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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Emerging growth 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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•
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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 small footprint.
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•
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Health Mart® — Health Mart® is a national network of more than 4,800 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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Health Mart Atlas® — 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 independent retail 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 allows 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 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. In the second quarter of 2018, we acquired BDI Pharma, LLC (“BDI”).
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•
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McKesson OneStop Generics® — Described above.
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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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59
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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 — 22 years.
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Britt J. Vitalone
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49
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Executive Vice President and Chief Financial Officer since January 2018; Senior Vice President and Chief Financial Officer, U.S. Pharmaceutical from July 2014 to December 2017; Senior Vice President and Chief Financial Officer, U.S. Pharmaceutical and Specialty Health from October 2017 to December 2017; Senior Vice President of Corporate Finance and M&A Finance from March 2012 to June 2014. Service with the Company — 12 years.
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Jorge L. Figueredo
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57
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Executive Vice President, Human Resources since May 2008. Service with the Company — 10 years.
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Kathleen D. McElligott
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62
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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 — 2 years.
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Bansi Nagji
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53
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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 — 3 years.
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Lori A. Schechter
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56
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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 — 6 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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2018
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2017
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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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169.29
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$
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133.82
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$
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188.43
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$
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154.33
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Second quarter
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$
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168.87
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$
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145.13
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$
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199.43
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$
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163.57
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Third quarter
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$
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164.29
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$
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134.25
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$
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166.78
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$
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114.53
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Fourth quarter
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$
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178.86
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$
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137.10
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$
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153.07
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$
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134.17
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(b)
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Holders:
The number of record holders of the Company’s common stock at March 31,
2018
was approximately 5,619.
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(c)
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Dividends:
In July 2017, the Company’s quarterly dividend was raised from
$0.28
to
$0.34
per common share for dividends declared on or after such date by the Company’s Board of Directors (the “Board”). The Company declared regular cash dividends of
$1.30
and
$1.12
per share in the years ended March 31,
2018
and
2017
.
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(d)
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Securities Authorized for Issuance under Equity Compensation Plans:
Information relating to this item is provided under Part III, Item 12, to this Annual Report on Form 10-K.
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(e)
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Share Repurchase Plans:
Stock repurchases may be made from time to time in open market transactions, privately negotiated transactions, through accelerated share repurchase (“ASR”) programs, or by any combination of such methods. The timing of any repurchases and the actual number of shares repurchased will depend on a variety of factors, including our stock price, corporate and regulatory requirements, restrictions under our debt obligations and other market and economic conditions.
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Share Repurchases
(1)
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(In millions, except price per share)
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Total
Number of Shares
Purchased
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Average Price Paid per Share
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Total Number of Shares Purchased as Part of Publicly Announced Programs
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Approximate Dollar Value of Shares that May Yet Be Purchased Under the Programs
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||||||
January 1, 2018 - January 31, 2018
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—
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$
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—
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—
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$
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1,846
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February 1, 2018 - February 28, 2018
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0.7
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152.00
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0.7
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1,734
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March 1, 2018 - March 31, 2018
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3.5
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155.87
(2)
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3.5
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1,096
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Total
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4.2
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4.2
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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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(2)
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The average price paid per share computation includes the initial share settlement of 2.5 million shares from the March 2018 ASR program, of which the actual average price of shares will be determined at the termination of the program.
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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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2013
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2014
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2015
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2016
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2017
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2018
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McKesson Corporation
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$
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100.00
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$
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164.63
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$
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211.91
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$
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148.16
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$
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140.65
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$
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133.64
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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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121.86
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$
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137.37
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$
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139.82
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$
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163.83
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$
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186.75
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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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129.24
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$
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163.09
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$
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154.64
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$
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172.57
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$
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192.01
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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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2018
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2017
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2016
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2015
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2014
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Operating Results
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Revenues
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$
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208,357
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$
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198,533
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$
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190,884
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$
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179,045
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$
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137,392
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Percent change
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4.9
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%
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4.0
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%
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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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|||||
Gross profit
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$
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11,184
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$
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11,271
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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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Income from continuing operations before income taxes
(2)
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239
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6,891
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3,250
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2,657
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2,171
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|||||
Income (loss) after income taxes
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||||||||||
Continuing operations
(2)
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292
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|
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5,277
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2,342
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1,842
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|
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1,414
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|||||
Discontinued operations
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5
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(124
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)
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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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Net income
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297
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|
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5,153
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2,310
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1,543
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|
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1,258
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|||||
Net (income) loss attributable to noncontrolling
interests
(1)
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(230
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)
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(83
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)
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(52
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)
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(67
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)
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5
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|||||
Net income attributable to McKesson Corporation
(2)
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67
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|
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5,070
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2,258
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1,476
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1,263
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Financial Position
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Working capital
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$
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451
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$
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1,336
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$
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3,366
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$
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3,173
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$
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3,221
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Days sales outstanding for:
(3)
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||||||||||
Customer receivables
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25
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|
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27
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|
28
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26
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29
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|||||
Inventories
|
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30
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|
|
30
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|
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32
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|
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31
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|
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33
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|
|||||
Drafts and accounts payable
|
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60
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|
|
61
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|
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59
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|
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54
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54
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|||||
Total assets
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$
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60,381
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$
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60,969
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$
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56,523
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$
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53,870
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$
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51,759
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Total debt, including capital lease obligations
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7,880
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8,545
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8,114
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9,844
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10,594
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|||||
Total McKesson stockholders’ equity
(4)
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9,804
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11,095
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8,924
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8,001
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|
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8,522
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|||||
Payments for property, plant and equipment
|
|
405
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|
|
404
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|
|
488
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|
|
376
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|
|
278
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|
|||||
Acquisitions, net of cash and cash equivalents acquired
|
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2,893
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4,237
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|
40
|
|
|
170
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|
|
4,634
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|||||
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||||||||||
Common Share Information
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||||||||||
Common shares outstanding at year-end
|
|
202
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|
|
211
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|
|
225
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|
|
232
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|
|
231
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|
|||||
Shares on which earnings per common share were based
|
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||||||||||
Diluted
|
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209
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|
|
223
|
|
|
233
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|
|
235
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|
|
233
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|
|||||
Basic
|
|
208
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|
|
221
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|
|
230
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|
|
232
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|
|
229
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|
|||||
Diluted earnings (loss) per common share attributable to McKesson Corporation
(5)
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|
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|
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||||||||||
Continuing operations
|
|
$
|
0.30
|
|
|
$
|
23.28
|
|
|
$
|
9.84
|
|
|
$
|
7.54
|
|
|
$
|
6.08
|
|
Discontinued operations
|
|
0.02
|
|
|
(0.55
|
)
|
|
(0.14
|
)
|
|
(1.27
|
)
|
|
(0.67
|
)
|
|||||
Total
|
|
0.32
|
|
|
22.73
|
|
|
9.70
|
|
|
6.27
|
|
|
5.41
|
|
|||||
Cash dividends declared
|
|
270
|
|
|
249
|
|
|
249
|
|
|
226
|
|
|
214
|
|
|||||
Cash dividends declared per common share
|
|
1.30
|
|
|
1.12
|
|
|
1.08
|
|
|
0.96
|
|
|
0.92
|
|
|||||
Book value per common share
(5) (6)
|
|
48.53
|
|
|
52.58
|
|
|
39.66
|
|
|
34.49
|
|
|
36.89
|
|
|||||
Market value per common share - year-end
|
|
140.87
|
|
|
148.26
|
|
|
157.25
|
|
|
226.20
|
|
|
176.57
|
|
|||||
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Supplemental Data
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Debt to capital ratio
(7)
|
|
40.6
|
%
|
|
39.2
|
%
|
|
43.6
|
%
|
|
50.3
|
%
|
|
55.4
|
%
|
|||||
Average McKesson stockholders’ equity
(8)
|
|
$
|
11,016
|
|
|
$
|
9,282
|
|
|
$
|
8,688
|
|
|
$
|
8,703
|
|
|
$
|
7,803
|
|
Return on McKesson stockholders’ equity
(9)
|
|
0.6
|
%
|
|
54.6
|
%
|
|
26.0
|
%
|
|
17.0
|
%
|
|
16.2
|
%
|
(1)
|
Primarily reflects guaranteed dividends for 2015 and annual recurring compensation for 2016, 2017 and 2018 that McKesson became obligated to pay to the noncontrolling shareholders of McKesson Europe upon the effectiveness of the Domination Agreement in December 2014. 2018 and 2017 also include net income attributable to third-party equity interests in our consolidated entities including Vantage and ClarusONE Sourcing Services LLP, which was formed in 2017.
|
(2)
|
2018 includes non-cash goodwill impairment charges (pre-tax and after-tax) of $1,738 million for our McKesson Europe and Rexall Health reporting units. 2017 includes a pre-tax gain of
$3,947 million
(
$3,018 million
after-tax) from the contribution of our Core MTS Business in connection with Healthcare Technology Net Asset Exchange.
|
(3)
|
Based on year-end balances and sales or cost of sales for the last 90 days of the year.
|
(4)
|
Excludes noncontrolling and redeemable noncontrolling interests.
|
(5)
|
Certain computations may reflect rounding adjustments.
|
(6)
|
Represents McKesson stockholders’ equity divided by year-end common shares outstanding.
|
(7)
|
Ratio is computed as total debt divided by the sum of total debt and McKesson stockholders’ equity excluding accumulated other comprehensive income (loss).
|
(8)
|
Represents a five-quarter average of McKesson stockholders’ equity.
