Document and Company Informatio
Document and Company Information (USD $) | ||
3 Months Ended
Jun. 30, 2009 | Sep. 30, 2008
| |
Document and Company Information [Abstract] | ||
Entity Registrant Name | McKESSON CORPORATION | |
Entity Central Index Key | 0000927653 | |
Document Type | 10-Q | |
Document Period End Date | 2009-06-30 | |
Amendment Flag | false | |
Amendment Description | N/A | |
Current Fiscal Year End Date | --03-31 | |
Entity Well-known Seasoned Issuer | Yes | |
Entity Voluntary Filers | No | |
Entity Current Reporting Status | Yes | |
Entity Filer Category | Large Accelerated Filer | |
Entity Public Float | $14,553,849,341 | |
Entity Common Stock, Shares Outstanding (actual number of shares) | 266,140,008 |
Condensed Consolidated Statemen
Condensed Consolidated Statements of Operations (USD $) | ||
In Millions, except Per Share data | 3 Months Ended
Jun. 30, 2009 | 3 Months Ended
Jun. 30, 2008 |
Revenues | $26,657 | $26,704 |
Cost of Sales | 25,354 | 25,436 |
Gross Profit | 1,303 | 1,268 |
Operating Expenses | 844 | 897 |
Operating Income | 459 | 371 |
Other Income, Net | 10 | 21 |
Interest Expense | (48) | (34) |
Income Before Income Taxes | 421 | 358 |
Income Tax Expense | (133) | (123) |
Net Income | $288 | $235 |
Earnings Per Common Share | ||
Diluted | 1.06 | 0.83 |
Basic | 1.07 | 0.85 |
Dividends Declared Per Common Share | 0.12 | 0.12 |
Weighted Average Shares | ||
Diluted | 272 | 282 |
Basic | 270 | 277 |
Condensed Consolidated Balance
Condensed Consolidated Balance Sheets (USD $) | ||
In Millions | Jun. 30, 2009
| Mar. 31, 2009
|
Current Assets | ||
Cash and cash equivalents | $2,644 | $2,109 |
Receivables, net | 7,532 | 7,774 |
Inventories, net | 8,615 | 8,527 |
Prepaid expenses and other | 271 | 261 |
Total | 19,062 | 18,671 |
Property, Plant and Equipment, Net | 814 | 796 |
Capitalized Software Held for Sale, Net | 230 | 221 |
Goodwill | 3,549 | 3,528 |
Intangible Assets, Net | 630 | 661 |
Other Assets | 1,432 | 1,390 |
Total Assets | 25,717 | 25,267 |
Current Liabilities | ||
Drafts and accounts payable | 12,156 | 11,739 |
Deferred revenue | 1,088 | 1,145 |
Current portion of long-term debt | 217 | 219 |
Other accrued liabilities | 2,480 | 2,503 |
Total | 15,941 | 15,606 |
Long-Term Debt | 2,292 | 2,290 |
Other Noncurrent Liabilities | 1,213 | 1,178 |
Stockholders' Equity | ||
Preferred stock, $0.01 par value, 100 shares authorized, no shares issued or outstanding | 0 | 0 |
Common stock, $0.01 par value Shares authorized: June 30, 2009 and March 31, 2009 - 800 Shares issued: June 30, 2009 - 353 and March 31, 2009 - 351 | 4 | 4 |
Additional Paid-in Capital | 4,434 | 4,417 |
Retained Earnings | 6,358 | 6,103 |
Accumulated Other Comprehensive Loss | (84) | (179) |
Other | (8) | (8) |
Treasury Shares, at Cost, June 30, 2009 - 87 and March 31, 2009 - 80 | (4,433) | (4,144) |
Total Stockholders' Equity | 6,271 | 6,193 |
Total Liabilities and Stockholders' Equity | $25,717 | $25,267 |
1_Condensed Consolidated Balanc
Condensed Consolidated Balance Sheets (Parenthetical) (USD $) | ||
Share data in Millions | Jun. 30, 2009
| Mar. 31, 2009
|
Preferred stock, par value (actual amount) | 0.01 | 0.01 |
Preferred stock, shares authorized | 100 | 100 |
Preferred stock, shares issued | 0 | 0 |
Preferred stock, shares outstanding | 0 | 0 |
Common stock, par value (actual amount) | 0.01 | 0.01 |
Common stock, shares authorized | 800 | 800 |
Common stock, shares issued | 353 | 351 |
Treasury shares | 87 | 80 |
2_Condensed Consolidated Statem
Condensed Consolidated Statements of Cash Flows (USD $) | ||
In Millions | 3 Months Ended
Jun. 30, 2009 | 3 Months Ended
Jun. 30, 2008 |
Operating Activities | ||
Net income | $288 | $235 |
Adjustments to reconcile to net cash provided by operating activities: | ||
Depreciation and amortization | 111 | 106 |
Deferred taxes | 60 | 10 |
Share-based compensation expense | 24 | 28 |
Other non-cash items | 18 | (4) |
Changes in operating assets and liabilities, net of business acquisitions: | ||
Receivables | 301 | (311) |
Impact of accounts receivable sales facility | 0 | 325 |
Inventories | (42) | (272) |
Drafts and accounts payable | 356 | 329 |
Deferred revenue | (84) | (53) |
Taxes | 17 | 62 |
Other | (142) | (141) |
Net cash provided by operating activities | 907 | 314 |
Investing Activities | ||
Property acquisitions | (42) | (40) |
Capitalized software expenditures | (44) | (38) |
Acquisitions of businesses, less cash and cash equivalents acquired | 0 | (242) |
Other | 0 | (42) |
Net cash used in investing activities | (86) | (362) |
Financing Activities | ||
Proceeds from short-term borrowings | 5 | 558 |
Repayments of short-term borrowings | (6) | (558) |
