Cardinal Health 2008 Annual Report Download - page 46

the Company’s use of its technology, which could adversely affect the Company’s results of operations. In
addition, if the Company is found to be infringing on proprietary rights of others, the Company may be required
to develop non-infringing technology, obtain a license or cease making, using and/or selling the infringing
products.
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 to 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.
Risks generally associated with the Company’s information systems and implementation of a new
accounting software system could adversely affect the Company’s results of operations or the effectiveness
of internal control over financial reporting.
The Company relies on information systems in its business to obtain, rapidly process, analyze and manage
data to:
• facilitate the purchase and distribution of thousands of inventory items from numerous distribution
centers;
• receive, process and ship orders on a timely basis;
• manage the accurate billing and collections for thousands of customers;
• process payments to suppliers; and
• facilitate the manufacturing and assembly of medical products.
The Company’s results of operations could be adversely affected if these systems are interrupted, damaged
by unforeseen events or fail for any extended period of time, including due to the actions of third parties.
In addition, during fiscal 2008, the Company began implementing a new accounting software system and
will continue to transition selected financial processes to the new system throughout fiscal 2009. If the Company
does not effectively implement this system or if the system does not operate as intended, it could adversely affect
the effectiveness of the Company’s internal control over financial reporting.
Tax legislation initiatives or challenges to the Company’s tax positions could adversely affect the
Company’s results of operations and financial condition.
The Company is a large multinational corporation with operations in the United States and international
jurisdictions. As such, the Company is subject to the tax laws and regulations of the U.S. federal, state and local
governments and of many international jurisdictions. From time to time, various legislative initiatives may be
proposed that could adversely affect the Company’s tax positions. There can be no assurance that the Company’s
effective tax rate or tax payments will not be adversely affected by these initiatives. In addition, U.S. federal,
state and local, as well as international, tax laws and regulations are extremely complex and subject to varying
interpretations. There can be no assurance that the Company’s tax positions will not be challenged by relevant
tax authorities or that the Company would be successful in any such challenge. See Note 11 of “Notes to
Consolidated Financial Statements” for a discussion of Notices of Proposed Adjustment received during fiscal
2008.
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