|
(9)
|
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 and ratios)
|
Years Ended March 31,
|
|
Change
|
||||||||||||||||
2018
|
|
2017
|
|
2016
|
|
2018
|
|
2017
|
|||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Revenues
|
$
|
208,357
|
|
|
$
|
198,533
|
|
|
$
|
190,884
|
|
|
5
|
|
%
|
|
4
|
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Gross Profit
|
$
|
11,184
|
|
|
$
|
11,271
|
|
|
$
|
11,416
|
|
|
(1
|
)
|
%
|
|
(1
|
)
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Gross Profit Margin
|
$
|
5.37
|
|
|
$
|
5.68
|
|
|
$
|
5.98
|
|
|
(31
|
)
|
bp
|
|
(30
|
)
|
bp
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Operating Expenses
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Operating Expenses
|
$
|
(8,263
|
)
|
|
$
|
(7,801
|
)
|
|
$
|
(7,771
|
)
|
|
6
|
|
%
|
|
—
|
|
%
|
Goodwill impairment charges
|
(1,738
|
)
|
|
(290
|
)
|
|
—
|
|
|
499
|
|
|
|
NM
|
|
|
|||
Restructuring and asset impairment charges
|
(567
|
)
|
|
(18
|
)
|
|
(203
|
)
|
|
3,050
|
|
|
|
(91
|
)
|
|
|||
Gains from sales of businesses
|
109
|
|
|
—
|
|
|
103
|
|
|
NM
|
|
|
|
NM
|
|
|
|||
Gain on healthcare technology net asset exchange, net
|
37
|
|
|
3,947
|
|
|
—
|
|
|
(99
|
)
|
|
|
NM
|
|
|
|||
Total Operating Expenses
|
$
|
(10,422
|
)
|
|
$
|
(4,162
|
)
|
|
$
|
(7,871
|
)
|
|
150
|
|
%
|
|
(47
|
)
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Loss from Equity Method Investment in Change Healthcare
|
$
|
(248
|
)
|
|
$
|
—
|
|
|
$
|
—
|
|
|
NM
|
|
|
|
NM
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Loss on Debt Extinguishment
|
$
|
(122
|
)
|
|
$
|
—
|
|
|
$
|
—
|
|
|
NM
|
|
|
|
NM
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Income from Continuing Operations Before Income Taxes
|
$
|
239
|
|
|
$
|
6,891
|
|
|
$
|
3,250
|
|
|
(97
|
)
|
%
|
|
112
|
|
%
|
Income Tax Benefit (Expense)
|
53
|
|
|
(1,614
|
)
|
|
(908
|
)
|
|
(103
|
)
|
|
|
78
|
|
|
|||
Income from Continuing Operations
|
292
|
|
|
5,277
|
|
|
2,342
|
|
|
(94
|
)
|
|
|
125
|
|
|
|||
Income (Loss) from Discontinued Operations, Net of Tax
|
5
|
|
|
(124
|
)
|
|
(32
|
)
|
|
(104
|
)
|
|
|
288
|
|
|
|||
Net Income
|
297
|
|
|
5,153
|
|
|
2,310
|
|
|
(94
|
)
|
|
|
123
|
|
|
|||
Net Income Attributable to Noncontrolling Interests
|
(230
|
)
|
|
(83
|
)
|
|
(52
|
)
|
|
177
|
|
|
|
60
|
|
|
|||
Net Income Attributable to McKesson Corporation
|
$
|
67
|
|
|
$
|
5,070
|
|
|
$
|
2,258
|
|
|
(99
|
)
|
%
|
|
125
|
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Diluted Earnings (Loss) Per Common Share Attributable to McKesson Corporation
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Continuing Operations
|
$
|
0.30
|
|
|
$
|
23.28
|
|
|
$
|
9.84
|
|
|
(99
|
)
|
%
|
|
137
|
|
%
|
Discontinued Operations
|
0.02
|
|
|
(0.55
|
)
|
|
(0.14
|
)
|
|
(104
|
)
|
|
|
293
|
|
|
|||
Total
|
$
|
0.32
|
|
|
$
|
22.73
|
|
|
$
|
9.70
|
|
|
(99
|
)
|
%
|
|
134
|
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Weighted Average Diluted Common Shares
|
209
|
|
|
223
|
|
|
233
|
|
|
(6
|
)
|
%
|
|
(4
|
)
|
%
|
•
|
Total non-cash goodwill impairment charges (pre-tax and after-tax) of
$1,738 million
for our McKesson Europe AG (“McKesson Europe”) and Rexall Health reporting units, as further described below. The charges were recorded within our Distribution Solutions segment. There were no tax benefits associated with these goodwill impairment charges.
|
•
|
Non-cash pre-tax long-lived asset impairment charges of
$446 million
(
$410 million
after-tax) and pre-tax restructuring charges of
$74 million
(
$67 million
after-tax) primarily representing employee severance and lease exit costs for our McKesson Europe business;
|
•
|
Higher expenses due to our business acquisitions; and
|
•
|
Pre-tax charitable contribution expense of
$100 million
(
$64 million
after-tax) to a public benefit California foundation (“Foundation”), as further described below.
|
|
Years Ended March 31,
|
|
Change
|
||||||||||||||||
(Dollars in millions)
|
2018
|
|
2017
|
|
2016
|
|
2018
|
|
2017
|
||||||||||
Distribution Solutions
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
North America pharmaceutical distribution
& services
|
$
|
174,186
|
|
|
$
|
164,832
|
|
|
$
|
158,469
|
|
|
6
|
|
%
|
|
4
|
|
%
|
International pharmaceutical distribution & services
|
27,320
|
|
|
24,847
|
|
|
23,497
|
|
|
10
|
|
|
|
6
|
|
|
|||
Medical-Surgical distribution & services
|
6,611
|
|
|
6,244
|
|
|
6,033
|
|
|
6
|
|
|
|
3
|
|
|
|||
Total Distribution Solutions
|
208,117
|
|
|
195,923
|
|
|
187,999
|
|
|
6
|
|
|
|
4
|
|
|
|||
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Technology Solutions - products and services
|
240
|
|
|
2,610
|
|
|
2,885
|
|
|
(91
|
)
|
|
|
(10
|
)
|
|
|||
Total Revenues
|
$
|
208,357
|
|
|
$
|
198,533
|
|
|
$
|
190,884
|
|
|
5
|
|
%
|
|
4
|
|
%
|
|
Years Ended March 31,
|
|
Change
|
|||||||||||||||||||
(Dollars in millions, except ratios)
|
2018
|
|
|
2017
|
|
|
2016
|
|
|
2018
|
|
2017
|
||||||||||
Gross Profit
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Distribution Solutions
(1)
|
$
|
11,064
|
|
|
|
$
|
9,856
|
|
|
|
$
|
9,948
|
|
|
|
12
|
|
%
|
|
(1
|
)
|
%
|
Technology Solutions
|
120
|
|
|
|
1,415
|
|
|
|
1,468
|
|
|
|
(92
|
)
|
|
|
(4
|
)
|
|
|||
Total
|
$
|
11,184
|
|
|
|
$
|
11,271
|
|
|
|
$
|
11,416
|
|
|
|
(1
|
)
|
%
|
|
(1
|
)
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Gross Profit Margin
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Distribution Solutions
|
5.32
|
|
%
|
|
5.03
|
|
%
|
|
5.29
|
|
%
|
|
29
|
|
bp
|
|
(26
|
)
|
bp
|
|||
Technology Solutions
|
50.00
|
|
|
|
54.21
|
|
|
|
50.88
|
|
|
|
(421
|
)
|
|
|
333
|
|
|
|||
Total
|
5.37
|
|
|
|
5.68
|
|
|
|
5.98
|
|
|
|
(31
|
)
|
|
|
(30
|
)
|
|
(1)
|
Distribution Solutions segment’s gross profit includes LIFO credits of
$99 million
and
$7 million
in 2018 and 2017 and LIFO charges of
$244 million
in 2016. Gross profit for 2017 and 2016 also includes
$144 million
and
$76 million
of net cash proceeds representing our share of antitrust legal settlements.
|
|
Years Ended March 31,
|
|
Change
|
|||||||||||||||||
(Dollars in millions, except ratios)
|
2018
|
|
2017
|
|
2016
|
|
|
2018
|
|
2017
|
||||||||||
Operating Expenses
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Distribution Solutions
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Operating Expenses
(1)
|
$
|
7,648
|
|
|
$
|
6,540
|
|
|
$
|
6,280
|
|
|
|
17
|
|
%
|
|
4
|
|
%
|
Goodwill impairment charges
|
1,738
|
|
|
—
|
|
|
—
|
|
|
|
NM
|
|
|
|
NM
|
|
|
|||
Restructuring and asset impairment charges
|
567
|
|
|
19
|
|
|
156
|
|
|
|
2,884
|
|
|
|
(88
|
)
|
|
|||
Total Distribution Solutions
|
9,953
|
|
|
6,559
|
|
|
6,436
|
|
|
|
52
|
|
%
|
|
2
|
|
%
|
|||
Technology Solutions
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Operating Expenses
(2)
|
42
|
|
|
858
|
|
|
1,002
|
|
|
|
(95
|
)
|
%
|
|
(14
|
)
|
%
|
|||
Gains from sales of businesses
|
(109
|
)
|
|
—
|
|
|
(51
|
)
|
|
|
NM
|
|
|
|
NM
|
|
|
|||
Gain on healthcare technology net asset exchange, net
|
(37
|
)
|
|
(3,947
|
)
|
|
—
|
|
|
|
(99
|
)
|
|
|
NM
|
|
|
|||
Goodwill impairment charge
|
—
|
|
|
290
|
|
|
—
|
|
|
|
NM
|
|
|
|
NM
|
|
|
|||
Total Technology Solutions
|
(104
|
)
|
|
(2,799
|
)
|
|
951
|
|
|
|
(96
|
)
|
%
|
|
(394
|
)
|
%
|
|||
Corporate
|
573
|
|
|
402
|
|
|
484
|
|
|
|
43
|
|
|
|
(17
|
)
|
|
|||
Total
|
$
|
10,422
|
|
|
$
|
4,162
|
|
|
$
|
7,871
|
|
|
|
150
|
|
%
|
|
(47
|
)
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Operating Expenses as a Percentage of Revenues
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Distribution Solutions
|
4.78
|
|
%
|
3.35
|
|
%
|
3.42
|
|
%
|
|
143
|
|
bp
|
|
(7
|
)
|
bp
|
|||
Technology Solutions
|
(43.33
|
)
|
|
(107.24
|
)
|
|
32.96
|
|
|
|
NM
|
|
|
|
NM
|
|
|
|||
Total
|
5.00
|
|
|
2.10
|
|
|
4.12
|
|
|
|
290
|
|
|
|
(202
|
)
|
|
|||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Other Income, Net
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Distribution Solutions
|
$
|
120
|
|
|
$
|
64
|
|
|
$
|
41
|
|
|
|
88
|
|
%
|
|
56
|
|
%
|
Technology Solutions
|
1
|
|
|
1
|
|
|
2
|
|
|
|
-
|
|
|
|
(50
|
)
|
|
|||
Corporate
|
9
|
|
|
25
|
|
|
15
|
|
|
|
(64
|
)
|
|
|
67
|
|
|
|||
Total
|
$
|
130
|
|
|
$
|
90
|
|
|
$
|
58
|
|
|
|
44
|
|
%
|
|
55
|
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Loss from Equity Method Investment in Change Healthcare - Technology Solutions
|
$
|
248
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
|
NM
|
|
|
|
NM
|
|
|
(1)
|
The amounts exclude the goodwill impairment charges and restructuring and asset impairment charges. 2016 includes a pre-tax gain of
$52 million
from the 2016 third quarter sale of our ZEE Medical business.
|
(2)
|
The amounts exclude the gain from sale of business, gain on healthcare technology net asset exchange, net, and goodwill impairment charge.
|
•
|
Non-cash goodwill impairment charges (pre-tax and after-tax) of
$1,283 million
for our McKesson Europe reporting unit and
$455 million
for our Rexall Health reporting unit;
|
•
|
Non-cash pre-tax long-lived asset impairment charges of
$446 million
(
$410 million
after-tax) and pre-tax restructuring charges of
$74 million
(
$67 million
after-tax) for our McKesson Europe business;
|
•
|
Non-cash charges of
$33 million
(pre-tax and after-tax) to impair the carrying value of certain intangible assets (primarily customer relationships) for our Rexall Health business. The impairment was primarily due to the decline in the estimated future cash flows from certain pharmacies of Rexall Health’s business, driven primarily by generics reimbursement reductions implemented across Canada; and
|
•
|
Higher expenses due to our business acquisitions.
