SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended March 31, 1995
or
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
Commission file number 1-13252
McKESSON CORPORATION
A Delaware Corporation
I.R.S. Employer Number 94-3207296
McKesson Plaza, One Post Street, San Francisco, CA 94104
Telephone - Area Code (415) 983-8300
Securities registered pursuant to Section 12(b) of the Act:
(Name Of Each Exchange
(Title Of Each Class) On Which Registered)
Common Stock, $.01 par value New York Stock Exchange
Pacific Stock Exchange
Securities registered pursuant to Section 12 (g) of the Act: None.
Indicate by check mark whether the Registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the Registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes X No
--- ---
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of Registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. [X]
Aggregate market value of voting stock held by nonaffiliates of the Registrant
at June 1, 1995: $1,734,940,620
Number of shares of common stock outstanding at June 1, 1995: 44,626,319
DOCUMENTS INCORPORATED BY REFERENCE
Portions of the Appendix to the Registrant's Proxy Statement for the Annual
Meeting of Stockholders to be held on July 26, 1995 are incorporated by
reference into Parts I and II of this report. Portions of the Registrant's
Proxy Statement for said meeting are incorporated by reference into Part III of
this report.
TABLE OF CONTENTS
Item Page
- ---- ----
PART I
1. Business......................................................... 1
2. Properties....................................................... 6
3. Legal Proceedings................................................ 6
4. Submission of Matters to a Vote of Security Holders.............. 8
Executive Officers of the Registrant............................. 9
PART II
5. Market for the Registrant's Common Stock and Related Stockholder
Matters......................................................... 11
6. Selected Financial Data.......................................... 11
7. Management's Discussion and Analysis of Financial Condition and
Results of Operations........................................... 11
8. Financial Statements and Supplementary Data...................... 11
9. Changes in and Disagreements with Accountants on Accounting and
Financial Disclosure............................................ 11
PART III
10. Directors and Executive Officers of the Registrant............... 12
11. Executive Compensation........................................... 12
12. Security Ownership of Certain Beneficial Owners and Management... 12
13. Certain Relationships and Related Transactions................... 12
PART IV
14. Exhibits, Financial Statement Schedules, and Reports on Form 8-K. 13
Signatures....................................................... 14
PART I
ITEM 1. BUSINESS
(a) General Development of Business
New McKesson (the "Company") was organized in the state of Delaware on July
7, 1994 as a wholly-owned subsidiary of McKesson Corporation, a Delaware
corporation ("McKesson"), for the purpose of owning and operating the businesses
of McKesson following the acquisition of McKesson's pharmaceutical benefits
management business ("PCS") by ECO Acquisition Corporation ("ECO"), a subsidiary
of Eli Lilly and Company ("Lilly"), for approximately $4 billion (the "PCS
Transaction"). PCS had been operated primarily by PCS Health Systems, Inc. and
Clinical Pharmaceuticals, Inc., both of which were wholly-owned subsidiaries of
McKesson.
As part of the PCS Transaction, on November 21, 1994 the Company acquired
all of the assets and liabilities of McKesson, other than those related to PCS,
and McKesson distributed to its stockholders one share of the Company's common
stock for each share of McKesson common stock held of record as of November 19,
1994 (the "Spin-Off").
Simultaneously with the Spin-Off, ECO consummated a tender offer for all
outstanding shares of McKesson common stock at a price of $76 per share (the
"Offer"). Following the completion of the Offer, McKesson merged with and into
ECO.
As a result of the PCS Transaction (i) Lilly became the indirect sole owner
of PCS, and (ii) each existing McKesson stockholder received (a) a cash payment
of $76 per share of McKesson common stock (representing the proceeds from the
sale of PCS) and (b) one share of common stock of the Company, representing
their continuing interest in the retained businesses.
For financial statement purposes, the Company is the continuing entity and
has retained the name McKesson Corporation. PCS is reflected as a discontinued
operation in the Company's consolidated financial statements.
In May 1995, the Company announced its intention to repurchase from time to
time up to 3.5 million shares of its common stock in open market or private
transactions.
Developments which could be considered significant to individual segments
of the business are described under (c)(1) "Narrative Description of Business"
on pages 1 through 6 of this report.
(b) Financial Information About Industry Segments
Financial information for the three years ended March 31, 1995 appears in
Financial Note 15, "Segments of Business", on pages 39 and 40 of the Appendix to
the Company's 1995 Proxy Statement, which note is incorporated herein by
reference.
(c) Narrative Description of Business
(1) Description of Segments of Business
The principal segments of the Company's business are:
Health Care Services
Water Products
Armor All
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Health Care Services
PRODUCTS & MARKETS
Wholesale Distribution of Pharmaceutical & Health Care Products -- Within
the United States and Canada, the Company is the largest wholesale distributor
of ethical and proprietary drugs and health and beauty care products. Its
products are distributed to chain and independent drug stores, hospitals, food
stores and mass merchandisers. This business requires large inventories,
significant amounts of which are financed by related payables. In addition, the
Company owns a 22.7% equity interest in Nadro, S.A. de C.V. the leading
pharmaceutical wholesaler in Mexico.
Using the name "Economost" and "Econolink" and a number of related service
marks, the Company has promoted electronic order entry systems and a wide range
of computerized merchandising and asset management services for drug retailers
and hospitals. The Company is also a supplier of computer systems and software
for pharmacy management.
In the United States, the Company does business under the McKesson Drug
Company tradename. In Canada, the Company does business under the name Medis
Health and Pharmaceutical Services Inc..
Voluntary Marketing Program -- Under the Valu-Rite pharmacy program, the
Company provides its independent U.S. retail drug store customers with a common
marketing identity, group advertising, purchasing programs, promotional
merchandise and access to a pharmacy provider network. At March 31, 1995,
approximately 5,000 stores were participating in the Valu-Rite program. Similar
programs are available to independent drug stores through other drug
wholesalers. The Company provides similar services to retail drug stores in
Canada.
Millbrook Distribution Services Co. -- Millbrook Distribution Services Co.
distributes health and beauty care products, general merchandise and specialty
foods to supermarkets, drug stores and discount department stores. The
distribution services provided include product recommendations, procurement,
warehousing, distribution, retail shelf management and temporary field labor.
