Document
Document | 9 Months Ended |
Dec. 31, 2015shares | |
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 | Dec. 31, 2015 |
Document Fiscal Year Focus | 2,016 |
Document Fiscal Period Focus | Q3 |
Amendment Flag | false |
Entity Common Stock, Shares Outstanding (Cover) | 228,586,974 |
CONDENSED CONSOLIDATED STATEMEN
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS - USD ($) shares in Millions, $ in Millions | 3 Months Ended | 9 Months Ended | ||
Dec. 31, 2015 | Dec. 31, 2014 | Dec. 31, 2015 | Dec. 31, 2014 | |
Income Statement [Abstract] | ||||
Revenues | $ 47,899 | $ 46,484 | $ 144,206 | $ 134,120 |
Cost of Sales | (45,027) | (43,586) | (135,642) | (125,626) |
Gross Profit | 2,872 | 2,898 | 8,564 | 8,494 |
Operating Expenses | (1,952) | (2,098) | (5,759) | (6,226) |
Operating Income | 920 | 800 | 2,805 | 2,268 |
Other Income, Net | 13 | 12 | 43 | 53 |
Interest Expense | (87) | (93) | (267) | (284) |
Income from Continuing Operations Before Income Taxes | 846 | 719 | 2,581 | 2,037 |
Income Tax Expense | (204) | (198) | (704) | (606) |
Income from Continuing Operations | 642 | 521 | 1,877 | 1,431 |
Income (Loss) from Discontinued Operations, Net of Tax | 5 | (10) | (11) | (32) |
Net Income | 647 | 511 | 1,866 | 1,399 |
Net Income Attributable to Noncontrolling Interests | (13) | (39) | (39) | (55) |
Net Income Attributable to McKesson Corporation | $ 634 | $ 472 | $ 1,827 | $ 1,344 |
Diluted | ||||
Continuing operations (in dollars per share) | $ 2.71 | $ 2.04 | $ 7.86 | $ 5.85 |
Discontinued operations (in dollars per share) | 0.02 | (0.04) | (0.05) | (0.13) |
Total (in dollars per share) | 2.73 | 2 | 7.81 | 5.72 |
Basic | ||||
Continuing operations (in dollars per share) | 2.74 | 2.07 | 7.95 | 5.94 |
Discontinued operations (in dollars per share) | 0.02 | (0.04) | (0.04) | (0.14) |
Total (in dollars per share) | 2.76 | 2.03 | 7.91 | 5.80 |
Dividends declared per common share (in dollars per share) | $ 0.28 | $ 0.24 | $ 0.80 | $ 0.72 |
Weighted Average Common Shares | ||||
Diluted (in shares) | 232 | 236 | 234 | 235 |
Basic (in shares) | 230 | 232 | 231 | 232 |
CONDENSED CONSOLIDATED STATEME3
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | ||
Dec. 31, 2015 | Dec. 31, 2014 | Dec. 31, 2015 | Dec. 31, 2014 | |
Statement of Comprehensive Income [Abstract] | ||||
Net Income | $ 647 | $ 511 | $ 1,866 | $ 1,399 |
Other Comprehensive Income (Loss), Net of Tax | ||||
Foreign currency translation adjustments arising during period | (246) | (416) | (142) | (995) |
Unrealized gains (losses) on cash flow hedges arising during period | (1) | 1 | 5 | (1) |
Retirement-related benefit plans | 15 | (16) | (2) | (8) |
Other Comprehensive Income (Loss), Net of Tax | (232) | (431) | (139) | (1,004) |
Comprehensive Income (Loss) | 415 | 80 | 1,727 | 395 |
Comprehensive Loss (Income) Attributable to Noncontrolling Interests | 18 | 13 | (32) | 148 |
Comprehensive Income (Loss) Attributable to McKesson Corporation | $ 433 | $ 93 | $ 1,695 | $ 543 |
CONDENSED CONSOLIDATED BALANCE
CONDENSED CONSOLIDATED BALANCE SHEETS - USD ($) $ in Millions | Dec. 31, 2015 | Mar. 31, 2015 |
Current Assets | ||
Cash and cash equivalents | $ 3,406 | $ 5,341 |
Receivables, net | 17,402 | 15,914 |
Inventories, net | 16,411 | 14,296 |
Prepaid expenses and other | 1,042 | 1,119 |
Total Current Assets | 38,261 | 36,670 |
Property, Plant and Equipment, Net | 2,112 | 2,045 |
Goodwill | 9,701 | 9,817 |
Intangible Assets, Net | 3,103 | 3,441 |
Other Assets | 1,910 | 1,897 |
Total Assets | 55,087 | 53,870 |
Current Liabilities | ||
Drafts and accounts payable | 26,854 | 25,166 |
Short-term borrowings | 7 | 135 |
Deferred revenue | 999 | 1,078 |
Deferred tax liabilities | 1,979 | 1,820 |
Current portion of long-term debt | 996 | 1,529 |
Other accrued liabilities | 3,644 | 3,769 |
Total Current Liabilities | 34,479 | 33,497 |
Long-Term Debt | 7,715 | 8,180 |
Other Noncurrent Liabilities | $ 2,555 | $ 2,722 |
Commitments and Contingent Liabilities (Note 13) | ||
Redeemable Noncontrolling Interests | $ 1,378 | $ 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 December 31, 2015 and March 31, 2015, 271 and 384 shares issued at December 31, 2015 and March 31, 2015 | 3 | 4 |
Additional Paid-in Capital | 5,793 | 6,968 |
Retained Earnings | 7,995 | 12,705 |
Accumulated Other Comprehensive Loss | (1,845) | (1,713) |
Other | (2) | (7) |
Treasury Shares, at Cost, 42 and 152 at December 31, 2015 and March 31, 2015 | (3,068) | (9,956) |
Total McKesson Corporation Stockholders’ Equity | 8,876 | 8,001 |
Noncontrolling Interests | 84 | 84 |
Total Equity | 8,960 | 8,085 |
Total Liabilities, Redeemable Noncontrolling Interests and Equity | $ 55,087 | $ 53,870 |
CONDENSED CONSOLIDATED BALANCE5
CONDENSED CONSOLIDATED BALANCE SHEETS (Parentheticals) - $ / shares | Dec. 31, 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) | 100,000,000 | 100,000,000 |
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) | 800,000,000 | 800,000,000 |
Common stock, shares issued (in shares) | 271,000,000 | 384,000,000 |
Treasury stock, shares (in shares) | 42,000,000 | 152,000,000 |
CONDENSED CONSOLIDATED STATEME6
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Millions | 9 Months Ended | |
Dec. 31, 2015 | Dec. 31, 2014 | |
Operating Activities | ||
Net income | $ 1,866 | $ 1,399 |
Adjustments to reconcile to net cash provided by operating activities: | ||
Depreciation and amortization | 671 | 786 |
Deferred taxes | 30 | 74 |
Charges associated with last-in-first-out inventory method | 215 | 287 |
Share-based compensation expense | 113 | 127 |
Gain from sales of businesses | (103) | 0 |
Other non-cash items | 139 | (51) |
Changes in operating assets and liabilities, net of acquisitions: | ||
Receivables | (1,667) | (2,815) |
Inventories | (2,397) | (2,580) |
Drafts and accounts payable | 1,695 | 4,074 |
Deferred revenue | (66) | (19) |
Taxes | 114 | (203) |
Other | (44) | 150 |
Net cash provided by operating activities | 566 | 1,229 |
Investing Activities | ||
Property acquisitions | (272) | (281) |
Capitalized software expenditures | (145) | (118) |
Acquisitions, net of cash and cash equivalents acquired | (25) | (40) |
Proceeds from sale of businesses, net | 204 | 15 |
Other | 10 | (15) |
Net cash used in investing activities | (228) | (439) |
Financing Activities | ||
Proceeds from short-term borrowings | 1,532 | 2,424 |
Repayments of short-term borrowings | (1,668) | (2,320) |
Proceeds from issuances of long-term debt | 0 | 3 |
Repayments of long-term debt | (996) | (233) |
Common stock transactions: | ||
Issuances | 97 | 115 |
Share repurchases, including shares surrendered for tax withholding | (960) | (106) |
Dividends paid | (179) | (171) |
Other | (73) | 36 |
Net cash used in financing activities | (2,247) | (252) |
Effect of exchange rate changes on cash and cash equivalents | (26) | (144) |
Net increase (decrease) in cash and cash equivalents | (1,935) | 394 |
Cash and cash equivalents at beginning of period | 5,341 | 4,193 |
Cash and cash equivalents at end of period | $ 3,406 | $ 4,587 |
Significant Accounting Policies
Significant Accounting Policies | 9 Months Ended |
Dec. 31, 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 variable 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 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 and nine months ended December 31, 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, which relate to our discontinued operations, 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 Businesses” 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 Financial Instruments: In January 2016, amended guidance was issued that requires equity investments to be measured at fair value with changes in fair value recognized in net income and enhanced disclosures about those investments. This guidance also simplifies the impairment assessments of equity investments without readily determinable fair value. The investments that are accounted for under the equity method of accounting or result in consolidation of the investee are excluded from the scope of this amended guidance. The amended guidance will become effective for us commencing in the first quarter of 2019 and will be adopted through a cumulative-effect adjustment. Early adoption is not permitted except for certain provisions. We are currently evaluating the impact of this amended guidance on our consolidated financial statements. Deferred Income Taxes : In November 2015, amended guidance was issued for the balance sheet classification of deferred income taxes. The amended guidance requires the classification of all deferred tax assets and liabilities as noncurrent on the balance sheet instead of separating deferred taxes into current and noncurrent amounts. Deferred tax assets and liabilities will continue to be offset and presented as a single amount under the amended guidance. The amended guidance will become effective for us commencing in the first quarter of 2018 and will only result in a change in presentation of these deferred taxes on our consolidated balance sheets. The amended guidance can be adopted either on a prospective or retrospective basis. Early adoption is permitted. We are currently evaluating the impact of this amended guidance on our condensed consolidated financial statements. Business Combinations: In September 2015, amended guidance was issued for an acquirer’s accounting for measurement-period adjustments. The amended guidance eliminates the requirement that an acquirer in a business combination account for measurement-period adjustments retrospectively and instead requires that measurement-period adjustments be recognized during the period in which it determines the adjustment. In addition, the amended guidance requires that the acquirer record, in the same period’s financial statements, the effect on earnings of changes in depreciation, amortization, or other income effects, if any, as a result of the change to the provisional amounts, calculated as if the accounting had been completed at the acquisition date. The amended guidance is effective for us prospectively commencing in the first quarter of 2017. Early adoption is permitted. 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 retrospectively commencing in the first quarter of 2017. Early adoption is permitted. This amended guidance is primarily expected to affect our annual disclosures related to our pension benefits. 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 on the balance sheet as a direct deduction from the carrying amount of that debt liability. The recognition and measurement guidance for debt issuance costs is not affected by the amended guidance. In August 2015, a clarification was added to this amended guidance that debt issuance costs related to line-of-credit arrangements can continue to be deferred and presented as an asset on the balance sheet. The amended guidance will become effective for us commencing in the first quarter of 2017. Early adoption is permitted. The amended guidance will affect financial statement presentation only and therefore 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. In August 2015, additional guidance was issued to defer the effective date of the amended revenue recognition guidance by one year. As a result, 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 | 9 Months Ended |
Dec. 31, 2015 | |
Business Combinations [Abstract] | |
