Cardinal Health 2010 Annual Report Download - page 72

The following table summarizes all of our customers that individually account for at least 10% of revenu
e
and their corresponding percent of gross trade receivables. The customers in the table below are serviced through
o
ur Pharmaceutical segment
.
Percent o
f
Revenu
e
Percent o
fG
ros
s
Tr
ade
R
ece
i
vab
l
es at
June
30
,
2010
2009
2008
2010
2009
W
algreen Co
.
................................................ 24% 24% 20% 32% 3
6%
CVS Caremark Cor
p
oratio
n
....................................
22% 21% 23% 21% 21%
Certa
i
no
f
our
b
us
i
nesses
h
ave entere
di
nto a
g
reements w
i
t
hg
roup purc
h
as
i
n
g
or
g
an
i
zat
i
ons (“GPOs”)
w
hi
c
h
act as purc
h
as
i
n
g
a
g
ents t
h
at ne
g
ot
i
ate ven
d
or contracts on
b
e
h
a
lf
o
f
t
h
e
i
r mem
b
ers.
T
h
e
f
o
ll
ow
i
ng ta
bl
e summar
i
zes t
h
e revenue t
h
at was
d
er
i
ve
df
rom GPO mem
b
ers t
h
roug
h
t
h
e contractua
l
arrangements esta
bli
s
h
e
d
w
i
t
h
Novat
i
on, LLC an
d
Prem
i
er Purc
h
as
i
ng Partners, L.P., our two
l
argest GPO
r
e
l
at
i
ons
hi
ps
i
n terms o
f
revenue:
Percent of Revenue
20
1
0
2
009
2
008
G
PO members
.
.............................................................. 1
5
%1
5
%1
5%
Our tra
d
e rece
i
va
bl
e
b
a
l
ances are w
i
t
hi
n
di
v
id
ua
l
mem
b
ers o
f
t
h
e GPO an
d
t
h
ere
f
ore no s
ig
n
ifi
can
t
concentrat
i
on o
f
cre
di
tr
i
s
k
ex
i
sts w
i
t
h
t
h
ese t
y
pes o
f
arran
g
ements
.
In
v
entories
.
A
su
b
stant
i
a
l
port
i
on o
f
our
i
nventor
i
es (73% at June 30, 2010 an
d
74% June 30, 2009) ar
e
va
l
ue
d
at t
h
e
l
ower o
f
cost, us
i
n
g
t
h
e LIFO met
h
o
d
, or mar
k
et. T
h
ese
i
nventor
i
es are
i
nc
l
u
d
e
d
w
i
t
hi
nt
h
e core
ph
armaceut
i
ca
ldi
str
ib
ut
i
on
f
ac
ili
t
i
es o
f
our P
h
armaceut
i
ca
l
se
g
ment (“D
i
str
ib
ut
i
on
f
ac
ili
t
i
es”) an
d
are pr
i
mar
ily
merc
h
an
di
se
i
nventor
i
es. We
b
e
li
eve t
h
at t
h
e avera
g
e cost met
h
o
d
o
fi
nventor
y
va
l
uat
i
on prov
id
es a reasona
bl
e
approx
i
mat
i
on o
f
t
h
e current cost o
f
rep
l
ac
i
n
gi
nventor
y
w
i
t
hi
nt
h
eD
i
str
ib
ut
i
on
f
ac
ili
t
i
es. As suc
h
,t
h
e LIFO
r
eserve
i
st
h
e
diff
erence
b
etween (a)
i
nventor
y
at t
h
e
l
ower o
f
LIFO cost or mar
k
et an
d
(
b
)
i
nventor
y
at
r
ep
l
acement cost
d
eterm
i
ne
d
us
i
n
g
t
h
e avera
g
e cost met
h
o
d
o
fi
nventor
y
va
l
uat
i
on. In
fi
sca
l
2010 an
d
2009, we
did
not recor
d
an
y
LIFO reserve re
d
uct
i
ons
.
I
f we had used the average cost method of inventory valuation for all inventory within the Distribution
f
acilities, inventories would not have changed in fiscal 2010 or fiscal 2009. In fact, primarily due to continued
generic pharmaceutical deflation, inventories valued at LIFO were
$
37.7 million and
$
34.9 million higher tha
n
the average cost value as of June 30, 2010 and 2009, respectively. Our policy, however, is not to recor
d
inventories in excess of re
p
lacement cost
.
Our remainin
g
inventor
y
is primaril
y
stated at the lower of cost, usin
g
the FIFO method, or market
.
I
nventor
i
es presente
d
on t
h
e conso
lid
ate
db
a
l
ance s
h
eets are net o
f
reserves
f
or excess an
d
o
b
so
l
et
e
inventor
y
which were $34.4 million and $39.5 million at June 30, 2010 and 2009, respectivel
y
. We reserve for
i
nventor
y
o
b
so
l
escence us
i
n
g
est
i
mates
b
ase
d
on
hi
stor
i
ca
l
exper
i
ences, sa
l
es tren
d
s, spec
ifi
c cate
g
or
i
es o
f
i
nventor
y
an
d
a
g
eo
f
on-
h
an
di
nventor
y
.
C
ash Discounts
.
M
anufacturer cash discounts are recorded as a component of inventory cost and recognize
d
as a reduction of cost of products sold when the related inventory is sold
.
P
roperty and E
q
uipment
.
Propert
y
and equipment are carried at cost less accumulated depreciation. Propert
y
and e
q
ui
p
ment held for sale are recorded at the lower of cost or fair value less cost to sell. De
p
reciation ex
p
ens
e
is computed usin
g
the strai
g
ht-line method over the estimated useful lives of the assets, includin
g
capital leas
e
4
6