|
|
Years Ended March 31,
|
||||||||||
(Dollars in millions)
|
2018
|
|
2017
|
|
2016
|
||||||
Operating Expenses
|
|
|
|
|
|
||||||
Gain on Change Healthcare Net Asset Exchange, net
|
$
|
(37
|
)
|
|
$
|
(3,947
|
)
|
|
$
|
—
|
|
Transaction closing expenses
|
15
|
|
|
30
|
|
|
10
|
|
|||
Restructuring, severance and relocation
|
36
|
|
|
25
|
|
|
—
|
|
|||
Other
|
54
|
|
|
85
|
|
|
100
|
|
|||
Total
|
68
|
|
|
(3,807
|
)
|
|
110
|
|
|||
Other Expenses
(1)
|
100
|
|
|
10
|
|
|
4
|
|
|||
Total Acquisition-Related Expenses and Adjustments
|
$
|
168
|
|
|
$
|
(3,797
|
)
|
|
$
|
114
|
|
(1)
|
Fiscal 2018 includes our proportionate share of transaction and integration expenses incurred by Change Healthcare, excluding certain fair value adjustments, which was recorded within “Loss from Equity Method Investment in Change Healthcare”.
|
|
Years Ended March 31,
|
||||||||||
(Dollars in millions)
|
2018
|
|
2017
|
|
2016
|
||||||
Distribution Solutions
|
$
|
99
|
|
|
$
|
133
|
|
|
$
|
112
|
|
Technology Solutions
|
60
|
|
|
(3,936
|
)
|
|
—
|
|
|||
Corporate
|
9
|
|
|
6
|
|
|
2
|
|
|||
Total Acquisition-Related Expenses and Adjustments
(1)
|
$
|
168
|
|
|
$
|
(3,797
|
)
|
|
$
|
114
|
|
(1)
|
The amounts were recorded in operating expenses, other income, net and loss from equity method investment in Change Healthcare.
|
|
Years Ended March 31,
|
||||||||||
(Dollars in millions)
|
2018
|
|
2017
|
|
2016
|
||||||
Distribution Solutions
|
$
|
503
|
|
|
$
|
418
|
|
|
$
|
389
|
|
Technology Solutions
(1)
|
289
|
|
|
22
|
|
|
34
|
|
|||
Total
|
$
|
792
|
|
|
$
|
440
|
|
|
$
|
423
|
|
(1)
|
Fiscal 2018 primarily represents amortization expenses of equity method intangibles associated with the Change Healthcare joint venture, which were recorded in our proportionate share of the loss from Change Healthcare.
|
|
Years Ended March 31,
|
|
|
Change
|
||||||||||||||||
(Dollars in millions, except ratios)
|
2018
|
|
2017
|
|
2016
|
|
|
2018
|
|
2017
|
||||||||||
Segment Operating Profit (Loss)
(1) (2)
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Distribution Solutions
(3)
|
$
|
1,231
|
|
|
$
|
3,361
|
|
|
$
|
3,553
|
|
|
|
(63
|
)
|
%
|
|
(5
|
)
|
%
|
Technology Solutions
(4)
|
(23
|
)
|
|
4,215
|
|
|
519
|
|
|
|
(101
|
)
|
|
|
712
|
|
|
|||
Subtotal
|
1,208
|
|
|
7,576
|
|
|
4,072
|
|
|
|
(84
|
)
|
|
|
86
|
|
|
|||
Corporate Expenses, Net
(2) (5)
|
(564
|
)
|
|
(377
|
)
|
|
(469
|
)
|
|
|
50
|
|
|
|
(20
|
)
|
|
|||
Loss on Debt Extinguishment
|
(122
|
)
|
|
—
|
|
|
—
|
|
|
|
NM
|
|
|
|
NM
|
|
|
|||
Interest Expense
|
(283
|
)
|
|
(308
|
)
|
|
(353
|
)
|
|
|
(8
|
)
|
|
|
(13
|
)
|
|
|||
Income From Continuing Operations Before Income Taxes
|
$
|
239
|
|
|
$
|
6,891
|
|
|
$
|
3,250
|
|
|
|
(97
|
)
|
%
|
|
112
|
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Segment Operating Profit (Loss) Margin
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Distribution Solutions
|
0.59
|
|
%
|
1.72
|
|
%
|
1.89
|
|
%
|
|
(113
|
)
|
bp
|
|
(17
|
)
|
bp
|
|||
Technology Solutions
|
NM
|
|
|
161.49
|
|
|
17.99
|
|
|
|
NM
|
|
|
|
14,350
|
|
|
(1)
|
Segment operating profit (loss) includes gross profit, net of operating expenses, as well as other income, net, for our two reportable segments.
|
(2)
|
In connection with the 2016 Cost Alignment Plan, we recorded pre-tax restructuring charges of $229 million in 2016. 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.
|
(3)
|
Distribution Solutions segment’s operating profit for 2018 includes
non-cash pre-tax goodwill impairment charges of
$1,283 million
for our McKesson Europe reporting unit and
$455 million
for our Rexall Health reporting unit. This segment’s operating profit for 2018 also includes non-cash pre-tax long-lived asset impairment charges of
$446 million
and pre-tax restructuring charges of
$74 million
for our McKesson Europe business. 2016 includes a pre-tax gain of
$52 million
from the 2016 third quarter sale of our ZEE Medical business.
|
(4)
|
Technology Solutions segment’s operating profit for 2018 includes our proportionate share of loss from Change Healthcare of
$248 million
, partially offset by a pre-tax gain of
$109 million
from the 2018 third quarter sale of our EIS business. Operating profit for 2017 includes a pre-tax gain of
$3,947 million
recognized from the Healthcare Technology Net Asset Exchange, net of transaction and related expenses and a non-cash pre-tax charge of
$290 million
for goodwill impairment related to the EIS reporting unit. Operating profit for 2016 includes a pre-tax gain of
$51 million
recognized from the sale of our nurse triage business.
|
(5)
|
Corporate expenses, net for 2018 include a pre-tax charitable contribution of
$100 million
to the Foundation.
|
•
|
U.S. Pharmaceutical and Specialty Solutions;
|
•
|
European Pharmaceutical Solutions; and
|
•
|
Medical-Surgical Solutions.
|
|
Years Ended March 31,
|
||||||||||
(In millions, except per share data)
|
2018
|
|
2017
|
|
2016
|
||||||
Number of shares repurchased
(1)
|
10.5
|
|
|
15.5
|
|
|
8.7
|
|
|||
Average price paid per share
|
$
|
151.06
|
|
(2)
|
$
|
141.16
|
|
|
$
|
173.64
|
|
Total value of shares repurchased
(1)
|
$
|
1,650
|
|
|
$
|
2,250
|
|
|
$
|
1,504
|
|
(1)
|
Excludes shares surrendered for tax withholding.
|
(2)
|
The average price paid per share computation includes the initial share settlement of 2.5 million shares from the March 2018 ASR program, of which the actual average price of shares will be determined at the termination of the program in the first quarter of 2019.
|
|
March 31,
|
|||||||||||||
(Dollars in millions, except ratios)
|
2018
|
|
2017
|
|
2016
|
|||||||||
Cash and cash equivalents
|
$
|
2,672
|
|
|
|
$
|
2,783
|
|
|
|
$
|
4,048
|
|
|
Working capital
|
451
|
|
|
|
1,336
|
|
|
|
3,366
|
|
|
|||
Debt to capital ratio
(1)
|
40.6
|
|
%
|
|
39.2
|
|
%
|
|
43.6
|
|
%
|
|||
Return on McKesson stockholders’ equity
(2)
|
0.6
|
|
|
|
54.6
|
|
|
|
26.0
|
|
|
(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)
|
$
|
7,880
|
|
|
$
|
1,129
|
|
|
$
|
690
|
|
|
$
|
1,037
|
|
|
$
|
5,024
|
|
Other
(2) (3)
|
666
|
|
|
230
|
|
|
229
|
|
|
62
|
|
|
145
|
|
|||||
|
|
|
|
|
|
|
|
|
|
||||||||||
Off balance sheet
|
|
|
|
|
|
|
|
|
|
||||||||||
Interest on borrowings
(4)
|
2,090
|
|
|
223
|
|
|
396
|
|
|
355
|
|
|
1,116
|
|
|||||
Purchase obligations
(5)
|
4,369
|
|
|
4,356
|
|
|
9
|
|
|
4
|
|
|
—
|
|
|||||
Operating lease obligations
(6)
|
3,072
|
|
|
502
|
|
|
826
|
|
|
610
|
|
|
1,134
|
|
|||||
Other
(7)
|
338
|
|
|
178
|
|
|
25
|
|
|
28
|
|
|
107
|
|
|||||
Total
|
$
|
18,415
|
|
|
$
|
6,618
|
|
|
$
|
2,175
|
|
|
$
|
2,096
|
|
|
$
|
7,526
|
|
(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. The estimated benefit payments do not reflect the potential effect of the termination of the U.S. defined benefit pension plan approved by the Company’s Board of Directors on May 23, 2018. Refer to Financial Note 30, “Subsequent Events” to the consolidated financial statements appearing in this Annual Report on Form 10-K for additional information.
|
(3)
|
Includes our contingent consideration liability relating to our business acquisition and a pledge payable to a public benefit California foundation.
