Document
Document - Jun. 30, 2015 - shares | Total |
Document And Entity Information [Abstract] | |
Entity Registrant Name | MCKESSON CORP |
Entity Central Index Key | 927,653 |
Current Fiscal Year End Date | --03-31 |
Entity Filer Category | Large Accelerated Filer |
Document Type | 10-Q |
Document Period End Date | Jun. 30, 2015 |
Document Fiscal Year Focus | 2,016 |
Document Fiscal Period Focus | Q1 |
Amendment Flag | false |
Entity Common Stock, Shares Outstanding | 232,403,216 |
Condensed Consolidated Statemen
Condensed Consolidated Statements Of Operations - USD ($) shares in Millions, $ in Millions | 3 Months Ended | ||
Jun. 30, 2015 | Jun. 30, 2014 | ||
Income Statement [Abstract] | |||
Revenues | $ 47,546 | $ 43,476 | |
Cost of Sales | (44,698) | (40,744) | |
Gross Profit | 2,848 | 2,732 | |
Operating Expenses | (1,917) | (2,051) | |
Operating Income | 931 | 681 | |
Other Income, Net | 13 | 19 | |
Interest Expense | (89) | (96) | |
Income from Continuing Operations Before Income Taxes | 855 | 604 | |
Income Tax Expense | (256) | (185) | |
Income from Continuing Operations | 599 | 419 | |
Loss from Discontinued Operations, Net of Tax | (10) | (8) | |
Net Income | 589 | 411 | |
Net Income Attributable to Noncontrolling Interests | (13) | (8) | |
Net Income Attributable to McKesson Corporation | $ 576 | $ 403 | |
Diluted (in dollars per share) | |||
Continuing operations | [1] | $ 2.50 | $ 1.76 |
Discontinued operations | [1] | (0.05) | (0.04) |
Total | [1] | 2.45 | 1.72 |
Basic (in dollars per share) | |||
Continuing operations | [1] | 2.53 | 1.79 |
Discontinued operations | [1] | (0.04) | (0.04) |
Total | [1] | 2.49 | 1.75 |
Dividends Declared Per Common Share | $ 0.24 | $ 0.24 | |
Weighted Average Common Shares (in shares) | |||
Diluted | 235 | 235 | |
Basic | 232 | 231 | |
[1] | Certain computations may reflect rounding adjustments. |
Condensed Consolidated Stateme3
Condensed Consolidated Statements of Comprehensive Income - USD ($) $ in Millions | 3 Months Ended | ||
Jun. 30, 2015 | Jun. 30, 2014 | ||
Statement of Comprehensive Income [Abstract] | |||
Net Income | $ 589 | $ 411 | |
Other Comprehensive Income (Loss), Net of Tax | |||
Foreign currency translation adjustments arising during period | [1] | 347 | 98 |
Unrealized gains (losses) on cash flow hedges arising during period | 4 | (2) | |
Retirement-related benefit plans | (28) | 2 | |
Other Comprehensive Income (Loss), Net of Tax | 323 | 98 | |
Comprehensive Income | 912 | 509 | |
Comprehensive Loss (Income) Attributable to Noncontrolling Interests | (57) | 4 | |
Comprehensive Income Attributable to McKesson Corporation | $ 855 | $ 513 | |
[1] | The first quarters of 2016 and 2015 include net foreign currency translation gains of $50 million and net foreign currency translation losses of $12 million attributable to noncontrolling and redeemable noncontrolling interests. |
Condensed Consolidated Balance
Condensed Consolidated Balance Sheets - USD ($) $ in Millions | Jun. 30, 2015 | Mar. 31, 2015 |
Current Assets | ||
Cash and cash equivalents | $ 5,635 | $ 5,341 |
Receivables, net | 16,684 | 15,914 |
Inventories, net | 14,932 | 14,296 |
Prepaid expenses and other | 1,320 | 1,119 |
Total Current Assets | 38,571 | 36,670 |
Property, Plant and Equipment, Net | 2,100 | 2,045 |
Goodwill | 9,949 | 9,817 |
Intangible Assets, Net | 3,426 | 3,441 |
Other Assets | 1,879 | 1,897 |
Total Assets | 55,925 | 53,870 |
Current Liabilities | ||
Drafts and accounts payable | 26,319 | 25,166 |
Short-term borrowings | 144 | 135 |
Deferred revenue | 939 | 1,078 |
Deferred tax liabilities | 1,869 | 1,820 |
Current portion of long-term debt | 1,510 | 1,529 |
Other accrued liabilities | 3,892 | 3,769 |
Total Current Liabilities | 34,673 | 33,497 |
Long-Term Debt | 8,142 | 8,180 |
Other Noncurrent Liabilities | $ 2,741 | $ 2,722 |
Commitments and Contingent Liabilities (Note 13) | ||
Redeemable Noncontrolling Interests | $ 1,430 | $ 1,386 |
McKesson Corporation Stockholders’ Equity | ||
Preferred stock, $0.01 par value, 100 shares authorized, no shares issued or outstanding | 0 | 0 |
Common stock, $0.01 par value, 800 shares authorized at June 30, 2015 and March 31, 2015, 385 and 384 shares issued at June 30, 2015 and March 31, 2015 | 4 | 4 |
Additional Paid-in Capital | 7,121 | 6,968 |
Retained Earnings | 13,227 | 12,705 |
Accumulated Other Comprehensive Loss | (1,434) | (1,713) |
Other | (4) | (7) |
Treasury Shares, at Cost, 153 and 152 at June 30, 2015 and March 31, 2015 | (10,061) | (9,956) |
Total McKesson Corporation Stockholders’ Equity | 8,853 | 8,001 |
Noncontrolling Interests | 86 | 84 |
Total Equity | 8,939 | 8,085 |
Total Liabilities, Redeemable Noncontrolling Interests and Equity | $ 55,925 | $ 53,870 |
Condensed Consolidated Balance5
Condensed Consolidated Balance Sheets (Parentheticals) - $ / shares shares in Millions | Jun. 30, 2015 | Mar. 31, 2015 |
McKesson Corporation Stockholders’ Equity | ||
Preferred stock, par value (in dollars per share) | $ 0.01 | $ 0.01 |
Preferred stock, shares authorized (in shares) | 100 | 100 |
Preferred stock, shares issued (in shares) | 0 | 0 |
Preferred stock, shares outstanding (in shares) | 0 | 0 |
Common stock, par value (in dollars per share) | $ 0.01 | $ 0.01 |
Common stock, shares authorized (in shares) | 800 | 800 |
Common stock, shares issued (in shares) | 385 | 384 |
Treasury stock, shares (in shares) | 153 | 152 |
Condensed Consolidated Stateme6
Condensed Consolidated Statements Of Cash Flows - USD ($) $ in Millions | 3 Months Ended | |
Jun. 30, 2015 | Jun. 30, 2014 | |
Operating Activities | ||
Operating Activities | $ 589 | $ 411 |
Adjustments to reconcile to net cash provided by operating activities: | ||
Depreciation and amortization | 229 | 280 |
Deferred taxes | 23 | 138 |
Charges associated with last-in-first-out inventory method | 91 | 98 |
Other non-cash items | (31) | 13 |
Changes in operating assets and liabilities, net of acquisitions: | ||
Receivables | (749) | (693) |
Inventories | (635) | (893) |
Drafts and accounts payable | 1,003 | 1,367 |
Deferred revenue | (126) | (134) |
Taxes | 205 | (134) |
Other | (145) | (271) |
Net cash provided by operating activities | 454 | 182 |
Investing Activities | ||
Property acquisitions | (77) | (83) |
Capitalized software expenditures | (43) | (33) |
Acquisitions, net of cash and cash equivalents acquired | (6) | (14) |
Proceeds from sale of business | 84 | 0 |
Other | 25 | 18 |
Net cash used in investing activities | (17) | (112) |
Financing Activities | ||
Proceeds from short-term borrowings | 531 | 905 |
Repayments of short-term borrowings | (534) | (747) |
Proceeds from issuances of long-term debt | 0 | 6 |
Repayments of long-term debt | (96) | (228) |
Common stock transactions: | ||
Issuances | 38 | 34 |
Share repurchases, including shares surrendered for tax withholding | (105) | (102) |
Dividends paid | (59) | (59) |
Other | 22 | 24 |
Net cash used in financing activities | (203) | (167) |
Effect of exchange rate changes on cash and cash equivalents | 60 | 9 |
Net increase (decrease) in cash and cash equivalents | 294 | (88) |
Cash and cash equivalents at beginning of period | 5,341 | 4,193 |
Cash and cash equivalents at end of period | $ 5,635 | $ 4,105 |
Significant Accounting Policies
Significant Accounting Policies | 3 Months Ended |
Jun. 30, 2015 | |
Accounting Policies [Abstract] | |
Significant accounting policies | Significant Accounting Policies Basis of Presentation: The condensed consolidated financial statements of McKesson Corporation (“McKesson,” the “Company,” or “we” and other similar pronouns) include the financial statements of all wholly-owned subsidiaries and majority‑owned or controlled companies. We also evaluate our ownership, contractual and other interests in entities to determine if they are variable interest entities (“VIEs”), if we have a variable interest in those entities and the nature and extent of those interests. These evaluations are highly complex and involve judgment and the use of estimates and assumptions based on available historical information and management’s judgment, among other factors. Based on our evaluations, if we determine we are the primary beneficiary of such VIEs, we consolidate such entities into our financial statements. Investments in business entities in which we do not have control, but have the ability to exercise significant influence over operating and financial policies, are accounted for using the equity method and our proportionate share of income or loss is recorded in Other Income, Net. Intercompany transactions and balances have been eliminated. The condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) for interim financial reporting and the rules and regulations of the U.S. Securities and Exchange Commission (“SEC”) and, therefore, do not include all information and footnote disclosures normally included in the annual consolidated financial statements. To prepare the financial statements in conformity with GAAP, management must make estimates and assumptions that affect the reported amounts of assets and liabilities as of the date of these financial statements and income and expenses during the reporting period. Actual amounts may differ from these estimated amounts. In our opinion, the accompanying unaudited condensed consolidated financial statements include all normal recurring adjustments necessary for a fair presentation of our financial position, results of operations and cash flows for the interim periods presented. The results of operations for the quarter ended June 30, 2015 are not necessarily indicative of the results that may be expected for the entire year. These interim financial statements should be read in conjunction with the annual audited financial statements, accounting policies and financial notes included in our Annual Report on Form 10-K for the fiscal year ended March 31, 2015 previously filed with the SEC on May 12, 2015 (“2015 Annual Report”). Certain prior period amounts have been reclassified to conform to the current period presentation. The Company’s fiscal year begins on April 1 and ends on March 31. Unless otherwise noted, all references to a particular year shall mean the Company’s fiscal year. Recently Adopted Accounting Pronouncements Discontinued Operations: In the first quarter of 2016, we adopted amended guidance for reporting of discontinued operations and disclosures of disposals of components. The amended guidance revises the criteria for disposals to qualify as discontinued operations and permits significant continuing involvement and continuing cash flows with the discontinued operation. In addition, the amended guidance requires additional disclosures for discontinued operations and new disclosures for individually material disposal transactions that do not meet the definition of a discontinued operation. Refer to Financial Notes 4 and 5, “Divestiture of a Business” and “Discontinued Operations,” for more information regarding the impact of this amended guidance on our condensed consolidated financial statements. Recently Issued Accounting Pronouncements Not Yet Adopted Inventory: In July 2015, amended guidance was issued for the subsequent measurement of inventory. The amended guidance requires entities to measure inventory at the lower of cost or net realizable value. Net realizable value is the estimated selling prices in the ordinary course of business, less reasonably predictable costs of completion, disposal, and transportation. The requirement would replace the current lower of cost or market evaluation. Accounting guidance is unchanged for inventory measured using last-in, first-out (“LIFO”) or the retail method. The amended guidance will become effective for us commencing in the first quarter of 2018. Early adoption is permitted. We are currently evaluating the impact of this amended guidance on our condensed consolidated financial statements. Fair Value Measurement: In May 2015, amended guidance was issued that limits disclosures and removes the requirement to categorize investments within the fair value hierarchy if the fair value of the investment is measured using the net asset value per share practical expedient. The amended guidance will become effective for us commencing in the first quarter of 2017. Early adoption is permitted. We are currently evaluating the impact of this amended guidance on our condensed consolidated financial statements. Fees Paid in a Cloud Computing Arrangement : In April 2015, amended guidance was issued for a customer’s accounting for fees paid in a cloud computing arrangement. The amended guidance requires customers to determine whether or not an arrangement contains a software license element. If the arrangement contains a software element, the related fees paid should be accounted