Healthcare Delivery Systems, Inc. ("HDS") -- HDS provides services designed
to meet the needs of pharmaceutical and other healthcare manufacturers in
commercializing a product and enhancing its market position. The core activity
of HDS currently is the development of integrated systems for specialized
delivery of pharmaceutical products. These systems manage manufacturer cost and
information requirements through a variety of services including financial
assistance programs for patients, reimbursement support and patient advocacy
programs, clinical trial support services, and product hot-line and physician
and patient information programs.
Other -- Through its Sunmark operations, the Company supplies durable
medical equipment to the home health care industry. Through its Central
American operation, the Company manufactures a full line of branded generic
pharmaceuticals that is distributed directly and indirectly to retailers in
Central America. Through Zee Medical, Inc., the Company distributes first-aid
products and supplies to industrial and commercial customers.
COMPETITION
In every area of operations, the distribution businesses (not including
HDS) face strong competition both in price and service from national, regional
and local full-line, short-line and specialty wholesalers, service
merchandisers, and from manufacturers engaged in direct distribution. The
particular area in which HDS provides services is in a rapid state of
development and therefore there are no clearly defined markets in which HDS
competes. It nonetheless faces competition from various other service providers
and from pharmaceutical and other healthcare manufacturers (as well as other
potential customers of HDS) which may from time to time decide to develop, for
their own internal needs,
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those services which are provided by HDS and other competing service providers.
Price, quality of service, and, in some cases, convenience to the customer are
generally the principal competitive elements in the industry.
INTELLECTUAL PROPERTY
The principal trademarks and service marks of the Health Care Services
segment are: ECONOMOST(R), ECONOLINK(R) and VALU-RITE(R). The Health Care
Services segment also owns other registered and unregistered trademarks and
service marks and similar rights. All of the principal marks are registered in
the United States and registration has been obtained or applied for in Canada
with respect to such marks. The United States federal registrations of these
trademarks and service marks have ten or twenty year terms, depending on date of
registration; the Canadian registrations have fifteen year terms. All are
subject to unlimited renewals. The Company believes this business has taken all
necessary steps to preserve the registration and duration of its trademarks and
service marks, although no assurance can be given that it will be able to
successfully enforce or protect its rights thereunder in the event that they are
subject to third-party infringement. The Company does not consider any
particular patents, licenses, franchises or concessions to be material to the
business of the Health Care Services segment.
Water Products
PRODUCTS & MARKETS
McKesson Water Products Company is primarily engaged in the processing and
sale of bottled drinking water delivered to homes and businesses under its
Sparkletts, Alhambra, and Crystal brands in California, Arizona, Nevada and
Texas. It also sells and leases bottled water dispensers and coolers in the
foregoing states, and sells packaged water through retail stores in
approximately 40 states. In addition, under the Aqua-Vend trademark, it sells
processed water through vending machines in California, Arizona, Nevada, Texas,
Louisiana and Florida. Due to the nature of this business, it does not
generally (a) require significant amounts of inventory to meet the needs of its
customers or to meet its own internal supply requirements, (b) provide
significant extended payment terms to its customers or (c) otherwise have
significant working capital requirements.
COMPETITION
Although this business faces competition from several larger competitors,
the competition is generally widely dispersed between many different entities.
Principal among the large local competitors of the Water Products segment are:
Arrowhead (California and Arizona) and Ozarka/Oasis (Texas) (both owned by
Nestle); Hinckley & Schmitt (Arizona, Las Vegas, and Southern California) and
Sierra Springs (Northern California and Texas) (both owned by Anjou Bottled
Water Group, a subsidiary of a large French water utility); Crystal Geyser
(nationally distributed); Evian (nationally distributed) (owned by Groupe
Donone, S.A.) and Glacier Water Services, Inc.. This operation faces
significant competition in both price and service in all aspects of its
business.
INTELLECTUAL PROPERTY
The principal trademarks and service marks of the Water Products segment
are: SPARKLETTS(R), ALHAMBRA(R), CRYSTAL(TM), CRYSTAL-FRESH(R) and AQUA-
VEND(R). The McKesson Water Products Company also owns other registered and
unregistered trademarks and service marks used by the Water Products segment.
All of the principal trademarks and service marks are registered in the United
States, in addition to certain other jurisdictions. The United States federal
registrations of these trademarks have terms of ten or twenty years, depending
on date of registration, and are subject to
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unlimited renewals. The Company believes this business has taken all necessary
steps to preserve the registration and duration of its trademarks and service
marks, although no assurance can be given that it will be able to successfully
enforce or protect its rights thereunder in the event that they are subject to
third-party infringement. The Company does not consider any particular patents,
licenses, franchises or concessions to be material to the business of the Water
Products segment.
Armor All
PRODUCTS & MARKETS
The Company is engaged through its majority-owned Armor All Products
Corporation subsidiary ("Armor All") in developing and marketing a line of
branded appearance enhancement and protection products primarily for the do-it-
yourself automotive and home care markets. Its principal brand, Armor All(R),
has the leading position in the domestic automotive protectant market. A second
major brand, Rain Dance(R), is a strong competitor in the market for automotive
waxes, polishes and washes. Armor All's principal product, Armor All(R)
Protectant, is designed to protect and beautify natural and synthetic polymer
materials and is used primarily on certain automobile surfaces. Armor All's
products are marketed in the U.S. and Canada by its direct sales force and
through independent manufacturers' representatives and distributors.
International sales are effected through foreign sales offices, foreign
distributors and a marketing and distribution alliance with S.C. Johnson.
Primary customers include mass merchandise retailers, auto supply stores,
warehouse clubs, hardware stores and other retail outlets. The Company in
recent years has extended its product lines by introducing Armor All(R) Tire
Foam(R) Protectant, Armor All(R) QuickSilver(TM) Wheel Cleaner, Armor All(R)
Protectant Low-Gloss Natural Finish, Armor All(R) Spot & Wash(TM) Concentrate,
Armor All(R) Leather Care Protectant, WAX PAX(TM) Instant Car Wax and three car
polishes under the Rain Dance name. In January 1994, Armor All entered the home
care market with the acquisition of the E-Z Deck Wash(R) and E-Z D(TM) brands.
