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, 1996
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. [ ]
Aggregate market value of voting stock held by nonaffiliates of the Registrant
at June 3, 1996 $1,453,307,348
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Number of shares of common stock outstanding at June 3, 1996: 42,939,511
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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 31, 1996 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........................................... 7
3. Legal Proceedings.................................... 7
4. Submission of Matters to a Vote of Security Holders.. 9
Executive Officers of the Registrant................. 10
PART II
5. Market for the Registrant's Common Stock and
Related Stockholder Matters.......................... 13
6. Selected Financial Data.............................. 13
7. Management's Discussion and Analysis of Financial
Condition and Results of Operations.................. 13
8. Financial Statements and Supplementary Data.......... 13
9. Changes in and Disagreements with Accountants on
Accounting and Financial Disclosure.................. 13
PART III
10. Directors and Executive Officers of the Registrant... 14
11. Executive Compensation............................... 14
12. Security Ownership of Certain Beneficial Owners and
Management........................................... 14
13. Certain Relationships and Related Transactions....... 14
PART IV
14. Exhibits, Financial Statement Schedules, and Reports
on Form 8-K......................................... 15
Signatures........................................... 16
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 a subsidiary of Eli Lilly and Company, for
approximately $4 billion (the "PCS Transaction").
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.
During fiscal 1996, the Company made several key acquisitions and
investments reflecting its increased focus on health care.
In December 1995, the Company acquired Ogden BioServices Corporation,
renamed McKesson Bioservices Corporation, which provides support services to
commercial, non-profit and governmental organizations engaged in drug
development and biomedical research. Also during fiscal 1996, the Company
acquired interests in two companies engaged in the development of new
technology-based initiatives to enhance the Health Care Services segment's
competitive position.
In addition, during fiscal 1996 the Company made significant internal
investments in technology-based initiatives to improve its competitiveness in
the retail and institutional market segments. The CareMax(SM) and OmniLink(SM)
programs provide value-added programs and services designed to improve the
profitability and competitiveness of community pharmacies. The BidLink(SM) and
SupplyNET(SM) programs are designed to assist institutional consumers in
enhancing logistics, contract compliance and utilization management.
In April 1996, the Company acquired Automated Healthcare, Inc. which
provides automated pharmaceutical dispensing equipment for use by health care
institutions.
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. During fiscal 1996, the Company repurchased 1.35 million shares
for $63 million. On May 31, 1996, the Company announced the authorization for
the repurchase of an additional 3.5 million common shares and that substantially
all of the shares in the initial authorization had been repurchased.
Developments which could be considered significant to individual segments
of the business are described under (c)(1) "Narrative Description of Business"
on pages 2 through 6 of this report.
(b) Financial Information About Industry Segments
Financial information for the three years ended March 31, 1996 appears in
Financial Note 15, "Segments of Business", on pages 37 and 38 of the Appendix to
the Company's 1996 Proxy Statement, which note is incorporated herein by
reference.
1
(c) Narrative Description of Business
(1) Description of Segments of Business
The principal segments of the Company's business are:
Health Care Services
Service Merchandising
Water Products
Armor All
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,
alternate care sites, 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 names "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.
Voluntary Marketing Program -- Under the Valu-Rite(R) 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, 1996,
approximately 5,050 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. Independent pharmacists will have access to OmniLink through CareMax, a
new pharmacy network. This will enable CareMax members to take advantage of new
profit opportunities through improved access to managed care networks and
programs designed to enhance patient care.
OmniLink is a centralized pharmacy computer application offered to all the
Company's retail customers. OmniLink enables pharmacists to streamline pharmacy
transactions, increase transaction accuracy, and participate in patient care
programs. Using OmniLink, retailers can better manage and serve customers,
pharmacy benefit managers, pharmaceutical manufacturers and managed care
organizations.
In the institutional market segment, BidLink enables hospitals, alternate
care sites and long-term health care providers to manage price and product mix.
