Cardinal Health 2010 Annual Report Download - page 39

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A
c
q
uisitions are not a
l
wa
y
s as success
f
u
l
as we ex
p
ect t
h
em to
b
e.
Historically, an important element of our growth strategy has been to acquire other businesses that expand
o
r complement our existing businesses. Acquisitions involve risks: we may overpay for a business or fail t
o
r
ealize the synergies and other benefits we expect from the acquisition; we may encounter unforeseen accounting
o
r internal control over financial reporting issues; or the acquired business may have regulatory or compliance
issues that we did not antici
p
ate.
W
e depend on certain suppliers to make their raw materials and products available to us and are sub
j
ect t
o
f
luctuations in costs of raw materials and products
.
We
d
epen
d
on var
i
ous components, compoun
d
s, raw mater
i
a
l
san
d
ener
gy
(
i
nc
l
u
di
n
g
ra
di
o
i
sotopes an
d
o
il,
oil
-re
l
ate
d
an
d
ot
h
er commo
di
t
i
es) supp
li
e
dby
ot
h
ers
f
or our operat
i
ons. An
y
o
f
our supp
li
er re
l
at
i
ons
hi
ps cou
ld
b
e
i
nterrupte
dd
ue to natura
ldi
sasters or ot
h
er events or cou
ld b
e term
i
nate
d
. A susta
i
ne
di
nterrupt
i
on
i
nt
h
e
fl
ow
of
a
d
equate supp
li
es cou
ld h
ave an a
d
verse e
ff
ect on our
b
us
i
ness. In a
ddi
t
i
on, w
hil
ewe
h
ave processes t
o
m
i
n
i
m
i
ze vo
l
at
ili
t
yi
n component an
d
mater
i
a
l
pr
i
c
i
n
g
,wema
y
not
b
ea
bl
e to success
f
u
lly
mana
g
epr
i
c
e
fl
uctuat
i
ons
.
Our manufacturing businesses use oil, oil-related and other commodities as raw materials in many products
.
Prices of oil and gas also affect our distribution and transportation costs. Oil and gas prices are volatile and hav
e
f
luctuated significantly in recent years, so our costs to produce and distribute our products also have fluctuated.
B
ecause the healthcare industry is highly competitive and many customers and third-party payors have institute
d
cost-containment initiatives, we may be unable to pass along cost increases through higher prices. If we cannot
f
ully offset cost increases through other cost reductions, or recover these costs through price increases or fuel
surcharges, our results of operations could be adversely affected.
Our global operations are sub
j
ect to a number of economic, political and regulatory risks
.
Our
gl
o
b
a
l
operat
i
ons are a
ff
ecte
dbyl
oca
l
econom
i
c env
i
ronments,
i
nc
l
u
di
n
gi
n
fl
at
i
on, recess
i
on, currenc
y
vo
l
at
ili
t
y
an
d
compet
i
t
i
on. Po
li
t
i
ca
l
c
h
an
g
es can
di
srupt our supp
ly
c
h
a
i
n—as we
ll
as our customers an
d
o
perat
i
n
g
act
i
v
i
t
i
es—
i
n a part
i
cu
l
ar
l
ocat
i
on. We ma
y
not
b
ea
bl
e to enter
i
nto
h
e
dg
es or o
b
ta
i
n
i
nsurance to
p
rotect us a
g
a
i
nst t
h
ese r
i
s
k
s, an
d
an
yh
e
dg
es t
h
at we enter
i
nto or
i
nsurance t
h
at we are a
bl
etoo
b
ta
i
nma
ybe
expens
i
ve an
d
ma
y
not success
f
u
lly
m
i
t
ig
ate t
h
ese r
i
s
k
s
.
I
n addition, our global operations are subject to risks arising from violations of U.S. laws such as the U.S.
Foreign Corrupt Practices Act and similar anti-bribery laws in other jurisdictions, and various export control an
d
trade embargo laws and regulations, including those that may require licenses or other authorizations for
transactions within certain countries or with certain counterparties. If we fail to comply with applicable laws and
r
egulations, we could suffer civil and criminal penalties.
R
isks associated with the Spin-Off of CareFusion.
T
hi
s sect
i
on
d
escr
ib
es some o
f
t
h
er
i
s
k
st
h
at ex
i
st as a resu
l
to
f
t
h
eSp
i
n-O
ff
o
f
CareFus
i
on, w
hi
c
hi
s
d
escr
ib
e
di
n
g
reater
d
eta
il i
nt
h
e Mana
g
ement’s D
i
scuss
i
on an
d
Ana
ly
s
i
so
f
F
i
nanc
i
a
l
Con
di
t
i
on an
d
Resu
l
ts o
f
Operat
i
ons
i
nt
hi
s Form 10-K.
CareFusion may not satisfy all of its contractual obligations. We entered into a number of agreements wit
h
CareFusion that govern the rights and obligations of the parties following the Spin-Off. We have certain rights
under those agreements, including indemnification against certain liabilities allocated to CareFusion. The failure
o
f CareFusion to perform its obligations under the agreements could have an adverse effect on our financia
l
condition and results of o
p
erations
.
13