The E-Z Deck Wash product is designed to clean and restore wood surfaces such as
patio decks, siding and fences. In February 1995, Armor All introduced three
new home care products: Armor All Deck Protector, Armor All Water Proofing
Sealer and Armor All Vinyl Siding Wash. Products which comprise a majority of
Armor All's sales volume are manufactured under full service packaging
agreements whereby contract packagers generally own the raw materials and
finished goods in their possession and transfer title to Armor All just prior to
shipment to Armor All's customers. Armor All's use of contract packagers
permits it to avoid significant investments in inventory, machinery and other
fixed assets. Armor All's relationships with its three most important packagers
have lasted for 7, 10 and 22 years, respectively. Subject to contractual
arrangements, Armor All periodically reevaluates its selection of packagers, and
believes that other acceptable packagers are readily available.
COMPETITION
In the domestic protectant market, Armor All Protectant has two principal
competitors, STP(R) Son-of-a-Gun(R) Protectant and Turtle Wax(R) Formula
2001(R), and several secondary competitors. Armor All Tire Foam Protectant has
three principal competitors, No Touch(R), Turtle Wax(R) Formula 2001 and STP(R)
Son-of-a-Gun(R) Tire Care, and several secondary competitors. Armor All
QuickSilver Wheel Cleaner has four principal competitors, Eagle One(R), Turtle
Wax(R) Formula 2001, Turtle Wax(R) Wheel Brite and Espree(R), and several
secondary competitors. Armor All brand cleaner competes against many specialty
automotive cleaner products. Armor All brand wash products and all of the Rain
Dance and Rally brand products compete with numerous wash, wax and polish
products in the automotive aftermarket. Competition in international markets
varies by country. Armor All believes that brand recognition and loyalty,
access to retail shelf space, product convenience and effectiveness, trade
promotion and consumer advertising, support of customers' inventory management
and marketing efforts, and pricing are important competitive factors in the
appearance protection market. Armor All believes that it competes favorably
with respect to these factors.
4
In the domestic home care products market, the E-Z Deck Wash brand product
has two principal competitors, Thompson's(R) Deck Wash and Olympic(R) Deck
Cleaner, and several secondary competitors. Armor All Deck Protector and Water
Proofing Sealer each compete against products marketed under the Thompson's,
Olympic and Behr brand names. There are no directly competitive products to
Armor All Vinyl Siding Wash.
INTELLECTUAL PROPERTY
The principal trademarks and service marks of the Armor All segment are:
ARMOR ALL(R), VIKING DESIGN(R) and related designs, RAIN DANCE(R), RALLY(R), NO.
7(R), TIRE FOAM(R), QUICKSILVER(TM), SPOT & WASH(R), WAX PAX(TM), E-Z DECK
WASH(R) and E-Z D(TM). Armor All also owns other registered and unregistered
trademarks and service marks. All of the principal trademarks and service marks
are registered in the United States and Canada. Such marks are also registered
in certain other foreign jurisdictions. The United States federal registrations
of these trademarks and service marks have ten or twenty year terms, depending
on date of registration; the Canadian registrations have fifteen year terms.
All are subject to unlimited renewals. The Company believes it has taken all
necessary steps to preserve the registration and duration of its trademarks and
service marks, although no assurance can be given that it will be able to
successfully enforce or protect its rights thereunder in the event that they are
subject to third-party infringement.
Armor All owns a process patent on ARMOR ALL Protectant and a patent on
RAIN DANCE wax, and has applied for patents on ARMOR ALL QuickSilver Wheel
Cleaner, ARMOR ALL Spot & Wash Concentrate, WAX PAX Instant Car Wax and ARMOR
ALL Vinyl Siding Wash. In addition, Armor All owns a patent on an E-D DECK WASH
product and has other domestic and foreign E-D DECK WASH patents pending. Armor
All's process patent on ARMOR ALL Protectant will expire in 1996. Armor All's
patent on RAIN DANCE wax will expire in the year 2000. The Company believes
that Armor All's trademarks are more important assets than its patents, and that
the termination or invalidity of its patents would not have a material adverse
effect on Armor All.
OWNERSHIP
In fiscal 1994, the Company sold to the public 5,175,000 shares and donated
to the McKesson Foundation 250,000 shares of common stock of Armor All. An
additional 350,000 shares of Armor All common stock were donated to the McKesson
Foundation in fiscal 1995. These transactions reduced the Company's equity
interest in Armor All from 83% to 55%. In addition, in fiscal 1994, the Company
sold $180 million of subordinated debentures that are exchangeable, at the
option of the holders, into 6.9 million additional shares of Armor All common
stock owned by the Company, subject to the Company's right to pay cash equal to
the market price of the stock in lieu of making the exchange. If all of the
debentures were exchanged, the Company's ownership interest in Armor All would
be reduced to approximately 22%. As a result of the foregoing, the Company may
not be able to exercise continued control over the business operations of Armor
All and may not be able to obtain the financial benefits it would otherwise have
received if it had maintained its controlling interest in Armor All.
(2) Other Information About the Business
Customers -- Sales to the Company's largest customer, Wal-Mart Stores,
Inc., accounted for 10% of consolidated revenues in fiscal 1995 and 1994;
however, no material part of the business is dependent upon a single or a very
few customers, the loss of any one of which could have a material adverse effect
on the Company or any of its business segments.
Environmental Legislation -- The Company sold its chemical distribution
operations in fiscal 1987. In connection with the disposition of those
operations, the Company retained responsibility for certain environmental
obligations and has entered into agreements with the EPA and certain states
5
pursuant to which it is or may be required to conduct environmental assessments
and cleanups at several closed sites. These matters are described further in
Item 3 "Legal Proceedings" below. Other than any capital expenditures which may
be required in connection with those matters, the Company does not anticipate
making substantial capital expenditures for environmental control facilities or
to comply with environmental laws and regulations in the future. The amount of
capital expenditures expended by the Company for environmental compliance was
not material in fiscal 1995 and is not expected to be material in the next
fiscal year.
Employees -- At March 31, 1995, the Company employed approximately 12,200
persons.
Backlog Orders -- Each of the Company's segments seeks to promptly fill or
otherwise satisfy the orders of each such segment's customers. Accordingly,
none of the Company's segments has a significant backlog of customer orders.