Business Combinations | Business Combinations In September 2015, we entered into an agreement to acquire the pharmaceutical distribution business of UDG Healthcare Plc (“UDG”) based in Ireland for €408 million in cash (or, using the currency exchange ratio of $ 1.09 /€1 as of December 31, 2015, approximately $445 million ). The business primarily provides pharmaceutical and other healthcare products to retail and hospital pharmacies. The transaction was approved by UDG shareholders on October 13, 2015, and is subject to the approval of the applicable regulatory authorities as well as other customary closing conditions. The acquisition is currently expected to close during the first half of calendar year 2016. In July 2015, we announced plans to acquire the pharmacy business of J Sainsbury Plc (“Sainsbury”) based in the U.K. for £125 million in cash (or, using the currency exchange ratio of $ 1.48 /£1 as of December 31, 2015, approximately $185 million ). Under the terms of the transaction, we will acquire 281 pharmacies in the U.K. including 277 in-store pharmacies and four hospital pharmacies. The transaction is subject to the approval of the applicable regulatory authorities as well as other customary closing conditions and is currently expected to close during the first half of calendar year 2016. Upon closing, the acquired UDG and Sainsbury businesses will be included as part of our International pharmaceutical distribution and services business within our Distribution Solutions segment. We completed a number of smaller acquisitions within our Distribution Solutions segment during the last two years. 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 | 9 Months Ended |
Dec. 31, 2015 | |
Noncontrolling Interest [Abstract] | |
Redeemable Noncontrolling Interests | Redeemable Noncontrolling Interests Under a domination and profit and loss transfer agreement (the “Domination Agreement”), McKesson is obligated to pay an annual recurring compensation amount of €0.83 per Celesio share (“Compensation Amount”) to the noncontrolling shareholders of Celesio AG (“Celesio”). Additionally, 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”) under the Domination Agreement. Accordingly, the noncontrolling interests in Celesio are presented as “Redeemable Noncontrolling Interests” on the accompanying 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 paid during the second quarter of 2016 related to calendar year 2014 (“Guaranteed Dividend”) and any Compensation Amount already paid in respect of the relevant time period (“Put Amount”). 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. 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, McKesson Deutschland GmbH & Co. KGaA (“McKesson Deutschland,” formerly known as Dragonfly GmbH & Co. KGaA) 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. The exercise of the Put Right will reduce the balance of redeemable noncontrolling interests. There were no material exercises during the third quarter and first nine months 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 December 31, 2015 and March 31, 2015, the carrying value of redeemable noncontrolling interests of $1.38 billion and $1.39 billion exceeded the maximum redemption value of $1.22 billion and $1.21 billion . At December 31, 2015 and March 31, 2015, we owned approximately 76.0% of Celesio’s outstanding common shares. 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 34 Other comprehensive income (loss) (7 ) Reclassification of recurring compensation to other accrued liabilities (35 ) Balance, December 31, 2015 $ 1,378 There were no material changes in our ownership interests with noncontrolling interests during the third quarters and first nine months of 2016 and 2015. |
Divestiture of Businesses
Divestiture of Businesses | 9 Months Ended |
Dec. 31, 2015 | |
Business Combinations [Abstract] | |
Divestiture of Businesses | Divestiture of Businesses During the second quarter of 2016, we sold our ZEE Medical business within our Distribution Solutions segment for a total purchase price of $134 million and recorded a pre-tax gain of $52 million ( $29 million after-tax) from this sale. During the first quarter of 2016, we also sold our nurse triage business within our Technology Solutions segment for net sale proceeds of $84 million and recorded a pre-tax gain of $51 million ( $38 million after-tax) from the sale. These divestitures did not meet the criteria to qualify as discontinued operations under the amended accounting guidance, which became effective for us in the first quarter of 2016. Accordingly, pre-tax gains from both divestitures were recorded in operating expenses within continuing operations of our condensed consolidated statements of operations. Pre and after-tax income of these businesses was not material for the quarters and nine months ended December 31, 2015 and 2014. |
Discontinued Operations
Discontinued Operations | 9 Months Ended |
Dec. 31, 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 of 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 costs to sell, based on our assessment at that time. The ultimate loss from the sale of this Brazilian distribution business may be different from our current assessment of the business’ fair value. As a result, we may record additional loss upon the disposition of the business within discontinued operations. 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 effective in the first quarter of 2015 for all periods presented and we recorded a non-cash pre-tax charge of $34 million primarily in cost of sales relating to depreciation and amortization expense for the period in 2014 while the business was classified as held for sale. 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 December 31, Nine Months Ended December 31, (In millions) 2015 2014 2015 2014 Revenues $ 381 $ 523 $ 1,246 $ 1,742 Cost of sales (341 ) (479 ) (1,123 ) (1,565 ) Operating expenses (36 ) (66 ) (128 ) (214 ) Other income (loss), net (7 ) (4 ) (21 ) (10 ) Pre-tax loss from discontinued operations (3 ) (26 ) (26 ) (47 ) Loss on sale — — — (6 ) Income tax benefit 8 16 15 21 Loss from discontinued operations, net of tax $ 5 $ (10 ) $ (11 ) $ (32 ) A summary of carrying amounts of major classes of assets and liabilities included as part of discontinued operations is as follows: December 31, March 31, (In millions) 2015 2015 Receivables, net $ 255 $ 314 Inventories, net 241 254 Other assets 86 92 Total assets of discontinued operations (1) 582 660 Drafts and account payable 247 209 Short-term borrowings 100 126 Other liabilities 248 328 Total liabilities of discontinued operations (1) $ 595 $ 663 (1) 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. |
Income Taxes
Income Taxes | 9 Months Ended |
Dec. 31, 2015 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | Income Taxes During the third quarters of 2016 and 2015, income tax expense related to continuing operations was $204 million and $198 million and included a net discrete tax benefit of $16 million and a net discrete tax expense of $4 million . During the first nine months of 2016 and 2015, income tax expense related to continuing operations was $704 million and $606 million and included net discrete tax benefits of $45 million and $14 million . Our reported income tax rates for the third quarters of 2016 and 2015 were 24.1% and 27.5% and for the first nine months of 2016 and 2015 were 27.3% and 29.7% . The fluctuations in our reported income tax rates are primarily due to changes within our business mix, including varying proportions of income attributable to foreign countries that have lower income tax rates and discrete items. During the third quarter of 2016, we recognized a $19 million discrete tax benefit due to a reduction in our deferred tax liabilities as a result of enacted tax law changes in certain foreign jurisdictions. During the second quarter of 2016, we evaluated the U.S. Tax Court’s decision in Altera Corp. v. Commissioner related to the treatment of stock-based compensation expense in an intercompany cost-sharing agreement and recognized a discrete tax benefit of $25 million based on our historical tax filing position. As of December 31, 2015 , we had $564 million of unrecognized tax benefits, of which $392 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 $123 million . However, this amount may change as we continue to have ongoing negotiations with various taxing authorities throughout the year. We report interest and penalties on tax deficiencies as income tax expense. We recognized income tax expense of $3 million and $5 million during the third quarters of 2016 and 2015 and income tax expense of $9 million and $12 million during the first nine months of 2016 and 2015, before any tax benefit, related to interest and penalties in our condensed consolidated statements of operations. At December 31, 2015, before any tax benefits, our accrued interest and penalties on unrecognized tax benefits amounted to $78 million . We file income tax returns in the U.S. federal jurisdiction, various U.S. state jurisdictions and various foreign jurisdictions. The IRS is currently examining our U.S. corporation income tax returns for years 2007 through 2009 and may issue a Revenue Agent Report before the end of our fiscal year 2016. We previously received reassessments from the Canada Revenue Agency (“CRA”) related to a transfer pricing matter impacting years 2003 through 2010. During the third quarter of 2014, 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. The CRA is currently examining our Canadian income tax returns for years 2011 through 2013. |
Earnings Per Common Share
Earnings Per Common Share | 9 Months Ended |
Dec. 31, 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 December 31, Nine Months Ended December 31, (In millions, except per share amounts) 2015 2014 2015 2014 Income from continuing operations $ 642 $ 521 $ 1,877 $ 1,431 Net income attributable to noncontrolling interests (13 ) (39 ) (39 ) (55 ) Income from continuing operations attributable to McKesson 629 482 1,838 1,376 Income (Loss) from discontinued operations, net of tax 5 (10 ) (11 ) (32 ) Net income attributable to McKesson $ 634 $ 472 $ 1,827 $ 1,344 Weighted average common shares outstanding: Basic 230 232 231 232 Effect of dilutive securities: Options to purchase common stock 1 2 1 1 Restricted stock units 1 2 2 2 Diluted 232 236 234 235 Earnings (loss) per common share attributable to McKesson: (1) Diluted Continuing operations $ 2.71 $ 2.04 $ 7.86 $ 5.85 Discontinued operations 0.02 (0.04 ) (0.05 ) (0.13 ) Total $ 2.73 $ 2.00 $ 7.81 $ 5.72 Basic Continuing operations $ 2.74 $ 2.07 $ 7.95 $ 5.94 Discontinued operations 0.02 (0.04 ) (0.04 ) (0.14 ) Total $ 2.76 $ 2.03 $ 7.91 $ 5.80 (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 nil potentially dilutive securities were excluded from the computations of diluted net earnings per common share for each of the quarters ended December 31, 2015 and 2014 and 1 million and 2 million potentially dilutive securities were excluded from the computations of diluted net earnings per common share for the nine months ended December 31, 2015 and 2014 , as they were anti-dilutive. |
Goodwill And Intangible Assets,
Goodwill And Intangible Assets, Net | 9 Months Ended |
