Cardinal Health 2009 Annual Report Download - page 41

Download and view the complete annual report

Please find page 41 of the 2009 Cardinal Health annual report below. You can navigate through the pages in the report by either clicking on the pages listed below, or by using the keyword search tool below to find specific information within the annual report.

Page out of 154

  • 1
  • 2
  • 3
  • 4
  • 5
  • 6
  • 7
  • 8
  • 9
  • 10
  • 11
  • 12
  • 13
  • 14
  • 15
  • 16
  • 17
  • 18
  • 19
  • 20
  • 21
  • 22
  • 23
  • 24
  • 25
  • 26
  • 27
  • 28
  • 29
  • 30
  • 31
  • 32
  • 33
  • 34
  • 35
  • 36
  • 37
  • 38
  • 39
  • 40
  • 41
  • 42
  • 43
  • 44
  • 45
  • 46
  • 47
  • 48
  • 49
  • 50
  • 51
  • 52
  • 53
  • 54
  • 55
  • 56
  • 57
  • 58
  • 59
  • 60
  • 61
  • 62
  • 63
  • 64
  • 65
  • 66
  • 67
  • 68
  • 69
  • 70
  • 71
  • 72
  • 73
  • 74
  • 75
  • 76
  • 77
  • 78
  • 79
  • 80
  • 81
  • 82
  • 83
  • 84
  • 85
  • 86
  • 87
  • 88
  • 89
  • 90
  • 91
  • 92
  • 93
  • 94
  • 95
  • 96
  • 97
  • 98
  • 99
  • 100
  • 101
  • 102
  • 103
  • 104
  • 105
  • 106
  • 107
  • 108
  • 109
  • 110
  • 111
  • 112
  • 113
  • 114
  • 115
  • 116
  • 117
  • 118
  • 119
  • 120
  • 121
  • 122
  • 123
  • 124
  • 125
  • 126
  • 127
  • 128
  • 129
  • 130
  • 131
  • 132
  • 133
  • 134
  • 135
  • 136
  • 137
  • 138
  • 139
  • 140
  • 141
  • 142
  • 143
  • 144
  • 145
  • 146
  • 147
  • 148
  • 149
  • 150
  • 151
  • 152
  • 153
  • 154

Disruptions in the financial market may adversely affect the availability and cost of credit to the Company.
The Company’s ability to make scheduled payments or refinance its obligations with respect to indebtedness
will depend on its operating and financial performance, which in turn is subject to prevailing economic
conditions and financial, business and other factors beyond its control. The credit and capital markets are
experiencing significant volatility that is difficult to predict. Disruptions in the financial markets, including the
bankruptcy or restructuring of a number of financial institutions, reduced lending activity, decreased liquidity and
higher costs in the commercial paper market and reduced markets for securitizations, may adversely affect the
availability and cost of credit that the Company has already arranged, and the availability, terms and cost of
credit in the future. There can be no assurances that government initiatives in response to the disruptions in the
financial markets will stabilize the markets in general or increase liquidity and the availability of credit to the
Company.
Declining economic conditions could adversely affect the Company’s results of operations and financial
condition.
Disruptions in the financial markets and other macro-economic challenges currently affecting the economy
and the economic outlook of the United States and other parts of the world could adversely impact the
Company’s customers and vendors in a number of ways, which could adversely affect the Company.
Recessionary conditions and depressed levels of consumer and commercial spending have caused and may
continue to cause customers to reduce, modify, delay or cancel plans to purchase the Company’s products and
may cause vendors to reduce their output or change terms of sales. For example, certain hospitals delayed capital
equipment purchase decisions during the second half of fiscal 2009, which affected the financial results of the
Clinical and Medical Products segment during the period. The Company expects this delay will have an adverse
impact on the financial results of CareFusion through the middle of calendar year 2010. If customers’ cash flow
or operating and financial performance deteriorate, or if they are unable to make scheduled payments or obtain
credit, they may not be able to pay, or may delay payment of, accounts receivable owed to the Company.
Likewise, for similar reasons vendors may restrict credit or impose different payment terms. Any inability of
current and/or potential customers to pay the Company for its products or any demands by vendors for different
payment terms may adversely affect the Company’s results of operations and financial condition.
The Company is involved in legal proceedings that could adversely affect the Company’s results of
operations and financial condition.
The Company is involved in a number of legal proceedings, certain of which are discussed in Note 11 of
“Notes to Consolidated Financial Statements.” Litigation is inherently unpredictable and unfavorable resolutions
could occur. It is possible that cash flows or results of operations could be adversely affected in any particular
period by the unfavorable resolution of one or more of these contingencies.
Generic drug manufacturers are increasingly challenging the validity or enforceability of patents on branded
pharmaceutical products. During the pendency of these legal challenges, a generic pharmaceutical manufacturer
may begin manufacturing and selling a generic version of the branded product prior to the final resolution of its
legal challenge over the branded product’s patent. To the extent the Company distributes such generic products
that are launched by the generic manufacturer “at risk,” the brand-name company could assert infringement
claims against the Company. While the Company obtains indemnity rights from generic manufacturers as a
condition of distributing their products, there can be no assurances that these indemnity rights will be adequate or
sufficient to protect the Company.
In addition, certain of the Company’s products and services expose it to product and professional liability
risks. The availability of product liability insurance for large companies in the pharmaceutical and medical
device industry is generally more limited than insurance available to smaller companies and companies in other
industries. Insurance carriers providing product liability insurance to large pharmaceutical and medical device
19