for as an acquisition of a software license. If the arrangement does not contain a software license, it is accounted for as a service contract. The amended guidance will become effective for us commencing in the first quarter of 2017. Early adoption is permitted. We are currently evaluating the impact of this amended guidance on our condensed consolidated financial statements. Debt Issuance Costs : In April 2015, amended guidance was issued for the balance sheet presentation of debt issuance costs. The amended guidance requires debt issuance costs related to a recognized debt liability to be reported in the balance sheet as a direct deduction from the carrying amount of that debt liability. The recognition and measurement guidance for debt issuance costs are not affected by the amended guidance. The amended guidance will become effective for us commencing in the first quarter of 2017. Early adoption is permitted. We do not expect the adoption of this guidance to have a material effect on our condensed consolidated financial statements. Consolidation: In February 2015, amended guidance was issued for consolidating legal entities in which a reporting entity holds a variable interest. The amended guidance modifies the evaluation of whether limited partnerships and similar legal entities are VIEs and changes the consolidation analysis of reporting entities that are involved with VIEs that have fee arrangements and related party relationships. The amended guidance will become effective for us commencing in the first quarter of 2017. Early adoption is permitted. We are currently evaluating the impact of this amended guidance on our condensed consolidated financial statements. Revenue Recognition: In May 2014, amended guidance was issued for recognizing revenue from contracts with customers. The amended guidance eliminates industry specific guidance and applies to all companies. Revenues will be recognized when an entity satisfies a performance obligation by transferring control of a promised good or service to a customer in an amount that reflects the consideration to which the entity expects to be entitled for that good or service. Revenue from a contract that contains multiple performance obligations is allocated to each performance obligation generally on a relative standalone selling price basis. The amended guidance also requires additional quantitative and qualitative disclosures. As a result of a July 2015 decision by the Financial Accounting Standards Board, the amended guidance is effective for us commencing in the first quarter of 2019. The amended guidance allows for either full retrospective adoption or modified retrospective adoption. Early adoption is permitted but not prior to our first quarter of 2018. We are currently evaluating the impact of this amended guidance on our condensed consolidated financial statements. |
Business Combinations
Business Combinations | 3 Months Ended |
Jun. 30, 2015 | |
Business Combinations [Abstract] | |
Business combinations | Business Combinations On February 6, 2014 , we completed the acquisition of 77.6% of the then outstanding common shares of Celesio AG (“Celesio”) and certain convertible bonds of Celesio for cash consideration of $4.5 billion , net of cash acquired. Celesio is an international wholesale and retail company and a provider of logistics and services to the pharmaceutical and healthcare sectors. Celesio’s headquarters is in Stuttgart, Germany and it operates in 14 countries around the world. The fair value measurements of the assets acquired and liabilities assumed of Celesio as of the acquisition date were finalized upon completion of the measurement period in the fourth quarter of 2015. The refinements did not have a significant impact on our consolidated statements of operations, balance sheets or cash flows in any period and, therefore, were not retrospectively adjusted in our financial statements. Financial results for Celesio are included within our International pharmaceutical distribution and services business, which is part of our Distribution Solutions segment, since the date of the acquisition. During the last two years, we also completed a number of smaller acquisitions within our Distribution Solutions segment. Financial results for our business acquisitions have been included in our consolidated financial statements since their respective acquisition dates. Purchase prices for our business acquisitions have been allocated based on estimated fair values at the date of acquisition. Goodwill recognized for our business acquisitions is generally not expected to be deductible for tax purposes. However, if we acquire the assets of a company, the goodwill may be deductible for tax purposes. |
Redeemable Noncontrolling Inter
Redeemable Noncontrolling Interests | 3 Months Ended |
Jun. 30, 2015 | |
Noncontrolling Interest [Abstract] | |
Redeemable noncontrolling interest | Redeemable Noncontrolling Interests On May 22, 2014, Celesio and McKesson, through its wholly-owned subsidiary, Celesio Holdings Deutschland GmbH & Co. KGaA (“Celesio Deutschland,” formerly known as “McKesson Deutschland GmbH & Co. KGaA”), entered into the domination and profit and loss transfer agreement (the “Domination Agreement”). The Domination Agreement was approved at the general shareholders’ meeting of Celesio on July 15, 2014, approved by the Stuttgart Higher Regional Court for registration on December 2, 2014, and was registered in the commercial register of Celesio at the local court of Stuttgart on December 2, 2014. Under the Domination Agreement, McKesson is obligated to pay an annual recurring compensation amount of €0.83 per Celesio share (“Compensation Amount”). The Compensation Amount is recognized ratably during the applicable annual period and is included in our condensed consolidated statements of operations within the caption, “Net Income Attributable to Noncontrolling Interests,” and the corresponding liability balance is included within “Other accrued liabilities” on our condensed consolidated balance sheet. In addition, under the Domination Agreement, the noncontrolling interests in Celesio are redeemable at the option of the holder as a result of a right to put their Celesio shares at €22.99 per share (“Put Right”). Accordingly, the noncontrolling interests in Celesio are presented as “Redeemable Noncontrolling Interests” on our condensed consolidated balance sheet. The Put Right amount is increased annually for interest in the amount of five percentage points above a base rate published by the German Bundesbank semiannually, less the guaranteed dividend payment for calendar year 2014 (“Guaranteed Dividend”) and any Compensation Amount already paid in respect of the relevant time period (“Put Amount”). The exercise of the Put Right will reduce the balance of redeemable noncontrolling interests. There were no material exercises during the first quarter of 2016. The balance of redeemable noncontrolling interests is reported at the greater of its carrying value or its maximum redemption value at each reporting date. The redemption value is the Put Amount adjusted for exchange rate fluctuations each period. At June 30, 2015 and March 31, 2015, the carrying value of redeemable noncontrolling interests of $1.43 billion and $1.39 billion exceeded the maximum redemption value of $1.26 billion and $1.21 billion . At June 30, 2015 and March 31, 2015, we owned approximately 76.0% of Celesio’s outstanding common shares. Subsequent to the Domination Agreement’s registration, certain noncontrolling shareholders of Celesio initiated appraisal proceedings (“Appraisal Proceedings”) with the Stuttgart Higher Regional Court to challenge the Compensation Amount, Guaranteed Dividend and/or Put Amount. As long as any Appraisal Proceedings are pending, the Compensation Amount, Guaranteed Dividend and/or Put Amount will be paid as specified currently in the Domination Agreement. If any such Appraisal Proceedings result in an adjustment to the Compensation Amount, Guaranteed Dividend and/or Put Amount, Celesio Deutschland would be required to make certain additional payments for any shortfall to all Celesio noncontrolling shareholders who previously received the Guaranteed Dividend, Compensation Amount and/or Put Amount. The Put Right specified in the Domination Agreement may be exercised until two months after the announcement regarding the end of the Appraisal Proceedings. In addition, if the Domination Agreement is terminated, the Put Right may be exercised for a two-month period after the date of termination. Changes in redeemable noncontrolling interests were as follows: (In millions) Redeemable Noncontrolling Interests Balance, March 31, 2015 $ 1,386 Net income attributable to noncontrolling interests 11 Other comprehensive income 44 Reclassification of recurring compensation to other accrued liabilities (11 ) Balance, June 30, 2015 $ 1,430 During the first quarter of 2015, the effect of changes in our ownership interest in Celesio on our equity of $3 million was recorded as an increase to McKesson’s stockholders’ paid-in capital. Net income attributable to McKesson and transfers from noncontrolling interests to McKesson equity amounted to $406 million for the first quarter of 2015. There were no material changes in our ownership interest in Celesio during the first quarter of 2016. On August 14, 2014, Magnetar Capital filed a lawsuit against Celesio with the Stuttgart Regional Court claiming that the shareholders’ approval of the Domination Agreement was void under the German Stock Corporation Act. On June 16, 2015, the Stuttgart Regional Court ruled in favor of Celesio. |
Divestiture of a Business
Divestiture of a Business | 3 Months Ended |
Jun. 30, 2015 | |
Business Combinations [Abstract] | |
Other income and other expense disclosure | Divestiture of a Business During the first quarter of 2016, we sold our nurse triage business within our Technology Solutions segment for net sale proceeds of $84 million . This divestiture did not meet the criteria to qualify as a discontinued operation under the amended guidance, which became effective for us in the first quarter of 2016. Accordingly, a pre-tax gain of $51 million ( $38 million after-tax) from this divestiture was recorded in operating expenses within continuing operations of our condensed consolidated statements of operations. Pre and after-tax income of our nurse triage business were not material for the quarters ended June 30, 2015 and 2014 |
Discontinued Operations
Discontinued Operations | 3 Months Ended |
Jun. 30, 2015 | |
Discontinued Operations and Disposal Groups [Abstract] | |
Discontinued operations | Discontinued Operations During the fourth quarter of 2015, we committed to a plan to sell our Brazilian pharmaceutical distribution business and a small business from our Distribution Solutions segment. We acquired the Brazilian distribution business through our February 2014 acquisition of Celesio. The results of operations and cash flows of these businesses are classified as discontinued operations for all periods presented in our condensed consolidated financial statements. During the fourth quarter of 2015, we recorded $241 million non-cash pre-tax ( $235 million after-tax) impairment charges to reduce the carrying value of this Brazilian distribution business to its estimated fair value, less cost to sell. The ultimate loss from the sale may be higher or lower than our current assessment of the business’ fair value and will be recorded in discontinued operations. In April 2015, a fire destroyed one of our Brazilian warehouses. While we maintain property loss and business interruption insurance, this event may impact the fair value of our Brazilian business. During the first quarter of 2015, we decided to retain the workforce business within our International Technology business, which had been classified as a discontinued operation since the time we committed to a plan to sell the International Technology business in the first quarter of 2014. As a result, the workforce business was reclassified to continuing operations in the first quarter of 2015 for all periods presented and we recorded a non-cash pre-tax charge of $34 million ( $27 million after-tax) primarily relating to depreciation and amortization expense for the period in 2014 while the business was classified as held for sale. This non-cash charge was recorded in our consolidated statements of operations primarily in cost of sales. The workforce business, which provided workforce management solutions for the National Health Service in the United Kingdom, was transitioned to another service provider during the first quarter of 2016. We completed the sale of a software business within our International Technology business during the second quarter of 2015 and at that time, we recorded a pre-tax and after-tax loss of $6 million within the discontinued operations of our condensed consolidated statements of operations. A summary of results of discontinued operations is as follows: Quarter Ended June 30, (In millions) 2015 2014 Revenues $ 447 $ 618 Cost of sales (405 ) (543 ) Operating expenses (52 ) (84 ) Other expenses, net (3 ) (3 ) Pre-tax loss from discontinued operations (13 ) (12 ) Income tax benefit 3 4 Loss from discontinued operations, net of tax $ (10 ) $ (8 ) A summary of carrying amounts of major classes of assets and liabilities included as part of discontinued operations is as follows: June 30, March 31, (In millions) 2015 2015 Receivables, net $ 347 $ 314 Inventories, net 273 254 Other assets 101 92 Total assets of discontinued operations (1) 721 660 Drafts and account payable 243 209 Short-term borrowings 153 126 Other liabilities 341 328 Total liabilities of discontinued operations (1) $ 737 $ 663 (1) All assets and liabilities of discontinued operations are included under the captions “Prepaid expenses and other” and “Other accrued liabilities” within our condensed consolidated balance sheets. The carrying values of the assets and liabilities classified as held for sale were $817 million and $750 million at June 30, 2015 and $660 million and $663 million at March 31, 2015. |
