x
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ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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Delaware
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94-3207296
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(State or other jurisdiction of incorporation or organization)
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(I.R.S. Employer Identification No.)
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One Post Street, San Francisco, California
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94104
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(Address of principal executive offices)
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(Zip Code)
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(Title of each class)
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(Name of each exchange on which registered)
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Common stock, $0.01 par value
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New York Stock Exchange
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Large accelerated filer
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x
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Accelerated filer
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¨
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Non-accelerated filer
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¨
(Do not check if a smaller reporting company)
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Smaller reporting company
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¨
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Item
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Page
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1.
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1A.
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1B.
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2.
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3.
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4.
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5.
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6.
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7.
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7A.
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8.
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9.
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9A.
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9B.
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10.
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11.
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12.
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13.
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14.
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15.
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Item 1.
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Business.
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Years Ended March 31,
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||||||||||||||||
(Dollars in billions)
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2016
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2015
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2014
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||||||||||||
Distribution Solutions
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$
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188.0
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98
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%
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$
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176.0
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98
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%
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$
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134.1
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98
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%
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Technology Solutions
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2.9
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2
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3.1
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2
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3.3
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2
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Total
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$
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190.9
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100
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%
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$
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179.1
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100
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%
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$
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137.4
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100
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%
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•
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Central Fill
SM
— Prescription refill service that enables pharmacies to more quickly refill prescriptions remotely, more accurately and at a lower cost, while reducing inventory levels and improving customer service.
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•
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Redistribution Centers — Two facilities totaling over 750,000 square feet that offer access to inventory for single source warehouse purchasing, including pharmaceuticals and biologics. These distribution centers also provide the foundation for a two-tiered distribution network that supports best-in-class direct store delivery.
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•
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McKesson SynerGx® — Generic pharmaceutical purchasing program and inventory management that helps pharmacies maximize their cost savings with a broad selection of generic drugs, competitive pricing and one-stop shopping.
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•
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RxPak
SM
— Bulk-to-bottle repackaging service that leverages our purchasing scale and supplier relationships to provide pharmaceuticals at reduced prices, help increase inventory turns and reduce working capital investment.
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•
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Inventory Management — An integrated solution comprising forecasting software and automated replenishment technologies that reduce inventory-carrying costs.
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•
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ExpressRx Track™ — Pharmacy automation solution featuring state-of-the-art robotics, upgraded imaging and expanded vial capabilities, and industry-leading speed and accuracy in a radically small footprint.
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•
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Health Mart® — Health Mart® is a national network of more than 4,600 independently-owned pharmacies and is one of the industry’s most comprehensive pharmacy franchise programs. Health Mart® provides franchisees support for managed care contracting, branding and local marketing solutions, the Health Mart private label line of products, merchandising solutions and programs for enhanced patient support.
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•
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AccessHealth® — Comprehensive managed care and reconciliation assistance services that help independent pharmacies save time, access competitive reimbursement rates and improve cash flow.
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•
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McKesson Reimbursement Advantage
SM
(“MRA”) — MRA is one of the industry’s most comprehensive reimbursement optimization packages, comprising financial services (automated claim resubmission), analytic services and customer care.
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•
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McKesson OneStop Generics® — Generic pharmaceutical purchasing program that helps pharmacies maximize their cost savings with a broad selection of generic drugs, competitive pricing and one-stop shopping.
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•
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Sunmark® — Complete line of more than 600 products that provide retail independent pharmacies with value-priced alternatives to national brands.
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•
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FrontEdge™ — Strategic planning, merchandising and price maintenance program that helps independent pharmacies maximize store profitability.
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•
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McKesson Sponsored Clinical Services (SCS) Network — Access to patient-support services that allow pharmacists to earn service fees and to develop stronger patient relationships.
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•
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Fulfill-Rx
SM
— Ordering and inventory management system that empowers hospitals to optimize the often complicated and disjointed processes related to unit-based cabinet replenishment and inventory management.
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•
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Asset Management — Award-winning inventory optimization and purchasing management program that helps institutional providers lower costs while ensuring product availability.
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•
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SKY Packaging — Blister-format packaging containing the most widely prescribed dosages and strengths in generic oral-solid medications. SKY Packaging enables acute care, long-term care and institutional pharmacies to provide cost-effective, uniform packaging.
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•
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McKesson Plasma and BioLogics — A full portfolio of plasma-derivatives and biologic products.
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•
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McKesson OneStop Generics® — Described above.
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•
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EnterpriseRx® — A Software as a Service (SaaS) pharmacy management system, that allows large retail chain, health system and retail independent pharmacies to meet demand for prescriptions while maximizing profits and optimizing operations.
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•
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Pharmaserv® — A fully integrated, server-based pharmacy management system that gives the customer complete control of their pharmacy data.
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•
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PharmacyRx — A cost-effective, SaaS-based pharmacy management system that can be installed quickly and makes processing prescriptions fast and easy.
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•
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McKesson 340B Solution Suite and Macro Helix® — Software as a Service (SaaS)-based solutions that help providers manage, track and report on medication replenishment associated with the federal 340B Drug Pricing Program.
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•
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Supplylogix® — Develops and delivers practical supply chain intelligence solutions to pharmacy and related businesses and provides a wide array of services to healthcare providers nationwide.
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•
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InterQual® Criteria for clinical decision support and utilization management;
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•
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Clear Coverage
TM
for point-of-care utilization management, coverage determination and network compliance;
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•
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Claims payment solutions to facilitate accurate and efficient medical claim payments;
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•
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Business intelligence tools for measuring, reporting and improving clinical and financial performance;
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•
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Network management tools to enable health plans to transform the performance of their networks; and
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•
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RelayHealth® financial solutions to facilitate communication between healthcare providers and patients, and to aggregate data for claims management and trend analysis, and optimize revenue cycle management processes.
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Item 1A.
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Risk Factors
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Item 1B.
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Unresolved Staff Comments.
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Item 2.
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Properties.
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Item 3.
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Legal Proceedings.
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Item 4.
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Mine Safety Disclosures.
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Name
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Age
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Position with Registrant and Business Experience
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John H. Hammergren
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57
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Chairman of the Board since July 2002; President and Chief Executive Officer since April 2001; and a director since July 1999. Service with the Company — 20 years.
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James A. Beer
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55
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Executive Vice President and Chief Financial Officer since October 2013; Executive Vice President and Chief Financial Officer, Symantec Corporation from 2006 to October 2013; Senior Vice President and Chief Financial Officer, AMR Corporation and its principal subsidiary, American Airlines, Inc., from 2004 to 2006, Service with the Company — 2 years.
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Patrick J. Blake
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52
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Executive Vice President and Group President since June 2009; President of McKesson Specialty Care Solutions (now McKesson Specialty Health) from April 2006 to June 2009. Service with the Company — 20 years.
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Jorge L. Figueredo
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55
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Executive Vice President, Human Resources since May 2008; Service with the Company — 8 years.
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Paul C. Julian
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60
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Executive Vice President and Group President since April 2004. Service with the Company — 20 years.
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Kathleen D. McElligott
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60
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Executive Vice President, Chief Information Officer and Chief Technology Officer since July 2015; Chief Information Officer and Vice President, Information Technology, Emerson Electric from 2010 to July 2015. Service with the Company — 9 months.
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Bansi Nagji
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51
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Executive Vice President, Corporate Strategy and Business Development since February 2015; Principal, Deloitte Consulting, LLP and Global Leader, Monitor Deloitte (which was formed by the global merger of Monitor Group with Deloitte) from January 2013 to February 2015; President, Monitor Group from July 2012 to January 2013; Partner, Monitor Group from 2001 to January 2013. Service with the Company — 1 year, 3 months.
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Lori A. Schechter
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54
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Executive Vice President, General Counsel and Chief Compliance Officer since June 2014; Associate General Counsel from January 2012 to June 2014; Litigation Partner, Morrison & Foerster LLP from January 1995 to December 2011. Service with the Company — 4 years.
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Item 5.
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Market for the Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities.
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(a)
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Market Information:
The principal market on which the Company’s common stock is traded is the New York Stock Exchange (“NYSE”).
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2016
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2015
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||||||||||
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High
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Low
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High
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Low
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First quarter
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$
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243.61
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$
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219.51
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$
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192.03
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$
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162.90
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Second quarter
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$
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236.86
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$
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160.10
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$
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200.00
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$
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185.66
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Third quarter
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$
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202.20
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$
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169.00
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$
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214.37
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$
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178.28
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Fourth quarter
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$
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196.84
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$
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148.29
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$
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232.69
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$
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205.72
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(b)
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Holders:
The number of record holders of the Company’s common stock at March 31,
2016
was approximately 6,204.
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(c)
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Dividends:
In July 2015, the Company’s quarterly dividend was raised from $0.24 to $0.28 per common share for dividends declared after such date, until further action by the Company’s Board of Directors (the “Board”). The Company declared regular cash dividends of $1.08 and $0.96 per share in the years ended March 31,
2016
and
2015
.
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(d)
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Securities Authorized for Issuance under Equity Compensation Plans:
Information relating to this item is provided under Part III, Item 12, to this Annual Report on Form 10-K.
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(e)
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Share Repurchase Plans:
Stock repurchases may be made from time to time in open market transactions, privately negotiated transactions, through accelerated share repurchase (“ASR”) programs, or by any combination of such methods. The timing of any repurchases and the actual number of shares repurchased will depend on a variety of factors, including our stock price, corporate and regulatory requirements, restrictions under our debt obligations and other market and economic conditions.
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Share Repurchases
(1)
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||||||||||||
(In millions, except price per share)
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Total
Number of Shares
Purchased
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Average Price Paid per Share
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Total Number of Shares Purchased as Part of Publicly Announced Programs
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Approximate Dollar Value of Shares that May Yet Be Purchased Under the Programs
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||||||
January 1, 2016 - January 31, 2016
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—
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$
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—
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—
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$
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1,646
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February 1, 2016 - February 29, 2016
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3.2
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154.04
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3.2
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1,148
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March 1, 2016 - March 31, 2016
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1.0
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154.04
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1.0
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996
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Total
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4.2
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4.2
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$
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996
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(1)
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This table does not include shares tendered to satisfy the exercise price in connection with cashless exercises of employee stock options or shares tendered to satisfy tax-withholding obligations in connection with employee equity awards.
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(f)
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Stock Price Performance Graph*
: The following graph compares the cumulative total stockholder return on the Company’s common stock for the periods indicated with the Standard & Poor’s 500 Index and the S&P 500 Health Care Index. The S&P 500 Health Care Index was selected as a comparator because it is generally available to investors and broadly used by other companies in the same industry.
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March 31,
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||||||||||||||||||||||
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2011
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2012
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2013
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2014
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2015
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2016
|
||||||||||||
McKesson Corporation
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$
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100.00
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$
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112.13
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$
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139.12
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$
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229.03
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$
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294.79
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$
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206.10
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S&P 500 Index
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$
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100.00
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$
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108.54
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$
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123.69
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$
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150.73
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$
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169.92
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$
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172.95
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S&P 500 Health Care Index
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$
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100.00
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$
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116.36
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$
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145.65
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$
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188.21
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$
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237.45
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$
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225.15
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|
Item 6.
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Selected Financial Data.
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As of and for the Years Ended March 31,
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|||||||||||||||||||
(In millions, except per share data and ratios)
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2016
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2015
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2014
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2013
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2012
|
||||||||||
Operating Results
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|
||||||||||
Revenues
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$
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190,884
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|
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$
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179,045
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|
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$
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137,392
|
|
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$
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122,196
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|
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$
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122,453
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Percent change
|
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6.6
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%
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30.3
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%
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12.4
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%
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|
(0.2
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)%
|
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9.5
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%
|
|||||
Gross profit
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$
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11,416
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$
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11,411
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$
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8,352
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$
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6,881
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$
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6,435
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Income from continuing operations before income taxes
|
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3,250
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|
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2,657
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2,171
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1,950
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1,915
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|
|||||
Income (loss) after income taxes
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||||||||||
Continuing operations
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2,342
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|
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1,842
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1,414
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1,363
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|
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1,394
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|||||
Discontinued operations
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(32
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)
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(299
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)
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(156
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)
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(25
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)
|
|
9
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|
|||||
Net income
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2,310
|
|
|
1,543
|
|
|
1,258
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|
|
1,338
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|
|
1,403
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|
|||||
Net (income) loss attributable to noncontrolling
interests
(1)
|
|
(52
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)
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(67
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)
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|
5
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|
|
—
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—
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|||||
Net income attributable to McKesson Corporation
|
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2,258
|
|
|
1,476
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|
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1,263
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1,338
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|
|
1,403
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|||||
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|
||||||||||
Financial Position
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|
||||||||||
Working capital
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$
|
3,366
|
|
|
$
|
3,173
|
|
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$
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3,221
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|
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$
|
1,813
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|
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$
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1,917
|
|
Days sales outstanding for:
(2)
|
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|
||||||||||
Customer receivables
|
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28
|
|
|
26
|
|
|
29
|
|
|
26
|
|
|
24
|
|
|||||
Inventories
|
|
32
|
|
|
31
|
|
|
33
|
|
|
33
|
|
|
31
|
|
|||||
Drafts and accounts payable
|
|
59
|
|
|
54
|
|
|
54
|
|
|
51
|
|
|
49
|
|
|||||
Total assets
|
|
$
|
56,563
|
|
|
$
|
53,870
|
|
|
$
|
51,759
|
|
|
$
|
34,786
|
|
|
$
|
33,093
|
|
Total debt, including capital lease obligations
|
|
8,154
|
|
|
9,844
|
|
|
10,594
|
|
|
4,873
|
|
|
3,980
|
|
|||||
Total McKesson stockholders’ equity
(3)
|
|
8,924
|
|
|
8,001
|
|
|
8,522
|
|
|
7,070
|
|
|
6,831
|
|
|||||
Payments for property, plant and equipment
|
|
488
|
|
|
376
|
|
|
278
|
|
|
241
|
|
|
221
|
|
|||||
Acquisitions, net of cash and cash equivalents acquired
|
|
40
|
|
|
170
|
|
|
4,634
|
|
|
1,873
|
|
|
1,051
|
|
|||||
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Common Share Information
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Common shares outstanding at year-end
|
|
225
|
|
|
232
|
|
|
231
|
|
|
227
|
|
|
235
|
|
|||||
Shares on which earnings per common share were based
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Diluted
|
|
233
|
|
|
235
|
|
|
233
|
|
|
239
|
|
|
251
|
|
|||||
Basic
|
|
230
|
|
|
232
|
|
|
229
|
|
|
235
|
|
|
246
|
|
|||||
Diluted earnings (loss) per common share attributable to McKesson Corporation
(4)
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Continuing operations
|
|
$
|
9.84
|
|
|
$
|
7.54
|
|
|
$
|
6.08
|
|
|
$
|
5.69
|
|
|
$
|
5.56
|
|
Discontinued operations
|
|
(0.14
|
)
|
|
(1.27
|
)
|
|
(0.67
|
)
|
|
(0.10
|
)
|
|
0.04
|
|
|||||
Total
|
|
9.70
|
|
|
6.27
|
|
|
5.41
|
|
|
5.59
|
|
|
5.60
|
|
|||||
Cash dividends declared
|
|
249
|
|
|
226
|
|
|
214
|
|
|
192
|
|
|
202
|
|
|||||
Cash dividends declared per common share
|
|
1.08
|
|
|
0.96
|
|
|
0.92
|
|
|
0.80
|
|
|
0.80
|
|
|||||
Book value per common share
(4) (5)
|
|
39.66
|
|
|
34.49
|
|
|
36.89
|
|
|
31.15
|
|
|
29.07
|
|
|||||
Market value per common share - year-end
|
|
157.25
|
|
|
226.20
|
|
|
176.57
|
|
|
107.96
|
|
|
87.77
|
|
|||||
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Supplemental Data
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Debt to capital ratio
(6)
|
|
43.7
|
%
|
|
50.3
|
%
|
|
55.4
|
%
|
|
40.6
|
%
|
|
36.8
|
%
|
|||||
Average McKesson stockholders’ equity
(7)
|
|
$
|
8,688
|
|
|
$
|
8,703
|
|
|
$
|
7,803
|
|
|
$
|
7,294
|
|
|
$
|
7,108
|
|
Return on McKesson stockholders’ equity
(8)
|
|
26.0
|
%
|
|
17.0
|
%
|
|
16.2
|
%
|
|
18.3
|
%
|
|
19.7
|
%
|
(1)
|
Primarily reflects guaranteed dividends and annual recurring compensation that McKesson became obligated to pay to the noncontrolling shareholders of Celesio AG upon the effectiveness of the Domination Agreement in December 2014.
|
(2)
|
Based on year-end balances and sales or cost of sales for the last 90 days of the year.
|
(3)
|
Excludes noncontrolling and redeemable noncontrolling interests.
|
(4)
|
Certain computations may reflect rounding adjustments.
|
(5)
|
Represents McKesson stockholders’ equity divided by year-end common shares outstanding.
|
(6)
|
Ratio is computed as total debt divided by the sum of total debt and McKesson stockholders’ equity excluding accumulated other comprehensive income (loss).
|
(7)
|
Represents a five-quarter average of McKesson stockholders’ equity.
|
(8)
|
Ratio is computed as net income attributable to McKesson Corporation for the last four quarters, divided by a five-quarter average of McKesson stockholders’ equity.
|
Item 7.
|
Management’s Discussion and Analysis of Financial Condition and Results of Operations.
|
(Dollars in millions, except per share data)
|
Years Ended March 31,
|
|
Change
|
||||||||||||||||
2016
|
|
2015
|
|
2014
|
|
2016
|
|
2015
|
|||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Revenues
|
$
|
190,884
|
|
|
$
|
179,045
|
|
|
$
|
137,392
|
|
|
7
|
|
%
|
|
30
|
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Gross Profit
|
$
|
11,416
|
|
|
$
|
11,411
|
|
|
$
|
8,352
|
|
|
-
|
|
%
|
|
37
|
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Operating Expenses
|
$
|
7,871
|
|
|
$
|
8,443
|
|
|
$
|
5,913
|
|
|
(7
|
)
|
%
|
|
43
|
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Income from Continuing Operations Before Income Taxes
|
$
|
3,250
|
|
|
$
|
2,657
|
|
|
$
|
2,171
|
|
|
22
|
|
%
|
|
22
|
|
%
|
Income Tax Expense
|
(908
|
)
|
|
(815
|
)
|
|
(757
|
)
|
|
11
|
|
|
|
8
|
|
|
|||
Income from Continuing Operations
|
2,342
|
|
|
1,842
|
|
|
1,414
|
|
|
27
|
|
|
|
30
|
|
|
|||
Loss from Discontinued Operations, Net of Tax
|
(32
|
)
|
|
(299
|
)
|
|
(156
|
)
|
|
(89
|
)
|
|
|
92
|
|
|
|||
Net Income
|
2,310
|
|
|
1,543
|
|
|
1,258
|
|
|
50
|
|
|
|
23
|
|
|
|||
Net (Income) Loss Attributable to Noncontrolling Interests
|
(52
|
)
|
|
(67
|
)
|
|
5
|
|
|
(22
|
)
|
|
|
(1,440
|
)
|
|
|||
Net Income Attributable to McKesson Corporation
|
$
|
2,258
|
|
|
$
|
1,476
|
|
|
$
|
1,263
|
|
|
53
|
|
%
|
|
17
|
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Diluted Earnings (Loss) Per Common Share Attributable to McKesson Corporation
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Continuing Operations
|
$
|
9.84
|
|
|
$
|
7.54
|
|
|
$
|
6.08
|
|
|
31
|
|
%
|
|
24
|
|
%
|
Discontinued Operations
|
(0.14
|
)
|
|
(1.27
|
)
|
|
(0.67
|
)
|
|
(89
|
)
|
|
|
90
|
|
|
|||
Total
|
$
|
9.70
|
|
|
$
|
6.27
|
|
|
$
|
5.41
|
|
|
55
|
|
%
|
|
16
|
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Weighted Average Diluted Common Shares
|
233
|
|
|
235
|
|
|
233
|
|
|
(1
|
)
|
%
|
|
1
|
|
%
|
|
Years Ended March 31,
|
|
Change
|
||||||||||||||||
(Dollars in millions)
|
2016
|
|
2015
|
|
2014
|
|
2016
|
|
2015
|
||||||||||
Distribution Solutions
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
North America pharmaceutical distribution
& services
|
$
|
158,469
|
|
|
$
|
143,711
|
|
|
$
|
123,929
|
|
|
10
|
|
%
|
|
16
|
|
%
|
International pharmaceutical distribution & services
|
23,497
|
|
|
26,358
|
|
|
4,485
|
|
|
(11
|
)
|
|
|
488
|
|
|
|||
Medical-Surgical distribution & services
|
6,033
|
|
|
5,907
|
|
|
5,648
|
|
|
2
|
|
|
|
5
|
|
|
|||
Total Distribution Solutions
|
187,999
|
|
|
175,976
|
|
|
134,062
|
|
|
7
|
|
|
|
31
|
|
|
|||
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Technology Solutions - products and services
|
2,885
|
|
|
3,069
|
|
|
3,330
|
|
|
(6
|
)
|
|
|
(8
|
)
|
|
|||
Total Revenues
|
$
|
190,884
|
|
|
$
|
179,045
|
|
|
$
|
137,392
|
|
|
7
|
|
%
|
|
30
|
|
%
|
|
Years Ended March 31,
|
|
Change
|
|||||||||||||||||||
(Dollars in millions)
|
2016
|
|
|
2015
|
|
|
2014
|
|
|
2016
|
|
2015
|
||||||||||
Gross Profit
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Distribution Solutions
(1) (2)
|
$
|
9,948
|
|
|
|
$
|
9,937
|
|
|
|
$
|
6,745
|
|
|
|
-
|
|
%
|
|
47
|
|
%
|
Technology Solutions
(2)
|
1,468
|
|
|
|
1,474
|
|
|
|
1,607
|
|
|
|
-
|
|
|
|
(8
|
)
|
|
|||
Total
|
$
|
11,416
|
|
|
|
$
|
11,411
|
|
|
|
$
|
8,352
|
|
|
|
-
|
|
%
|
|
37
|
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Gross Profit Margin
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Distribution Solutions
|
5.29
|
|
%
|
|
5.65
|
|
%
|
|
5.03
|
|
%
|
|
(36
|
)
|
bp
|
|
62
|
|
bp
|
|||
Technology Solutions
|
50.88
|
|
|
|
48.03
|
|
|
|
48.26
|
|
|
|
285
|
|
|
|
(23
|
)
|
|
|||
Total
|
5.98
|
|
|
|
6.37
|
|
|
|
6.08
|
|
|
|
(39
|
)
|
|
|
29
|
|
|
(1)
|
Gross profit for our Distribution Solutions segment includes LIFO expenses of
$244 million
,
$337 million
and
$311 million
for 2016, 2015 and 2014, and for 2016 and 2014 includes
$76 million
and $37 million of net cash proceeds representing our share of antitrust legal settlements.