Common stock repurchases, including shares surrendered for tax withholding | (298) | (147) |
Common stock transactions - other | 31 | 35 |
Dividends paid | (34) | (17) |
Other | (1) | (1) |
Net cash used in financing activities | (303) | (130) |
Effect of exchange rate changes on cash and cash equivalents | 17 | 3 |
Net increase (decrease) in cash and cash equivalents | 535 | (175) |
Cash and cash equivalents at beginning of period | 2,109 | 1,362 |
Cash and cash equivalents at end of period | $2,644 | $1,187 |
Significant Accounting Policies
Significant Accounting Policies | |
3 Months Ended
Jun. 30, 2009 USD / shares | |
Significant Accounting Policies [Abstract] | |
Significant Accounting Policies | 1. 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, majority-owned or controlled companies and certain immaterial variable interest entities (VIEs) of which we are the primary beneficiary. 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). Accordingly, certain information and footnote disclosures normally included in the annual consolidated financial statements prepared in accordance with GAAP have been condensed. In accordance with the Financial Accounting Standards Board (FASB) Interpretation (FIN) No.46 (revised December2003), Consolidation of Variable Interest Entities, we evaluate our ownership, contractual and other interests in entities to determine if they are VIEs, if we have a variable interest in those entities and the nature and extent of those interests. These evaluations are highly complex and involve judgment and the use of estimates and assumptions based on available historical information and managements estimates, among other factors. 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, these unaudited condensed consolidated financial statements include all adjustments necessary for a fair presentation of the Companys financial position as of June30, 2009 and the results of operations and cash flows for the quarters ended June30, 2009 and 2008. The results of operations for the quarter ended June30, 2009 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 March31, 2009 (2009 Annual Report) previously filed with the SEC on May5, 2009. Certain prior period amounts have been reclassified to conform to the current period presentation. The Companys fiscal year begins on April 1 and ends on March31. Unless otherwise noted, all references to a particular year shall mean the Companys fiscal year. We evaluated all subsequent events that occurred after the balance sheet date through the date and time our financial statements were issued on July 28, 2009. Recently Adopted Accounting Pronouncements: In September2006, the FASB issued Statement of Financial Accounting Standards (SFAS) No.157, Fair Value Measurements, which provides a consistent definition of fair value that focuses on exit price |
Business Acquisitions
Business Acquisitions | |
3 Months Ended
Jun. 30, 2009 USD / shares | |
Business Acquisitions [Abstract] | |
Business Acquisitions | 2. Business Acquisitions During the first quarter of 2009, we acquired McQueary Brothers Drug Company (McQueary Brothers) of Springfield, Missouri for approximately $190million. McQueary Brothers is a regional distributor of pharmaceutical, health and beauty products to independent and regional chain pharmacies in the Midwestern U.S. This acquisition expanded our existing U.S. pharmaceutical distribution business. The acquisition was funded with cash on hand. Approximately $126million of the purchase price allocation was assigned to goodwill, which primarily reflects the expected future benefits from synergies to be realized upon integrating the business. During the first quarter of 2010, the acquisition accounting was completed. Financial results for McQueary Brothers have been included within our Distribution Solutions segment since the date of acquisition. During the last two years, we also completed a number of other smaller acquisitions within both of our operating segments. 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. Pro forma results of operations for our business acquisitions have not been presented because the effects were not material to the consolidated financial statements on either an individual or an aggregate basis. |
Share Based Payment
Share Based Payment | |
3 Months Ended
Jun. 30, 2009 USD / shares | |
Share-Based Payment [Abstract] | |
