Segment Information
Our operations are principally managed on a products and services basis and are comprised of two operating segments, which are the same as our reportable segments: Pharmaceutical and Medical. The factors for determining the reportable segments include the manner in which management evaluates our performance combined with the nature of the individual business activities.
The Pharmaceutical segment distributes branded and generic pharmaceutical, specialty pharmaceutical, over-the-counter healthcare and consumer products. This segment also operates nuclear pharmacies and cyclotron facilities, provides pharmacy services to hospitals and other healthcare facilities, and provides services to healthcare companies supporting the marketing, distribution and payment for specialty pharmaceutical products. Through our Cardinal Health China division, this segment imports and distributes pharmaceuticals, over-the-counter and consumer products as well as provides services in China.
The Medical segment distributes a broad range of medical, surgical and laboratory products to hospitals, ambulatory surgery centers, clinical laboratories, physician offices and other healthcare providers in the United States, Canada and China and to patients in the home in the United States. This segment also manufactures, sources and develops its own line of private brand medical and surgical products. Our medical and surgical products are sold directly or through third-party distributors in the United States, Canada, Europe, South America and the Asia/Pacific region. The results of AssuraMed, which we acquired on March 18, 2013, are included in our Medical segment from the date of the acquisition. See Note 2 for further discussion of this acquisition.
The following table presents revenue for each reportable segment and reconciling items necessary to agree to amounts reported in the consolidated statements of earnings:
|
| | | | | | | | | | | |
(in millions) | 2013 | | 2012 | | 2011 |
Pharmaceutical | $ | 91,097 |
| | $ | 97,925 |
| | $ | 93,744 |
|
Medical | 10,060 |
| | 9,642 |
| | 8,922 |
|
Total segment revenue | 101,157 |
| | 107,567 |
| | 102,666 |
|
Corporate (1) | (64 | ) | | (15 | ) | | (22 | ) |
Total revenue | $ | 101,093 |
| | $ | 107,552 |
| | $ | 102,644 |
|
| |
(1) | Corporate revenue consists of the elimination of inter-segment revenue. |
We evaluate segment performance based upon segment profit, among other measures. Segment profit is segment revenue, less segment cost of products sold, less segment SG&A expenses. Segment SG&A expenses includes share-based compensation expense as well as allocated corporate expenses for shared functions, including corporate management, corporate finance, financial and customer care shared services, human resources, information technology and legal. Corporate expenses are allocated to the segments based upon headcount, level of benefit provided and ratable allocation. Interest income and expense and income taxes are not allocated to the segment level.
Restructuring and employee severance, acquisition-related costs, impairments and loss on disposal of assets and litigation (recoveries)/charges, net are not allocated to the segments. See Notes 1, 2, 3, 4 and 8 for further information about these items. In addition, certain investment and other spending are not allocated to the segments. Investment spending generally includes the first year spend for certain projects that require incremental investments in the form of additional operating expenses. We encourage our segments 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 often retained at Corporate. Investment spending within Corporate was $37 million, $21 million and $14 million for fiscal 2013, 2012 and 2011, respectively.
The following table presents segment profit by reportable segment and reconciling items necessary to agree to amounts reported in the consolidated statements of earnings:
|
| | | | | | | | | | | |
(in millions) | 2013 | | 2012 | | 2011 |
Pharmaceutical | $ | 1,734 |
| | $ | 1,558 |
| | $ | 1,329 |
|
Medical | 372 |
| | 332 |
| | 373 |
|
Total segment profit | 2,106 |
| | 1,890 |
| | 1,702 |
|
Corporate | (1,110 | ) | | (98 | ) | | (188 | ) |
Total operating earnings | $ | 996 |
| | $ | 1,792 |
| | $ | 1,514 |
|
The following tables present depreciation and amortization and additions to property and equipment by reportable segment and at Corporate:
|
| | | | | | | | | | | |
(in millions) | 2013 | | 2012 | | 2011 |
Pharmaceutical (1) | $ | 125 |
| | $ | 114 |
| | $ | 107 |
|
Medical (1) | 137 |
| | 119 |
| | 108 |
|
Corporate | 135 |
| | 92 |
| | 98 |
|
Total depreciation and amortization | $ | 397 |
| | $ | 325 |
| | $ | 313 |
|
| |
(1) | Depreciation incurred at Corporate for shared information technology is allocated to the segments. Prior-year amounts have been reclassified to reflect this presentation, which resulted in no impact to segment profit or consolidated operating earnings. |
|
| | | | | | | | | | | |
(in millions) | 2013 | | 2012 | | 2011 |
Pharmaceutical | $ | 46 |
| | $ | 44 |
| | $ | 55 |
|
Medical | 48 |
| | 100 |
| | 123 |
|
Corporate | 101 |
| | 119 |
| | 113 |
|
Total additions to property and equipment | $ | 195 |
| | $ | 263 |
| | $ | 291 |
|
The following table presents total assets for each segment as well as reconciling items necessary to total the amounts reported in the consolidated balance sheets at June 30:
|
| | | | | | | | | | | |
(in millions) | 2013 | | 2012 | | 2011 |
Pharmaceutical | $ | 16,258 |
| | $ | 16,642 |
| | $ | 16,126 |
|
Medical | 6,521 |
| | 4,399 |
| | 3,895 |
|
Corporate | 3,040 |
| | 3,219 |
| | 2,825 |
|
Total assets | $ | 25,819 |
| | $ | 24,260 |
| | $ | 22,846 |
|
The following table presents revenue and property and equipment, net by geographic area:
|
| | | | | | | | | | | | | | | | | | | | | | | |
| Revenue | | Property and Equipment, net |
(in millions) | 2013 | | 2012 | | 2011 | | 2013 | | 2012 | | 2011 |
United States | $ | 97,994 |
| | $ | 105,205 |
| | $ | 101,080 |
| | $ | 1,355 |
| | $ | 1,425 |
| | $ | 1,398 |
|
International | 3,099 |
| | 2,347 |
| | 1,564 |
| | 134 |
| | 126 |
| | 114 |
|
Total | $ | 101,093 |
| | $ | 107,552 |
| | $ | 102,644 |
| | $ | 1,489 |
| | $ | 1,551 |
| | $ | 1,512 |
|