SupplyNET provides tools to the Company's institutional customers for contract
compliance and utilization management.
In the United States, the Company does business under the McKesson Drug
Company and McKesson Health Systems trade-names. In Canada, the Company does
business under the name Medis Health and Pharmaceutical Services Inc.
Pharmaceutical Services Group -- McKesson's Pharmaceutical Services Group
is comprised of Healthcare Delivery Systems, Inc. ("HDS") and McKesson
Bioservices Corporation ("Bioservices"). HDS
2
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 currently is the development of integrated systems
for specialized delivery of biotech and other high-cost pharmaceutical
therapies. 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 and product hot-
line, physician and patient information programs. These services are also
provided to manufacturers on a stand alone basis outside of integrated service
systems. Bioservices provides support services to commercial, non-profit and
governmental organizations engaged in drug development and biomedical research
including biological repository management, clinical trials support and
regulatory process management services.
Other -- Through its Sunmark operations, the Company supplies durable
medical equipment to the home health care industry. Through Zee Medical, Inc.,
the Company distributes first-aid products and supplies to industrial and
commercial customers. Through Automated Healthcare Inc., acquired in April
1996, the Company provides automated pharmaceutical dispensing equipment for use
by health care institutions.
Competition
In every area of operations, the distribution businesses (excluding the
Pharmaceutical Services Group) 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 areas in which the Pharmaceutical Services Group
provides services are in a rapid state of development and therefore there are no
clearly defined markets in which the Pharmaceutical Services Group competes. It
nonetheless faces competition from various other service providers and from
pharmaceutical and other healthcare manufacturers (as well as other potential
customers of the Pharmaceutical Services Group) which may from time to time
decide to develop, for their own internal needs, those services which are
provided by the Pharmaceutical Services Group 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 Health Care
Services segment.
Intellectual Property
The principal trademarks and service marks of the Health Care Services
segment are: ECONOMOST(R), ECONOLINK(R), VALU-RITE(R), BidLink, SupplyNET,
CareMax, OmniLink and RxOBOT(TM). 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.
3
Service Merchandising
Products & Markets
Millbrook Distribution Services Inc. ("Millbrook") -- Millbrook distributes
health and beauty care products, general merchandise and specialty foods to
supermarkets, convenience stores, discount department stores and drugstores.
The primary market area for product distribution is the U.S., east of the
Rockies. In addition to the core procurement and distribution businesses,
Millbrook provides services such as product recommendations, planogramming,
retail shelf management and temporary field labor.
Competition
In all areas of operation, Millbrook faces strong competition both as to
price and service from national and regional grocery wholesalers, regional
specialty distributors, service merchandisers and self-warehousing by retailers
and buying organizations. Economies of scale, as well as price, product
variety, value-add services and marketing and technological support are
generally the principal competitive elements.
Intellectual Property
The principal trademarks and service marks of the Service Merchandising
segment are: VALU-STAR(R), BRIGHT IDEAS(R), and CARRIAGE TRADE(R). Millbrook
also owns other registered and unregistered trademarks and service marks and
similar rights. All of the principal marks are registered in the United States.
The United States federal registrations of these trademarks and service marks
have ten or twenty year terms, depending on date of registration; and 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 Service Merchandising 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
Water Products faces significant competition in both price and service in
all aspects of its business from several large local and regional competitors.
4
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). 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 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. Armor All 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, Armor All(R) Armor Plate(R) Paint Protectant
and Armor All(R) FlashBlack(TM) Tire Shine. 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. Subsequent to the acquisition,
Armor All expanded its home care line by introducing several products under the
Armor All brand name: Deck Protector, WaterProofing Sealer, Vinyl Siding Wash,
Painted Wood Wash and three Pressure Washing Formulas. 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 8, 11 and 23 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). Armor All(R) Tire Foam(TM) Protectant has four principal competitors
and Armor All(R) QuickSilver(TM) Wheel Cleaner has three principal competitors.
