="FONT-FAMILY: Times New Roman" size="2">$</font></td> <td valign="bottom" align="right"><font style="FONT-FAMILY: Times New Roman" size="2">148.9</font></td> <td valign="bottom"><font size="1">&#xA0;&#xA0;</font></td> <td valign="bottom"><font style="FONT-FAMILY: Times New Roman" size="2">$</font></td> <td valign="bottom" align="right"><font style="FONT-FAMILY: Times New Roman" size="2">174.7</font></td> </tr> <tr style="FONT-SIZE: 1px"> <td valign="bottom"></td> <td valign="bottom">&#xA0;&#xA0;</td> <td style="BORDER-TOP: #000000 1px solid" valign="bottom"> &#xA0;</td> <td style="BORDER-TOP: #000000 1px solid" valign="bottom"> &#xA0;</td> <td valign="bottom">&#xA0;&#xA0;</td> <td style="BORDER-TOP: #000000 1px solid" valign="bottom"> &#xA0;</td> <td style="BORDER-TOP: #000000 1px solid" valign="bottom"> &#xA0;</td> </tr> <tr bgcolor="#CCEEFF"> <td valign="top"> <p style="MARGIN-LEFT: 1em; TEXT-INDENT: -1em"><font style="FONT-FAMILY: Times New Roman" size="2">Current liabilities</font></p> </td> <td valign="bottom"><font size="1">&#xA0;&#xA0;</font></td> <td valign="bottom"><font style="FONT-FAMILY: Times New Roman" size="2">&#xA0;</font></td> <td valign="bottom" align="right"><font style="FONT-FAMILY: Times New Roman" size="2">28.2</font></td> <td valign="bottom"><font size="1">&#xA0;&#xA0;</font></td> <td valign="bottom"><font style="FONT-FAMILY: Times New Roman" size="2">&#xA0;</font></td> <td valign="bottom" align="right"><font style="FONT-FAMILY: Times New Roman" size="2">16.5</font></td> </tr> <tr> <td valign="top"> <p style="MARGIN-LEFT: 1em; TEXT-INDENT: -1em"><font style="FONT-FAMILY: Times New Roman" size="2">Long-term debt and other</font></p> </td> <td valign="bottom"><font size="1">&#xA0;&#xA0;</font></td> <td valign="bottom"><font style="FONT-FAMILY: Times New Roman" size="2">&#xA0;</font></td> <td valign="bottom" align="right"><font style="FONT-FAMILY: Times New Roman" size="2">7.7</font></td> <td valign="bottom"><font size="1">&#xA0;&#xA0;</font></td> <td valign="bottom"><font style="FONT-FAMILY: Times New Roman" size="2">&#xA0;</font></td> <td valign="bottom" align="right"><font style="FONT-FAMILY: Times New Roman" size="2">8.4</font></td> </tr> <tr style="FONT-SIZE: 1px"> <td valign="bottom"></td> <td valign="bottom">&#xA0;&#xA0;</td> <td style="BORDER-TOP: #000000 1px solid" valign="bottom"> &#xA0;</td> <td style="BORDER-TOP: #000000 1px solid" valign="bottom"> &#xA0;</td> <td valign="bottom">&#xA0;&#xA0;</td> <td style="BORDER-TOP: #000000 1px solid" valign="bottom"> &#xA0;</td> <td style="BORDER-TOP: #000000 1px solid" valign="bottom"> &#xA0;</td> </tr> <tr bgcolor="#CCEEFF"> <td valign="top"> <p style="MARGIN-LEFT: 3em; TEXT-INDENT: -1em"><font style="FONT-FAMILY: Times New Roman" size="2">Total liabilities</font></p> </td> <td valign="bottom"><font size="1">&#xA0;&#xA0;</font></td> <td valign="bottom"><font style="FONT-FAMILY: Times New Roman" size="2">$</font></td> <td valign="bottom" align="right"><font style="FONT-FAMILY: Times New Roman" size="2">35.9</font></td> <td valign="bottom"><font size="1">&#xA0;&#xA0;</font></td> <td valign="bottom"><font style="FONT-FAMILY: Times New Roman" size="2">$</font></td> <td valign="bottom" align="right"><font style="FONT-FAMILY: Times New Roman" size="2">24.9</font></td> </tr> <tr style="FONT-SIZE: 1px"> <td valign="bottom"></td> <td valign="bottom">&#xA0;&#xA0;</td> <td style="BORDER-TOP: #000000 1px solid" valign="bottom"> &#xA0;</td> <td style="BORDER-TOP: #000000 1px solid" valign="bottom"> &#xA0;</td> <td valign="bottom">&#xA0;&#xA0;</td> <td style="BORDER-TOP: #000000 1px solid" valign="bottom"> &#xA0;</td> <td style="BORDER-TOP: #000000 1px solid" valign="bottom"> &#xA0;</td> </tr> </table> </div> 4. DISCONTINUED OPERATIONS AND ASSETS HELD FOR SALE CareFusion Effective August&#xA0;31, 2009, the Company completed the distribution to its shareholders of false false No definition available. No authoritative reference available. false false 1 1 false UnKnown UnKnown UnKnown false true XML 31 R6.xml IDEA: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES 1.0.0.3 false SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES false 1 $ false false iso4217_USD Standard http://www.xbrl.org/2003/iso4217 USD iso4217 0 iso4217_USD_per_shares Divide http://www.xbrl.org/2003/iso4217 USD iso4217 http://www.xbrl.org/2003/instance shares 0 shares Standard http://www.xbrl.org/2003/instance shares 0 5 3 us-gaap_SignificantAccountingPoliciesTextBlock us-gaap true na duration string No definition available. false false false false false false false false false 1 false false 0 0 <div> <p style="MARGIN-TOP: 0px; MARGIN-BOTTOM: 0px" align="center"></p> <p style="MARGIN-TOP: 12px; MARGIN-BOTTOM: 0px"><font style="FONT-FAMILY: Times New Roman" size="2"><b>1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES</b></font></p> <p style="MARGIN-TOP: 6px; MARGIN-BOTTOM: 0px; MARGIN-LEFT: 2%"> <font style="FONT-FAMILY: Times New Roman" size="2"><b><i>Spin-Off of CareFusion Corporation</i></b></font></p> <p style="MARGIN-TOP: 6px; MARGIN-BOTTOM: 0px; TEXT-INDENT: 4%"> <font style="FONT-FAMILY: Times New Roman" size="2">Effective August&#xA0;31, 2009, Cardinal Health, Inc. (the &#x201C;Company&#x201D;) completed the distribution to its shareholders of approximately 81% of the then outstanding common stock of CareFusion Corporation (&#x201C;CareFusion&#x201D;), with the Company retaining 41.4&#xA0;million shares of CareFusion common stock (the &#x201C;Spin-Off&#x201D;). Under the requirements of the Private Letter Ruling obtained from the Internal Revenue Service, the Company is required to dispose of the retained shares of CareFusion common stock within five years of the Spin-Off. During the second quarter of fiscal 2010, the Company disposed of approximately 5.5&#xA0;million shares of CareFusion common stock. Refer to Note 6 for additional information. While Cardinal Health is a party to a separation agreement and various other agreements relating to the separation, including a transition services agreement, a tax matters agreement, an employee matters agreement, intellectual property agreements and certain other commercial agreements, the Company has determined that it has no significant continuing involvement in the operations of CareFusion. Accordingly, the net assets of CareFusion are presented separately in these condensed consolidated financial statements as assets from businesses held for sale and discontinued operations and the operating results of CareFusion are presented within discontinued operations for all periods presented through the date of the Spin-Off. The Company retained certain surgical and exam gloves, surgical drapes and apparel and fluid management businesses previously within the Clinical and Medical Products segment following the Spin-Off.</font></p> <p style="MARGIN-TOP: 12px; MARGIN-BOTTOM: 0px; TEXT-INDENT: 4%"> <font style="FONT-FAMILY: Times New Roman" size="2">For fiscal 2009, the Company had three reportable segments &#x2014; Healthcare Supply Chain Services, Clinical and Medical Products and All Other. Effective July&#xA0;1, 2009, the Company changed its reportable segments to: Pharmaceutical, Medical and CareFusion. The Pharmaceutical segment encompasses the businesses previously within the Healthcare Supply Chain Services segment that distributed pharmaceutical, radiopharmaceutical and over-the-counter healthcare products as well as the businesses previously within the All Other segment.&#xA0;The Medical segment encompasses the remaining businesses within the Healthcare Supply Chain Services segment as well as certain surgical and exam gloves, surgical drapes and apparel and fluid management businesses previously within the Clinical and Medical Products segment.&#xA0;The CareFusion segment encompasses the businesses previously within the Clinical and Medical Products segment excluding the above-referenced surgical and exam gloves, surgical drapes and apparel and fluid management businesses and includes all businesses included in the Spin-Off.</font></p> <p style="MARGIN-TOP: 12px; MARGIN-BOTTOM: 0px; TEXT-INDENT: 4%"> <font style="FONT-FAMILY: Times New Roman" size="2">In connection with the Spin-Off, the Company reorganized its reportable segments into two segments: Pharmaceutical and Medical. See Note 14 for information about these segments.</font></p> <p style="MARGIN-TOP: 18px; MARGIN-BOTTOM: 0px; MARGIN-LEFT: 2%"> <font style="FONT-FAMILY: Times New Roman" size="2"><b><i>Relationship between the Company and CareFusion</i></b></font></p> <p style="MARGIN-TOP: 6px; MARGIN-BOTTOM: 0px; TEXT-INDENT: 4%"> <font style="FONT-FAMILY: Times New Roman" size="2">On July&#xA0;22, 2009, the Company and CareFusion entered into a separation agreement to effect the Spin-Off and provide a framework for the relationship between the Company and CareFusion after the Spin-Off. In addition, on August&#xA0;31, 2009, the Company and CareFusion entered into a transition services agreement, a tax matters agreement, an employee matters agreement, intellectual property agreements and certain other commercial agreements. These agreements, including the separation agreement, provide for allocation between the Company and CareFusion of the Company&#x2019;s assets, employees, liabilities and obligations (including its investments, property and employee benefits and tax-related assets and liabilities) attributable to periods prior to, at and after the Spin-Off and govern certain relationships between the Company and CareFusion after the Spin-Off. The Company and CareFusion also entered into a stockholder&#x2019;s and registration rights agreement pursuant to which, among other things, CareFusion agrees that, upon the request of the Company, CareFusion will use its commercially reasonable efforts to effect the registration under applicable federal and state securities laws of any shares of CareFusion common stock retained by Cardinal Health.