Share-Based Payment | 3. Share-Based Payment We provide share-based compensation for our employees, officers and non-employee directors, including stock options, an employee stock purchase plan, restricted stock (RS), restricted stock units (RSUs) and performance-based restricted stock units (PeRSUs) (collectively, share-based awards). Most of the Companys share-based awards are granted in the first quarter of each fiscal year. Compensation expense for employee stock options is recognized on a straight-line basis over the requisite service period and is based on the grant-date fair value for the portion of the awards that is ultimately expected to vest. We have elected to expense the fair value of RS and RSUs with only graded vesting and service conditions on a straight-line basis over the requisite service period. PeRSUs are RSUs for which the number of RSUs awarded may be conditional upon the attainment of one or more performance objectives over a specified period. PeRSUs are accounted for as variable awards until the performance goals are reached and the grant date is established. The fair value of PeRSUs is determined by the product of the number of shares eligible to be awarded and expected to vest and the market price of the Companys common stock, commencing at the inception of the requisite service period. During the performance period, the PeRSUs are re-valued using the market price and the performance modifier at the end of a reporting period. At the end of the performance period, if the goals are attained, the awards are granted and classified as RSUs and accounted for on that basis. For PeRSUs granted prior to 2009 with multiple vest dates, we recognize the fair value of these awards on a graded vesting basis over the requisite service period of four years. PeRSUs granted during or after 2009 and the related RSUs (granted during or after 2010) have a single vest date and accordingly, we recognize expense on a straight-line basis over the requisite service period of four years. Compensation expense is recognized for the portion of the awards that is ultimately expected to vest. We develop an estimate of the number of share-based awards which will ultimately vest primarily based on historical experience. The estimated forfeiture rate established upon grant is re-assessed throughout the requisite service period. As required, the forfeiture estimates will be adjusted to reflect actual forfeitures when an award vests. The actual forfeitures in future reporting periods could be higher or lower than our current estimates. The compensation expense recognized under SFAS No.123(R), Share-Based Payment, has been classified in the condensed consolidated statements of operations or capitalized on the condensed consolidated balance sheets in the same manner as cash compensation paid to our employees. There was no material share-based compensation expense capitalized as part of the cost of an asset for the quarters ended June30, 2009 and 2008. The components of share-based compensation expense and the related tax benefit for the quarters ended June30, 2009 and 2008 are shown in the following table: Quarter Ended Jun |
Income Taxes
Income Taxes | |
3 Months Ended
Jun. 30, 2009 USD / shares | |
Income Taxes [Abstract] | |
Income Taxes | 4. Income Taxes The Companys reported income tax rate for the first quarters of 2010 and 2009 was 31.6% and 34.4%. Fluctuations in our reported tax rate are primarily due to changes within state and foreign tax rates resulting from our business mix, including varying proportions of income attributable to foreign countries that have lower income tax rates. In addition, income tax expense includes net discrete items of a benefit of $1million and an expense of $5million during the first quarters of 2010 and 2009. As of June30, 2009, we had $581million of unrecognized tax benefits, of which $345million 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 $27million. However, this amount may change because we continue to have ongoing negotiations with various taxing authorities throughout the year. We continue to report interest and penalties on tax deficiencies as income tax expense. At June30, 2009, before any tax benefits, our accrued interest on unrecognized tax benefits amounted to $106million. We recognized $5million of interest expense, before any tax benefits, in our condensed consolidated statements of operations during the quarter ended June30, 2009. We have no amounts accrued for penalties. |
Earnings Per Share
Earnings Per Share | |
3 Months Ended
Jun. 30, 2009 USD / shares | |
Earnings (Loss) Per Share [Abstract] | |
