Noncontrolling Interests

At March 31, 2014, we owned approximately 75.4% of Celesio’s outstanding and fully diluted common shares and the noncontrolling interests in Celesio were presented within the permanent equity section of our condensed consolidated balance sheet. Noncontrolling interests are generally adjusted for the net income or loss and other comprehensive income attributable to the noncontrolling shareholders and any distribution to those shareholders.

In April 2014, we completed a tender offer and paid $32 million in cash to acquire approximately 1 million additional common shares of Celesio, which increased our ownership share by 0.5% and decreased noncontrolling interests by $35 million. In July 2014, Celesio paid dividends to the noncontrolling shareholders of Celesio relating to Celesio’s fiscal year ended December 31, 2013 totaling $16 million (€0.30 per common share).

On August 5, 2014, Celesio completed the purchase of the remaining 40% ownership interests in Oncoprod S.A., Sao Paulo (“Oncoprod”), a wholesaler for specialty pharmaceuticals in Brazil. Celesio previously held a 60% ownership interest in Oncoprod.

On December 2, 2014, the Agreement between Celesio and McKesson, through its wholly-owned subsidiary, McKesson Deutschland, became effective as previously discussed in Financial Note 2, “Business Combinations”. Prior to the effectiveness of the Agreement, the net income or loss from Celesio was attributed to the noncontrolling shareholders of Celesio based on their proportionate ownership interest in Celesio. Upon the effectiveness of the Agreement, McKesson became obligated to pay the $50 million Guaranteed Dividend to the noncontrolling shareholders of Celesio. As a result, during the third quarter of 2015, we recorded a $36 million net income attribution to increase the total attribution of net income to the noncontrolling shareholders of Celesio to $50 million for the first nine months of 2015. All amounts were recorded in our consolidated statement of operations within the caption, “Net Income Attributable to Noncontrolling Interests”, and the corresponding liability balance was recorded in other accrued liabilities on our condensed consolidated balance sheet.

In addition, because the noncontrolling interests in Celesio became redeemable as a result of a put right, the carrying value of noncontrolling interests related to Celesio of $1.5 billion was reclassified from “Total Equity” to “Redeemable Noncontrolling Interests” on our condensed consolidated balance sheet. The balance of redeemable noncontrolling interests will be reported at the greater of its carrying value or its maximum redemption value at each reporting date. The redemption value is the Put Amount adjusted for exchange rate fluctuations each period. At December 31, 2014, the carrying value of redeemable noncontrolling interests amounted to $1.5 billion, which exceeded the maximum redemption value of $1.4 billion.

Effective January 1, 2015, we are also obligated to pay an annual recurring compensation amount of €0.83 per Celesio share for shares that are not redeemed. The recurring compensation amount will be recognized ratably during the applicable annual period and recorded in our consolidated statement of operations within the caption, “Net Income Attributable to Noncontrolling Interests”.

Changes in noncontrolling interests and redeemable noncontrolling interests were as follows:



(In millions)	Noncontrolling Interests			Redeemable Noncontrolling Interests
Balance, March 31, 2014	$	1,796		$	—
Net income attributable to noncontrolling interests ⁽¹⁾	5			50
Other comprehensive loss	(164		)	(39		)
Purchase of noncontrolling interests	(60		)	—
Dividends paid to noncontrolling interest shareholders	(16		)	—
Reclassification from Total Equity to Redeemable Noncontrolling Interests ⁽²⁾	(1,500		)	1,500
Reclassification of guaranteed dividends to other accrued liabilities	—			(50		)
Other	11			—
Balance, December 31, 2014	$	72		$	1,461


(1)	Includes the Guaranteed Dividend of $50 million for Celesio’s fiscal year ended December 31, 2014


(2)	Includes net foreign currency losses of $138 million attributable to noncontrolling interests

The effect of changes in our ownership interests with noncontrolling interests on our equity of nil and $3 million were recorded as a net decrease to McKesson’s stockholders’ paid-in capital during the third quarter and first nine months of 2015. Net income attributable to McKesson and transfers from noncontrolling interests amounted to $472 million and $1,341 million during the third quarter and first nine months of 2015.