</font></p> <p style="MARGIN-TOP: 12px; MARGIN-BOTTOM: 0px; TEXT-INDENT: 4%"> <font style="FONT-FAMILY: Times New Roman" size="2">Pursuant to the transition services agreement, for the three months ended December&#xA0;31, 2009, the Company recognized approximately $42.5 million in transition service fee income which approximately offsets the costs associated with providing the transition services. The Company has recognized $55.2 million in transition service fee income year-to-date since the Spin-Off. Additionally, the Company purchased $167.2 million of CareFusion trade receivables pursuant to an accounts receivable factoring arrangement between the Company and CareFusion during the three months ended December&#xA0;31, 2009. The Company has purchased $273.5 million of CareFusion trade receivables year-to-date since the Spin-Off.</font></p> <p style="MARGIN-TOP: 18px; MARGIN-BOTTOM: 0px; MARGIN-LEFT: 2%"> <font style="FONT-FAMILY: Times New Roman" size="2"><b><i>Basis of Presentation</i></b></font></p> <p style="MARGIN-TOP: 6px; MARGIN-BOTTOM: 0px; TEXT-INDENT: 4%"> <font style="FONT-FAMILY: Times New Roman" size="2">The condensed consolidated financial statements of the Company include the accounts of all majority-owned subsidiaries and all significant intercompany amounts have been eliminated. References to the &#x201C;Company&#x201D; or &#x201C;Cardinal Health&#x201D; in these condensed consolidated financial statements shall be deemed to be references to Cardinal Health, Inc. and its majority-owned subsidiaries unless the context otherwise requires.</font></p> <p style="MARGIN-TOP: 0px; MARGIN-BOTTOM: 0px"><font size="1">&#xA0;</font></p> <p style="MARGIN-TOP: 0px; MARGIN-BOTTOM: 0px; TEXT-INDENT: 4%"> <font style="FONT-FAMILY: Times New Roman" size="2">The condensed consolidated financial statements have been prepared in accordance with the U.S. Securities and Exchange Commission (&#x201C;SEC&#x201D;) instructions to Quarterly Reports on Form 10-Q and include all of the information and disclosures required by accounting principles generally accepted in the United States (&#x201C;GAAP&#x201D;) for interim financial reporting. The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect amounts reported in the condensed consolidated financial statements and accompanying notes. Actual amounts may differ from these estimated amounts. In addition, operating results presented for this fiscal 2010 interim period are not necessarily indicative of the results that may be expected for the full fiscal year ending June&#xA0;30, 2010. Beginning in the first quarter of fiscal 2010, the Company changed the presentation of certain items on the condensed consolidated statements of earnings. Prior periods have been adjusted to conform with this new presentation. The Company has disclosed all material subsequent events through February 5, 2010, the date the financial statements were issued.</font></p> <p style="MARGIN-TOP: 12px; MARGIN-BOTTOM: 0px; TEXT-INDENT: 4%"> <font style="FONT-FAMILY: Times New Roman" size="2">These condensed consolidated financial statements are unaudited and are presented pursuant to the rules and regulations of the SEC. Accordingly, the condensed consolidated financial statements included in this Quarterly Report on Form 10-Q (this &#x201C;Form 10-Q&#x201D;) should be read in conjunction with the audited consolidated financial statements and related notes contained in the Company&#x2019;s Annual Report on Form 10-K for the fiscal year ended June&#xA0;30, 2009, as updated by the Company&#x2019;s Form 8-K filed on November&#xA0;16, 2009 (&#x201C;FY2009 Financial Statements&#x201D;). Note 1 of the &#x201C;Notes to Consolidated Financial Statements&#x201D; from the FY2009 Financial Statements is specifically incorporated in this Form 10-Q by reference. In the opinion of management, all adjustments necessary for a fair presentation of the condensed consolidated financial statements have been included. Except as disclosed elsewhere in this Form 10-Q, all such adjustments are of a normal and recurring nature.</font></p> <p style="MARGIN-TOP: 12px; MARGIN-BOTTOM: 0px; TEXT-INDENT: 4%"> <font style="FONT-FAMILY: Times New Roman" size="2"><i>Revenue Recognition.</i> The Company recognizes revenue when persuasive evidence of an arrangement exists, product delivery has occurred or the services have been rendered, the price is fixed or determinable and collectability is reasonably assured. Revenue is recognized net of sales returns and allowances.</font></p> <p style="MARGIN-TOP: 12px; MARGIN-BOTTOM: 0px; TEXT-INDENT: 4%"> <font style="FONT-FAMILY: Times New Roman" size="2"><u>Pharmaceutical</u>. This segment recognizes distribution revenue when title transfers to its customers and the business has no further obligation to provide services related to such merchandise.</font></p> <p style="MARGIN-TOP: 12px; MARGIN-BOTTOM: 0px; TEXT-INDENT: 4%"> <font style="FONT-FAMILY: Times New Roman" size="2">Revenue within this segment includes revenue from bulk customers. Most deliveries to bulk customers consist of product shipped in the same form as the product is received from the manufacturer. Bulk customers have the ability to process large quantities of products in central locations and self distribute these products to their individual retail stores or customers. Revenue from bulk customers is recorded when title transfers to the customer and the Company has no further obligation to provide services related to such merchandise.</font></p> <p style="MARGIN-TOP: 12px; MARGIN-BOTTOM: 0px; TEXT-INDENT: 4%"> <font style="FONT-FAMILY: Times New Roman" size="2">Revenue for deliveries that are directly shipped to customer warehouses from the manufacturer whereby the Company acts as an intermediary in the ordering and delivery of products is recorded gross in accordance with accounting standards addressing reporting revenue on a gross basis as a principal versus on a net basis as an agent. This revenue is recorded on a gross basis since the Company incurs credit risk from the customer, bears the risk of loss for incomplete shipments and does not receive a separate fee or commission for the transaction and, as such, is the primary obligor.</font></p> <p style="MARGIN-TOP: 12px; MARGIN-BOTTOM: 0px; TEXT-INDENT: 4%"> <font style="FONT-FAMILY: Times New Roman" size="2">Radiopharmaceutical revenue is recognized upon delivery of the product to the customer. Service-related revenue, including fees received for analytical services or sales and marketing services, is recognized upon the completion of such services.</font></p> <p style="MARGIN-TOP: 12px; MARGIN-BOTTOM: 0px; TEXT-INDENT: 4%"> <font style="FONT-FAMILY: Times New Roman" size="2">Pharmacy management and other service revenue is recognized as the services are rendered according to the contracts established. A fee is charged under such contracts through a capitation fee, a dispensing fee, a monthly management fee or an actual costs-incurred arrangement. Under certain contracts, fees for services are guaranteed by the Company not to exceed stipulated amounts or have other risk-sharing provisions. Revenue is adjusted to reflect the estimated effects of such contractual guarantees and risk-sharing provisions.</font></p> <p style="MARGIN-TOP: 12px; MARGIN-BOTTOM: 0px; TEXT-INDENT: 4%"> <font style="FONT-FAMILY: Times New Roman" size="2">Through its Medicine Shoppe International, Inc. and Medicap Pharmacies Incorporated franchise operations (collectively, &#x201C;Medicine Shoppe&#x201D;), the Company has apothecary-style pharmacy franchisees from which it earns franchise and origination fees. Franchise fees represent monthly fees that are either fixed or based upon franchisees&#x2019; sales and are recognized as revenue when they are earned. Origination fees from signing new franchise agreements are recognized as revenue when the new franchise store is opened.</font></p> <p style="MARGIN-TOP: 12px; MARGIN-BOTTOM: 0px; TEXT-INDENT: 4%"> <font style="FONT-FAMILY: Times New Roman" size="2"><u>Medical</u>. This segment recognizes distribution revenue when title transfers to its customers and the business has no further obligation to provide services related to such merchandise. Revenue from the sale of medical products and supplies is recognized when title and risk of loss transfers to its customers, which is typically upon delivery.</font></p> <p style="MARGIN-TOP: 12px; MARGIN-BOTTOM: 0px; TEXT-INDENT: 4%"> <font style="FONT-FAMILY: Times New Roman" size="2"><u>Multiple Segments or Business Units</u>. Arrangements involving multiple segments or business units containing no software or software which is incidental to the functionality of the product or service are accounted for as revenue arrangements with multiple deliverables. If the deliverable meets the criterion of a separate unit of accounting, the arrangement revenue is allocated to each element based upon its relative fair value and recognized in accordance with the applicable revenue recognition criteria for each element.