Cardinal Health 2011 Annual Report Download - page 37

operations, withdrawal of existing approvals and third-party claims, which could have an adverse effec
t
on our resu
l
ts o
f
operat
i
ons an
dfi
nanc
i
a
l
con
di
t
i
on
.
• We are requ
i
re
d
to comp
l
yw
i
t
hl
aws an
d
regu
l
at
i
ons re
l
at
i
ng to
h
ea
l
t
h
care
f
rau
d
an
d
a
b
use. I
f
we
f
a
il
t
o compl
y
with them, we could be sub
j
ect to federal or state
g
overnment investi
g
ations, or false claim
s
act proceedings initiated by private parties, which could result in civil judgments and criminal penaltie
s
i
nc
l
u
di
ng t
h
e
l
oss o
fli
censes or t
h
ea
bili
ty to part
i
c
i
pate
i
nMe
di
care, Me
di
ca
id
an
d
ot
h
er
f
e
d
era
l
an
d
s
tate healthcare pro
g
rams. The scope or requirements of these laws or re
g
ulations ma
y
be interpreted or
applied by a regulator, prosecutor or judge in a manner that could negatively impact or require us to
ch
ange our operat
i
ons.
• Our g
l
o
b
a
l
operat
i
ons are requ
i
re
d
to comp
l
yw
i
t
h
t
h
eUn
i
te
d
States Fore
i
gn Corrupt Pract
i
ces Act an
d
s
imilar anti-briber
y
laws in other
j
urisdictions and with United States and forei
g
n export control, trade
e
mbargo and customs laws. If we fail to comply with them, we could suffer civil and crimina
l
p
ena
l
t
i
es
.
W
e could be subject to adverse changes in the tax laws or challenges to our tax positions.
We are a lar
g
e multinational corporation with operations in the United States and man
y
forei
g
n countries.
As a result, we are subject to the tax laws and regulations of many jurisdictions. From time to time, legislativ
e
i
n
i
t
i
at
i
ves are propose
d
, suc
h
as t
h
e repea
l
o
f
LIFO (
l
ast-
i
n,
fi
rst-out) treatment o
fi
nventory or t
h
e current U.S.
taxation of income earned b
y
forei
g
n subsidiaries, that could adversel
y
affect our tax positions, effective tax rate,
tax payments or financial condition. Tax laws and regulations are extremely complex and subject to varying
i
nterpretat
i
ons. Tax aut
h
or
i
t
i
es
h
ave c
h
a
ll
enge
d
some o
f
our tax pos
i
t
i
ons an
di
t
i
s poss
ibl
et
h
at t
h
ey w
ill
challen
g
e others. These challen
g
es ma
y
adversel
y
affect our effective tax rate, tax pa
y
ments or financial
condition.
O
ur P
h
armaceutica
l
segment’s margin ma
yb
ea
ff
ecte
dbyp
rices esta
bl
is
h
e
dby
manu
f
acturers or mar
k
et
f
orces that are beyond our control
.
A
s described in
g
reater detail in the discussion of our business in Item 1, we
g
enerate a portion of ou
r
branded manufacturer margin from pharmaceutical price appreciation. If branded manufacturers increase price
s
l
ess
f
requent
l
yor
b
y sma
ll
er amounts, we w
ill
earn
l
ess
b
ran
d
e
d
manu
f
acturer marg
i
n. In a
ddi
t
i
on, pr
i
ces
f
o
r
g
eneric pharmaceuticals distributed b
y
our pharmaceutical distribution business have
g
enerall
y
declined ove
r
time, which could have an adverse effect on our generic manufacturer margin, if not offset by generi
c
p
h
armaceut
i
ca
l
programs,
i
nc
l
u
di
ng new pro
d
uct
l
aunc
h
es.
O
ur business and operations depend on the proper functioning of information systems and critical facilities.
We rel
y
on information s
y
stems to obtain, rapidl
y
process, anal
y
ze and mana
g
e data to:
• facilitate the purchase and distribution of thousands of inventor
y
items from numerous distribution
c
enters
;
• receive, process and ship orders on a timely basis
;
• manage the accurate billing and collections for thousands of customers;
• process payments to suppliers
;
• facilitate the manufacturing and assembly of medical products; an
d
• generate financial transactions and information
.
Our business also depends on the proper functionin
g
of our critical facilities, includin
g
our national lo
g
istics
center. Our results of operations could be adversely affected if these systems or facilities are interrupted
,
11