|
(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/ Britt J. Vitalone
|
Britt J. Vitalone
|
Executive Vice President and Chief Financial Officer
|
(Principal Financial Officer)
|
|
/s/ Deloitte & Touche LLP
|
San Francisco, California
|
May 24, 2018
|
|
Years Ended March 31,
|
||||||||||
|
2018
|
|
2017
|
|
2016
|
||||||
Revenues
|
$
|
208,357
|
|
|
$
|
198,533
|
|
|
$
|
190,884
|
|
Cost of Sales
|
(197,173
|
)
|
|
(187,262
|
)
|
|
(179,468
|
)
|
|||
Gross Profit
|
11,184
|
|
|
11,271
|
|
|
11,416
|
|
|||
Operating Expenses
|
|
|
|
|
|
||||||
Selling, distribution and administrative expenses
|
(8,138
|
)
|
|
(7,460
|
)
|
|
(7,379
|
)
|
|||
Research and development
|
(125
|
)
|
|
(341
|
)
|
|
(392
|
)
|
|||
Goodwill impairment charges
|
(1,738
|
)
|
|
(290
|
)
|
|
—
|
|
|||
Restructuring and asset impairment charges
|
(567
|
)
|
|
(18
|
)
|
|
(203
|
)
|
|||
Gains from sales of businesses
|
109
|
|
|
—
|
|
|
103
|
|
|||
Gain on healthcare technology net asset exchange, net
|
37
|
|
|
3,947
|
|
|
—
|
|
|||
Total Operating Expenses
|
(10,422
|
)
|
|
(4,162
|
)
|
|
(7,871
|
)
|
|||
Operating Income
|
762
|
|
|
7,109
|
|
|
3,545
|
|
|||
Other Income, Net
|
130
|
|
|
90
|
|
|
58
|
|
|||
Loss from Equity Method Investment in Change Healthcare
|
(248
|
)
|
|
—
|
|
|
—
|
|
|||
Loss on Debt Extinguishment
|
(122
|
)
|
|
—
|
|
|
—
|
|
|||
Interest Expense
|
(283
|
)
|
|
(308
|
)
|
|
(353
|
)
|
|||
Income from Continuing Operations Before Income Taxes
|
239
|
|
|
6,891
|
|
|
3,250
|
|
|||
Income Tax Benefit (Expense)
|
53
|
|
|
(1,614
|
)
|
|
(908
|
)
|
|||
Income from Continuing Operations
|
292
|
|
|
5,277
|
|
|
2,342
|
|
|||
Income (Loss) from Discontinued Operations, Net of Tax
|
5
|
|
|
(124
|
)
|
|
(32
|
)
|
|||
Net Income
|
297
|
|
|
5,153
|
|
|
2,310
|
|
|||
Net Income Attributable to Noncontrolling Interests
|
(230
|
)
|
|
(83
|
)
|
|
(52
|
)
|
|||
Net Income Attributable to McKesson Corporation
|
$
|
67
|
|
|
$
|
5,070
|
|
|
$
|
2,258
|
|
|
|
|
|
|
|
||||||
Earnings (Loss) Per Common Share Attributable to
McKesson Corporation
|
|
|
|
|
|
||||||
Diluted
|
|
|
|
|
|
||||||
Continuing operations
|
$
|
0.30
|
|
|
$
|
23.28
|
|
|
$
|
9.84
|
|
Discontinued operations
|
0.02
|
|
|
(0.55
|
)
|
|
(0.14
|
)
|
|||
Total
|
$
|
0.32
|
|
|
$
|
22.73
|
|
|
$
|
9.70
|
|
Basic
|
|
|
|
|
|
||||||
Continuing operations
|
$
|
0.30
|
|
|
$
|
23.50
|
|
|
$
|
9.96
|
|
Discontinued operations
|
0.02
|
|
|
(0.55
|
)
|
|
(0.14
|
)
|
|||
Total
|
$
|
0.32
|
|
|
$
|
22.95
|
|
|
$
|
9.82
|
|
|
|
|
|
|
|
||||||
Weighted Average Common Shares
|
|
|
|
|
|
||||||
Diluted
|
209
|
|
|
223
|
|
|
233
|
|
|||
Basic
|
208
|
|
|
221
|
|
|
230
|
|
|
Years Ended March 31,
|
||||||||||
|
2018
|
|
2017
|
|
2016
|
||||||
Net Income
|
$
|
297
|
|
|
$
|
5,153
|
|
|
$
|
2,310
|
|
|
|
|
|
|
|
||||||
Other Comprehensive Income (Loss), Net of Tax
|
|
|
|
|
|
||||||
Foreign currency translation adjustments arising during the period
|
624
|
|
|
(632
|
)
|
|
113
|
|
|||
|
|
|
|
|
|
|
|
|
|||
Unrealized gains (losses) on cash flow hedges arising during the period
|
(30
|
)
|
|
(19
|
)
|
|
9
|
|
|||
|
|
|
|
|
|
|
|
|
|||
Retirement-related benefit plans
|
15
|
|
|
(8
|
)
|
|
50
|
|
|||
Other Comprehensive Income (Loss), Net of Tax
|
609
|
|
|
(659
|
)
|
|
172
|
|
|||
|
|
|
|
|
|
||||||
Comprehensive Income
|
906
|
|
|
4,494
|
|
|
2,482
|
|
|||
Comprehensive (Income) Attributable to Noncontrolling Interests
|
(415
|
)
|
|
(4
|
)
|
|
(72
|
)
|
|||
Comprehensive Income Attributable to McKesson Corporation
|
$
|
491
|
|
|
$
|
4,490
|
|
|
$
|
2,410
|
|
|
March 31,
|
||||||
|
2018
|
|
2017
|
||||
ASSETS
|
|
|
|
||||
Current Assets
|
|
|
|
||||
Cash and cash equivalents
|
$
|
2,672
|
|
|
$
|
2,783
|
|
Receivables, net
|
17,711
|
|
|
18,215
|
|
||
Inventories, net
|
16,310
|
|
|
15,278
|
|
||
Prepaid expenses and other
|
443
|
|
|
672
|
|
||
Total Current Assets
|
37,136
|
|
|
36,948
|
|
||
Property, Plant and Equipment, Net
|
2,464
|
|
|
2,292
|
|
||
Goodwill
|
10,924
|
|
|
10,586
|
|
||
Intangible Assets, Net
|
4,102
|
|
|
3,665
|
|
||
Equity Method Investment in Change Healthcare
|
3,728
|
|
|
4,063
|
|
||
Other Noncurrent Assets
|
2,027
|
|
|
3,415
|
|
||
Total Assets
|
$
|
60,381
|
|
|
$
|
60,969
|
|
LIABILITIES, REDEEMABLE NONCONTROLLING INTERESTS AND EQUITY
|
|
|
|
||||
Current Liabilities
|
|
|
|
||||
Drafts and accounts payable
|
$
|
32,177
|
|
|
$
|
31,022
|
|
Short-term borrowings
|
—
|
|
|
183
|
|
||
Deferred revenue
|
63
|
|
|
346
|
|
||
Current portion of long-term debt
|
1,129
|
|
|
1,057
|
|
||
Other accrued liabilities
|
3,316
|
|
|
3,004
|
|
||
Total Current Liabilities
|
36,685
|
|
|
35,612
|
|
||
Long-Term Debt
|
6,751
|
|
|
7,305
|
|
||
Long-Term Deferred Tax Liabilities
|
2,804
|
|
|
3,678
|
|
||
Other Noncurrent Liabilities
|
2,625
|
|
|
1,774
|
|
||
Commitments and Contingent Liabilities (Note 24)
|
|
|
|
||||
Redeemable Noncontrolling Interests
|
1,459
|
|
|
1,327
|
|
||
McKesson Corporation Stockholders’ Equity
|
|
|
|
||||
Preferred stock, $0.01 par value, 100 shares authorized, no shares issued or outstanding
|
—
|
|
|
—
|
|
||
Common stock, $0.01 par value, 800 shares authorized at March 31, 2018 and 2017, 275 and 273 shares issued at March 31, 2018 and 2017
|
3
|
|
|
3
|
|
||
Additional Paid-in Capital
|
6,188
|
|
|
6,028
|
|
||
Retained Earnings
|
12,986
|
|
|
13,189
|
|
||
Accumulated Other Comprehensive Loss
|
(1,717
|
)
|
|
(2,141
|
)
|
||
Other
|
(1
|
)
|
|
(2
|
)
|
||
Treasury Stock, at Cost, 73 and 62 shares at March 31, 2018 and 2017
|
(7,655
|
)
|
|
(5,982
|
)
|
||
Total McKesson Corporation Stockholders’ Equity
|
9,804
|
|
|
11,095
|
|
||
Noncontrolling Interests
|
253
|
|
|
178
|
|
||
Total Equity
|
10,057
|
|
|
11,273
|
|
||
Total Liabilities, Redeemable Noncontrolling Interests and Equity
|
$
|
60,381
|
|
|
$
|
60,969
|
|
|
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, 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
|
|
Issuance of shares under employee plans
|
3
|
|
|
—
|
|
|
125
|
|
|
|
|
|
|
|
|
|
|
(61
|
)
|
|
|
|
64
|
|
|||||||||||||
Share-based compensation
|
|
|
|
|
110
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
110
|
|
||||||||||||||||
Tax benefit related to issuance of shares under employee plans
|
|
|
|
|
|
|
|
|
|
7
|
|
|
|
|
|
|
|
|
|
|
7
|
|
|||||||||||||||
Acquisition of Vantage
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
89
|
|
|
89
|
|
||||||||||||||||
Other comprehensive loss
|
|
|
|
|
|
|
|
|
|
|
(580
|
)
|
|
|
|
|
|
|
|
(580
|
)
|
||||||||||||||||
Net income
|
|
|
|
|
|
|
|
|
5,070
|
|
|
|
|
|
|
|
|
39
|
|
|
5,109
|
|
|||||||||||||||
Repurchase of common stock
|
|
|
|
|
(50
|
)
|
|
|
|
|
|
|
|
(16
|
)
|
|
(2,200
|
)
|
|
|
|
(2,250
|
)
|
||||||||||||||
Cash dividends declared, $1.12 per common share
|
|
|
|
|
|
|
|
|
(249
|
)
|
|
|
|
|
|
|
|
|
|
(249
|
)
|
||||||||||||||||
Other
|
(1
|
)
|
|
|
|
(2
|
)
|
|
—
|
|
|
1
|
|
|
|
|
|
|
|
|
(34
|
)
|
|
(35
|
)
|
||||||||||||
Balances, March 31, 2017
|
273
|
|
|
$
|
3
|
|
|
$
|
6,028
|
|
|
$
|
(2
|
)
|
|
$
|
13,189
|
|
|
$
|
(2,141
|
)
|
|
(62
|
)
|
|
$
|
(5,982
|
)
|
|
$
|
178
|
|
|
$
|
11,273
|
|
Issuance of shares under employee plans
|
2
|
|
|
—
|
|
|
126
|
|
|
|
|
|
|
|
|
|
|
(59
|
)
|
|
|
|
67
|
|
|||||||||||||
Share-based compensation
|
|
|
|
|
67
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
67
|
|
||||||||||||||||
Payments to noncontrolling interests
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(98
|
)
|
|
(98
|
)
|
||||||||||||||||
Other comprehensive income
|
|
|
|
|
|
|
|
|
|
|
424
|
|
|
|
|
|
|
|
|
424
|
|
||||||||||||||||
Net income
|
|
|
|
|
|
|
|
|
67
|
|
|
|
|
|
|
|
|
187
|
|
|
254
|
|
|||||||||||||||
Repurchase of common stock
|
|
|
|
|
(36
|
)
|
|
|
|
|
|
|
|
(11
|
)
|
|