</font></p> <p style="MARGIN-TOP: 0px; MARGIN-BOTTOM: 0px"><font size="1">&#xA0;</font></p> <p style="MARGIN-TOP: 0px; MARGIN-BOTTOM: 0px; MARGIN-LEFT: 2%"> <font style="FONT-FAMILY: Times New Roman" size="2"><b><i>Recent Financial Accounting Standards</i></b></font></p> <p style="MARGIN-TOP: 6px; MARGIN-BOTTOM: 0px; TEXT-INDENT: 4%"> <font style="FONT-FAMILY: Times New Roman" size="2">In December 2007, the FASB issued new accounting guidance on the accounting and reporting for business combinations and minority interests in consolidated financial statements. This guidance is effective for fiscal years beginning after December&#xA0;15, 2008. The adoption of this new accounting guidance in the first quarter of fiscal 2010 did not have a material impact on the Company&#x2019;s financial position or results of operations; however, it may have an impact on the Company&#x2019;s accounting and disclosure practices for future business combinations.</font></p> <p style="MARGIN-TOP: 12px; MARGIN-BOTTOM: 0px; TEXT-INDENT: 4%"> <font style="FONT-FAMILY: Times New Roman" size="2">In June 2008, the FASB issued new accounting guidance addressing whether instruments granted in share-based payment transactions are participating securities prior to vesting and, therefore, need to be included in the computation of earnings per share. This guidance is effective for fiscal years beginning after December&#xA0;15, 2008, and interim periods within those fiscal years. The adoption of this new accounting guidance in the first quarter of fiscal 2010 did not have a material impact on the Company&#x2019;s financial position or results of operations.</font></p> <p style="MARGIN-TOP: 12px; MARGIN-BOTTOM: 0px; TEXT-INDENT: 4%"> <font style="FONT-FAMILY: Times New Roman" size="2">In June 2009, the FASB issued new accounting guidance on the accounting for transfers of financial assets. This guidance improves the relevance, representational faithfulness and comparability of information provided about a transfer of financial assets, the effects of a transfer of financial assets on an entity&#x2019;s financial statements, and a transferor&#x2019;s continuing involvement, if any, in financial assets transferred. This guidance is effective for fiscal years beginning after November&#xA0;15, 2009. The Company is in the process of determining the impact of adopting this new accounting guidance.</font></p> <p style="MARGIN-TOP: 12px; MARGIN-BOTTOM: 0px; TEXT-INDENT: 4%"> <font style="FONT-FAMILY: Times New Roman" size="2">In June 2009, the FASB issued new accounting guidance regarding the consolidation of variable interest entities. This guidance improves the financial reporting by enterprises involved with variable interest entities. This guidance is effective for fiscal years beginning after November&#xA0;15, 2009. The Company is in the process of determining the impact of adopting this new accounting guidance.</font></p> <p style="MARGIN-TOP: 12px; MARGIN-BOTTOM: 0px; TEXT-INDENT: 4%"> <font style="FONT-FAMILY: Times New Roman" size="2">In June&#xA0;2009, the FASB issued the Accounting Standards Codification (the &#x201C;Codification&#x201D;), which became the source of authoritative GAAP recognized by the FASB to be applied by nongovernmental entities effective July&#xA0;1, 2009. Rules and interpretive releases of the SEC under authority of federal securities laws are also sources of authoritative GAAP for SEC registrants. Effective July&#xA0;1, 2009, the Codification superseded all then-existing non-SEC accounting and reporting standards. The adoption of this new accounting guidance in the first quarter of fiscal 2010 did not have an impact on the Company&#x2019;s financial position or results of operations. The Company has updated its disclosures in the notes to the financial statements to reflect the updated accounting guidance.</font></p> </div> 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Spin-Off of CareFusion Corporation Effective August&#xA0;31, 2009, Cardinal Health, Inc. false false No definition available. 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No authoritative reference available. false 48 4 us-gaap_CashFlowNoncashInvestingAndFinancingActivitiesDisclosureAbstract us-gaap true na duration string No definition available. false false false false false true false false false 1 false false 0 0 false false 2 false false 0 0 false false No definition available. false 49 5 cah_NoncashInvestment cah false credit duration monetary Represents Cardinal Health, Inc.'s approximately 19% investment in the net book value of CareFusion Corporation's assets... false false false false false false false false false 1 false true 863100000 863.1 false false 2 false true 0 0 false false Represents Cardinal Health, Inc.'s approximately 19% investment in the net book value of CareFusion Corporation's assets immediately following the August 31, 2009 spin-off of CareFusion Corporation. No authoritative reference available. false 50 5 cah_NoncashDividendInConnectionWithSpinoff cah false debit duration monetary Represents the distribution from Cardinal Health, Inc. to its shareholders of approximately 81% of the CareFusion Corporation... false false false false false false false false false 1 true true 3728400000 3728.4 false false 2 true true 0 0 false false Represents the distribution from Cardinal Health, Inc. to its shareholders of approximately 81% of the CareFusion Corporation common shares in connection with the August 31, 2009 spin-off of CareFusion Corporation. No authoritative reference available. false false 2 45 false HundredThousands UnKnown UnKnown false true XML 33 defnref.xml IDEA: XBRL DOCUMENT No authoritative reference available. No authoritative reference available. No authoritative reference available. No authoritative reference available. No authoritative reference available. No authoritative reference available. Disclosure relating to the charge against earnings resulting from the disposal of assets as well as the aggregate write down of all assets from their carrying value to their fair value. No authoritative reference available. No authoritative reference available. No authoritative reference available. No authoritative reference available. No authoritative reference available. No authoritative reference available. No authoritative reference available. No authoritative reference available. No authoritative reference available. No authoritative reference available. No authoritative reference available. No authoritative reference available. No authoritative reference available. No authoritative reference available. No authoritative reference available. No authoritative reference available. No authoritative reference available. No authoritative reference available. No authoritative reference available. No authoritative reference available. No authoritative reference available. No authoritative reference available. No authoritative reference available. Net Goodwill and Other Intangible Assets No authoritative reference available. No authoritative reference available. No authoritative reference available. The premium paid in connection with the early extinguishment of debt. No authoritative reference available. Represents the distribution from Cardinal Health, Inc. to its shareholders of approximately 81% of the CareFusion Corporation common shares in connection with the August 31, 2009 spin-off of CareFusion Corporation. No authoritative reference available. No authoritative reference available. No authoritative reference available. No authoritative reference available. No authoritative reference available. No authoritative reference available. No authoritative reference available. No authoritative reference available. No authoritative reference available. No authoritative reference available. No authoritative reference available. 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No authoritative reference available. No authoritative reference available. No authoritative reference available. No authoritative reference available. No authoritative reference available. No authoritative reference available. No authoritative reference available. No authoritative reference available. No authoritative reference available. No authoritative reference available. Discloses the methodology and assumptions used to compute basic and diluted earnings (loss) per share. Addresses all significant policy factors, including any antidilutive items that have been excluded from the computation. Also includes certain shareholders' equity disclosures. No authoritative reference available. No authoritative reference available. No authoritative reference available. No authoritative reference available. No authoritative reference available. No authoritative reference available. No authoritative reference available. No authoritative reference available. No authoritative reference available. No authoritative reference available. No authoritative reference available. No authoritative reference available. No authoritative reference available. Represents Cardinal Health, Inc.'s approximately 19% investment in the net book value of CareFusion Corporation's assets immediately following the August 31, 2009 spin-off of CareFusion Corporation. No authoritative reference available. No authoritative reference available. No authoritative reference available. No authoritative reference available. No authoritative reference available. No authoritative reference available. No authoritative reference available. No authoritative reference available. No authoritative reference available. No authoritative reference available. No authoritative reference available. The charge against earnings resulting from the disposal of assets as well as the aggregate write down of all assets from their carrying value to their fair value. No authoritative reference available. No authoritative reference available. No authoritative reference available. No authoritative reference available. No authoritative reference available. No authoritative reference available. No authoritative reference available. No authoritative reference available. No authoritative reference available. No authoritative reference available. No authoritative reference available. No authoritative reference available. No authoritative reference available. No authoritative reference available. No authoritative reference available. No authoritative reference available. No authoritative reference available. No authoritative reference available. No authoritative reference available. No authoritative reference available. No authoritative reference available. No authoritative reference available. No authoritative reference available. No authoritative reference available. No authoritative reference available. No authoritative reference available. 