Armor All brand cleaner competes against many specialty automotive cleaner
products. Armor All brand wash
5
products and all of the Rain Dance and Rally brand products compete with
numerous wash, wax and polish products in the automotive aftermarket. The No.7
brand products compete with many wash and specialty cleaning products.
Competition in international markets varies by country.
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
Armor All WaterProofing Sealer each compete against products marketed under the
Thompson's, Olympic and Behr brand names. Armor All Vinyl Siding Wash and Armor
All Painted Wood Wash compete against multi-surface products marketed under the
Thompson's and Olympic brand names. The Armor All Power Washing Formulas compete
against products marketed by the manufacturers of power washer machines; Coleman
and Karcher are the principal brand names.
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), ARMOR PLATE(R),
FLASHBLACK(R), EXPRESS WASH(TM), 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 patent on ARMOR ALL Armor Plate Paint Protectant, RAIN
DANCE wax, and Armor All Spot & Wash concentrate, and has applied for patents on
ARMOR ALL QuickSilver Wheel Cleaner and ARMOR ALL Vinyl Siding Wash. In
addition, Armor All owns a patent on an E-Z DECK WASH product and has other
domestic and foreign E-Z DECK WASH patents pending. Armor All has the exclusive
right to use a supplier's patented formula to produce ARMOR ALL Deck Protector.
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
At March 31, 1996, the Company owned 55% of the outstanding common shares
of Armor All. 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%. In such
event, 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 11% of consolidated revenues in fiscal 1996 and 10% in
fiscal 1995; 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.
6
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
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 1996 and is not expected to be material in the next
fiscal year.
Employees -- At March 31, 1996, the Company employed approximately 11,300
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 37 and 38 of the Appendix to the Company's 1996
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 pages 29 and 30 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 currently is a defendant in six civil actions filed since late
1993 by retail 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. A fifth action, Salk Drug Co. v. Abbott Laboratories, was filed in
7
the District Court of Minnesota, Fourth Judicial District. Finally, an action
was filed this past year in California Superior Court for San Francisco County,
Horton v. Abbott Laboratories, et. al.. These actions were brought as purported
class actions on behalf of all other similarly-situated retail pharmacies. A
class has been certified in Feitelberg and in MDL 997. There are numerous other
defendants in these actions including pharmaceutical manufacturers, a
pharmaceutical mail order firm, and several other wholesale 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, plaintiffs allege that defendants' actions constitute price
fixing in violation of the Sherman Act. In the K-S Pharmacies, Inc. and Salk
Drug complaints, plaintiffs allege violation of Wisconsin and Minnesota
antitrust laws, respectively. 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. In
MDL 997, the court recently granted the motion for summary judgment filed by the
Company and other wholesaler defendants. In K-S Pharmacies, the court dismissed
the Company and other wholesaler defendants without prejudice and is considering
whether the dismissal will be with prejudice. The Company believes it has
meritorious defenses to the allegations made against it and intends to
vigorously defend itself in the remaining 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.
Primarily as a result of the operation of its former chemical businesses,
which were divested in fiscal 1987, the Company is involved in various matters
pursuant to environmental laws and regulations:
The Company has received claims and demands from governmental agencies relating
to investigative and remedial actions purportedly required to address
environmental conditions alleged to exist at five sites where the Company (or
entities acquired by the Company) formerly conducted operations; and the
Company, by administrative order or otherwise, has agreed to take certain
actions at those sites, including soil and groundwater remediation.
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
five sites is approximately $24 million, net of amounts which third parties have
agreed to pay in settlement or which the Company expects, based either on
agreements or nonrefundable contributions which are ongoing, to be contributed
by third parties. The $24 million is expected to be paid out between April 1996
and March 2028 and is included in the Company's recorded environmental reserves
at March 31, 1996.