Income Taxes
Income Taxes | 3 Months Ended |
Jun. 30, 2015 | |
Income Tax Disclosure [Abstract] | |
Income taxes | Income Taxes During the first quarters of 2016 and 2015, income tax expense related to continuing operations was $256 million and $185 million and included net discrete tax benefits of $5 million and $12 million . As of June 30, 2015 , we had $497 million of unrecognized tax benefits, of which $337 million would reduce income tax expense and the effective tax rate, if recognized. During the next twelve months, it is reasonably possible that audit resolutions and the expiration of statutes of limitations could potentially reduce our unrecognized tax benefits by up to $131 million . However, this amount may change as we continue to have ongoing negotiations with various taxing authorities throughout the year. We received reassessments from the Canada Revenue Agency (“CRA”) related to a transfer pricing matter impacting years 2003 through 2010, and filed Notices of Appeal to the Tax Court of Canada for all of these years. On December 13, 2013, the Tax Court of Canada dismissed our appeal of the 2003 reassessment and we filed a Notice of Appeal to the Federal Court of Appeal. During the first quarter of 2016, we reached an agreement to settle the transfer pricing matter for years 2003 through 2010 and recorded a discrete income tax benefit of $12 million for a previously unrecognized tax benefit. During the first quarter of 2015, we reached an agreement with the Internal Revenue Service (“IRS”) to settle all outstanding issues relating to years 2003 through 2006 and recognized a discrete tax benefit of $17 million to record a previously unrecognized tax benefit. The IRS is currently examining our U.S. corporation income tax returns for 2007 through 2009 and may issue a Revenue Agent Report during the second quarter of 2016. The CRA is currently examining our Canadian income tax returns for years 2011 through 2013. In nearly all jurisdictions, the tax years prior to 2003 are no longer subject to examination. We report interest and penalties on tax deficiencies as income tax expense. During the first quarters of 2016 and 2015, we recognized income tax expense of $6 million and $4 million , before any tax benefit, related to interest and penalties in our condensed consolidated statements of operations. At June 30, 2015 and 2014, before any tax benefits, our accrued interest and penalties on unrecognized tax benefits amounted to $75 million and $161 million . |
Earnings Per Common Share
Earnings Per Common Share | 3 Months Ended |
Jun. 30, 2015 | |
Earnings Per Share [Abstract] | |
Earnings per common share | Earnings Per Common Share Basic earnings per common share are computed by dividing net income by the weighted average number of common shares outstanding during the reporting period. Diluted earnings per common share are computed similar to basic earnings per common share except that it reflects the potential dilution that could occur if dilutive securities or other obligations to issue common stock were exercised or converted into common stock. The computations for basic and diluted earnings per common share are as follows: Quarter Ended June 30, (In millions, except per share amounts) 2015 2014 Income from continuing operations $ 599 $ 419 Net income attributable to noncontrolling interests (13 ) (8 ) Income from continuing operations attributable to McKesson 586 411 Loss from discontinued operations, net of tax (10 ) (8 ) Net income attributable to McKesson $ 576 $ 403 Weighted average common shares outstanding: Basic 232 231 Effect of dilutive securities: Options to purchase common stock 1 2 Restricted stock units 2 2 Diluted 235 235 Earnings (loss) per common share attributable to McKesson: (1) Diluted Continuing operations $ 2.50 $ 1.76 Discontinued operations (0.05 ) (0.04 ) Total $ 2.45 $ 1.72 Basic Continuing operations $ 2.53 $ 1.79 Discontinued operations (0.04 ) (0.04 ) Total $ 2.49 $ 1.75 (1) Certain computations may reflect rounding adjustments. Potentially dilutive securities include outstanding stock options, restricted stock units, and performance-based and other restricted stock units. Approximately 1 million and 2 million potentially dilutive securities were excluded from the computations of diluted net earnings per common share for the quarters ended June 30, 2015 and 2014 , as they were anti-dilutive. |
Goodwill And Intangible Assets,
Goodwill And Intangible Assets, Net | 3 Months Ended |
Jun. 30, 2015 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Goodwill and intangible assets, net | Goodwill and Intangible Assets, Net Changes in the carrying amount of goodwill were as follows: (In millions) Distribution Solutions Technology Solutions Total Balance, March 31, 2015 $ 7,994 $ 1,823 $ 9,817 Goodwill acquired 6 — 6 Goodwill related to a business sold — (26 ) (26 ) Amounts reclassified to assets held for sale (61 ) — (61 ) Acquisition accounting, transfers and other adjustments 8 — 8 Foreign currency translation adjustments, net 198 7 205 Balance, June 30, 2015 $ 8,145 $ 1,804 $ 9,949 As of June 30, 2015 and March 31, 2015 , the accumulated goodwill impairment losses were $36 million in our Technology Solutions segment. Information regarding intangible assets is as follows: June 30, 2015 March 31, 2015 (Dollars in millions) Weighted Average Remaining Amortization Period (years) Gross Carrying Amount Accumulated Amortization Net Carrying Amount Gross Carrying Amount Accumulated Amortization Net Carrying Amount Customer lists 9 $ 2,717 $ (1,190 ) $ 1,527 $ 2,683 $ (1,116 ) $ 1,567 Service agreements 15 964 (230 ) 734 957 (215 ) 742 Pharmacy licenses 26 926 (83 ) 843 874 (65 ) 809 Trademarks and trade names 15 325 (87 ) 238 315 (82 ) 233 Technology 3 210 (187 ) 23 213 (184 ) 29 Other 4 175 (114 ) 61 162 (101 ) 61 Total $ 5,317 $ (1,891 ) $ 3,426 $ 5,204 $ (1,763 ) $ 3,441 Amortization expense of intangible assets was $112 million and $129 million for the quarters ended June 30, 2015 and 2014 . Estimated annual amortization expense of these assets is as follows: $301 million , $383 million , $358 million , $329 million and $302 million for the remainder of 2016 and each of the succeeding years through 2020 and $1,753 million thereafter. All intangible assets were subject to amortization as of June 30, 2015 and March 31, 2015 . |
Debt and Financing Activities
Debt and Financing Activities | 3 Months Ended |
Jun. 30, 2015 | |
Debt Disclosure [Abstract] | |
Debt and financing activities | Debt and Financing Activities Long-Term Debt Our long-term debt includes Euro-denominated corporate bonds consisting of 4.00% bonds due October 18, 2016 and 4.50% bonds due April 26, 2017. At June 30, 2015 and March 31, 2015, $402 million and $388 million of the 4.00% bonds and $582 million and $563 million of the 4.50% bonds, for a total of $984 million and $951 million , were outstanding. At March 31, 2015, we had a term loan with an outstanding balance of $89 million (or £60 million ). During the first quarter of 2016, we repaid this term loan for $93 million . Accounts Receivable Facilities We have an accounts receivable sales facility (the “Facility”) with a committed balance of $1.35 billion, although from time to time, the available amount of the Facility may be less than $1.35 billion based on accounts receivable concentration limits and other eligibility requirements. During the first quarters of 2016 and 2015, there were no borrowings under the Facility. At June 30, 2015 and March 31, 2015, there were no borrowings and related securitized accounts receivable outstanding under the Facility. The Facility contains requirements relating to the performance of the accounts receivable and covenants relating to the Company. If we do not comply with these covenants, our ability to use the Facility may be suspended and repayment of any outstanding balances under the Facility may be required. At June 30, 2015 and March 31, 2015 , we were in compliance with all covenants . The Facility will expire in November 2016 . We also have accounts receivable factoring facilities (the “Factoring Facilities”) denominated in foreign currencies with a total committed balance of $179 million . During the first quarters of 2016 and 2015, we borrowed $285 million and $758 million and repaid $295 million and $746 million in short-term borrowings under these facilities. At June 30, 2015 and March 31, 2015, there were $132 million and $135 million in secured borrowings and related accounts receivable outstanding under these facilities. The Factoring Facilities will expire through January 2016 . Revolving Credit Facilities and Lines of Credit We have a syndicated $1.3 billion five-year senior unsecured revolving credit facility, which expires in September 2016 . Borrowings under this facility bear interest based upon either the London Interbank Offered Rate or a prime rate . There were no borrowings under this facility during the first quarters of 2016 and 2015 . As of June 30, 2015 and March 31, 2015 , there were no amounts outstanding under this facility. We also have a syndicated €500 million five-year senior unsecured revolving credit facility, which expires in February 2018 . Borrowings under this facility bear interest based upon the Euro Interbank Offered Rate plus an agreed margin. There were no borrowings under this facility during the first quarters of 2016 and 2015 and no amounts outstanding as of June 30, 2015 and March 31, 2015. We also maintain bilateral credit lines primarily denominated in Euros with a total committed and uncommitted balance of $1.4 billion . During the first quarters of 2016 and 2015, we borrowed $246 million and $147 million and repaid $240 million and $16 million under these credit lines primarily related to short-term borrowings. As of June 30, 2015 and March 31, 2015, there were $40 million and $29 million outstanding under these credit lines. |
Pension Benefits
Pension Benefits | 3 Months Ended |
Jun. 30, 2015 | |
Defined Benefit Pension Plans and Defined Benefit Postretirement Plans Disclosure [Abstract] | |
Pension and other postretirement benefits disclosure [Text Block] | Pension Benefits The net periodic expense for our defined pension benefit plans is as follows: U.S. Plans Non-U.S. Plans Quarter Ended June 30, Quarter Ended June 30, (In millions) 2015 2014 2015 2014 Service cost - benefits earned during the year $ — $ — $ 5 $ 4 Interest cost on projected benefit obligation 5 5 6 9 Expected return on assets (5 ) (5 ) (8 ) (7 ) Amortization of unrecognized actuarial loss and prior service costs 9 4 1 1 Net periodic pension expense $ 9 $ 4 $ 4 $ 7 Cash contributions to these plans were $34 million and $15 million for the first quarters of 2016 and 2015. The projected unit credit method is utilized in measuring net periodic pension expense over the employees’ service life for the pension plans. Unrecognized actuarial losses exceeding 10% of the greater of the projected benefit obligation or the market value of assets are amortized straight-line over the average remaining future service periods and expected life expectancy. |
Hedging Activities
Hedging Activities | 3 Months Ended |
Jun. 30, 2015 | |
Derivative Instruments and Hedging Activities Disclosure [Abstract] | |