Dec. 31, 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 15 — 15 Acquisition accounting and other adjustments 8 — 8 Goodwill disposed (59 ) (26 ) (85 ) Foreign currency translation adjustments, net (49 ) (5 ) (54 ) Balance, December 31, 2015 $ 7,909 $ 1,792 $ 9,701 As of December 31, 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: December 31, 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 8 $ 2,663 $ (1,295 ) $ 1,368 $ 2,683 $ (1,116 ) $ 1,567 Service agreements 15 943 (251 ) 692 957 (215 ) 742 Pharmacy licenses 25 884 (111 ) 773 874 (65 ) 809 Trademarks and trade names 14 300 (90 ) 210 315 (82 ) 233 Technology 2 209 (193 ) 16 213 (184 ) 29 Other 3 163 (119 ) 44 162 (101 ) 61 Total $ 5,162 $ (2,059 ) $ 3,103 $ 5,204 $ (1,763 ) $ 3,441 Amortization expense of intangible assets was $108 million and $329 million for the quarter and nine months ended December 31, 2015 and $125 million and $384 million for the quarter and nine months ended December 31, 2014 . Estimated annual amortization expense of these assets is as follows: $86 million , $378 million , $360 million , $327 million and $302 million for the remainder of 2016 and each of the succeeding years through 2020 and $1,651 million thereafter. All intangible assets were subject to amortization as of December 31, 2015 and March 31, 2015 . |
Debt and Financing Activities
Debt and Financing Activities | 9 Months Ended |
Dec. 31, 2015 | |
Debt Disclosure [Abstract] | |
Debt and Financing Activities | Debt and Financing Activities Long-Term Debt Our long-term debt includes both U.S. dollar and foreign currency (primarily Euro) denominated borrowings. At December 31, 2015 and March 31, 2015, $8,711 million and $9,709 million of total long-term debt were outstanding, of which $996 million and $1,529 million were included under the caption “Current portion of long-term debt” within the condensed consolidated balance sheets. 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 . During the second quarter of 2016, we repaid our $400 million floating rate notes due September 10, 2015 at maturity. During the third quarter of 2016, we repaid our $500 million 0.95% notes due December 4, 2015 at maturity. Revolving Credit Facilities We had a syndicated $1.3 billion five -year senior unsecured revolving credit facility, which was to expire in September 2016. We also had a syndicated €500 million five -year senior unsecured revolving credit facility, which was to expire in February 2018. Both revolving credit facilities were terminated in connection with the execution of a new $3.5 billion revolving credit facility in October 2015, as discussed below. There were no borrowings under these facilities during the first nine months of 2016 and 2015. As of March 31, 2015, there were no amounts outstanding under these facilities. During the third quarter of 2016, we entered into a syndicated $3.5 billion five -year senior unsecured revolving credit facility (the “Global Facility”). The Global Facility has a $3.15 billion aggregate sublimit of availability in Canadian dollars, British pounds sterling and Euros. The remaining terms and conditions of the Global Facility are substantially similar to those previously in place under the $1.3 billion revolving credit facility which was terminated in October 2015. There were no borrowings outstanding under this facility during the third quarter of 2016, and as of December 31, 2015. The Global Facility contains a financial covenant which obligates the Company to maintain a debt to capital ratio of no greater than 65% and other customary investment grade covenants. If we do not comply with these covenants, our ability to use the Global Facility may be suspended and repayment of any outstanding balances under the Global Facility may be required. At December 31, 2015, we were in compliance with all covenants. We also maintain bilateral credit lines primarily denominated in Euros with a total committed and uncommitted balance of $1.1 billion . During the first nine months of 2016 and 2015, we borrowed $631 million and $222 million and repaid $633 million and $181 million under these credit lines primarily related to short-term borrowings. These credit lines have interest rates ranging from 0.18% to 6% . As of December 31, 2015 and March 31, 2015, there were $29 million and $29 million outstanding under these credit lines. Accounts Receivable Facilities In connection with the execution of the Global Facility, we also terminated an accounts receivable sales facility (the “AR Facility”) with a committed balance of $1.35 billion during the third quarter of 2016. There were no borrowings outstanding under the AR Facility during the first nine months of 2016 (prior to the date of termination) and 2015, and as of March 31, 2015. The AR Facility contained requirements relating to the performance of the accounts receivable and covenants relating to the Company. If we did not comply with these covenants, our ability to use the AR Facility would have been suspended and repayment of any outstanding balances under the AR Facility would have been required. At March 31, 2015 , we were in compliance with all covenants . We also have accounts receivable factoring facilities (the “Factoring Facilities”) denominated in foreign currencies with a total committed balance of $6 million . During the first nine months of 2016 and 2015, we borrowed $901 million and $2,200 million and repaid $1,037 million and $2,154 million in short-term borrowings under these facilities. At December 31, 2015 and March 31, 2015, there were $6 million and $135 million in secured borrowings outstanding under these facilities. The Factoring Facilities will expire through April 2016 . Commercial Paper We maintain a commercial paper program to support our working capital requirements and for other general corporate purposes. In November 2015, we replaced the existing program with a new commercial paper program through which the Company can issue up to $3.5 billion in outstanding notes. We had no outstanding obligations under either program during the nine months ended December 31, 2015 and 2014, and as of December 31, 2015 and March 31, 2015. |
Pension Benefits
Pension Benefits | 9 Months Ended |
Dec. 31, 2015 | |
Defined Benefit Pension Plans and Defined Benefit Postretirement Plans Disclosure [Abstract] | |
Pension Benefits | Pension Benefits The net periodic expense for our defined pension benefit plans is as follows: U.S. Plans Non-U.S. Plans U.S. Plans Non-U.S. Plans Quarter Ended December 31, Quarter Ended December 31, Nine Months Ended December 31, Nine Months Ended December 31, (In millions) 2015 2014 2015 2014 2015 2014 2015 2014 Service cost - benefits earned during the year $ 1 $ — $ 4 $ 4 $ 3 $ 1 $ 14 $ 13 Interest cost on projected benefit obligation 4 5 6 8 13 14 18 26 Expected return on assets (5 ) (5 ) (7 ) (8 ) (14 ) (16 ) (23 ) (23 ) Amortization of unrecognized actuarial loss and prior service costs 11 5 1 1 32 15 3 3 Curtailment loss (gain) — — — 5 — — — — 5 Net periodic pension expense $ 11 $ 5 $ 4 $ 10 $ 34 $ 14 $ 12 $ 24 Cash contributions to these plans were $8 million and $35 million for the third quarters of 2016 and 2015, and $52 million and $65 million for the first nine months 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 | 9 Months Ended |
Dec. 31, 2015 | |
Derivative Instruments and Hedging Activities Disclosure [Abstract] | |
Hedging Activities | 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 We conduct our business worldwide in U.S. dollars and the functional currencies of our foreign subsidiaries, including Euro, British pounds and Canadian dollars. Changes in foreign exchange rates will affect our results of operations, assets and liabilities, capital ratios and purchasing activities that are reported in U.S. dollars. We have certain foreign currency rate risk programs that manage the impact of foreign currency fluctuations primarily through the use of foreign currency forward-exchange contracts. These contracts are typically used to offset the potential earnings effects from intercompany foreign currency loans. These programs reduce but do not entirely eliminate foreign currency rate risk. At December 31, 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 into 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 quarters and nine months ended December 31, 2015 and 2014. 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 December 31, 2015 and March 31, 2015, the total notional value of these contracts was $1,878 million and $1,755 million . These contracts will mature through 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 into earnings and accordingly, net losses of $24 million and $2 million for the third quarter and first nine months of 2016 and net losses of $24 million and $74 million for the third quarter and first nine months of 2015 were recorded within operating expenses. However, the gains and 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 December 31, 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 $ 19 $ — $ 76 $ 14 $ — $ 76 Foreign exchange contracts (non-current) Other assets 75 — 323 53 — 323 Total $ 94 $ — $ 67 $ — Derivatives not designated for hedge accounting Foreign exchange contracts (current) Prepaid expenses and other $ 25 $ — $ 1,162 $ 7 $ — $ 493 Foreign exchange contracts (current) Other accrued liabilities — 10 716 — 79 1,262 Total $ 25 $ 10 $ 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 | 9 Months Ended |
Dec. 31, 2015 | |
Fair Value Disclosures [Abstract] | |
Fair Value Measurements | Fair Value Measurements At December 31, 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 is carried at amortized cost. The carrying amounts and estimated fair values of these liabilities were $8.7 billion and $9.0 billion at December 31, 2015 and $9.7 billion and $10.4 billion at March 31, 2015 . The estimated fair value of our long-term debt was 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 December 31, 2015 and March 31, 2015 were investments in money market funds and time deposits of $1.9 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 and nine months ended December 31, 2015 and 2014 . |
Commitments and Contingent Liab
Commitments and Contingent Liabilities | 9 Months Ended |
Dec. 31, 2015 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments and Contingent Liabilities | 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 on Form 10-K and our Quarterly Report on Form 10-Q for the periods ended June 30, 2015 and September 30, 2015, 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 . The trial began on June 22, 2015 and has concluded. Post trial briefs will be filed, with a verdict to follow. 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. 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) . In August 2015, McKesson was granted a waiver from the opt out requirement from the Federal Communications Commission. Plaintiffs have appealed that decision. In September 2015, plaintiffs filed for class certification. The Court’s ruling on that motion is pending. On January 8, 2016, the state of West Virginia filed suit against the Company in state court in Boone County, West Virginia, State of West Virginia ex rel. Patrick Morrisey, Attorney General v. McKesson Corporation , Case No. 16-C-1 . As with similar suits pending against other distributors, the lawsuit alleges violations of the West Virginia Controlled Substances Act, the West Virginia Consumer Credit and Protection Act, as well as common law claims for negligence, public nuisance and unjust enrichment, related to McKesson’s supply of controlled substances to West Virginia from 2007-2012, and its alleged failure to report suspicious controlled substances orders. As previously disclosed, on May 21, 2014, four hedge funds managed by Magnetar Capital filed a complaint against McKesson Deutschland GmbH & Co. KGaA (formerly known as “Dragonfly GmbH & Co KGaA”), a wholly-owned subsidiary of the Company, in a German court in Frankfurt, Germany, alleging that McKesson Deutschland violated German takeover law in connection with the Company’s acquisition of Celesio by paying more to some holders of Celesio’s convertible bonds than it paid to the shareholders of Celesio’s stock, Magnetar Capital Master Fund Ltd. et al. v. Dragonfly GmbH & Co KGaA, No. 3- 05 O 44/14 . On December 5, 2014, the court dismissed Magnetar’s lawsuit. Magnetar subsequently appealed that ruling. On January 19, 2016, the appellate court issued a ruling reversing the lower court’s decision. The Company plans to appeal. 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 | 9 Months Ended |
