Segment Information

9 Months Ended

Dec. 31, 2013

Segment Reporting [Abstract]

Segment Information

Segment Information

We report our operations in two operating segments: McKesson Distribution Solutions and McKesson Technology Solutions. The factors for determining the reportable segments included the manner in which management evaluates the performance of the Company combined with the nature of the individual business activities. We evaluate the performance of our operating segments on a number of measures, including operating profit before interest expense, income taxes and results from discontinued operations.

Financial information relating to our reportable operating segments and reconciliations to the condensed consolidated totals is as follows:

	Quarter Ended December 31,						Nine Months Ended December 31,
(In millions)	2013			2012			2013			2012
Revenues
Distribution Solutions (1)
Direct distribution & services	$	24,859		$	22,386		$	71,620		$	64,625
Sales to customers’ warehouses	4,416			4,468			13,204			14,621
Total U.S. pharmaceutical distribution & services	29,275			26,854			84,824			79,246
Canada pharmaceutical distribution & services	2,785			2,633			7,984			7,559
Medical-Surgical distribution & services	1,462			874			4,286			2,542
Total Distribution Solutions	33,522			30,361			97,094			89,347
Technology Solutions
Services	658			598			1,975			1,777
Software	107			120			338			357
Hardware	19			20			61			72
Total Technology Solutions	784			738			2,374			2,206
Total Revenues	$	34,306		$	31,099		$	99,468		$	91,553
Operating profit
Distribution Solutions (2) (3) (4) (5)	$	552		$	525		$	1,856		$	1,646
Technology Solutions (6)	37			92			269			274
Total	589			617			2,125			1,920
Corporate Expenses, Net (7)	(112		)	(109		)	(307		)	(212		)
Interest Expense	(69		)	(59		)	(187		)	(170		)
Income Before Income Taxes from Continuing Operations	$	408		$	449		$	1,631		$	1,538

(1) Revenues derived from services represent less than 2% of this segment’s total revenues.

(2) Operating profit for the third quarter of 2014 includes AWP litigation charges of $18 million and for the first nine months of 2014 and 2013 includes AWP litigation charges of $68 million and $60 million, which were recorded in operating expenses.

(3) Operating profit for the third quarter and first nine months of 2014 includes last-in-first-out (“LIFO”) charges of $142 million and $186 million and, for the third quarter and first nine months of 2013 includes LIFO charges of $2 million and $5 million, which were recorded in cost of sales.

(4) Operating profit for the third quarter and first nine months of 2014 includes the receipt of $27 million and $34 million and for the third quarter and first nine months of fiscal year 2013 the receipt of $8 million and $27 million representing our share of settlements of antitrust class action lawsuits brought against drug manufacturers, which was recorded as a reduction to cost of sales.

(5) Operating profit for the third quarter and first nine months of 2013 includes a $40 million charge for a legal dispute in our Canadian business, which was recorded in operating expenses.

(6) Technology Solutions segment results for the third quarter of 2014 include product alignment charges, integration-related expenses and reduction-in-workforce severance charges totaling $57 million, of which $34 million was recorded in cost of sales and $23 million was recorded in operating expenses. This segment’s results for the first nine months of 2014 include product alignment charges, integration-related expenses and reduction-in-workforce severance charges totaling $60 million, of which $34 million was recorded in cost of sales and $26 million was recorded in operating expenses.

(7) Corporate expenses, net for the third quarter and first nine months of 2014 include $25 million of acquisition-related expenses and for the first nine months of 2013 are net of an $81 million pre-tax gain on business combination related to the acquisition of the remaining 50% ownership interest in our corporate headquarters building.