Hedging activities disclosure [Text Block] | Hedging Activities In the normal course of business, we are exposed to interest rate changes and foreign currency fluctuations. At times, we limit these risks through the use of derivatives such as interest rate swaps and forward foreign exchange contracts. In accordance with our policy, derivatives are only used for hedging purposes. We do not use derivatives for trading or speculative purposes. Foreign currency rate risk The majority of our operations are conducted in U.S. dollars; however, certain assets and liabilities, revenues and expense and purchasing activities are incurred in and exposed to other currencies. We have certain foreign currency rate risk programs that manage the impact of foreign currency fluctuation including the use of foreign currency forward-exchange contracts. These contracts are used to offset the potential earnings effects from mostly intercompany foreign currency loans. These programs reduce but do not entirely eliminate foreign currency rate risk. At June 30, 2015 and March 31, 2015, forward contracts to hedge the U.S. dollar against cash flows denominated in Canadian dollars with total notional values of $399 million were designated for hedge accounting. These contracts will mature between March 2016 and March 2020 . Changes in the fair values of contracts designated for hedge accounting are recorded to accumulated other comprehensive income and reclassified into earnings in the same period in which the hedged transaction affects earnings; amounts recorded to earnings for these contracts were not material during the first quarters of 2016 and 2015. We also have a number of forward contracts to primarily hedge the Euro against cash flows denominated in British pounds and other European currencies. At June 30, 2015 and March 31, 2015, the total notional value of these contracts was $2,002 million and $1,755 million . These contracts will mature from July 2015 to June 2016 and none of these contracts were designated for hedge accounting. Changes in the fair values of contracts not designated for hedge accounting are recorded directly to earnings and accordingly, net losses from the changes in the fair value of these contracts of $45 million and $20 million were recorded within operating expenses during the first quarters of 2016 and 2015. However, the losses from these contracts are largely offset by changes in the value of the underlying intercompany foreign currency loans. Information regarding the fair value of derivatives on a gross basis is as follows: Balance Sheet Caption June 30, 2015 March 31, 2015 Fair Value of Derivative U.S. Dollar Notional Fair Value of Derivative U.S Dollar Notional (In millions) Asset Liability Asset Liability Derivatives designated for hedge accounting Foreign exchange contracts (current) Prepaid expenses and other $ 13 $ — $ 76 $ 14 $ — $ 76 Foreign exchange contracts (non-current) Other assets 50 — 323 53 — 323 Total $ 63 $ — $ 67 $ — Derivatives not designated for hedge accounting Foreign exchange contracts (current) Prepaid expenses and other $ 1 $ — $ 248 $ 7 $ — $ 493 Foreign exchange contracts (current) Other accrued liabilities — 51 1,754 — 79 1,262 Total $ 1 $ 51 $ 7 $ 79 Refer to Financial Note 12, "Fair Value Measurements," for more information on these recurring fair value measurements. |
Fair Value Measurements
Fair Value Measurements | 3 Months Ended |
Jun. 30, 2015 | |
Fair Value Disclosures [Abstract] | |
Fair value measurements | Fair Value Measurements At June 30, 2015 and March 31, 2015 , the carrying amounts of cash, certain cash equivalents, restricted cash, marketable securities, receivables, drafts and accounts payable, short-term borrowings and other current liabilities approximated their estimated fair values because of the short maturity of these financial instruments. Our long-term debt and other financing are carried at amortized cost. The carrying amounts and estimated fair values of these liabilities were $9.7 billion and $9.9 billion at June 30, 2015 and $9.7 billion and $10.4 billion at March 31, 2015 . The estimated fair values of our long-term debt and other financing were determined using quoted market prices in a less active market and other observable inputs from available market information, which are considered to be Level 2 inputs, and may not be representative of actual values that could have been realized or that will be realized in the future. Included in cash and cash equivalents at June 30, 2015 and March 31, 2015 were investments in money market funds, time deposits and repurchase agreements of $4.8 billion and $4.2 billion , which are reported at fair value. The fair value of these investments was determined by using quoted prices for identical investments in active markets, which are considered to be Level 1 inputs under the fair value measurements and disclosure guidance. The carrying value of all other cash equivalents approximates their fair value due to their relatively short-term nature. Fair values of our forward foreign currency derivatives were determined using quoted market prices of similar instruments in an active market and other observable inputs from available market information. These inputs are considered Level 2 under the fair value measurements and disclosure guidance, and may not be representative of actual values that could have been realized or that will be realized in the future. Refer to Financial Note 11, "Hedging Activities," for more information on our forward foreign currency derivatives. There were no transfers between Level 1, Level 2 or Level 3 of the fair value hierarchy during the quarters ended June 30, 2015 and 2014 . |
Commitments and Contingent Liab
Commitments and Contingent Liabilities | 3 Months Ended |
Jun. 30, 2015 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments and contingencies disclosure [Text Block] | Commitments and Contingent Liabilities In addition to commitments and obligations in the ordinary course of business, we are subject to various claims, other pending and potential legal actions for damages, investigations relating to governmental laws and regulations and other matters arising out of the normal conduct of our business. As described below, many of these proceedings are at preliminary stages and many seek an indeterminate amount of damages. When a loss is considered probable and reasonably estimable, we record a liability in the amount of our best estimate for the ultimate loss. However, the likelihood of a loss with respect to a particular contingency is often difficult to predict and determining a meaningful estimate of the loss or a range of loss may not be practicable based on the information available and the potential effect of future events and decisions by third parties that will determine the ultimate resolution of the contingency. Moreover, it is not uncommon for such matters to be resolved over many years, during which time relevant developments and new information must be reevaluated at least quarterly to determine both the likelihood of potential loss and whether it is possible to reasonably estimate a range of possible loss. When a loss is probable but a reasonable estimate cannot be made, disclosure of the proceeding is provided. Disclosure also is provided when it is reasonably possible that a loss will be incurred or when it is reasonably possible that the amount of a loss will exceed the recorded provision. We review all contingencies at least quarterly to determine whether the likelihood of loss has changed and to assess whether a reasonable estimate of the loss or range of loss can be made. As discussed above, development of a meaningful estimate of loss or a range of potential loss is complex when the outcome is directly dependent on negotiations with or decisions by third parties, such as regulatory agencies, the court system and other interested parties. Such factors bear directly on whether it is possible to reasonably estimate a range of potential loss and boundaries of high and low estimates. Significant developments in previously reported proceedings and in other litigation and claims, since the filing of our 2015 Annual Report are set out below. Unless otherwise stated, we are currently unable to estimate a range of reasonably possible losses for the unresolved proceedings described below. Should any one or a combination of more than one of these proceedings be successful, or should we determine to settle any or a combination of these matters, we may be required to pay substantial sums, become subject to the entry of an injunction or be forced to change the manner in which we operate our business, which could have a material adverse impact on our financial position or results of operations. Litigation, Government Subpoenas and Investigations On August 29, 2007, PSKW, LLC filed a lawsuit against McKesson Specialty Arizona Inc. in the New York Supreme Court, New York County, alleging that McKesson Specialty Arizona misappropriated trade secrets and confidential information in launching its LoyaltyScript® program, PSKW, LLC v. McKesson Specialty Arizona Inc., Index No. 602921/07 . Plaintiff later amended its complaint twice to add additional, but related claims. On August 31, 2011, McKesson Specialty Arizona moved for summary judgment on all claims. On December 23, 2013, the court dismissed PSKW’s cause of action for misappropriation of ideas. PSKW appealed this decision and on October 21, 2014, the Appellate Division reversed. On January 30, 2015, the trial court granted McKesson Specialty Arizona’s motion to strike the jury and later set trial for June 15, 2015. The trial began on June 22, 2015 and will resume in September 2015. In May 2013, True Health Chiropractic, Inc. filed a class action against McKesson Corporation, claiming that McKesson sent unsolicited marketing faxes in violation of the Telephone Consumer Protection Act of 1991 (“TCPA”), as amended by the Junk Fax Protection Act of 2005 or JFPA. In July 2014, Plaintiff amended its complaint, adding an additional named plaintiff and McKesson Technologies Inc. as a defendant. Plaintiffs purport to represent all persons who were sent marketing faxes that did not contain proper opt-out notices and from whom McKesson did not obtain prior express permission from June 2009 to the present. The case is pending in the Northern District of California. True Health Chiropractic Inc., et al. v. McKesson Corporation, et al. , CV-13-02219 (HG). From time-to-time, the Company receives subpoenas or requests for information from various government agencies. The Company generally responds to such subpoenas and requests in a cooperative, thorough and timely manner. These responses sometimes require time and effort and can result in considerable costs being incurred by the Company. Such subpoenas and requests also can lead to the assertion of claims or the commencement of civil or criminal legal proceedings against the Company and other members of the health care industry, as well as to settlements. Examples of such subpoenas and investigations are included in the Company’s 2015 Annual Report on Form 10-K. The Company continues to receive and respond to these requests. Value Added Tax Assessments We operate in various countries outside the United States which collect value added taxes (“VAT”). The determination of the manner in which a VAT applies to our foreign operations is subject to varying interpretations arising from the complex nature of the tax laws. We have received assessments for VAT which are in various stages of appeal. We disagree with these assessments and believe that we have strong legal arguments to defend our tax positions. Certain VAT assessments relate to years covered by an indemnification agreement. Due to the complex nature of the tax laws, it is not possible to estimate the outcome of these matters. However, based on the currently available information, we believe the ultimate outcome of these matters will not have a material adverse effect on our financial position, cash flows or results of operations. |
Stockholders' Equity
Stockholders' Equity | 3 Months Ended |
Jun. 30, 2015 | |
Equity [Abstract] | |