|
(2)
|
Gross profit includes pre-tax restructuring charges of
$5 million
and
$21 million
for the Cost Alignment Plan within our Distribution Solutions segment and Technology Solutions segment in 2016.
|
|
Years Ended March 31,
|
|
Change
|
|||||||||||||||||
(Dollars in millions)
|
2016
|
|
2015
|
|
2014
|
|
|
2016
|
|
2015
|
||||||||||
Operating Expenses
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Distribution Solutions
(1) (2) (3)
|
$
|
6,436
|
|
|
$
|
6,938
|
|
|
$
|
4,301
|
|
|
|
(7
|
)
|
%
|
|
61
|
|
%
|
Technology Solutions
(1) (2)
|
951
|
|
|
1,039
|
|
|
1,161
|
|
|
|
(8
|
)
|
|
|
(11
|
)
|
|
|||
Corporate
|
484
|
|
|
466
|
|
|
451
|
|
|
|
4
|
|
|
|
3
|
|
|
|||
Total
|
$
|
7,871
|
|
|
$
|
8,443
|
|
|
$
|
5,913
|
|
|
|
(7
|
)
|
%
|
|
43
|
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Operating Expenses as a Percentage of Revenues
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Distribution Solutions
|
3.42
|
|
%
|
3.94
|
|
%
|
3.21
|
|
%
|
|
(52
|
)
|
bp
|
|
73
|
|
bp
|
|||
Technology Solutions
|
32.96
|
|
|
33.85
|
|
|
34.86
|
|
|
|
(89
|
)
|
|
|
(101
|
)
|
|
|||
Total
|
4.12
|
|
|
4.72
|
|
|
4.30
|
|
|
|
(60
|
)
|
|
|
42
|
|
|
(1)
|
Operating expenses for 2016 include pre-tax charges associated with the Cost Alignment Plan of
$156 million
,
$30 million
and
$17 million
within our Distribution Solutions and Technology Solutions segments, and Corporate.
|
(2)
|
Operating expenses for 2016 include pre-tax gains of
$52 million
from the sale of our ZEE Medical business within our Distribution Solutions segment and
$51 million
from the sale of our nurse triage business within our Technology Solutions segment.
|
(3)
|
Operating expenses for 2015 and 2014 include pre-tax claim and litigation charges of $150 million and $68 million.
|
|
Years Ended March 31,
|
||||||||||
(Dollars in millions)
|
2016
|
|
2015
|
|
2014
|
||||||
Cost of Sales
|
$
|
—
|
|
|
$
|
1
|
|
|
$
|
3
|
|
Operating Expenses
|
|
|
|
|
|
||||||
Transaction closing expenses
|
10
|
|
|
6
|
|
|
39
|
|
|||
Restructuring, severance and relocation
|
—
|
|
|
57
|
|
|
43
|
|
|||
Outside service fees
|
27
|
|
|
66
|
|
|
27
|
|
|||
Other
|
73
|
|
|
94
|
|
|
46
|
|
|||
Total
|
110
|
|
|
223
|
|
|
155
|
|
|||
Other Income, Net
|
4
|
|
|
—
|
|
|
14
|
|
|||
Interest Expense - bridge loan fees
|
—
|
|
|
—
|
|
|
46
|
|
|||
Total Acquisition Expenses and Related Adjustments
|
$
|
114
|
|
|
$
|
224
|
|
|
$
|
218
|
|
|
Years Ended March 31,
|
||||||||||
(Dollars in millions)
|
2016
|
|
2015
|
|
2014
|
||||||
Cost of Sales
|
$
|
—
|
|
|
$
|
1
|
|
|
$
|
3
|
|
Operating Expenses and Other Income, Net
|
|
|
|
|
|
||||||
Distribution Solutions
|
112
|
|
|
211
|
|
|
120
|
|
|||
Technology Solutions
|
—
|
|
|
—
|
|
|
15
|
|
|||
Corporate
|
2
|
|
|
12
|
|
|
34
|
|
|||
Total
|
114
|
|
|
223
|
|
|
169
|
|
|||
Corporate - Interest Expense
|
—
|
|
|
—
|
|
|
46
|
|
|||
Total Acquisition Expenses and Related Adjustments
|
$
|
114
|
|
|
$
|
224
|
|
|
$
|
218
|
|
|
Years Ended March 31,
|
||||||||||
(Dollars in millions)
|
2016
|
|
2015
|
|
2014
|
||||||
Distribution Solutions
|
$
|
389
|
|
|
$
|
442
|
|
|
$
|
255
|
|
Technology Solutions
|
34
|
|
|
40
|
|
|
52
|
|
|||
Corporate
|
—
|
|
|
1
|
|
|
1
|
|
|||
Total
|
$
|
423
|
|
|
$
|
483
|
|
|
$
|
308
|
|
|
Years Ended March 31,
|
|
Change
|
||||||||||||||||
(Dollars in millions)
|
2016
|
|
2015
|
|
2014
|
|
2016
|
|
2015
|
||||||||||
Distribution Solutions
|
$
|
41
|
|
|
$
|
48
|
|
|
$
|
28
|
|
|
(15
|
)
|
%
|
|
71
|
|
%
|
Technology Solutions
|
2
|
|
|
3
|
|
|
2
|
|
|
(33
|
)
|
|
|
50
|
|
|
|||
Corporate
|
15
|
|
|
12
|
|
|
2
|
|
|
25
|
|
|
|
500
|
|
|
|||
Total
|
$
|
58
|
|
|
$
|
63
|
|
|
$
|
32
|
|
|
(8
|
)
|
%
|
|
97
|
|
%
|
|
Years Ended March 31,
|
|
|
Change
|
||||||||||||||||
(Dollars in millions)
|
2016
|
|
2015
|
|
2014
|
|
|
2016
|
|
2015
|
||||||||||
Segment Operating Profit
(1) (2)
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Distribution Solutions
|
$
|
3,553
|
|
|
$
|
3,047
|
|
|
$
|
2,472
|
|
|
|
17
|
|
%
|
|
23
|
|
%
|
Technology Solutions
|
519
|
|
|
438
|
|
|
448
|
|
|
|
18
|
|
|
|
(2
|
)
|
|
|||
Subtotal
|
4,072
|
|
|
3,485
|
|
|
2,920
|
|
|
|
17
|
|
|
|
19
|
|
|
|||
Corporate Expenses, Net
(2)
|
(469
|
)
|
|
(454
|
)
|
|
(449
|
)
|
|
|
3
|
|
|
|
1
|
|
|
|||
Interest Expense
|
(353
|
)
|
|
(374
|
)
|
|
(300
|
)
|
|
|
(6
|
)
|
|
|
25
|
|
|
|||
Income From Continuing Operations Before Income Taxes
(2)
|
$
|
3,250
|
|
|
$
|
2,657
|
|
|
$
|
2,171
|
|
|
|
22
|
|
%
|
|
22
|
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Segment Operating Profit Margin
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Distribution Solutions
|
1.89
|
|
%
|
1.73
|
|
%
|
1.84
|
|
%
|
|
16
|
|
bp
|
|
(11
|
)
|
bp
|
|||
Technology Solutions
|
17.99
|
|
|
14.27
|
|
|
13.45
|
|
|
|
372
|
|
|
|
82
|
|
|
(1)
|
Segment operating profit includes gross profit, net of operating expenses, plus other income, net, for our two operating segments.
|
(2)
|
In connection with the Cost Alignment Plan, the Company recorded pre-tax restructuring charges of $229 million in 2016. Pre-tax charges were recorded as follows:
$161 million
,
$51 million
and
$17 million
within our Distribution Solutions segment, Technology Solutions segment and Corporate expenses, net.
|
|
Years Ended March 31,
|
||||||||||
(In millions, except per share data)
|
2016
|
|
2015
|
|
2014
|
||||||
Number of shares repurchased
(1)
|
8.7
|
|
|
1.5
|
|
|
—
|
|
|||
Average price paid per share
|
$
|
173.64
|
|
|
$
|
226.55
|
|
|
$
|
—
|
|
Total value of shares repurchased
(1)
|
$
|
1,504
|
|
|
$
|
340
|
|
|
$
|
—
|
|
(1)
|
Excludes shares surrendered for tax withholding.
|
|
March 31,
|
|||||||||||||
(Dollars in millions)
|
2016
|
|
2015
|
|
2014
|
|||||||||
Cash and cash equivalents
|
$
|
4,048
|
|
|
|
$
|
5,341
|
|
|
|
$
|
4,193
|
|
|
Working capital
|
3,366
|
|
|
|
3,173
|
|
|
|
3,221
|
|
|
|||
Debt to capital ratio
(1)
|
43.7
|
|
%
|
|
50.3
|
|
%
|
|
55.4
|
|
%
|
|||
Return on McKesson stockholders’ equity
(2)
|
26.0
|
|
|
|
17.0
|
|
|
|
16.2
|
|
|
(1)
|
Ratio is computed as total debt divided by the sum of total debt and McKesson stockholders’ equity, which excludes noncontrolling and redeemable noncontrolling interests and accumulated other comprehensive income (loss).
|
(2)
|
Ratio is computed as net income attributable to McKesson Corporation for the last four quarters, divided by a five-quarter average of McKesson stockholders’ equity, which excludes noncontrolling and redeemable noncontrolling interests.
|
|
|
|
Years
|
||||||||||||||||
(In millions)
|
Total
|
|
Within 1
|
|
Over 1 to 3
|
|
Over 3 to 5
|
|
After 5
|
||||||||||
On balance sheet
|
|
|
|
|
|
|
|
|
|
||||||||||
Long-term debt
(1)
|
$
|
8,147
|
|
|
$
|
1,612
|
|
|
$
|
2,550
|
|
|
$
|
5
|
|
|
$
|
3,980
|
|
Other
(2) (3)
|
643
|
|
|
198
|
|
|
269
|
|
|
54
|
|
|
122
|
|
|||||
|
|
|
|
|
|
|
|
|
|
||||||||||
Off balance sheet
|
|
|
|
|
|
|
|
|
|
||||||||||
Interest on borrowings
(4)
|
2,725
|
|
|
298
|
|
|
456
|
|
|
322
|
|
|
1,649
|
|
|||||
Purchase obligations
(5)
|
4,750
|
|
|
4,668
|
|
|
68
|
|
|
14
|
|
|
—
|
|
|||||
Operating lease obligations
(6)
|
1,970
|
|
|
363
|
|
|
561
|
|
|
377
|
|
|
669
|
|
|||||
Other
(7)
|
340
|
|
|
194
|
|
|
18
|
|
|
24
|
|
|
104
|
|
|||||
Total
|
$
|
18,575
|
|
|
$
|
7,333
|
|
|
$
|
3,922
|
|
|
$
|
796
|
|
|
$
|
6,524
|
|
(1)
|
Represents maturities of the Company’s long-term obligations including an immaterial amount of capital lease obligations.
|
(2)
|
Includes our estimated benefit payments, including assumed executive lump sum payments, for the unfunded benefit plans and minimum funding requirements for the pension plans. Actual lump sum payments could significantly differ from the estimated amounts depending on the timing of executive retirements and the lump sum interest rate in effect upon retirement.
|
(3)
|
Includes our estimated severance payments associated with the Cost Alignment Plan.
|
(4)
|
Primarily represents interest that will become due on our fixed rate long-term debt obligations.
|
(5)
|
A purchase obligation is defined as an arrangement to purchase goods or services that is enforceable and legally binding on the Company. These obligations primarily relate to inventory purchases, capital commitments and outsourcing service agreements.
|
(6)
|
Represents minimum rental payments for operating leases.
|
(7)
|
Includes agreements under which we have guaranteed the repurchase of our customers’ inventory and our customers’ debt in the event these customers are unable to meet their obligations to those financial institutions.
|
Item 7A.
|
Quantitative and Qualitative Disclosures about Market Risk
|
Item 8.
|
Financial Statements and Supplementary Data
|
|
Page
|
Consolidated Financial Statements:
|
|
|
/s/ John H. Hammergren
|
John H. Hammergren
|
Chairman of the Board, President and Chief Executive Officer
|
(Principal Executive Officer)
|
|
/s/ James A. Beer
|
James A. Beer
|
Executive Vice President and Chief Financial Officer
|
(Principal Financial Officer)
|
|
/s/ Deloitte & Touche LLP
|
San Francisco, California
|
May 5, 2016
|
|
Years Ended March 31,
|
||||||||||
|
2016
|
|
2015
|
|
2014
|
||||||
Revenues
|
$
|
190,884
|
|
|
$
|
179,045
|
|
|
$
|
137,392
|
|
Cost of Sales
|
(179,468
|
)
|
|
(167,634
|
)
|
|
(129,040
|
)
|
|||
Gross Profit
|
11,416
|
|
|
11,411
|
|
|
8,352
|
|
|||
Operating Expenses
|
|
|
|
|
|
||||||
Selling, distribution and administrative expenses
|
(7,276
|
)
|
|
(7,901
|
)
|
|
(5,388
|
)
|
|||
Research and development
|
(392
|
)
|
|
(392
|
)
|
|
(457
|
)
|
|||
Restructuring charges
|
(203
|
)
|
|
—
|
|
|
—
|
|
|||
Claim and litigation charges
|
—
|
|
|
(150
|
)
|
|
(68
|
)
|
|||
Total Operating Expenses
|
(7,871
|
)
|
|
(8,443
|
)
|
|
(5,913
|
)
|
|||
Operating Income
|
3,545
|
|
|
2,968
|
|
|
2,439
|
|
|||
Other Income, Net
|
58
|
|
|
63
|
|
|
32
|
|
|||
Interest Expense
|
(353
|
)
|
|
(374
|
)
|
|
(300
|
)
|
|||
Income from Continuing Operations Before Income Taxes
|
3,250
|
|
|
2,657
|
|
|
2,171
|
|
|||
Income Tax Expense
|
(908
|
)
|
|
(815
|
)
|
|
(757
|
)
|
|||
Income from Continuing Operations
|
2,342
|
|
|
1,842
|
|
|
1,414
|
|
|||
Loss from Discontinued Operations, Net of Tax
|
(32
|
)
|
|
(299
|
)
|
|
(156
|
)
|
|||
Net Income
|
2,310
|
|
|
1,543
|
|
|
1,258
|
|
|||
Net (Income) Loss Attributable to Noncontrolling Interests
|
(52
|
)
|
|
(67
|
)
|
|
5
|
|
|||
Net Income Attributable to McKesson Corporation
|
$
|
2,258
|
|
|
$
|
1,476
|
|
|
$
|
1,263
|
|
|
|
|
|
|
|
||||||
Earnings (Loss) Per Common Share Attributable to
McKesson Corporation
|
|
|
|
|
|
||||||
Diluted
|
|
|
|
|
|
||||||
Continuing operations
|
$
|
9.84
|
|
|
$
|
7.54
|
|
|
$
|
6.08
|
|
Discontinued operations
|
(0.14
|
)
|
|
(1.27
|
)
|
|
(0.67
|
)
|
|||
Total
|
$
|
9.70
|
|
|
$
|
6.27
|
|
|
$
|
5.41
|
|
Basic
|
|
|
|
|
|
||||||
Continuing operations
|
$
|
9.96
|
|
|
$
|
7.66
|
|
|
$
|
6.19
|
|
Discontinued operations
|
(0.14
|
)
|
|
(1.29
|
)
|
|
(0.68
|
)
|
|||
Total
|
$
|
9.82
|
|
|
$
|
6.37
|
|
|
$
|
5.51
|
|
|
|
|
|
|
|
||||||
Weighted Average Common Shares
|
|
|
|
|
|
||||||
Diluted
|
233
|
|
|
235
|
|
|
233
|
|
|||
Basic
|
230
|
|
|
232
|
|
|
229
|
|
|
Years Ended March 31,
|
||||||||||
|
2016
|
|
2015
|
|
2014
|
||||||
Net Income
|
$
|
2,310
|
|
|
$
|
1,543
|
|
|
$
|
1,258
|
|
|
|
|
|
|
|
||||||
Other Comprehensive Income (Loss), Net of Tax
|
|
|
|
|
|
||||||
Foreign currency translation adjustments arising during the period
|
113
|
|
|
(1,855
|
)
|
|
53
|
|
|||
|
|
|
|
|
|
|
|
|
|||
Unrealized gains (losses) on cash flow hedges arising during the period
|
9
|
|
|
(10
|
)
|
|
(6
|
)
|
|||
|
|
|
|
|
|
|
|
|
|||
Retirement-related benefit plans
|
50
|
|
|
(124
|
)
|
|
36
|
|
|||
Other Comprehensive Income (Loss), Net of Tax
|
172
|
|
|
(1,989
|
)
|
|
83
|
|
|||
|
|
|
|
|
|
||||||
Comprehensive Income (Loss)
|
2,482
|
|
|
(446
|
)
|
|
1,341
|
|
|||
Comprehensive (Income) Loss Attributable to Noncontrolling Interests
|
(72
|
)
|
|
212
|
|
|
(16
|
)
|
|||
Comprehensive Income (Loss) Attributable to McKesson Corporation
|
$
|
2,410
|
|
|
$
|
(234
|
)
|
|
$
|
1,325
|
|
|
McKesson Corporation Stockholders’ Equity
|
|
|
|
|
||||||||||||||||||||||||||||||||
|
Common
Stock
|
|
Additional Paid-in Capital
|
|
Other Capital
|
|
Retained Earnings
|
|
Accumulated Other
Comprehensive
Income (Loss)
|
|
Treasury
|
|
Noncontrolling
Interests
|
|
Total
Equity
|
||||||||||||||||||||||
|
Shares
|
|
Amount
|
|
Common Shares
|
|
Amount
|
||||||||||||||||||||||||||||||
Balances, March 31, 2013
|
376
|
|
|
$
|
4
|
|
|
$
|
6,078
|
|
|
$
|
14
|
|
|
$
|
10,402
|
|
|
$
|
(65
|
)
|
|
(149
|
)
|
|
$
|
(9,363
|
)
|
|
$
|
—
|
|
|
$
|
7,070
|
|
Issuance of shares under employee plans
|
5
|
|
|
—
|
|
|
177
|
|
|
|
|
|
|
|
|
(1
|
)
|
|
(130
|
)
|
|
|
|
47
|
|
||||||||||||
Share-based compensation
|
|
|
|
|
160
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
160
|
|
||||||||||||||||
Tax benefit related to issuance of shares under employee plans
|
|
|
|
|
92
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
92
|
|
||||||||||||||||
Acquisition of Celesio
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,500
|
|
|
1,500
|
|
|||||||||||||||
Conversion of Celesio convertible bonds
|
|
|
|
|
33
|
|
|
|
|
|
|
|
|
|
|
|
|
280
|
|
|
313
|
|
|||||||||||||||
Other comprehensive income
|
|
|
|
|
|
|
|
|
|
|
62
|
|
|
|
|
|
|
21
|
|
|
83
|
|
|||||||||||||||
Net income (loss)
|
|
|
|
|
|
|
|
|
1,263
|
|
|
|
|
|
|
|
|
(5
|
)
|
|
1,258
|
|
|||||||||||||||
Repurchase of common stock
|
|
|
|
|
14
|
|
|
|
|
|
|
|
|
—
|
|
|
(14
|
)
|
|
|
|
—
|
|
||||||||||||||
Cash dividends declared, $0.92 per common share
|
|
|
|
|
|
|
|
|
(214
|
)
|
|
|
|
|
|
|
|
|
|
(214
|
)
|
||||||||||||||||
Other
|
|
|
|
|
(2
|
)
|
|
9
|
|
|
2
|
|
|
|
|
|
|
|
|
|
|
9
|
|
||||||||||||||
Balances, March 31, 2014
|
381
|
|
|
$
|
4
|
|
|
$
|
6,552
|
|
|
$
|
23
|
|
|
$
|