(1,614
|
)
|
|
|
|
(1,650
|
)
|
||||||||||||||
Exercise of put right by noncontrolling shareholders of McKesson Europe
|
|
|
|
|
3
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3
|
|
||||||||||||||||
Cash dividends declared, $1.30 per common share
|
|
|
|
|
|
|
|
|
(270
|
)
|
|
|
|
|
|
|
|
|
|
(270
|
)
|
||||||||||||||||
Other
|
|
|
|
|
|
|
1
|
|
|
|
|
|
|
|
|
|
|
(14
|
)
|
|
(13
|
)
|
|||||||||||||||
Balances, March 31, 2018
|
275
|
|
|
$
|
3
|
|
|
$
|
6,188
|
|
|
$
|
(1
|
)
|
|
$
|
12,986
|
|
|
$
|
(1,717
|
)
|
|
(73
|
)
|
|
$
|
(7,655
|
)
|
|
$
|
253
|
|
|
$
|
10,057
|
|
|
Years Ended March 31,
|
||||||||||
|
2018
|
|
2017
|
|
2016
|
||||||
Operating Activities
|
|
|
|
|
|
||||||
Net income
|
$
|
297
|
|
|
$
|
5,153
|
|
|
$
|
2,310
|
|
Adjustments to reconcile to net cash provided by operating activities:
|
|
|
|
|
|
||||||
Depreciation
|
303
|
|
|
324
|
|
|
281
|
|
|||
Amortization
|
648
|
|
|
586
|
|
|
604
|
|
|||
Gain on Healthcare Technology Net Asset Exchange, net
|
(37
|
)
|
|
(3,947
|
)
|
|
—
|
|
|||
Goodwill and other asset impairment charges
|
2,217
|
|
|
290
|
|
|
8
|
|
|||
Loss from equity method investment in Change Healthcare
|
248
|
|
|
—
|
|
|
—
|
|
|||
Deferred taxes
|
(868
|
)
|
|
882
|
|
|
64
|
|
|||
Share-based compensation expense
|
69
|
|
|
115
|
|
|
123
|
|
|||
Charges (credits) associated with last-in-first-out inventory method
|
(99
|
)
|
|
(7
|
)
|
|
244
|
|
|||
Loss (gain) from sales of businesses and equity investments
|
(169
|
)
|
|
94
|
|
|
(103
|
)
|
|||
Other non-cash items
|
(2
|
)
|
|
88
|
|
|
108
|
|
|||
Changes in operating assets and liabilities, net of acquisitions:
|
|
|
|
|
|
||||||
Receivables
|
1,175
|
|
|
(762
|
)
|
|
(1,957
|
)
|
|||
Inventories
|
(458
|
)
|
|
320
|
|
|
(1,251
|
)
|
|||
Drafts and accounts payable
|
271
|
|
|
2,070
|
|
|
3,302
|
|
|||
Deferred revenue
|
(143
|
)
|
|
(87
|
)
|
|
(120
|
)
|
|||
Taxes
|
671
|
|
|
146
|
|
|
(78
|
)
|
|||
Settlement payment
|
—
|
|
|
(150
|
)
|
|
—
|
|
|||
Other
|
222
|
|
|
(371
|
)
|
|
137
|
|
|||
Net cash provided by operating activities
|
4,345
|
|
|
4,744
|
|
|
3,672
|
|
|||
|
|
|
|
|
|
||||||
Investing Activities
|
|
|
|
|
|
||||||
Payments for property, plant and equipment
|
(405
|
)
|
|
(404
|
)
|
|
(488
|
)
|
|||
Capitalized software expenditures
|
(175
|
)
|
|
(158
|
)
|
|
(189
|
)
|
|||
Acquisitions, net of cash and cash equivalents acquired
|
(2,893
|
)
|
|
(4,237
|
)
|
|
(40
|
)
|
|||
Proceeds from sale of businesses and other assets, net
|
374
|
|
|
206
|
|
|
210
|
|
|||
Payments received on Healthcare Technology Net Asset Exchange, net
|
126
|
|
|
1,228
|
|
|
—
|
|
|||
Restricted cash for acquisitions
|
1,469
|
|
|
(506
|
)
|
|
(939
|
)
|
|||
Other
|
(18
|
)
|
|
75
|
|
|
(111
|
)
|
|||
Net cash used in investing activities
|
(1,522
|
)
|
|
(3,796
|
)
|
|
(1,557
|
)
|
|||
|
|
|
|
|
|
||||||
Financing Activities
|
|
|
|
|
|
||||||
Proceeds from short-term borrowings
|
20,542
|
|
|
8,294
|
|
|
1,561
|
|
|||
Repayments of short-term borrowings
|
(20,725
|
)
|
|
(8,124
|
)
|
|
(1,688
|
)
|
|||
Proceeds from issuances of long-term debt
|
1,522
|
|
|
1,824
|
|
|
—
|
|
|||
Repayments of long-term debt
|
(2,287
|
)
|
|
(1,601
|
)
|
|
(1,598
|
)
|
|||
Payments for debt extinguishments
|
(112
|
)
|
|
—
|
|
|
—
|
|
|||
Common stock transactions:
|
|
|
|
|
|
|
|||||
Issuances
|
132
|
|
|
120
|
|
|
123
|
|
|||
Share repurchases, including shares surrendered for tax withholding
|
(1,709
|
)
|
|
(2,311
|
)
|
|
(1,612
|
)
|
|||
Dividends paid
|
(262
|
)
|
|
(253
|
)
|
|
(244
|
)
|
|||
Other
|
(185
|
)
|
|
(18
|
)
|
|
5
|
|
|||
Net cash used in financing activities
|
(3,084
|
)
|
|
(2,069
|
)
|
|
(3,453
|
)
|
|||
Effect of exchange rate changes on cash and cash equivalents
|
150
|
|
|
(144
|
)
|
|
45
|
|
|||
Net decrease in cash and cash equivalents
|
(111
|
)
|
|
(1,265
|
)
|
|
(1,293
|
)
|
|||
Cash and cash equivalents at beginning of year
|
2,783
|
|
|
4,048
|
|
|
5,341
|
|
|||
Cash and cash equivalents at end of year
|
$
|
2,672
|
|
|
$
|
2,783
|
|
|
$
|
4,048
|
|
|
|
|
|
|
|
||||||
Supplemental Cash Flow Information
|
|
|
|
|
|
||||||
Cash paid for:
|
|
|
|
|
|
||||||
Interest
|
$
|
298
|
|
|
$
|
315
|
|
|
$
|
337
|
|
Income taxes, net of refunds
|
$
|
144
|
|
|
$
|
587
|
|
|
$
|
923
|
|
1.
|
Significant Accounting Policies
|
2.
|
Healthcare Technology Net Asset Exchange
|
3.
|
Goodwill Impairment Charges
|
4.
|
Restructuring and Asset Impairment Charges
|
(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.
|
(In millions)
|
Distribution
Solutions
|
|
Technology
Solutions
|
|
Corporate
|
|
Total
|
||||||||
Balance, March 31, 2016
|
$
|
156
|
|
|
$
|
45
|
|
|
$
|
21
|
|
|
$
|
222
|
|
Net restructuring charges recognized
|
19
|
|
|
(10
|
)
|
|
5
|
|
|
14
|
|
||||
Non-cash charges
|
(10
|
)
|
|
—
|
|
|
1
|
|
|
(9
|
)
|
||||
Cash payments
|
(67
|
)
|
|
(20
|
)
|
|
(19
|
)
|
|
(106
|
)
|
||||
Other
|
(8
|
)
|
|
(5
|
)
|
|
(2
|
)
|
|
(15
|
)
|
||||
Balance, March 31, 2017
(1)
|
$
|
90
|
|
|
$
|
10
|
|
|
$
|
6
|
|
|
$
|
106
|
|
Net restructuring charges recognized
|
13
|
|
|
—
|
|
|
—
|
|
|
13
|
|
||||
Non-cash charges
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||
Cash payments
|
(36
|
)
|
|
(4
|
)
|
|
(5
|
)
|
|
(45
|
)
|
||||
Other
|
(3
|
)
|
|
(6
|
)
|
|
4
|
|
|
(5
|
)
|
||||
Balance, March 31, 2018
(2)
|
$
|
64
|
|
|
$
|
—
|
|
|
$
|
5
|
|
|
$
|
69
|
|
(1)
|
The reserve balance as of March 31, 2017 includes
$71 million
recorded in other accrued liabilities and
$35 million
recorded in other noncurrent liabilities on our consolidated balance sheet.
|
(2)
|
The reserve balance as of March 31, 2018 includes
$39 million
recorded in other accrued liabilities and
$30 million
recorded in other noncurrent liabilities on our consolidated balance sheet.
|
5.
|
Divestitures
|
6.
|
Business Combinations
|
(In millions)
|
Amounts Previously Recognized as of Acquisition Date (Provisional)
(1)
|
|
Measurement Period Adjustments
|
|
Amounts Recognized as of Acquisition Date
|
||||||
Receivables
|
$
|
106
|
|
|
$
|
(5
|
)
|
|
$
|
101
|
|
Other current assets, net of cash and cash equivalents acquired
|
19
|
|
|
—
|
|
|
19
|
|
|||
Goodwill
|
1,219
|
|
|
(87
|
)
|
|
1,132
|
|
|||
Intangible assets
|
136
|
|
|
79
|
|
|
215
|
|
|||
Other long-term assets
|
76
|
|
|
54
|
|
|
130
|
|
|||
Current liabilities
|
(117
|
)
|
|
(15
|
)
|
|
(132
|
)
|
|||
Other long-term liabilities
|
(80
|
)
|
|
(89
|
)
|
|
(169
|
)
|
|||
Fair value of net assets, less cash and cash equivalents
|
1,359
|
|
|
(63
|
)
|
|
1,296
|
|
|||
Less: Noncontrolling Interests
|
(152
|
)
|
|
63
|
|
|
(89
|
)
|
|||
Net assets acquired, net of cash and cash equivalents
|
$
|
1,207
|
|
|
$
|
—
|
|
|
$
|
1,207
|
|
(1)
|
As reported on Form 10-Q for the quarter ended June 30, 2016.
|
7.
|
Discontinued Operations
|
8.
|
Share-Based Compensation
|
|
Years Ended March 31,
|
||||||||||
(In millions)
|
2018
|
|
2017
|
|
2016
|
||||||
Restricted stock unit awards
(1)
|
$
|
46
|
|
|
$
|
79
|
|
|
$
|
88
|
|
Stock options
|
14
|
|
|
24
|
|
|
22
|
|
|||
Employee stock purchase plan
|
9
|
|
|
12
|
|
|
13
|
|
|||
Share-based compensation expense
(2)
|
69
|
|
|
115
|
|
|
123
|
|
|||
Tax benefit for share-based compensation expense
(3)
|
(28
|
)
|
|
(92
|
)
|
|
(41
|
)
|
|||
Share-based compensation expense, net of tax
|
$
|
41
|
|
|
$
|
23
|
|
|
$
|
82
|
|
(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 expense, which was recorded due to employee terminations associated with the March 2016 Cost Alignment 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. Income tax expense for 2018 and 2017 included discrete income tax benefits of
$8 million
and
$54 million
related to the adoption of the amended accounting guidance on share-based compensation.