Earnings Per Share | 5. Earnings Per Share Basic earnings per share is computed by dividing net income by the weighted average number of common shares outstanding during the reporting period. Diluted earnings per share is computed similar to basic earnings per 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 share are as follows: Quarter Ended June 30, (In millions, except per share data) 2009 2008 Net income $ 288 $ 235 Weighted average common shares outstanding: Basic 270 277 Effect of dilutive securities: Options to purchase common stock 1 4 Restricted stock/Restricted stock units 1 1 Diluted 272 282 Earnings per common share: (1) Diluted $ 1.06 $ 0.83 Basic $ 1.07 $ 0.85 (1) Certain computations may reflect rounding adjustments. Approximately 13million and 12million stock options were excluded from the computations of diluted net earnings per share for the quarters ended June30, 2009 and 2008 as their exercise price was higher than the Companys average stock price for the quarter. |
Goodwill and Intangible Assets,
Goodwill and Intangible Assets, Net | |
3 Months Ended
Jun. 30, 2009 USD / shares | |
Goodwill and Intangible Assets, Net [Abstract] | |
Goodwill and Intangible Assets, Net | 6. Goodwill and Intangible Assets, Net Changes in the carrying amount of goodwill for the quarter ended June30, 2009 are as follows: Distribution Technology (In millions) Solutions Solutions Total Balance, March31, 2009 $ 1,869 $ 1,659 $ 3,528 Acquisition accounting adjustments (3 ) (3 ) Foreign currency translation adjustments 8 16 24 Balance, June30, 2009 $ 1,874 $ 1,675 $ 3,549 Information regarding intangible assets is as follows: June 30, March 31, (In millions) 2009 2009 Customer lists $ 823 $ 824 Technology 188 187 Trademarks and other 71 70 Gross intangibles 1,082 1,081 Accumulated amortization (452 ) (420 ) Intangible assets, net $ 630 $ 661 Amortization expense of intangible assets was $30million for the quarters ended June30, 2009 and 2008. The weighted average remaining amortization periods for customer lists, technology and trademarks and other intangible assets as of June30, 2009 were 7years, 3years and 6years. Estimated annual amortization expense of these assets is as follows: $118million, $111million, $105million, $86million and $74million for 2010 through 2014, and $166million thereafter. All intangible assets were subject to amortization as of June30, 2009 and March31, 2009. |
Financing Activities
Financing Activities | |
3 Months Ended
Jun. 30, 2009 USD / shares | |
Financing Activities [Abstract] | |
Financing Activities | 7. Financing Activities Accounts Receivable Sales Facility In May2009, we renewed our accounts receivable sales facility for an additional one year period under terms similar to those previously in place. The renewed facility will expire in May 2010. The May2009 renewal increased the committed balance from $1.0billion to $1.1billion, although from time-to-time the available amount may be less than $1.1billion based on concentration limits and receivable eligibility requirements. Through this facility, McKesson Corporation sells certain U.S. pharmaceutical trade accounts receivable on a non-recourse basis to a wholly-owned and consolidated subsidiary which then sells these receivables to a special purpose entity (SPE), which is a wholly-owned, bankruptcy-remote subsidiary of McKesson Corporation that is consolidated in our financial statements. This SPE then sells undivided interests in the receivables to third-party purchaser groups, each of which includes commercial paper conduits (Conduits), which are special purpose legal entities administered by financial institutions. Sales of undivided interests in the receivables by the SPE to the Conduits are accounted for as a sale in accordance with SFAS No.140, Accounting for Transfers and Servicing of Financial Assets and Extinguishments of Liabilities, because we have relinquished control of the receivables. Accordingly, accounts receivable sold under these transactions are excluded from receivables, net in the accompanying condensed consolidated balance sheets. Receivables sold and receivables retained by the Company are carried at face value, which due to the short-term nature of our accounts receivable and terms of the facility, approximates fair value. McKesson receives cash in the amount of the face value for the receivables sold. No gain or loss is recorded upon sale as fee charges from the Conduits are based upon a floating yield rate and the period the undivided interests remain outstanding. Fee charges from the Conduits are accrued at the end of each month and are recorded within administrative expenses in the condensed consolidated statements of operations. Should we default under the accounts receivable sales facility, the Conduits are entitled to receive only collections on receivables owned by the SPE. We continue servicing the receivables sold. No servicing asset is recorded at the time of