Cardinal Health 2011 Annual Report Download - page 54

paid, CareFusion is liable under the tax matters agreement for
$
592 million of the total amount. We disagree wit
h
t
h
ese propose
d
a
dj
ustments an
di
nten
d
to v
i
gorous
l
y contest t
h
em, an
d
we
b
e
li
eve our accrua
l
s
f
or t
h
ese matter
s
a
re ade
q
uate.
E
arnings/(Loss)
f
rom Discontinue
d
O
p
eration
s
CareFus
i
on operat
i
ng resu
l
ts are
i
nc
l
u
d
e
d
w
i
t
hi
n earn
i
ngs
f
rom
di
scont
i
nue
d
operat
i
ons
f
or a
ll
per
i
o
d
s
t
h
roug
h
t
h
e
d
ate o
f
t
h
eSp
i
n-O
ff
,an
dh
a
d
as
i
gn
ifi
cant
i
mpact on earn
i
ngs
f
rom
di
scont
i
nue
d
operat
i
ons
f
or
fi
sca
l
2010 and 2009. See Note
5
in the “Notes to Consolidated Financial Statements” for additional information on
di
scont
i
nue
d
operat
i
ons
.
R
ecent
D
eve
l
opment
s
I
n late Au
g
ust 2011, the FDA notified us that it was haltin
g
entr
y
into the United States of all procedure kit
s
that we assemble in Mexico and im
p
ort at El Paso, Texas (“Im
p
orted Kits”). The FDA indicated that we had not
supp
li
e
d
a
d
equate
d
ocumentary support
f
or certa
i
n components o
f
t
h
e Importe
d
K
i
ts,
b
ut
h
as not
i
n
di
cate
d
any
concerns a
b
out pat
i
ent sa
f
et
y
. We are wor
ki
n
g
w
i
t
h
t
h
e FDA to a
dd
ress t
h
e
i
r concerns, an
d
,
i
nt
h
e
i
nter
i
m, ar
e
implementin
g
steps to miti
g
ate the impact to customers and our business, includin
g
shiftin
g
assembl
y
of kits t
o
f
acilities in the United States. Sales of the Imported Kits were approximately 5 percent of Medical segment
re
v
enue
i
n
fi
sca
l
2
0
11.
Liq
u
i
d
i
t
y
and
C
a
pi
tal Resource
s
We currently believe that, based upon available capital resources (cash on hand), projected operating cas
h
fl
ow, an
d
access to comm
i
tte
d
cre
di
t
f
ac
ili
t
i
es, we
h
ave a
d
equate cap
i
ta
l
resources to
f
un
d
wor
ki
ng cap
i
ta
l
nee
d
s
,
currentl
y
anticipated capital expenditures, business
g
rowth and expansion, contractual obli
g
ations, current an
d
projected debt service requirements, dividends and share repurchases. During fiscal 2011, we acquired Kinray,
Yong Yu an
d
P4 Hea
l
t
h
care w
i
t
h
cas
h
on
h
an
d
.I
f
we
d
ec
id
e to engage
i
n one or more a
ddi
t
i
ona
l
acqu
i
s
i
t
i
ons,
d
ependin
g
on the size and timin
g
of such transactions, we ma
y
need supplemental fundin
g.
Ca
p
ita
l
Resource
s
Cas
h
an
d
Equiva
l
ent
s
O
ur cash and e
q
uivalents balance was
$
1.9 billion at June 30, 2011, com
p
ared to
$
2.8 billion at June 30
,
2010. At June 30, 2011, our cas
h
an
d
cas
h
equ
i
va
l
ents were
h
e
ld i
n cas
hd
epos
i
tory accounts w
i
t
h
ma
j
or
b
an
k
s
a
round the world or invested in hi
g
h qualit
y
, short-term liquid investments. The decrease was primaril
y
driven b
y
a
cquisitions, offset by net cash provided by operating activities (which is primarily driven by net earnings and
wor
ki
ng cap
i
ta
l
), an
d
t
h
esa
l
eo
f
our rema
i
n
i
ng
i
nvestment
i
n CareFus
i
on. C
h
anges
i
n wor
ki
ng cap
i
ta
l
can var
y
si
g
nificantl
y
dependin
g
on factors such as the timin
g
of inventor
y
purchases, customer pa
y
ments of account
s
receivable, and payments to vendors during the regular course of business.
We use
d
a
y
ssa
l
es outstan
di
n
g
(“DSO”),
d
a
y
s
i
nventor
y
on
h
an
d
(“DIOH”) an
dd
a
y
spa
y
a
bl
e outstan
di
n
g
(“DPO”) to evaluate our workin
g
capital performance. DSO is calculated as trade receivables, net divided b
y
a
verage
d
a
il
y revenue
d
ur
i
ng t
h
e
l
ast mont
h
o
f
t
h
e report
i
ng per
i
o
d
. DIOH
i
sca
l
cu
l
ate
d
as
i
nventor
i
es
di
v
id
e
dby
a
vera
g
e
d
a
ily
cost o
f
pro
d
ucts so
ld
an
d
c
h
ar
g
e
b
ac
k billi
n
g
s
d
ur
i
n
g
t
h
e
l
ast quarter o
f
t
h
e report
i
n
g
per
i
o
d
. DPO
is
calculated as accounts pa
y
able divided b
y
avera
g
e dail
y
cost of products sold and char
g
eback billin
g
s durin
g
th
e
l
ast quarter o
f
t
h
e report
i
ng per
i
o
d
.C
h
arge
b
ac
k billi
ngs are t
h
e
diff
erence
b
etween a pro
d
uct’s w
h
o
l
esa
l
e
a
cqu
i
s
i
t
i
on cost an
d
t
h
e contract pr
i
ce esta
bli
s
h
e
db
etween t
h
e ven
d
ors an
d
t
h
een
d
customer
.
Fi
scal Year Ended June 30
,
2011
2010
2009
Da
y
s sales outstandin
g
..............................................
2
0.3 18.
6
1
9
.1
Da
y
s inventor
y
on han
d
.............................................
2
2.
5
21.
5
23.1
Days paya
bl
e outstan
di
ng
.
...........................................
3
4.
83
2.1
30
.
5
28