|
•
|
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,
|
||||
|
2018
|
|
2017
|
|
2016
|
Expected stock price volatility
|
25%
|
|
21%
|
|
21%
|
Expected dividend yield
|
0.8%
|
|
0.7%
|
|
0.4%
|
Risk-free interest rate
|
1.7%
|
|
1.1%
|
|
1.4%
|
Expected life (in years)
|
4.5
|
|
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
|
||||||||||
$
|
76.55
|
|
–
|
$
|
158.24
|
|
|
1
|
|
2
|
|
$
|
108.17
|
|
|
1
|
|
$
|
106.05
|
|
158.25
|
|
–
|
239.93
|
|
|
2
|
|
4
|
|
190.18
|
|
|
1
|
|
199.13
|
|
||||
|
|
|
|
3
|
|
|
|
|
|
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, 2017
|
4
|
|
$
|
145.76
|
|
|
4
|
|
$
|
97
|
|
Granted
|
1
|
|
157.45
|
|
|
|
|
|
|||
Cancelled
|
(1)
|
|
180.79
|
|
|
|
|
|
|||
Exercised
|
(1)
|
|
86.95
|
|
|
|
|
|
|||
Outstanding, March 31, 2018
|
3
|
|
$
|
161.27
|
|
|
4
|
|
$
|
36
|
|
|
|
|
|
|
|
|
|
||||
Vested and expected to vest
(1)
|
3
|
|
$
|
160.28
|
|
|
4
|
|
$
|
35
|
|
Vested and exercisable, March 31, 2018
|
2
|
|
147.76
|
|
|
2
|
|
35
|
|
(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)
|
2018
|
|
2017
|
|
2016
|
||||||
Weighted-average grant date fair value per stock option
|
$
|
34.24
|
|
|
$
|
32.19
|
|
|
$
|
44.04
|
|
Aggregate intrinsic value on exercise
|
$
|
60
|
|
|
$
|
97
|
|
|
$
|
107
|
|
Cash received upon exercise
|
$
|
77
|
|
|
$
|
54
|
|
|
$
|
47
|
|
Tax benefits realized related to exercise
|
$
|
22
|
|
|
$
|
38
|
|
|
$
|
42
|
|
Total fair value of stock options vested
|
$
|
20
|
|
|
$
|
18
|
|
|
$
|
18
|
|
Total compensation cost, net of estimated forfeitures, related to unvested stock options not yet recognized, pre-tax
|
$
|
15
|
|
|
$
|
21
|
|
|
$
|
20
|
|
Weighted-average period in years over which stock option compensation cost is expected to be recognized
|
2
|
|
|
2
|
|
|
2
|
|
|
Years Ended March 31,
|
||||
|
2018
|
|
2017
|
|
2016
|
Expected stock price volatility
|
29%
|
|
23%
|
|
18%
|
Expected dividend yield
|
0.8%
|
|
0.7%
|
|
0.4%
|
Risk-free interest rate
|
1.5%
|
|
1.1%
|
|
0.9%
|
Expected life (in years)
|
3
|
|
3
|
|
3
|
|
Years Ended March 31,
|
||||||||||
(In millions)
|
2018
|
|
2017
|
|
2016
|
||||||
Total fair value of shares vested
|
$
|
156
|
|
|
$
|
109
|
|
|
$
|
104
|
|
Total compensation cost, net of estimated forfeitures, related to nonvested restricted stock unit awards not yet recognized, pre-tax
|
$
|
97
|
|
|
$
|
99
|
|
|
$
|
144
|
|
Weighted-average period in years over which restricted stock unit award cost is expected to be recognized
|
2
|
|
|
2
|
|
|
2
|
|
9.
|
Other Income, Net
|
|
Years Ended March 31,
|
||||||||||
(In millions)
|
2018
|
2017
|
2016
|
||||||||
Interest income
|
$
|
48
|
|
|
$
|
29
|
|
|
$
|
18
|
|
Equity in earnings, net
(1)
|
32
|
|
|
30
|
|
|
15
|
|
|||
Gain from sale of equity method investment
(2)
|
43
|
|
|
—
|
|
|
—
|
|
|||
Other, net
(1)
|
7
|
|
|
31
|
|
|
25
|
|
|||
Total
|
$
|
130
|
|
|
$
|
90
|
|
|
$
|
58
|
|
(1)
|
Primarily recorded within our Distribution Solutions segment.
|
(2)
|
Amount represented a pre-tax gain from the sale of an equity method investment from our Distribution Solutions segment to a third party during the second quarter of 2018.
|
10.
|
Income Taxes
|
|
Years Ended March 31,
|
||||||||||
(In millions)
|
2018
|
|
2017
|
|
2016
|
||||||
Income from continuing operations before income taxes
|
|
|
|
|
|
||||||
U.S.
|
$
|
1,175
|
|
|
$
|
5,772
|
|
|
$
|
2,319
|
|
Foreign
|
(936
|
)
|
|
1,119
|
|
|
931
|
|
|||
Total income from continuing operations before income taxes
|
$
|
239
|
|
|
$
|
6,891
|
|
|
$
|
3,250
|
|
|
Years Ended March 31,
|
||||||||||
(In millions)
|
2018
|
|
2017
|
|
2016
|
||||||
Current
|
|
|
|
|
|
||||||
Federal
|
$
|
577
|
|
|
$
|
524
|
|
|
$
|
658
|
|
State
|
33
|
|
|
86
|
|
|
96
|
|
|||
Foreign
|
205
|
|
|
122
|
|
|
90
|
|
|||
Total current
|
815
|
|
|
732
|
|
|
844
|
|
|||
|
|
|
|
|
|
||||||
Deferred
|
|
|
|
|
|
||||||
Federal
|
(767
|
)
|
|
767
|
|
|
95
|
|
|||
State
|
17
|
|
|
164
|
|
|
42
|
|
|||
Foreign
|
(118
|
)
|
|
(49
|
)
|
|
(73
|
)
|
|||
Total deferred
|
(868
|
)
|
|
882
|
|
|
64
|
|
|||
Income tax (benefit) expense
|
$
|
(53
|
)
|
|
$
|
1,614
|
|
|
$
|
908
|
|
|
Years Ended March 31,
|
||||||||||
(In millions)
|
2018
|
|
2017
|
|
2016
|
||||||
Income tax expense at federal statutory rate
|
$
|
75
|
|
|
$
|
2,411
|
|
|
$
|
1,137
|
|
State income taxes net of federal tax benefit
|
50
|
|
|
153
|
|
|
92
|
|
|||
Tax effect of foreign operations
|
(146
|
)
|
|
(326
|
)
|
|
(295
|
)
|
|||
Unrecognized tax benefits and settlements
|
454
|
|
|
57
|
|
|
(14
|
)
|
|||
Non-deductible goodwill
|
585
|
|
|
106
|
|
|
—
|
|
|||
Share-based compensation
|
(8
|
)
|
|
(54
|
)
|
|
—
|
|
|||
Net tax benefit on intellectual property transfer
|
(178
|
)
|
|
(137
|
)
|
|
—
|
|
|||
Rate differential on gain from Change Healthcare Net Asset Exchange
|
—
|
|
|
(587
|
)
|
|
—
|
|
|||
Remeasurement of U.S. deferred taxes
|
(1,324
|
)
|
|
—
|
|
|
—
|
|
|||
Transition tax on foreign earnings
|
457
|
|
|
—
|
|
|
—
|
|
|||
Other, net
(1)
|
(18
|
)
|
|
(9
|
)
|
|
(12
|
)
|
|||
Income tax (benefit) expense
|
$
|
(53
|
)
|
|
$
|
1,614
|
|
|
$
|
908
|
|
(1)
|
Our 2018 effective tax rate was impacted by other favorable U.S. federal permanent differences including research and development credits of
$11 million
.
|
|
March 31,
|
||||||
(In millions)
|
2018
|
|
2017
|
||||
Assets
|
|
|
|
||||
Receivable allowances
|
$
|
58
|
|
|
$
|
124
|
|
Compensation and benefit related accruals
|
345
|
|
|
593
|
|
||
Net operating loss and credit carryforwards
|
811
|
|
|
594
|
|
||
Long-term contractual obligations
|
59
|
|
|
107
|
|
||
Other
|
279
|
|
|
241
|
|
||
Subtotal
|
1,552
|
|
|
1,659
|
|
||
Less: valuation allowance
|
(751
|
)
|
|
(503
|
)
|
||
Total assets
|
801
|
|
|
1,156
|
|
||
Liabilities
|
|
|
|
||||
Inventory valuation and other assets
|
(1,869
|
)
|
|
(2,818
|
)
|
||
Fixed assets and systems development costs
|
(158
|
)
|
|
(224
|
)
|
||
Intangibles
|
(644
|
)
|
|
(921
|
)
|
||
Change Healthcare Equity Investment
|
(814
|
)
|
|
(773
|
)
|
||
Other
|
(71
|
)
|
|
(70
|
)
|
||
Total liabilities
|
(3,556
|
)
|
|
(4,806
|
)
|
||
Net deferred tax liability
|
$
|
(2,755
|
)
|
|
$
|
(3,650
|
)
|
|
|
|
|
||||
Long-term deferred tax asset
|
49
|
|
|
28
|
|
||
Long-term deferred tax liability
|
(2,804
|
)
|
|
(3,678
|
)
|
||
Net deferred tax liability
|
$
|
(2,755
|
)
|
|
$
|
(3,650
|
)
|
|
Years Ended March 31,
|
||||||||||
(In millions)
|
2018
|
|
2017
|
|
2016
|
||||||
Unrecognized tax benefits at beginning of period
|
$
|
486
|
|
|
$
|
555
|
|
|
$
|
616
|
|
Additions based on tax positions related to prior years
|
47
|
|
|
7
|
|
|
116
|
|
|||
Reductions based on tax positions related to prior years
|
(124
|
)
|
|
(67
|
)
|
|
(62
|
)
|
|||
Additions based on tax positions related to current year
|
778
|
|
|
105
|
|
|
28
|
|
|||
Reductions based on settlements
|
(7
|
)
|
|
(113
|
)
|
|
(141
|
)
|
|||
Reductions based on the lapse of the applicable statutes of limitations
|
—
|
|
|
—
|
|
|
(6
|
)
|
|||
Exchange rate fluctuations
|
3
|
|
|
(1
|
)
|
|
4
|
|
|||
Unrecognized tax benefits at end of period
|
$
|
1,183
|
|
|
$
|
486
|
|
|
$
|
555
|
|
11.
|
Redeemable Noncontrolling Interests and Noncontrolling Interests
|
(In millions)
|
Noncontrolling
Interests
|
Redeemable
Noncontrolling
Interests
|
||||
Balance, March 31, 2016
|
$
|
84
|
|
$
|
1,406
|
|
Net income attributable to noncontrolling interests
|
39
|
|
44
|
|
||
Other comprehensive loss
|
—
|
|
(78
|
)
|
||
Reclassification of recurring compensation to other accrued liabilities
|
—
|
|
(44
|
)
|
||
Purchases of noncontrolling interests
(1)
|
89
|
|
—
|
|
||
Other
|
(34
|
)
|
(1
|
)
|
||
Balance, March 31, 2017
|
$
|
178
|
|
$
|
1,327
|
|
Net income attributable to noncontrolling interests
|
187
|
|
43
|
|
||
Other comprehensive income
|
—
|
|
185
|
|
||
Reclassification of recurring compensation to other accrued liabilities
|
—
|
|
(43
|
)
|
||
Payments to noncontrolling interests
|
(98
|
)
|
—
|
|
||
Exercises of Put Right
|
—
|
|
(53
|
)
|
||
Other
|
(14
|
)
|
—
|
|
||
Balance, March 31, 2018
|
$
|
253
|
|
$
|
1,459
|
|
(1)
|
Represents the fair value of noncontrolling interests we purchased related to our 2016 acquisition of Vantage. Refer to Financial Note 6, “Business Combinations,” for more information.