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No authoritative reference available. No authoritative reference available. No authoritative reference available. No authoritative reference available. No authoritative reference available. No authoritative reference available. No authoritative reference available. Represents the noncurrent portion of deferred tax liabilities, which result from applying the applicable tax rate to net taxable temporary differences pertaining to each jurisdiction to which the entity is obligated to pay income tax. A noncurrent taxable temporary difference is a difference between the tax basis and the carrying amount of a noncurrent asset or liability in the financial statements prepared in accordance with generally accepted accounting principles. In a classified statement of financial position, an enterprise shall separate deferred tax liabilities and assets into a current amount and a noncurrent amount. Deferred tax liabilities and assets shall be classified as current or noncurrent based on the classification of the related asset or liability for financial reporting. A deferred tax liability or asset that is not related to an asset or liability for financial reporting, including deferred tax assets related to carryforwards, shall be classified according to the expected reversal date of the temporary difference. And aggregate carrying amount, as of the balance sheet date, of noncurrent obligations not separately disclosed in the balance sheet due to materiality considerations. Noncurrent liabilities are expected to be paid after one year (or the normal operating cycle, if longer). No authoritative reference available. No authoritative reference available. No authoritative reference available. No authoritative reference available. No authoritative reference available. No authoritative reference available. No authoritative reference available. No authoritative reference available. 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No authoritative reference available. XML 34 R21.xml IDEA: Document Information 1.0.0.3 false Document Information false 1 $ false false iso4217_USD Standard http://www.xbrl.org/2003/iso4217 USD iso4217 0 iso4217_USD_per_shares Divide http://www.xbrl.org/2003/iso4217 USD iso4217 http://www.xbrl.org/2003/instance shares 0 shares Standard http://www.xbrl.org/2003/instance shares 0 5 3 dei_DocumentType dei false na duration na No definition available. false false false false false false false false false 1 false false 0 0 10-Q 10-Q false false No definition available. No authoritative reference available. false 6 3 dei_AmendmentFlag dei false na duration na No definition available. false false false false false false false false false 1 false false 0 0 false false false false No definition available. No authoritative reference available. false 7 3 dei_DocumentPeriodEndDate dei false na duration date No definition available. false false false false false false false false false 1 false false 0 0 2009-12-31 2009-12-31 false false No definition available. No authoritative reference available. false false 1 3 false UnKnown UnKnown UnKnown false true XML 35 R13.xml IDEA: INCOME TAXES 1.0.0.3 false INCOME TAXES false 1 $ false false iso4217_USD Standard http://www.xbrl.org/2003/iso4217 USD iso4217 0 iso4217_USD_per_shares Divide http://www.xbrl.org/2003/iso4217 USD iso4217 http://www.xbrl.org/2003/instance shares 0 shares Standard http://www.xbrl.org/2003/instance shares 0 5 3 us-gaap_IncomeTaxDisclosureTextBlock us-gaap true na duration string No definition available. false false false false false false false false false 1 false false 0 0 <div> <p style="MARGIN-TOP: 18px; MARGIN-BOTTOM: 0px"><font style="FONT-FAMILY: Times New Roman" size="2"><b>8. INCOME TAXES</b></font></p> <p style="MARGIN-TOP: 6px; MARGIN-BOTTOM: 0px; TEXT-INDENT: 4%"> <font style="FONT-FAMILY: Times New Roman" size="2">Effective July&#xA0;1, 2007, the Company adopted new accounting guidance regarding the accounting for uncertainty in income taxes recognized in the financial statements, resulting in a $139.3 million reduction of retained earnings. This accounting guidance provides that a tax benefit from an uncertain tax position may be recognized when it is more likely than not that the position will be sustained upon examination, including resolutions of any related appeals or litigation processes, based on the technical merits. The amount recognized is measured as the largest amount of tax benefit that is greater than 50% likely of being realized upon settlement. This interpretation also provides guidance on measurement, derecognition, classification, interest and penalties, accounting in interim periods, disclosure and transition.</font></p> <p style="MARGIN-TOP: 12px; MARGIN-BOTTOM: 0px; TEXT-INDENT: 4%"> <font style="FONT-FAMILY: Times New Roman" size="2">The balance of unrecognized tax benefits and the amount of interest and penalties were as follows as of December&#xA0;31, 2009 and June&#xA0;30, 2009:</font></p> <p style="MARGIN-TOP: 0px; FONT-SIZE: 12px; MARGIN-BOTTOM: 0px"> &#xA0;</p> <table cellspacing="0" cellpadding="0" width="76%" align="center" border="0"> <tr> <td width="76%"></td> <td valign="bottom" width="7%"></td> <td></td> <td></td> <td valign="bottom" width="7%"></td> <td></td> <td></td> </tr> <tr> <td valign="bottom" nowrap="nowrap"> <p style="WIDTH: 40pt; BORDER-BOTTOM: #000000 1px solid"> <font style="FONT-FAMILY: Times New Roman" size="1"><b>(in millions)</b></font></p> </td> <td valign="bottom"><font size="1">&#xA0;&#xA0;</font></td> <td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" align="center" colspan="2"><font style="FONT-FAMILY: Times New Roman" size="1"><b>December&#xA0;31,<br /> 2009</b></font></td> <td valign="bottom"><font size="1">&#xA0;&#xA0;</font></td> <td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" align="center" colspan="2"><font style="FONT-FAMILY: Times New Roman" size="1"><b>June&#xA0;30,<br /> 2009</b></font></td> </tr> <tr bgcolor="#CCEEFF"> <td valign="top"> <p style="MARGIN-LEFT: 1em; TEXT-INDENT: -1em"><font style="FONT-FAMILY: Times New Roman" size="2">Unrecognized tax benefits (1)&#xA0;(2)&#xA0;(3)</font></p> </td> <td valign="bottom"><font size="1">&#xA0;&#xA0;</font></td> <td valign="bottom"><font style="FONT-FAMILY: Times New Roman" size="2">$</font></td> <td valign="bottom" align="right"><font style="FONT-FAMILY: Times New Roman" size="2">698.5</font></td> <td valign="bottom"><font size="1">&#xA0;&#xA0;</font></td> <td valign="bottom"><font style="FONT-FAMILY: Times New Roman" size="2">$</font></td> <td valign="bottom" align="right"><font style="FONT-FAMILY: Times New Roman" size="2">848.8</font></td> </tr> <tr> <td valign="top"> <p style="MARGIN-LEFT: 3em; TEXT-INDENT: -1em"><font style="FONT-FAMILY: Times New Roman" size="2">Portion that, if recognized, would reduce tax expense and effective tax rate&#xA0;(2)</font></p> </td> <td valign="bottom"><font size="1">&#xA0;&#xA0;</font></td> <td valign="bottom"><font style="FONT-FAMILY: Times New Roman" size="2">&#xA0;</font></td> <td valign="bottom" align="right"><font style="FONT-FAMILY: Times New Roman" size="2">333.8</font></td> <td valign="bottom"><font size="1">&#xA0;&#xA0;</font></td> <td valign="bottom"><font style="FONT-FAMILY: Times New Roman" size="2">&#xA0;</font></td> <td valign="bottom" align="right"><font style="FONT-FAMILY: Times New Roman" size="2">610.9</font></td> </tr> <tr bgcolor="#CCEEFF"> <td valign="top"> <p style="MARGIN-LEFT: 1em; TEXT-INDENT: -1em"><font style="FONT-FAMILY: Times New Roman" size="2">Accrued penalties and interest (2)&#xA0;(3)&#xA0;(4)</font></p> </td> <td valign="bottom"><font size="1">&#xA0;&#xA0;</font></td> <td valign="bottom"><font style="FONT-FAMILY: Times New Roman" size="2">&#xA0;</font></td> <td valign="bottom" align="right"><font style="FONT-FAMILY: Times New Roman" size="2">222.3</font></td> <td valign="bottom"><font size="1">&#xA0;&#xA0;</font></td> <td valign="bottom"><font style="FONT-FAMILY: Times New Roman" size="2">&#xA0;</font></td> <td valign="bottom" align="right"><font style="FONT-FAMILY: Times New Roman" size="2">247.0</font></td> </tr> </table> <p style="MARGIN-TOP: 0px; FONT-SIZE: 12px; MARGIN-BOTTOM: 0px"> &#xA0;</p> <table style="BORDER-COLLAPSE: collapse" cellspacing="0" cellpadding="0" width="100%" border="0"> <tr> <td valign="top" align="left" width="4%"><font style="FONT-FAMILY: Times New Roman" size="2">(1)</font></td> <td valign="top" align="left"><font style="FONT-FAMILY: Times New Roman" size="2">The Company includes the full amount of unrecognized tax benefits in deferred income taxes and other liabilities in the condensed consolidated balance sheets.