11,453
|
|
|
$
|
(3
|
)
|
|
(150
|
)
|
|
$
|
(9,507
|
)
|
|
$
|
1,796
|
|
|
$
|
10,318
|
|
Issuance of shares under employee plans
|
3
|
|
|
—
|
|
|
152
|
|
|
|
|
|
|
|
|
—
|
|
|
(109
|
)
|
|
|
|
43
|
|
||||||||||||
Share-based compensation
|
|
|
|
|
165
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
165
|
|
||||||||||||||||
Tax benefit related to issuance of shares under employee plans
|
|
|
|
|
105
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
105
|
|
||||||||||||||||
Purchase of noncontrolling interests
|
|
|
|
|
(2
|
)
|
|
|
|
|
|
|
|
|
|
|
|
(60
|
)
|
|
(62
|
)
|
|||||||||||||||
Reclassification of noncontrolling interests to redeemable noncontrolling interests
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1,500
|
)
|
|
(1,500
|
)
|
||||||||||||||||
Other comprehensive income
|
|
|
|
|
|
|
|
|
|
|
(1,710
|
)
|
|
|
|
|
|
(174
|
)
|
|
(1,884
|
)
|
|||||||||||||||
Net income
|
|
|
|
|
|
|
|
|
1,476
|
|
|
|
|
|
|
|
|
5
|
|
|
1,481
|
|
|||||||||||||||
Repurchase of common stock
|
|
|
|
|
|
|
|
|
|
|
|
|
(2
|
)
|
|
(340
|
)
|
|
|
|
(340
|
)
|
|||||||||||||||
Cash dividends declared, $0.96 per common share
|
|
|
|
|
|
|
|
|
(226
|
)
|
|
|
|
|
|
|
|
|
|
(226
|
)
|
||||||||||||||||
Other
|
|
|
|
|
(4
|
)
|
|
(30
|
)
|
|
2
|
|
|
|
|
|
|
|
|
17
|
|
|
(15
|
)
|
|||||||||||||
Balances, March 31, 2015
|
384
|
|
|
$
|
4
|
|
|
$
|
6,968
|
|
|
$
|
(7
|
)
|
|
$
|
12,705
|
|
|
$
|
(1,713
|
)
|
|
(152
|
)
|
|
$
|
(9,956
|
)
|
|
$
|
84
|
|
|
$
|
8,085
|
|
Issuance of shares under employee plans
|
3
|
|
|
—
|
|
|
123
|
|
|
|
|
|
|
|
|
(1
|
)
|
|
(109
|
)
|
|
|
|
14
|
|
||||||||||||
Share-based compensation
|
|
|
|
|
130
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
130
|
|
||||||||||||||||
Tax benefit related to issuance of shares under employee plans
|
|
|
|
|
117
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
117
|
|
||||||||||||||||
Other comprehensive income
|
|
|
|
|
|
|
|
|
|
|
152
|
|
|
|
|
|
|
|
|
152
|
|
||||||||||||||||
Net income
|
|
|
|
|
|
|
|
|
2,258
|
|
|
|
|
|
|
|
|
8
|
|
|
2,266
|
|
|||||||||||||||
Repurchase of common stock
|
|
|
|
|
|
|
|
|
|
|
|
|
(9
|
)
|
|
(1,504
|
)
|
|
|
|
(1,504
|
)
|
|||||||||||||||
Retirement of common stock
|
(116
|
)
|
|
(1
|
)
|
|
(1,493
|
)
|
|
|
|
(6,354
|
)
|
|
|
|
116
|
|
|
7,848
|
|
|
|
|
—
|
|
|||||||||||
Cash dividends declared, $1.08 per common share
|
|
|
|
|
|
|
|
|
(249
|
)
|
|
|
|
|
|
|
|
|
|
(249
|
)
|
||||||||||||||||
Other
|
|
|
|
|
|
|
5
|
|
|
|
|
|
|
|
|
|
|
(8
|
)
|
|
(3
|
)
|
|||||||||||||||
Balances, March 31, 2016
|
271
|
|
|
$
|
3
|
|
|
$
|
5,845
|
|
|
$
|
(2
|
)
|
|
$
|
8,360
|
|
|
$
|
(1,561
|
)
|
|
(46
|
)
|
|
$
|
(3,721
|
)
|
|
$
|
84
|
|
|
$
|
9,008
|
|
|
Years Ended March 31,
|
||||||||||
|
2016
|
|
2015
|
|
2014
|
||||||
Operating Activities
|
|
|
|
|
|
||||||
Net income
|
$
|
2,310
|
|
|
$
|
1,543
|
|
|
$
|
1,258
|
|
Adjustments to reconcile to net cash provided by operating activities:
|
|
|
|
|
|
||||||
Depreciation
|
281
|
|
|
306
|
|
|
185
|
|
|||
Amortization
|
604
|
|
|
711
|
|
|
550
|
|
|||
Deferred taxes
|
64
|
|
|
171
|
|
|
17
|
|
|||
Share-based compensation expense
|
123
|
|
|
174
|
|
|
160
|
|
|||
Gain from sales of businesses
|
(103
|
)
|
|
—
|
|
|
—
|
|
|||
Impairment charges and impairment of equity investment
|
8
|
|
|
241
|
|
|
80
|
|
|||
Charges associated with last-in-first-out inventory method
|
244
|
|
|
337
|
|
|
311
|
|
|||
Other non-cash items
|
108
|
|
|
47
|
|
|
130
|
|
|||
Changes in operating assets and liabilities, net of acquisitions:
|
|
|
|
|
|
||||||
Receivables
|
(1,957
|
)
|
|
(2,821
|
)
|
|
(868
|
)
|
|||
Inventories
|
(1,251
|
)
|
|
(2,144
|
)
|
|
(1,182
|
)
|
|||
Drafts and accounts payable
|
3,302
|
|
|
4,718
|
|
|
2,412
|
|
|||
Deferred revenue
|
(120
|
)
|
|
(141
|
)
|
|
(81
|
)
|
|||
Taxes
|
(78
|
)
|
|
(222
|
)
|
|
218
|
|
|||
Claim and litigation charges
|
—
|
|
|
150
|
|
|
68
|
|
|||
Litigation settlement payments
|
—
|
|
|
—
|
|
|
(105
|
)
|
|||
Other
|
137
|
|
|
42
|
|
|
(17
|
)
|
|||
Net cash provided by operating activities
|
3,672
|
|
|
3,112
|
|
|
3,136
|
|
|||
|
|
|
|
|
|
||||||
Investing Activities
|
|
|
|
|
|
||||||
Payments for property, plant and equipment
|
(488
|
)
|
|
(376
|
)
|
|
(278
|
)
|
|||
Capitalized software expenditures
|
(189
|
)
|
|
(169
|
)
|
|
(141
|
)
|
|||
Acquisitions, net of cash and cash equivalents acquired
|
(40
|
)
|
|
(170
|
)
|
|
(4,634
|
)
|
|||
Proceeds from sale of businesses and equity investment, net
|
210
|
|
|
15
|
|
|
97
|
|
|||
Restricted cash for acquisitions
|
(939
|
)
|
|
—
|
|
|
46
|
|
|||
Other
|
(111
|
)
|
|
23
|
|
|
(136
|
)
|
|||
Net cash used in investing activities
|
(1,557
|
)
|
|
(677
|
)
|
|
(5,046
|
)
|
|||
|
|
|
|
|
|
||||||
Financing Activities
|
|
|
|
|
|
||||||
Proceeds from short-term borrowings
|
1,561
|
|
|
3,100
|
|
|
6,080
|
|
|||
Repayments of short-term borrowings
|
(1,688
|
)
|
|
(3,152
|
)
|
|
(6,132
|
)
|
|||
Proceeds from issuances of long-term debt
|
—
|
|
|
3
|
|
|
4,124
|
|
|||
Repayments of long-term debt
|
(1,598
|
)
|
|
(353
|
)
|
|
(348
|
)
|
|||
Common stock transactions:
|
|
|
|
|
|
|
|||||
Issuances
|
123
|
|
|
152
|
|
|
177
|
|
|||
Share repurchases, including shares surrendered for tax withholding
|
(1,612
|
)
|
|
(450
|
)
|
|
(130
|
)
|
|||
Dividends paid
|
(244
|
)
|
|
(227
|
)
|
|
(214
|
)
|
|||
Other
|
5
|
|
|
(41
|
)
|
|
62
|
|
|||
Net cash (used in) provided by financing activities
|
(3,453
|
)
|
|
(968
|
)
|
|
3,619
|
|
|||
Effect of exchange rate changes on cash and cash equivalents
|
45
|
|
|
(319
|
)
|
|
28
|
|
|||
Net (decrease) increase in cash and cash equivalents
|
(1,293
|
)
|
|
1,148
|
|
|
1,737
|
|
|||
Cash and cash equivalents at beginning of year
|
5,341
|
|
|
4,193
|
|
|
2,456
|
|
|||
Cash and cash equivalents at end of year
|
$
|
4,048
|
|
|
$
|
5,341
|
|
|
$
|
4,193
|
|
|
|
|
|
|
|
||||||
Supplemental Cash Flow Information
|
|
|
|
|
|
||||||
Cash paid for:
|
|
|
|
|
|
||||||
Interest
|
$
|
337
|
|
|
$
|
359
|
|
|
$
|
255
|
|
Income taxes, net of refunds
|
$
|
923
|
|
|
$
|
866
|
|
|
$
|
508
|
|
Non-cash item:
|
|
|
|
|
|
||||||
Fair value of debt assumed on acquisitions
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
(2,312
|
)
|
Conversion of Celesio’s convertible bonds to equity
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
313
|
|
1.
|
Significant Accounting Policies
|
2.
|
Business Combinations
|
(In millions)
|
Distribution Solutions
|
|
Technology Solutions
|
|
Corporate
|
|
Total
|
||||||||
Severance and employee-related costs, net
(1)
|
$
|
147
|
|
|
$
|
44
|
|
|
$
|
16
|
|
|
$
|
207
|
|
Exit-related costs
|
3
|
|
|
1
|
|
|
1
|
|
|
5
|
|
||||
Asset impairments and accelerated depreciation and amortization
(2)
|
11
|
|
|
6
|
|
|
—
|
|
|
17
|
|
||||
Total
|
$
|
161
|
|
|
$
|
51
|
|
|
$
|
17
|
|
|
$
|
229
|
|
|
|
|
|
|
|
|
|
||||||||
Cost of Sales
|
$
|
5
|
|
|
$
|
21
|
|
|
$
|
—
|
|
|
$
|
26
|
|
Operating Expenses
|
156
|
|
|
30
|
|
|
17
|
|
|
203
|
|
||||
Total
|
$
|
161
|
|
|
$
|
51
|
|
|
$
|
17
|
|
|
$
|
229
|
|
(1)
|
Severance and employee-related costs, net, include charges of
$117 million
and
$90 million
, for a total of
$207 million
, for a reduction in workforce and business process initiatives.
|
(2)
|
Asset impairments and accelerated depreciation and amortization charges primarily include impairments for capitalized software projects and software licenses due to abandonments.
|
|
|
Quarter and Year Ended March 31, 2016
|
|
|
||||||||||||||||||||
(In millions)
|
|
Balance March 31, 2015
|
|
Net restructuring charges recognized
|
|
Non-cash charges
|
|
Cash Payments
|
|
Other
|
|
Balance March 31, 2016
(1)
|
||||||||||||
2016 Cost Alignment Plan
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Distribution Solutions
|
|
$
|
—
|
|
|
$
|
161
|
|
|
$
|
(4
|
)
|
|
$
|
(1
|
)
|
|
$
|
—
|
|
|
$
|
156
|
|
Technology Solutions
|
|
—
|
|
|
51
|
|
|
(3
|
)
|
|
—
|
|
|
(3
|
)
|
|
45
|
|
||||||
Corporate
|
|
—
|
|
|
17
|
|
|
5
|
|
|
—
|
|
|
(1
|
)
|
|
21
|
|
||||||
Total 2016 Cost Alignment Plan
|
|
$
|
—
|
|
|
$
|
229
|
|
|
$
|
(2
|
)
|
|
$
|
(1
|
)
|
|
$
|
(4
|
)
|
|
$
|
222
|
|
(1)
|
The reserve balances as of March 31, 2016 include
$172 million
recorded in other accrued liabilities and
$50 million
recorded in other noncurrent liabilities in our consolidated balance sheet.
|
4.
|
Asset Impairments and Product Alignment Charges
|
5.
|
Divestiture of Businesses
|
6.
|
Share-Based Compensation
|
|
Years Ended March 31,
|
||||||||||
(In millions)
|
2016
|
|
2015
|
|
2014
|
||||||
Restricted stock unit awards
(1)
|
$
|
88
|
|
|
$
|
137
|
|
|
$
|
126
|
|
Stock options
|
22
|
|
|
24
|
|
|
22
|
|
|||
Employee stock purchase plan
|
13
|
|
|
13
|
|
|
12
|
|
|||
Share-based compensation expense
(2)
|
123
|
|
|
174
|
|
|
160
|
|
|||
Tax benefit for share-based compensation expense
(3)
|
(41
|
)
|
|
(61
|
)
|
|
(55
|
)
|
|||
Share-based compensation expense, net of tax
|
$
|
82
|
|
|
$
|
113
|
|
|
$
|
105
|
|
(1)
|
Includes compensation expense recognized for RSUs, PeRSUs and TSRUs. Our TSRUs were awarded beginning in 2015.
|
(2)
|
2016 includes non-cash credits of
$14 million
representing the reversal of previously recognized share-based compensation, which was recorded due to employee terminations associated with the March 2016 restructuring plan.
|
(3)
|
Income tax benefit is computed using the tax rates of applicable tax jurisdictions. Additionally, a portion of pre-tax compensation expense is not tax-deductible.
|
•
|
Expected stock price volatility is based on a combination of historical volatility of our common stock and implied market volatility. We believe that this market-based input provides a reasonable estimate of our future stock price movements and is consistent with employee stock option valuation considerations.
|
•
|
Expected dividend yield is based on historical experience and investors’ current expectations.
|
•
|
The risk-free interest rate for periods within the expected life of the option is based on the constant maturity U.S. Treasury rate in effect at the time of grant.
|
•
|
Expected life of the options is based primarily on historical employee stock option exercises and other behavior data and reflects the impact of changes in contractual life of current option grants compared to our historical grants.
|
|
Years Ended March 31,
|
||||
|
2016
|
|
2015
|
|
2014
|
Expected stock price volatility
|
21%
|
|
22%
|
|
22%
|
Expected dividend yield
|
0.4%
|
|
0.6%
|
|
0.7%
|
Risk-free interest rate
|
1.4%
|
|
1.3%
|
|
0.7%
|
Expected life (in years)
|
4
|
|
4
|
|
4
|
|
|
Options Outstanding
|
|
Options Exercisable
|
||||||||||||||||
Range of Exercise
Prices
|
|
Number of
Options
Outstanding
at Year End
(In millions)
|
|
Weighted-
Average
Remaining
Contractual
Life (Years)
|
|
Weighted-
Average
Exercise Price
|
|
Number of
Options
Exercisable at
Year End
(In millions)
|
|
Weighted-
Average
Exercise Price
|
||||||||||
$
|
40.46
|
|
–
|
$
|
140.19
|
|
|
3
|
|
2
|
|
$
|
83.62
|
|
|
2
|
|
$
|
78.01
|
|
140.20
|
|
–
|
239.93
|
|
|
1
|
|
6
|
|
206.58
|
|
|
—
|
|
180.24
|
|
||||
|
|
|
|
4
|
|
|
|
|
|
2
|
|
|
(In millions, except per share data)
|
Shares
|
|
Weighted-
Average
Exercise
Price
|
|
Weighted-
Average
Remaining
Contractual
Term (Years)
|
|
Aggregate
Intrinsic
Value
(2)
|
||||
Outstanding, March 31, 2015
|
5
|
|
$
|
95.01
|
|
|
4
|
|
$
|
539
|
|
Granted
|
1
|
|
236.77
|
|
|
|
|
|
|||
Cancelled
|
(1)
|
|
149.19
|
|
|
|
|
|
|||
Exercised
|
(1)
|
|
63.75
|
|
|
|
|
|
|||
Outstanding, March 31, 2016
|
4
|
|
$
|
118.95
|
|
|
3
|
|
$
|
201
|
|
|
|
|
|
|
|
|
|
||||
Vested and expected to vest
(1)
|
3
|
|
$
|
118.21
|
|
|
3
|
|
$
|
200
|
|
Vested and exercisable, March 31, 2016
|
2
|
|
85.15
|
|
|
2
|
|
173
|
|
(1)
|
The number of options expected to vest takes into account an estimate of expected forfeitures.
|
(2)
|
The intrinsic value is calculated as the difference between the period-end market price of the Company’s common stock and the exercise price of “in-the-money” options.
|
|
Years Ended March 31,
|
||||||||||
(In millions, except per share data)
|
2016
|
|
2015
|
|
2014
|
||||||
Weighted-average grant date fair value per stock option
|
$
|
44.04
|
|
|
$
|
35.49
|
|
|
$
|
21.45
|
|
Aggregate intrinsic value on exercise
|
$
|
107
|
|
|
$
|
153
|
|
|
$
|
144
|
|
Cash received upon exercise
|
$
|
47
|
|
|
$
|
76
|
|
|
$
|
111
|
|
Tax benefits realized related to exercise
|
$
|
42
|
|
|
$
|
60
|
|
|
$
|
55
|
|
Total fair value of stock options vested
|
$
|
18
|
|
|
$
|
20
|
|
|
$
|
24
|
|
Total compensation cost, net of estimated forfeitures, related to unvested stock options not yet recognized, pre-tax
|
$
|
20
|
|
|
$
|
22
|
|
|
$
|
29
|
|
Weighted-average period in years over which stock option compensation cost is expected to be recognized
|
2
|
|
|
2
|
|
|
1
|
|
|
Years Ended March 31,
|
||
|
2016
|
|
2015
|
Expected stock price volatility
|
18%
|
|
21%
|
Expected dividend yield
|
0.4%
|
|
0.5%
|
Risk-free interest rate
|
0.9%
|
|
0.7%
|
Expected life (in years)
|
3
|
|
3
|
|
Years Ended March 31,
|
||||||||||
(In millions)
|
2016
|
|
2015
|
|
2014
|
||||||
Total fair value of shares vested
|
$
|
104
|
|
|
$
|
126
|
|
|
$
|
184
|
|
Total compensation cost, net of estimated forfeitures, related to nonvested restricted stock unit awards not yet recognized, pre-tax
|
$
|
144
|
|
|
$
|
206
|
|
|
$
|
236
|
|
Weighted-average period in years over which restricted stock unit award cost is expected to be recognized
|
2
|
|
|
2
|
|
|
2
|
|
7.
|
Other Income, Net
|
|
Years Ended March 31,
|
||||||||||
(In millions)
|
2016
|
2015
|
2014
|
||||||||
Interest income
|
$
|
18
|
|
|
$
|
20
|
|
|
$
|
16
|
|
Equity in earnings, net
(1)
|
15
|
|
|
12
|
|
|
—
|
|
|||
Other, net
(1)
|
25
|
|
|
31
|
|
|
16
|
|
|||
Total
|
$
|
58
|
|
|
$
|
63
|
|
|
$
|
32
|
|
(1)
|
Primarily recorded within our Distribution Solutions segment.