Stockholders' equity | Stockholders’ Equity Each share of the Company’s outstanding common stock is permitted one vote on proposals presented to stockholders and is entitled to share equally in any dividends declared by the Company’s Board of Directors (the “Board”). The Company currently pays quarterly cash dividends of $0.24 per common share. In July 2015, the Company’s quarterly dividend was raised from $0.24 to $0.28 per common share for dividends declared on or after such date by the Board. The Company anticipates that it will continue to pay quarterly cash dividends in the future. However, the payment and amount of future dividends remain within the discretion of the Board and will depend upon the Company's future earnings, financial condition, capital requirements and other factors. In May 2015, the Board authorized the repurchase of up to $500 million of the Company’s common stock. The total authorization outstanding for repurchases of the Company’s common stock was $500 million at June 30, 2015 . Other Comprehensive Income (Loss) Information regarding other comprehensive income (loss) including noncontrolling and redeemable noncontrolling interests, net of tax, by component is as follows: Quarter Ended June 30, (In millions) 2015 2014 Foreign currency translation adjustments Foreign currency translation adjustments arising during period, net of income tax expense of nil and nil (1) $ 347 $ 98 Reclassified to income statement, net of income tax expense of nil and nil — — 347 98 Unrealized gains (losses) on cash flow hedges Unrealized gains (losses) on cash flow hedges arising during period, net of income tax expense of nil and nil 4 (2 ) Changes in retirement-related benefit plans Net actuarial loss and prior service cost arising during the period, net of income tax benefit of $8 and nil (2) (29 ) — Amortization of actuarial loss and prior service costs, net of income tax expense of $4 and $1 (3) 7 3 Foreign currency translation adjustments, net of income tax expense of nil and nil (6 ) (1 ) (28 ) 2 Other comprehensive income, net of tax $ 323 $ 98 (1) The first quarters of 2016 and 2015 include net foreign currency translation gains of $50 million and net foreign currency translation losses of $12 million attributable to noncontrolling and redeemable noncontrolling interests. (2) The first quarter of 2016 includes net actuarial losses of $6 million attributable to redeemable noncontrolling interests. (3) Pre-tax amount reclassified into cost of sales and operating expenses in our condensed consolidated statements of operations. The related tax expense was reclassified into income tax expense in our condensed consolidated statements of operations. Accumulated Other Comprehensive Income (Loss) Information regarding changes in our accumulated other comprehensive income (loss), net of tax, by component is as follows: (In millions) Foreign Currency Translation Adjustments, Net of Tax Unrealized Losses on Cash Flow Hedges, Net of Tax Unrealized Net Loss and Other Components of Benefit Plans, Net of Tax Total Accumulated Other Comprehensive Income (Loss) Balance at March 31, 2015 $ (1,420 ) $ (21 ) $ (272 ) $ (1,713 ) Other comprehensive income (loss) before reclassifications 347 4 (29 ) 322 Amounts reclassified to earnings and other — — 1 1 Other comprehensive income (loss) 347 4 (28 ) 323 Less: amounts attributable to noncontrolling and redeemable noncontrolling interests 50 — (6 ) 44 Other comprehensive income (loss) attributable to McKesson 297 4 (22 ) 279 Balance at June 30, 2015 $ (1,123 ) $ (17 ) $ (294 ) $ (1,434 ) |
Segment Information
Segment Information | 3 Months Ended |
Jun. 30, 2015 | |
Segment Reporting [Abstract] | |
Segment reporting disclosure [Text Block] | Segment Information We report our operations in two operating segments: McKesson Distribution Solutions and McKesson Technology Solutions. The factors for determining the reportable segments included the manner in which management evaluates the performance of the Company combined with the nature of the individual business activities. We evaluate the performance of our operating segments on a number of measures, including operating profit before interest expense, income taxes and results from discontinued operations. Financial information relating to our reportable operating segments and reconciliations to the condensed consolidated totals is as follows: Quarter Ended June 30, (In millions) 2015 2014 Revenues Distribution Solutions (1) North America pharmaceutical distribution and services $ 39,532 $ 34,304 International pharmaceutical distribution and services 5,838 7,025 Medical-Surgical distribution and services 1,440 1,379 Total Distribution Solutions 46,810 42,708 Technology Solutions - products and services 736 768 Total Revenues $ 47,546 $ 43,476 Operating profit Distribution Solutions (2) $ 910 $ 740 Technology Solutions (3) 158 68 Total 1,068 808 Corporate Expenses, Net (124 ) (108 ) Interest Expense (89 ) (96 ) Income from Continuing Operations Before Income Taxes $ 855 $ 604 (1) Revenues derived from services represent less than 2% of this segment’s total revenues. (2) Distribution Solutions operating profit for the first quarters of 2016 and 2015 include $91 million and $98 million pre-tax charges related to our last-in-first-out (“LIFO”) method of accounting for inventories. The first quarter of 2016 also includes $59 million of cash proceeds representing our share of net settlements of antitrust class action lawsuits against drug manufacturers. (3) Technology Solutions operating profit for the first quarter of 2016 includes a pre-tax gain of $51 million recognized upon the sale of our nurse triage business, and for the first quarter of 2015 includes a non-cash pre-tax charge of $34 million related to the retained workforce business within our International Technology business. |
Significant Accounting Polici22
Significant Accounting Policies (Policy) | 3 Months Ended |
Jun. 30, 2015 | |
Accounting Policies [Abstract] | |
Basis of presentation | Basis of Presentation: The condensed consolidated financial statements of McKesson Corporation (“McKesson,” the “Company,” or “we” and other similar pronouns) include the financial statements of all wholly-owned subsidiaries and majority‑owned or controlled companies. We also evaluate our ownership, contractual and other interests in entities to determine if they are variable interest entities (“VIEs”), if we have a variable interest in those entities and the nature and extent of those interests. These evaluations are highly complex and involve judgment and the use of estimates and assumptions based on available historical information and management’s judgment, among other factors. Based on our evaluations, if we determine we are the primary beneficiary of such VIEs, we consolidate such entities into our financial statements. Investments in business entities in which we do not have control, but have the ability to exercise significant influence over operating and financial policies, are accounted for using the equity method and our proportionate share of income or loss is recorded in Other Income, Net. Intercompany transactions and balances have been eliminated. The condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) for interim financial reporting and the rules and regulations of the U.S. Securities and Exchange Commission (“SEC”) and, therefore, do not include all information and footnote disclosures normally included in the annual consolidated financial statements. |
Use of estimates | To prepare the financial statements in conformity with GAAP, management must make estimates and assumptions that affect the reported amounts of assets and liabilities as of the date of these financial statements and income and expenses during the reporting period. Actual amounts may differ from these estimated amounts. In our opinion, the accompanying unaudited condensed consolidated financial statements include all normal recurring adjustments necessary for a fair presentation of our financial position, results of operations and cash flows for the interim periods presented. The results of operations for the quarter ended June 30, 2015 are not necessarily indicative of the results that may be expected for the entire year. These interim financial statements should be read in conjunction with the annual audited financial statements, accounting policies and financial notes included in our Annual Report on Form 10-K for the fiscal year ended March 31, 2015 previously filed with the SEC on May 12, 2015 (“2015 Annual Report”). |
Reclassifications | Certain prior period amounts have been reclassified to conform to the current period presentation. |
Fiscal period | The Company’s fiscal year begins on April 1 and ends on March 31. Unless otherwise noted, all references to a particular year shall mean the Company’s fiscal year. |
Recently adopted accounting pronouncements | Recently Adopted Accounting Pronouncements Discontinued Operations: In the first quarter of 2016, we adopted amended guidance for reporting of discontinued operations and disclosures of disposals of components. The amended guidance revises the criteria for disposals to qualify as discontinued operations and permits significant continuing involvement and continuing cash flows with the discontinued operation. In addition, the amended guidance requires additional disclosures for discontinued operations and new disclosures for individually material disposal transactions that do not meet the definition of a discontinued operation. Refer to Financial Notes 4 and 5, “Divestiture of a Business” and “Discontinued Operations,” for more information regarding the impact of this amended guidance on our condensed consolidated financial statements. |
Recently issued accounting pronouncements not yet adopted | Recently Issued Accounting Pronouncements Not Yet Adopted Inventory: In July 2015, amended guidance was issued for the subsequent measurement of inventory. The amended guidance requires entities to measure inventory at the lower of cost or net realizable value. Net realizable value is the estimated selling prices in the ordinary course of business, less reasonably predictable costs of completion, disposal, and transportation. The requirement would replace the current lower of cost or market evaluation. Accounting guidance is unchanged for inventory measured using last-in, first-out (“LIFO”) or the retail method. The amended guidance will become effective for us commencing in the first quarter of 2018. Early adoption is permitted. We are currently evaluating the impact of this amended guidance on our condensed consolidated financial statements. Fair Value Measurement: In May 2015, amended guidance was issued that limits disclosures and removes the requirement to categorize investments within the fair value hierarchy if the fair value of the investment is measured using the net asset value per share practical expedient. The amended guidance will become effective for us commencing in the first quarter of 2017. Early adoption is permitted. We are currently evaluating the impact of this amended guidance on our condensed consolidated financial statements. Fees Paid in a Cloud Computing Arrangement : In April 2015, amended guidance was issued for a customer’s accounting for fees paid in a cloud computing arrangement. The amended guidance requires customers to determine whether or not an arrangement contains a software license element. If the arrangement contains a software element, the related fees paid should be accounted for as an acquisition of a software license. If the arrangement does not contain a software license, it is accounted for as a service contract. The amended guidance will become effective for us commencing in the first quarter of 2017. Early adoption is permitted. We are currently evaluating the impact of this amended guidance on our condensed consolidated financial statements. Debt Issuance Costs : In April 2015, amended guidance was issued for the balance sheet presentation of debt issuance costs. The amended guidance requires debt issuance costs related to a recognized debt liability to be reported in the balance sheet as a direct deduction from the carrying amount of that debt liability. The recognition and measurement guidance for debt issuance costs are not affected by the amended guidance. The amended guidance will become effective for us commencing in the first quarter of 2017. Early adoption is permitted. We do not expect the adoption of this guidance to have a material effect on our condensed consolidated financial statements. Consolidation: In February 2015, amended guidance was issued for consolidating legal entities in which a reporting entity holds a variable interest. The amended guidance modifies the evaluation of whether limited partnerships and similar legal entities are VIEs and changes the consolidation analysis of reporting entities that are involved with VIEs that have fee arrangements and related party relationships. The amended guidance will become effective for us commencing in the first quarter of 2017. Early adoption is permitted. We are currently evaluating the impact of this amended guidance on our condensed consolidated financial statements. Revenue Recognition: In May 2014, amended guidance was issued for recognizing revenue from contracts with customers. The amended guidance eliminates industry specific guidance and applies to all companies. Revenues will be recognized when an entity satisfies a performance obligation by transferring control of a promised good or service to a customer in an amount that reflects the consideration to which the entity expects to be entitled for that good or service. Revenue from a contract that contains multiple performance obligations is allocated to each performance obligation generally on a relative standalone selling price basis. The amended guidance also requires additional quantitative and qualitative disclosures. As a result of a July 2015 decision by the Financial Accounting Standards Board, the amended guidance is effective for us commencing in the first quarter of 2019. The amended guidance allows for either full retrospective adoption or modified retrospective adoption. Early adoption is permitted but not prior to our first quarter of 2018. We are currently evaluating the impact of this amended guidance on our condensed consolidated financial statements. |