(d) Financial Information About Foreign and Domestic Operations and Export
Sales
Information as to foreign operations is included in Financial Note 15,
"Segments of Business" on pages 39 and 40 of the Appendix to the Company's 1995
Proxy Statement (the "Appendix"), which notes are incorporated herein by
reference.
ITEM 2. PROPERTIES
Because of the nature of the Company's principal businesses, plant,
warehousing, office and other facilities are operated in widely dispersed
locations. The warehouses are typically owned or leased on a long-term basis.
The Company considers its operating properties to be in satisfactory condition
and adequate to meet its needs for the next several years. Information as to
material lease commitments is included in Financial Note 10, "Lease Obligations"
on page 31 of the Appendix, which note is incorporated herein by reference. Due
to the numerous warehousing, office and other facilities utilized by the Company
in its business operations, the Company does not believe that any one of its
facilities is materially important to the Company.
ITEM 3. LEGAL PROCEEDINGS
In addition to commitments and obligations in the ordinary course of
business, the Company is subject to various claims, other pending and possible
legal actions for product liability and other damages, investigations relating
to governmental laws and regulations, and other matters arising out of the
normal conduct of the Company's business.
The Company is a defendant in four civil actions filed between late 1993
and March of this year by independent pharmacies. The first proceeding,
Feitelberg v. Abbott Laboratories, is pending in the Superior Court for the
State of California (County of San Francisco) and is now referred to as
Coordinated Proceeding Special Title, Pharmaceutical Cases I, II and III. The
second proceeding, HJB, Inc. v. Abbott Laboratories (now known as MDL 997), is
pending in the United States District Court for the Northern District of
Illinois. The third proceeding, K-S Pharmacies, Inc. v. Abbott Laboratories, is
pending in the Circuit Court of Wisconsin for Dane County. A fourth action,
Adams v. Abbott Laboratories, was filed in the U.S. District Court for the
Eastern District of Arkansas. These actions were brought as purported class
actions on behalf of all other similarly-situated retail pharmacies. A class
has been certified in MDL 997. There are numerous other defendants in these
actions including pharmaceutical manufacturers, a pharmaceutical mail order
firm, and several other wholesale
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distributors. These cases allege, in essence, that the defendants have
unlawfully conspired together and agreed to fix the prices of brand name
pharmaceuticals sold to plaintiffs at artificially high, discriminatory, and
non-competitive levels, all in violation of various state and federal antitrust
laws. Some of the plaintiffs specifically contend that the wholesaler and
manufacturer defendants are engaged in a conspiracy to fix prices charged to
plaintiffs and members of the purported classes (independent and chain retail
drug stores) above the price levels charged to mail order pharmacies, HMOs and
other institutional buyers. The California cases allege, among other things,
violation of California antitrust law. In MDL 997 and Adams, plaintiffs allege
that defendants' actions constitute price fixing in violation of the Sherman
Act. In the K-S Pharmacies, Inc. complaint, plaintiffs allege violation of
Wisconsin antitrust law. In each of the complaints, except Adams, plaintiffs
seek certification as a class and remedies in the form of injunctive relief,
unquantified monetary damages (trebled as provided by law), and attorneys fees
and costs. In addition, the California cases seek restitution. The Company
believes it has meritorious defenses to the allegations made against it and
intends to vigorously defend itself in all of these cases. In addition, the
Company has entered into a judgment sharing agreement with certain
pharmaceutical manufacturer defendants, which provides generally that the
Company (together with the other wholesale distributor defendants) will be held
harmless by such pharmaceutical manufacturer defendants and will be indemnified
against the costs of adverse judgments, if any, against the wholesaler and
manufacturers in these or similar actions, in excess of $1 million in the
aggregate per wholesale distributor defendant. Plaintiffs have attempted to have
the court declare the judgment sharing agreement unlawful, but these efforts, to
date, have been unsuccessful.
Primarily as a result of the operation of its former chemical businesses,
which were divested in fiscal 1987, the Company is involved in numerous matters
pursuant to various environmental laws and regulations. The Company has
received various claims and demands from governmental agencies relating to
investigative and remedial actions purportedly required to address environmental
conditions alleged to exist at six (6) sites where the Company formerly
conducted operations; and the Company, by administrative order or otherwise, has
agreed to take certain actions at those sites. These actions include the
investigation and remediation of contamination from its (or its former
subsidiaries') former operations at the sites located in Newark, New Jersey,
Santa Fe Springs, California, Spartanburg, South Carolina, Syracuse, New York
and Union City, California. The site in Newark, New Jersey, is being
investigated pursuant to a New Jersey Department of Environmental Protection
administrative consent order dated August 20, 1993. The site in Santa Fe
Springs, California, is undergoing soil remediation, with an evaluation of the
ground water remediation alternatives to follow, pursuant to a California
Environmental Protection Agency Department of Toxic Substances Control consent
order dated January 8, 1990. The current owner of the site in Spartanburg,
South Carolina, has agreed to fully indemnify the Company. Pursuant to a New
York State Department of Environmental Conservation consent order dated August
31, 1987, the unsaturated soils at the Syracuse, New York location were
remediated; the saturated soils and groundwater are being addressed as part of a
separate operable unit. The site in Union City, California is undergoing soil
and ground water remediation pursuant to a California Regional Water Quality
Control Board site cleanup requirements order dated June 15, 1988 . At the
sixth site, which is undergoing a Resource Conservation and Recovery Act closure
and is located in Des Moines, Iowa, the Company has requested the EPA to
acknowledge that the site has achieved the requirements for clean closure. The
current estimate (determined by the Company's environmental staff, in
consultation with outside environmental specialists and counsel) of the upper
limit of the Company's range of reasonably possible remediation costs for these
six (6) sites is approximately $22 million, net of amounts which third parties
have agreed to pay in settlement or which the Company expects, based either on
pending settlement offers or nonrefundable contributions which are ongoing but
are not the subject of an agreement, to be contributed by third parties. The
$22 million is expected to be paid out between April 1995 and March 2027.
Another such Superfund site is a closed wood treatment facility formerly
operated by Mass Merchandisers, Inc. ("MMI") acquired by the Company in 1985.