|
8.
|
Income Taxes
|
|
Years Ended March 31,
|
||||||||||
(In millions)
|
2016
|
|
2015
|
|
2014
|
||||||
Income from continuing operations before income taxes
|
|
|
|
|
|
||||||
U.S.
|
$
|
2,319
|
|
|
$
|
1,893
|
|
|
$
|
1,554
|
|
Foreign
|
931
|
|
|
764
|
|
|
617
|
|
|||
Total income from continuing operations before income taxes
|
$
|
3,250
|
|
|
$
|
2,657
|
|
|
$
|
2,171
|
|
|
Years Ended March 31,
|
||||||||||
(In millions)
|
2016
|
|
2015
|
|
2014
|
||||||
Income tax expense at federal statutory rate
|
$
|
1,137
|
|
|
$
|
930
|
|
|
$
|
760
|
|
State income taxes net of federal tax benefit
|
92
|
|
|
81
|
|
|
57
|
|
|||
Foreign income taxed at various rates
|
(295
|
)
|
|
(247
|
)
|
|
(177
|
)
|
|||
Canadian litigation
|
(8
|
)
|
|
—
|
|
|
122
|
|
|||
Controlled substance distribution reserve
|
—
|
|
|
58
|
|
|
—
|
|
|||
Unrecognized tax benefits and settlements
|
(6
|
)
|
|
10
|
|
|
(6
|
)
|
|||
Tax credits
|
(18
|
)
|
|
(10
|
)
|
|
(6
|
)
|
|||
Other, net
|
6
|
|
|
(7
|
)
|
|
7
|
|
|||
Income tax expense
|
$
|
908
|
|
|
$
|
815
|
|
|
$
|
757
|
|
|
March 31,
|
||||||
(In millions)
|
2016
|
|
2015
|
||||
Assets
|
|
|
|
||||
Receivable allowances
|
$
|
110
|
|
|
$
|
83
|
|
Deferred revenue
|
77
|
|
|
72
|
|
||
Compensation and benefit related accruals
|
710
|
|
|
681
|
|
||
Net operating loss and credit carryforwards
|
367
|
|
|
316
|
|
||
Other
|
275
|
|
|
266
|
|
||
Subtotal
|
1,539
|
|
|
1,418
|
|
||
Less: valuation allowance
|
(267
|
)
|
|
(229
|
)
|
||
Total assets
|
1,272
|
|
|
1,189
|
|
||
Liabilities
|
|
|
|
||||
Inventory valuation and other assets
|
(2,619
|
)
|
|
(2,333
|
)
|
||
Fixed assets and systems development costs
|
(326
|
)
|
|
(324
|
)
|
||
Intangibles
|
(981
|
)
|
|
(1,073
|
)
|
||
Other
|
(21
|
)
|
|
(61
|
)
|
||
Total liabilities
|
(3,947
|
)
|
|
(3,791
|
)
|
||
Net deferred tax liability
|
$
|
(2,675
|
)
|
|
$
|
(2,602
|
)
|
|
|
|
|
||||
Current net deferred tax asset
(1)
|
$
|
—
|
|
|
$
|
27
|
|
Current net deferred tax liability
(1)
|
—
|
|
|
(1,820
|
)
|
||
Long-term deferred tax asset
|
59
|
|
|
50
|
|
||
Long-term deferred tax liability
|
(2,734
|
)
|
|
(859
|
)
|
||
Net deferred tax liability
|
$
|
(2,675
|
)
|
|
$
|
(2,602
|
)
|
(1)
|
Upon the adoption of the amended accounting guidance, we reclassified current net deferred tax liabilities and current net deferred tax assets as noncurrent on our consolidated balance sheet as of March 31, 2016. Our March 31, 2015 balances were not retrospectively reclassified.
|
|
Years Ended March 31,
|
||||||||||
(In millions)
|
2016
|
|
2015
|
|
2014
|
||||||
Unrecognized tax benefits at beginning of period
|
$
|
616
|
|
|
$
|
647
|
|
|
$
|
560
|
|
Additions based on tax positions related to prior years
|
116
|
|
|
62
|
|
|
106
|
|
|||
Reductions based on tax positions related to prior years
|
(62
|
)
|
|
(18
|
)
|
|
(23
|
)
|
|||
Additions based on tax positions related to current year
|
28
|
|
|
27
|
|
|
23
|
|
|||
Reductions based on settlements
|
(141
|
)
|
|
(65
|
)
|
|
(4
|
)
|
|||
Reductions based on the lapse of the applicable statutes of limitations
|
(6
|
)
|
|
(12
|
)
|
|
(7
|
)
|
|||
Exchange rate fluctuations
|
4
|
|
|
(25
|
)
|
|
(8
|
)
|
|||
Unrecognized tax benefits at end of period
|
$
|
555
|
|
|
$
|
616
|
|
|
$
|
647
|
|
9.
|
Discontinued Operations
|
|
Years Ended March 31,
|
||||||||||
(In millions)
|
2016
|
|
2015
|
|
2014
|
||||||
Revenues
|
$
|
1,603
|
|
|
$
|
2,196
|
|
|
$
|
637
|
|
|
|
|
|
|
|
||||||
Loss from discontinued operations
|
$
|
(24
|
)
|
|
$
|
(321
|
)
|
|
$
|
(177
|
)
|
Loss on sale
|
—
|
|
|
(6
|
)
|
|
(5
|
)
|
|||
Loss from discontinued operations before income tax
|
(24
|
)
|
|
(327
|
)
|
|
(182
|
)
|
|||
Income tax (expense) benefit
|
(8
|
)
|
|
28
|
|
|
26
|
|
|||
Loss from discontinued operations, net of tax
|
$
|
(32
|
)
|
|
$
|
(299
|
)
|
|
$
|
(156
|
)
|
|
March 31,
|
||||||
(In millions)
|
2016
|
|
2015
|
||||
Receivables, net
|
$
|
289
|
|
|
$
|
314
|
|
Inventories, net
|
266
|
|
|
254
|
|
||
Other assets
|
80
|
|
|
92
|
|
||
Total assets of discontinued operations
(1)
|
635
|
|
|
660
|
|
||
Drafts and account payable
|
264
|
|
|
209
|
|
||
Short-term borrowings
|
142
|
|
|
126
|
|
||
Other liabilities
|
254
|
|
|
328
|
|
||
Total liabilities of discontinued operations
(1)
|
$
|
660
|
|
|
$
|
663
|
|
10.
|
Noncontrolling Interests and Redeemable Noncontrolling Interests
|
(In millions)
|
Noncontrolling interests
|
Redeemable
Noncontrolling
Interests
|
||||
Balance, March 31, 2014
|
$
|
1,796
|
|
$
|
—
|
|
Net income attributable to noncontrolling interests
(1)
|
5
|
|
62
|
|
||
Other comprehensive loss
|
(174
|
)
|
(105
|
)
|
||
Purchase of noncontrolling interests
(2) (3) (4)
|
(60
|
)
|
(9
|
)
|
||
Reclassification from Total Equity to Redeemable Noncontrolling Interests
(5)
|
(1,500
|
)
|
1,500
|
|
||
Reclassification of guaranteed dividends and recurring compensation to other accrued liabilities
|
—
|
|
(62
|
)
|
||
Other
|
17
|
|
—
|
|
||
Balance, March 31, 2015
|
84
|
|
1,386
|
|
||
Net income attributable to noncontrolling interests
(1)
|
8
|
|
44
|
|
||
Other comprehensive loss
|
—
|
|
20
|
|
||
Reclassification of recurring compensation to other accrued liabilities
|
—
|
|
(44
|
)
|
||
Other
|
(8
|
)
|
—
|
|
||
Balance, March 31, 2016
|
$
|
84
|
|
$
|
1,406
|
|
(1)
|
Redeemable noncontrolling interests for 2015 include the Guaranteed Dividend of
$50 million
and the Compensation Amount of
$12 million
, and for 2016 include the Compensation Amount of
$44 million
.
|
(2)
|
Includes
$35 million
decrease in noncontrolling interests resulting from the April 2014 completion of McKesson’s tender offer for approximately
1 million
additional Celesio shares.
|
(3)
|
Includes
$25 million
decrease in noncontrolling interests resulting from the July 2014 purchase of the remaining ownership interests in a wholesale distributor in Brazil.
|
(4)
|
Decrease in redeemable noncontrolling interests reflects the exercise of the Put Right by the noncontrolling shareholders of Celesio.
|
(5)
|
Includes net foreign currency losses of
$138 million
attributable to noncontrolling interests.
|
11.
|
Earnings Per Common Share
|
|
Years Ended March 31,
|
||||||||||
(In millions, except per share amounts)
|
2016
|
|
2015
|
|
2014
|
||||||
Income from continuing operations
|
$
|
2,342
|
|
|
$
|
1,842
|
|
|
$
|
1,414
|
|
Net (income) loss attributable to noncontrolling interests
|
(52
|
)
|
|
(67
|
)
|
|
5
|
|
|||
Income from continuing operations attributable to McKesson
|
2,290
|
|
|
1,775
|
|
|
1,419
|
|
|||
Loss from discontinued operations, net of tax
|
(32
|
)
|
|
(299
|
)
|
|
(156
|
)
|
|||
Net income attributable to McKesson
|
$
|
2,258
|
|
|
$
|
1,476
|
|
|
$
|
1,263
|
|
|
|
|
|
|
|
||||||
Weighted average common shares outstanding:
|
|
|
|
|
|
||||||
Basic
|
230
|
|
|
232
|
|
|
229
|
|
|||
Effect of dilutive securities:
|
|
|
|
|
|
||||||
Options to purchase common stock
|
1
|
|
|
1
|
|
|
1
|
|
|||
Restricted stock units
|
2
|
|
|
2
|
|
|
3
|
|
|||
Diluted
|
233
|
|
|
235
|
|
|
233
|
|
|||
|
|
|
|
|
|
||||||
Earnings (loss) per common share attributable to McKesson:
(1)
|
|
|
|
|
|
||||||
Diluted
|
|
|
|
|
|
||||||
Continuing operations
|
$
|
9.84
|
|
|
$
|
7.54
|
|
|
$
|
6.08
|
|
Discontinued operations
|
(0.14
|
)
|
|
(1.27
|
)
|
|
(0.67
|
)
|
|||
Total
|
$
|
9.70
|
|
|
$
|
6.27
|
|
|
$
|
5.41
|
|
Basic
|
|
|
|
|
|
||||||
Continuing operations
|
$
|
9.96
|
|
|
$
|
7.66
|
|
|
$
|
6.19
|
|
Discontinued operations
|
(0.14
|
)
|
|
(1.29
|
)
|
|
(0.68
|
)
|
|||
Total
|
$
|
9.82
|
|
|
$
|
6.37
|
|
|
$
|
5.51
|
|
(1)
|
Certain computations may reflect rounding adjustments.
|
|
March 31,
|
||||||
(In millions)
|
2016
|
|
2015
|
||||
Customer accounts
|
$
|
14,519
|
|
|
$
|
13,117
|
|
Other
|
3,711
|
|
|
2,965
|
|
||
Total
|
18,230
|
|
|
16,082
|
|
||
Allowances
|
(250
|
)
|
|
(168
|
)
|
||
Net
|
$
|
17,980
|
|
|
$
|
15,914
|
|
13.
|
Property, Plant and Equipment, Net
|
|
March 31,
|
||||||
(In millions)
|
2016
|
|
2015
|
||||
Land
|
$
|
228
|
|
|
$
|
207
|
|
Building, machinery, equipment and other
|
3,556
|
|
|
3,237
|
|
||
Total property, plant and equipment
|
3,784
|
|
|
3,444
|
|
||
Accumulated depreciation
|
(1,506
|
)
|
|
(1,399
|
)
|
||
Property, plant and equipment, net
|
$
|
2,278
|
|
|
$
|
2,045
|
|
14.
|
Goodwill and Intangible Assets, Net
|
(In millions)
|
Distribution
Solutions
|
|
Technology
Solutions
|
|
Total
|
||||||
Balance, March 31, 2014
|
$
|
8,078
|
|
|
$
|
1,849
|
|
|
$
|
9,927
|
|
Goodwill acquired
|
93
|
|
|
—
|
|
|
93
|
|
|||
Amount reclassified to assets held-for-sale
|
(14
|
)
|
|
(1
|
)
|
|
(15
|
)
|
|||
Acquisition accounting, transfers and other adjustments
|
625
|
|
|
—
|
|
|
625
|
|
|||
Foreign currency translation adjustments, net
|
(788
|
)
|
|
(25
|
)
|
|
(813
|
)
|
|||
Balance, March 31, 2015
|
$
|
7,994
|
|
|
$
|
1,823
|
|
|
$
|
9,817
|
|
Goodwill acquired
|
21
|
|
|
—
|
|
|
21
|
|
|||
Acquisition accounting, transfers and other adjustments
|
8
|
|
|
—
|
|
|
8
|
|
|||
Goodwill disposed
|
(59
|
)
|
|
(27
|
)
|
|
(86
|
)
|
|||
Foreign currency translation adjustments, net
|
23
|
|
|
3
|
|
|
26
|
|
|||
Balance, March 31, 2016
|
$
|
7,987
|
|
|
$
|
1,799
|
|
|
$
|
9,786
|
|
|
March 31, 2016
|
|
March 31, 2015
|
||||||||||||||||||||||
(Dollars in millions)
|
Weighted
Average
Remaining
Amortization
Period
(Years)
|
|
Gross
Carrying
Amount
|
|
Accumulated
Amortization
|
|
Net
Carrying
Amount
|
|
Gross
Carrying
Amount
|
|
Accumulated
Amortization
|
|
Net
Carrying
Amount
|
||||||||||||
Customer lists
|
7
|
|
$
|
2,652
|
|
|
$
|
(1,324
|
)
|
|
$
|
1,328
|
|
|
$
|
2,683
|
|
|
$
|
(1,116
|
)
|
|
$
|
1,567
|
|
Service agreements
|
14
|
|
959
|
|
|
(269
|
)
|
|
690
|
|
|
957
|
|
|
(215
|
)
|
|
742
|
|
||||||
Pharmacy licenses
|
25
|
|
857
|
|
|
(121
|
)
|
|
736
|
|
|
874
|
|
|
(65
|
)
|
|
809
|
|
||||||
Trademarks and trade names
|
14
|
|
314
|
|
|
(96
|
)
|
|
218
|
|
|
315
|
|
|
(82
|
)
|
|
233
|
|
||||||
Technology
|
2
|
|
195
|
|
|
(182
|
)
|
|
13
|
|
|
213
|
|
|
(184
|
)
|
|
29
|
|
||||||
Other
|
3
|
|
163
|
|
|
(127
|
)
|
|
36
|
|
|
162
|
|
|
(101
|
)
|
|
61
|
|
||||||
Total
|
|
|
$
|
5,140
|
|
|
$
|
(2,119
|
)
|
|
$
|
3,021
|
|
|
$
|
5,204
|
|
|
$
|
(1,763
|
)
|
|
$
|
3,441
|
|
15.
|
Capitalized Software Held for Sale, Net
|
|
Years Ended March 31,
|
||||||||||
(In millions)
|
2016
|
|
2015
|
|
2014
|
||||||
Balance, at beginning of period
|
$
|
91
|
|
|
$
|
103
|
|
|
$
|
126
|
|
Amounts capitalized
|
30
|
|
|
34
|
|
|
40
|
|
|||
Amortization expense
|
(37
|
)
|
|
(40
|
)
|
|
(50
|
)
|
|||
Impairment charges
|
—
|
|
|
—
|
|
|
(12
|
)
|
|||
Disposal
|
(5
|
)
|
|
—
|
|
|
—
|
|
|||
Foreign currency translations adjustments, net
|
(1
|
)
|
|
(6
|
)
|
|
(1
|
)
|
|||
Balance, at end of period
|
$
|
78
|
|
|
$
|
91
|
|
|
$
|
103
|
|
16.
|
Debt and
Financing Activities
|
|
March 31,
|
||||||
(In millions)
|
2016
|
|
2015
|
||||
U.S. Dollar notes
(1)
|
|
|
|
||||
Floating Rate Notes due September 10, 2015
|
$
|
—
|
|
|
$
|
400
|
|
0.95% Notes due December 4, 2015
|
—
|
|
|
500
|
|
||
3.25% Notes due March 1, 2016
|
—
|
|
|
600
|
|
||
5.70% Notes due March 1, 2017
|
500
|
|
|
500
|
|
||
1.29% Notes due March 10, 2017
|
700
|
|
|
700
|
|
||
1.40% Notes due March 15, 2018
|
500
|
|
|
499
|
|
||
7.50% Notes due February 15, 2019
|
350
|
|
|
349
|
|
||
2.28% Notes due March 15, 2019
|
1,100
|
|
|
1,100
|
|
||
4.75% Notes due March 1, 2021
|
599
|
|
|
599
|
|
||
2.70% Notes due December 15, 2022
|
400
|
|
|
400
|
|
||
2.85% Notes due March 15, 2023
|
400
|
|
|
400
|
|
||
3.80% Notes due March 15, 2024
|
1,100
|
|
|
1,100
|
|
||
7.65% Debentures due March 1, 2027
|
175
|
|
|
175
|
|
||
6.00% Notes due March 1, 2041
|
493
|
|
|
493
|
|
||
4.88% Notes due March 15, 2044
|
800
|
|
|
800
|
|
||
Foreign currency notes
(2)
|
|
|
|
||||
4.00% Bonds due October 18, 2016
|
403
|
|
|
388
|
|
||
4.50% Bonds due April 26, 2017
|
583
|
|
|
563
|
|
||
|
|
|
|
||||
Lease and other obligations
|
44
|
|
|
143
|
|
||
Total debt
|
8,147
|
|
|
9,709
|
|
||
Less current portion
|
(1,612
|
)
|
|
(1,529
|
)
|
||
Total long-term debt
|
$
|
6,535
|
|
|
$
|
8,180
|
|
(1)
|
Interest on these notes is payable semiannually each year. These notes are unsecured and unsubordinated obligations of the Company.
|
(2)
|
Interest on these Euro-denominated bonds is due annually each year.
|
17.
|
Variable Interest Entities
|
18.
|
Pension Benefits
|
|
U.S. Plans
|
|
Non-U.S. Plans
|
||||||||||||||||||||
|
Years Ended March 31,
|
|
Years Ended March 31,
|
||||||||||||||||||||
(In millions)
|
2016
|
|
2015
|
|
2014
|
|
2016
|
|
2015
|
|
2014
|
||||||||||||
Service cost - benefits earned during the year
|
$
|
4
|
|
|
$
|
1
|
|
|
$
|
4
|
|
|
$
|
20
|
|
|
$
|
16
|
|
|
$
|
6
|
|
Interest cost on projected benefit obligation
|
18
|
|
|
19
|
|
|
19
|
|
|
24
|
|
|
34
|
|
|
11
|
|
||||||
Expected return on assets
|
(19
|
)
|
|
(21
|
)
|
|
(20
|
)
|
|
(30
|
)
|
|
(30
|
)
|
|
(12
|
)
|
||||||
Amortization of unrecognized actuarial loss, prior service costs and net transitional obligation
|
42
|
|
|
19
|
|
|
32
|
|
|
3
|
|
|
3
|
|
|
4
|
|
||||||
Curtailment/settlement loss (gain)
|
2
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
6
|
|
|
(1
|
)
|
||||||
Net periodic pension expense
|
$
|
47
|
|
|
$
|
18
|
|
|
$
|
35
|
|
|
$
|
17
|
|
|
$
|
29
|
|
|
$
|
8
|
|
|
U.S. Plans
|
|
Non-U.S. Plans
|
||||||||||||
|
Years Ended March 31,
|
|
Years Ended March 31,
|
||||||||||||
(In millions)
|
2016
|
|
2015
|
|
2016
|
|
2015
|
||||||||
Change in benefit obligations
|
|
|
|
|
|
|
|
||||||||
Benefit obligation at beginning of period
(1)
|
$
|
583
|
|
|
$
|
540
|
|
|
$
|
963
|
|
|
$
|
934
|
|
Service cost
|
4
|
|
|
1
|
|
|
20
|
|
|
16
|
|
||||
Interest cost
|
18
|
|
|
19
|
|
|
24
|
|
|
34
|
|
||||
Actuarial loss (gain)
|
(13
|
)
|
|
53
|
|
|
(64
|
)
|
|
194
|
|
||||
Benefit payments
|
(54
|
)
|
|
(30
|
)
|
|
(35
|
)
|
|
(49
|
)
|
||||
Amendments
|
—
|
|
|
—
|
|
|
(2
|
)
|
|
(6
|
)
|
||||
Expenses paid
|
(3
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
||||
Foreign exchange impact and other
|
—
|
|
|
—
|
|
|
(7
|
)
|
|
(160
|
)
|
||||
Benefit obligation at end of period
(1)
|
$
|
535
|
|
|
$
|
583
|
|
|
$
|
899
|
|
|
$
|
963
|
|
|
|
|
|
|
|
|
|
||||||||
Change in plan assets
|
|
|
|
|
|
|
|
||||||||
Fair value of plan assets at beginning of period
|
$
|
298
|
|
|
$
|
300
|
|
|
$
|
612
|
|
|
$
|
590
|
|
Actual return on plan assets
|
(3
|
)
|
|
16
|
|
|
2
|
|
|
88
|
|
||||
Employer and participant contributions
|
24
|
|
|
12
|
|
|
44
|
|
|
73
|
|
||||
Benefits paid
|
(54
|
)
|
|
(30
|
)
|
|
(35
|
)
|
|
(49
|
)
|
||||
Expenses paid
|
(3
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
||||
Foreign exchange impact and other
|
—
|
|
|
—
|
|
|
(16
|
)
|
|
(90
|
)
|
||||
Fair value of plan assets at end of period
|
$
|
262
|
|
|
$
|
298
|
|
|
$
|
607
|
|
|
$
|
612
|
|
|
|
|
|
|
|
|
|
||||||||
Funded status at end of period
|
$
|
(273
|
)
|
|
$
|
(285
|
)
|
|
$
|
(292
|
)
|
|
$
|
(351
|
)
|
|
|
|
|
|
|
|
|
||||||||
Amounts recognized on the balance sheet
|
|
|
|
|
|
|
|
||||||||
Assets
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
21
|
|
|
$
|
—
|
|
Current liabilities
|
(2
|
)
|
|
(17
|
)
|
|
(11
|
)
|
|
(6
|
)
|
||||
Long-term liabilities
|
(271
|
)
|
|
(268
|
)
|
|
(302
|
)
|
|
(345
|
)
|
||||
Total
|
$
|
(273
|
)
|
|
$
|
(285
|
)
|
|
$
|
(292
|
)
|
|
$
|
(351
|
)
|
(1)
|
The benefit obligation is the projected benefit obligation.