Redeemable Noncontrolling Int23
Redeemable Noncontrolling Interests, Schedule of Changes (Tables) | 3 Months Ended |
Jun. 30, 2015 | |
Noncontrolling Interest [Abstract] | |
Redeemable noncontrolling interest | Changes in redeemable noncontrolling interests were as follows: (In millions) Redeemable Noncontrolling Interests Balance, March 31, 2015 $ 1,386 Net income attributable to noncontrolling interests 11 Other comprehensive income 44 Reclassification of recurring compensation to other accrued liabilities (11 ) Balance, June 30, 2015 $ 1,430 |
Discontinued Operations (Tables
Discontinued Operations (Tables) | 3 Months Ended |
Jun. 30, 2015 | |
Discontinued Operations and Disposal Groups [Abstract] | |
Schedule of results from discontinued operations | A summary of results of discontinued operations is as follows: Quarter Ended June 30, (In millions) 2015 2014 Revenues $ 447 $ 618 Cost of sales (405 ) (543 ) Operating expenses (52 ) (84 ) Other expenses, net (3 ) (3 ) Pre-tax loss from discontinued operations (13 ) (12 ) Income tax benefit 3 4 Loss from discontinued operations, net of tax $ (10 ) $ (8 ) A summary of carrying amounts of major classes of assets and liabilities included as part of discontinued operations is as follows: June 30, March 31, (In millions) 2015 2015 Receivables, net $ 347 $ 314 Inventories, net 273 254 Other assets 101 92 Total assets of discontinued operations (1) 721 660 Drafts and account payable 243 209 Short-term borrowings 153 126 Other liabilities 341 328 Total liabilities of discontinued operations (1) $ 737 $ 663 (1) All assets and liabilities of discontinued operations are included under the captions “Prepaid expenses and other” and “Other accrued liabilities” within our condensed consolidated balance sheets. |
Earnings Per Common Share (Tabl
Earnings Per Common Share (Tables) | 3 Months Ended |
Jun. 30, 2015 | |
Earnings Per Share [Abstract] | |
Basic and diluted earnings per common share | The computations for basic and diluted earnings per common share are as follows: Quarter Ended June 30, (In millions, except per share amounts) 2015 2014 Income from continuing operations $ 599 $ 419 Net income attributable to noncontrolling interests (13 ) (8 ) Income from continuing operations attributable to McKesson 586 411 Loss from discontinued operations, net of tax (10 ) (8 ) Net income attributable to McKesson $ 576 $ 403 Weighted average common shares outstanding: Basic 232 231 Effect of dilutive securities: Options to purchase common stock 1 2 Restricted stock units 2 2 Diluted 235 235 Earnings (loss) per common share attributable to McKesson: (1) Diluted Continuing operations $ 2.50 $ 1.76 Discontinued operations (0.05 ) (0.04 ) Total $ 2.45 $ 1.72 Basic Continuing operations $ 2.53 $ 1.79 Discontinued operations (0.04 ) (0.04 ) Total $ 2.49 $ 1.75 (1) Certain computations may reflect rounding adjustments. |
Goodwill And Intangible Asset26
Goodwill And Intangible Assets, Net (Tables) | 3 Months Ended |
Jun. 30, 2015 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Changes In the carrying amount of goodwill | Changes in the carrying amount of goodwill were as follows: (In millions) Distribution Solutions Technology Solutions Total Balance, March 31, 2015 $ 7,994 $ 1,823 $ 9,817 Goodwill acquired 6 — 6 Goodwill related to a business sold — (26 ) (26 ) Amounts reclassified to assets held for sale (61 ) — (61 ) Acquisition accounting, transfers and other adjustments 8 — 8 Foreign currency translation adjustments, net 198 7 205 Balance, June 30, 2015 $ 8,145 $ 1,804 $ 9,949 |
Information regarding intangible assets | Information regarding intangible assets is as follows: June 30, 2015 March 31, 2015 (Dollars in millions) Weighted Average Remaining Amortization Period (years) Gross Carrying Amount Accumulated Amortization Net Carrying Amount Gross Carrying Amount Accumulated Amortization Net Carrying Amount Customer lists 9 $ 2,717 $ (1,190 ) $ 1,527 $ 2,683 $ (1,116 ) $ 1,567 Service agreements 15 964 (230 ) 734 957 (215 ) 742 Pharmacy licenses 26 926 (83 ) 843 874 (65 ) 809 Trademarks and trade names 15 325 (87 ) 238 315 (82 ) 233 Technology 3 210 (187 ) 23 213 (184 ) 29 Other 4 175 (114 ) 61 162 (101 ) 61 Total $ 5,317 $ (1,891 ) $ 3,426 $ 5,204 $ (1,763 ) $ 3,441 |
Pension Benefits (Tables)
Pension Benefits (Tables) | 3 Months Ended |
Jun. 30, 2015 | |
Defined Benefit Pension Plans and Defined Benefit Postretirement Plans Disclosure [Abstract] | |
Schedule of net benefit costs [Table Text Block] | The net periodic expense for our defined pension benefit plans is as follows: U.S. Plans Non-U.S. Plans Quarter Ended June 30, Quarter Ended June 30, (In millions) 2015 2014 2015 2014 Service cost - benefits earned during the year $ — $ — $ 5 $ 4 Interest cost on projected benefit obligation 5 5 6 9 Expected return on assets (5 ) (5 ) (8 ) (7 ) Amortization of unrecognized actuarial loss and prior service costs 9 4 1 1 Net periodic pension expense $ 9 $ 4 $ 4 $ 7 |
Derivative Fair Value Table (Ta
Derivative Fair Value Table (Tables) | 3 Months Ended |
Jun. 30, 2015 | |
Derivative Instruments and Hedging Activities Disclosure [Abstract] | |
Fair value, by balance sheet grouping [Table Text Block] | Information regarding the fair value of derivatives on a gross basis is as follows: Balance Sheet Caption June 30, 2015 March 31, 2015 Fair Value of Derivative U.S. Dollar Notional Fair Value of Derivative U.S Dollar Notional (In millions) Asset Liability Asset Liability Derivatives designated for hedge accounting Foreign exchange contracts (current) Prepaid expenses and other $ 13 $ — $ 76 $ 14 $ — $ 76 Foreign exchange contracts (non-current) Other assets 50 — 323 53 — 323 Total $ 63 $ — $ 67 $ — Derivatives not designated for hedge accounting Foreign exchange contracts (current) Prepaid expenses and other $ 1 $ — $ 248 $ 7 $ — $ 493 Foreign exchange contracts (current) Other accrued liabilities — 51 1,754 — 79 1,262 Total $ 1 $ 51 $ 7 $ 79 |
Stockholders' Equity (Tables)
Stockholders' Equity (Tables) | 3 Months Ended |
Jun. 30, 2015 | |
Equity [Abstract] | |
Schedule of comprehensive income (Loss) | Information regarding other comprehensive income (loss) including noncontrolling and redeemable noncontrolling interests, net of tax, by component is as follows: Quarter Ended June 30, (In millions) 2015 2014 Foreign currency translation adjustments Foreign currency translation adjustments arising during period, net of income tax expense of nil and nil (1) $ 347 $ 98 Reclassified to income statement, net of income tax expense of nil and nil — — 347 98 Unrealized gains (losses) on cash flow hedges Unrealized gains (losses) on cash flow hedges arising during period, net of income tax expense of nil and nil 4 (2 ) Changes in retirement-related benefit plans Net actuarial loss and prior service cost arising during the period, net of income tax benefit of $8 and nil (2) (29 ) — Amortization of actuarial loss and prior service costs, net of income tax expense of $4 and $1 (3) 7 3 Foreign currency translation adjustments, net of income tax expense of nil and nil (6 ) (1 ) (28 ) 2 Other comprehensive income, net of tax $ 323 $ 98 (1) The first quarters of 2016 and 2015 include net foreign currency translation gains of $50 million and net foreign currency translation losses of $12 million attributable to noncontrolling and redeemable noncontrolling interests. (2) The first quarter of 2016 includes net actuarial losses of $6 million attributable to redeemable noncontrolling interests. (3) Pre-tax amount reclassified into cost of sales and operating expenses in our condensed consolidated statements of operations. The related tax expense was reclassified into income tax expense in our condensed consolidated statements of operations. |
Schedule of accumulated other comprehensive income (Loss) | Information regarding changes in our accumulated other comprehensive income (loss), net of tax, by component is as follows: (In millions) Foreign Currency Translation Adjustments, Net of Tax Unrealized Losses on Cash Flow Hedges, Net of Tax Unrealized Net Loss and Other Components of Benefit Plans, Net of Tax Total Accumulated Other Comprehensive Income (Loss) Balance at March 31, 2015 $ (1,420 ) $ (21 ) $ (272 ) $ (1,713 ) Other comprehensive income (loss) before reclassifications 347 4 (29 ) 322 Amounts reclassified to earnings and other — — 1 1 Other comprehensive income (loss) 347 4 (28 ) 323 Less: amounts attributable to noncontrolling and redeemable noncontrolling interests 50 — (6 ) 44 Other comprehensive income (loss) attributable to McKesson 297 4 (22 ) 279 Balance at June 30, 2015 $ (1,123 ) $ (17 ) $ (294 ) $ (1,434 ) |
Segment Information (Tables)
Segment Information (Tables) | 3 Months Ended |
Jun. 30, 2015 | |
Segment Reporting [Abstract] | |
Schedule of segment reporting information, by segment [Table Text Block] | Financial information relating to our reportable operating segments and reconciliations to the condensed consolidated totals is as follows: Quarter Ended June 30, (In millions) 2015 2014 Revenues Distribution Solutions (1) North America pharmaceutical distribution and services $ 39,532 $ 34,304 International pharmaceutical distribution and services 5,838 7,025 Medical-Surgical distribution and services 1,440 1,379 Total Distribution Solutions 46,810 42,708 Technology Solutions - products and services 736 768 Total Revenues $ 47,546 $ 43,476 Operating profit Distribution Solutions (2) $ 910 $ 740 Technology Solutions (3) 158 68 Total 1,068 808 Corporate Expenses, Net (124 ) (108 ) Interest Expense (89 ) (96 ) Income from Continuing Operations Before Income Taxes $ 855 $ 604 (1) Revenues derived from services represent less than 2% of this segment’s total revenues. (2) Distribution Solutions operating profit for the first quarters of 2016 and 2015 include $91 million and $98 million pre-tax charges related to our last-in-first-out (“LIFO”) method of accounting for inventories. The first quarter of 2016 also includes $59 million of cash proceeds representing our share of net settlements of antitrust class action lawsuits against drug manufacturers. (3) Technology Solutions operating profit for the first quarter of 2016 includes a pre-tax gain of $51 million recognized upon the sale of our nurse triage business, and for the first quarter of 2015 includes a non-cash pre-tax charge of $34 million related to the retained workforce business within our International Technology business. |
Business Combinations (Narrativ
Business Combinations (Narrative) (Details) - Feb. 06, 2014 - Celesio $ in Billions | USD ($)country |
Business Acquisition [Line Items] | |
Effective date of acquisition | Feb. 6, 2014 |
Voting interests acquired, percentage | 77.60% |
Acquired entity, name | Celesio AG |
Cash paid for acquisition | $ | $ 4.5 |
Number of Countries in which Entity Operates | 14 |
Redeemable Noncontrolling Int32
Redeemable Noncontrolling Interests (Narrative) (Details) $ in Millions | 3 Months Ended | |||
Jun. 30, 2014USD ($) | Jun. 30, 2015€ / shares | Jun. 30, 2015USD ($) | Mar. 31, 2015USD ($) | |
Noncontrolling Interest [Abstract] | ||||
NCI, annual compensation per share | € / shares | € 0.83 | |||
NCI, put right redemption price per share | € / shares | € 22.99 | |||
NCI, put right per share interest rate spread | 5.00% | |||
Redeemable Noncontrolling Interests | $ 1,430 | $ 1,386 | ||
Redeemable NCI, maximum redemption value | $ 1,260 | $ 1,210 | ||
NCI, ownership percentage | 76.00% | 76.00% | ||
NCI, change in ownership, paid in capital | $ 3 | |||
NCI, change in ownership, net income attributable to parent and NCI transfers | $ 406 |
Redeemable Noncontrolling Int33
Redeemable Noncontrolling Interest (Schedule of Changes) (Details) $ in Millions | 3 Months Ended |
Jun. 30, 2015USD ($) | |
Reedemable Noncontrolling Interest [Roll Forward] | |
Ending balance | $ 1,386 |
Net income attributable to noncontrolling interests | 11 |