In fiscal 1993, a consent decree was entered whereby the Company will remediate
the site at a cost estimated by the EPA to be approximately $11 million, with an
additional estimated contingent cost of approximately $4 million. Through March
31, 1995, approximately $2 million had been paid out on the remediation of this
site and approximately $9 million is expected to be paid out between April 1995
and March 1998. The $4 million additional estimated contingent cost will be
paid, if at all, between April 2000 and March
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2030. The anticipated costs of $22 million and $9 million are included in the
Company's recorded environmental reserves at March 31, 1995.
In addition to the foregoing remedial actions, the Company has been asked
by current property owners to contribute to the investigation and environmental
cleanup of eight (8) properties which the Company formerly owned or leased. At
one of these properties, the government has ordered both the Company and an
earlier former owner to investigate and remediate, and the Company is funding
the work under a reservation of rights. One of the other properties is the
subject of an order to investigate directed both to the current owner and the
Company. No determination has been made of the Company's liability, if any, in
proportion to other PRPs at any of these eight (8) former properties; however,
$2.5 million has been included in the Company's recorded environmental reserves
at March 31, 1995. The Company has also been designated as a potentially
responsible party ("PRP") by the EPA under the Comprehensive Environmental
Response Compensation and Liability Act of 1980, as amended (the "Superfund"
law), for environmental assessment and cleanup costs as the result of the
Company's alleged treatment or disposal of hazardous substances at twenty-six
(26) Superfund sites, at none of which the Company is the sole PRP. With
respect to each of these Superfund sites, numerous other PRPs have similarly
been designated and, while the current state of the law potentially imposes
joint and several liability upon PRPs, as a practical matter costs of these
sites are typically shared with other PRPs. In some cases the Company has
partial indemnity agreements with its insurers or an allocation or contribution
agreement with other PRPs; at 18 of the 26 sites, while there is currently no
indemnification from third parties or agreements from insurers to pay costs, the
Company's alleged waste volumes were typically small. At three (3) of these
Superfund sites another PRP has agreed to pay 45% of the allocated share of the
Company's former subsidiary; three insurers have agreed to pay collectively 80%
of the remainder. Such insurers have also agreed to pay 80% of the former
subsidiary's allocation at one other Superfund site, and have agreed to
indemnify 65% of the Company's allocation at seven (7) other Superfund sites.
The estimated dollar amount of the Company's liability at the twenty-six (26)
Superfund sites referenced in this paragraph is approximately $2.8 million, net
of amounts which the third parties have agreed, or are expected, to contribute.
Settlements and costs paid by the Company in Superfund matters to date have not
been significant.
The potential costs to the Company related to all of these environmental
matters are highly uncertain due to such factors as: the unknown magnitude of
possible pollution and cleanup costs; the complexity and evolving nature of
governmental laws and regulations and their interpretations; the timing, varying
costs and effectiveness of alternative cleanup technologies; the determination
of the Company's liability in proportion to other PRPs; and the extent, if any,
to which such costs are recoverable from insurance or other parties. The
Company has established reserves, based on estimated total future cash flows,
which it considers to be appropriate for these environmental matters, which
reserves are net of approximately $15 million at March 31, 1995, relating to
amounts third parties have agreed to pay in settlement or which the Company
expects to be contributed by third parties, where the Company believes it is
probable that the third parties will fulfill their agreements to pay.
Management believes, based on current knowledge and the advice of the
Company's counsel, that the outcome of the litigation and governmental
proceedings discussed in this Item 3 will not have a material adverse effect on
the Company.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
No matters were submitted to a vote of security holders, through the
solicitation of proxies or otherwise, during the three months ended March 31,
1995.
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Executive Officers of the Registrant
The following table sets forth information concerning the executive
officers of the Registrant as of June 1, 1995. The number of years of service
with the Company includes service with predecessor and acquired companies,
including McKesson.
There are no family relationships between any of the executive officers or
directors of the Registrant. The executive officers are chosen annually to
serve until the first meeting of the Board of Directors following the next
annual meeting of stockholders and until their successors are elected and have
qualified, or until death, resignation or removal, whichever is sooner.
Name Age Position with Registrant and Business Experience
- ----------------- ----- ---------------------------------------------------
Alan Seelenfreund 58 Chairman of the Board and Chief Executive Officer
since July 1994 and a Director since November 1994.
Formerly Chairman of the Board and Chief Executive
Officer (November 1989-November 1994), a Director
(July 1988-November 1994) and Chief Financial
Officer (April 1984-April 1990) of McKesson.
Service with the Company - 20 years.
David E. McDowell 52 President and Chief Operating Officer since
September 1994 and a Director since November 1994.
Formerly President and Chief Operating Officer and
a Director (January 1992-November 1994) of
McKesson. Vice President and General Manager,
Quality and Chief Information Officer, IBM
Corporation (November 1990-January 1992); President
of IBM's National Service Division (July 1987-
August 1990) and Assistant General Manager
(January-July 1987). Service with the Company -
3.5 years.
William A. Armstrong 54 Vice President Human Resources and Administration
since September 1994. Formerly Vice President Human
Resources and Administration (April 1993-November
1994), Vice President Administration (July 1991-
April 1993) and Executive Assistant to the Office
of the Chief Executive (1990-April 1992) of
McKesson. Service with the Company - 23 years.
Michael T. Dalby 49 Vice President Strategic Planning since September
1994. Principal at McKinsey & Company, Inc., an
international management consulting firm (1988-
1994). Service with the Company - 8 months.
Jon W. d'Alessio 48 Treasurer since September 1994. Formerly Treasurer
(January 1992-November 1994), Staff Vice President
Corporate Treasury (November 1991-January 1992) and
Staff Vice President and Chief Information Officer
(1990-November 1991) of McKesson. Service with the
Company - 17 years.
Kevin B. Ferrell 47 Vice President and Chief Financial Officer since
October 1994. Executive Vice President of Global
Investment Management at Bank of America (1993-
March 1994). Other positions in the last 18 years,
all associated with Bank of America: President and
Director of SeaFirst Bank, Senior Vice President
and Head of Corporate Banking in San Francisco and
Senior Vice President of Finance and Treasury.
Service with the Company - 7 months.
9
Name Age Position with Registrant and Business Experience
- ----------------- ----- ---------------------------------------------------
Richard H. Hawkins 45 Vice President and Controller of the Company since
September 1994. Formerly Vice President (April 1993-
November 1994) and Controller (April 1990-November
1994) of McKesson, Chief Financial Officer
(September 1993-November 1994) of McKesson's Drug
Company division and Vice President Finance
(February 1991-April 1993) of McKesson's
Distribution Group. Service with the Company - 11
years.
