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Commitments, Contingent Liabilities and Litigation
12 Months Ended
Jun. 30, 2012
Commitments and Contingencies Disclosure [Abstract]  
Commitments and Contingencies Disclosure
Commitments, Contingent Liabilities and Litigation
Commitments
The future minimum rental payments for operating leases having initial or remaining non-cancelable lease terms in excess of one year at June 30, 2012 are as follows: $83 million, $64 million, $48 million, $35 million, $25 million for fiscal 2013 through 2017, and $45 million thereafter. Rental expense relating to operating leases was $86 million, $79 million and $80 million in fiscal 2012, 2011 and 2010, respectively. Sublease rental income was not material for any period presented.
Legal Proceedings
We become involved from time-to-time in disputes, litigation and regulatory matters incidental to our business, including governmental investigations and enforcement actions, personal injury claims, employment matters, commercial disputes, intellectual property matters, government contract compliance matters, disputes regarding environmental clean-up costs, litigation in connection with acquisitions and divestitures, and other matters arising out of the normal conduct of our business. We intend to vigorously defend ourselves in such litigation. We do not believe that the outcome of any pending litigation will have a material adverse effect on our financial position or results of operations.
Occasionally, we may suspect that products we manufacture, market or distribute do not meet product specifications, published standards or regulatory requirements. In such circumstances, we investigate and take appropriate corrective action. Such actions can lead to product recalls, costs to repair or replace affected products, temporary interruptions in product sales, and action by regulators.
We accrue for contingencies related to litigation and regulatory matters. We accrue an estimated loss contingency in our 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 developments or resolutions can occur, assessing contingencies is highly subjective and requires judgments about future events. We regularly review contingencies to determine whether our accruals and related disclosures are adequate. The amount of ultimate loss may differ from these estimates.
We recognize income from the favorable outcome of litigation when we receive the associated cash or assets.
We recognize estimated loss contingencies for litigation and regulatory matters and income from favorable resolution of litigation in litigation (recoveries)/charges, net in our consolidated statements of earnings.

On February 3, 2012 the DEA issued an order to show cause and immediate suspension of our Lakeland, Florida distribution center's registration to distribute controlled substances. In the order, the DEA asserted that we failed to maintain required controls against the diversion of controlled substances. We filed a complaint and motion for a temporary restraining order in the U.S. District Court for the District of Columbia to enjoin the suspension of the Lakeland facility's registration. The court granted the temporary restraining order restoring the DEA registration but denied our motion for a preliminary injunction on February 29, 2012, and the immediate suspension was reinstated. We appealed that decision to the U.S. Court of Appeals for the D.C. Circuit. On May 14, 2012, we entered into a settlement agreement with the DEA. Upon entering into the agreement, we withdrew our appeal of the U.S. District Court's decision not to grant us a preliminary injunction.
Under the settlement agreement with the DEA: (i) our Lakeland registration will remain suspended until May 15, 2014; (ii) we agreed to enhance certain procedures designed to detect and prevent the diversion of controlled substances; and (iii) the DEA confirmed that it was planning no further administrative actions at any of our other facilities based on conduct prior to the settlement. The settlement agreement did not foreclose the possibility of the U.S. Department of Justice seeking civil fines for historical conduct covered by the settlement agreement. In that regard, we are responding to civil subpoenas from two local offices within the DEA and the U.S. Department of Justice related to our distribution of controlled substances. Due to the early state of these matters, it is not possible to reasonably estimate a range of possible loss.
On June 26, 2012, the West Virginia Attorney General filed complaints against fourteen pharmaceutical wholesale distributors, including us, in the Circuit Court of Boone County, West Virginia alleging, among other things, that the distributors failed to maintain effective controls to guard against diversion of controlled substances in West Virginia, failed to report suspicious orders of controlled substances in accordance with the West Virginia Uniform Controlled Substances Act, were negligent in distributing controlled substances to pharmacies that serve individuals who abuse controlled substances, were unjustly enriched by such conduct, violated consumer credit and protection laws, created a public nuisance, and violated state antitrust laws in connection with the distribution of controlled substances. In addition to injunctive and other equitable relief, the attorney general is seeking monetary damages and the creation of a court-supervised fund, to be financed by the defendants in these actions, for a medical monitoring program focused on prescription drug abuse. Motions have been filed to remove the cases from the Circuit Court of Boone County, West Virginia to the United States District Court for the Southern District of West Virginia. Because this matter only recently commenced, it is not possible to reasonably estimate a range of possible loss.
Insurance and Antitrust Litigation Proceeds
During fiscal 2010, we recognized $27 million of income related to insurance proceeds released from escrow following the resolution of previously disclosed and settled securities and derivative litigation against certain of our directors and officers. This amount is comprised of $26 million received from directors’ and officers’ insurance policies recognized in litigation (recoveries)/charges, net and $1 million of accrued interest income recognized in interest expense, net.
During fiscal 2010, we recognized $41 million of income resulting from settlement of a class action antitrust claim in which we were a class member. This amount is recognized in litigation (recoveries)/charges, net in the consolidated statements of earnings.
Income Taxes
See Note 8 for discussion of contingencies related to our income taxes.