Cardinal Health 2010 Annual Report Download - page 85

The 4.00%,
5
.
5
0%
5
.6
5
%,
5
.80%,
5
.8
5
%, 6.00% and 6.7
5
% Notes and the Floating Rate Notes due 200
9
r
epresent unsecured obligations. The 7.80% and 7.00% Debentures represent unsecured obligations of Allegiance
Corporation (a wholly-owned subsidiary), which Cardinal Health, Inc. has guaranteed. None of these obligation
s
are subject to a sinking fund and the Allegiance obligations are not redeemable prior to maturity. Interest is paid
p
ursuant to the terms of the obligations. These notes are effectively subordinated to the liabilities of our
subsidiaries, including trade payables of
$
9.5 billion
.
On September 24, 2009, we completed a debt tender announced on August 27, 2009 for an aggregate
p
urchase price, including an early tender premium but excluding accrued interest, fees and expenses, of
$
1.1
billion of the following series of debt securities: (i) 7.80% Debentures due October 1
5
, 2016 of Allegianc
e
Corporation; (ii) our 6.7
5
% Notes due February 1
5
, 2011; (iii) our 6.00% Notes due June 1
5
, 2017; (iv) 7.00
%
Debentures due October 1
5
, 2026 of Allegiance Corporation; (v) our
5
.8
5
% Notes due December 1
5
, 2017
;
(vi) our
5
.80% Notes due October 1
5
, 2016; (vii) our
5
.6
5
% Notes due June 1
5
, 2012; (viii) our
5
.
5
0% Notes du
e
June 1
5
, 2013; and (ix) our 4.00% Notes due June 1
5
, 201
5
. In connection with the debt tender, we incurred a
p
re-tax loss for the early extinguishment of debt of approximately
$
39.9 million, which included an early tender
p
remium of
$
66.4 million, the write-off of
$
5.3 million of unamortized debt issuance costs, and an offsettin
g
$
31.8 million fair value adjustment to the respective debt related to previously terminated interest rate swaps.
T
he debt tender was completed using a portion of the
$
1.4 billion of cash distributed to us from CareFusion in
connection with the S
p
in-Off
.
I
n June 2008, we sold
$
300 million aggregate principal amount of fixed rate notes due 2013 (“the 2013
Notes”) in a registered offering. The 2013 Notes mature on June 1
5
, 2013. Interest on the 2013 Notes accrues a
t
5
.
5
0% per year payable semi-annually. If we experience specific types of change of control and the notes ar
e
r
ated below investment grade by S&P, Moody’s, and Fitch, we will be required to offer to purchase the 2013
Notes at 101% of the principal amount thereof, plus accrued and unpaid interest, if any, to the date of repurchase.
W
e used the proceeds to repay
$
150.0 million of 6.25% Notes due 2008 on July 15, 2008 and to repay
$
149.0
million of
p
referred debt securities on October 3, 2008.
I
n addition to cash and equivalents, at June 30, 2010 and 2009, our sources of liquidity included
a
$
1.5 billion commercial paper program backed by a
$
1.5 billion revolving credit facility. The revolving credi
t
f
acility exists largely to support issuances of commercial paper as well as other short-term borrowings for general
cor
p
orate
p
ur
p
oses and remained unused at June 30, 2010 and 2009, exce
p
t for
$
48.2 million and
$
70.2 million,
r
espectively, of standby letters of credit. On April 1
6
, 2009, in connection with the Spin-Off, we amended ou
r
$
1.5 billion revolving credit facility to, among other things, replace a minimum net worth covenant with
covenants that require us to maintain a consolidated interest coverage ratio as of the end of any fiscal quarter of
at least 4-to-1 and to maintain a consolidated leverage ratio of no more than 3.2
5
-to-1. The new covenants
became effective u
p
on S
p
in-Off. As of June 30, 2010, we were in com
p
liance with these financial covenants.
We also maintain other short-term credit facilities and an unsecured line of credit that allowed fo
r
borrowings up to
$
4.8 million and
$
48.9 million at June 30, 2010 and 2009, respectively. At June 30, 2009
,
$
15.7 million was outstanding under uncommitted facilities, all of which related to CareFusion; there was no
amount outstanding at June 30, 2010. The
$
6.1 million and
$
7.8 million balance of other obligations at June 30
,
2010, and 2009, respectively, consisted primarily of additional notes, loans and capital leases
.
M
aturities of long-term obligations and other short-term borrowings for the next five fiscal years an
d
thereafter are as follows:
(
in millions) 2
0
1
1
2
0
1
2
2013 2
0
14
20
15 Thereafter Total
Maturities of long-term obligations and othe
r
short-term borrowings
.................
$
233.2
$
214.1
$
306.8
$
1.2
$
530.9
$
843.1
$
2,129.3
59