David L. Mahoney 40 Vice President and President of Healthcare Delivery
Systems, Inc., a wholly-owned subsidiary of the
Company, since September 1994. Formerly Vice
President Strategic Planning (July 1990-September
1994) of McKesson. Principal at McKinsey & Company,
Inc., an international management consulting firm
(1987-July 1990). Service with the Company - 5
years.
Ivan D. Meyerson 50 Vice President and General Counsel since July 1994.
Formerly Vice President and General Counsel
(January 1987-November 1994) of McKesson. Service
with the Company - 17 years.
Nancy A. Miller 51 Vice President and Corporate Secretary since July
1994. Formerly Vice President and Corporate
Secretary (December 1989-November 1994) of
McKesson. Service with the Company - 17 years.
Charles A. Norris 50 Vice President and President of McKesson Water
Products Company, a wholly-owned subsidiary of the
Company, since September 1994. Formerly Vice
President (April 1993-November 1994) and President
(May 1990-November 1994) of McKesson Water Products
Company, a wholly-owned subsidiary of McKesson.
President of Deer Park Water Company, a bottled
drinking water firm (1981-May 1990). Service with
the Company - 5 years.
Garret A. Scholz 55 Vice President Finance since July 1994. Formerly
Vice President Finance (April 1990-November 1994)
and Vice President and Treasurer (November 1984-
April 1990) of McKesson. Service with the Company -
22 years.
James H. Smith 51 Vice President and President of the McKesson Drug
Company division since September 1994. Formerly
Vice President and President (February-November
1994) of the McKesson Drug Company division of
McKesson. Senior Vice President of Avnet, Inc., a
distributor of electrical and computer components
(1990-February 1994); Executive Vice President of
the Hamilton Hallmark Division (1990-February 1994)
and Vice President of the Hamilton Avnet Division
(1986-1990). Service with the Company - 1.3 years.
10
PART II
ITEM 5. MARKET FOR THE REGISTRANT'S COMMON STOCK AND RELATED
STOCKHOLDER MATTERS
(a) Market Information
The principal market on which the Company's common stock is traded is the
New York Stock Exchange. High and low prices for the common stock by quarter
appear in Financial Note 17, "Quarterly Financial Information" on pages 43 and
44 of the Appendix which note is incorporated herein by reference.
(b) Holders
The number of record holders of the Company's common stock as of March 31,
1995 was 15,765.
(c) Dividends
Dividend information is included in Financial Note 17, "Quarterly Financial
Information" on pages 43 and 44 of the Appendix, which note is incorporated
herein by reference.
ITEM 6. SELECTED FINANCIAL DATA
Selected financial data is shown on pages 2 to 5 of the Appendix and is
incorporated herein by reference.
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
Management's discussion and analysis of the Company's financial condition
and results of operations appears in the Financial Review on pages 6 to 16 of
the Appendix and is incorporated herein by reference.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
Financial Statements and Supplementary Data appear on pages 20 to 44 of the
Appendix and are incorporated herein by reference.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
None.
11
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
Information with respect to Directors of the Company is incorporated by
reference from the Company's 1995 Proxy Statement (the "Proxy Statement").
Certain information relating to Executive Officers of the Company appears at
pages 9 and 10 of this Form 10-K Annual Report. The information with respect to
this item required by Item 405 of Regulation S-K is incorporated herein by
reference from the Company's 1995 Proxy Statement.
ITEM 11. EXECUTIVE COMPENSATION
Information with respect to this item is incorporated herein by reference
from the Company's Proxy Statement.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
Information with respect to this item is incorporated herein by reference
from the Company's Proxy Statement.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Information with respect to certain transactions with management is
incorporated by reference from the Company's Proxy Statement.
12
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K
(a) Exhibits and Financial Statement Schedules
The following consolidated financial statements of the Company and the
Independent Auditors' Report are included on pages 19 to 44 of the Appendix and
are incorporated by reference in Item 8:
Independent Auditors' Report
Consolidated Financial Statements
Statements of Consolidated Income for the years ended
March 31, 1995, 1994 and 1993
Consolidated Balance Sheets, March 31, 1995, 1994 and 1993
Statements of Consolidated Stockholders' Equity for the years
ended March 31, 1995, 1994 and 1993
Statements of Consolidated Cash Flows for the years ended
March 31, 1995, 1994 and 1993
Financial Notes
The following are included herein: Page
----
Independent Auditors' Report on Supplementary Financial Schedule 15
Supplementary Financial Schedule:
II Consolidated Valuation and Qualifying Accounts 16
Financial statements and schedules not included or incorporated by
reference herein have been omitted because of the absence of conditions under
which they are required or because the required information, where material, is
shown in the financial statements, financial notes or supplementary financial
information.
Exhibits submitted with this Form 10-K as filed with the SEC and those
incorporated by reference to other filings are listed on the Exhibit Index on
pages 17 through 20.
(b) Reports on Form 8-K
None.
13
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Registrant has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized.
