-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, ToKo8TMJ7fDpb970sE9lqfLU08s/3ZPnoB5Zkqsz2Z3bOrWApWhPR6d28qJCyrLx PZb/EmaBPhkVlLQgsFI4cg== 0000950149-05-000017.txt : 20050127 0000950149-05-000017.hdr.sgml : 20050127 20050127161748 ACCESSION NUMBER: 0000950149-05-000017 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 20050127 ITEM INFORMATION: Results of Operations and Financial Condition ITEM INFORMATION: Financial Statements and Exhibits FILED AS OF DATE: 20050127 DATE AS OF CHANGE: 20050127 FILER: COMPANY DATA: COMPANY CONFORMED NAME: MCKESSON CORP CENTRAL INDEX KEY: 0000927653 STANDARD INDUSTRIAL CLASSIFICATION: WHOLESALE-DRUGS PROPRIETARIES & DRUGGISTS' SUNDRIES [5122] IRS NUMBER: 943207296 STATE OF INCORPORATION: DE FISCAL YEAR END: 0331 FILING VALUES: FORM TYPE: 8-K SEC ACT: 1934 Act SEC FILE NUMBER: 001-13252 FILM NUMBER: 05554070 BUSINESS ADDRESS: STREET 1: ONE POST ST STREET 2: MCKESSON PLAZA CITY: SAN FRANCISCO STATE: CA ZIP: 94104 BUSINESS PHONE: 4159838300 MAIL ADDRESS: STREET 1: ONE POST ST CITY: SAN FRANCISCO STATE: CA ZIP: 94104 FORMER COMPANY: FORMER CONFORMED NAME: MCKESSON HBOC INC DATE OF NAME CHANGE: 19990115 FORMER COMPANY: FORMER CONFORMED NAME: MCKESSON CORP DATE OF NAME CHANGE: 19950209 FORMER COMPANY: FORMER CONFORMED NAME: SP VENTURES INC DATE OF NAME CHANGE: 19940728 8-K 1 f04929e8vk.htm FORM 8-K e8vk
 



SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549


FORM 8-K

CURRENT REPORT
Pursuant to Section 13 or 15 (d) of
The Securities Exchange Act of 1934

Date of Report: January 27, 2005
(Date of earliest event reported)

McKesson Corporation

(Exact name of registrant as specified in its charter)

         
Delaware   1-13252   94-3207296
         
(State of
incorporation)
  (Commission
File Number)
  (IRS Employer
Identification No.)
     
McKesson Plaza, One Post Street, San Francisco, CA   94104
     
(Address of principal executive offices)   (Zip Code)

(415) 983-8300


(Registrant’s telephone number, including area code)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

o Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

o Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

o Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

o Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 40.13e-4(c))



 


 

Item 2.02 Results of Operations and Financial Condition.

     On January 27, 2005, McKesson Corporation (the “Company”) announced via press release the Company’s preliminary results for its third quarter of fiscal year 2005, ended December 31, 2004. A copy of the Company’s press release is attached hereto as Exhibit 99.1. This Form 8-K and the attached exhibit are provided under Item 2.02 of Form 8-K and are furnished to, but not filed with, the Securities and Exchange Commission.

Item 9.01 Financial Statements, Pro Forma Financial Information and Exhibits.

     (c)     Exhibits

  99.1   Press Release issued by the Company, dated January 27, 2005, reporting the Company’s third quarter fiscal year 2005 preliminary results for the period ended December 31, 2004.

2


 

SIGNATURES

     Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
         
  McKesson Corporation
 
 
Date: January 27, 2005  By:   Jeffrey C. Campbell    
    Jeffrey C. Campbell    
    Executive Vice President, Chief Financial Officer
and Principal Financial Officer
 
 

3

EX-99.1 2 f04929exv99w1.htm PRESS RELEASE DATED JANUARY 27, 2005 exv99w1
 

Exhibit 99.1

(logo)

McKESSON REPORTS FISCAL 2005 THIRD QUARTER RESULTS

•   Revenues of $20.8 billion, up 14%.
•   Net loss of $665 million or $2.26 per share including $810 million after-tax charge for securities litigation.
•   Excluding the securities litigation charge, net income of $145 million or 49 cents per diluted share, up 20%.