In addition, the Company has been been designated as a potentially
responsible party ("PRP") by the U.S. Environmental Protection Agency 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 disposal of hazardous substances at 27
Superfund sites. 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. The Company's
estimated liability at these 27 Superfund sites is approximately $3 million, net
of amounts which third parties are expected or have agreed to contribute where
the Company believes it is probable that the third parties will fulfill their
agreements to pay. Settlements and costs paid by the Company in Superfund
8
matters to date have not been significant. The $3 million is included in the
Company's recorded environmental reserves at March 31, 1996, along with an
additional $1 million for miscellaneous other matters.
The potential costs to the Company related to environmental matters is
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.
Management believes, based on current knowledge and the advise of the
Company's counsel, that the outcome of the litigation and governmental
proceeding 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,
1996.
9
Executive Officers of the Registrant
The following table sets forth information concerning the executive
officers of the Registrant as of June 3, 1996. 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 59 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 - 21 years.
Mark A. Pulido 43 President and Chief Operating Officer and a Director
since May 20, 1996. Chief Executive Officer, Sandoz
Pharmaceuticals Corporation (January-April 1996) and
Chief Operating Officer (December 1994-December
1995). Other positions in the last six years, all
with Red Line Healthcare Corporation, a Sandoz
affiliate: Chairman of the Board (December 1994-
January 1996), Chairman, President and Chief
Executive Officer (March 1992-November 1994),
President and Chief Executive Officer (January 1992-
March 1992), and President and Chief Operating
Officer (February 1990-December 1991). Service with
the Company - 1 month.
William A. Armstrong 55 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 - 24 years.
Jon W. d'Alessio 49 Staff Vice President and Treasurer since September
1994. Formerly Staff Vice President and 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 - 18 years.
10
Name Age Position with Registrant and Business Experience
- ------------------- --- ------------------------------------------------
Michael T. Dalby 50 Vice President Strategic Planning since September
1994. Principal at McKinsey & Company, Inc., an
international management consulting firm (1988-1994).
Service with the Company - 1 year 9 months.
Kevin B. Ferrell 48 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 - 1 year 7 months.
John H. Hammergren 37 Vice President and President of McKesson Health
Systems since January 1996. President, Medical/
Surgical Division, Kendall Healthcare Products
Company (1993-1996) and Vice President and General
Manager (1991-1993). Service with the Company - 5
months.
Richard H. Hawkins 46 Vice President and Controller 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 - 12 years.
David L. Mahoney 41 Vice President since September 1994 and President,
Pharmaceutical Services Group since February 1996.
Formerly President of Healthcare Delivery Systems,
Inc., a wholly-owned subsidiary of the Company,
(September 1994-December 1995) and Vice President
Strategic Planning (July 1990-September 1994) of
McKesson. Service with the Company - 6 years.
Ivan D. Meyerson 51 Vice President and General Counsel since July 1994.
Formerly Vice President and General Counsel (January
1987-November 1994) of McKesson. Service with the
Company - 18 years.
Nancy A. Miller 52 Vice President and Corporate Secretary since July
1994. Formerly Vice President and Corporate Secretary
(December 1989-November 1994) of McKesson. Service
with the Company - 18 years.
11
Name Age Position with Registrant and Business Experience
- ------------------- --- ------------------------------------------------
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.
Service with the Company - 6 years.
Robert A. Sigel 42 Vice President since November 1995 and President of
Millbrook Distribution Services Inc., a wholly-owned
subsidiary of the Company, since November 1994.
Formerly President (1990-November 1994) of Millbrook
Distribution Services Inc., a wholly-owned subsidiary
of McKesson, and its predecessor companies. Service
with the Company - 10 years.
12
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 41 and
42 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,
1996 was 15,143.
(c) Dividends
Dividend information is included in Financial Note 17, "Quarterly Financial
Information" on pages 41 and 42 of the Appendix, which note is incorporated
herein by reference.