McKESSON CORPORATION
Date: May 26, 1995 By: /s/Kevin B. Ferrell
-------------------------------------
Kevin B. Ferrell, Vice President
and Chief Financial Officer
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below on May 26, 1995 by the following persons on behalf
of the Registrant and in the capacities indicated:
/s/Alan Seelenfreund /s/David E. McDowell
- ------------------------------------- --------------------------------------
Alan Seelenfreund, Chairman and Chief David E. McDowell, President and Chief
Executive Officer and Director Operating Officer and Director
/s/Kevin B. Ferrell /s/Richard H. Hawkins
- ------------------------------------- --------------------------------------
Kevin B. Ferrell, Vice President Richard H. Hawkins, Vice President
and Chief Financial Officer and Controller
/s/Tully M. Friedman
- ------------------------------------- --------------------------------------
Mary G.F. Bitterman, Director Tully M. Friedman, Director
/s/James R. Harvey /s/George M. Keller
- ------------------------------------- --------------------------------------
James R. Harvey, Director George M. Keller, Director
/s/Leslie L. Luttgens /s/John M. Pietruski
- ------------------------------------- --------------------------------------
Leslie L. Luttgens, Director John M. Pietruski, Director
/s/Jane E. Shaw /s/Robert H. Waterman
- ------------------------------------- --------------------------------------
Jane E. Shaw, Director Robert H. Waterman, Jr., Director
14
INDEPENDENT AUDITORS' REPORT ON
SUPPLEMENTARY FINANCIAL SCHEDULE
The Stockholders and Board of Directors of McKesson Corporation:
We have audited the consolidated financial statements of McKesson Corporation
and subsidiaries as of March 31, 1995, 1994 and 1993, and for the years then
ended and have issued our report thereon dated May 12, 1995 which expresses an
unqualified opinion and includes an explanatory paragraph relating to the
Corporation's change in its method of accounting for postemployment benefits;
such consolidated financial statements and report are included in the Appendix
to your Proxy Statement for the 1995 annual meeting of stockholders of the
Corporation and are incorporated herein by reference. Our audits also included
the consolidated supplementary financial schedule of McKesson Corporation,
listed in Item 14(a). This consolidated supplementary financial schedule is the
responsibility of the Corporation's management. Our responsibility is to
express an opinion based on our audits. In our opinion, such consolidated
supplementary financial schedule, when considered in relation to the basic
consolidated financial statements taken as a whole, presents fairly in all
material respects the information set forth therein.
/s/ Deloitte & Touche LLP
DELOITTE & TOUCHE LLP
San Francisco, California
May 12, 1995
15
Schedule II
McKESSON CORPORATION - CONSOLIDATED
VALUATION AND QUALIFYING ACCOUNTS
FOR THE YEARS ENDED MARCH 31, 1995, 1994 AND 1993
(in thousands)
Column A Column B Column C Column D Column E
- --------------------------------- ---------- ---------------------- ------------- ----------------
Additions
----------------------
Balance at Charged to Charged to
Beginning Costs and Other Balance at
Description of Period Expenses Accounts Deductions End of Period
- --------------------------------- ---------- ---------- ---------- ------------- ----------------
AMOUNTS DEDUCTED FROM
ASSETS TO WHICH THEY APPLY:
Year Ended March 31, 1995
- -------------------------
Allowances for doubtful
accounts receivable $18,637 $49,452 $ - $24,505 $43,584
Other reserves 15,599 6,066 - 5,621 16,044
------- ------- ------- ------- -------
$34,236 $55,518 $ - $30,126/(1)/ $59,628/(2)/
======= ======= ======= ======= =======
Year Ended March 31, 1994
- -------------------------
Allowances for doubtful
accounts receivable $26,346 $ 9,994 $ 1 $17,704 $18,637
Other reserves 14,886 5,144 - 4,431 15,599
------- ------- ------- ------- -------
$41,232 $15,138 $ 1 $22,135/(1)/ $34,236/(2)/
======= ======= ======= ======= =======
Year Ended March 31, 1993
- -------------------------
Allowances for doubtful
accounts receivable $19,585 $17,670 $ 76 $10,985 $26,346
Other reserves 13,823 3,855 - 2,792 14,886
------- ------- ------- ------- -------
$33,408 $21,525 $ 76 $13,777/(1)/ $41,232/(2)/
======= ======= ======= ======= =======
- -------------------------------------------
NOTES: 1995 1994 1993
------ ------ ------
1 Deductions:
Written off $27,491 $17,704 $12,995
Credited to other accounts 2,635 4,431 782
------- ------- -------
Total $30,126 $22,135 $13,777
======= ======= =======
2 Amounts shown as deductions from:
Current receivables $56,023 $30,826 $38,014
Other assets 3,605 3,410 3,218
------- ------- -------
Total $59,628 $34,236 $41,232
======= ======= =======
16
EXHIBIT INDEX
Exhibit
Number Description
- ------- ----------------------------------------------------------------------
2.1 Restructuring and Distribution Agreement dated as of July 10, 1994, by
and among McKesson Corporation, a Delaware corporation ("Old
McKesson"), McKesson Corporation, a Maryland corporation ("Maryland"),
Clinical Pharmaceuticals, Inc. ("CPI"), PCS Health Systems, Inc.
("PCS") and the Company (Exhibit 2.1 (1)).
2.2 Amendment, dated as of October 10, 1994, by and among Old McKesson,
Maryland, CPI, PCS and the Company, which amends the Distribution
Agreement (Exhibit 2.2 (3)).
2.3 Second Amendment, dated as of November 3, 1994, by and among Old
McKesson, Maryland, CPI, PCS and the Company, which amends the
Distribution Agreement (Exhibit 2.5 (5)).
2.4 Agreement and Plan of Merger, dated as of July 10, 1994, by and among
Old McKesson, Eli Lilly and Company ("Parent") and ECO Acquisition
Corporation (the "Purchaser") (Exhibit 2.3 (4)).
2.5 Amendment, dated as of August 8, 1994, by and among Old McKesson,
Parent and Purchaser, which amends the Merger Agreement (Exhibit 2.4
(5))
3.1 Corrected Restated Certificate of Incorporation of the Company, as
filed with the Office of the Delaware Secretary of State on June 9,
1995.
3.2 Restated By-Laws of the Company, as amended through April 26, 1995.
4 Rights Agreement dated as of September 14, 1994 between the Company
and First Chicago Trust Company of New York, as Rights Agent (Exhibit
4.1 (4)).
10.1 Tax Sharing Agreement, dated as of July 10, 1994, among the Company,
Old McKesson, Parent and the Purchaser (Exhibit 10.1 (1)).
10.2 HDS Services Agreement, dated as of July 10, 1994, among Parent, PCS
and Healthcare Delivery Systems, Inc. (Exhibit 10.2 (1)).
10.3 McKesson Services Agreement, dated as of July 10, 1994, between PCS
and the Company (Exhibit 10.3 (1)).
10.4 Memorandum of Understanding, dated as of July 10, 1994, between Parent
and the Company (Exhibit 10.4 (1)).
10.5 Non-Competition Agreement, dated as of July 10, 1994, between the
Company, Old McKesson, the Purchaser and Parent (Exhibit 10.5 (1)).
10.6 McKesson Corporation 1994 Stock Option and Restricted Stock Plan
(Amended Effective April 26, 1995) (Exhibit A (6)).