     SAN FRANCISCO, January 27, 2005 – McKesson Corporation (NYSE: MCK) today reported that revenues for the third fiscal quarter ended December 31, 2004, were $20.8 billion, an increase of 14% from $18.2 billion in the third quarter a year ago. For the quarter, McKesson had a net loss of $665 million or $2.26 per share including the previously announced after-tax charge of $810 million for settling the company’s consolidated securities class action and reserves for remaining related cases.

     Not including the securities litigation charge, McKesson had net income of $145 million or 49 cents per diluted share, an increase of 20%. Net income in the third quarter a year ago was $120 million or 41 cents per share.

     “We are very pleased with this quarter’s 20% growth in earnings per share, excluding the impact of our securities litigation charge,” said John H. Hammergren, chairman and chief executive officer. “We are also pleased with the continued improvement in our cash flow, which year-to-date is up strongly versus last year.”

     “Earlier this month, we announced a settlement agreement that represents a major positive step in resolving the securities litigation and removing the uncertainty that has been an overhang on the company for the past six years. Given our strong balance sheet and increasing cash flow, we expect to have no difficulty financing the settlement as payment becomes due later this calendar year. We look forward to the increased financial flexibility we now have to continue to execute our strategy for creating shareholder value.”

     A discussion of results by business segment follows.

 


 

Pharmaceutical Solutions

     Pharmaceutical Solutions revenues including warehouse sales were up 14% to $19.7 billion from the third quarter a year ago. U.S. Pharmaceutical Solutions revenues excluding warehouse sales were up 19% and warehouse sales were up 6% in the quarter, despite having one less selling day compared to a year ago. Canadian revenues were up 17%, including a positive currency impact of 9%.

     Operating profit was up 19%, to $244.7 million from $205.4 million the prior year. The third quarter this year included a $20 million LIFO credit.

     “Pharmaceutical Solutions revenue growth was again strong, reflecting new customer agreements in the U.S. that took effect earlier in the year, and continued growth in Canada,” said Hammergren. “McKesson is the largest pharmaceutical distributor in North America, with leading positions in the United States, Canada and Mexico. We believe we are extremely well-positioned to take advantage of the demographics driving increasing drug utilization in this important region. In addition, within each geography, we are well-balanced in terms of customer categories and product mix.”

     ”Pharmaceutical price increases played an important role in our third-quarter Pharmaceutical Solutions operating profit. The magnitude and timing of these increases returned to their historical ranges in the latter portion of the quarter. This trend has continued in January.”

     “While we are pleased with the trend and this quarter’s results, our goal is to reach new agreements with pharmaceutical manufacturers that improve the visibility and predictability of our economics while maintaining appropriate compensation. I am pleased to report that we continue to make significant progress in our discussions. We are in the process of finalizing new agreements that meet these objectives with more than half of our largest manufacturing partners, and expect to meet our goal of having a significant majority of our volume covered by these new agreements by fiscal year end. On the customer side, we remain focused on meeting our customers’ needs through prime vendor relationships that can be expanded over time to include additional value-adding products and services.”

 


 

Medical-Surgical Solutions

     Medical-Surgical Solutions revenues were up 3% to $736 million compared to the third quarter a year ago. Operating profit of $24.7 million was down 5% from $25.9 million a year ago.

     “In Medical-Surgical Solutions, we again achieved solid growth among our alternate site customers,” Hammergren said. “However, the lack of flu vaccine supply this season hampered sales to physician offices and reduced our operating profit.”

Provider Technologies

     Provider Technologies revenues increased 13% in the third quarter to $332 million. Software revenues were up 41% to $66 million, driven primarily by an increase in automation revenues and increased implementations of clinical software solutions. Operating profit of $27.6 million was up from $2.6 million in the third quarter a year ago, which included a $20 million increase in reserves for international contracts.

     “In Provider Technologies, demand remains strong for our clinical solutions and we are beginning to see acceleration in the pace of our implementations,” continued Hammergren. “Since announcing in early January that 100 physicians at the Duke University Heart Center began using Horizon Expert Orders, the implementation has been expanded in the last 30 days to cover the medical, surgical, pulmonary and ICU units, with 96% of orders entered by physicians using computers. An aggressive hospital-wide rollout is now underway. Our success with this complex implementation demonstrates the viability of this product and provides valuable experience that can be applied to accelerate other installations in earlier stages of implementation.”