sale because we do not receive any servicing fees from third parties or other income related to servicing the receivables. We do not record any servicing liability at the time of sale as the receivables collection period is relatively short and the costs of servicing the receivables sold over the servicing period are insignificant. Servicing costs are recognized as incurred over the servicing period. Information regarding our outstanding balances related to our interests in accounts receivable sold or qualifying receivables retained is as follows: June 30, March 31, (In millions) 2009 2009 Receivables sold outstanding (1) $ $ Receivables retained, net of allowance for doubtful accounts 4,752 4,814 (1) Ded |
Pension and Other Postretiremen
Pension and Other Postretirement Benefit Plans | |
3 Months Ended
Jun. 30, 2009 USD / shares | |
Pension and Other Postretirement Benefit Plans [Abstract] | |
Pension and Other Postretirement Benefit Plans | 8. Pension and Other Postretirement Benefit Plans Net periodic expense for the Companys defined benefit pension and other postretirement benefit plans was $8million and $3million for the first quarters of 2010 and 2009. Cash contributions to these plans for the first quarters of 2010 and 2009 were $10million and $7 million. As previously reported in our 2009 Annual Report, the McKesson Corporation Profit Sharing Investment Plan (PSIP) is a member of the settlement class in the Consolidated Securities Litigation Action. On April27, 2009, the court issued an order approving the distribution of the settlement funds. The PSIP is anticipating receiving its share of the settlement of approximately $90million during 2010. Approximately $30million of the Consolidated Securities Litigation Action proceeds are attributable to the allocated shares of McKesson common stock owned by the PSIP participants during the Consolidated Securities Litigation Action class holding period and will be allocated to the respective participants on that basis. Approximately $60million of the proceeds are attributable to the unallocated shares (the Unallocated Proceeds) of McKesson common stock owned by the PSIP in an employee stock ownership plan (the ESOP) suspense account. In accordance with the plan terms, the PSIP will distribute all of the Unallocated Proceeds to current PSIP participants as soon as administratively feasible after the close of the plan year. The receipt of the Unallocated Proceeds by the PSIP is reimbursement for the loss in value of the Companys common stock held by the PSIP in its ESOP suspense account during the Consolidated Securities Litigation Action class holding period and is not a contribution made by the Company to the PSIP or ESOP. Accordingly, there are no accounting consequences to the Companys financial statements relating to the receipt of the Unallocated Proceeds by the PSIP. The Company accounts for shares of its common stock contributed to the ESOP prior to 1993 in accordance with the American Institute of Certified Public Accountants Statement of Position (SOP) 76-3, Accounting Practices for Certain Employee Stock Ownership Plans. SOP 76-3 requires that compensation expense be recognized only to the extent that the Company contributes or commits to contribute to the ESOP. The Company accounts for all contributions of shares of its common stock made to the ESOP after 1993 under SOP 93-6, Employers Accounting for Stock Ownership Plans. During the first quarter of 2010, the Company contributed $1million to the ESOP in order to extinguish the remaining ESOP loan and made no commitments to otherwise contribute to the PSIP or ESOP. Upon repayment, our ESOP became a non-leveraged ESOP. At June30, 2009, of the 24million shares of the Companys common stock purchased by the ESOP since its inception, all but 66,444 shares have been allocated to PSIP participants. As a result of the payment, pre-tax PSIP expense for the first quarter of 2010 was $1million. The Company anticipates that its PSIP expense for the full year will remain at $1 million, as it currently does not anticipate making or committing to make additional |
Financial Guarantees and Warran
Financial Guarantees and Warranties | |
3 Months Ended
Jun. 30, 2009 USD / shares | |
Financial Guarantees and Warranties [Abstract] | |
