Cardinal Health 2011 Annual Report Download - page 55

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T
he increase in DSO in fiscal 2011 was driven by the impact of acquisitions and the increase in DPO wa
s
d
ue to t
h
et
i
m
i
ng o
f
payments to ven
d
ors
d
ur
i
ng t
h
e regu
l
ar course o
fb
us
i
ness.
T
he decrease in DSO in fiscal 2010 was driven by focused efforts to manage customer accounts and reduce
d
e
li
nquency rates. T
h
es
i
gn
ifi
cant
i
mprovement
i
n DIOH
i
n
fi
sca
l
2010 was
l
arge
l
y
d
ue to en
h
ance
d
e
ffi
c
i
ency
in
o
ur suppl
y
chain operations to reduce inventor
y
requirements. The chan
g
e in DPO durin
g
fiscal 2010 was lar
g
el
y
d
riven by a change in payable terms with a supplier in our Pharmaceutical segment.
D
urin
g
fiscal 2011, we deplo
y
ed $2.3 billion of cash on acquisitions, $291 million on capital expenditures
,
$
274 million on dividends and
$
270 million on share repurchases. During fiscal 2011, we received
$
706 millio
n
i
n procee
d
s
f
rom sa
l
eo
f
CareFus
i
on common stoc
k.
D
uring fiscal 2010, we deployed
$
260 million of cash on capital expenditures,
$
253 million on dividends
a
nd
$
230 million on share repurchases (an additional
$
20 million repurchased during fiscal 2010 settled durin
g
the first quarter of 2011). Durin
g
fiscal 2010, we received $271 million in proceeds from sale of CareFusio
n
common stock and
$
154 million from the divestitures of our Martindale business in the United Kingdom and
SpecialtyScripts. In addition, we completed a debt tender resulting in the purchase of more than
$
1.1 billion debt
securities usin
g
cash of $1.4 billion distributed to us from CareFusion in connection with the Spin-Off.
Additionally, in October 2009, we repaid our
$
350 million floating rate notes at maturity
.
T
he cash and equivalents balance at the end of fiscal 2011 included $266 million of cash held b
y
subsidiaries outside of the United States. Although the vast majority of this cash is available for repatriation
,
permanent
l
y
b
r
i
ng
i
ng t
h
e money
i
nto t
h
eUn
i
te
d
States cou
ld
tr
i
gger U.S.
f
e
d
era
l
, state an
dl
oca
li
ncome ta
x
o
bli
g
ations. As a U.S. parent compan
y
,wema
y
temporaril
y
access cash held b
y
our forei
g
n subsidiaries withou
t
becoming subject to U.S. federal income tax through intercompany loans.
T
he net cash provided b
y
discontinued operations for fiscal 2010 of $1.4 billion primaril
y
reflecte
d
permanent financing obtained by CareFusion prior to the Spin-Off offset by
$
90 million cash funding provide
d
b
y us to CareFus
i
on pursuant to t
h
eSp
i
n-O
ff
separat
i
on agreement. Net cas
h
prov
id
e
db
y/(use
di
n)
di
scont
i
nue
d
o
perations for fiscal 2009 of $341 million primaril
y
related to the earnin
g
s and chan
g
es in workin
g
capital fo
r
C
areFusion
.
Owners
h
ip of S
h
ares of CareFusion Common Stoc
k
D
uring fiscal 2011 and 2010, we disposed of 30.5 million and 10.9 million shares of CareFusion common
stock for cash proceeds of $706 million and $271 million, respectivel
y
.
Credit Facilities and Commercial Pa
p
er
O
ur sources of liquidity include a
$
1.5 billion revolving credit facility and a
$
950 million committed
rece
i
va
bl
es sa
l
es
f
ac
ili
ty program. Dur
i
ng
fi
sca
l
2011, we rep
l
ace
d
our pr
i
or revo
l
v
i
ng cre
di
t
f
ac
ili
ty w
i
t
h
ane
w
$
1.5 billion facilit
y
that expires in Ma
y
2016 and amended the committed receivables sales facilit
y
pro
g
ram to
extend its term to November 2012. We also have a commercial paper program of up to
$
1.5 billion, backed by
t
h
e revo
l
v
i
ng cre
di
t
f
ac
ili
ty. We
h
a
d
no outstan
di
ng
b
orrow
i
ngs
f
rom t
h
e commerc
i
a
l
paper program an
d
n
o
o
utstandin
g
balance under the committed receivables sales facilit
y
pro
g
ram at June 30, 2011. Our abilit
y
to
a
ccess the commercial paper market is limited based on our current credit rating from Moody’s Investo
r
S
er
vi
ces
.
O
ur revolving credit facility and committed receivables sales facility require us to maintain a consolidated
i
nterest coverage rat
i
o, as o
f
any
fi
sca
l
quarter en
d
,o
f
at
l
east 4-to-1 an
d
a conso
lid
ate
dl
everage rat
i
oo
f
no more
than 3.2
5
-to-1. As of June 30, 2011, we were in com
p
liance with these financial covenants.
29