|
|
U.S. Plans
|
|
Non-U.S. Plans
|
||||||||||||
|
March 31,
|
|
March 31,
|
||||||||||||
(In millions)
|
2016
|
|
2015
|
|
2016
|
|
2015
|
||||||||
Projected benefit obligation
|
$
|
535
|
|
|
$
|
583
|
|
|
$
|
899
|
|
|
$
|
963
|
|
Accumulated benefit obligation
|
535
|
|
|
583
|
|
|
855
|
|
|
897
|
|
||||
Fair value of plan assets
|
262
|
|
|
298
|
|
|
607
|
|
|
612
|
|
|
U.S. Plans
|
|
Non-U.S. Plans
|
||||||||||||
|
March 31,
|
|
March 31,
|
||||||||||||
(In millions)
|
2016
|
|
2015
|
|
2016
|
|
2015
|
||||||||
Net actuarial loss
|
$
|
185
|
|
|
$
|
220
|
|
|
$
|
133
|
|
|
$
|
175
|
|
Prior service credit
|
—
|
|
|
—
|
|
|
(11
|
)
|
|
(6
|
)
|
||||
Total
|
$
|
185
|
|
|
$
|
220
|
|
|
$
|
122
|
|
|
$
|
169
|
|
|
U.S. Plans
|
|
Non-U.S. Plans
|
||||||||||||||||||||
|
Years Ended March 31,
|
|
Years Ended March 31,
|
||||||||||||||||||||
(In millions)
|
2016
|
|
2015
|
|
2014
|
|
2016
|
|
2015
|
|
2014
|
||||||||||||
Net actuarial loss (gain)
|
$
|
9
|
|
|
$
|
58
|
|
|
$
|
(31
|
)
|
|
$
|
(38
|
)
|
|
$
|
117
|
|
|
$
|
12
|
|
Prior service credit
|
—
|
|
|
—
|
|
|
(8
|
)
|
|
(5
|
)
|
|
(8
|
)
|
|
—
|
|
||||||
Amortization of:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Net actuarial loss
|
(44
|
)
|
|
(27
|
)
|
|
(32
|
)
|
|
(5
|
)
|
|
(5
|
)
|
|
(4
|
)
|
||||||
Prior service credit (cost)
|
—
|
|
|
8
|
|
|
—
|
|
|
2
|
|
|
2
|
|
|
2
|
|
||||||
Foreign exchange impact and other
|
—
|
|
|
—
|
|
|
(1
|
)
|
|
(1
|
)
|
|
(8
|
)
|
|
4
|
|
||||||
Total recognized in other comprehensive loss (income)
|
$
|
(35
|
)
|
|
$
|
39
|
|
|
$
|
(72
|
)
|
|
$
|
(47
|
)
|
|
$
|
98
|
|
|
$
|
14
|
|
|
U.S. Plans
|
|
Non-U.S. Plans
|
||||||||||||||
|
Years Ended March 31,
|
|
Years Ended March 31,
|
||||||||||||||
|
2016
|
|
2015
|
|
2014
|
|
2016
|
|
2015
|
|
2014
|
||||||
Net periodic pension expense
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Discount rates
|
3.36
|
%
|
|
3.74
|
%
|
|
3.39
|
%
|
|
2.36
|
%
|
|
3.85
|
%
|
|
3.95
|
%
|
Rate of increase in compensation
|
4.00
|
|
|
4.00
|
|
|
4.00
|
|
|
2.80
|
|
|
3.11
|
|
|
2.66
|
|
Expected long-term rate of return on plan assets
|
6.75
|
|
|
7.25
|
|
|
7.25
|
|
|
4.87
|
|
|
5.39
|
|
|
5.71
|
|
Benefit obligation
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Discount rates
|
3.27
|
%
|
|
3.18
|
%
|
|
3.58
|
%
|
|
2.84
|
%
|
|
2.50
|
%
|
|
3.92
|
%
|
Rate of increase in compensation
|
4.00
|
|
|
4.00
|
|
|
4.00
|
|
|
2.98
|
|
|
3.24
|
|
|
3.27
|
|
|
U.S. Plans
|
|
Non-U.S. Plans
|
||||||||
(In millions)
|
One Percentage
Point Increase
|
|
One Percentage
Point Decrease
|
|
One Percentage
Point Increase
|
|
One Percentage
Point Decrease
|
||||
Increase (decrease) on projected benefit obligation
|
$
|
(35)
|
|
$
|
41
|
|
$
|
(85)
|
|
$
|
101
|
Increase (decrease) on net periodic pension cost
|
|
—
|
|
|
—
|
|
|
(4)
|
|
|
6
|
|
U.S. Plans
|
|
Non-U.S. Plans
|
||||||||||||||||||||||||||||
|
March 31, 2016
|
|
March 31, 2016
|
||||||||||||||||||||||||||||
(In millions)
|
Level 1
|
|
Level 2
|
|
Level 3
|
|
Total
|
|
Level 1
|
|
Level 2
|
|
Level 3
|
|
Total
|
||||||||||||||||
Cash and cash equivalents
|
$
|
4
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
4
|
|
|
$
|
4
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
4
|
|
Equity securities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Common and preferred stock
|
16
|
|
|
—
|
|
|
—
|
|
|
16
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||||
Equity commingled funds
|
—
|
|
|
165
|
|
|
—
|
|
|
165
|
|
|
6
|
|
|
150
|
|
|
—
|
|
|
156
|
|
||||||||
Fixed income securities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Government securities
|
—
|
|
|
12
|
|
|
—
|
|
|
12
|
|
|
23
|
|
|
68
|
|
|
—
|
|
|
91
|
|
||||||||
Corporate bonds
|
—
|
|
|
12
|
|
|
—
|
|
|
12
|
|
|
1
|
|
|
14
|
|
|
—
|
|
|
15
|
|
||||||||
Mortgage-backed securities
|
—
|
|
|
14
|
|
|
—
|
|
|
14
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||||
Asset-backed securities and other
|
—
|
|
|
22
|
|
|
—
|
|
|
22
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||||
Fixed income commingled funds
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
66
|
|
|
120
|
|
|
—
|
|
|
186
|
|
||||||||
Other:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Real estate funds
|
—
|
|
|
—
|
|
|
17
|
|
|
17
|
|
|
—
|
|
|
—
|
|
|
24
|
|
|
24
|
|
||||||||
Other
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
21
|
|
|
107
|
|
|
3
|
|
|
131
|
|
||||||||
Total
|
$
|
20
|
|
|
$
|
225
|
|
|
$
|
17
|
|
|
$
|
262
|
|
|
$
|
121
|
|
|
$
|
459
|
|
|
$
|
27
|
|
|
$
|
607
|
|
|
U.S. Plans
|
|
Non-U.S. Plans
|
||||||||||||||||||||||||||||
|
March 31, 2015
|
|
March 31, 2015
|
||||||||||||||||||||||||||||
(In millions)
|
Level 1
|
|
Level 2
|
|
Level 3
|
|
Total
|
|
Level 1
|
|
Level 2
|
|
Level 3
|
|
Total
|
||||||||||||||||
Cash and cash equivalents
|
$
|
55
|
|
|
$
|
1
|
|
|
$
|
—
|
|
|
$
|
56
|
|
|
$
|
8
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
8
|
|
Equity securities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Common and preferred stock
|
18
|
|
|
—
|
|
|
—
|
|
|
18
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||||
Equity commingled funds
|
—
|
|
|
138
|
|
|
—
|
|
|
138
|
|
|
7
|
|
|
149
|
|
|
—
|
|
|
156
|
|
||||||||
Fixed income securities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Government securities
|
—
|
|
|
14
|
|
|
—
|
|
|
14
|
|
|
26
|
|
|
53
|
|
|
—
|
|
|
79
|
|
||||||||
Corporate bonds
|
—
|
|
|
14
|
|
|
—
|
|
|
14
|
|
|
—
|
|
|
13
|
|
|
—
|
|
|
13
|
|
||||||||
Mortgage-backed securities
|
—
|
|
|
14
|
|
|
—
|
|
|
14
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||||
Asset-backed securities and other
|
—
|
|
|
26
|
|
|
—
|
|
|
26
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||||
Fixed income commingled funds
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
64
|
|
|
127
|
|
|
—
|
|
|
191
|
|
||||||||
Other:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Real estate funds
|
—
|
|
|
—
|
|
|
18
|
|
|
18
|
|
|
—
|
|
|
—
|
|
|
26
|
|
|
26
|
|
||||||||
Other commingled funds
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
13
|
|
|
—
|
|
|
13
|
|
||||||||
Other
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
7
|
|
|
115
|
|
|
4
|
|
|
126
|
|
||||||||
Total
|
$
|
73
|
|
|
$
|
207
|
|
|
$
|
18
|
|
|
$
|
298
|
|
|
$
|
112
|
|
|
$
|
470
|
|
|
$
|
30
|
|
|
$
|
612
|
|
|
U.S. Plans
|
|
Non-U.S. Plans
|
||||||||||||||||
(In millions)
|
Real Estate
Funds
|
|
Total
|
|
Real
Estate
Funds
|
|
Other
|
|
Total
|
||||||||||
Balance at March 31, 2014
|
$
|
16
|
|
|
$
|
16
|
|
|
$
|
7
|
|
|
$
|
5
|
|
|
$
|
12
|
|
Acquisitions
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
Unrealized gain on plan assets still held
|
2
|
|
|
2
|
|
|
1
|
|
|
—
|
|
|
1
|
|
|||||
Purchases, sales and settlements
|
—
|
|
|
—
|
|
|
18
|
|
|
(1
|
)
|
|
17
|
|
|||||
Balance at March 31, 2015
|
$
|
18
|
|
|
$
|
18
|
|
|
$
|
26
|
|
|
$
|
4
|
|
|
$
|
30
|
|
Acquisitions
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
Unrealized gain on plan assets still held
|
1
|
|
|
1
|
|
|
(2
|
)
|
|
(1
|
)
|
|
(3
|
)
|
|||||
Purchases, sales and settlements
|
(2
|
)
|
|
(2
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
Balance at March 31, 2016
|
$
|
17
|
|
|
$
|
17
|
|
|
$
|
24
|
|
|
$
|
3
|
|
|
$
|
27
|
|
19.
|
Postretirement Benefits
|
|
Years Ended March 31,
|
||||||||||
(In millions)
|
2016
|
|
2015
|
|
2014
|
||||||
Service cost - benefits earned during the year
|
$
|
1
|
|
|
$
|
1
|
|
|
$
|
2
|
|
Interest cost on accumulated benefit obligation
|
4
|
|
|
5
|
|
|
5
|
|
|||
Amortization of unrecognized actuarial gain and prior service credit
|
—
|
|
|
(4
|
)
|
|
(1
|
)
|
|||
Curtailment gain
|
—
|
|
|
—
|
|
|
(2
|
)
|
|||
Net periodic postretirement expense
|
$
|
5
|
|
|
$
|
2
|
|
|
$
|
4
|
|
|
Years Ended March 31,
|
||||||
(In millions)
|
2016
|
|
2015
|
||||
Benefit obligation at beginning of period
|
$
|
118
|
|
|
$
|
119
|
|
Service cost
|
1
|
|
|
1
|
|
||
Interest cost
|
4
|
|
|
5
|
|
||
Plan amendments
|
(16
|
)
|
|
—
|
|
||
Actuarial loss
|
3
|
|
|
5
|
|
||
Benefit payments
|
(11
|
)
|
|
(12
|
)
|
||
Curtailment gain
|
(1
|
)
|
|
—
|
|
||
Benefit obligation at end of period
|
$
|
98
|
|
|
$
|
118
|
|
20.
|
Hedging Activities
|
|
Balance Sheet
Caption
|
March 31, 2016
|
|
March 31, 2015
|
||||||||||||||||
|
Fair Value of
Derivative
|
U.S. Dollar Notional
|
|
Fair Value of
Derivative
|
U.S. Dollar Notional
|
|||||||||||||||
(In millions)
|
Asset
|
Liability
|
|
Asset
|
Liability
|
|||||||||||||||
Derivatives designated for hedge accounting
|
|
|
|
|
|
|
|
|
||||||||||||
Foreign exchange
contracts (current)
|
Prepaid expenses and other
|
$
|
16
|
|
$
|
—
|
|
$
|
80
|
|
|
$
|
14
|
|
$
|
—
|
|
$
|
76
|
|
Foreign exchange
contracts (non-current)
|
Other Noncurrent Assets
|
46
|
|
—
|
|
243
|
|
|
53
|
|
—
|
|
323
|
|
||||||
Cross currency
swaps (non-current)
|
Other Noncurrent Liabilities
|
—
|
|
8
|
|
546
|
|
|
—
|
|
—
|
|
—
|
|
||||||
Total
|
|
$
|
62
|
|
$
|
8
|
|
|
|
$
|
67
|
|
$
|
—
|
|
|
||||
Derivatives not designated for hedge accounting
|
|
|
|
|
|
|
|
|
||||||||||||
Foreign exchange
contracts (current)
|
Prepaid expenses and other
|
$
|
23
|
|
$
|
—
|
|
$
|
680
|
|
|
$
|
7
|
|
$
|
—
|
|
$
|
493
|
|
Foreign exchange
contracts (current)
|
Other accrued liabilities
|
—
|
|
—
|
|
196
|
|
|
—
|
|
79
|
|
1,262
|
|
||||||
Total
|
|
$
|
23
|
|
$
|
—
|
|
|
|
$
|
7
|
|
$
|
79
|
|
|
21.
|
Fair Value Measurements
|
|
March 31, 2016
|
|
March 31, 2015
|
||||||||||||||||||||||
(In millions
)
|
Level 1
|
Level 2
|
Level 3
|
Total
|
|
Level 1
|
Level 2
|
Level 3
|
Total
|
||||||||||||||||
Cash Equivalents
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Money market funds
(1)
|
$
|
2,413
|
|
$
|
—
|
|
$
|
—
|
|
$
|
2,413
|
|
|
$
|
2,880
|
|
$
|
—
|
|
$
|
—
|
|
$
|
2,880
|
|
Time deposits
(2)
|
—
|
|
—
|
|
—
|
|
—
|
|
|
—
|
|
94
|
|
—
|
|
94
|
|
||||||||
Repurchase agreements
(2)
|
—
|
|
—
|
|
—
|
|
—
|
|
|
1,243
|
|
—
|
|
—
|
|
1,243
|
|
||||||||
Total cash equivalents
|
$
|
2,413
|
|
$
|
—
|
|
$
|
—
|
|
$
|
2,413
|
|
|
$
|
4,123
|
|
$
|
94
|
|
$
|
—
|
|
$
|
4,217
|
|
22.
|
Lease Obligations
|
(In millions)
|
Noncancelable
Operating
Leases
|
||
2017
|
$
|
363
|
|
2018
|
309
|
|
|
2019
|
252
|
|
|
2020
|
209
|
|
|
2021
|
168
|
|
|
Thereafter
|
669
|
|
|
Total minimum lease payments
(1)
|
$
|
1,970
|
|
(1)
|
Minimum lease payments have not been reduced by minimum sublease rentals of
$45
million due under future noncancelable subleases.
|
23.
|
Financial Guarantees and Warranties
|
24.
|
Commitments and Contingent Liabilities
|
25.
|
Stockholders’ Equity
|
|
Share Repurchases
(1)
|
|||||||||
(In millions, except price per share data)
|
|
Total
Number of
Shares
Purchased
(2) (3)
|
|
Average Price
Paid Per Share
|
|
Approximate
Dollar Value of
Shares that May
Yet Be Purchased
Under the
Programs
|
||||
Balance, March 31, 2013
|
|
|
|
|
|
$
|
340
|
|
||
Shares repurchased
|
|
—
|
|
$
|
—
|
|
|
—
|
|
|
Balance, March 31, 2014
|
|
|
|
|
|
$
|
340
|
|
||
Shares repurchased
|
|
1.5
|
|
$
|
226.55
|
|
|
(340
|
)
|
|
Balance, March 31, 2015
|
|
|
|
|
|
$
|
—
|
|
||
Shares repurchase plans authorized
|
|
|
|
|
|
|
||||
May 2015
|
|
|
|
|
|
500
|
|
|||
October 2015
|
|
|
|
|
|
2,000
|
|
|||
Shares repurchased
|
|
8.7
|
|
$
|
173.64
|
|
|
(1,504
|
)
|
|
Balance, March 31, 2016
|
|
|
|
|
|
$
|
996
|
|
(1)
|
This table does not include shares tendered to satisfy the exercise price in connection with cashless exercises of employee stock options or shares tendered to satisfy tax withholding obligations in connection with employee equity awards.
|
(2)
|
All of the shares purchased were part of the publicly announced programs.
|
(3)
|
The number of shares purchased reflects rounding adjustments.
|
|
Years Ended March 31,
|
||||||||||
(In millions)
|
2016
|
|
2015
|
|
2014
|
||||||
Foreign currency translation adjustments
(1)
|
|
|
|
|
|
||||||
Foreign currency translation adjustments arising during period, net of income tax expense (benefit) of ($23), nil and nil
(2) (3)
|
$
|
113
|
|
|
$
|
(1,845
|
)
|
|
$
|
9
|
|
Reclassified to income statement, net of income tax expense of nil, nil and 24
(4)
|
—
|
|
|
(10
|
)
|
|
44
|
|
|||
|
113
|
|
|
(1,855
|
)
|
|
53
|
|
|||
Unrealized gains (losses) on cash flow hedges
|
|
|
|
|
|
||||||
Unrealized gains (losses) on cash flow hedges arising during period, net of income tax benefit of nil, nil and nil
|
6
|
|
|
(13
|
)
|
|
(6
|
)
|
|||
Reclassified to income statement, net of income tax expense of nil, nil and nil
|
3
|
|
|
3
|
|
|
—
|
|
|||
|
9
|
|
|
(10
|
)
|
|
(6
|
)
|
|||
|
|
|
|
|
|
|
|
|
|||
Changes in retirement-related benefit plans
|
|
|
|
|
|
||||||
Net actuarial gain (loss) and prior service credit (cost) arising during period, net of income tax expense (benefit) of $13, ($66) and $16
(5)
|
23
|
|
|
(140
|
)
|
|
17
|
|
|||
Amortization of actuarial loss, prior service cost and transition obligation, net of income tax expense of $18, $6 and $12
(6)
|
30
|
|
|
11
|
|
|
22
|
|
|||
Foreign currency translation adjustments and other, net of income tax expense of nil, nil and nil
|
(3
|
)
|
|
4
|
|
|
(4
|
)
|
|||
Reclassified to income statement, net of income tax expense of nil, nil, and $1
|
—
|
|
|
1
|
|
|
1
|
|
|||
|
50
|
|
|
(124
|
)
|
|
36
|
|
|||
|
|
|
|
|
|
|
|||||
Other Comprehensive Income (Loss), net of tax
|
$
|
172
|
|
|
$
|
(1,989
|
)
|
|
$
|
83
|
|
(1)
|
Foreign currency translation adjustments result from the conversion of non-U.S. dollar financial statements of our foreign subsidiaries into the Company’s reporting currency, U.S. dollars, and were primarily related to our foreign subsidiary, Celesio, in 2016 and 2015.