Fiscal 2005 Expectations

     “While we are making excellent progress securing more predictable compensation from manufacturers, our earnings through the end of the fiscal year continue to be somewhat dependent on the level and timing of price increases, which to date in the quarter have met our expectations. Assuming that the timing and magnitude of pharmaceutical price increases remain within their historical ranges for the balance of our fiscal year, we are narrowing our guidance for Fiscal 2005 diluted earnings per share excluding the impact of the securities litigation charge to $2.05 to $2.15 from our

 


 

     previous guidance of $2.00 to $2.20. We continue to expect to generate significantly better operating cash flow than last year’s $563 million,” concluded Hammergren.

Company Highlights

     The quarter included the following highlights:

•   McKesson signed a two-year renewal of its prime vendor agreement with Wal-Mart Stores, Inc., the largest retailer in the world. The agreement includes repackaging services though McKesson’s RxPak business.

•   Sales of generic pharmaceuticals were up 39% in the third quarter compared to a year ago, driven by new product launches and increased numbers of customers in McKesson proprietary programs.

•   McKesson now has prime vendor relationships with 6 of the 10 largest companies providing pharmaceuticals by mail order to their covered patients, and also the Department of Veterans Affairs, which operates sizable mail order operations.

•   After the close of the quarter, McKesson increased its ownership of Nadro, S.A., a leading Mexican pharmaceutical distributor, from 22% to approximately 48%. McKesson will continue to report its share of Nadro earnings in Pharmaceutical Solutions earnings.

•   The Centers for Medicare & Medicaid Services awarded McKesson a Chronic Care Improvement Program to provide disease management services to Mississippi Medicare fee-for-service beneficiaries. McKesson was one of nine companies selected for an award made through Section 721 of the Medicare Modernization Act of 2003.

•   McKesson Medical-Surgical signed a long-term distribution agreement with Canadian flu vaccine manufacturer ID Biomedical Corporation. Under the terms of the agreement, McKesson will be one of three distributor/wholesalers to supply Fluviral influenza vaccine in the United States, once cleared by the U.S. Food & Drug Administration (FDA). ID Biomedical has submitted its application to conduct clinical trials of its vaccine in the United States in 2005.

 


 

•   In the Top 20: 2004 Best in KLAS year-end report, 12 McKesson products were ranked among the top three for their categories, more than any other company. Two McKesson solutions were named “Best in KLAS” for their No. 1 rankings, while two others were named Specialty Niche Category Leaders. The annual report covered a 13-month period ended in late 2004.

•   Cash flow from operations for the first nine months was $534 million compared to a use of $242 million for the first nine months a year ago. McKesson’s net debt to net capital ratio was 8% at December 31, 2004.

•   On January 12, McKesson announced that it reached an agreement to settle the consolidated securities class action arising out of a 1999 financial restatement pending against it and its subsidiary the former HBO & Co., Inc. Under the agreement, McKesson would pay the class members a total of $960 million in cash. Also, McKesson established additional reserves of $240 million for remaining related cases.

Risk Factors

     Except for historical information contained in this press release, matters discussed may constitute “forward-looking statements”, within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934, that involve risks and uncertainties that could cause actual results to differ materially from those projected, anticipated or implied. These statements may be identified by their use of forward-looking terminology such as “believes”, “expects”, “anticipates”, “may”, “will”, “should”, “seeks”, “approximates”, “intends”, “plans”, “estimates” or the negative of these words or other comparable terminology. The most significant of these risks and uncertainties are described in the company’s Form 10-K, Form 10-Q and Form 8-K reports filed with the Securities and Exchange Commission and include, but are not limited to: the resolution or outcome of pending securities litigation regarding the 1999 restatement of our historical financial statements; the changing U.S. healthcare environment, including the impact of current and potential future mandated benefits; changes in private and governmental reimbursement or in the delivery systems for healthcare products and services; governmental efforts to regulate the pharmaceutical supply chain; changes in pharmaceutical and medical-surgical

 


 

     manufacturers’ pricing, selling, inventory, distribution or supply policies or practices; substantial defaults in payment or a material reduction in purchases by large customers; challenges in integrating and implementing the company’s software and software-related system products, or the slowing or deferral of demand for these products; the company’s ability to successfully identify, consummate and integrate strategic acquisitions; changes in generally accepted accounting principles (GAAP); tax legislation initiatives; foreign currency fluctuations; and general economic conditions. The reader should not place undue reliance on forward-looking statements, which speak only as of the date they are made. The company assumes no obligation to update or revise any such statements, whether as a result of new information or otherwise.