ITEM 6. SELECTED FINANCIAL DATA
Selected financial data is shown on pages 2 to 6 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 7 through 15
of the Appendix and is incorporated herein by reference.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
Financial Statements and Supplementary Data appear on pages 18 through 42
of the Appendix and are incorporated herein by reference.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
None.
13
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 1996 Proxy Statement (the "Proxy Statement").
Certain information relating to Executive Officers of the Company appears from
pages 10 through 12 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 1996 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.
14
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULE, AND REPORTS ON FORM 8-K
(a) Exhibits and Financial Statement Schedule
The following consolidated financial statements of the Company and the
Independent Auditors' Report are included on pages 17 through 42 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, 1996, 1995 and 1994
Consolidated Balance Sheets, March 31, 1996, 1995 and 1994
Statements of Consolidated Stockholders' Equity for the years
ended March 31, 1996, 1995 and 1994
Statements of Consolidated Cash Flows for the years ended
March 31, 1996, 1995 and 1994
Financial Notes
The following are included herein: Page
----
Independent Auditors' Report on Supplementary
Financial Schedule 17
Supplementary Financial Schedule: 18
II Consolidated Valuation and Qualifying Accounts
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 19 through 22.
(b) Reports on Form 8-K
None.
15
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 31, 1996 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 31, 1996 by the following persons on behalf
of the Registrant and in the capacities indicated:
/s/Alan Seelenfreund /s/Mark A. Pulido
- ----------------------------------------- --------------------------------
Alan Seelenfreund, Chairman and Mark A. Pulido, President and
Chief Executive Officer and Director Chief 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/Mary G.F. Bitterman /s/Tully M. Friedman
- ----------------------------------------- --------------------------------
Mary G.F. Bitterman, Director Tully M. Friedman, Director
/s/George M. Keller
- ----------------------------------------- --------------------------------
James R. Harvey, Director George M. Keller, Director
/s/John M. Pietruski
- ----------------------------------------- --------------------------------
John M. Pietruski, Director Carl E. Reichardt, Director
/s/Jane E. Shaw /s/Robert H. Waterman
- ----------------------------------------- --------------------------------
Jane E. Shaw, Director Robert H. Waterman, Jr., Director
16
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, 1996, 1995 and 1994, and for the years then
ended and have issued our report thereon dated May 13, 1996 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 1996 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 13, 1996
17
Schedule II
McKESSON CORPORATION - CONSOLIDATED
VALUATION AND QUALIFYING ACCOUNTS
FOR THE YEARS ENDED MARCH 31, 1996, 1995 AND 1994
(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 /(1)/ End of Period /(2)/
- -------------------------- --------- --------- ---------- ---------------- -------------------
AMOUNTS DEDUCTED FROM
ASSETS TO WHICH THEY APPLY:
Year Ended March 31, 1996
- ---------------------------
Allowances for doubtful
accounts receivable $43,584 $13,947 $ - $30,111 $27,420
Other reserves 16,044 13,749 - 13,271 16,522
------- ------- ------- ------- -------
$59,628 $27,696 $ - $43,382 $43,942
======= ======= ======= ======= =======
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 $59,628
======= ======= ======= ======= =======
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 $34,236
======= ======= ======= ======= =======
- ---------------------
NOTES: 1996 1995 1994
---- ---- ----
(1) Deductions:
Written off $30,696 $27,491 $17,704
Credited to other accounts 12,686 2,635 4,431
------- ------- -------
Total $43,382 $30,126 $22,135
======= ======= =======
(2) Amounts shown as deductions from:
Current receivables $43,047 $56,023 $30,826
Other assets 895 3,605 3,410
------- ------- -------
Total $43,942 $59,628 $34,236
======= ======= =======
18
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 Restated Certificate of Incorporation of the Company, as filed with
the Office of the Delaware Secretary of State on January 31, 1996.