</font></td> </tr> </table> <table style="BORDER-COLLAPSE: collapse" cellspacing="0" cellpadding="0" width="100%" border="0"> <tr> <td valign="top" align="left" width="4%"><font style="FONT-FAMILY: Times New Roman" size="2">(2)</font></td> <td valign="top" align="left"><font style="FONT-FAMILY: Times New Roman" size="2">Due to the anticipated repatriation of certain foreign earnings, taxes associated with a special purpose entity transaction no longer represent uncertain tax benefits and have been classified at December&#xA0;31, 2009 as deferred tax liabilities.</font></td> </tr> </table> <table style="BORDER-COLLAPSE: collapse" cellspacing="0" cellpadding="0" width="100%" border="0"> <tr> <td valign="top" align="left" width="4%"><font style="FONT-FAMILY: Times New Roman" size="2">(3)</font></td> <td valign="top" align="left"><font style="FONT-FAMILY: Times New Roman" size="2">The December&#xA0;31, 2009 balance includes unrecognized tax benefits related to CareFusion. In accordance with indemnification provisions of the tax matters agreement entered into between the Company and CareFusion, the Company is entitled to reimbursement from CareFusion. The Company has recorded a long term receivable of approximately $214.5 million from CareFusion for these amounts (net of any tax refund claims).</font></td> </tr> </table> <table style="BORDER-COLLAPSE: collapse" cellspacing="0" cellpadding="0" width="100%" border="0"> <tr> <td valign="top" align="left" width="4%"><font style="FONT-FAMILY: Times New Roman" size="2">(4)</font></td> <td valign="top" align="left"><font style="FONT-FAMILY: Times New Roman" size="2">Balances are gross amounts before any tax benefits and are included in deferred income taxes and other liabilities in the condensed consolidated balance sheets.</font></td> </tr> </table> <p style="MARGIN-TOP: 0px; MARGIN-BOTTOM: 0px"><font size="1">&#xA0;</font></p> <p style="MARGIN-TOP: 0px; MARGIN-BOTTOM: 0px; TEXT-INDENT: 4%"> <font style="FONT-FAMILY: Times New Roman" size="2">Upon completion of the Spin-Off, the Company recorded a tax charge of approximately $171.9 million related to the anticipated repatriation of a portion of cash currently loaned to the Company&#x2019;s entities within the United States from its international subsidiaries. This charge is included within earnings from continuing operations for the six months ended December&#xA0;31, 2009.</font></p> <p style="MARGIN-TOP: 12px; MARGIN-BOTTOM: 0px; TEXT-INDENT: 4%"> <font style="FONT-FAMILY: Times New Roman" size="2">The Company files income tax returns in the U.S. federal jurisdiction, various U.S. state jurisdictions and various foreign jurisdictions. With few exceptions, the Company is subject to audit by taxing authorities for fiscal years ended June&#xA0;30, 2001 through the current fiscal year.</font></p> <p style="MARGIN-TOP: 12px; MARGIN-BOTTOM: 0px; TEXT-INDENT: 4%"> <font style="FONT-FAMILY: Times New Roman" size="2">The Internal Revenue Service (&#x201C;IRS&#x201D;) currently has ongoing audits of fiscal years 2001 through 2007. During the three months ended December&#xA0;31, 2007, the Company was notified that the IRS transferred jurisdiction over fiscal years 2001 and 2002 from the Office of Appeals back to the Examinations level to reconsider previously-unadjusted specific issues. During the three months ended March&#xA0;31, 2008, the Company received Notices of Proposed Adjustment (&#x201C;NPA&#x2019;s&#x201D;) from the IRS related to fiscal years 2001 through 2005 challenging deductions arising from the sale of trade receivables to a special purpose accounts receivable and financing entity. The amount of additional tax, excluding penalties and interest, proposed by the IRS in these notices was $178.9 million. The Company anticipates that this transaction could be the subject of proposed adjustments by the IRS in tax audits of fiscal years 2006 to 2009. As discussed above, the Company recorded a charge of $171.9 million during the first quarter of fiscal 2010 to reflect the anticipated repatriation of earnings from the special purpose entity. Due to the anticipated repatriation of the earnings, the tax associated with the transaction, including the tax assessed by the IRS, no longer represents an uncertain tax benefit. Taxes associated with this transaction, including both the charge taken in the first quarter of fiscal 2010 and the amount previously accrued as an unrecognized tax benefit, are classified as deferred tax liabilities or current taxes payable.</font></p> <p style="MARGIN-TOP: 12px; MARGIN-BOTTOM: 0px; TEXT-INDENT: 4%"> <font style="FONT-FAMILY: Times New Roman" size="2">During fiscal 2009, the Company received a Revenue Agent&#x2019;s Report for tax years 2003 through 2005, which included the NPA&#x2019;s discussed above and new NPA&#x2019;s related to the Company&#x2019;s transfer pricing arrangements between foreign and domestic subsidiaries and the transfer of intellectual property among subsidiaries of an acquired entity prior to its acquisition by the Company. The amount of additional tax proposed by the IRS in the new notices total $598.1 million, excluding penalties and interest, but including $462.1 million related to issues for which CareFusion is liable under the tax matters agreement in the event the amount must be paid to the taxing authority. The Company disagrees with these proposed adjustments and intends to vigorously contest them. The Company believes that it is adequately reserved for the uncertain tax position relating to these matters.</font></p> <p style="MARGIN-TOP: 12px; MARGIN-BOTTOM: 0px; TEXT-INDENT: 4%"> <font style="FONT-FAMILY: Times New Roman" size="2">It is reasonably possible that there could be a change in the amount of unrecognized tax benefits within the next 12 months due to activities of the IRS or other taxing authorities, including proposed assessments of additional tax, possible settlement of audit issues, or the expiration of applicable statutes of limitations. The Company estimates that the range of the possible change in unrecognized tax benefits within the next 12 months is a decrease of approximately zero to $25 million excluding penalties and interest.</font></p> <p style="MARGIN-TOP: 12px; MARGIN-BOTTOM: 0px; TEXT-INDENT: 4%"> <font style="FONT-FAMILY: Times New Roman" size="2">The Company&#x2019;s provision for income taxes as a percentage of pretax earnings from continuing operations (&#x201C;effective tax rate&#x201D;) was 36.9% and 68.8%, respectively, for the three and six months ended December 31, 2009 compared to 37.7% and 35.1%, respectively, for the three and six months ended December 31, 2008. Generally, fluctuations in the effective tax rate are due to changes within international and U.S. state effective tax rates resulting from the Company&#x2019;s business mix and the impact of restructuring and employee severance, impairments and other discrete items. During the six months ended December 31, 2009 the effective tax rate was impacted by an unfavorable adjustment of $172 million, or 31.8%, attributable to earnings no longer indefinitely invested offshore.</font></p> </div> 8. INCOME TAXES Effective July&#xA0;1, 2007, the Company adopted new accounting guidance regarding the accounting for uncertainty in income taxes false false No definition available. 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RESTRUCTURING AND EMPLOYEE SEVERANCE</b></font></p> <p style="MARGIN-TOP: 6px; MARGIN-BOTTOM: 0px; MARGIN-LEFT: 2%"> <font style="FONT-FAMILY: Times New Roman" size="2"><b><i>Restructuring Policy</i></b></font></p> <p style="MARGIN-TOP: 6px; MARGIN-BOTTOM: 0px; TEXT-INDENT: 4%"> <font style="FONT-FAMILY: Times New Roman" size="2">The Company classifies a restructuring activity as a program whereby the Company fundamentally changes its operations such as closing facilities, moving manufacturing of a product to another location or outsourcing the production of a product. Restructuring activities may also involve substantial re-alignment of the management structure of a business unit in response to changing market conditions. A liability for a cost associated with an exit or disposal activity is recognized and measured initially at its fair value in the period in which it is incurred except for a liability for a one-time termination benefit which is recognized over its future service period.</font></p> <p style="MARGIN-TOP: 18px; MARGIN-BOTTOM: 0px; MARGIN-LEFT: 2%"> <font style="FONT-FAMILY: Times New Roman" size="2"><b><i>Restructuring and Employee Severance</i></b></font></p> <p style="MARGIN-TOP: 6px; MARGIN-BOTTOM: 0px; TEXT-INDENT: 4%"> <font style="FONT-FAMILY: Times New Roman" size="2">Effective July&#xA0;1, 2008, the Company consolidated its businesses into two primary operating and reportable segments to reduce costs and align resources with the needs of each segment. The costs incurred related to this consolidation during the three months ended December&#xA0;31, 2008 were $(0.9) million and for the six months ended December&#xA0;31, 2009 and 2008 were $1.0 million and $17.2 million, respectively. In connection with the Spin-Off, these reportable segments have since been reorganized. Refer to Notes 1 and 14 for additional information regarding the Company&#x2019;s current reportable segments.</font></p> <p style="MARGIN-TOP: 12px; MARGIN-BOTTOM: 0px; TEXT-INDENT: 4%"> <font style="FONT-FAMILY: Times New Roman" size="2">Also, during fiscal 2009 and the first half of fiscal 2010, the Company incurred restructuring expenses related to the Spin-Off consisting of employee-related costs, costs to evaluate and execute the transaction, costs to separate certain functions and information technology systems and other one-time transaction related costs. The costs incurred related to this restructuring during the three months ended December&#xA0;31, 2009 and 2008 were $6.6 million and $12.7 million, respectively, and for the six months ended December&#xA0;31, 2009 and 2008 were $56.1 million and $13.0 million, respectively.