Dec. 31, 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”). 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. During the second quarter of 2016, we bought 2.5 million shares at an average price per share of $196.20 . At September 30, 2015, no authorized amounts were available for future repurchases of the Company’s common stock under the May 2015 share purchase plan. In October 2015, the Board authorized the repurchase of up to $2 billion of the Company’s common stock. During the third quarter of 2016, we bought 1.9 million shares at an average price per share of $186.99 . During 2016, our share repurchases were completed through open market transactions. The total authorization outstanding for repurchases of the Company’s common stock was $1.6 billion at December 31, 2015. During the third quarter of 2016, we retired 115.5 million or $7.8 billion of the Company’s treasury shares previously repurchased. Under the applicable state law, these shares resume the status of authorized and unissued shares upon retirement. In accordance with our accounting policy, we allocate any excess of share repurchase price over par value between additional paid-in capital and retained earnings. Accordingly, our retained earnings and additional paid-in capital were reduced by $6.3 billion and $1.5 billion during the third quarter of 2016. 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 December 31, Nine Months Ended December 31, (In millions) 2015 2014 2015 2014 Foreign currency translation adjustments (1) Foreign currency translation adjustments arising during period, net of income tax benefit of $3, nil, $3 and nil (2) (3) $ (246 ) $ (416 ) $ (142 ) $ (985 ) Reclassified to income statement, net of income tax expense of nil, nil, nil and nil (4) — — — (10 ) (246 ) (416 ) (142 ) (995 ) Unrealized gains (losses) on cash flow hedges Unrealized gains (losses) on cash flow hedges arising during period, net of income tax expense of nil, nil, nil and nil (1 ) 1 5 (1 ) Changes in retirement-related benefit plans Net actuarial gain (loss) and prior service cost arising during the period, net of income tax benefit of nil, $6, $9 and $6 (5) — (21 ) (28 ) (21 ) Amortization of actuarial loss and prior service costs, net of income tax expense of $4, $2, $13 and $5 (6) 8 3 23 9 Foreign currency translation adjustments, net of income tax expense of nil, nil, nil and nil 7 2 3 4 15 (16 ) (2 ) (8 ) Other comprehensive income (loss), net of tax $ (232 ) $ (431 ) $ (139 ) $ (1,004 ) (1) Foreign currency translation adjustments result from the conversion of non-U.S. dollar financial statements of our foreign subsidiaries into the Company’s reporting currency, U.S. dollars, and were primarily related to our foreign subsidiary, Celesio, in 2016 and 2015. (2) The net foreign currency translation losses during the third quarter of 2016 were primarily due to the weakening of the Euro, British pound sterling and Canadian dollar against the U.S. dollar from October 1, 2015 to December 31, 2015. The net foreign currency translation losses during first nine months of 2016 were primarily due to the weakening of the Canadian dollar against the U.S. dollar from April 1, 2015 to December 31, 2015. During the third quarter and first nine months of 2015, the currency translation losses were primarily due to the weakening of the Euro and British pound sterling against the U.S. dollar from April 1, 2014 to December 31, 2014. (3) The third quarter and first nine months of 2016 include net foreign currency translation losses of $32 million and $2 million , which are primarily attributable to redeemable noncontrolling interests. The third quarter and first nine months of 2015 included net foreign currency translation losses of $13 million and $164 million attributable to noncontrolling interests and translation losses of $39 million attributable to redeemable noncontrolling interests. (4) These net foreign currency losses were reclassified from accumulated other comprehensive income (loss) to discontinued operations within our consolidated statement of operations due to the sales of certain businesses. (5) The third quarter and first nine months of 2016 include net actuarial gains of $1 million and losses of $5 million attributable to redeemable noncontrolling interests. (6) 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 for the third quarter and first nine months of 2016 is as follows: (In millions) Foreign Currency Translation Adjustments, Net of Tax Unrealized Gains (Losses) on Cash Flow Hedges, Net of Tax Unrealized Net Gains (Losses) and Other Components of Benefit Plans, Net of Tax Total Accumulated Other Comprehensive Income (Loss) Balance at September 30, 2015 $ (1,346 ) $ (15 ) $ (283 ) $ (1,644 ) Other comprehensive income (loss) before reclassifications (246 ) (1 ) — (247 ) Amounts reclassified to earnings and other — — 15 15 Other comprehensive income (loss) (246 ) (1 ) 15 (232 ) Less: amounts attributable to noncontrolling and redeemable noncontrolling interests (32 ) — 1 (31 ) Other comprehensive income (loss) attributable to McKesson (214 ) (1 ) 14 (201 ) Balance at December 31, 2015 $ (1,560 ) $ (16 ) $ (269 ) $ (1,845 ) Balance at March 31, 2015 $ (1,420 ) $ (21 ) $ (272 ) $ (1,713 ) Other comprehensive income (loss) before reclassifications (142 ) 5 (28 ) (165 ) Amounts reclassified to earnings and other — — 26 26 Other comprehensive income (loss) (142 ) 5 (2 ) (139 ) Less: amounts attributable to noncontrolling and redeemable noncontrolling interests (2 ) — (5 ) (7 ) Other comprehensive income (loss) attributable to McKesson (140 ) 5 3 (132 ) Balance at December 31, 2015 $ (1,560 ) $ (16 ) $ (269 ) $ (1,845 ) |
Segment Information
Segment Information | 9 Months Ended |
Dec. 31, 2015 | |
Segment Reporting [Abstract] | |
Segment Information | 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 December 31, Nine Months Ended December 31, (In millions) 2015 2014 2015 2014 Revenues Distribution Solutions (1) North America pharmaceutical distribution and services $ 39,615 $ 37,397 $ 119,750 $ 106,848 International pharmaceutical distribution and services 6,022 6,767 17,726 20,506 Medical-Surgical distribution and services 1,568 1,565 4,579 4,473 Total Distribution Solutions 47,205 45,729 142,055 131,827 Technology Solutions - products and services 694 755 2,151 2,293 Total Revenues $ 47,899 $ 46,484 $ 144,206 $ 134,120 Operating profit Distribution Solutions (2) $ 906 $ 803 $ 2,742 $ 2,333 Technology Solutions (3) 122 112 426 305 Total 1,028 915 3,168 2,638 Corporate Expenses, Net (95 ) (103 ) (320 ) (317 ) Interest Expense (87 ) (93 ) (267 ) (284 ) Income from Continuing Operations Before Income Taxes $ 846 $ 719 $ 2,581 $ 2,037 (1) Revenues derived from services represent less than 2% of this segment’s total revenues. (2) Distribution Solutions operating profit for the third quarter and first nine months of 2016 include $33 million and $215 million in pre-tax charges related to our last-in, first-out (“LIFO”) method of accounting for inventories. The third quarter and first nine months of 2015 include pre-tax LIFO charges of $95 million and $287 million . LIFO expense for the third quarter of 2016 includes a gross charge of $65 million , partially offset by a $32 million reversal of a portion of the LIFO expense recorded in the first half of 2016 due to a change in estimate. LIFO expense was less in 2016 primarily due to lower full year expectations for price increases. The third quarter and first nine months of 2016 include $17 million and $76 million of net cash proceeds representing our share of net settlements of antitrust class action lawsuits against drug manufacturers. Additionally, the first nine months of 2016 include a pre-tax gain of $52 million recognized from the sale of our ZEE Medical business. (3) Technology Solutions operating profit for the first nine months of 2016 includes a pre-tax gain of $51 million recognized from the sale of our nurse triage business, and for the first nine months 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 (Policies) | 9 Months Ended |
Dec. 31, 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 variable 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 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 and nine months ended December 31, 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, which relate to our discontinued operations, 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 and Recently Issued Accounting Pronouncements Not Yet Adopted | 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 Businesses” 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 Financial Instruments: In January 2016, amended guidance was issued that requires equity investments to be measured at fair value with changes in fair value recognized in net income and enhanced disclosures about those investments. This guidance also simplifies the impairment assessments of equity investments without readily determinable fair value. The investments that are accounted for under the equity method of accounting or result in consolidation of the investee are excluded from the scope of this amended guidance. The amended guidance will become effective for us commencing in the first quarter of 2019 and will be adopted through a cumulative-effect adjustment. Early adoption is not permitted except for certain provisions. We are currently evaluating the impact of this amended guidance on our consolidated financial statements. Deferred Income Taxes : In November 2015, amended guidance was issued for the balance sheet classification of deferred income taxes. The amended guidance requires the classification of all deferred tax assets and liabilities as noncurrent on the balance sheet instead of separating deferred taxes into current and noncurrent amounts. Deferred tax assets and liabilities will continue to be offset and presented as a single amount under the amended guidance. The amended guidance will become effective for us commencing in the first quarter of 2018 and will only result in a change in presentation of these deferred taxes on our consolidated balance sheets. The amended guidance can be adopted either on a prospective or retrospective basis. Early adoption is permitted. We are currently evaluating the impact of this amended guidance on our condensed consolidated financial statements. Business Combinations: In September 2015, amended guidance was issued for an acquirer’s accounting for measurement-period adjustments. The amended guidance eliminates the requirement that an acquirer in a business combination account for measurement-period adjustments retrospectively and instead requires that measurement-period adjustments be recognized during the period in which it determines the adjustment. In addition, the amended guidance requires that the acquirer record, in the same period’s financial statements, the effect on earnings of changes in depreciation, amortization, or other income effects, if any, as a result of the change to the provisional amounts, calculated as if the accounting had been completed at the acquisition date. The amended guidance is effective for us prospectively commencing in the first quarter of 2017. Early adoption is permitted. 