Other comprehensive income | 44 |
Reclassification of recurring compensation to other accrued liabilities | (11) |
Ending balance | $ 1,430 |
Divestiture of a Business (Deta
Divestiture of a Business (Details) - Nurse triage $ in Millions | 3 Months Ended |
Jun. 30, 2015USD ($) | |
Noncash or Part Noncash Divestitures [Line Items] | |
Proceeds from divestiture of businesses | $ 84 |
Gain (Loss) on disposition of business | 51 |
Gain (Loss) on Disposition of Business After Tax | $ 38 |
Discontinued Operations (Narrat
Discontinued Operations (Narrative) (Details) - USD ($) $ in Millions | 3 Months Ended | |||
Mar. 31, 2015 | Sep. 30, 2014 | Jun. 30, 2014 | Jun. 30, 2015 | |
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items] | ||||
Asset impairment charges | $ 241 | |||
Asset impairment charges after tax | 235 | |||
Assets, fair value adjustment | $ 34 | |||
Assets fair value adjustment, net of tax | $ 27 | |||
Discontinued operation, loss from disposal of discontinued operation, before income tax | $ 6 | |||
Disposal group, held for sale or disposed of by sale, discontinued operation and not discontinued operation | ||||
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items] | ||||
Disposal group, including discontinued operation, assets | 660 | $ 817 | ||
Disposal group, including discontinued operation, liabilities | $ 663 | $ 750 |
Discontinued Operations (Schedu
Discontinued Operations (Schedule of Results from Discontinued Operations) (Details) - USD ($) $ in Millions | 3 Months Ended | |
Jun. 30, 2015 | Jun. 30, 2014 | |
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items] | ||
Loss from discontinued operations, net of tax | $ (10) | $ (8) |
Discontinued operations, held-for-sale or disposed of by sale | ||
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items] | ||
Revenues | 447 | 618 |
Cost of sales | (405) | (543) |
Operating expenses | (52) | (84) |
Disposal Group, Including Discontinued Operation, Other (Income) Expense, Net | (3) | (3) |
Pre-tax loss from discontinued operations | (13) | (12) |
Income tax benefit | 3 | 4 |
Loss from discontinued operations, net of tax | $ (10) | $ (8) |
Discontinued Operations (Sche37
Discontinued Operations (Schedule of Results from Discontinued Operations 2) (Details) - Discontinued operations, held-for-sale or disposed of by sale - USD ($) $ in Millions | Jun. 30, 2015 | Mar. 31, 2015 |
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items] | ||
Receivables, net | $ 347 | $ 314 |
Inventories, net | 273 | 254 |
Other assets | 101 | 92 |
Total assets of discontinued operations (1) | 721 | 660 |
Drafts and account payable | 243 | 209 |
Short-term borrowings | 153 | 126 |
Other liabilities | 341 | 328 |
Total liabilities of discontinued operations (1) | $ 737 | $ 663 |
Income Taxes (Narrative) (Detai
Income Taxes (Narrative) (Details) - USD ($) $ in Millions | 3 Months Ended | |
Jun. 30, 2015 | Jun. 30, 2014 | |
Income Tax [Line Items] | ||
Income tax expense | $ 256 | $ 185 |
Income tax benefit discrete items | 5 | 12 |
Unrecognized tax benefits | 497 | |
Unrecognized tax benefits that would impact income tax expense and the effective tax rate | 337 | |
Significant change in unrecognized tax benefits is reasonably possible, amount of unrecorded benefit | 131 | |
Income tax examination, penalties and interest expense | 6 | 4 |
Accrued interest and penalties on unrecognized tax benefits | 75 | 161 |
Canada revenue agency assessments | ||
Income Tax [Line Items] | ||
Income tax expense to settle transfer pricing | $ 12 | |
Internal revenue service (IRS) | ||
Income Tax [Line Items] | ||
Income tax benefit discrete items | $ 17 |
Earnings Per Common Share (Narr
Earnings Per Common Share (Narrative) (Details) - shares shares in Millions | 3 Months Ended | |
Jun. 30, 2015 | Jun. 30, 2014 | |
Earnings Per Share [Abstract] | ||
Antidilutive securities excluded from computation of earnings per share, amount | 1 | 2 |
Earnings Per Common Share (Basi
Earnings Per Common Share (Basic and Diluted Earnings per Common Share) (Details) - USD ($) $ / shares in Units, shares in Millions, $ in Millions | 3 Months Ended | ||
Jun. 30, 2015 | Jun. 30, 2014 | ||
Earnings Per Share [Abstract] | |||
Income from continuing operations | $ 599 | $ 419 | |
Net income attributable to noncontrolling interests | (13) | (8) | |
Income from continuing operations attributable to McKesson | 586 | 411 | |
Loss from discontinued operations, net of tax | (10) | (8) | |
Net Income Attributable to McKesson Corporation | $ 576 | $ 403 | |
Weighted Average Common Shares (in shares) | |||
Basic | 232 | 231 | |
Effect of dilutive securities: (in shares) | |||
Options to purchase common stock | 1 | 2 | |
Restricted stock units | 2 | 2 | |
Diluted | 235 | 235 | |
Diluted (in dollars per share) | |||
Continuing operations | [1] | $ 2.50 | $ 1.76 |
Discontinued operations | [1] | (0.05) | (0.04) |
Total | [1] | 2.45 | 1.72 |
Basic (in dollars per share) | |||
Continuing operations | [1] | 2.53 | 1.79 |
Discontinued operations | [1] | (0.04) | (0.04) |
Total | [1] | $ 2.49 | $ 1.75 |
[1] | Certain computations may reflect rounding adjustments. |
Goodwill And Intangible Asset41
Goodwill And Intangible Assets, Net Changes in the Carrying Amount of Goodwill (Narrative - Goodwill) (Details) - USD ($) $ in Millions | 3 Months Ended | |
Jun. 30, 2015 | Mar. 31, 2015 | |
Goodwill [Roll Forward] | ||
Beginning balance | $ 9,817 | |
Goodwill acquired | 6 | |
Goodwill related to a business sold | (26) | |
Amounts reclassified to assets held for sale | (61) | |
Acquisition accounting, transfers and other adjustments | 8 | |
Foreign currency translation adjustments, net | 205 | |
Ending balance | 9,949 | |
Distribution solutions | ||
Goodwill [Roll Forward] | ||
Beginning balance | 7,994 | |
Goodwill acquired | 6 | |
Goodwill related to a business sold | 0 | |
Amounts reclassified to assets held for sale | (61) | |
Acquisition accounting, transfers and other adjustments | 8 | |
Foreign currency translation adjustments, net | 198 | |
Ending balance | 8,145 | |
Technology solutions | ||
Goodwill [Roll Forward] | ||
Beginning balance | 1,823 | |
Goodwill acquired | 0 | |
Goodwill related to a business sold | (26) | |
Amounts reclassified to assets held for sale | 0 | |
Acquisition accounting, transfers and other adjustments | 0 | |
Foreign currency translation adjustments, net | 7 | |
Ending balance | 1,804 | |
Goodwill, impaired, accumulated impairment loss | $ 36 | $ 36 |
Goodwill And Intangible Asset42
Goodwill And Intangible Assets, Net (Information Regarding Intangible Assets) (Details) - USD ($) $ in Millions | 3 Months Ended | |
Jun. 30, 2015 | Mar. 31, 2015 | |
Intangible assets | ||
Gross carrying amount | $ 5,317 | $ 5,204 |
Accumulated amortization | (1,891) | (1,763) |
Net carrying amount | $ 3,426 | 3,441 |
Customer lists | ||
Intangible assets | ||
Weighted average remaining amortization period (years) | 9 years | |
Gross carrying amount | $ 2,717 | 2,683 |
Accumulated amortization | (1,190) | (1,116) |
Net carrying amount | $ 1,527 | 1,567 |
Service agreements | ||
Intangible assets | ||
Weighted average remaining amortization period (years) | 15 years | |
Gross carrying amount | $ 964 | 957 |
Accumulated amortization | (230) | (215) |
Net carrying amount | $ 734 | 742 |
Pharmacy licenses | ||
Intangible assets | ||
Weighted average remaining amortization period (years) | 26 years | |
Gross carrying amount | $ 926 | 874 |
Accumulated amortization | (83) | (65) |
Net carrying amount | $ 843 | 809 |
Trademarks and trade names | ||
Intangible assets | ||
Weighted average remaining amortization period (years) | 15 years | |
Gross carrying amount | $ 325 | 315 |
Accumulated amortization | (87) | (82) |
Net carrying amount | $ 238 | 233 |
Technology-based intangible assets | ||
Intangible assets | ||
Weighted average remaining amortization period (years) | 3 years | |
Gross carrying amount | $ 210 | 213 |
Accumulated amortization | (187) | (184) |
Net carrying amount | $ 23 | 29 |
Other | ||
Intangible assets | ||
Weighted average remaining amortization period (years) | 4 years | |
Gross carrying amount | $ 175 | 162 |
Accumulated amortization | (114) | (101) |
Net carrying amount | $ 61 | $ 61 |
Goodwill And Intangible Asset43
Goodwill And Intangible Assets, Net (Narrative - Intangible Assets) (Details) - USD ($) $ in Millions | 3 Months Ended | |
Jun. 30, 2015 | Jun. 30, 2014 | |
Goodwill and Intangible Assets Disclosure [Abstract] | ||
Amortization expense of intangible assets | $ 112 | $ 129 |
Annual amortization expense, 2015 | 301 | |
Annual amortization expense, 2016 | 383 | |
Annual amortization expense, 2017 | 358 | |
Annual amortization expense, 2018 | 329 | |
Annual amortization expense, 2019 | 302 | |
Annual amortization expense, after 2019 | $ 1,753 |
Debt and Financing Activities (
Debt and Financing Activities (Celesio Debt) (Narrative) (Details) € in Millions, £ in Millions | 3 Months Ended | 12 Months Ended | |||||
Jun. 30, 2015USD ($) | Jun. 30, 2014USD ($) | Mar. 31, 2014 | Jun. 30, 2015EUR (€) | Jun. 30, 2015USD ($) | Mar. 31, 2015GBP (£) | Mar. 31, 2015USD ($) | |
Line of Credit Facility [Line Items] | |||||||
Long-term debt | $ 9,700,000,000 | $ 9,700,000,000 | |||||
Repayments of debt and capital lease obligations | $ 96,000,000 | $ 228,000,000 | |||||
Accounts receivable sales facility | |||||||
Line of Credit Facility [Line Items] | |||||||
Credit facility capacity | 1,350,000,000 | ||||||
Line of credit facility, expiration date | Nov. 15, 2016 | ||||||
Proceeds from lines of credit | $ 0 | ||||||
Repayments of lines of credit | 0 | ||||||
Line of credit facility, covenant compliance | we were in compliance with all covenants | we were in compliance with all covenants | |||||
Borrowings outstanding | 0 | 0 | |||||
Revolving credit facility | |||||||
Line of Credit Facility [Line Items] | |||||||
Credit facility capacity | 1,300,000,000 | ||||||
Line of credit facility, expiration date | Sep. 23, 2016 | ||||||
Proceeds from lines of credit | $ 0 | 0 | |||||
Line of credit facility, interest rate description | bear interest based upon either the London Interbank Offered Rate or a prime rate | ||||||
Borrowings outstanding | 0 | 0 | |||||
Celesio | Bonds [Member] | |||||||
Line of Credit Facility [Line Items] | |||||||
Long-term debt | £ 60 | 89,000,000 | |||||
Repayments of debt and capital lease obligations | $ 93,000,000 | ||||||
Celesio | Accounts receivable factoring facility | |||||||
Line of Credit Facility [Line Items] | |||||||
Credit facility capacity | 179,000,000 | ||||||
Line of credit facility, expiration date | Jan. 31, 2016 | ||||||
Proceeds from lines of credit | $ 285,000,000 | 758,000,000 | |||||
Repayments of lines of credit | 295,000,000 | 746,000,000 | |||||
Borrowings outstanding | 132,000,000 | 135,000,000 | |||||
Celesio | Revolving credit facility | |||||||
Line of Credit Facility [Line Items] | |||||||
Credit facility capacity | 1,400,000,000 | ||||||
Proceeds from lines of credit | 246,000,000 | 147,000,000 | |||||
Repayments of lines of credit | $ 240,000,000 | 16,000,000 | |||||
Borrowings outstanding | 40,000,000 | 29,000,000 | |||||
Celesio | Revolving credit facility | Revolving credit facility due february two thousand eighteen | |||||||
Line of Credit Facility [Line Items] | |||||||
Credit facility capacity | € | € 500 | ||||||
Line of credit facility, expiration date | Feb. 28, 2018 | ||||||
Proceeds from lines of credit | $ 0 | $ 0 | |||||
Borrowings outstanding | $ 0 | 0 | |||||
Four percent bonds due october eighteen two thousand sixteen | Celesio | |||||||
Line of Credit Facility [Line Items] | |||||||
Debt instrument, interest rate, stated percentage | 4.00% | 4.00% | |||||
Long-term debt | $ 402,000,000 | 388,000,000 | |||||
Four percent bonds due october eighteen two thousand sixteen | Celesio | Bonds [Member] | |||||||
Line of Credit Facility [Line Items] | |||||||
Long-term debt | $ 984,000,000 | ||||||
Four point five percent bonds due april twenty six two thousand seventeen | Celesio | |||||||
Line of Credit Facility [Line Items] | |||||||
Debt instrument, interest rate, stated percentage | 4.50% | 4.50% | |||||
Long-term debt | $ 582,000,000 | 563,000,000 | |||||
Four point five percent bonds due april twenty six two thousand seventeen | Celesio | Bonds [Member] | |||||||
Line of Credit Facility [Line Items] | |||||||
Long-term debt | $ 951,000,000 |
Pension Benefits (Narrative) (D
Pension Benefits (Narrative) (Details) - USD ($) $ in Millions | 3 Months Ended | |
Jun. 30, 2015 | Jun. 30, 2014 | |
Defined Benefit Pension Plans and Defined Benefit Postretirement Plans Disclosure [Abstract] | ||
Defined benefit plan, contributions by employer | $ 34 | $ 15 |
Pension Benefits Tables (Detail