|
(2)
|
The 2016 net foreign currency translation gains of
$113 million
were primarily due to the recovery of the Euro against the U.S. dollar, partly offset by the weakening of the Canadian dollar and British pound sterling against the U.S. dollar during the period between April 1, 2015 and March 31, 2016. The 2015 foreign currency translation losses of
$1,855 million
were primarily due to the weakening of the Euro against U.S. dollar during the period between April 1, 2014 and March 31, 2015.
|
(3)
|
2016 includes net foreign currency translation gains of
$16 million
and 2015 includes net foreign currency translations losses of
$267 million
attributable to noncontrolling and redeemable noncontrolling interests.
|
(4)
|
These net foreign currency losses were reclassified from accumulated other comprehensive income (loss) to discontinued operations within our consolidated statement of operations due to the sale of certain businesses.
|
(5)
|
The net gains of
$4 million
and net losses of
$12 million
attributable to noncontrolling and redeemable noncontrolling interests in 2016 and 2015.
|
(6)
|
Pre-tax amount was reclassified into cost of sales and operating expenses in the consolidated statements of operations. The related tax expense was reclassified into income tax expense in the consolidated statements of operations.
|
(In millions)
|
Foreign Currency Translation Adjustments, Net of Tax
|
|
Unrealized Losses on Cash Flow Hedges,
Net of Tax
|
|
Unrealized Net Gains (Losses) and Other Components of Benefit Plans, Net of Tax
|
|
Total Accumulated Other Comprehensive Income (Loss)
|
||||||||
Balance at March 31, 2014
|
$
|
168
|
|
|
$
|
(11
|
)
|
|
$
|
(160
|
)
|
|
$
|
(3
|
)
|
Other comprehensive income (loss) before reclassifications
|
(1,845
|
)
|
|
(13
|
)
|
|
(136
|
)
|
|
(1,994
|
)
|
||||
Amounts reclassified to earnings
|
(10
|
)
|
|
3
|
|
|
12
|
|
|
5
|
|
||||
Other comprehensive income (loss)
|
$
|
(1,855
|
)
|
|
$
|
(10
|
)
|
|
$
|
(124
|
)
|
|
$
|
(1,989
|
)
|
Less: amounts attributable to noncontrolling and redeemable interests
|
(267
|
)
|
|
—
|
|
|
(12
|
)
|
|
(279
|
)
|
||||
Other comprehensive income (loss) attributable to McKesson
|
$
|
(1,588
|
)
|
|
$
|
(10
|
)
|
|
$
|
(112
|
)
|
|
$
|
(1,710
|
)
|
Balance at March 31, 2015
|
$
|
(1,420
|
)
|
|
$
|
(21
|
)
|
|
$
|
(272
|
)
|
|
$
|
(1,713
|
)
|
Other comprehensive income (loss) before reclassifications
|
113
|
|
|
6
|
|
|
23
|
|
|
142
|
|
||||
Amounts reclassified to earnings and other
|
—
|
|
|
3
|
|
|
27
|
|
|
30
|
|
||||
Other comprehensive income (loss)
|
$
|
113
|
|
|
$
|
9
|
|
|
$
|
50
|
|
|
$
|
172
|
|
Less: amounts attributable to noncontrolling and redeemable interests
|
16
|
|
|
—
|
|
|
4
|
|
|
20
|
|
||||
Other comprehensive income (loss) attributable to McKesson
|
$
|
97
|
|
|
$
|
9
|
|
|
$
|
46
|
|
|
$
|
152
|
|
Balance at March 31, 2016
|
$
|
(1,323
|
)
|
|
$
|
(12
|
)
|
|
$
|
(226
|
)
|
|
$
|
(1,561
|
)
|
26.
|
Related Party Balances and Transactions
|
27.
|
Segments of Business
|
|
Years Ended March 31,
|
||||||||||
(In millions)
|
2016
|
|
2015
|
|
2014
|
||||||
Revenues
|
|
|
|
|
|
||||||
Distribution Solutions
(1)
|
|
|
|
|
|
||||||
North America pharmaceutical distribution and services
|
$
|
158,469
|
|
|
$
|
143,711
|
|
|
$
|
123,929
|
|
International pharmaceutical distribution and services
|
23,497
|
|
|
26,358
|
|
|
4,485
|
|
|||
Medical-Surgical distribution and services
|
6,033
|
|
|
5,907
|
|
|
5,648
|
|
|||
Total Distribution Solutions
|
187,999
|
|
|
175,976
|
|
|
134,062
|
|
|||
|
|
|
|
|
|
||||||
Technology Solutions - products and services
|
2,885
|
|
|
3,069
|
|
|
3,330
|
|
|||
Total Revenues
|
$
|
190,884
|
|
|
$
|
179,045
|
|
|
$
|
137,392
|
|
|
|
|
|
|
|
||||||
Operating profit
|
|
|
|
|
|
||||||
Distribution Solutions
(2) (4)
|
$
|
3,553
|
|
|
$
|
3,047
|
|
|
$
|
2,472
|
|
Technology Solutions
(3) (4)
|
519
|
|
|
438
|
|
|
448
|
|
|||
Total
|
4,072
|
|
|
3,485
|
|
|
2,920
|
|
|||
Corporate Expenses, Net
(4)
|
(469
|
)
|
|
(454
|
)
|
|
(449
|
)
|
|||
Interest Expense
|
(353
|
)
|
|
(374
|
)
|
|
(300
|
)
|
|||
Income From Continuing Operations Before Income Taxes
|
$
|
3,250
|
|
|
$
|
2,657
|
|
|
$
|
2,171
|
|
|
|
|
|
|
|
||||||
Depreciation and amortization
(5)
|
|
|
|
|
|
||||||
Distribution Solutions
|
$
|
669
|
|
|
$
|
750
|
|
|
$
|
446
|
|
Technology Solutions
|
107
|
|
|
156
|
|
|
169
|
|
|||
Corporate
|
109
|
|
|
111
|
|
|
120
|
|
|||
Total
|
$
|
885
|
|
|
$
|
1,017
|
|
|
$
|
735
|
|
|
|
|
|
|
|
||||||
Expenditures for long-lived assets
(6)
|
|
|
|
|
|
||||||
Distribution Solutions
|
$
|
306
|
|
|
$
|
301
|
|
|
$
|
179
|
|
Technology Solutions
|
15
|
|
|
27
|
|
|
47
|
|
|||
Corporate
|
167
|
|
|
48
|
|
|
52
|
|
|||
Total
|
$
|
488
|
|
|
$
|
376
|
|
|
$
|
278
|
|
|
|
|
|
|
|
||||||
Revenues, net by geographic area
(7)
|
|
|
|
|
|
||||||
United States
|
$
|
158,255
|
|
|
$
|
142,810
|
|
|
$
|
122,426
|
|
Foreign
|
32,629
|
|
|
36,235
|
|
|
14,966
|
|
|||
Total
|
$
|
190,884
|
|
|
$
|
179,045
|
|
|
$
|
137,392
|
|
(1)
|
Revenues derived from services represent less than
2%
of this segment’s total revenues.
|
(2)
|
Distribution Solutions operating profit for the year ended March 31, 2016, 2015, and 2014 include
$244 million
,
$337 million
, and
$311 million
in pre-tax charges related to our last-in, first-out (“LIFO”) method of accounting for inventories. LIFO expense was less in 2016 primarily due to lower net price increases. For the year ended March 31, 2016 includes
$76 million
of net cash proceeds representing our share of net settlements of antitrust class action lawsuits as well as a pre-tax gain of
$52 million
recognized from the sale of our ZEE Medical business.
|
(3)
|
Technology Solutions operating profit for the year ended March 31, 2016 includes a pre-tax gain of
$51 million
recognized from the sale of our nurse triage business, and for year ended March 31, 2015 includes a non-cash pre-tax charge of
$34 million
related to the retained workforce business within our International Technology business.
|
(4)
|
During the fourth quarter of 2016, the Company approved the Cost Alignment Plan to reduce its operating expenses and recorded pre-tax restructuring charges of
$229 million
. Pre-tax charges were recorded as follows:
$161 million
,
$51 million
and
$17 million
within our Distribution Solutions segment, Technology Solutions segment and Corporate.
|
(5)
|
Amounts primarily include amortization of acquired intangible assets purchased in connection with business acquisitions, capitalized software held for sale and capitalized software for internal use.
|
(6)
|
Long-lived assets consist of property, plant and equipment.
|
(7)
|
Net revenues were attributed to geographic areas based on the customers’ shipment locations.
|
|
March 31,
|
||||||
(In millions)
|
2016
|
|
2015
|
||||
Segment assets
|
|
|
|
||||
Distribution Solutions
|
$
|
47,088
|
|
|
$
|
43,982
|
|
Technology Solutions
|
3,072
|
|
|
3,281
|
|
||
Total
|
50,160
|
|
|
47,263
|
|
||
Corporate
|
|
|
|
||||
Cash and cash equivalents
|
4,048
|
|
|
5,341
|
|
||
Other
|
2,355
|
|
|
1,266
|
|
||
Total
|
$
|
56,563
|
|
|
$
|
53,870
|
|
|
|
|
|
||||
Property, plant and equipment, net
|
|
|
|
|
|
||
United States
|
$
|
1,500
|
|
|
$
|
1,273
|
|
Foreign
|
778
|
|
|
772
|
|
||
Total
|
$
|
2,278
|
|
|
$
|
2,045
|
|
28.
|
Quarterly Financial Information (Unaudited)
|
(In millions, except per share amounts)
|
First
Quarter
|
|
Second
Quarter
|
|
Third
Quarter
|
|
Fourth
Quarter
|
||||||||
Fiscal 2016
|
|
|
|
|
|
|
|
||||||||
Revenues
|
$
|
47,546
|
|
|
$
|
48,761
|
|
|
$
|
47,899
|
|
|
$
|
46,678
|
|
Gross profit
(1) (2) (3)
|
2,848
|
|
|
2,844
|
|
|
2,872
|
|
|
2,852
|
|
||||
Income after income taxes:
|
|
|
|
|
|
|
|
||||||||
Continuing operations
(1) (3) (4)
|
$
|
599
|
|
|
$
|
636
|
|
|
$
|
642
|
|
|
$
|
465
|
|
Discontinued operations
|
(10
|
)
|
|
(6
|
)
|
|
5
|
|
|
(21
|
)
|
||||
Net income
|
$
|
589
|
|
|
$
|
630
|
|
|
$
|
647
|
|
|
$
|
444
|
|
Net income attributable to McKesson
|
$
|
576
|
|
|
$
|
617
|
|
|
$
|
634
|
|
|
$
|
431
|
|
Earnings (loss) per common share attributable
to McKesson
(5)
|
|
|
|
|
|
|
|
||||||||
Diluted
|
|
|
|
|
|
|
|
||||||||
Continuing operations
|
$
|
2.50
|
|
|
$
|
2.65
|
|
|
$
|
2.71
|
|
|
$
|
1.97
|
|
Discontinued operations
|
(0.05
|
)
|
|
(0.02
|
)
|
|
0.02
|
|
|
(0.09
|
)
|
||||
Total
|
$
|
2.45
|
|
|
$
|
2.63
|
|
|
$
|
2.73
|
|
|
$
|
1.88
|
|
Basic
|
|
|
|
|
|
|
|
||||||||
Continuing operations
|
$
|
2.53
|
|
|
$
|
2.68
|
|
|
$
|
2.74
|
|
|
$
|
1.99
|
|
Discontinued operations
|
(0.04
|
)
|
|
(0.02
|
)
|
|
0.02
|
|
|
(0.09
|
)
|
||||
Total
|
$
|
2.49
|
|
|
$
|
2.66
|
|
|
$
|
2.76
|
|
|
$
|
1.90
|
|
(1)
|
Gross profit for the first, second, third and fourth quarters of 2016 included pre-tax charges related to our last-in-first-out (“LIFO”) method of accounting for inventories of
$91 million
,
$91 million
,
$33 million
and
$29 million
.
|
(2)
|
Gross profit for the first and third quarters of 2016 included
$59 million
and
$17 million
of cash proceeds representing our share of net settlements of antitrust class action lawsuits against drug manufacturers.
|
(3)
|
Financial results for the fourth quarter of 2016 include pre-tax restructuring charges of
$229 million
within our continuing operations. Charges were recorded as follows:
$26 million
in cost of sales and
$203 million
in operating expenses.
|
(4)
|
Financial results for the first quarter of 2016 include an after-tax gain of
$38 million
from the sale of our nurse triage business, and for the second quarter of 2016 include an after-tax gain of
$29 million
from the sale of ZEE Medical business.
|
(5)
|
Certain computations may reflect rounding adjustments.
|
(In millions, except per share amounts)
|
First
Quarter
|
|
Second
Quarter
|
|
Third
Quarter
|
|
Fourth
Quarter
|
||||||||
Fiscal 2015
|
|
|
|
|
|
|
|
||||||||
Revenues
|
$
|
43,476
|
|
|
$
|
44,160
|
|
|
$
|
46,484
|
|
|
$
|
44,925
|
|
Gross profit
(1)
|
2,732
|
|
|
2,864
|
|
|
2,898
|
|
|
2,917
|
|
||||
Income after income taxes
|
|
|
|
|
|
|
|
||||||||
Continuing operations
(1)
(2)
|
$
|
419
|
|
|
$
|
491
|
|
|
$
|
521
|
|
|
$
|
411
|
|
Discontinued operations
(3)
|
(8
|
)
|
|
(14
|
)
|
|
(10
|
)
|
|
(267
|
)
|
||||
Net income
|
$
|
411
|
|
|
$
|
477
|
|
|
$
|
511
|
|
|
$
|
144
|
|
Net income attributable to McKesson
|
$
|
403
|
|
|
$
|
469
|
|
|
$
|
472
|
|
|
$
|
132
|
|
Earnings per common share attributable
to McKesson
(4)
|
|
|
|
|
|
|
|
||||||||
Diluted
|
|
|
|
|
|
|
|
||||||||
Continued operations
|
$
|
1.76
|
|
|
$
|
2.05
|
|
|
$
|
2.04
|
|
|
$
|
1.69
|
|
Discontinued operations
|
(0.04
|
)
|
|
(0.06
|
)
|
|
(0.04
|
)
|
|
(1.13
|
)
|
||||
Total
|
$
|
1.72
|
|
|
$
|
1.99
|
|
|
$
|
2.00
|
|
|
$
|
0.56
|
|
Basic
|
|
|
|
|
|
|
|
||||||||
Continuing operations
|
$
|
1.79
|
|
|
$
|
2.08
|
|
|
$
|
2.07
|
|
|
$
|
1.72
|
|
Discontinued operations
|
(0.04
|
)
|
|
(0.06
|
)
|
|
(0.04
|
)
|
|
(1.15
|
)
|
||||
Total
|
$
|
1.75
|
|
|
$
|
2.02
|
|
|
$
|
2.03
|
|
|
$
|
0.57
|
|
(1)
|
Gross profit for the first, second, third and fourth quarters of 2015 included pre-tax charges related to our LIFO method of accounting for inventories of
$98 million
,
$94 million
,
$95 million
and
$50 million
.
|
(2)
|
Financial results for the fourth quarter of 2015 included a non-cash after-tax charge of
$150 million
related to the settlement of controlled substance distribution claims.
|
(3)
|
Discontinued operations for the fourth quarter of 2015 included
$235 million
non-cash after-tax impairment charges related to our Brazilian pharmaceutical distribution business.
|
(4)
|
Certain computations may reflect rounding adjustments.
|
Item 9.
|
Changes in and Disagreements with Accountants on Accounting and Financial Disclosure.
|
Item 9A.
|
Controls and Procedures.
|
Item 9B.
|
Other Information.
|
Item 10.
|
Directors, Executive Officers and Corporate Governance.
|
Item 11.
|
Executive Compensation.
|
Item 12.
|
Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters.
|
Plan Category
(In millions, except per share amounts)
|
Number of securities
to be issued upon
exercise of
outstanding options,
warrants and rights
|
|
Weighted-average
exercise price of
outstanding options,
warrants and rights
(1)
|
|
Number of securities remaining available for future issuance under equity compensation plans (excluding securities reflected in the first column)
|
|||
Equity compensation plans approved by
security holders
|
6.4
(2)
|
|
$
|
118.95
|
|
|
33.0
(3)
|
|
Equity compensation plans not approved by
security holders
|
—
|
|
$
|
—
|
|
|
—
|
|
(1)
|
The weighted-average exercise price set forth in this column is calculated excluding outstanding restricted stock unit (“RSU”) awards, since recipients are not required to pay an exercise price to receive the shares subject to these awards.
|
(2)
|
Represents option and RSU awards outstanding under the following plans: (i) 1997 Non-Employee Directors’ Equity Compensation and Deferral Plan; (ii) the 2005 Stock Plan; and (iii) the 2013 Stock Plan.
|
(3)
|
Represents 4,373,049 shares available for purchase under the 2000 Employee Stock Purchase Plan and 28,608,465 shares available for grant under the 2013 Stock Plan.
|
Item 13.
|
Certain Relationships and Related Transactions, and Director Independence.
|
Item 14.
|
Principal Accounting Fees and Services.
|
Item 15.
|
Exhibits and Financial Statement Schedule.
|
|
Page
|
(a)(1) Consolidated Financial Statements
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(a)(2) Financial Statement Schedule
|
|
|
|
|
|
All other schedules not included 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.
|
|
|
|
|
|
|
|
|
M
C
K
ESSON
C
ORPORATION
|
|
|
|
|
Date: May 5, 2016
|
|
/s/ James A. Beer
|
|
|
|
|
James A. Beer
|
|
|
|
Executive Vice President and Chief Financial Officer
|
|
|
|
Additions
|
|
|
|
|
||||||||||||
Description
|
Balance at Beginning of Year
|
|
Charged to Costs and Expenses
|
|
Charged to Other Accounts
(3)
|
|
Deductions From Allowance Accounts
(1)
|
|
Balance at End of
Year
(2)
|
||||||||||
Year Ended March 31, 2016
|
|
|
|
|
|
|
|
|
|
||||||||||
Allowances for doubtful
accounts
|
$
|
141
|
|
|
$
|
113
|
|
|
$
|
2
|
|
|
$
|
(44
|
)
|
|
$
|
212
|
|
Other allowances
|
33
|
|
|
—
|
|
|
(3
|
)
|
|
11
|
|
|
41
|
|
|||||
|
$
|
174
|
|
|
$
|
113
|
|
|
$
|
(1
|
)
|
|
$
|
(33
|
)
|
|
$
|
253
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Year Ended March 31, 2015
|
|
|
|
|
|
|
|
|
|
||||||||||
Allowances for doubtful
accounts
|
$
|
112
|
|
|
$
|
67
|
|
|
$
|
—
|
|
|
$
|
(38
|
)
|
|
$
|
141
|
|
Other allowances
|
22
|
|
|
8
|
|
|
—
|
|
|
3
|
|
|
33
|
|
|||||
|
$
|
134
|
|
|
$
|
75
|
|
|
$
|
—
|
|
|
$
|
(35
|
)
|
|
$
|
174
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Year Ended March 31, 2014
|
|
|
|
|
|
|
|
|
|
||||||||||
Allowances for doubtful
accounts
|
$
|
121
|
|
|
$
|
36
|
|
|
$
|
(11
|
)
|
|
$
|
(34
|
)
|
|
$
|
112
|
|
Other allowances
|
15
|
|
|
—
|
|
|
10
|
|
|
(3
|
)
|
|
22
|
|
|||||
|
$
|
136
|
|
|
$
|
36
|
|
|
$
|
(1
|
)
|
|
$
|
(37
|
)
|
|
$
|
134
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2016
|
|
2015
|
|
2014
|
||||||
(1)
|
Deductions:
|
|
|
|
|
|
|
||||||
|
Written off
|
|
$
|
(33
|
)
|
|
$
|
(34
|
)
|
|
$
|
(39
|
)
|
|
Credited to other accounts
|
|
—
|
|
|
(1
|
)
|
|
2
|
|
|||
|
Total
|
|
$
|
(33
|
)
|
|
$
|
(35
|
)
|
|
$
|
(37
|
)
|
|
|
|
|
|
|
|
|
||||||
(2)
|
Amounts shown as deductions from current and non-current receivables
|
|
$
|
253
|
|
|
$
|
174
|
|
|
$
|
134
|
|
|
|
|
|
|
|
|
|
||||||
(3)
|
Primarily represents reclassifications from other balance sheet accounts.