     A Webcast of the company’s regular conference call to review financial results with the financial community is available through McKesson’s website, www.mckesson.com, live at 5 PM ET today and on replay afterwards. Shareholders are encouraged to review SEC filings and more information about McKesson, all of which are located on the company’s website.

About McKesson

     McKesson Corporation (NYSE: MCK) is a Fortune 16 healthcare services and information technology company dedicated to helping its customers deliver high-quality healthcare by reducing costs, streamlining processes and improving the quality and safety of patient care. Over the course of its 170-year history, McKesson has grown by providing pharmaceutical and medical-surgical supply management across the spectrum of care; healthcare information technology for hospitals, physicians, homecare and payors; hospital and retail pharmacy automation; and services for manufacturers and payors designed to improve outcomes for patients. For more information, visit us at www.mckesson.com.

###

CONTACT:

          Larry Kurtz, 415-983-8418
          (Investors and Financial Press)
          larry.kurtz@mckesson.com
          Kate Rohrbach 415-983-9023
          (Business and Trade Media)
          kate.rohrbach@mckesson.com

 


 

Schedule I

McKESSON CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(unaudited)
(in millions except per share amounts)

                                                 
    Quarter Ended December 31,     Nine Months Ended December 31,  
    FY05     FY04     Chg.     FY05     FY04     Chg.  

Revenues

  $ 20,781.9     $ 18,231.9       14 %   $ 59,902.8     $ 51,566.2       16 %

Cost of sales

    19,941.3       17,476.4       14       57,475.2       49,212.5       17  
 
                                       
Gross profit
    840.6       755.5       11       2,427.6       2,353.7       3  

Operating expenses

    606.0       571.0       6       1,803.4       1,690.5       7  
Securities litigation charge
    1,200.0                   1,200.0              
 
                                       
 
    1,806.0       571.0             3,003.4       1,690.5        
 
                                       
Operating income (loss)
    (965.4 )     184.5             (575.8 )     663.2        

Interest expense

    (30.6 )     (30.2 )     1       (90.4 )     (90.0 )      

Other income

    15.8       9.7       63       45.7       36.7       25  
 
                                       

Income (loss) before income taxes

    (980.2 )     164.0             (620.5 )     609.9        

Income taxes (3)

    314.8       (43.8 )           204.8       (177.6 )      
 
                                       

Net income (loss)

  $ (665.4 )   $ 120.2           $ (415.7 )   $ 432.3        
 
                                       

Earnings (loss) per common share

                                               
Diluted (1) (2) (4)
  $ (2.26 )   $ 0.41           $ (1.42 )   $ 1.46        
Basic
  $ (2.26 )   $ 0.41           $ (1.42 )   $ 1.49        

Weighted average shares outstanding

                                               
Diluted (1) (4)
    293.8       298.7       (2 )%     292.7       299.0       (2 )%
Basic
    293.8       290.2       1 %     292.7       290.0       1 %

(1)   For the quarter and nine months ended December 31, 2004, potentially dilutive securities have been excluded from the per share computations due to their antidilutive effect.
 
(2)   For the quarter and nine months ended December 31, 2003, interest expense, net of related income taxes, of $1.5 million and $4.6 million has been added to net income for purposes of calculating diluted earnings per share. This adjustment reflects the impact of the Company’s potentially dilutive obligations.
 
(3)   Includes $390 million estimated income tax benefit for the $1.2 billion securities litigation charge.
 
(4)   Diluted earnings per share, excluding the securities litigation charge, is as follows:

                                                 
    Quarter Ended December 31,     Nine Months Ended December 31,  
    FY05     FY04     Chg.     FY05     FY04     Chg.  
Net income (loss) — as reported
  $ (665.4 )   $ 120.2       %   $ (415.7 )   $ 432.3       %
 
                                       
Exclude: Securities litigation charge
    (1,200.0 )                 (1,200.0 )            
           Estimated income tax benefit
    390.0                   390.0              
 
                                       
 
    (810.0 )                 (810.0 )            
 
                                       

Net income, excluding securities litigation charge

  $ 144.6     $ 120.2       20 %   $ 394.3     $ 432.3       (9 )%
 
                                       
Diluted earnings per common share, excluding securities litigation charge *
  $ 0.49     $ 0.41       20 %   $ 1.33     $ 1.46       (9 )%
Shares on which diluted earnings per common share were based
    300.5       298.7       1 %     300.1       299.0       %

*   For the quarter and nine months ended December 31, 2004 and 2003, interest expense, net of related income taxes, of $1.5 million and $4.6 million has been added to net income, excluding the securities litigation charge, for purposes of calculating diluted earnings per share. This calculation also includes the impact of dilutive securities (stock options, convertible junior subordinated debentures and restricted stock).

