Segment Information

9 Months Ended

Mar. 31, 2012

Segment Information [Abstract]

Segment Information

13. SEGMENT INFORMATION

Our operations are principally managed on a products and services basis and are comprised of two reportable segments: Pharmaceutical and Medical. The factors for determining the reportable segments include the manner in which management evaluates our performance combined with the nature of the individual business activities. The accounting policies of the segments are the same as those described in Note 1.

Effective the first quarter of fiscal 2012, we began reporting the operating results of certain non-U.S. operations, including portions of our Cardinal Health China and Cardinal Health Puerto Rico subsidiaries, in the Medical segment to better align reported results with the nature of the services provided. Prior period financial results have not been adjusted because the change in reporting was not significant to previously reported segment results.

The following table includes revenue for each reportable segment and reconciling items necessary to agree to amounts reported in the condensed consolidated financial statements for the three and nine months ended March 31, 2012 and 2011:

	Three Months Ended March 31,						Nine Months Ended March 31,
(in millions)	2012			2011			2012			2011
Segment revenue:
Pharmaceutical	$	24,508.0		$	23,845.3		$	73,590.9		$	69,285.8
Medical		2,414.2			2,231.4			7,210.3			6,609.6
Total segment revenue		26,922.2			26,076.7			80,801.2			75,895.4
Corporate		(4.7	)		(5.3	)		(13.7	)		(14.7	)
Total consolidated revenue	$	26,917.5		$	26,071.4		$	80,787.5		$	75,880.7

We evaluate the performance of the segments based upon segment profit, among other measures. Segment profit is segment revenue, less segment cost of products sold, less segment distribution, selling, general and administrative expense ("SG&A"). Segment SG&A expenses include share-based compensation expense as well as allocated corporate expenses for shared functions, including corporate management, corporate finance, financial shared services, human resources, information technology, legal, compliance 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.

Restructuring and employee severance, acquisition-related costs, impairments and loss on disposal of assets, litigation (recoveries)/charges, net, and certain investment and other spending are not allocated to the segments. See Notes 2, 3 and 7, respectively, for further discussion of our acquisition-related costs, restructuring and employee severance and litigation (recoveries)/charges, net and Note 1 for a discussion of the reclassification of amortization of acquisition-related intangible assets. Investment spending generally includes the first year spend for certain projects that require incremental strategic investments in the form of additional operating expenses. We encourage our segments to identify investment projects that will promote 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. Investment spending within Corporate was $4.3 million and $5.1 million for the three months ended March 31, 2012 and 2011, respectively, and $14.1 million and $8.5 million for the nine months ended March 31, 2012 and 2011, respectively. Spin-Off costs included in SG&A are not allocated to our segments. Spin-Off costs included in SG&A were $0.2 million and $0.7 million for the three months ended March 31, 2012 and 2011, respectively, and $1.5 million and $7.4 million for the nine months ended March 31, 2012 and 2011, respectively.

The following table includes segment profit by reportable segment and reconciling items necessary to agree to amounts reported in the condensed consolidated financial statements for the three and nine months ended March 31, 2012 and 2011:

	Three Months Ended March 31,						Nine Months Ended March 31,
(in millions)	2012			2011			2012			2011
Segment profit:
Pharmaceutical	$	446.4		$	411.4		$	1,204.0		$	1,021.4
Medical		89.4			107.9			252.9			294.4
Total segment profit		535.8			519.3			1,456.9			1,315.8
Corporate		(9.2	)		(72.0	)		(68.7	)		(160.7	)
Total consolidated operating earnings	$	526.6		$	447.3		$	1,388.2		$	1,155.1