|
12.
|
Earnings Per Common Share
|
|
Years Ended March 31,
|
||||||||||
(In millions, except per share amounts)
|
2018
|
|
2017
|
|
2016
|
||||||
Income from continuing operations
|
$
|
292
|
|
|
$
|
5,277
|
|
|
$
|
2,342
|
|
Net income attributable to noncontrolling interests
|
(230
|
)
|
|
(83
|
)
|
|
(52
|
)
|
|||
Income from continuing operations attributable to McKesson
|
62
|
|
|
5,194
|
|
|
2,290
|
|
|||
Income (Loss) from discontinued operations, net of tax
|
5
|
|
|
(124
|
)
|
|
(32
|
)
|
|||
Net income attributable to McKesson
|
$
|
67
|
|
|
$
|
5,070
|
|
|
$
|
2,258
|
|
|
|
|
|
|
|
||||||
Weighted average common shares outstanding:
|
|
|
|
|
|
||||||
Basic
|
208
|
|
|
221
|
|
|
230
|
|
|||
Effect of dilutive securities:
|
|
|
|
|
|
||||||
Options to purchase common stock
|
—
|
|
|
1
|
|
|
1
|
|
|||
Restricted stock units
|
1
|
|
|
1
|
|
|
2
|
|
|||
Diluted
|
209
|
|
|
223
|
|
|
233
|
|
|||
|
|
|
|
|
|
||||||
Earnings (loss) per common share attributable to McKesson:
(1)
|
|
|
|
|
|
||||||
Diluted
|
|
|
|
|
|
||||||
Continuing operations
|
$
|
0.30
|
|
|
$
|
23.28
|
|
|
$
|
9.84
|
|
Discontinued operations
|
0.02
|
|
|
(0.55
|
)
|
|
(0.14
|
)
|
|||
Total
|
$
|
0.32
|
|
|
$
|
22.73
|
|
|
$
|
9.70
|
|
Basic
|
|
|
|
|
|
||||||
Continuing operations
|
$
|
0.30
|
|
|
$
|
23.50
|
|
|
$
|
9.96
|
|
Discontinued operations
|
0.02
|
|
|
(0.55
|
)
|
|
(0.14
|
)
|
|||
Total
|
$
|
0.32
|
|
|
$
|
22.95
|
|
|
$
|
9.82
|
|
(1)
|
Certain computations may reflect rounding adjustments.
|
|
March 31,
|
||||||
(In millions)
|
2018
|
|
2017
|
||||
Customer accounts
|
$
|
14,349
|
|
|
$
|
14,602
|
|
Other
|
3,578
|
|
|
3,893
|
|
||
Total
|
17,927
|
|
|
18,495
|
|
||
Allowances
|
(216
|
)
|
|
(280
|
)
|
||
Net
|
$
|
17,711
|
|
|
$
|
18,215
|
|
|
March 31,
|
||||||
(In millions)
|
2018
|
|
2017
|
||||
Land
|
$
|
187
|
|
|
$
|
166
|
|
Building, machinery, equipment and other
|
3,746
|
|
|
3,637
|
|
||
Total property, plant and equipment
|
3,933
|
|
|
3,803
|
|
||
Accumulated depreciation
|
(1,469
|
)
|
|
(1,511
|
)
|
||
Property, plant and equipment, net
|
$
|
2,464
|
|
|
$
|
2,292
|
|
15.
|
Goodwill and Intangible Assets, Net
|
(In millions)
|
Distribution
Solutions
|
|
Technology
Solutions
|
|
Total
|
||||||
Balance, March 31, 2016
|
$
|
7,987
|
|
|
$
|
1,799
|
|
|
$
|
9,786
|
|
Goodwill acquired
|
2,836
|
|
|
22
|
|
|
2,858
|
|
|||
Acquisition accounting, transfers and other adjustments
|
(146
|
)
|
|
1
|
|
|
(145
|
)
|
|||
Goodwill impairment
|
—
|
|
|
(290
|
)
|
|
(290
|
)
|
|||
Amount reclassified to assets held for sale
|
(165
|
)
|
|
—
|
|
|
(165
|
)
|
|||
Goodwill disposed
(1)
|
(30
|
)
|
|
(1,078
|
)
|
|
(1,108
|
)
|
|||
Foreign currency translation adjustments, net
|
(350
|
)
|
|
—
|
|
|
(350
|
)
|
|||
Balance, March 31, 2017
|
$
|
10,132
|
|
|
$
|
454
|
|
|
$
|
10,586
|
|
Goodwill acquired
|
1,707
|
|
|
—
|
|
|
1,707
|
|
|||
Acquisition accounting, transfers and other adjustments
(2)
|
369
|
|
|
(330
|
)
|
|
39
|
|
|||
Goodwill impairment
(3)
|
(1,738
|
)
|
|
—
|
|
|
(1,738
|
)
|
|||
Goodwill disposed
(1)
|
(48
|
)
|
|
(124
|
)
|
|
(172
|
)
|
|||
Amount reclassified to assets held for sale
|
(2
|
)
|
|
—
|
|
|
(2
|
)
|
|||
Foreign currency translation adjustments, net
|
504
|
|
|
—
|
|
|
504
|
|
|||
Balance, March 31, 2018
|
$
|
10,924
|
|
|
$
|
—
|
|
|
$
|
10,924
|
|
(1)
|
2017 Technology Solutions segment amount represents goodwill disposal associated with Healthcare Technology Net Asset Exchange transaction. Refer to Financial Note 2, “Healthcare Technology Net Asset Exchange” for more information. 2018 Technology Solutions segment amount represents goodwill disposal associated with the sale of our EIS business. Refer to Financial Note 5, “Divestitures” for more information.
|
(2)
|
Effective April 1, 2017, our RHP business was transferred from the Technology Solutions segment to the Distribution Solutions segment.
|
(3)
|
In 2018, goodwill impairment charges from our international businesses were translated at average exchange rates during the corresponding period and accumulated goodwill impairment losses described below were translated at year-end exchange rates.
|
|
March 31, 2018
|
|
March 31, 2017
|
||||||||||||||||||||||
(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 relationships
|
12
|
|
$
|
3,619
|
|
|
$
|
(1,550
|
)
|
|
$
|
2,069
|
|
|
$
|
2,893
|
|
|
$
|
(1,295
|
)
|
|
$
|
1,598
|
|
Service agreements
|
12
|
|
1,037
|
|
|
(386
|
)
|
|
651
|
|
|
1,009
|
|
|
(316
|
)
|
|
693
|
|
||||||
Pharmacy licenses
|
26
|
|
684
|
|
|
(196
|
)
|
|
488
|
|
|
741
|
|
|
(150
|
)
|
|
591
|
|
||||||
Trademarks and trade names
|
14
|
|
932
|
|
|
(187
|
)
|
|
745
|
|
|
845
|
|
|
(124
|
)
|
|
721
|
|
||||||
Technology
|
4
|
|
147
|
|
|
(84
|
)
|
|
63
|
|
|
69
|
|
|
(64
|
)
|
|
5
|
|
||||||
Other
|
4
|
|
262
|
|
|
(176
|
)
|
|
86
|
|
|
201
|
|
|
(144
|
)
|
|
57
|
|
||||||
Total
|
|
|
$
|
6,681
|
|
|
$
|
(2,579
|
)
|
|
$
|
4,102
|
|
|
$
|
5,758
|
|
|
$
|
(2,093
|
)
|
|
$
|
3,665
|
|
16.
|
Debt and
Financing Activities
|
|
March 31,
|
||||||
(In millions)
|
2018
|
|
2017
|
||||
U.S. Dollar notes
(1) (2)
|
|
|
|
||||
1.40% Notes due March 15, 2018
|
$
|
—
|
|
|
$
|
500
|
|
7.50% Notes due February 15, 2019
|
—
|
|
|
350
|
|
||
2.28% Notes due March 15, 2019
|
1,100
|
|
|
1,100
|
|
||
4.75% Notes due March 1, 2021
|
323
|
|
|
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
|
167
|
|
|
175
|
|
||
3.95% Notes due February 16, 2028
|
600
|
|
|
—
|
|
||
6.00% Notes due March 1, 2041
|
282
|
|
|
493
|
|
||
4.88% Notes due March 15, 2044
|
411
|
|
|
800
|
|
||
Foreign currency notes
(1) (3)
|
|
|
|
||||
4.50% Euro Bonds due April 26, 2017
|
—
|
|
|
533
|
|
||
Floating Rate Euro Notes due February 12, 2020
(4)
|
337
|
|
|
—
|
|
||
0.63% Euro Notes due August 17, 2021
|
695
|
|
|
638
|
|
||
1.50% Euro Notes due November 17, 2025
|
691
|
|
|
635
|
|
||
1.63% Euro Notes due October 30, 2026
|
669
|
|
|
—
|
|
||
3.13% Sterling Notes due February 17, 2029
|
630
|
|
|
564
|
|
||
|
|
|
|
||||
Lease and other obligations
|
75
|
|
|
75
|
|
||
Total debt
|
7,880
|
|
|
8,362
|
|
||
Less: Current portion
|
1,129
|
|
|
1,057
|
|
||
Total long-term debt
|
$
|
6,751
|
|
|
$
|
7,305
|
|
(1)
|
These notes are unsecured and unsubordinated obligations of the Company.
|
(2)
|
Interest on these notes is payable semiannually.
|
(3)
|
Interest on these foreign bonds and notes is payable annually, except the 2020 Floating Rate Euro Notes.
|
(4)
|
Interest on these notes is payable quarterly.
|
17.
|
Variable Interest Entities
|
18.