</font></p> <p style="MARGIN-TOP: 12px; MARGIN-BOTTOM: 0px; TEXT-INDENT: 4%"> <font style="FONT-FAMILY: Times New Roman" size="2">In addition to the restructuring programs discussed above, from time to time the Company incurs costs to implement smaller restructuring efforts for specific operations within its segments. These restructuring plans focus on various aspects of operations, including closing and consolidating certain manufacturing and distribution operations, rationalizing headcount, and aligning operations in the most strategic and cost-efficient structure.</font></p> <p style="MARGIN-TOP: 0px; MARGIN-BOTTOM: 0px"><font size="1">&#xA0;</font></p> <p style="MARGIN-TOP: 0px; MARGIN-BOTTOM: 0px; TEXT-INDENT: 4%"> <font style="FONT-FAMILY: Times New Roman" size="2">The following table summarizes activity related to the Company&#x2019;s restructuring and employee severance costs during the three and six months ended December&#xA0;31, 2009 and 2008:</font></p> <p style="MARGIN-TOP: 0px; FONT-SIZE: 12px; MARGIN-BOTTOM: 0px"> &#xA0;</p> <table cellspacing="0" cellpadding="0" width="92%" align="center" border="0"> <tr> <td width="76%"></td> <td valign="bottom" width="3%"></td> <td></td> <td></td> <td valign="bottom" width="3%"></td> <td></td> <td></td> <td valign="bottom" width="3%"></td> <td></td> <td></td> <td valign="bottom" width="3%"></td> <td></td> <td></td> </tr> <tr> <td valign="bottom"><font size="1">&#xA0;</font></td> <td valign="bottom"><font size="1">&#xA0;&#xA0;</font></td> <td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" align="center" colspan="5"><font style="FONT-FAMILY: Times New Roman" size="1"><b>Three&#xA0;Months&#xA0;Ended<br /> December&#xA0;31,</b></font></td> <td valign="bottom"><font size="1">&#xA0;&#xA0;</font></td> <td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" align="center" colspan="5"><font style="FONT-FAMILY: Times New Roman" size="1"><b>Six&#xA0;Months&#xA0;Ended<br /> December&#xA0;31,</b></font></td> </tr> <tr> <td valign="bottom" nowrap="nowrap"> <p style="WIDTH: 40pt; BORDER-BOTTOM: #000000 1px solid"> <font style="FONT-FAMILY: Times New Roman" size="1"><b>(in millions)</b></font></p> </td> <td valign="bottom"><font size="1">&#xA0;&#xA0;</font></td> <td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" align="center" colspan="2"><font style="FONT-FAMILY: Times New Roman" size="1"><b>2009</b></font></td> <td valign="bottom"><font size="1">&#xA0;&#xA0;</font></td> <td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" align="center" colspan="2"><font style="FONT-FAMILY: Times New Roman" size="1"><b>2008</b></font></td> <td valign="bottom"><font size="1">&#xA0;&#xA0;</font></td> <td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" align="center" colspan="2"><font style="FONT-FAMILY: Times New Roman" size="1"><b>2009</b></font></td> <td valign="bottom"><font size="1">&#xA0;&#xA0;</font></td> <td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" align="center" colspan="2"><font style="FONT-FAMILY: Times New Roman" size="1"><b>2008</b></font></td> </tr> <tr bgcolor="#CCEEFF"> <td valign="top"> <p style="MARGIN-LEFT: 1em; TEXT-INDENT: -1em"><font style="FONT-FAMILY: Times New Roman" size="2">Employee related costs (1)</font></p> </td> <td valign="bottom"><font size="1">&#xA0;&#xA0;</font></td> <td valign="bottom"><font style="FONT-FAMILY: Times New Roman" size="2">$</font></td> <td valign="bottom" align="right"><font style="FONT-FAMILY: Times New Roman" size="2">2.1</font></td> <td valign="bottom"><font size="1">&#xA0;&#xA0;</font></td> <td valign="bottom"><font style="FONT-FAMILY: Times New Roman" size="2">$</font></td> <td valign="bottom" align="right"><font style="FONT-FAMILY: Times New Roman" size="2">0.1</font></td> <td valign="bottom"><font size="1">&#xA0;&#xA0;</font></td> <td valign="bottom"><font style="FONT-FAMILY: Times New Roman" size="2">$</font></td> <td valign="bottom" align="right"><font style="FONT-FAMILY: Times New Roman" size="2">29.2</font></td> <td valign="bottom"><font size="1">&#xA0;&#xA0;</font></td> <td valign="bottom"><font style="FONT-FAMILY: Times New Roman" size="2">$</font></td> <td valign="bottom" align="right"><font style="FONT-FAMILY: Times New Roman" size="2">21.1</font></td> </tr> <tr> <td valign="top"> <p style="MARGIN-LEFT: 1em; TEXT-INDENT: -1em"><font style="FONT-FAMILY: Times New Roman" size="2">Facility exit and other costs (2)</font></p> </td> <td valign="bottom"><font size="1">&#xA0;&#xA0;</font></td> <td valign="bottom"><font style="FONT-FAMILY: Times New Roman" size="2">&#xA0;</font></td> <td valign="bottom" align="right"><font style="FONT-FAMILY: Times New Roman" size="2">8.6</font></td> <td valign="bottom"><font size="1">&#xA0;&#xA0;</font></td> <td valign="bottom"><font style="FONT-FAMILY: Times New Roman" size="2">&#xA0;</font></td> <td valign="bottom" align="right"><font style="FONT-FAMILY: Times New Roman" size="2">16.8</font></td> <td valign="bottom"><font size="1">&#xA0;&#xA0;</font></td> <td valign="bottom"><font style="FONT-FAMILY: Times New Roman" size="2">&#xA0;</font></td> <td valign="bottom" align="right"><font style="FONT-FAMILY: Times New Roman" size="2">41.2</font></td> <td valign="bottom"><font size="1">&#xA0;&#xA0;</font></td> <td valign="bottom"><font style="FONT-FAMILY: Times New Roman" size="2">&#xA0;</font></td> <td valign="bottom" align="right"><font style="FONT-FAMILY: Times New Roman" size="2">16.5</font></td> </tr> <tr style="FONT-SIZE: 1px"> <td valign="bottom"></td> <td valign="bottom">&#xA0;&#xA0;</td> <td style="BORDER-TOP: #000000 1px solid" valign="bottom"> &#xA0;</td> <td style="BORDER-TOP: #000000 1px solid" valign="bottom"> &#xA0;</td> <td valign="bottom">&#xA0;&#xA0;</td> <td style="BORDER-TOP: #000000 1px solid" valign="bottom"> &#xA0;</td> <td style="BORDER-TOP: #000000 1px solid" valign="bottom"> &#xA0;</td> <td valign="bottom">&#xA0;&#xA0;</td> <td style="BORDER-TOP: #000000 1px solid" valign="bottom"> &#xA0;</td> <td style="BORDER-TOP: #000000 1px solid" valign="bottom"> &#xA0;</td> <td valign="bottom">&#xA0;&#xA0;</td> <td style="BORDER-TOP: #000000 1px solid" valign="bottom"> &#xA0;</td> <td style="BORDER-TOP: #000000 1px solid" valign="bottom"> &#xA0;</td> </tr> <tr bgcolor="#CCEEFF"> <td valign="top"> <p style="MARGIN-LEFT: 1em; TEXT-INDENT: -1em"><font style="FONT-FAMILY: Times New Roman" size="2">Total restructuring and employee severance</font></p> </td> <td valign="bottom"><font size="1">&#xA0;&#xA0;</font></td> <td valign="bottom"><font style="FONT-FAMILY: Times New Roman" size="2">$</font></td> <td valign="bottom" align="right"><font style="FONT-FAMILY: Times New Roman" size="2">10.7</font></td> <td valign="bottom"><font size="1">&#xA0;&#xA0;</font></td> <td valign="bottom"><font style="FONT-FAMILY: Times New Roman" size="2">$</font></td> <td valign="bottom" align="right"><font style="FONT-FAMILY: Times New Roman" size="2">16.9</font></td> <td valign="bottom"><font size="1">&#xA0;&#xA0;</font></td> <td valign="bottom"><font style="FONT-FAMILY: Times New Roman" size="2">$</font></td> <td valign="bottom" align="right"><font style="FONT-FAMILY: Times New Roman" size="2">70.4</font></td> <td valign="bottom"><font size="1">&#xA0;&#xA0;</font></td> <td valign="bottom"><font style="FONT-FAMILY: Times New Roman" size="2">$</font></td> <td valign="bottom" align="right"><font style="FONT-FAMILY: Times New Roman" size="2">37.6</font></td> </tr> <tr style="FONT-SIZE: 1px"> <td valign="bottom"></td> <td valign="bottom">&#xA0;&#xA0;</td> <td style="BORDER-TOP: #000000 1px solid" valign="bottom"> &#xA0;</td> <td style="BORDER-TOP: #000000 1px solid" valign="bottom"> &#xA0;</td> <td valign="bottom">&#xA0;&#xA0;</td> <td style="BORDER-TOP: #000000 1px solid" valign="bottom"> &#xA0;</td> <td style="BORDER-TOP: #000000 1px solid" valign="bottom"> &#xA0;</td> <td valign="bottom">&#xA0;&#xA0;</td> <td style="BORDER-TOP: #000000 1px solid" valign="bottom"> &#xA0;</td> <td style="BORDER-TOP: #000000 1px solid" valign="bottom"> &#xA0;</td> <td valign="bottom">&#xA0;&#xA0;</td> <td style="BORDER-TOP: #000000 1px solid" valign="bottom"> &#xA0;</td> <td style="BORDER-TOP: #000000 1px solid" valign="bottom"> &#xA0;</td> </tr> </table> <p style="MARGIN-TOP: 0px; MARGIN-BOTTOM: 2px; WIDTH: 10%; LINE-HEIGHT: 8px; BORDER-BOTTOM: #000000 0.5pt solid"> &#xA0;</p> <table style="BORDER-COLLAPSE: collapse" cellspacing="0" cellpadding="0" width="100%" border="0"> <tr> <td valign="top" align="left" width="4%"><font style="FONT-FAMILY: Times New Roman" size="2">(1)</font></td> <td valign="top" align="left"><font style="FONT-FAMILY: Times New Roman" size="2"><i><u>Employee-Related Costs</u>.</i>&#xA0;These costs primarily consist of one-time termination benefits provided to employees who have been involuntarily terminated and duplicate payroll costs during transition periods. In addition, during the six months ended December&#xA0;31, 2009, the Company incurred $18.6 million of costs related to the retirement of its former Chairman and Chief Executive Officer upon completion of the Spin-Off.</font></td> </tr> </table> <table style="BORDER-COLLAPSE: collapse" cellspacing="0" cellpadding="0" width="100%" border="0"> <tr> <td valign="top" align="left" width="4%"><font style="FONT-FAMILY: Times New Roman" size="2">(2)</font></td> <td valign="top" align="left"><font style="FONT-FAMILY: Times New Roman" size="2"><i><u>Facility Exit and Other Costs</u>.