 


 

Schedule II

McKESSON CORPORATION
CONDENSED CONSOLIDATED INCOME INFORMATION BY BUSINESS SEGMENT
(unaudited)
(in millions)

                                                 
    Quarter Ended December 31,     Nine Months Ended December 31,  
    FY05     FY04     Chg.     FY05     FY04     Chg.  
REVENUES
                                               
Pharmaceutical Solutions
                                               
U.S. Healthcare direct distribution & services
  $ 12,130.3     $ 10,197.4       19 %   $ 34,779.5     $ 29,187.4       19 %
U.S. Healthcare sales to customers’ warehouses
    6,179.5       5,827.1       6       18,116.8       16,049.1       13  
 
                                       
Subtotal
    18,309.8       16,024.5       14       52,896.3       45,236.5       17  
Canada distribution & services
    1,404.7       1,199.6       17       3,914.7       3,313.6       18  
 
                                       
Total Pharmaceutical Solutions
    19,714.5       17,224.1       14       56,811.0       48,550.1       17  
 
                                       

Medical-Surgical Solutions

    735.9       714.0       3       2,156.6       2,140.2       1  
 
                                       

Provider Technologies

                                               
Software & software systems
    65.9       46.6       41       166.5       159.7       4  
Services
    235.1       220.7       7       685.8       641.6       7  
Hardware
    30.5       26.5       15       82.9       74.6       11  
 
                                       
Total Provider Technologies
    331.5       293.8       13       935.2       875.9       7  
 
                                       
Total
  $ 20,781.9     $ 18,231.9       14     $ 59,902.8     $ 51,566.2       16  
 
                                       

GROSS PROFIT

                                               
Pharmaceutical Solutions
  $ 520.2     $ 480.9       8     $ 1,512.4     $ 1,508.0        
Medical-Surgical Solutions
    162.2       153.2       6       482.8       450.5       7  
Provider Technologies
    158.2       121.4       30       432.4       395.2       9  
 
                                       
Gross profit
  $ 840.6     $ 755.5       11     $ 2,427.6     $ 2,353.7       3  
 
                                       

OPERATING EXPENSES

                                               
Pharmaceutical Solutions
  $ 281.2     $ 281.2           $ 843.5     $ 834.3       1  
Medical-Surgical Solutions
    138.2       127.8       8       414.4       375.8       10  
Provider Technologies
    132.5       121.1       9       377.1       359.3       5  
Corporate
    54.1       40.9       32       168.4       121.1       39  
 
                                       
Subtotal
    606.0       571.0       6       1,803.4       1,690.5       7  
Securities litigation charge
    1,200.0                   1,200.0              
 
                                       
Operating expenses
  $ 1,806.0     $ 571.0       216     $ 3,003.4     $ 1,690.5       78  
 
                                       

OTHER INCOME

                                               
Pharmaceutical Solutions
  $ 5.7     $ 5.7           $ 17.0     $ 18.4       (8 )
Medical-Surgical Solutions
    0.7       0.5       40       2.4       2.3       4  
Provider Technologies
    1.9       2.3       (17 )     5.8       8.6       (33 )
Corporate
    7.5       1.2       525       20.5       7.4       177  
 
                                       
Other income
  $ 15.8     $ 9.7       63     $ 45.7     $ 36.7       25  
 
                                       

OPERATING PROFIT

                                               
Pharmaceutical Solutions
  $ 244.7     $ 205.4       19     $ 685.9     $ 692.1       (1 )
Medical-Surgical Solutions
    24.7       25.9       (5 )     70.8       77.0       (8 )
Provider Technologies
    27.6       2.6       962       61.1       44.5       37  
 
                                       
Operating profit
    297.0       233.9       27       817.8       813.6        
Corporate
    (1,246.6 )     (39.7 )           (1,347.9 )     (113.7 )      
 
                                       

Income (loss) before interest expense and income taxes

  $ (949.6 )   $ 194.2           $ (530.1 )   $ 699.9        
 
                                       

STATISTICS

                                               
Operating profit as a % of revenues
                                               
Pharmaceutical Solutions
    1.24 %     1.19 %     5 bp     1.21 %     1.43 %     (22 )bp
Medical-Surgical Solutions
    3.36 %     3.63 %     (27 )     3.28 %     3.60 %     (32 )
Provider Technologies
    8.33 %     0.88 %     745       6.53 %     5.08 %     145  

Return on Stockholders’ Equity (1)

    (3.9 %)     13.1 %                              

(1)   Ratio is computed as the sum of net income (loss) for the last four quarters, divided by the average of stockholders’ equity for the last five quarters.