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 retrospectively commencing in the first quarter of 2017. Early adoption is permitted. This amended guidance is primarily expected to affect our annual disclosures related to our pension benefits. 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 on the balance sheet as a direct deduction from the carrying amount of that debt liability. The recognition and measurement guidance for debt issuance costs is not affected by the amended guidance. In August 2015, a clarification was added to this amended guidance that debt issuance costs related to line-of-credit arrangements can continue to be deferred and presented as an asset on the balance sheet. The amended guidance will become effective for us commencing in the first quarter of 2017. Early adoption is permitted. The amended guidance will affect financial statement presentation only and therefore 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. In August 2015, additional guidance was issued to defer the effective date of the amended revenue recognition guidance by one year. As a result, 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 (Tables) | 9 Months Ended |
Dec. 31, 2015 | |
Noncontrolling Interest [Abstract] | |
Schedule of changes in redeemable noncontrolling interests | 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 34 Other comprehensive income (loss) (7 ) Reclassification of recurring compensation to other accrued liabilities (35 ) Balance, December 31, 2015 $ 1,378 |
Discontinued Operations (Tables
Discontinued Operations (Tables) | 9 Months Ended |
Dec. 31, 2015 | |
Discontinued Operations and Disposal Groups [Abstract] | |
Summary of results from discontinued operations and summary of carrying amounts of major classes of assets and liabilities included as part of discontinued operations | A summary of results of discontinued operations is as follows: Quarter Ended December 31, Nine Months Ended December 31, (In millions) 2015 2014 2015 2014 Revenues $ 381 $ 523 $ 1,246 $ 1,742 Cost of sales (341 ) (479 ) (1,123 ) (1,565 ) Operating expenses (36 ) (66 ) (128 ) (214 ) Other income (loss), net (7 ) (4 ) (21 ) (10 ) Pre-tax loss from discontinued operations (3 ) (26 ) (26 ) (47 ) Loss on sale — — — (6 ) Income tax benefit 8 16 15 21 Loss from discontinued operations, net of tax $ 5 $ (10 ) $ (11 ) $ (32 ) A summary of carrying amounts of major classes of assets and liabilities included as part of discontinued operations is as follows: December 31, March 31, (In millions) 2015 2015 Receivables, net $ 255 $ 314 Inventories, net 241 254 Other assets 86 92 Total assets of discontinued operations (1) 582 660 Drafts and account payable 247 209 Short-term borrowings 100 126 Other liabilities 248 328 Total liabilities of discontinued operations (1) $ 595 $ 663 (1) 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) | 9 Months Ended |
Dec. 31, 2015 | |
Earnings Per Share [Abstract] | |
Schedule of computations for basic and diluted earnings per common share | The computations for basic and diluted earnings per common share are as follows: Quarter Ended December 31, Nine Months Ended December 31, (In millions, except per share amounts) 2015 2014 2015 2014 Income from continuing operations $ 642 $ 521 $ 1,877 $ 1,431 Net income attributable to noncontrolling interests (13 ) (39 ) (39 ) (55 ) Income from continuing operations attributable to McKesson 629 482 1,838 1,376 Income (Loss) from discontinued operations, net of tax 5 (10 ) (11 ) (32 ) Net income attributable to McKesson $ 634 $ 472 $ 1,827 $ 1,344 Weighted average common shares outstanding: Basic 230 232 231 232 Effect of dilutive securities: Options to purchase common stock 1 2 1 1 Restricted stock units 1 2 2 2 Diluted 232 236 234 235 Earnings (loss) per common share attributable to McKesson: (1) Diluted Continuing operations $ 2.71 $ 2.04 $ 7.86 $ 5.85 Discontinued operations 0.02 (0.04 ) (0.05 ) (0.13 ) Total $ 2.73 $ 2.00 $ 7.81 $ 5.72 Basic Continuing operations $ 2.74 $ 2.07 $ 7.95 $ 5.94 Discontinued operations 0.02 (0.04 ) (0.04 ) (0.14 ) Total $ 2.76 $ 2.03 $ 7.91 $ 5.80 (1) Certain computations may reflect rounding adjustments. |
Goodwill And Intangible Asset26
Goodwill And Intangible Assets, Net (Tables) | 9 Months Ended |
Dec. 31, 2015 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Schedule of 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 15 — 15 Acquisition accounting and other adjustments 8 — 8 Goodwill disposed (59 ) (26 ) (85 ) Foreign currency translation adjustments, net (49 ) (5 ) (54 ) Balance, December 31, 2015 $ 7,909 $ 1,792 $ 9,701 |
Schedule of information regarding intangible assets | Information regarding intangible assets is as follows: December 31, 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 8 $ 2,663 $ (1,295 ) $ 1,368 $ 2,683 $ (1,116 ) $ 1,567 Service agreements 15 943 (251 ) 692 957 (215 ) 742 Pharmacy licenses 25 884 (111 ) 773 874 (65 ) 809 Trademarks and trade names 14 300 (90 ) 210 315 (82 ) 233 Technology 2 209 (193 ) 16 213 (184 ) 29 Other 3 163 (119 ) 44 162 (101 ) 61 Total $ 5,162 $ (2,059 ) $ 3,103 $ 5,204 $ (1,763 ) $ 3,441 |
Pension Benefits (Tables)
Pension Benefits (Tables) | 9 Months Ended |
Dec. 31, 2015 | |
Defined Benefit Pension Plans and Defined Benefit Postretirement Plans Disclosure [Abstract] | |
Schedule of net periodic expense for defined pension benefit plans | The net periodic expense for our defined pension benefit plans is as follows: U.S. Plans Non-U.S. Plans U.S. Plans Non-U.S. Plans Quarter Ended December 31, Quarter Ended December 31, Nine Months Ended December 31, Nine Months Ended December 31, (In millions) 2015 2014 2015 2014 2015 2014 2015 2014 Service cost - benefits earned during the year $ 1 $ — $ 4 $ 4 $ 3 $ 1 $ 14 $ 13 Interest cost on projected benefit obligation 4 5 6 8 13 14 18 26 Expected return on assets (5 ) (5 ) (7 ) (8 ) (14 ) (16 ) (23 ) (23 ) Amortization of unrecognized actuarial loss and prior service costs 11 5 1 1 32 15 3 3 Curtailment loss (gain) — — — 5 — — — — 5 Net periodic pension expense $ 11 $ 5 $ 4 $ 10 $ 34 $ 14 $ 12 $ 24 |
Hedging Activities (Tables)
Hedging Activities (Tables) | 9 Months Ended |
Dec. 31, 2015 | |
Derivative Instruments and Hedging Activities Disclosure [Abstract] | |
Schedule of information regarding the fair value of derivatives on a gross basis | Information regarding the fair value of derivatives on a gross basis is as follows: Balance Sheet Caption December 31, 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 $ 19 $ — $ 76 $ 14 $ — $ 76 Foreign exchange contracts (non-current) Other assets 75 — 323 53 — 323 Total $ 94 $ — $ 67 $ — Derivatives not designated for hedge accounting Foreign exchange contracts (current) Prepaid expenses and other $ 25 $ — $ 1,162 $ 7 $ — $ 493 Foreign exchange contracts (current) Other accrued liabilities — 10 716 — 79 1,262 Total $ 25 $ 10 $ 7 $ 79 |
Stockholders' Equity (Tables)
Stockholders' Equity (Tables) | 9 Months Ended |
Dec. 31, 2015 | |
Equity [Abstract] | |
Schedule of information regarding other comprehensive income (loss) including noncontrolling and redeemable noncontrolling interests, net of tax, by component | Information regarding other comprehensive income (loss) including noncontrolling and redeemable noncontrolling interests, net of tax, by component is as follows: Quarter Ended December 31, Nine Months Ended December 31, (In millions) 2015 2014 2015 2014 Foreign currency translation adjustments (1) Foreign currency translation adjustments arising during period, net of income tax benefit of $3, nil, $3 and nil (2) (3) $ (246 ) $ (416 ) $ (142 ) $ (985 ) Reclassified to income statement, net of income tax expense of nil, nil, nil and nil (4) — — — (10 ) (246 ) (416 ) (142 ) (995 ) Unrealized gains (losses) on cash flow hedges Unrealized gains (losses) on cash flow hedges arising during period, net of income tax expense of nil, nil, nil and nil (1 ) 1 5 (1 ) Changes in retirement-related benefit plans Net actuarial gain (loss) and prior service cost arising during the period, net of income tax benefit of nil, $6, $9 and $6 (5) — (21 ) (28 ) (21 ) Amortization of actuarial loss and prior service costs, net of income tax expense of $4, $2, $13 and $5 (6) 8 3 23 9 Foreign currency translation adjustments, net of income tax expense of nil, nil, nil and nil 7 2 3 4 15 (16 ) (2 ) (8 ) Other comprehensive income (loss), net of tax $ (232 ) $ (431 ) $ (139 ) $ (1,004 ) (1) Foreign currency translation adjustments result from the conversion of non-U.S. dollar financial statements of our foreign subsidiaries into the Company’s reporting currency, U.S. dollars, and were primarily related to our foreign subsidiary, Celesio, in 2016 and 2015. (2) The net foreign currency translation losses during the third quarter of 2016 were primarily due to the weakening of the Euro, British pound sterling and Canadian dollar against the U.S. dollar from October 1, 2015 to December 31, 2015. The net foreign currency translation losses during first nine months of 2016 were primarily due to the weakening of the Canadian dollar against the U.S. dollar from April 1, 2015 to December 31, 2015. During the third quarter and first nine months of 2015, the currency translation losses were primarily due to the weakening of the Euro and British pound sterling against the U.S. dollar from April 1, 2014 to December 31, 2014. (3) The third quarter and first nine months of 2016 include net foreign currency translation losses of $32 million and $2 million , which are primarily attributable to redeemable noncontrolling interests. The third quarter and first nine months of 2015 included net foreign currency translation losses of $13 million and $164 million attributable to noncontrolling interests and translation losses of $39 million attributable to redeemable noncontrolling interests. (4) These net foreign currency losses were reclassified from accumulated other comprehensive income (loss) to discontinued operations within our consolidated statement of operations due to the sales of certain businesses. (5) The third quarter and first nine months of 2016 include net actuarial gains of $1 million and losses of $5 million attributable to redeemable noncontrolling interests. (6) 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 information regarding changes in accumulated other comprehensive income (loss), net of tax, by component | Information regarding changes in our accumulated other comprehensive income (loss), net of tax, by component for the third quarter and first nine months of 2016 is as follows: (In millions) Foreign Currency Translation Adjustments, Net of Tax Unrealized Gains (Losses) on Cash Flow Hedges, Net of Tax Unrealized Net Gains (Losses) and Other Components of Benefit Plans, Net of Tax Total Accumulated Other Comprehensive Income (Loss) Balance at September 30, 2015 $ (1,346 ) $ (15 ) $ (283 ) $ (1,644 ) Other comprehensive income (loss) before reclassifications (246 ) (1 ) — (247 ) Amounts reclassified to earnings and other — — 15 15 Other comprehensive income (loss) (246 ) (1 ) 15 (232 ) Less: amounts attributable to noncontrolling and redeemable noncontrolling interests (32 ) — 1 (31 ) Other comprehensive income (loss) attributable to McKesson (214 ) (1 ) 14 (201 ) Balance at December 31, 2015 $ (1,560 ) $ (16 ) $ (269 ) $ (1,845 ) Balance at March 31, 2015 $ (1,420 ) $ (21 ) $ (272 ) $ (1,713 ) Other comprehensive income (loss) before reclassifications (142 ) 5 (28 ) (165 ) Amounts reclassified to earnings and other — — 26 26 Other comprehensive income (loss) (142 ) 5 (2 ) (139 ) Less: amounts attributable to noncontrolling and redeemable noncontrolling interests (2 ) — (5 ) (7 ) Other comprehensive income (loss) attributable to McKesson (140 ) 5 3 (132 ) Balance at December 31, 2015 $ (1,560 ) $ (16 ) $ (269 ) $ (1,845 ) |