10.7 McKesson Corporation Supplemental PSIP (Exhibit 10.7 (2)).
10.8 McKesson Corporation Deferred Compensation Administration Plan
(Exhibit 10.8 (2)).
17
EXHIBIT INDEX
Exhibit
Number Description
- ------- ----------------------------------------------------------------------
10.9 McKesson Corporation Deferred Compensation Administration Plan II
(Exhibit 10.9 (2)).
10.10 McKesson Corporation Directors' Deferred Compensation Plan (Exhibit
10.10 (2)).
10.11 McKesson Corporation 1985 Directors' Elective Deferred Compensation
Plan (Exhibit 10.11 (2)).
10.12 McKesson Corporation 1994 Option Gain Deferral Plan (Exhibit 10.12
(3)).
10.13 McKesson Corporation 1985 Executives' Elective Deferred Compensation
Plan (Exhibit 10.13 (2)).
10.14 McKesson Corporation Management Deferred Compensation Plan (Exhibit
10.14 (2)).
10.15 McKesson Corporation 1984 Executive Benefit Retirement Plan (Exhibit
10.15 (2)).
10.16 McKesson Corporation 1988 Executive Survivor Benefits Plan (Exhibit
10.16 (2)).
10.17 McKesson Corporation Executive Medical Plan Summary (Exhibit 10.17
(3)).
10.18 McKesson Corporation 1988 Management Survivor Benefits Plan (Exhibit
10.18 (2)).
10.19 McKesson Corporation Severance Policy for Executive Employees (Exhibit
10.19 (2)).
10.20 McKesson Corporation 1989 Management Incentive Plan (Amended and
Restated Effective April 26, 1995) (Exhibit B (6)).
10.21 McKesson Corporation 1981 Long-Term Incentive Plan (Exhibit 10.21
(2)).
10.22 McKesson Corporation 1973 Stock Purchase Plan (Exhibit 10.22 (2)).
10.23 Form of Termination Agreement by and between the Company and certain
designated Executive Officers.
10.24 Description of McKesson Corporation Retirement Program for Nonemployee
Directors.
10.25 Credit Agreement entered into as of March 31, 1995, among the Company,
Medis Health and Pharmaceutical Services, Inc., an indirect wholly-
owned subsidiary of the Company, the several financial institutions
from time to time party to the agreement (collectively the "Banks"),
Bank of America National Trust and Savings Association, as Agent for
the Banks, Chemical Bank, as Co-Agent for the Banks and Bank of
America Canada, as Canadian Administrative Agent.
10.26 Custodial Agreement Acknowledgment entered into as of March 31, 1995,
among the Company and Bank of America National Trust and Savings
Association (the "Custodian") in its capacity as Custodian under the
Custodial Agreement and as Agent for the Banks from time to time party
to the Credit Agreement.
18
EXHIBIT INDEX
Exhibit
Number Description
- ------- ----------------------------------------------------------------------
10.27 Pledge Agreement entered into as of March 31, 1995 among the Company
(the "Pledgor") and Bank of America National Trust and Savings
Association, as Agent for the Banks from time to time party to the
Credit Agreement.
10.28 Guaranty entered into as of March 31, 1995 by the Company (the
"Guarantor"), in favor of and for the benefit of Bank of America
National Trust and Savings Association, as Agent for and
representative of the Banks party to the Credit Agreement.
11 Computation of Earnings Per Common Share for the Five Years Ended
March 31, 1995.
13 1995 Annual Report to Security Holders Pursuant to Rule 14a-3(b). (7)
21 List of Subsidiaries of the Company.
23 Independent Auditors' Consent.
27 Financial Data Schedule.
Footnotes to Exhibit Index:
(1) Incorporated by reference to designated exhibit to the Company's
Registration Statement on Form 10 filed with the Commission on July 27,
1994, File No. 1-13252.
(2) Incorporated by reference to designated exhibit to Amendment No. 1 to the
Company's Registration Statement on Form 10 filed with the Commission on
August 26, 1994, File No. 1-13252.
(3) Incorporated by reference to designated exhibit to Amendment No. 2 to the
Company's Registration Statement on Form 10 filed with the Commission on
October 11, 1994, File No. 1-13252.
(4) Incorporated by reference to designated exhibit to Amendment No. 3 to the
Company's Registration Statement on Form 10 filed with the Commission on
October 27, 1994, File No. 1-13252.
(5) Incorporated by reference to designated exhibit to Amendment No. 4 to the
Company's Registration Statement on Form 10 filed with the Commission on
November 7, 1994, File No. 1-13252.
(6) Incorporated by reference to designated exhibit attached to the Company's
definitive Proxy Statement dated June 9, 1995 for the Annual Meeting of
Stockholders to be held on July 26, 1995.
(7) Filed as an Appendix to the Company's definitive Proxy Statement dated June
9, 1995 for the Annual Meeting of Stockholders to be held on July 26, 1995,
and incorporated by reference herein.
19
Executive Compensation Plans and Arrangements
1. McKesson Corporation 1994 Stock Option and Restricted Stock Plan (Amended
Effective April 26, 1995).
2. McKesson Corporation Supplemental PSIP.
3. McKesson Corporation Deferred Compensation Administration Plan.
4. McKesson Corporation Deferred Compensation Administration Plan II.
5. McKesson Corporation Directors' Deferred Compensation Plan.
6. McKesson Corporation 1985 Directors' Elective Deferred Compensation Plan.
7. McKesson Corporation 1994 Option Gain Deferral Plan.
8. McKesson Corporation 1985 Executives' Elective Deferred Compensation Plan.
9. McKesson Corporation Management Deferred Compensation Plan.
10. McKesson Corporation 1984 Executive Benefit Retirement Plan.
11. McKesson Corporation 1988 Executive Survivor Benefits Plan.
12. McKesson Corporation Executive Medical Plan Summary.
13. McKesson Corporation 1988 Management Survivor Benefits Plan.
14. McKesson Corporation Severance Policy for Executive Employees.
15. McKesson Corporation 1989 Management Incentive Plan (Amended and Restated
Effective April 26, 1995).
16. McKesson Corporation 1981 Long-Term Incentive Plan.
17. McKesson Corporation 1973 Stock Purchase Plan.
18. Form of Termination Agreement by and between the Company and certain
designated Executive Officers.
19. Description of McKesson Corporation Retirement Program for Nonemployee
Directors.
20