 


 

Schedule III

McKESSON CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
(unaudited)
(in millions)

                 
    December 31,     March 31,  
    2004     2004  

ASSETS

               
Current Assets
               
Cash and cash equivalents
  $ 1,032.9     $ 708.0  
Marketable securities
    8.9       9.8  
Receivables, net
    5,615.6       5,418.8  
Inventories
    8,316.7       6,735.1  
Prepaid expenses and other
    335.3       132.5  
 
           
Total
    15,309.4       13,004.2  
Property, Plant and Equipment, net
    612.0       599.9  
Capitalized Software Held for Sale
    130.1       129.4  
Notes Receivable
    160.1       172.2  
Goodwill and Other Intangibles
    1,514.0       1,490.2  
Other Assets
    958.6       844.3  
 
           
Total Assets
  $ 18,684.2     $ 16,240.2  
 
           
LIABILITIES AND STOCKHOLDERS’ EQUITY
               
Current Liabilities
               
Drafts and accounts payable
  $ 8,821.7     $ 7,362.1  
Deferred revenue
    610.7       503.2  
Current portion of long-term debt
    259.9       274.8  
Securities litigation
    1,200.0        
Other
    1,155.8       1,276.2  
 
           
Total
    12,048.1       9,416.3  
Postretirement Obligations and Other Noncurrent Liabilities
    509.6       448.8  
Long-Term Debt
    1,201.8       1,209.8  
Stockholders’ Equity
    4,924.7       5,165.3  
 
           
Total Liabilities and Stockholders’ Equity
  $ 18,684.2     $ 16,240.2  
 
           

 


 

Schedule IV

McKESSON CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(unaudited)
(in millions)

                 
    Nine Months Ended December 31,  
    FY05     FY04  
OPERATING ACTIVITIES
               
Net income (loss)
  $ (415.7 )   $ 432.3  
Adjustments to reconcile to net cash provided (used) by operating activities:
               
Depreciation
    83.1       73.8  
Amortization
    102.7       91.5  
Provision for bad debts
    17.5       54.3  
Securities litigation charge, net of deferred tax benefit
    810.0        
Deferred taxes on income
    32.0       139.2  
Other non-cash items
    (6.0 )     (21.4 )
 
           
Total
    623.6       769.7  
 
           
Effects of Changes In:
               
Receivables
    (220.6 )     (710.3 )
Inventories
    (1,534.6 )     (1,047.2 )
Accounts and drafts payable
    1,396.2       617.9  
Deferred revenue
    106.5       81.7  
Taxes
    57.1       (1.6 )
Proceeds from sale of notes receivable
    59.3       42.2  
Other
    46.6       5.5  
 
           
Total
    (89.5 )     (1,011.8 )
 
           
Net cash provided (used) by operating activities
    534.1       (242.1 )
 
           

INVESTING ACTIVITIES

               
Property acquisitions
    (90.9 )     (71.6 )
Capitalized software expenditures
    (93.2 )     (131.0 )
Acquisitions of businesses, less cash and cash equivalents acquired
    (85.7 )     (45.6 )
Proceeds from sale of business
    12.3        
Other
    (22.8 )     16.4  
 
           
Net cash used by investing activities
    (280.3 )     (231.8 )
 
           

FINANCING ACTIVITIES

               
Proceeds from issuance of debt
          217.6  
Repayment of debt
    (17.6 )     (10.7 )
Capital stock transactions:
               
Issuances
    117.1       81.8  
Share repurchases
          (115.3 )
ESOP notes and guarantees
    16.4       9.1  
Dividends paid
    (52.7 )     (52.3 )
Other
    7.9       22.2  
 
           
Net cash provided by financing activities
    71.1       152.4  
 
           

Net increase (decrease) in cash and cash equivalents

    324.9       (321.5 )
Cash and cash equivalents at beginning of period
    708.0       522.0  
 
           
Cash and cash equivalents at end of period
  $ 1,032.9     $ 200.5  
 
           

 

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