Segment Information (Tables)
Segment Information (Tables) | 9 Months Ended |
Dec. 31, 2015 | |
Segment Reporting [Abstract] | |
Schedule of financial information relating to reportable operating segments and reconciliations to the condensed consolidated totals | Financial information relating to our reportable operating segments and reconciliations to the condensed consolidated totals is as follows: Quarter Ended December 31, Nine Months Ended December 31, (In millions) 2015 2014 2015 2014 Revenues Distribution Solutions (1) North America pharmaceutical distribution and services $ 39,615 $ 37,397 $ 119,750 $ 106,848 International pharmaceutical distribution and services 6,022 6,767 17,726 20,506 Medical-Surgical distribution and services 1,568 1,565 4,579 4,473 Total Distribution Solutions 47,205 45,729 142,055 131,827 Technology Solutions - products and services 694 755 2,151 2,293 Total Revenues $ 47,899 $ 46,484 $ 144,206 $ 134,120 Operating profit Distribution Solutions (2) $ 906 $ 803 $ 2,742 $ 2,333 Technology Solutions (3) 122 112 426 305 Total 1,028 915 3,168 2,638 Corporate Expenses, Net (95 ) (103 ) (320 ) (317 ) Interest Expense (87 ) (93 ) (267 ) (284 ) Income from Continuing Operations Before Income Taxes $ 846 $ 719 $ 2,581 $ 2,037 (1) Revenues derived from services represent less than 2% of this segment’s total revenues. (2) Distribution Solutions operating profit for the third quarter and first nine months of 2016 include $33 million and $215 million in pre-tax charges related to our last-in, first-out (“LIFO”) method of accounting for inventories. The third quarter and first nine months of 2015 include pre-tax LIFO charges of $95 million and $287 million . LIFO expense for the third quarter of 2016 includes a gross charge of $65 million , partially offset by a $32 million reversal of a portion of the LIFO expense recorded in the first half of 2016 due to a change in estimate. LIFO expense was less in 2016 primarily due to lower full year expectations for price increases. The third quarter and first nine months of 2016 include $17 million and $76 million of net cash proceeds representing our share of net settlements of antitrust class action lawsuits against drug manufacturers. Additionally, the first nine months of 2016 include a pre-tax gain of $52 million recognized from the sale of our ZEE Medical business. (3) Technology Solutions operating profit for the first nine months of 2016 includes a pre-tax gain of $51 million recognized from the sale of our nurse triage business, and for the first nine months 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 (Details)
Business Combinations (Details) € in Millions, £ in Millions, $ in Millions | 1 Months Ended | 9 Months Ended | ||||||
Sep. 30, 2015EUR (€) | Sep. 30, 2015USD ($) | Jul. 31, 2015hospital_pharmacy | Jul. 31, 2015GBP (£) | Jul. 31, 2015USD ($) | Jul. 31, 2015pharmacy | Jul. 31, 2015in_store_pharmacy | Dec. 31, 2015 | |
UDG | Ireland | ||||||||
Business Acquisition [Line Items] | ||||||||
Agreement to acquire pharmaceutical distribution business in cash | € 408 | $ 445 | ||||||
Currency exchange ratio, usd/euro | 1.09 | |||||||
Sainsbury | U.K. | ||||||||
Business Acquisition [Line Items] | ||||||||
Agreement to acquire pharmaceutical distribution business in cash | £ 125 | $ 185 | ||||||
Currency exchange ratio, usd/gbp | 1.48 | |||||||
Number of businesses acquired | 4 | 281 | 277 |
Redeemable Noncontrolling Int32
Redeemable Noncontrolling Interests - Narrative (Details) $ in Millions | 9 Months Ended | ||
Dec. 31, 2015€ / shares | Dec. 31, 2015USD ($) | Mar. 31, 2015USD ($) | |
Noncontrolling Interest [Abstract] | |||
Annual recurring compensation amount per share (in euros per share) | € / shares | € 0.83 | ||
Put right redemption price per share (in euros per share) | € / shares | € 22.99 | ||
Put right value, interest rate spread (as a percent) | 5.00% | ||
Put right specified in domination agreement exercise period | 2 months | ||
Carrying value of redeemable noncontrolling interests | $ | $ 1,378 | $ 1,386 | |
Maximum redemption value of redeemable noncontrolling interest | $ | $ 1,220 | $ 1,210 | |
Ownership percentage (as a percent) | 76.00% | 76.00% |
Redeemable Noncontrolling Int33
Redeemable Noncontrolling Interests - Schedule of Changes in Redeemable Noncontrolling Interests (Details) $ in Millions | 9 Months Ended |
Dec. 31, 2015USD ($) | |
Redeemable Noncontrolling Interests | |
Beginning balance | $ 1,386 |
Net income attributable to noncontrolling interests | 34 |
Other comprehensive income (loss) | (7) |
Reclassification of recurring compensation to other accrued liabilities | (35) |
Ending balance | $ 1,378 |
Divestiture of Businesses (Deta
Divestiture of Businesses (Details) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2015 | Jun. 30, 2015 | Dec. 31, 2015 | Dec. 31, 2014 | |
Noncash or Part Noncash Divestitures [Line Items] | ||||
Gain from sale of business, pre-tax | $ 103 | $ 0 | ||
ZEE Medical Business | Operating Segments | Distribution Solutions | ||||
Noncash or Part Noncash Divestitures [Line Items] | ||||
Proceeds from divestiture of businesses | $ 134 | |||
Gain from sale of business, pre-tax | 52 | |||
Gain from sale of business, after tax | $ 29 | |||
Nurse Triage | Operating Segments | Technology Solutions | ||||
Noncash or Part Noncash Divestitures [Line Items] | ||||
Proceeds from divestiture of businesses | $ 84 | |||
Gain from sale of business, pre-tax | 51 | $ 51 | ||
Gain from sale of business, after tax | $ 38 |
Discontinued Operations - Narra
Discontinued Operations - Narrative (Details) - USD ($) $ in Millions | 3 Months Ended | ||
Mar. 31, 2015 | Sep. 30, 2014 | Jun. 30, 2014 | |
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items] | |||
Non-cash impairment charges, pre-tax | $ 241 | ||
Non-cash impairment charges after-tax | $ 235 | ||
Non-cash charge in cost of sales relating to depreciation and amortization expense, pre-tax | $ 34 | ||
Loss within the discontinued operations, pre-tax | $ 6 | ||
Loss within the discontinued operations of condensed consolidated statements of operations, after-tax | $ 6 |
Discontinued Operations - Summa
Discontinued Operations - Summary of Results of Discontinued Operations (Details) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | |||
Dec. 31, 2015 | Dec. 31, 2014 | Sep. 30, 2014 | Dec. 31, 2015 | Dec. 31, 2014 | |
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items] | |||||
Loss on sale | $ (6) | ||||
Loss from discontinued operations, net of tax | $ 5 | $ (10) | $ (11) | $ (32) | |
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 | 381 | 523 | 1,246 | 1,742 | |
Cost of sales | (341) | (479) | (1,123) | (1,565) | |
Operating expenses | (36) | (66) | (128) | (214) | |
Other income (loss), net | (7) | (4) | (21) | (10) | |
Pre-tax loss from discontinued operations | (3) | (26) | (26) | (47) | |
Loss on sale | 0 | 0 | 0 | (6) | |
Income tax benefit | 8 | 16 | 15 | 21 | |
Loss from discontinued operations, net of tax | $ 5 | $ (10) | $ (11) | $ (32) |
Discontinued Operations - Sum37
Discontinued Operations - Summary of Carrying Amounts of Major Classes of Assets and Liabilities (Details) - Discontinued Operations, Held-For-Sale or Disposed Of By Sale - USD ($) $ in Millions | Dec. 31, 2015 | Mar. 31, 2015 |
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items] | ||
Receivables, net | $ 255 | $ 314 |
Inventories, net | 241 | 254 |
Other assets | 86 | 92 |
Total assets of discontinued operations | 582 | 660 |
Drafts and account payable | 247 | 209 |
Short-term borrowings | 100 | 126 |
Other liabilities | 248 | 328 |
Total liabilities of discontinued operations | $ 595 | $ 663 |
Income Taxes (Details)
Income Taxes (Details) - USD ($) | 3 Months Ended | 9 Months Ended | ||||
Dec. 31, 2015 | Sep. 30, 2015 | Jun. 30, 2015 | Dec. 31, 2014 | Dec. 31, 2015 | Dec. 31, 2014 | |
Income Tax [Line Items] | ||||||
Income tax expense related to continuing operations | $ 204,000,000 | $ 198,000,000 | $ 704,000,000 | $ 606,000,000 | ||
Net discrete tax expense (benefits) | $ (16,000,000) | $ 4,000,000 | $ (45,000,000) | $ (14,000,000) | ||
Income tax rate (as a percent) | 24.10% | 27.50% | 27.30% | 29.70% | ||
Discrete tax benefit | $ 25,000,000 | |||||
Unrecognized tax benefits | $ 564,000,000 | $ 564,000,000 | ||||
Unrecognized tax benefits that would reduce income tax expense and the effective tax rate | 392,000,000 | 392,000,000 | ||||
Significant change in unrecognized tax benefits is reasonably possible, amount of unrecorded benefit (up to) | 123,000,000 | 123,000,000 | ||||
Income tax expense | 3,000,000 | $ 5,000,000 | 9,000,000 | $ 12,000,000 | ||
Accrued interest and penalties on unrecognized tax benefits | 78,000,000 | $ 78,000,000 | ||||
CRA | ||||||
Income Tax [Line Items] | ||||||
Income tax benefit to settle transfer pricing | $ 12,000,000 | |||||
Foreign Tax Authority | ||||||
Income Tax [Line Items] | ||||||
Net discrete tax expense (benefits) | $ (19,000,000) |
Earnings Per Common Share - Sch
Earnings Per Common Share - Schedule of Computation for Basic and Diluted Earnings per Common Share (Details) - USD ($) $ / shares in Units, shares in Millions, $ in Millions | 3 Months Ended | 9 Months Ended | ||
Dec. 31, 2015 | Dec. 31, 2014 | Dec. 31, 2015 | Dec. 31, 2014 | |
Earnings Per Share [Abstract] | ||||
Income from continuing operations | $ 642 | $ 521 | $ 1,877 | $ 1,431 |
Net income attributable to noncontrolling interests | (13) | (39) | (39) | (55) |
Income from continuing operations attributable to McKesson | 629 | 482 | 1,838 | 1,376 |
Income (Loss) from discontinued operations, net of tax | 5 | (10) | (11) | (32) |
Net Income Attributable to McKesson Corporation | $ 634 | $ 472 | $ 1,827 | $ 1,344 |
Weighted average common shares outstanding: | ||||
Basic (in shares) | 230 | 232 | 231 | 232 |
Effect of dilutive securities: | ||||
Options to purchase common stock (in shares) | 1 | 2 | 1 | 1 |