Financial Guarantees and Warranties | 9. Financial Guarantees and Warranties Financial Guarantees We have agreements with certain of our customers financial institutions under which we have guaranteed the repurchase of inventory (primarily for our Canadian business) at a discount in the event these customers are unable to meet certain obligations to those financial institutions. Among other requirements, these inventories must be in resalable condition. The inventory repurchase agreements mostly range from one to two years. Customer guarantees range from one to five years and were primarily provided to facilitate financing for certain customers. The majority of our other customer guarantees are secured by certain assets of the customer. We also have an agreement with one software customer that, under limited circumstances, may require us to secure standby financing. Because the amount of the standby financing is not explicitly stated, the overall amount of these guarantees cannot reasonably be estimated. As of June30, 2009, the maximum amounts of inventory repurchase guarantees and other customer guarantees were $92million and $11million, none of which had been accrued. Our software license agreements generally include certain provisions for indemnifying customers against liabilities if our software products infringe a third partys intellectual property rights. To date, we have not incurred any material costs as a result of such indemnification agreements and have not accrued any liabilities related to such obligations. In conjunction with certain transactions, primarily divestitures, we may provide routine indemnification agreements (such as retention of previously existing environmental, tax and employee liabilities) whose terms vary in duration and often are not explicitly defined. Where appropriate, obligations for such indemnifications are recorded as liabilities. Because the amounts of these indemnification obligations often are not explicitly stated, the overall maximum amount of these commitments cannot be reasonably estimated. Other than obligations recorded as liabilities at the time of divestiture, we have historically not made significant payments as a result of these indemnification provisions. Warranties In the normal course of business, we provide certain warranties and indemnification protection for our products and services. For example, we provide warranties that the pharmaceutical and medical-surgical products we distribute are in compliance with the Food, Drug and Cosmetic Act and other applicable laws and regulations. We have received the same warranties from our suppliers, which customarily are the manufacturers of the products. In addition, we have indemnity obligations to our customers for these products, which have also been provided to us from our suppliers, either through express agreement or by operation of law. We also provide warranties regarding the performance of software and automation products we sell. Our liability under these warranties is to bring the product into compliance with previously agreed upon specifications. For software products, this may result in additional project costs, which are reflected in o |
Financial Instruments
Financial Instruments | |
3 Months Ended
Jun. 30, 2009 USD / shares | |
Financial Instruments [Abstract] | |
Financial Instruments | 10. Financial Instruments At June30, 2009 and March31, 2009, the carrying amounts of cash and cash equivalents, restricted cash, marketable securities, receivables, drafts and accounts payable and other current liabilities approximated their estimated fair values because of the short maturity of these financial instruments. All highly liquid debt instruments purchased with a maturity of three months or less at the date of acquisition are included in cash and cash equivalents. Included in cash and cash equivalents at June30, 2009 and March31, 2009 are money market fund investments of $2.0billion and $1.7billion 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 SFAS No.157, Fair Value Measurements. The carrying amounts and estimated fair values of our long-term debt were $2,509million and $2,657million at June30, 2009 and $2,509million and $2,545million at March31, 2009. The estimated fair value of our long-term debt was determined using quoted market prices and other inputs that were derived from available market information and may not be representative of actual values that could have been or will be realized in the future. |
Other Commitments and Contingen
Other Commitments and Contingent Liabilities | |
3 Months Ended
Jun. 30, 2009 USD / shares | |
Other Commitments and Contingent Liabilities [Abstract] | |