|
|
|
|
|
|
|
•
|
should not in all instances be treated as categorical statements of fact, but rather as a way of allocating the risk to one of the parties if those statements prove to be inaccurate;
|
•
|
may apply standards of materiality in a way that is different from what may be viewed as material to you or other investors; and
|
•
|
were made only as of the date of the applicable agreement or such other date or dates as may be specified in the agreement and are subject to more recent developments.
|
|
|
Incorporated by Reference
|
|||
Exhibit Number
|
Description
|
Form
|
File Number
|
Exhibit
|
Filing Date
|
10.1*
|
McKesson Corporation 1997 Non-Employee Directors’
Equity Compensation and Deferral Plan, as amended through January 29, 2003.
|
10-K
|
1-13252
|
10.4
|
June 10, 2004
|
10.2*
|
McKesson Corporation Supplemental Profit Sharing Investment Plan, as amended and restated on January 29, 2003.
|
10-K
|
1-13252
|
10.6
|
June 6, 2003
|
10.3*
|
McKesson Corporation Supplemental Profit Sharing Investment Plan II, as amended and restated on July 29, 2014.
|
10-Q
|
1-13252
|
10.1
|
October 28, 2014
|
10.4*
|
McKesson Corporation Deferred Compensation Administration Plan, as amended and restated as of October 28, 2004.
|
10-K
|
1-13252
|
10.6
|
May 13, 2005
|
10.5*
|
McKesson Corporation Deferred Compensation Administration Plan II, as amended and restated as of October 28, 2004, and Amendment No. 1 thereto effective July 25, 2007.
|
10-K
|
1-13252
|
10.7
|
May 7, 2008
|
10.6*
|
McKesson Corporation Deferred Compensation Administration Plan III, as amended and restated July 29, 2014.
|
10-Q
|
1-13252
|
10.2
|
October 28, 2014
|
10.7*
|
McKesson Corporation Executive Benefit Retirement Plan, as amended and restated on October 24, 2008.
|
10-Q
|
1-13252
|
10.3
|
October 29, 2008
|
10.8*
|
McKesson Corporation Executive Survivor Benefits Plan,
as amended and restated as of January 20, 2010.
|
8-K
|
1-13252
|
10.1
|
January 25, 2010
|
10.9*
|
McKesson Corporation Severance Policy for Executive Employees, as amended and restated as of April 23, 2013.
|
10-K
|
1-13252
|
10.11
|
May 7, 2013
|
10.10*
|
McKesson Corporation Change in Control Policy for Selected Executive Employees, as amended and restated on October 26, 2010.
|
10-Q
|
1-13252
|
10.2
|
February 1, 2011
|
10.11*
|
McKesson Corporation Management Incentive Plan, effective July 29, 2015.
|
8-K
|
1-13252
|
10.1
|
July 31, 2015
|
10.12*
|
Form of Statement of Terms and Conditions Applicable to Awards Pursuant to the McKesson Corporation Management Incentive Plan, effective May 26, 2015.
|
10-Q
|
1-13252
|
10.1
|
July 29, 2015
|
10.13*
|
McKesson Corporation Long-Term Incentive Plan, as amended and restated, effective May 26, 2015.
|
10-Q
|
1-13252
|
10.2
|
July 29, 2015
|
10.14†
|
Forms of Statement of Terms and Conditions Applicable to Awards Pursuant to the McKesson Corporation Long-Term Incentive Plan, effective May 24, 2016.
|
—
|
—
|
—
|
—
|
10.15*
|
McKesson Corporation 2005 Stock Plan, as amended and restated on July 28, 2010.
|
10-Q
|
1-13252
|
10.4
|
July 30, 2010
|
10.16*
|
Forms of (i) Statement of Terms and Conditions, (ii) Stock Option Grant Notice and (iii), Restricted Stock Unit Agreement, each as applicable to Awards under the McKesson Corporation 2005 Stock Plan.
|
10-Q
|
1-13252
|
10.2
|
July 26, 2012
|
10.17*
|
McKesson Corporation 2013 Stock Plan, as adopted on May 22, 2013.
|
8-K
|
1-13252
|
10.1
|
August 2, 2013
|
10.18†
|
Forms of Statement of Terms and Conditions Applicable to Awards Pursuant to the McKesson Corporation 2013 Stock Plan.
|
—
|
—
|
—
|
—
|
10.19†
|
Form of Commercial Paper Dealer Agreement between McKesson Corporation, as Issuer, and the Dealer
|
—
|
—
|
—
|
—
|
|
|
Incorporated by Reference
|
|||
Exhibit Number
|
Description
|
Form
|
File Number
|
Exhibit
|
Filing Date
|
10.20
|
Credit Agreement, dated as of October 22, 2015, among the Company and Certain Subsidiaries, as Borrowers, Bank of America, N.A. as Administrative Agent, Bank of America, N.A. (acting through its Canada Branch), Citibank, N.A. and Barclays Bank PLC, as Swing Line Lenders, Wells Fargo Bank, National Association as L/C Issuer, Barclays Bank PLC, Citibank N.A., Wells Fargo Bank, National Association as Co-Syndication Agents, Goldman Sachs Bank USA, JPMorgan Chase Bank, N.A., The Bank of Tokyo-Mitsubishi UFJ, Ltd. as Co-Documentation Agents, and The Other Lenders Party Thereto, and Merrill Lynch, Pierce, Fenner & Smith Incorporated, Barclays Bank PLC, Citigroup Global Markets Inc., Goldman Sachs Bank USA, J.P. Morgan Securities, LLC, The Bank of TokyoMitsubishi UFJ, Ltd. and Wells Fargo Securities, LLC as Joint Lead Arrangers and Joint Book Runners.
|
8-K
|
1-13252
|
10.1
|
October 23, 2015
|
10.21
|
Amendment No. 2, dated January 30, 2014, and Amendment No. 1, dated November 15, 2013, to the Credit Agreement and the Credit Agreement dated as of September 23, 2011, among the Company and McKesson Canada Corporation, collectively, the Borrowers, Bank of America, N.A. as Administrative Agent, Bank of America, N.A. (acting through its Canada branch), as Canadian Administrative Agent, JPMorgan Chase Bank, N.A. and Wells Fargo Bank, National Association, as Co-Syndication Agents, Wells Fargo Bank, National Association as L/C Issuer, The Bank of Tokyo-Mitsubishi UFJ, LTD., The Bank of Nova Scotia and U.S. Bank National Association as Co-Documentation Agents, and The Other Lenders Party Thereto, and Merrill Lynch, Pierce, Fenner & Smith Incorporated, Sole Lead Arranger and Sole Book Manager.
|
8-K
|
1-3252
|
10.1
|
February 5, 2014
|
10.22*
|
Amended and Restated Employment Agreement, effective as of November 1, 2008, by and between the Company and its Chairman, President and Chief Executive Officer.
|
10-Q
|
1-13252
|
10.10
|
October 29, 2008
|
10.23*
|
Letter dated March 27, 2012 relinquishing certain rights provided in the Amended and Restated Employment Agreement by and between the Company and its Chairman, President and Chief Executive Officer.
|
8-K
|
1-13252
|
10.1
|
April 2, 2012
|
10.24*
|
Letter dated February 27, 2014 relinquishing certain rights provided in the McKesson Corporation Executive Benefit Retirement Plan by and between the Company and its Chairman, President and Chief Executive Officer.
|
8-K
|
1-13252
|
10.1
|
February 28, 2014
|
10.25*
|
Amended and Restated Employment Agreement, effective as of November 1, 2008, by and between the Company and its Executive Vice President and Group President.
|
10-Q
|
1-13252
|
10.12
|
October 29, 2008
|
10.26*
|
Form of Director and Officer Indemnification Agreement.
|
10-K
|
1-13252
|
10.27
|
May 4, 2010
|
12†
|
Computation of Ratio of Earnings to Fixed Charges.
|
—
|
—
|
—
|
—
|
21†
|
List of Subsidiaries of the Registrant.
|
—
|
—
|
—
|
—
|
23†
|
Consent of Independent Registered Public Accounting Firm, Deloitte & Touche LLP.
|
—
|
—
|
—
|
—
|
24†
|
Power of Attorney.
|
—
|
—
|
—
|
—
|
31.1†
|
Certification of Chief Executive Officer Pursuant to Rule 13a-14(a) and Rule 15d-14(a) of the Securities Exchange Act of 1934, as amended, and adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
|
—
|
—
|
—
|
—
|
31.2†
|
Certification of Chief Financial Officer Pursuant to Rule 13a-14(a) and Rule 15d-14(a) of the Securities Exchange Act of 1934 as amended, and adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
|
—
|
—
|
—
|
—
|
|
|
Incorporated by Reference
|
|||
Exhibit Number
|
Description
|
Form
|
File Number
|
Exhibit
|
Filing Date
|
32††
|
Certification Pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
|
—
|
—
|
—
|
—
|
101†
|
The following materials from the McKesson Corporation Annual Report on Form 10-K for the fiscal year ended March 31, 2014, formatted in Extensible Business Reporting Language (XBRL): (i) the Consolidated Statements of Operations, (ii) Consolidated Statements of Comprehensive Income, (iii) Consolidated Balance Sheets, (iv) Consolidated Statements of Stockholders' Equity, (v) Consolidated Statements of Cash Flows, and (vi) related Financial Notes.
|
—
|
—
|
—
|
—
|
*
|
Management contract or compensation plan or arrangement in which directors and/or executive officers are eligible to participate.
|
†
|
Filed herewith.
|
††
|
Furnished herewith.
|
DIRECTORS AND OFFICERS
|
||
|
|
|
BOARD OF DIRECTORS
|
|
CORPORATE OFFICERS
|
|
|
|
John H. Hammergren
|
|
John H. Hammergren
|
Chairman of the Board,
|
|
Chairman of the Board,
|
President and Chief Executive Officer,
|
|
President and Chief Executive Officer,
|
McKesson Corporation
|
|
McKesson Corporation
|
|
|
|
Andy D. Bryant
|
|
James A. Beer
|
Chairman of the Board,
|
|
Executive Vice President and Chief Financial Officer
|
Intel Corporation
|
|
|
|
|
Patrick J. Blake
|
Wayne A. Budd
|
|
Executive Vice President and Group President
|
Senior Counsel,
|
|
|
Goodwin Procter LLP
|
|
Jorge L. Figueredo
|
|
|
Executive Vice President, Human Resources
|
N. Anthony Coles, M. D.
|
|
|
Chairman and Chief Executive Officer,
|
|
Paul C. Julian
|
Yumanity Therapeutics, LLC
|
|
Executive Vice President and Group President
|
|
|
|
Alton F. Irby III
|
|
Bansi Nagji
|
Chairman and Founding Partner,
|
|
Executive Vice President,
|
London Bay Capital
|
|
Corporate Strategy and Business Development
|
|
|
|
M. Christine Jacobs
|
|
Kathleen D. McElligott
|
Chairman of the Board, President and
|
|
Executive Vice President, Chief Information Officer and
|
Chief Executive Officer, Retired,
|
|
Chief Technology Officer
|
Theragenics Corporation
|
|
|
|
|
Lori A. Schechter
|
Donald R. Knauss
|
|
Executive Vice President, General Counsel and
|
Executive Chairman of the Board, Retired,
|
|
Chief Compliance Officer
|
The Clorox Company
|
|
|
|
|
Brian P. Moore
|
Marie L. Knowles
|
|
Senior Vice President and Treasurer
|
Executive Vice President and
|
|
|
Chief Financial Officer, Retired,
|
|
Nigel A. Rees
|
Atlantic Richfield Company
|
|
Senior Vice President and Controller
|
|
|
|
David M. Lawrence, M.D.
|
|
John G. Saia
|
Chairman of the Board and
|
|
Secretary
|
Chief Executive Officer, Retired,
|
|
|
Kaiser Foundation Health Plan, Inc. and
|
|
|
Kaiser Foundation Hospitals
|
|
|
|
|
|
Edward A. Mueller
|
|
|
Chairman of the Board and
|
|
|
Chief Executive Officer, Retired,
|
|
|
Qwest Communications International Inc.
|
|
|
|
|
|
Susan R. Salka
|
|
|
Chief Executive Officer and President,
|
|
|
AMN Healthcare Services, Inc.
|
|
|
|
|
|
|
|
|
|
|
|
(a)
|
Termination of Employment Prior to Payment of the Actual Award – General Rule
|
(b)
|
Termination of Employment by Reason of Death or Long-Term Disability On or After Completion of One Half of the Performance Period
|
(c)
|
Termination of Employment by Reason of Retirement On or After Completion of the First Year of the Performance Period
|
(d)
|
Termination of Employment by Reason of Severance
|
(a)
|
“Beneficiary” means the person, persons or entity designated by a Participant in accordance with any procedures established by the Committee to receive any amounts distributable under the Plan in the event of the death of the Participant. If no Beneficiary is designated or if no designated Beneficiary is living when a distribution is to be made, then the Beneficiary shall be the Participant’s current lawful spouse if then living or, if not, the Participant’s estate. A Participant may change or revoke a previous designation of a Beneficiary at any time.
|
(b)
|
“Cause” means termination of the Participant’s employment with the Company upon the Participant’s negligent or willful engagement in misconduct which, in the sole determination of the Chief Executive Officer (“CEO”) (or his designee), is injurious to the Company, its employees, or its customers.
|
(c)
|
“Change in Control” shall have the meaning set forth in Section 6 of the Plan.
|
(d)
|
“Committee” means the Compensation Committee of the Board of Directors of the Company.
|
(e)
|
“Company” means McKesson Corporation, a Delaware corporation, including its subsidiaries and affiliates.
|
(f)
|
“DCAP III” means the McKesson Corporation Deferred Compensation Administration Plan III, as amended from time to time.
|
(g)
|
“Good Reason” means any of the following actions, if taken without the express written consent of the Participant:
|
(i)
|
Any material change by the Company in the CEO’s functions, duties or responsibilities as President and Chief Executive Officer, which change would cause the CEO’s position with the Company to become of less dignity, responsibility, importance, or scope as compared to the position and attributes that applied to the CEO immediately prior to the Change in Control, or an adverse change in the CEO’s title, position or his obligation and right to report directly to the Board;
|
(ii)
|
Any reduction in the CEO’s base annual salary, MIP target or Long Term Incentive compensation (LTI) targets, which LTI targets include cash awards with performance periods greater than one year and equity based grants, except for reductions that are equivalent to reductions applicable to executive officers of the Company;
|
(iii)
|
Any material failure by the Company to comply with any of the provisions of an award (or of any employment agreement between the parties) subsequent to a Change in Control;
|
(iv)
|
The Company’s requiring the CEO to be based at any office or location more than 25 miles from the office at which the CEO is based on the date immediately preceding the Change in Control, except for travel reasonably required in the performance of the CEO’s responsibilities;
|
(v)
|
Cancellation of the automatic renewal mechanism set forth in the CEO’s Employment Agreement;
|
(vi)
|
If the Board removes the CEO as Chairman at or after a Change in Control (or prior to a Change in Control if at the request of any third party participating in or causing the Change in Control), unless such removal is required by then-applicable law; or
|
(vii)
|
A change in the majority of the members of the Board as it was construed immediately prior to the Change in Control;
|
(h)
|
“Long-Term Disability” shall mean a physical or mental condition in respect of which the administrator of the Company’s long-term disability plan has determined that the Participant is eligible to receive income replacement benefits; or, if the Participant is not then a participant in the Company’s long-term disability plan, a physical or mental condition that the administrator of the Company’s long-term disability plan determines would have rendered the Participant eligible to receive income replacement benefits, had the Participant been enrolled in such plan.
|
(i)
|
The “Performance Chart” shall be the performance measure(s) and award scale(s), specified by the Committee at the time of making the award.
|
(j)
|
“Performance Period” is the period of time, identified by a beginning and end date, specified by the Committee at the time of making the award over which performance is measured.
|
(k)
|
“Plan” means the McKesson Corporation Long-Term Incentive Plan, as amended from time to time.
|
(l)
|
“Retirement” means termination of employment with the Company (other than due to death, Long-Term Disability or for Cause) at or after age 60 (57, in the case of a participant in the McKesson Corporation 1984 Executive Benefit Retirement Plan) with at least 10 years of service with the Company and designation as a retiree by the Compensation Committee of the Board. For purposes of determining eligibility for Retirement, a
|
(m)
|
“Severance” means termination of employment with the Company, and qualified for participation in and entitlement to benefits under the McKesson Corporation Severance Pay Plan, in accordance with the terms and conditions of such plan.
|
(n)
|
“Target Award” means the amount specified by the Committee payable to a participant for the Performance Period and payable for achievement at 100%.
|
(a)
|
Termination of Employment Prior to Payment of the Actual Award – General Rule
|
(b)
|
Termination of Employment by Reason of Death or Long-Term Disability On or After Completion of One Half of the Performance Period
|
(c)
|
Termination of Employment by Reason of Retirement On or After Completion of the First Year of the Performance Period
|
(d)
|
Termination of Employment by Reason of Severance
|
(a)
|
“Beneficiary” means the person, persons or entity designated by a Participant in accordance with any procedures established by the Committee to receive any amounts distributable under the Plan in the event of the death of the Participant. If no Beneficiary is designated or if no designated Beneficiary is living when a distribution is to be made, then the Beneficiary shall be the Participant’s current lawful spouse if then living or, if not, the Participant’s estate. A Participant may change or revoke a previous designation of a Beneficiary at any time.
|
(b)
|
“Cause” means termination of the Participant’s employment with the Company upon the Participant’s negligent or willful engagement in misconduct which, in the sole determination of the Chief Executive Officer (or his designee), is injurious to the Company, its employees, or its customers.
|
(c)
|
“Change in Control” shall have the meaning set forth in Section 6 of the Plan.
|
(d)
|
“Committee” means the Compensation Committee of the Board of Directors of the Company.
|
(e)
|
“Company” means McKesson Corporation, a Delaware corporation, including its subsidiaries and affiliates.
|
(f)
|
“DCAP III” means the McKesson Corporation Deferred Compensation Administration Plan III, as amended from time to time.
|
(g)
|
“Good Reason” means any of the following actions, if taken without the express written consent of the Participant:
|
(i)
|
Any material adverse change by the Company in the Participant’s authorities, duties, or responsibilities, which change would cause the Participant’s position with the Company to become of less dignity, responsibility, importance, or scope from the position and attributes that applied to the Participant immediately prior to the Change in Control;
|
(ii)
|
Any significant reduction in the Participant’s base salary immediately prior to the Change in Control, other than a reduction effected as part of an across-the-board reduction affecting all Plan participants;
|
(iii)
|
Any material failure by the Company to comply with any of the provisions of an award (or of any employment agreement between the parties) subsequent to a Change in Control;
|
(iv)
|
The Company’s requiring the Participant to be based at any office or location more than 25 miles from the office at which the Participant is based on the date immediately preceding the Change in Control; or
|
(v)
|
Any change in the person to whom the Participant reports, as this relationship existed immediately prior to a Change in Control;
|
(h)
|
“Long-Term Disability” shall mean a physical or mental condition in respect of which the administrator of the Company’s long-term disability plan has determined that the Participant is eligible to receive income replacement benefits; or, if the Participant is not then a participant in the Company’s long-term disability plan, a physical or mental condition that the administrator of the Company’s long-term disability plan determines would have rendered the Participant eligible to receive income replacement benefits, had the Participant been enrolled in such plan.
|
(i)
|
The “Performance Chart” shall be the performance measure(s) and award scale(s), specified by the Committee at the time of making the award.
|
(j)
|
“Performance Period” is the period of time, identified by a beginning and end date, specified by the Committee at the time of making the award over which performance is measured.
|
(k)
|
“Plan” means the McKesson Corporation Long-Term Incentive Plan, as amended from time to time.
|
(l)
|
“Retirement” means termination of employment with the Company (other than due to death, Long-Term Disability or for Cause) at or after age 60 (57, in the case of a participant in the McKesson Corporation 1984 Executive Benefit Retirement Plan) with at least 10 years of service with the Company and designation as a retiree by the Compensation Committee of the Board. For purposes of determining eligibility for Retirement, a “year of service” means a completed whole year (12 consecutive months); provided that if a Participant who has a termination of employment with the Company by reason of Severance would have attained the aforementioned requirements for Retirement within six months after the Participant’s termination date, then such termination of employment with the Company shall be deemed to be “Retirement.”