Restricted stock units (in shares) | 1 | 2 | 2 | 2 |
Diluted (in shares) | 232 | 236 | 234 | 235 |
Diluted | ||||
Continuing operations (in dollars per share) | $ 2.71 | $ 2.04 | $ 7.86 | $ 5.85 |
Discontinued operations (in dollars per share) | 0.02 | (0.04) | (0.05) | (0.13) |
Total (in dollars per share) | 2.73 | 2 | 7.81 | 5.72 |
Basic | ||||
Continuing operations (in dollars per share) | 2.74 | 2.07 | 7.95 | 5.94 |
Discontinued operations (in dollars per share) | 0.02 | (0.04) | (0.04) | (0.14) |
Total (in dollars per share) | $ 2.76 | $ 2.03 | $ 7.91 | $ 5.80 |
Earnings Per Common Share - Nar
Earnings Per Common Share - Narrative (Details) - shares | 3 Months Ended | 9 Months Ended | ||
Dec. 31, 2015 | Dec. 31, 2014 | Dec. 31, 2015 | Dec. 31, 2014 | |
Earnings Per Share [Abstract] | ||||
Potentially dilutive securities excluded from computations of diluted net earnings per common share (in shares) | 1,000,000 | 0 | 1,000,000 | 2,000,000 |
Goodwill And Intangible Asset41
Goodwill And Intangible Assets, Net - Schedule of Changes in the Carrying Amount of Goodwill and Narrative (Details) - USD ($) $ in Millions | 9 Months Ended | |
Dec. 31, 2015 | Mar. 31, 2015 | |
Goodwill [Roll Forward] | ||
Beginning balance | $ 9,817 | |
Goodwill acquired | 15 | |
Acquisition accounting and other adjustments | 8 | |
Goodwill disposed | (85) | |
Foreign currency translation adjustments, net | (54) | |
Ending balance | 9,701 | |
Distribution Solutions | ||
Goodwill [Roll Forward] | ||
Beginning balance | 7,994 | |
Goodwill acquired | 15 | |
Acquisition accounting and other adjustments | 8 | |
Goodwill disposed | (59) | |
Foreign currency translation adjustments, net | (49) | |
Ending balance | 7,909 | |
Technology Solutions | ||
Goodwill [Roll Forward] | ||
Beginning balance | 1,823 | |
Goodwill acquired | 0 | |
Acquisition accounting and other adjustments | 0 | |
Goodwill disposed | (26) | |
Foreign currency translation adjustments, net | (5) | |
Ending balance | 1,792 | |
Accumulated goodwill impairment losses | $ 36 | $ 36 |
Goodwill And Intangible Asset42
Goodwill And Intangible Assets, Net - Schedule of Information Regarding Intangible Assets (Details) - USD ($) $ in Millions | 9 Months Ended | |
Dec. 31, 2015 | Mar. 31, 2015 | |
Finite-Lived Intangible Assets [Line Items] | ||
Gross Carrying Amount | $ 5,162 | $ 5,204 |
Accumulated Amortization | (2,059) | (1,763) |
Net Carrying Amount | $ 3,103 | 3,441 |
Customer lists | ||
Finite-Lived Intangible Assets [Line Items] | ||
Weighted Average Remaining Amortization Period (years) | 8 years | |
Gross Carrying Amount | $ 2,663 | 2,683 |
Accumulated Amortization | (1,295) | (1,116) |
Net Carrying Amount | $ 1,368 | 1,567 |
Service agreements | ||
Finite-Lived Intangible Assets [Line Items] | ||
Weighted Average Remaining Amortization Period (years) | 15 years | |
Gross Carrying Amount | $ 943 | 957 |
Accumulated Amortization | (251) | (215) |
Net Carrying Amount | $ 692 | 742 |
Pharmacy licenses | ||
Finite-Lived Intangible Assets [Line Items] | ||
Weighted Average Remaining Amortization Period (years) | 25 years | |
Gross Carrying Amount | $ 884 | 874 |
Accumulated Amortization | (111) | (65) |
Net Carrying Amount | $ 773 | 809 |
Trademarks and trade names | ||
Finite-Lived Intangible Assets [Line Items] | ||
Weighted Average Remaining Amortization Period (years) | 14 years | |
Gross Carrying Amount | $ 300 | 315 |
Accumulated Amortization | (90) | (82) |
Net Carrying Amount | $ 210 | 233 |
Technology | ||
Finite-Lived Intangible Assets [Line Items] | ||
Weighted Average Remaining Amortization Period (years) | 2 years | |
Gross Carrying Amount | $ 209 | 213 |
Accumulated Amortization | (193) | (184) |
Net Carrying Amount | $ 16 | 29 |
Other | ||
Finite-Lived Intangible Assets [Line Items] | ||
Weighted Average Remaining Amortization Period (years) | 3 years | |
Gross Carrying Amount | $ 163 | 162 |
Accumulated Amortization | (119) | (101) |
Net Carrying Amount | $ 44 | $ 61 |
Goodwill And Intangible Asset43
Goodwill And Intangible Assets, Net - Narrative - Intangible Assets (Details) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | ||
Dec. 31, 2015 | Dec. 31, 2014 | Dec. 31, 2015 | Dec. 31, 2014 | |
Goodwill and Intangible Assets Disclosure [Abstract] | ||||
Amortization expense of intangible assets | $ 108 | $ 125 | $ 329 | $ 384 |
Finite-Lived Intangible Assets, Amortization Expense, Maturity Schedule [Abstract] | ||||
Estimated annual amortization expense, 2016 | 86 | 86 | ||
Estimated annual amortization expense, 2017 | 378 | 378 | ||
Estimated annual amortization expense, 2018 | 360 | 360 | ||
Estimated annual amortization expense, 2019 | 327 | 327 | ||
Estimated annual amortization expense, 2020 | 302 | 302 | ||
Estimated annual amortization expense, thereafter | $ 1,651 | $ 1,651 |
Debt and Financing Activities -
Debt and Financing Activities - Long Term Debt (Details) £ in Millions | 3 Months Ended | 9 Months Ended | ||||
Sep. 30, 2015USD ($) | Jun. 30, 2015USD ($) | Dec. 31, 2015USD ($) | Dec. 31, 2014USD ($) | Mar. 31, 2015GBP (£) | Mar. 31, 2015USD ($) | |
Debt Instrument [Line Items] | ||||||
Long-term debt outstanding | $ 8,711,000,000 | $ 9,709,000,000 | ||||
Repayment of term loan | 996,000,000 | $ 233,000,000 | ||||
Repayment of floating rate notes | $ 400,000,000 | |||||
Bonds | ||||||
Debt Instrument [Line Items] | ||||||
Long-term debt outstanding | £ 60 | 89,000,000 | ||||
Repayment of term loan | $ 93,000,000 | |||||
0.95% Notes | ||||||
Debt Instrument [Line Items] | ||||||
Repayments of notes | 500,000,000 | |||||
Notes (as a percent) | 0.95% | |||||
Current Portion of Long-term Debt | ||||||
Debt Instrument [Line Items] | ||||||
Long-term debt outstanding | $ 996,000,000 | $ 1,529,000,000 |
Debt and Financing Activities45
Debt and Financing Activities - Revolving Credit Facilities (Details) | 9 Months Ended | |||||
Dec. 31, 2015USD ($) | Dec. 31, 2014USD ($) | Dec. 31, 2015EUR (€) | Dec. 31, 2015USD ($) | Oct. 31, 2015USD ($) | Mar. 31, 2015USD ($) | |
Revolving Credit Facility | ||||||
Line of Credit Facility [Line Items] | ||||||
Syndicated senior unsecured revolving credit facility | € 500,000,000 | $ 1,300,000,000 | $ 3,500,000,000 | |||
Syndicated senior unsecured revolving credit facility term | 5 years | |||||
Borrowings under the facility | $ 0 | $ 0 | ||||
Amounts outstanding under facility | 0 | $ 0 | ||||
Global Facility | ||||||
Line of Credit Facility [Line Items] | ||||||
Syndicated senior unsecured revolving credit facility | 3,500,000,000 | |||||
Credit facility, aggregate sublimit | $ 3,150,000,000 | |||||
Debt to capital covenant ratio (no greater than) | 0.65 | 0.65 | ||||
Line of Credit | ||||||
Line of Credit Facility [Line Items] | ||||||
Syndicated senior unsecured revolving credit facility | $ 1,100,000,000 | |||||
Borrowings under the facility | 631,000,000 | 222,000,000 | ||||
Amounts outstanding under facility | $ 29,000,000 | $ 29,000,000 | ||||
Repayments amount under credit lines | $ 633,000,000 | $ 181,000,000 | ||||
Line of Credit | Minimum | ||||||
Line of Credit Facility [Line Items] | ||||||
Credit lines interest rate | 0.18% | |||||
Line of Credit | Maximum | ||||||
Line of Credit Facility [Line Items] | ||||||
Credit lines interest rate | 6.00% |
Debt and Financing Activities46
Debt and Financing Activities - Accounts Receivable Facilities (Details) - USD ($) | 9 Months Ended | ||
Dec. 31, 2015 | Dec. 31, 2014 | Mar. 31, 2015 | |
Accounts Receivable Sales Facility | |||
Line of Credit Facility [Line Items] | |||
Accounts receivable sales facility committed balance | $ 1,350,000,000 | ||
Borrowings and related securitized accounts receivable outstanding | 0 | $ 0 | $ 0 |
Accounts Receivable Factoring Facility | |||
Line of Credit Facility [Line Items] | |||
Accounts receivable sales facility committed balance | 6,000,000 | ||
Borrowings under the facility | 901,000,000 | 2,200,000,000 | |
Repayments of short term borrowings | 1,037,000,000 | $ 2,154,000,000 | |
Borrowings and related securitized accounts receivable outstanding | $ 6,000,000 | $ 135,000,000 |
Debt and Financing Activities47
Debt and Financing Activities - Commercial Paper (Details) - Commercial Paper - USD ($) | Dec. 31, 2015 | Nov. 30, 2015 | Mar. 31, 2015 | Dec. 31, 2014 |
Debt Instrument [Line Items] | ||||
Outstanding notes (up to) | $ 3,500,000,000 | |||
Outstanding obligations | $ 0 | $ 0 | $ 0 |
Pension Benefits - Schedule of
Pension Benefits - Schedule of Net Periodic Expense (Details) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | ||
Dec. 31, 2015 | Dec. 31, 2014 | Dec. 31, 2015 | Dec. 31, 2014 | |
U.S. Plans | ||||
Defined Benefit Plan Disclosure [Line Items] | ||||
Service cost - benefits earned during the year | $ 1 | $ 0 | $ 3 | $ 1 |
Interest cost on projected benefit obligation | 4 | 5 | 13 | 14 |
Expected return on assets | (5) | (5) | (14) | (16) |
Amortization of unrecognized actuarial loss and prior service costs | 11 | 5 | 32 | 15 |
Curtailment loss (gain) | 0 | 0 | 0 | 0 |
Net periodic pension expense | 11 | 5 | 34 | 14 |
Non-U.S. Plans | ||||
Defined Benefit Plan Disclosure [Line Items] | ||||
Service cost - benefits earned during the year | 4 | 4 | 14 | 13 |
Interest cost on projected benefit obligation | 6 | 8 | 18 | 26 |
Expected return on assets | (7) | (8) | (23) | (23) |
Amortization of unrecognized actuarial loss and prior service costs | 1 | 1 | 3 | 3 |
Curtailment loss (gain) | 0 | 5 | 0 | 5 |
Net periodic pension expense | $ 4 | $ 10 | $ 12 | $ 24 |
Pension Benefits - Narrative (D
Pension Benefits - Narrative (Details) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | ||
Dec. 31, 2015 | Dec. 31, 2014 | Dec. 31, 2015 | Dec. 31, 2014 | |
Defined Benefit Pension Plans and Defined Benefit Postretirement Plans Disclosure [Abstract] | ||||
Cash contributions to the plans | $ 8 | $ 35 | $ 52 | $ 65 |
Percentage of greater of projected benefit obligation | 10.00% | 10.00% |
Hedging Activities - Narrative
Hedging Activities - Narrative (Details) - Foreign Exchange Contract - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | |||
Dec. 31, 2015 | Dec. 31, 2014 | Dec. 31, 2015 | Dec. 31, 2014 | Mar. 31, 2015 | |
Derivatives Designated for Hedge Accounting | |||||
Derivative [Line Items] | |||||
Notional values designated for hedge accounting | $ 399 | $ 399 | $ 399 | ||
Derivatives not Designated for Hedge Accounting | |||||
Derivative [Line Items] | |||||
Notional values designated for hedge accounting | 1,878 | 1,878 | $ 1,755 | ||
Net losses from changes in fair value not designated for hedge accounting | $ 24 | $ 24 | $ 2 | $ 74 |
Hedging Activities - Derivative
Hedging Activities - Derivative Instruments Fair Value (Details) - USD ($) $ in Millions | Dec. 31, 2015 | Mar. 31, 2015 |
Derivatives Designated for Hedge Accounting | Foreign Exchange Contract | ||
Derivatives, Fair Value [Line Items] | ||
Fair value of derivative, asset | $ 94 | $ 67 |
Fair value of derivative, liability | 0 | 0 |
Derivatives Designated for Hedge Accounting | Foreign Exchange Contract | Prepaid Expenses and Other | ||
Derivatives, Fair Value [Line Items] | ||
Fair value of derivative, asset | 19 | 14 |
Fair value of derivative, liability | 0 | 0 |
U.S. Dollar notional amount, asset | 76 | 76 |
Derivatives Designated for Hedge Accounting | Foreign Exchange Contract | Other Assets | ||
Derivatives, Fair Value [Line Items] | ||
Fair value of derivative, asset | 75 | 53 |