Other Commitments and Contingent Liabilities | 11. Other 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. In accordance with SFAS No.5, Accounting for Contingencies, we record a provision for a liability when management believes that it is both probable that a liability has been incurred and the amount of the loss can be reasonably estimated. We believe we have adequate provisions for any such matters. Management reviews these provisions at least quarterly and adjusts these provisions to reflect the impact of negotiations, settlements, rulings, advice of legal counsel and other information and events pertaining to a particular case. Because litigation outcomes are inherently unpredictable, these decisions often involve a series of complex assessments by management about future events that can rely heavily on estimates and assumptions and it is possible that the ultimate cost of these matters could impact our earnings, either negatively or positively, in the quarter of their resolution. Based on our experience, we believe that any damage amounts claimed in the specific matters referenced in our 2009 Annual Report and those matters discussed below are not meaningful indicators of our potential liability. We believe that we have valid defenses to these legal proceedings and are defending the matters vigorously. Nevertheless, the outcome of any litigation is inherently uncertain. We are currently unable to estimate the remaining possible losses in these unresolved legal proceedings. Should any one or a combination of more than one of these proceedings against us be successful, or should we determine to settle any or a combination of these matters on unfavorable terms, 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. As more fully described in our previous public reports filed with the SEC, we are involved in numerous legal proceedings. For a discussion of these proceedings, please refer to Financial Note 18, Other Commitments and Contingent Liabilities, included in our 2009 Annual Report. Significant developments in previously reported proceedings and in other litigation and claims since the referenced filings are set out below. As previously reported, in January of 2009, the Georgia Court of Appeals accepted our appeals from trial court rulings denying our summary judgment and expert disqualification motions in the last two remaining lawsuits arising out of our January12, 1999 acquisition of HBO Company Holcombe T. Green and HTG Corp. v. McKesson Corporation, et al. (Georgia State Court, Fulton County, Case No.06-VS-096767-D) and Hall Family Investments, L.P. v. McKesson Corporation, et al. (Georgia State Court, Fulton County, Case No.06-VS-096763-F). On July14, 2009, the Georgia Co |
Stockholders Equity
Stockholders Equity | |
4/1/2009 - 6/30/2009
USD / shares | |
Stockholders' Equity Disclosure [Abstract] | |
Stockholders' Equity | 12. Stockholders Equity Comprehensive income is as follows: Quarter Ended June 30, (In millions) 2009 2008 Net income $ 288 $ 235 Foreign currency translation adjustments and other 95 10 Comprehensive income $ 383 $ 245 In April2008, the Companys Board of Directors approved a plan to repurchase $1.0billion of the Companys common stock, of which $830million remained available at March31, 2009. During the first quarter of 2010, we repurchased 7million shares for $275million, leaving $555million available for future repurchases as of June30, 2009. Stock repurchases may be made from time-to-time in open market or private transactions. |
Segment Information
Segment Information | |
3 Months Ended
Jun. 30, 2009 USD / shares | |
Segment Information [Abstract] | |
Segment Information | 13. 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 based on operating profit before interest expense, income taxes and results from discontinued operations. Financial information relating to our reportable operating segments and reconciliations to the condensed consolidated totals is as follows: Quarter Ended June 30, (In millions) 2009 2008 Revenues Distribution Solutions (1) Direct distribution services $ 17,038 $ 16,428 Sales to customers warehouses 6,051 6,664 Total U.S. pharmaceutical distribution services 23,089 23,092 Canada pharmaceutical distribution services 2,140 2,241 Medical-Surgical distribution services 685 627 Total Distribution Solutions 25,914 25,960 Technology Solutions Services 589 564 Software and software systems 130 138 Hardware 24 42 Total Technology Solutions 743 744 Total $ 26,657 $ 26,704 Operating profit (2) Distribution Solutions $ 430 $ 384 Technology Solutions 103 66 Total 533 450 Corporate (64 ) (58 ) Interest Expense (48 ) (34 ) Income Before Income Taxes $ 421 $ 358 (1) Revenues derived from services represent less than 1% of this segments total revenues for the first quarters of 2010 and 2009. (2) Operating profit includes $5million and $8million of net earnings from equity investments for the first quarters of 2010 and 2009, primarily recorded within our Distribution Solutions segment. |