|
(m)
|
“Severance” means termination of employment with the Company, and qualified for participation in and entitlement to benefits under the McKesson Corporation Severance Pay Plan, in accordance with the terms and conditions of such plan.
|
(n)
|
“Target Award” means the amount specified by the Committee payable to a participant for the Performance Period and payable for achievement at 100%.
|
(a)
|
Termination of Employment Prior to Payment of the Actual Award – General Rule
|
(b)
|
Termination of Employment by Reason of Death or Long-Term Disability On or After Completion of One Half of the Performance Period
|
(c)
|
Termination of Employment by Reason of Retirement On or After Completion of the First Year of the Performance Period
|
(d)
|
Termination of Employment by Reason of Severance
|
(a)
|
“Beneficiary” means the person, persons or entity designated by a Participant in accordance with any procedures established by the Committee to receive any amounts distributable under the Plan in the event of the death of the Participant. If no Beneficiary is designated or if no designated Beneficiary is living when a distribution is to be made, then the Beneficiary shall be the Participant’s current lawful spouse if then living or, if not, the Participant’s estate. A Participant may change or revoke a previous designation of a Beneficiary at any time.
|
(b)
|
“Cause” means termination of the Participant’s employment with the Company upon the Participant’s negligent or willful engagement in misconduct which, in the sole determination of the Chief Executive Officer (or his designee), is injurious to the Company, its employees, or its customers.
|
(c)
|
“Change in Control” shall have the meaning set forth in Section 6 of the Plan.
|
(d)
|
“Committee” means the Compensation Committee of the Board of Directors of the Company.
|
(e)
|
“Company” means McKesson Corporation, a Delaware corporation, including its subsidiaries and affiliates.
|
(f)
|
“DCAP III” means the McKesson Corporation Deferred Compensation Administration Plan III, as amended from time to time.
|
(g)
|
“Good Reason” means any of the following actions, if taken without the express written consent of the Participant:
|
(i)
|
Any material adverse change by the Company in the Participant’s authorities, duties, or responsibilities, which change would cause the Participant’s position with the Company to become of less dignity, responsibility, importance, or scope from the position and attributes that applied to the Participant immediately prior to the Change in Control;
|
(ii)
|
Any significant reduction in the Participant’s base salary immediately prior to the Change in Control, other than a reduction effected as part of an across-the-board reduction affecting all Plan participants;
|
(iii)
|
Any material failure by the Company to comply with any of the provisions of an award (or of any employment agreement between the parties) subsequent to a Change in Control; or
|
(iv)
|
The Company’s requiring the Participant to be based at any office or location more than 25 miles from the office at which the Participant is based on the date immediately preceding the Change in Control;
|
(h)
|
“Long-Term Disability” shall mean a physical or mental condition in respect of which the administrator of the Company’s long-term disability plan has determined that the Participant is eligible to receive income replacement benefits; or, if the Participant is not then a participant in the Company’s long-term disability plan, a physical or mental condition that the administrator of the Company’s long-term disability plan determines would have rendered the Participant eligible to receive income replacement benefits, had the Participant been enrolled in such plan.
|
(i)
|
The “Performance Chart” shall be the performance measure(s) and award scale(s), specified by the Committee at the time of making the award.
|
(j)
|
“Performance Period” is the period of time, identified by a beginning and end date, specified by the Committee at the time of making the award over which performance is measured.
|
(k)
|
“Plan” means the McKesson Corporation Long-Term Incentive Plan, as amended from time to time.
|
(l)
|
“Retirement” means termination of employment with the Company (other than due to death, Long-Term Disability or for Cause) at or after age 60 (57, in the case of a participant in the McKesson Corporation 1984 Executive Benefit Retirement Plan) with at least 10 years of service with the Company and designation as a retiree by the Compensation Committee of the Board. For purposes of determining eligibility for Retirement, a “year of service” means a completed whole year (12 consecutive months); provided that if a Participant who has a termination of employment with the Company by reason of Severance would have attained the aforementioned requirements for Retirement within six months after the Participant’s termination date, then such termination of employment with the Company shall be deemed to be “Retirement.”
|
(m)
|
“Severance” means termination of employment with the Company, and qualified for participation in and entitlement to benefits under the McKesson Corporation Severance Pay Plan, in accordance with the terms and conditions of such plan.
|
(n)
|
“Target Award” means the amount specified by the Committee payable to a participant for the Performance Period and payable for achievement at 100%.
|
I.
|
INTRODUCTION
|
II.
|
RESTRICTED STOCK UNITS
|
III.
|
MISCELLANEOUS
|
I.
|
INTRODUCTION
|
II.
|
OPTIONS
|
III.
|
RESTRICTED STOCK
|
IV.
|
RESTRICTED STOCK UNITS AND PERFORMANCE SHARES
|
V.
|
TOTAL SHAREHOLDER RETURN (“TSR”) UNIT AWARDS
|
VI.
|
SPECIAL FORFEITURE AND REPAYMENT RULES
|
VII.
|
CHANGE IN CONTROL
|
VIII.
|
MISCELLANEOUS
|
IX.
|
DEFINITIONS
|
I.
|
INTRODUCTION
|
II.
|
OPTIONS
|
III.
|
RESTRICTED STOCK
|
IV.
|
RESTRICTED STOCK UNITS AND PERFORMANCE SHARES
|
V.
|
TOTAL SHAREHOLDER RETURN (“TSR”) UNIT AWARDS
|
VI.
|
SPECIAL FORFEITURE AND REPAYMENT RULES
|
VII.
|
CHANGE IN CONTROL
|
VIII.
|
MISCELLANEOUS
|
IX.
|
DEFINITIONS
|
I.
|
INTRODUCTION
|
II.
|
OPTIONS
|
III.
|
RESTRICTED STOCK
|
IV.
|
RESTRICTED STOCK UNITS AND PERFORMANCE SHARES
|
V.
|
SPECIAL FORFEITURE AND REPAYMENT RULES
|
VI.
|
CHANGE IN CONTROL
|
VII.
|
MISCELLANEOUS
|
VIII.
|
DEFINITIONS
|
I.
|
INTRODUCTION
|
II.
|
OPTIONS
|
III.
|
RESTRICTED STOCK
|
IV.
|
RESTRICTED STOCK UNITS AND PERFORMANCE SHARES
|
V.
|
SPECIAL FORFEITURE AND REPAYMENT RULES
|
VI.
|
CHANGE IN CONTROL
|
VII.
|
MISCELLANEOUS
|
VIII.
|
DEFINITIONS
|
Grantee Name:
|
|
Grantee Address:
|
|
Number of RSUs Granted:
|
|
Date of Grant:
|
|
Vesting Dates:
|
|
1.
|
I agree to receive copies of the stockholder information, including copies of any annual report, proxy and Form 10-K, from the Investor Resources section of the McKesson website at www.mckesson.com; and
|
2.
|
I also acknowledge that copies of the Plan, Plan prospectus, Plan information and stockholder information are available upon written or telephonic request to the Corporate Secretary (1-800-826-9360); and
|
3.
|
I have access to the Company’s web site; and
|
4.
|
I consent to receiving electronically a copy of the documents set forth above and attachments to this Notice; and
|
5.
|
The Plan and ST&Cs are incorporated by reference to this Notice; and
|
6.
|
The Company recommends that the Grantee consult with a tax advisor prior to accepting or vesting of this grant of RSUs; and
|
7.
|
I accept ALL the terms and conditions as set forth in the Plan and the ST&Cs applicable to this grant of RSUs.
|
PLEASE RETURN ONE SIGNED COPY OF THIS AGREEMENT TO:
McKesson Corporation
Stock Administration
One Post Street, 35
th
Floor, San Francisco, CA 94104
Attention: Evelyn Shaffer
|
ATTACHMENTS:
•
2013 Stock Plan
•
2013 Stock Plan Prospectus for Non-Employee Directors
•
ST&Cs Applicable to Outside Director
•
Hedging & Pledging Policy
•
Insider Trading Policy
•
Designation of Beneficiary Form
|
Optionee Name:
|
|
Optionee Address:
|
|
Type of Option:
|
Nonstatutory Stock Option
|
Grant Date:
|
|
Shares Granted:
|
|
Price per Share:
|
|
Vesting Schedule:
|
|
Expiration Date:
|
|
1.
|
I agree to receive copies of the Plan, the Plan prospectus and other Plan information, including information prepared to comply with the laws outside the United States, from the Company’s website and stockholder information, including copies of any annual report, proxy and Form
10-K, from the Investor Resources section of the McKesson website at www.mckesson.com; and |
2.
|
I also acknowledge that copies of the Plan, Plan prospectus, Plan information and stockholder information are available upon written or telephonic request to the Corporate Secretary (1-800-826-9360); and
|
3.
|
I have access to the Company’s web site; and
|
4.
|
I consent to receiving electronically a copy of the document set forth above and attachments to this Notice; and
|
5.
|
The Plan, (including the Recoupment Policy and Stock Ownership Policy) and ST&Cs are incorporated by reference to this Notice; and
|
6.
|
The Company recommends that the Optionee consult with a tax advisor prior to accepting or exercising this Option; and
|
7.
|
I accept ALL the terms and conditions as set forth in the Plan and ST&Cs applicable to this Option.
|
|
|
|
Optionee Name:
|
|
Optionee Address:
|
|
Type of Option:
|
Nonstatutory Stock Option
|
Grant Date:
|
|
Shares Granted:
|
|
Price per Share:
|
|
Vesting Schedule:
|
|
Expiration Date:
|
|
1.
|
I agree to receive copies of the Plan, the Plan prospectus and other Plan information, including information prepared to comply with the laws outside the United States, from the Company’s website and stockholder information, including copies of any annual report, proxy and Form
10-K, from the Investor Resources section of the McKesson website at www.mckesson.com; and |
2.
|
I also acknowledge that copies of the Plan, Plan prospectus, Plan information and stockholder information are available upon written or telephonic request to the Corporate Secretary (1-800-826-9360); and
|
3.
|
I have access to the Company’s web site; and
|
4.
|
I consent to receiving electronically a copy of the document set forth above and attachments to this Notice; and
|
5.
|
The Plan (including the Recoupment Policy) and ST&Cs are incorporated by reference to this Notice; and
|
6.
|
The Company recommends that the Optionee consult with a tax advisor prior to accepting or exercising this Option; and
|
7.
|
I accept ALL the terms and conditions as set forth in the Plan and the ST&Cs applicable to this Option.
|
|
|
|
Participant Name
|
|
Target Number of Units
|
|
Date Target Approved
|
|
Performance Period
|
|
•
|
You continue to be employed by McKesson Corporation or one of its affiliates through the date on which the Committee meets to determine achievement against the performance criteria, and
|
•
|
The Committee determines that, based on achievement of the performance criteria, a grant of shares of McKesson common stock will be made to you under the TSRU Program for _____-_____, then
|
•
|
Performance Criteria for your TSRU target award will be determined by the Committee at the beginning of the performance period and communicated to you. The performance criteria will include a goal based on McKesson’s total shareholder return (TSR) over the performance period.
|
•
|
If the performance criteria are met at no less than the threshold level determined by the Committee, you will receive a grant of shares.
|
•
|
You may earn from 0% to 200% of the Target Number of Units set forth above.
|
Grantee Name:
|
|
Grantee Address:
|
|
Number of RSUs Granted:
|
|
Date of Grant:
|
|
Vesting Dates:
|
|
1.
|
I agree to receive copies of the Plan, the Plan prospectus and other Plan information, including information prepared to comply with the laws outside the United States, from the Company’s website and stockholder information, including copies of any annual report, proxy and Form 10-K, from the Investor Resources section of the McKesson website at www.mckesson.com; and
|
2.
|
I also acknowledge that copies of the Plan, Plan prospectus, Plan information and stockholder information are available upon written or telephonic request to the Corporate Secretary (1-800-826-9360); and
|
3.
|
I have access to the Company’s web site; and
|
4.
|
I consent to receiving electronically a copy of the documents set forth above and attachments to this Notice; and
|
5.
|
The Plan (including the Recoupment Policy and Stock Ownership Policy) and ST&Cs are incorporated by reference to this Notice; and
|
6.
|
The Company recommends that the Grantee consult with a tax advisor prior to accepting or vesting of this grant of RSUs; and
|
7.
|
I accept ALL the terms and conditions as set forth in the Plan and ST&Cs applicable to this grant of RSUs.
|
|
|
|
Grantee Name:
|
|
Grantee Address:
|
|
Number of RSUs Granted:
|
|
Date of Grant:
|
|
Vesting Dates:
|
|
1.
|
I agree to receive copies of the Plan, the Plan prospectus and other Plan information, including information prepared to comply with the laws outside the United States, from the Company’s website and stockholder information, including copies of any annual report, proxy and Form 10-K, from the Investor Resources section of the McKesson website at www.mckesson.com; and
|
2.
|
I also acknowledge that copies of the Plan, Plan prospectus, Plan information and stockholder information are available upon written or telephonic request to the Corporate Secretary (1-800-826-9360); and
|
3.
|
I have access to the Company’s web site; and
|
4.
|
I consent to receiving electronically a copy of the documents set forth above and attachments to this Notice; and
|
5.
|
The Plan (including the Recoupment Policy) and ST&Cs are incorporated by reference to this Notice; and
|
6.
|
The Company recommends that the Grantee consult with a tax advisor prior to accepting or vesting of this grant of RSUs; and
|
7.
|
I accept ALL the terms and conditions as set forth in the Plan and the ST&Cs applicable to this grant of RSUs.
|
|
|
|
2.
|
The addresses of the respective parties for purposes of notices under Section 7.1 are as follows:
|
Address:
|
McKesson Corporation
One Post Street, 34th Floor San Francisco, CA 94104 |
Address:
|
McKesson Corporation
One Post Street, 33rd Floor San Francisco, CA 94104 |
Address:
|
|
|
Years Ended March 31,
|
||||||||||||||||||
(Dollars in millions)
|
2016
|
|
2015
|
|
2014
|
|
2013
|
|
2012
|
||||||||||
|
|
|
|
|
|
|
|
|
|
||||||||||
Earnings:
|
|
|
|
|
|
|
|
|
|
||||||||||
|
|
|
|
|
|
|
|
|
|
||||||||||
Income from continuing operations before income taxes
|
$
|
3,250
|
|
|
$
|
2,657
|
|
|
$
|
2,171
|
|
|
$
|
1,950
|
|
|
$
|
1,915
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Adjustment for equity in net income of and
dividends from equity investees
|
(1
|
)
|
|
(1
|
)
|
|
2
|
|
|
(1
|
)
|
|
(2
|
)
|
|||||
|
|
|
|
|
|
|
|
|
|
||||||||||
Fixed charges - below
|
498
|
|
|
520
|
|
|
400
|
|
|
316
|
|
|
329
|
|
|||||
|
|
|
|
|
|
|
|
|
|
||||||||||
Amortization of capitalized interest
|
1
|
|
|
1
|
|
|
2
|
|
|
2
|
|
|
3
|
|
|||||
|
|
|
|
|
|
|
|
|
|
||||||||||
Less: Capitalized interest
|
(1
|
)
|
|
—
|
|
|
—
|
|
|
(1
|
)
|
|
(1
|
)
|
|||||
|
|
|
|
|
|
|
|
|
|
||||||||||
Earnings as adjusted
(a)
|
$
|
3,747
|
|
|
$
|
3,177
|
|
|
$
|
2,575
|
|
|
$
|
2,266
|
|
|
$
|
2,244
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Fixed charges:
|
|
|
|
|
|
|
|
|
|
||||||||||
|
|
|
|
|
|
|
|
|
|
||||||||||
Interest expense
(b) (c)
|
$
|
353
|
|
|
$
|
374
|
|
|
$
|
300
|
|
|
$
|
240
|
|
|
$
|
250
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Capitalized interest
|
1
|
|
|
—
|
|
|
—
|
|
|
1
|
|
|
1
|
|
|||||
|
|
|
|
|
|
|
|
|
|
||||||||||
Portion of rental expense representative of the interest
factor
(d)
|
144
|
|
|
146
|
|
|
100
|
|
|
75
|
|
|
78
|
|
|||||
|
|
|
|
|
|
|
|
|
|
||||||||||
Total fixed charges
|
$
|
498
|
|
|
$
|
520
|
|
|
$
|
400
|
|
|
$
|
316
|
|
|
$
|
329
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Ratio:
|
|
|
|
|
|
|
|
|
|
||||||||||
|
|
|
|
|
|
|
|
|
|
||||||||||
Ratio of earnings to fixed charges
|
7.5
|
|
|
6.1
|
|
|
6.4
|
|
|
7.2
|
|
|
6.8
|
|
(a)
|
Fiscal years 2011 through 2014 have been recast primarily to exclude our Brazil pharmaceutical distribution business as a discontinued operation and reflect the reclassification of a business from discontinued operations to continuing operations.
|
(b)
|
Interest expense includes amortization of debt discounts and deferred loan costs.
|
(c)
|
Interest expense on uncertain tax liabilities is excluded from interest expense as the company records these amounts within income tax expense.
|
(d)
|
One-third of net rent expense is the portion of rental expense deemed representative of the interest factor.
|
|
JURISDICTION
OF
ORGANIZATION
|
McKesson US Finance Corporation
|
United States
|
McKesson UK Finance I Limited
|
United Kingdom
|
McKesson UK Finance II Limited
|
United Kingdom
|
McKesson Global Procurement & Sourcing Limited
|
United Kingdom
|
Celesio Holdings Deutschland GmbH & Co. KGaA
|
Germany
|
Celesio AG
|
Germany
|
CGSF Funding Corporation
|
United States
|
McKesson Financial Holdings (IP3)
|
Ireland
|
McKesson Canada
|
Canada
|
|
/s/ Deloitte & Touche LLP
|
San Francisco, California
|
May 5, 2016
|
/s/ James A. Beer
|
|
/s/ Donald R. Knauss
|
James A. Beer, Executive Vice President and
Chief Financial Officer
(Principal Financial Officer)
|
|
Donald R. Knauss, Director
|
|
|
|
/s/ Andy D. Bryant
|
|
/s/ Marie L. Knowles
|
Andy D. Bryant, Director
|
|
Marie L. Knowles, Director
|
|
|
|
/s/ Wayne A. Budd
|
|
/s/ David M. Lawrence
|
Wayne A. Budd, Director
|
|
David M. Lawrence, M.D., Director
|
|
|
|
/s/ N. Anthony Coles
|
|
/s/ Edward A. Mueller
|
N. Anthony Coles, M.D., Director
|
|
Edward A. Mueller, Director
|
|
|
|
/s/ John H. Hammergren
|
|
/s/ Susan R. Salka
|
John H. Hammergren, Chairman of the Board,
President and Chief Executive Officer
(Principal Executive Officer)
|
|
Susan R. Salka, Director
|
|
|
|
/s/ Alton F. Irby
|
|
/s/ Nigel A. Rees
|
Alton F. Irby III, Director
|
|
Nigel A. Rees, Senior Vice President and Controller
(Principal Accounting Officer)
|
|
|
|
/s/ M. Christine Jacobs
|
|
|
M. Christine Jacobs, Director
|
|
|
|
|
|
Dated: April 27, 2016
|
|
|
1.
|
I have reviewed this annual report on Form 10-K of McKesson Corporation;
|
2.
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
3.
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
|
4.
|
The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
|
a)
|
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
b)
|
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
c)
|
Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
d)
|
Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and
|
5.
|
The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):
|
a)
|
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and
|
b)
|
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.
|
Date: May 5, 2016
|
|
/s/ John H. Hammergren
|
|
|
|
|
John H. Hammergren
|
|
|
|
Chairman of the Board, President and Chief Executive Officer
|
1.
|
I have reviewed this annual report on Form 10-K of McKesson Corporation;
|
2.
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
3.
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
|
4.
|
The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
|
a)
|
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
b)
|
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
c)
|
Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
d)
|
Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and
|
5.
|
The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):
|
a)
|
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and
|
b)
|
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.
|
Date: May 5, 2016
|
|
/s/ James A. Beer
|
|
|
|
|
James A. Beer
|
|
|
|
Executive Vice President and Chief Financial Officer
|
1.
|
The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
|
2.
|
The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
|
/s/ John H. Hammergren
|
|
|
John H. Hammergren
|
|
|
Chairman of the Board, President and Chief Executive Officer
|
|
|
May 5, 2016
|
|
|
|
|
|
/s/ James A. Beer
|
|
|
James A. Beer
|
|
|
Executive Vice President and Chief Financial Officer
|
|
|
May 5, 2016
|
|
|
|
|
|