Fair value of derivative, liability | 0 | 0 |
U.S. Dollar notional amount, asset | 323 | 323 |
Derivatives not Designated for Hedge Accounting | ||
Derivatives, Fair Value [Line Items] | ||
Fair value of derivative, asset | 25 | 7 |
Fair value of derivative, liability | 10 | 79 |
Derivatives not Designated for Hedge Accounting | Foreign Exchange Contract | Prepaid Expenses and Other | ||
Derivatives, Fair Value [Line Items] | ||
Fair value of derivative, asset | 25 | 7 |
Fair value of derivative, liability | 0 | 0 |
U.S. Dollar notional amount, asset | 1,162 | 493 |
Derivatives not Designated for Hedge Accounting | Foreign Exchange Contract | Other Accrued Liabilities | ||
Derivatives, Fair Value [Line Items] | ||
Fair value of derivative, asset | 0 | 0 |
Fair value of derivative, liability | 10 | 79 |
U.S. Dollar, notional amount, liability | $ 716 | $ 1,262 |
Fair Value Measurements (Detail
Fair Value Measurements (Details) - USD ($) | Dec. 31, 2015 | Mar. 31, 2015 | Dec. 31, 2014 |
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||
Carrying amount of liabilities | $ 8,711,000,000 | $ 9,709,000,000 | |
Transfers between level 1, level 2, or level 3 of the fair value hierarchy | 0 | $ 0 | |
Fair malue, measurements, recurring | Fair value, inputs, level 2 | |||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||
Estimated fair values of liabilities | 9,000,000,000 | 10,400,000,000 | |
Fair malue, measurements, recurring | Fair value, inputs, level 1 | |||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||
Investments in money market funds, time deposits and repurchase agreements | $ 1,900,000,000 | $ 4,200,000,000 |
Stockholders' Equity - Narrativ
Stockholders' Equity - Narrative (Details) $ / shares in Units, shares in Millions | 1 Months Ended | 3 Months Ended | 9 Months Ended | ||||||
Jul. 31, 2015$ / shares | Dec. 31, 2015USD ($)vote$ / sharesshares | Sep. 30, 2015USD ($)$ / sharesshares | Jun. 30, 2015$ / shares | Dec. 31, 2014USD ($)$ / shares | Dec. 31, 2015USD ($)vote$ / shares | Dec. 31, 2014USD ($)$ / shares | Oct. 31, 2015USD ($) | May. 31, 2015USD ($) | |
Class of Stock [Line Items] | |||||||||
Share of common stock outstanding, vote on proposals | vote | 1 | 1 | |||||||
Dividends declared per common share (in dollars per share) | $ / shares | $ 0.28 | $ 0.28 | $ 0.24 | $ 0.24 | $ 0.80 | $ 0.72 | |||
Authorized amount of company's common stock by board | $ 2,000,000,000 | $ 500,000,000 | |||||||
Amount of shares bought (in shares) | shares | 1.9 | 2.5 | |||||||
Average price per share (in dollars per share) | $ / shares | $ 186.99 | $ 196.20 | |||||||
Authorized amount available for future repurchases | $ 1,600,000,000 | $ 0 | $ 1,600,000,000 | ||||||
Treasury shares retired | shares | 115.5 | ||||||||
Translation loss attributable to redeemable noncontrolling interest | $ 32,000,000 | 2,000,000 | $ 39,000,000 | ||||||
Net foreign currency translation losses attributable to noncontrolling interest | $ 13,000,000 | $ 164,000,000 | |||||||
Net actuarial gains (losses) attributable to redeemable noncontrolling interest | 1,000,000 | $ (5,000,000) | |||||||
Treasury Stock | |||||||||
Class of Stock [Line Items] | |||||||||
Retired amount of treasury shares previously repurchased | 7,800,000,000 | ||||||||
Retained Earnings | |||||||||
Class of Stock [Line Items] | |||||||||
Retired amount of treasury shares previously repurchased | 6,300,000,000 | ||||||||
Additional Paid-in Capital | |||||||||
Class of Stock [Line Items] | |||||||||
Retired amount of treasury shares previously repurchased | $ 1,500,000,000 |
Stockholders' Equity - Schedule
Stockholders' Equity - Schedule of Other Comprehensive Income (Loss), Net of Tax (Details) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | ||
Dec. 31, 2015 | Dec. 31, 2014 | Dec. 31, 2015 | Dec. 31, 2014 | |
Foreign currency translation adjustments | ||||
Foreign currency translation adjustments arising during period, net of income tax benefit of $3, nil, $3 and nil | $ (246) | $ (416) | $ (142) | $ (985) |
Reclassified to income statement, net of income tax expense of nil, nil, nil and nil | 0 | 0 | 0 | (10) |
Foreign currency translation adjustments | (246) | (416) | (142) | (995) |
Unrealized gains (losses) on cash flow hedges | ||||
Unrealized gains (losses) on cash flow hedges arising during period, net of income tax expense of nil, nil, nil and nil | (1) | 1 | 5 | (1) |
Changes in retirement-related benefit plans | ||||
Net actuarial gain (loss) and prior service cost arising during the period, net of income tax benefit of nil, $6, $9 and $6 | 0 | (21) | (28) | (21) |
Amortization of actuarial loss and prior service costs, net of income tax expense of $4, $2, $13 and $5 | 8 | 3 | 23 | 9 |
Foreign currency translation adjustments, net of income tax expense of nil, nil, nil and nil | 7 | 2 | 3 | 4 |
Changes in retirement-related benefit plans | 15 | (16) | (2) | (8) |
Other comprehensive income (loss), net of tax | (232) | (431) | (139) | (1,004) |
Foreign currency translation adjustments arising during period, income tax benefit | 3 | 0 | 3 | 0 |
Reclassified to income statement, income tax expense | 0 | 0 | 0 | 0 |
Unrealized gains (losses) on cash flow hedges arising during period, income tax expense | 0 | 0 | 0 | 0 |
Net actuarial gain (loss) and prior service cost arising during the period, income tax benefit | 0 | 6 | 9 | 6 |
Amortization of actuarial loss and prior service costs, income tax expense | 4 | 2 | 13 | 5 |
Foreign currency translation adjustments, income tax expense | $ 0 | $ 0 | $ 0 | $ 0 |
Stockholders' Equity - Schedu55
Stockholders' Equity - Schedule of Changes in Accumulated Other Comprehensive Income (Loss) by Component (Details) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | ||
Dec. 31, 2015 | Dec. 31, 2014 | Dec. 31, 2015 | Dec. 31, 2014 | |
AOCI Attributable to Parent, Net of Tax [Roll Forward] | ||||
Beginning balance | $ (1,644) | $ (1,713) | ||
Other comprehensive income (loss) before reclassifications | (247) | (165) | ||
Amounts reclassified to earnings and other | 15 | 26 | ||
Other Comprehensive Income (Loss), Net of Tax | (232) | $ (431) | (139) | $ (1,004) |
Less: amounts attributable to noncontrolling and redeemable noncontrolling interests | (31) | (7) | ||
Other comprehensive income (loss) attributable to McKesson | (201) | (132) | ||
Ending balance | (1,845) | (1,845) | ||
Foreign Currency Translation Adjustments, Net of Tax | ||||
AOCI Attributable to Parent, Net of Tax [Roll Forward] | ||||
Beginning balance | (1,346) | (1,420) | ||
Other comprehensive income (loss) before reclassifications | (246) | (142) | ||
Amounts reclassified to earnings and other | 0 | 0 | ||
Other Comprehensive Income (Loss), Net of Tax | (246) | (142) | ||
Less: amounts attributable to noncontrolling and redeemable noncontrolling interests | (32) | (2) | ||
Other comprehensive income (loss) attributable to McKesson | (214) | (140) | ||
Ending balance | (1,560) | (1,560) | ||
Unrealized Gains (Losses) on Cash Flow Hedges, Net of Tax | ||||
AOCI Attributable to Parent, Net of Tax [Roll Forward] | ||||
Beginning balance | (15) | (21) | ||
Other comprehensive income (loss) before reclassifications | (1) | 5 | ||
Amounts reclassified to earnings and other | 0 | 0 | ||
Other Comprehensive Income (Loss), Net of Tax | (1) | 5 | ||
Less: amounts attributable to noncontrolling and redeemable noncontrolling interests | 0 | 0 | ||
Other comprehensive income (loss) attributable to McKesson | (1) | 5 | ||
Ending balance | (16) | (16) | ||
Unrealized Net Gains (Losses) and Other Components of Benefit Plans, Net of Tax | ||||
AOCI Attributable to Parent, Net of Tax [Roll Forward] | ||||
Beginning balance | (283) | (272) | ||
Other comprehensive income (loss) before reclassifications | 0 | (28) | ||
Amounts reclassified to earnings and other | 15 | 26 | ||
Other Comprehensive Income (Loss), Net of Tax | 15 | (2) | ||
Less: amounts attributable to noncontrolling and redeemable noncontrolling interests | 1 | (5) | ||
Other comprehensive income (loss) attributable to McKesson | 14 | 3 | ||
Ending balance | $ (269) | $ (269) |
Segment Information (Details)
Segment Information (Details) $ in Millions | 3 Months Ended | 9 Months Ended | |||||
Dec. 31, 2015USD ($) | Sep. 30, 2015USD ($) | Jun. 30, 2015USD ($) | Dec. 31, 2014USD ($) | Jun. 30, 2014USD ($) | Dec. 31, 2015USD ($)segment | Dec. 31, 2014USD ($) | |
Segment Reporting [Abstract] | |||||||
Number of operating segments | segment | 2 | ||||||
Revenues | |||||||
Total Revenues | $ 47,899 | $ 46,484 | $ 144,206 | $ 134,120 | |||
Operating profit | |||||||
Total | 920 | 800 | 2,805 | 2,268 | |||
Interest Expense | (87) | (93) | (267) | (284) | |||
Income from Continuing Operations Before Income Taxes | 846 | $ 719 | 2,581 | 2,037 | |||
Gross charge | 215 | 287 | |||||
Gain on disposition of business | $ 103 | $ 0 | |||||
Non-cash pre-tax charge related to retained workforce business | $ 34 | ||||||
Total Distribution Solutions | Maximum | |||||||
Operating profit | |||||||
Revenue derived from services, percentage (less than) | 2.00% | 2.00% | 2.00% | ||||
Operating Segments | |||||||
Revenues | |||||||
Total Revenues | 47,899 | $ 46,484 | $ 144,206 | $ 134,120 | |||
Operating profit | |||||||
Total | 1,028 | 915 | 3,168 | 2,638 | |||
Operating Segments | Total Distribution Solutions | |||||||
Revenues | |||||||
Total Revenues | 47,205 | 45,729 | 142,055 | 131,827 | |||
Operating profit | |||||||
Total | $ 906 | 803 | 2,742 | 2,333 | |||
Revenue derived from services, percentage (less than) | 2.00% | ||||||
Gross charge | $ 65 | ||||||
Reversal of portion of LIFO expense | 32 | ||||||
Proceeds from legal settlements | 17 | 76 | |||||
Operating Segments | Total Distribution Solutions | ZEE Medical Business | |||||||
Operating profit | |||||||
Gain on disposition of business | $ 52 | ||||||
Operating Segments | Total Distribution Solutions | LIFO Method of Accounting | |||||||
Operating profit | |||||||
Total | 33 | 95 | 215 | 287 | |||
Operating Segments | Total Distribution Solutions | Reportable Subsegments | North America pharmaceutical distribution and services | |||||||
Revenues | |||||||
Total Revenues | 39,615 | 37,397 | 119,750 | 106,848 | |||
Operating Segments | Total Distribution Solutions | Reportable Subsegments | International pharmaceutical distribution and services | |||||||
Revenues | |||||||
Total Revenues | 6,022 | 6,767 | 17,726 | 20,506 | |||
Operating Segments | Total Distribution Solutions | Reportable Subsegments | Medical-Surgical distribution and services | |||||||
Revenues | |||||||
Total Revenues | 1,568 | 1,565 | 4,579 | 4,473 | |||
Operating Segments | Technology Solutions | |||||||
Revenues | |||||||
Total Revenues | 694 | 755 | 2,151 | 2,293 | |||
Operating profit | |||||||
Total | 122 | 112 | 426 | 305 | |||
Operating Segments | Technology Solutions | International Technology Workforce | |||||||
Operating profit | |||||||
Non-cash pre-tax charge related to retained workforce business | 34 | ||||||
Operating Segments | Technology Solutions | Nurse Triage | |||||||
Operating profit | |||||||
Gain on disposition of business | $ 51 | 51 | |||||
Corporate, Non-Segment | |||||||
Operating profit | |||||||
Corporate Expenses, Net | (95) | (103) | (320) | (317) | |||
Segment Reconciling Items | |||||||
Operating profit | |||||||
Interest Expense | $ (87) | $ (93) | $ (267) | $ (284) |