3.2 Restated By-Laws of the Company, as amended through June 10, 1996.
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)).
4.1 Registrant agrees to furnish to the Commission upon request a copy of
each instrument with respect to issues of long-term debt of the
Registrant, the authorized principal amount of which does not exceed
10% of the total assets of the Registrant.
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)).
19
EXHIBIT INDEX
Exhibit
Number Description
------- -------------------------------------------------------------------
10.7 McKesson Corporation Supplemental PSIP (Exhibit 10.7 (2)).
10.8 McKesson Corporation Deferred Compensation Administration Plan
(Exhibit 10.8 (2)).
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 1994 Option Gain Deferral Plan (Exhibit 10.12
(3)).
10.12 McKesson Corporation 1985 Executives' Elective Deferred Compensation
Plan (Exhibit 10.13 (2)).
10.13 McKesson Corporation Management Deferred Compensation Plan (Exhibit
10.14 (2)).
10.14 McKesson Corporation 1984 Executive Benefit Retirement Plan (Exhibit
10.15 (2)).
10.15 McKesson Corporation 1988 Executive Survivor Benefits Plan (Exhibit
10.16 (2)).
10.16 McKesson Corporation Executive Medical Plan Summary (Exhibit 10.17
(3)).
10.17 McKesson Corporation 1988 Management Survivor Benefits Plan (Exhibit
10.18 (2)).
10.18 McKesson Corporation Severance Policy for Executive Employees
(Exhibit 10.19 (2)).
10.19 McKesson Corporation 1989 Management Incentive Plan (Amended and
Restated Effective April 26, 1995) (Exhibit B (6)).
10.20 McKesson Corporation 1981 Long-Term Incentive Plan (Exhibit 10.21
(2)).
10.21 McKesson Corporation 1973 Stock Purchase Plan (Exhibit 10.22 (2)).
10.22 Form of Termination Agreement by and between the Company and certain
designated Executive Officers (Exhibit 10.23 (8)).
10.23 Description of McKesson Corporation Retirement Program for
Nonemployee Directors (Exhibit 10.24 (8)).
10.24 Separation and Mutual General Release Agreement entered into as of
February 12, 1996 by and between the Company and a former Executive
Officer.
20
EXHIBIT INDEX
Exhibit
Number Description
------- ---------------------------------------------------------------------
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. (Exhibit
10.25(8))
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. (Exhibit 10.26(8))
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. (Exhibit 10.27 (8)).
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.
(Exhibit 10.28 (8)).
11 Computation of Earnings Per Common Share for the Five Years Ended
March 31, 1996.
13 1996 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
17, 1996 for the Annual Meeting of Stockholders to be held on July 31, 1996,
and incorporated by reference herein.
(8) Incorporated by reference to designated exhibit to the Company's Annual
Report on Form 10-K for the fiscal year ended March 31, 1995.
21
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 1994 Option Gain Deferral Plan.
7. McKesson Corporation 1985 Executives' Elective Deferred Compensation Plan.
8. McKesson Corporation Management Deferred Compensation Plan.
9. McKesson Corporation 1984 Executive Benefit Retirement Plan.
10. McKesson Corporation 1988 Executive Survivor Benefits Plan.
11. McKesson Corporation Executive Medical Plan Summary.
12. McKesson Corporation 1988 Management Survivor Benefits Plan.
13. McKesson Corporation Severance Policy for Executive Employees.
14. McKesson Corporation 1989 Management Incentive Plan (Amended and Restated
Effective April 26, 1995).
15. McKesson Corporation 1981 Long-Term Incentive Plan.
16. McKesson Corporation 1973 Stock Purchase Plan.
17. Form of Termination Agreement by and between the Company and certain
designated Executive Officers.
18. Description of McKesson Corporation Retirement Program for Nonemployee
Directors.
19. Separation and Mutual General Release Agreement dated as of February 12,
1996 by and between the Company and a former Executive Officer.
22