Pension Benefits Tables (Details) - USD ($) $ in Millions | 3 Months Ended | |
Jun. 30, 2015 | Jun. 30, 2014 | |
United states pension plan of US entity, defined benefit | ||
Defined Benefit Plan Disclosure [Line Items] | ||
Service cost - benefits earned during the year | $ 0 | $ 0 |
Interest cost on projected benefit obligation | 5 | 5 |
Expected return on assets | (5) | (5) |
Amortization of unrecognized actuarial loss and prior service costs | 9 | 4 |
Net periodic pension expense | 9 | 4 |
Foreign pension plan, defined benefit | ||
Defined Benefit Plan Disclosure [Line Items] | ||
Service cost - benefits earned during the year | 5 | 4 |
Interest cost on projected benefit obligation | 6 | 9 |
Expected return on assets | (8) | (7) |
Amortization of unrecognized actuarial loss and prior service costs | 1 | 1 |
Net periodic pension expense | $ 4 | $ 7 |
Hedging Activities (Narrative)
Hedging Activities (Narrative) (Details) - USD ($) $ in Millions | 3 Months Ended | ||
Jun. 30, 2015 | Jun. 30, 2014 | Mar. 31, 2015 | |
Foreign exchange contract | |||
Derivative [Line Items] | |||
Description of foreign currency derivative activities | manage the impact of foreign currency fluctuation | ||
Foreign exchange contract | Designated as hedging instrument | |||
Derivative [Line Items] | |||
Derivative, notional amount | $ 399 | $ 399 | |
Foreign exchange contract | Not designated as hedging instrument | |||
Derivative [Line Items] | |||
Derivative, notional amount | 2,002 | $ 1,755 | |
Net losses from changes in fair value not designated for hedge accounting | $ 45 | $ 20 | |
Minimum | |||
Derivative [Line Items] | |||
Derivative, maturity date | Mar. 31, 2016 | ||
Minimum | Foreign exchange contract | Not designated as hedging instrument | |||
Derivative [Line Items] | |||
Maturity of foreign currency derivatives | Jul. 31, 2015 | ||
Maximum | |||
Derivative [Line Items] | |||
Derivative, maturity date | Mar. 31, 2020 | ||
Maximum | Foreign exchange contract | Not designated as hedging instrument | |||
Derivative [Line Items] | |||
Maturity of foreign currency derivatives | Jun. 15, 2016 |
Derivative Instruments Fair Val
Derivative Instruments Fair Value (Details) - USD ($) $ in Millions | Jun. 30, 2015 | Mar. 31, 2015 |
Designated as hedging instrument | Foreign exchange contract | ||
Derivatives, Fair Value [Line Items] | ||
Derivative asset, fair value, gross asset | $ 63 | $ 67 |
Derivative liability, fair value, gross liability | 0 | 0 |
Designated as hedging instrument | Foreign exchange contract | Prepaid expenses and other current assets | ||
Derivatives, Fair Value [Line Items] | ||
Derivative asset, fair value, gross asset | 13 | 14 |
Derivative liability, fair value, gross liability | 0 | 0 |
Derivative asset, notional amount | 76 | 76 |
Designated as hedging instrument | Foreign exchange contract | Other assets | ||
Derivatives, Fair Value [Line Items] | ||
Derivative asset, fair value, gross asset | 50 | 53 |
Derivative liability, fair value, gross liability | 0 | 0 |
Derivative asset, notional amount | 323 | 323 |
Not designated as hedging instrument | ||
Derivatives, Fair Value [Line Items] | ||
Derivative asset, fair value, gross asset | 1 | 7 |
Derivative liability, fair value, gross liability | 51 | 79 |
Not designated as hedging instrument | Foreign exchange contract | Prepaid expenses and other current assets | ||
Derivatives, Fair Value [Line Items] | ||
Derivative asset, fair value, gross asset | 1 | 7 |
Derivative liability, fair value, gross liability | 0 | 0 |
Derivative asset, notional amount | 248 | 493 |
Not designated as hedging instrument | Foreign exchange contract | Other current liabilities | ||
Derivatives, Fair Value [Line Items] | ||
Derivative asset, fair value, gross asset | 0 | 0 |
Derivative liability, fair value, gross liability | 51 | 79 |
Derivative liability, notional amount | $ 1,754 | $ 1,262 |
Fair Value Measurements (Narrat
Fair Value Measurements (Narrative) (Details) - USD ($) | Jun. 30, 2015 | Mar. 31, 2015 | Jun. 30, 2014 |
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||
Long-term debt | $ 9,700,000,000 | $ 9,700,000,000 | |
Fair value, assets, level 1 to level 2 transfers, amount | 0 | $ 0 | |
Fair malue, measurements, recurring | Fair value, inputs, level 1 | |||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||
Cash and cash equivalents, fair value disclosure | 4,800,000,000 | 4,200,000,000 | |
Fair malue, measurements, recurring | Fair value, inputs, level 2 | |||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||
Debt instrument, fair value disclosure | $ 9,900,000,000 | $ 10,400,000,000 |
Stockholders' Equity (Narrative
Stockholders' Equity (Narrative) (Details) - USD ($) | Jul. 29, 2015 | Jun. 30, 2015 | Jun. 30, 2014 | May. 31, 2015 |
Class of Stock [Line Items] | ||||
Common stock, dividends, per share, cash paid | $ 0.24 | |||
Dividends Declared Per Common Share | $ 0.24 | $ 0.24 | ||
Stock repurchase program, remaining authorized repurchase amount | $ 500,000,000 | |||
Other comprehensive income gain (loss), foreign currency transaction and translation adjustment, net of tax, portion attributable to noncontrolling interest | 50,000,000 | $ (12,000,000) | ||
Net actuarial losses attributable to redeemable noncontrolling interest | 29,000,000 | $ 0 | ||
Maximum | ||||
Class of Stock [Line Items] | ||||
Stock repurchase program, authorized amount | $ 500,000,000 | |||
Subsequent event | ||||
Class of Stock [Line Items] | ||||
Dividends Declared Per Common Share | $ 0.28 | |||
Noncontrolling interest | ||||
Class of Stock [Line Items] | ||||
Net actuarial losses attributable to redeemable noncontrolling interest | $ 6,000,000 |
Stockholders' Equity (Other Com
Stockholders' Equity (Other Comprehensive Income (Loss), Net of Tax) (Details) - USD ($) $ in Millions | 3 Months Ended | ||
Jun. 30, 2015 | Jun. 30, 2014 | ||
Equity [Abstract] | |||
Foreign currency translation adjustments arising during period, net of income tax expense of nil and nil (1) | [1] | $ 347 | $ 98 |
Reclassified to income statement, net of income tax expense of nil and nil | 0 | 0 | |
Unrealized gains (losses) on cash flow hedges arising during period, net of income tax expense of nil and nil | 4 | (2) | |
Other Comprehensive Income (Loss), Pension and Other Postretirement Benefit Plans, Net Unamortized Gain (Loss) Arising During Period, Net of Tax | (29) | 0 | |
Amortization of actuarial loss and prior service costs, net of income tax expense of $4 and $1 (3) | [2] | 7 | 3 |
Foreign currency translation adjustments, net of income tax expense of nil and nil | (6) | (1) | |
Other comprehensive income (loss), pension and other postretirement benefit plans, adjustment, net of tax | (28) | 2 | |
Other comprehensive income (loss), net of tax | 323 | 98 | |
Foreign currency translation adjustments arising during period, net of income tax expense of nil and nil | 0 | 0 | |
Other comprehensive income (Loss), foreign currency transaction and translation reclassification adjustment from AOCI, realized upon sale or liquidation, tax | 0 | 0 | |
Other comprehensive income (Loss), unrealized gain (Loss) on derivatives arising during period, net of tax | 0 | 0 | |
Other comprehensive (Income) loss, pension and other postretirement benefit plans, net prior service cost (Credit), tax | 8 | 0 | |
Amortization of actuarial loss and prior service costs, net of income tax expense of $4 and $1 | 4 | 1 | |
Foreign currency translation adjustments, net of income tax expense of nil and nil | $ 0 | $ 0 | |
[1] | The first quarters of 2016 and 2015 include net foreign currency translation gains of $50 million and net foreign currency translation losses of $12 million attributable to noncontrolling and redeemable noncontrolling interests. | ||
[2] | Pre-tax amount reclassified into cost of sales and operating expenses in our condensed consolidated statements of operations. The related tax expense was reclassified into income tax expense in our condensed consolidated statements of operations. |
Stockholders' Equity (Changes i
Stockholders' Equity (Changes in Accumulated Other Comprehensive Income (Loss) by Component) (Details) - USD ($) $ in Millions | 3 Months Ended | |
Jun. 30, 2015 | Jun. 30, 2014 | |
AOCI Attributable to Parent, Net of Tax [Roll Forward] | ||
Ending balance | $ (1,713) | |
Other Comprehensive Income (Loss), Net of Tax | 323 | $ 98 |
Balance at June 30, 2015 | (1,434) | |
Parent Company | ||
AOCI Attributable to Parent, Net of Tax [Roll Forward] | ||
Ending balance | (1,713) | |
Other comprehensive income (loss) before reclassifications | 322 | |
Amounts reclassified to earnings and other | 1 | |
Other Comprehensive Income (Loss), Net of Tax | 323 | |
Less: amounts attributable to noncontrolling and redeemable noncontrolling interests | 44 | |
Other comprehensive income (loss) attributable to McKesson | 279 | |
Balance at June 30, 2015 | (1,434) | |
Foreign currency translation adjustments, net of tax | ||
AOCI Attributable to Parent, Net of Tax [Roll Forward] | ||
Ending balance | (1,420) | |
Other comprehensive income (loss) before reclassifications | 347 | |
Amounts reclassified to earnings and other | 0 | |
Other Comprehensive Income (Loss), Net of Tax | 347 | |
Less: amounts attributable to noncontrolling and redeemable noncontrolling interests | 50 | |
Other comprehensive income (loss) attributable to McKesson | 297 | |
Balance at June 30, 2015 | (1,123) | |
Unrealized losses on cash flow hedges, net of tax | ||
AOCI Attributable to Parent, Net of Tax [Roll Forward] | ||
Ending balance | (21) | |
Other comprehensive income (loss) before reclassifications | 4 | |
Amounts reclassified to earnings and other | 0 | |
Other Comprehensive Income (Loss), Net of Tax | 4 | |
Less: amounts attributable to noncontrolling and redeemable noncontrolling interests | 0 | |
Other comprehensive income (loss) attributable to McKesson | 4 | |
Balance at June 30, 2015 | (17) | |
Unrealized net loss and other components of benefit plans, net of tax | ||
AOCI Attributable to Parent, Net of Tax [Roll Forward] | ||
Ending balance | (272) | |
Other comprehensive income (loss) before reclassifications | (29) | |
Amounts reclassified to earnings and other | 1 | |
Other Comprehensive Income (Loss), Net of Tax | (28) | |
Less: amounts attributable to noncontrolling and redeemable noncontrolling interests | (6) | |
Other comprehensive income (loss) attributable to McKesson | (22) | |
Balance at June 30, 2015 | $ (294) |
Segment Information (Schedule o
Segment Information (Schedule of Segment Information) (Details) - USD ($) $ in Millions | 3 Months Ended | |
Jun. 30, 2015 | Jun. 30, 2014 | |
Segment Reporting Information [Line Items] | ||
Segment reporting revenue from external customers | $ 47,546 | $ 43,476 |
Distribution solutions | 931 | 681 |
Interest Expense | (89) | (96) |
Income from Continuing Operations Before Income Taxes | 855 | 604 |
Assets, fair value adjustment | 34 | |
North America pharmaceutical distribution and services | ||
Segment Reporting Information [Line Items] | ||
Segment reporting revenue from external customers | 39,532 | 34,304 |
International pharmaceutical distribution and services | ||
Segment Reporting Information [Line Items] | ||
Segment reporting revenue from external customers | 5,838 | 7,025 |
Medical-Surgical distribution & services | ||
Segment Reporting Information [Line Items] | ||
Segment reporting revenue from external customers | 1,440 | 1,379 |
Distribution solutions | ||
Segment Reporting Information [Line Items] | ||
Segment reporting revenue from external customers | 46,810 | 42,708 |
Distribution solutions | 910 | $ 740 |
Proceeds from legal settlements | $ 59 | |
Distribution solutions | Maximum | ||
Segment Reporting Information [Line Items] | ||
Revenue derived from services, percentage | 2.00% | 2.00% |
Technology solutions | ||
Segment Reporting Information [Line Items] | ||
Segment reporting revenue from external customers | $ 736 | $ 768 |
Distribution solutions | 158 | 68 |
Operating segments | ||
Segment Reporting Information [Line Items] | ||
Distribution solutions | 1,068 | 808 |
Corporate | ||
Segment Reporting Information [Line Items] | ||
Corporate expenses, net | (124) | (108) |
Nurse triage | ||
Segment Reporting Information [Line Items] | ||
Gain (Loss) on disposition of business | 51 | |
Nurse triage | Technology solutions | ||
Segment Reporting Information [Line Items] | ||
Gain (Loss) on disposition of business | 51 | |
International Technology Workforce [Member] | Cost of Sales [Member] | ||
Segment Reporting Information [Line Items] | ||
Assets, fair value adjustment | 34 | |
LIFO method of accounting [Member] | Distribution solutions | ||
Segment Reporting Information [Line Items] | ||
Distribution solutions | $ 91 | $ 98 |