Cardinal Health 2011 Annual Report Download - page 84

Long-Term De
b
t
T
he 4.00%,
5
.
5
0%,
5
.6
5
%,
5
.80%,
5
.8
5
%, 6.00% and 6.7
5
% Notes represent unsecured obligations. Th
e
7
.80% an
d
7.00% De
b
entures represent unsecure
d
o
bli
gat
i
ons o
f
A
ll
eg
i
ance Corporat
i
on (a w
h
o
ll
y-owne
d
subsidiar
y
), which Cardinal Health, Inc. has
g
uaranteed. None of these obli
g
ations are sub
j
ect to a sinkin
g
fund
a
nd the Allegiance obligations are not redeemable prior to maturity. Interest is paid pursuant to the terms of th
e
obli
gat
i
ons. T
h
ese notes are e
ff
ect
i
ve
l
ysu
b
or
di
nate
d
to t
h
e
li
a
bili
t
i
es o
f
our su
b
s
idi
ar
i
es,
i
nc
l
u
di
ng tra
d
e paya
bl
e
s
o
f $11.3 billion
.
I
n December 2010, we sold
$
500.0 million aggregate principal amount of fixed rate notes due 2020 with
interest at 4.62
5
% per
y
ear (“the 4.62
5
% Notes”) in a re
g
istered offerin
g
. The 4.62
5
% Notes mature o
n
December 1
5
, 2020. The notes are unsecured and unsubordinated obligations and rank equally in right of
payment w
i
t
h
a
ll
o
f
our ex
i
st
i
ng an
df
uture unsecure
d
an
d
unsu
b
or
di
nate
di
n
d
e
b
te
d
ness. We use
d
t
h
e procee
ds
f
or
g
eneral corporate purposes and to repa
y
$219.7 million of our 6.75% Notes on Februar
y
15, 2011
.
T
he 5.65% Notes due 2012, 5.50% Notes due 2013, 6.00% Notes due 2017, and 4.625% Notes require us to
o
ffer to
p
urchase the notes at 101% of the
p
rinci
p
al amount
p
lus accrued and un
p
aid interest, if we have a defined
change of control and specified ratings below investment grade by S&P, Moody’s, and Fitch.
O
n September 24, 2009, we completed a debt tender announced on Au
g
ust 27, 2009 for an a
gg
re
g
ate
purchase 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 15, 2016 of Allegianc
e
C
orporation; (ii) our 6.7
5
% Notes due Februar
y
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 15, 2016;
(
vii
)
our 5.65% Notes due June 15, 2012;
(
viii
)
our 5.50% Notes due
J
une 1
5
, 2013; and (ix) our 4.00% Notes due June 1
5
, 201
5
. In connection with the debt tender, we incurred a
pre-tax loss for the early extinguishment of debt of approximately
$
39.9 million, which included an early tender
premium 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 ad
j
ustment to the respective debt related to previousl
y
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
connect
i
on w
i
t
h
t
h
eSp
i
n-O
ff.
O
ther Financing Arrangements
I
n addition to cash and equivalents, at June 30, 2011 and 2010, our sources of liquidit
y
included
a
$
1.5 billion commercial paper program backed by a
$
1.5 billion revolving credit facility. On May 12, 2011, w
e
replaced our prior revolving credit facility with a new
$
1.5 billion facility that expires in May 2016. The
revolvin
g
credit facilit
y
exists lar
g
el
y
to support issuances of commercial paper as well as other short-term
borrowings for general corporate purposes
.
We also maintain a $950.0 million committed receivables sales facilit
y
pro
g
ram. On November 9, 2010, w
e
a
mended our committed receivables sales facility to extend its term to November 2012. The committed
rece
i
va
bl
es sa
l
es
f
ac
ili
ty ex
i
sts
l
arge
l
y to prov
id
e
li
qu
idi
ty
b
yse
lli
ng
i
nterests
i
n our rece
i
va
bl
es
.
We had no outstanding borrowings from the commercial paper program and no outstanding balance unde
r
t
h
e comm
i
tte
d
rece
i
va
bl
es sa
l
es
f
ac
ili
ty program at June 30, 2011 an
d
2010. We a
l
so
h
a
d
no outstan
di
ng
b
a
l
anc
e
u
nder the revolvin
g
credit facilit
y
at June 30, 2011 and 2010, except for $44.3 million and $48.2 million
,
respectively, of standby letters of credit. Our revolving credit facility and committed receivables sales facility
requ
i
re us to ma
i
nta
i
n a conso
lid
ate
di
nterest coverage rat
i
o, as o
f
any
fi
sca
l
quarter en
d
,o
f
at
l
east 4-to-1 an
da
consolidated levera
g
e ratio of no more than 3.2
5
-to-1. As of June 30, 2011, we were in compliance with thes
e
f
inancial covenants.
58