&#xA0;</i>Facility exit and other costs consist of accelerated depreciation, equipment relocation costs, project consulting fees and costs associated with restructuring the Company&#x2019;s delivery of information technology infrastructure services. In addition, facility exit and other costs include certain costs related to the Spin-Off such as costs to evaluate and execute the transaction, costs to separate certain functions and information technology systems and other one-time transaction related costs.</font></td> </tr> </table> <p style="MARGIN-TOP: 18px; MARGIN-BOTTOM: 0px; MARGIN-LEFT: 2%"> <font style="FONT-FAMILY: Times New Roman" size="2"><b><i>Restructuring and Employee Severance Accrual Rollforward</i></b></font></p> <p style="MARGIN-TOP: 6px; MARGIN-BOTTOM: 0px; TEXT-INDENT: 4%"> <font style="FONT-FAMILY: Times New Roman" size="2">The following table summarizes activity related to liabilities associated with the Company&#x2019;s restructuring and employee severance activities during the six months ended December&#xA0;31, 2009:</font></p> <p style="MARGIN-TOP: 0px; FONT-SIZE: 12px; MARGIN-BOTTOM: 0px"> &#xA0;</p> <table cellspacing="0" cellpadding="0" width="84%" align="center" border="0"> <tr> <td width="61%"></td> <td valign="bottom" width="10%"></td> <td></td> <td></td> <td></td> <td valign="bottom" width="10%"></td> <td></td> <td></td> <td></td> <td valign="bottom" width="10%"></td> <td></td> <td></td> <td></td> </tr> <tr> <td valign="bottom" nowrap="nowrap"> <p style="WIDTH: 40pt; BORDER-BOTTOM: #000000 1px solid"> <font style="FONT-FAMILY: Times New Roman" size="1"><b>(in millions)</b></font></p> </td> <td valign="bottom"><font size="1">&#xA0;&#xA0;</font></td> <td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" align="center" colspan="2"><font style="FONT-FAMILY: Times New Roman" size="1"><b>Employee&#xA0;Related<br /> Costs</b></font></td> <td valign="bottom"><font size="1">&#xA0;</font></td> <td valign="bottom"><font size="1">&#xA0;</font></td> <td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" align="center" colspan="2"><font style="FONT-FAMILY: Times New Roman" size="1"><b>Facility&#xA0;Exit&#xA0;and<br /> Other Costs</b></font></td> <td valign="bottom"><font size="1">&#xA0;</font></td> <td valign="bottom"><font size="1">&#xA0;</font></td> <td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" align="center" colspan="2"><font style="FONT-FAMILY: Times New Roman" size="1"><b>Total</b></font></td> <td valign="bottom"><font size="1">&#xA0;</font></td> </tr> <tr bgcolor="#CCEEFF"> <td valign="top"> <p style="MARGIN-LEFT: 1em; TEXT-INDENT: -1em"><font style="FONT-FAMILY: Times New Roman" size="2">Balance at June&#xA0;30, 2009 (1)</font></p> </td> <td valign="bottom"><font size="1">&#xA0;&#xA0;</font></td> <td valign="bottom"><font style="FONT-FAMILY: Times New Roman" size="2">$</font></td> <td valign="bottom" align="right"><font style="FONT-FAMILY: Times New Roman" size="2">14.0</font></td> <td valign="bottom" nowrap="nowrap"><font style="FONT-FAMILY: Times New Roman" size="2">&#xA0;&#xA0;</font></td> <td valign="bottom"><font size="1">&#xA0;</font></td> <td valign="bottom"><font style="FONT-FAMILY: Times New Roman" size="2">$</font></td> <td valign="bottom" align="right"><font style="FONT-FAMILY: Times New Roman" size="2">17.2</font></td> <td valign="bottom" nowrap="nowrap"><font style="FONT-FAMILY: Times New Roman" size="2">&#xA0;&#xA0;</font></td> <td valign="bottom"><font size="1">&#xA0;</font></td> <td valign="bottom"><font style="FONT-FAMILY: Times New Roman" size="2">$</font></td> <td valign="bottom" align="right"><font style="FONT-FAMILY: Times New Roman" size="2">31.2</font></td> <td valign="bottom" nowrap="nowrap"><font style="FONT-FAMILY: Times New Roman" size="2">&#xA0;&#xA0;</font></td> </tr> <tr> <td valign="top"> <p style="MARGIN-LEFT: 1em; TEXT-INDENT: -1em"><font style="FONT-FAMILY: Times New Roman" size="2">Additions</font></p> </td> <td valign="bottom"><font size="1">&#xA0;&#xA0;</font></td> <td valign="bottom"><font style="FONT-FAMILY: Times New Roman" size="2">&#xA0;</font></td> <td valign="bottom" align="right"><font style="FONT-FAMILY: Times New Roman" size="2">29.2</font></td> <td valign="bottom" nowrap="nowrap"><font style="FONT-FAMILY: Times New Roman" size="2">&#xA0;&#xA0;</font></td> <td valign="bottom"><font size="1">&#xA0;</font></td> <td valign="bottom"><font style="FONT-FAMILY: Times New Roman" size="2">&#xA0;</font></td> <td valign="bottom" align="right"><font style="FONT-FAMILY: Times New Roman" size="2">41.2</font></td> <td valign="bottom" nowrap="nowrap"><font style="FONT-FAMILY: Times New Roman" size="2">&#xA0;&#xA0;</font></td> <td valign="bottom"><font size="1">&#xA0;</font></td> <td valign="bottom"><font style="FONT-FAMILY: Times New Roman" size="2">&#xA0;</font></td> <td valign="bottom" align="right"><font style="FONT-FAMILY: Times New Roman" size="2">70.4</font></td> <td valign="bottom" nowrap="nowrap"><font style="FONT-FAMILY: Times New Roman" size="2">&#xA0;&#xA0;</font></td> </tr> <tr bgcolor="#CCEEFF"> <td valign="top"> <p style="MARGIN-LEFT: 1em; TEXT-INDENT: -1em"><font style="FONT-FAMILY: Times New Roman" size="2">Payments and other adjustments</font></p> </td> <td valign="bottom"><font size="1">&#xA0;&#xA0;</font></td> <td valign="bottom"><font style="FONT-FAMILY: Times New Roman" size="2">&#xA0;</font></td> <td valign="bottom" align="right"><font style="FONT-FAMILY: Times New Roman" size="2">(25.8</font></td> <td valign="bottom" nowrap="nowrap"><font style="FONT-FAMILY: Times New Roman" size="2">)&#xA0;</font></td> <td valign="bottom"><font size="1">&#xA0;</font></td> <td valign="bottom"><font style="FONT-FAMILY: Times New Roman" size="2">&#xA0;</font></td> <td valign="bottom" align="right"><font style="FONT-FAMILY: Times New Roman" size="2">(44.7</font></td> <td valign="bottom" nowrap="nowrap"><font style="FONT-FAMILY: Times New Roman" size="2">)&#xA0;</font></td> <td valign="bottom"><font size="1">&#xA0;</font></td> <td valign="bottom"><font style="FONT-FAMILY: Times New Roman" size="2">&#xA0;</font></td> <td valign="bottom" align="right"><font style="FONT-FAMILY: Times New Roman" size="2">(70.5</font></td> <td valign="bottom" nowrap="nowrap"><font style="FONT-FAMILY: Times New Roman" size="2">)&#xA0;</font></td> </tr> <tr style="FONT-SIZE: 1px"> <td valign="bottom"></td> <td valign="bottom">&#xA0;&#xA0;</td> <td style="BORDER-TOP: #000000 1px solid" valign="bottom"> &#xA0;</td> <td style="BORDER-TOP: #000000 1px solid" valign="bottom"> &#xA0;</td> <td>&#xA0;</td> <td valign="bottom">&#xA0;</td> <td style="BORDER-TOP: #000000 1px solid" valign="bottom"> &#xA0;</td> <td style="BORDER-TOP: #000000 1px solid" valign="bottom"> &#xA0;</td> <td>&#xA0;</td> <td valign="bottom">&#xA0;</td> <td style="BORDER-TOP: #000000 1px solid" valign="bottom"> &#xA0;</td> <td style="BORDER-TOP: #000000 1px solid" valign="bottom"> &#xA0;</td> <td>&#xA0;</td> </tr> <tr> <td valign="top"> <p style="MARGIN-LEFT: 1em; TEXT-INDENT: -1em"><font style="FONT-FAMILY: Times New Roman" size="2">Balance at December&#xA0;31, 2009 (1)</font></p> </td> <td valign="bottom"><font size="1">&#xA0;&#xA0;</font></td> <td valign="bottom"><font style="FONT-FAMILY: Times New Roman" size="2">$</font></td> <td valign="bottom" align="right"><font style="FONT-FAMILY: Times New Roman" size="2">17.4</font></td> <td valign="bottom" nowrap="nowrap"><font style="FONT-FAMILY: Times New Roman" size="2">&#xA0;&#xA0;</font></td> <td valign="bottom"><font size="1">&#xA0;</font></td> <td valign="bottom"><font style="FONT-FAMILY: Times New Roman" size="2">$</font></td> <td valign="bottom" align="right"><font style="FONT-FAMILY: Times New Roman" size="2">13.7</font></td> <td valign="bottom" nowrap="nowrap"><font style="FONT-FAMILY: Times New Roman" size="2">&#xA0;&#xA0;</font></td> <td valign="bottom"><font size="1">&#xA0;</font></td> <td valign="bottom"><font style="FONT-FAMILY: Times New Roman" size="2">$</font></td> <td valign="bottom" align="right"><font style="FONT-FAMILY: Times New Roman" size="2">31.1</font></td> <td valign="bottom" nowrap="nowrap"><font style="FONT-FAMILY: Times New Roman" size="2">&#xA0;&#xA0;</font></td> </tr> <tr style="FONT-SIZE: 1px"> <td valign="bottom"></td> <td valign="bottom">&#xA0;&#xA0;</td> <td style="BORDER-TOP: #000000 1px solid" valign="bottom"> &#xA0;</td> <td style="BORDER-TOP: #000000 1px solid" valign="bottom"> &#xA0;</td> <td>&#xA0;</td> <td valign="bottom">&#xA0;</td> <td style="BORDER-TOP: #000000 1px solid" valign="bottom"> &#xA0;</td> <td style="BORDER-TOP: #000000 1px solid" valign="bottom"> &#xA0;</td> <td>&#xA0;</td> <td valign="bottom">&#xA0;</td> <td style="BORDER-TOP: #000000 1px solid" valign="bottom"> &#xA0;</td> <td style="BORDER-TOP: #000000 1px solid" valign="bottom"> &#xA0;</td> <td>&#xA0;</td> </tr> </table> <p style="MARGIN-TOP: 0px; MARGIN-BOTTOM: 2px; WIDTH: 10%; LINE-HEIGHT: 8px; BORDER-BOTTOM: #000000 0.5pt solid"> &#xA0;</p> <table style="BORDER-COLLAPSE: collapse" cellspacing="0" cellpadding="0" width="100%" border="0"> <tr> <td valign="top" align="left" width="4%"><font style="FONT-FAMILY: Times New Roman" size="2">(1)</font></td> <td valign="top" align="left"><font style="FONT-FAMILY: Times New Roman" size="2">Included within employee related costs are accruals of $6.3 million and $10.6 million at June&#xA0;30, 2009 and December&#xA0;31, 2009, respectively, related to the Spin-Off. 