Cardinal Health 2011 Annual Report Download - page 38

d
amaged by unforeseen events or actions of third parties, or fail for any extended period of time. Any dat
a
secur
i
ty
b
reac
h
cou
ld
a
d
verse
l
y
i
mpact our operat
i
ons, resu
l
ts o
f
operat
i
ons or our a
bili
ty to sat
i
s
f
y
l
ega
l
re
q
uirements.
T
he Medical segment is working on a medical business transformation project, which includes a new
i
n
f
ormat
i
on system
f
or certa
i
n supp
l
yc
h
a
i
n processes. T
h
eMe
di
ca
l
segment
i
sp
l
ann
i
ng to trans
i
t
i
on se
l
ecte
d
processes to the new s
y
stem throu
g
hout fiscal 2012 and 2013. If the s
y
stem is not effectivel
y
implemented or
f
ails to operate as intended, it could adversely affect the Medical segment’s supply chain operations and the
e
ff
ect
i
veness o
f
our
i
nterna
l
contro
l
over
fi
nanc
i
a
l
report
i
ng
.
Because of the nature of our business, we may become involved in legal proceedings that could adversel
y
i
m
p
act our cas
hfl
ows or resu
l
ts o
f
o
p
erations
.
D
ue to t
h
e nature o
f
our
b
us
i
nesses, w
hi
c
hi
nc
l
u
d
es t
h
e manu
f
acture an
ddi
str
ib
ut
i
on o
fh
ea
l
t
h
care pro
d
ucts,
we ma
y
from time to time become involved in le
g
al proceedin
g
s. For instance, some of the products w
e
manufacture or distribute may be alleged to cause personal injury or violate the intellectual property rights o
f
a
not
h
er party, su
bj
ect
i
ng us to pro
d
uct
li
a
bili
ty or
i
n
f
r
i
ngement c
l
a
i
ms. W
hil
e we genera
ll
yo
b
ta
i
n
i
n
d
emn
i
t
y
ri
g
hts from the manufacturers of products we distribute and we carr
y
product liabilit
y
insurance, it is possibl
e
that liability from such claims could exceed those protections. Litigation is inherently unpredictable and the
u
n
f
avora
bl
e reso
l
ut
i
on o
f
one or more o
f
t
h
ese
l
ega
l
procee
di
ngs cou
ld h
arm our cas
hfl
ows or resu
l
ts o
f
op
erations.
Ac
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.
A
n
i
mportant e
l
ement o
f
our growt
h
strategy
h
as
b
een to acqu
i
re ot
h
er
b
us
i
nesses t
h
at expan
d
o
r
complement our existin
g
businesses. As described above, in fiscal 2011, we acquired Kinra
y
, P4 Healthcare an
d
Yong Yu. Acquisitions involve risks: we may overpay for a business or fail to realize the synergies and other
b
ene
fi
ts we expect
f
rom t
h
e acqu
i
s
i
t
i
on; we may encounter un
f
oreseen account
i
ng or
i
nterna
l
contro
l
over
f
inancial reportin
g
issues; or the acquired business ma
y
have re
g
ulator
y
or compliance issues that we did no
t
a
ntici
p
ate.
W
e depend on certain suppliers to make their raw materials and products available to us and are subject to
f
luctuations in costs of raw materials and products.
We depend on the availability of various components, compounds, raw materials and energy (including
ra
di
o
i
sotopes an
d
o
il
-
b
ase
d
res
i
ns, cotton,
l
atex,
di
ese
lf
ue
l
an
d
ot
h
er commo
di
t
i
es) supp
li
e
db
yot
h
ers
f
or ou
r
o
perations. An
y
of our supplier relationships could be interrupted due to events be
y
ond our control, includin
g
natural disasters, or could be terminated. A sustained interru
p
tion in the flow of ade
q
uate su
pp
lies could have an
ad
verse e
ff
ect on our
b
us
i
ness. In a
ddi
t
i
on, w
hil
ewe
h
ave processes to m
i
n
i
m
i
ze vo
l
at
ili
ty
i
n component an
d
material pricin
g
,wema
y
not be able to successfull
y
mana
g
e price fluctuations.
O
ur manufacturing businesses use oil-based resins, cotton, latex, and other commodities as raw materials in
many pro
d
ucts. Pr
i
ces o
f
o
il
an
d
gas a
l
so a
ff
ect our
di
str
ib
ut
i
on an
d
transportat
i
on costs. Pr
i
ces o
f
t
h
es
e
commodities are volatile and have fluctuated si
g
nificantl
y
in recent
y
ears, so our costs to produce and distribute
o
ur products also have fluctuated. Due to competitive dynamics and contractual limitations, we may be unable to
pass a
l
ong cost
i
ncreases t
h
roug
hhi
g
h
er pr
i
ces. I
f
we cannot
f
u
ll
yo
ff
set cost
i
ncreases t
h
roug
h
ot
h
er cos
t
reductions, or recover these costs throu
g
h price increases or fuel surchar
g
es, our results of operations could be
a
dversely affected
.
O
ur global operations are subject to economic, political and currency risks.
O
ur
g
lobal operations are affected b
y
local economic environments, includin
g
inflation, recession, currenc
y
v
olatility and competition. Political changes can disrupt our supply chain—as well as our customers an
d
12