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EARNINGS PER SHARE AND SHAREHOLDERS&#x2019; EQUITY</b></font></p> <p style="MARGIN-TOP: 6px; MARGIN-BOTTOM: 0px; MARGIN-LEFT: 2%"> <font style="FONT-FAMILY: Times New Roman" size="2"><b><i>Earnings per Share</i></b></font></p> <p style="MARGIN-TOP: 6px; MARGIN-BOTTOM: 0px; TEXT-INDENT: 4%"> <font style="FONT-FAMILY: Times New Roman" size="2">Basic earnings per Common Share (&#x201C;Basic EPS&#x201D;) is computed by dividing net earnings (the numerator) by the weighted average number of Common Shares outstanding during each period (the denominator). Diluted earnings per Common Share (&#x201C;Diluted EPS&#x201D;) is similar to the computation for Basic EPS, except that the denominator is increased by the dilutive effect of vested and unvested stock options, restricted shares and restricted share units computed using the treasury stock method.</font></p> <p style="MARGIN-TOP: 12px; MARGIN-BOTTOM: 0px; TEXT-INDENT: 4%"> <font style="FONT-FAMILY: Times New Roman" size="2">The following table reconciles the number of Common Shares used to compute Basic EPS and Diluted EPS for the three and six months ended December&#xA0;31, 2009 and 2008:</font></p> <p style="MARGIN-TOP: 0px; FONT-SIZE: 12px; MARGIN-BOTTOM: 0px"> &#xA0;</p> <table cellspacing="0" cellpadding="0" width="92%" align="center" border="0"> <tr> <td width="76%"></td> <td valign="bottom" width="2%"></td> <td></td> <td valign="bottom" width="2%"></td> <td></td> <td valign="bottom" width="2%"></td> <td></td> <td valign="bottom" width="2%"></td> <td></td> </tr> <tr> <td valign="bottom">&#xA0;<font size="1">&#xA0;</font></td> <td valign="bottom"><font size="1">&#xA0;&#xA0;</font></td> <td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" align="center" colspan="3"><font style="FONT-FAMILY: Times New Roman" size="1"><b>Three&#xA0;Months&#xA0;Ended<br /> December&#xA0;31,</b></font></td> <td valign="bottom"><font size="1">&#xA0;&#xA0;</font></td> <td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" align="center" colspan="3"><font style="FONT-FAMILY: Times New Roman" size="1"><b>Six&#xA0;Months&#xA0;Ended<br /> December&#xA0;31,</b></font></td> </tr> <tr> <td valign="bottom" nowrap="nowrap"> <p style="WIDTH: 40pt; BORDER-BOTTOM: #000000 1px solid"> <font style="FONT-FAMILY: Times New Roman" size="1"><b>(in millions)</b></font></p> </td> <td valign="bottom"><font size="1">&#xA0;&#xA0;</font></td> <td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" align="center"><font style="FONT-FAMILY: Times New Roman" size="1"><b>2009</b></font></td> <td valign="bottom"><font size="1">&#xA0;&#xA0;</font></td> <td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" align="center"><font style="FONT-FAMILY: Times New Roman" size="1"><b>2008</b></font></td> <td valign="bottom"><font size="1">&#xA0;&#xA0;</font></td> <td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" align="center"><font style="FONT-FAMILY: Times New Roman" size="1"><b>2009</b></font></td> <td valign="bottom"><font size="1">&#xA0;&#xA0;</font></td> <td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" align="center"><font style="FONT-FAMILY: Times New Roman" size="1"><b>2008</b></font></td> </tr> <tr bgcolor="#CCEEFF"> <td valign="top"> <p style="MARGIN-LEFT: 1em; TEXT-INDENT: -1em"><font style="FONT-FAMILY: Times New Roman" size="2">Weighted-average Common Shares &#x2013; basic</font></p> </td> <td valign="bottom"><font size="1">&#xA0;&#xA0;</font></td> <td valign="bottom" align="right"><font style="FONT-FAMILY: Times New Roman" size="2">359.0</font></td> <td valign="bottom"><font size="1">&#xA0;&#xA0;</font></td> <td valign="bottom" align="right"><font style="FONT-FAMILY: Times New Roman" size="2">357.3</font></td> <td valign="bottom"><font size="1">&#xA0;&#xA0;</font></td> <td valign="bottom" align="right"><font style="FONT-FAMILY: Times New Roman" size="2">359.1</font></td> <td valign="bottom"><font size="1">&#xA0;&#xA0;</font></td> <td valign="bottom" align="right"><font style="FONT-FAMILY: Times New Roman" size="2">357.0</font></td> </tr> <tr> <td valign="top"> <p style="MARGIN-LEFT: 1em; TEXT-INDENT: -1em"><font style="FONT-FAMILY: Times New Roman" size="2">Effect of dilutive securities:</font></p> </td> <td valign="bottom"><font size="1">&#xA0;&#xA0;</font></td> <td valign="bottom"></td> <td valign="bottom"><font size="1">&#xA0;&#xA0;</font></td> <td valign="bottom"></td> <td valign="bottom"><font size="1">&#xA0;&#xA0;</font></td> <td valign="bottom"></td> <td valign="bottom"><font size="1">&#xA0;&#xA0;</font></td> <td valign="bottom"></td> </tr> <tr bgcolor="#CCEEFF"> <td valign="top"> <p style="MARGIN-LEFT: 3em; TEXT-INDENT: -1em"><font style="FONT-FAMILY: Times New Roman" size="2">Employee stock options, restricted shares and restricted share units</font></p> </td> <td valign="bottom"><font size="1">&#xA0;&#xA0;</font></td> <td valign="bottom" align="right"><font style="FONT-FAMILY: Times New Roman" size="2">2.0</font></td> <td valign="bottom"><font size="1">&#xA0;&#xA0;</font></td> <td valign="bottom" align="right"><font style="FONT-FAMILY: Times New Roman" size="2">3.0</font></td> <td valign="bottom"><font size="1">&#xA0;&#xA0;</font></td> <td valign="bottom" align="right"><font style="FONT-FAMILY: Times New Roman" size="2">2.0</font></td> <td valign="bottom"><font size="1">&#xA0;&#xA0;</font></td> <td valign="bottom" align="right"><font style="FONT-FAMILY: Times New Roman" size="2">4.2</font></td> </tr> <tr style="FONT-SIZE: 1px"> <td valign="bottom"></td> <td valign="bottom">&#xA0;&#xA0;</td> <td style="BORDER-TOP: #000000 1px solid" valign="bottom"> &#xA0;</td> <td valign="bottom">&#xA0;&#xA0;</td> <td style="BORDER-TOP: #000000 1px solid" valign="bottom"> &#xA0;</td> <td valign="bottom">&#xA0;&#xA0;</td> <td style="BORDER-TOP: #000000 1px solid" valign="bottom"> &#xA0;</td> <td valign="bottom">&#xA0;&#xA0;</td> <td style="BORDER-TOP: #000000 1px solid" valign="bottom"> &#xA0;</td> </tr> <tr> <td valign="top"> <p style="MARGIN-LEFT: 1em; TEXT-INDENT: -1em"><font style="FONT-FAMILY: Times New Roman" size="2">Weighted-average Common Shares &#x2013; diluted</font></p> </td> <td valign="bottom"><font size="1">&#xA0;&#xA0;</font></td> <td valign="bottom" align="right"><font style="FONT-FAMILY: Times New Roman" size="2">361.0</font></td> <td valign="bottom"><font size="1">&#xA0;&#xA0;</font></td> <td valign="bottom" align="right"><font style="FONT-FAMILY: Times New Roman" size="2">360.3</font></td> <td valign="bottom"><font size="1">&#xA0;&#xA0;</font></td> <td valign="bottom" align="right"><font style="FONT-FAMILY: Times New Roman" size="2">361.1</font></td> <td valign="bottom"><font size="1">&#xA0;&#xA0;</font></td> <td valign="bottom" align="right"><font style="FONT-FAMILY: Times New Roman" size="2">361.2</font></td> </tr> <tr style="FONT-SIZE: 1px"> <td valign="bottom"></td> <td valign="bottom">&#xA0;&#xA0;</td> <td style="BORDER-TOP: #000000 3px double" valign="bottom"> &#xA0;</td> <td valign="bottom">&#xA0;&#xA0;</td> <td style="BORDER-TOP: #000000 3px double" valign="bottom"> &#xA0;</td> <td valign="bottom">&#xA0;&#xA0;</td> <td style="BORDER-TOP: #000000 3px double" valign="bottom"> &#xA0;</td> <td valign="bottom">&#xA0;&#xA0;</td> <td style="BORDER-TOP: #000000 3px double" valign="bottom"> &#xA0;</td> </tr> </table> <p style="MARGIN-TOP: 12px; MARGIN-BOTTOM: 0px; TEXT-INDENT: 4%"> <font style="FONT-FAMILY: Times New Roman" size="2">The potentially dilutive securities that were antidilutive for the three months ended December&#xA0;31, 2009 and 2008 were 24.7&#xA0;million shares and 32.6&#xA0;million shares, respectively, and for the six months ended December&#xA0;31, 2009 and 2008 were 23.0&#xA0;million shares and 24.7&#xA0;million shares, respectively.</font></p> <p style="MARGIN-TOP: 12px; MARGIN-BOTTOM: 0px; TEXT-INDENT: 4%"> <font style="FONT-FAMILY: Times New Roman" size="2">The total number of Common Shares issued less the Common Shares held in treasury is used to determine the Common Shares outstanding.</font></p> <p style="MARGIN-TOP: 18px; MARGIN-BOTTOM: 0px"><font style="FONT-FAMILY: Times New Roman" size="2"><b>Shareholders&#x2019; Equity</b></font></p> <p style="MARGIN-TOP: 6px; MARGIN-BOTTOM: 0px; TEXT-INDENT: 4%"> <font style="FONT-FAMILY: Times New Roman" size="2">During the three months ended December&#xA0;31, 2009, the Company repurchased approximately $50 million of its Common Shares under its existing $500 million share repurchase program announced on August&#xA0;5, 2009. This repurchase authorization expires on August&#xA0;31, 2012. At December&#xA0;31, 2009, approximately $450 million remained from the $500 million repurchase authorization. The Company expects to use this repurchase program to at least offset equity plan issuances.</font></p> <p style="MARGIN-TOP: 12px; MARGIN-BOTTOM: 0px; TEXT-INDENT: 4%"> <font style="FONT-FAMILY: Times New Roman" size="2">In connection with the Spin-Off on August&#xA0;31, 2009, the Company issued a non-cash dividend of approximately $3.7 billion to its shareholders through the pro-rata distribution of approximately 81% of the CareFusion Corporation common shares.</font></p> </div> 12. EARNINGS PER SHARE AND SHAREHOLDERS&#x2019; EQUITY Earnings per Share Basic earnings per Common Share (&#x201C;Basic EPS&#x201D;) is computed by false false Discloses the methodology and assumptions used to compute basic and diluted earnings (loss) per share. Addresses all significant policy factors, including any antidilutive items that have been excluded from the computation. Also includes certain shareholders' equity disclosures. No authoritative reference available. false false 1 1 false UnKnown UnKnown UnKnown false true
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