|
Pension Benefits
|
|
U.S. Plans
|
|
Non-U.S. Plans
|
||||||||||||||||||||
|
Years Ended March 31,
|
|
Years Ended March 31,
|
||||||||||||||||||||
(In millions)
|
2018
|
|
2017
|
|
2016
|
|
2018
|
|
2017
|
|
2016
|
||||||||||||
Service cost - benefits earned during the year
|
$
|
3
|
|
|
$
|
5
|
|
|
$
|
4
|
|
|
$
|
15
|
|
|
$
|
15
|
|
|
$
|
20
|
|
Interest cost on projected benefit obligation
|
14
|
|
|
13
|
|
|
18
|
|
|
22
|
|
|
23
|
|
|
24
|
|
||||||
Expected return on assets
|
(19
|
)
|
|
(15
|
)
|
|
(19
|
)
|
|
(26
|
)
|
|
(26
|
)
|
|
(30
|
)
|
||||||
Amortization of unrecognized actuarial loss and prior service costs
|
6
|
|
|
11
|
|
|
42
|
|
|
5
|
|
|
4
|
|
|
3
|
|
||||||
Curtailment/settlement loss (gain)
|
2
|
|
|
—
|
|
|
2
|
|
|
1
|
|
|
(2
|
)
|
|
—
|
|
||||||
Net periodic pension expense
|
$
|
6
|
|
|
$
|
14
|
|
|
$
|
47
|
|
|
$
|
17
|
|
|
$
|
14
|
|
|
$
|
17
|
|
|
U.S. Plans
|
|
Non-U.S. Plans
|
||||||||||||
|
Years Ended March 31,
|
|
Years Ended March 31,
|
||||||||||||
(In millions)
|
2018
|
|
2017
|
|
2018
|
|
2017
|
||||||||
Change in benefit obligations
|
|
|
|
|
|
|
|
||||||||
Benefit obligation at beginning of period
(1)
|
$
|
513
|
|
|
$
|
535
|
|
|
$
|
943
|
|
|
$
|
899
|
|
Service cost
|
3
|
|
|
5
|
|
|
15
|
|
|
15
|
|
||||
Interest cost
|
14
|
|
|
13
|
|
|
22
|
|
|
23
|
|
||||
Actuarial loss (gain)
|
1
|
|
|
(11
|
)
|
|
(15
|
)
|
|
98
|
|
||||
Benefits paid
|
(44
|
)
|
|
(26
|
)
|
|
(42
|
)
|
|
(34
|
)
|
||||
Expenses paid
|
(2
|
)
|
|
(3
|
)
|
|
(1
|
)
|
|
(1
|
)
|
||||
Amendments
|
—
|
|
|
—
|
|
|
(2
|
)
|
|
—
|
|
||||
Acquisitions
|
—
|
|
|
—
|
|
|
—
|
|
|
37
|
|
||||
Foreign exchange impact and other
|
—
|
|
|
—
|
|
|
115
|
|
|
(94
|
)
|
||||
Benefit obligation at end of period
(1)
|
$
|
485
|
|
|
$
|
513
|
|
|
$
|
1,035
|
|
|
$
|
943
|
|
|
|
|
|
|
|
|
|
||||||||
Change in plan assets
|
|
|
|
|
|
|
|
||||||||
Fair value of plan assets at beginning of period
|
$
|
293
|
|
|
$
|
262
|
|
|
$
|
623
|
|
|
$
|
607
|
|
Actual return on plan assets
|
35
|
|
|
22
|
|
|
21
|
|
|
76
|
|
||||
Employer and participant contributions
|
53
|
|
|
38
|
|
|
17
|
|
|
16
|
|
||||
Benefits paid
|
(44
|
)
|
|
(26
|
)
|
|
(42
|
)
|
|
(34
|
)
|
||||
Expenses paid
|
(2
|
)
|
|
(3
|
)
|
|
(1
|
)
|
|
(1
|
)
|
||||
Acquisitions
|
—
|
|
|
—
|
|
|
—
|
|
|
35
|
|
||||
Foreign exchange impact and other
|
—
|
|
|
—
|
|
|
69
|
|
|
(76
|
)
|
||||
Fair value of plan assets at end of period
|
$
|
335
|
|
|
$
|
293
|
|
|
$
|
687
|
|
|
$
|
623
|
|
|
|
|
|
|
|
|
|
||||||||
Funded status at end of period
|
$
|
(150
|
)
|
|
$
|
(220
|
)
|
|
$
|
(348
|
)
|
|
$
|
(320
|
)
|
|
|
|
|
|
|
|
|
||||||||
Amounts recognized on the balance sheet
|
|
|
|
|
|
|
|
||||||||
Assets
|
$
|
10
|
|
|
$
|
—
|
|
|
$
|
19
|
|
|
$
|
4
|
|
Current liabilities
|
(39
|
)
|
|
(17
|
)
|
|
(7
|
)
|
|
(7
|
)
|
||||
Long-term liabilities
|
(121
|
)
|
|
(203
|
)
|
|
(360
|
)
|
|
(317
|
)
|
||||
Total
|
$
|
(150
|
)
|
|
$
|
(220
|
)
|
|
$
|
(348
|
)
|
|
$
|
(320
|
)
|
(1)
|
The benefit obligation is the projected benefit obligation.
|
|
U.S. Plans
|
|
Non-U.S. Plans
|
||||||||||||
|
March 31,
|
|
March 31,
|
||||||||||||
(In millions)
|
2018
|
|
2017
|
|
2018
|
|
2017
|
||||||||
Projected benefit obligation
|
$
|
485
|
|
|
$
|
513
|
|
|
$
|
1,035
|
|
|
$
|
943
|
|
Accumulated benefit obligation
|
485
|
|
|
513
|
|
|
990
|
|
|
902
|
|
||||
Fair value of plan assets
|
335
|
|
|
293
|
|
|
687
|
|
|
623
|
|
|
U.S. Plans
|
|
Non-U.S. Plans
|
||||||||||||
|
March 31,
|
|
March 31,
|
||||||||||||
(In millions)
|
2018
|
|
2017
|
|
2018
|
|
2017
|
||||||||
Net actuarial loss
|
$
|
134
|
|
|
$
|
157
|
|
|
$
|
162
|
|
|
$
|
160
|
|
Prior service credit
|
—
|
|
|
—
|
|
|
(5
|
)
|
|
(3
|
)
|
||||
Total
|
$
|
134
|
|
|
$
|
157
|
|
|
$
|
157
|
|
|
$
|
157
|
|
|
U.S. Plans
|
|
Non-U.S. Plans
|
||||||||||||||||||||
|
Years Ended March 31,
|
|
Years Ended March 31,
|
||||||||||||||||||||
(In millions)
|
2018
|
|
2017
|
|
2016
|
|
2018
|
|
2017
|
|
2016
|
||||||||||||
Net actuarial loss (gain)
|
$
|
(15
|
)
|
|
$
|
(17
|
)
|
|
$
|
9
|
|
|
$
|
(11
|
)
|
|
$
|
47
|
|
|
$
|
(38
|
)
|
Prior service credit
|
—
|
|
|
—
|
|
|
—
|
|
|
(2
|
)
|
|
—
|
|
|
(5
|
)
|
||||||
Amortization of:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Net actuarial loss
|
(8
|
)
|
|
(11
|
)
|
|
(44
|
)
|
|
(6
|
)
|
|
(4
|
)
|
|
(5
|
)
|
||||||
Prior service credit (cost)
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
2
|
|
|
2
|
|
||||||
Foreign exchange impact and other
|
—
|
|
|
—
|
|
|
—
|
|
|
19
|
|
|
(10
|
)
|
|
(1
|
)
|
||||||
Total recognized in other comprehensive loss (income)
|
$
|
(23
|
)
|
|
$
|
(28
|
)
|
|
$
|
(35
|
)
|
|
$
|
—
|
|
|
$
|
35
|
|
|
$
|
(47
|
)
|
|
U.S. Plans
|
|
Non-U.S. Plans
|
||||||||||||||
|
Years Ended March 31,
|
|
Years Ended March 31,
|
||||||||||||||
|
2018
|
|
2017
|
|
2016
|
|
2018
|
|
2017
|
|
2016
|
||||||
Net periodic pension expense
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Discount rates
|
3.55
|
%
|
|
3.40
|
%
|
|
3.36
|
%
|
|
2.34
|
%
|
|
2.72
|
%
|
|
2.36
|
%
|
Rate of increase in compensation
|
4.00
|
|
|
4.00
|
|
|
4.00
|
|
|
2.72
|
|
|
2.76
|
|
|
2.80
|
|
Expected long-term rate of return on plan assets
|
6.25
|
|
|
6.25
|
|
|
6.75
|
|
|
4.03
|
|
|
4.51
|
|
|
4.87
|
|
Benefit obligation
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Discount rates
|
3.69
|
%
|
|
3.39
|
%
|
|
3.27
|
%
|
|
2.35
|
%
|
|
2.35
|
%
|
|
2.84
|
%
|
Rate of increase in compensation
|
N/A
(1)
|
|
|
4.00
|
|
|
4.00
|
|
|
2.59
|
|
|
3.18
|
|
|
2.98
|
|
(1)
|
This assumption is no longer needed in actuarial valuations as U.S. plans are frozen or have fixed benefits for the remaining active participants.
|
|
U.S. Plans
|
|
Non-U.S. Plans
|
||||||||||||||||||||||||||||
|
March 31, 2018
|
|
March 31, 2018
|
||||||||||||||||||||||||||||
(In millions)
|
Level 1
|
|
Level 2
|
|
Level 3
|
|
Total
|
|
Level 1
|
|
Level 2
|
|
Level 3
|
|
Total
|
||||||||||||||||
Cash and cash equivalents
|
$
|
39
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
39
|
|
|
$
|
3
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
3
|
|
Equity securities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Common and preferred stock
|
7
|
|
|
—
|
|
|
—
|
|
|
7
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||||
Equity commingled funds
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
41
|
|
|
94
|
|
|
—
|
|
|
135
|
|
||||||||
Fixed income securities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Government securities
|
—
|
|
|
85
|
|
|
—
|
|
|
85
|
|
|
5
|
|
|
113
|
|
|
—
|
|
|
118
|
|
||||||||
Corporate bonds
|
—
|
|
|
58
|
|
|
—
|
|
|
58
|
|
|
114
|
|
|
136
|
|
|
—
|
|
|
250
|
|
||||||||
Mortgage-backed securities
|
—
|
|
|
7
|
|
|
—
|
|
|
7
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||||
Asset-backed securities and other
|
—
|
|
|
21
|
|
|
—
|
|
|
21
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||||
Fixed income commingled funds
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
64
|
|
|
—
|
|
|
64
|
|
||||||||
Other:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Real estate funds
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
2
|
|
|
—
|
|
|
—
|
|
|
2
|
|
||||||||
Other
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
22
|
|
|
—
|
|
|
4
|
|
|
26
|
|
||||||||
Total
|
$
|
46
|
|
|
$
|
171
|
|
|
$
|
—
|
|
|
$
|
217
|
|
|
$
|
187
|
|
|
$
|
407
|
|
|
$
|
4
|
|
|
$
|
598
|
|
Assets held at NAV practical expedient
(1)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Equity commingled funds
|
|
|
|
|
|
|
54
|
|
|
|
|
|
|
|
|
27
|
|
||||||||||||||
Fixed income commingled funds
|
|
|
|
|
|
|
53
|
|
|
|
|
|
|
|
|
—
|
|
||||||||||||||
Real estate funds
|
|
|
|
|
|
|
11
|
|
|
|
|
|
|
|
|
—
|
|
||||||||||||||
Other
|
|
|
|
|
|
|
—
|
|
|
|
|
|
|
|
|
62
|
|
||||||||||||||
Total plan assets
|
|
|
|
|
|
|
|
|
|
$
|
335
|
|
|
|
|
|
|
|
|
|
|
|
$
|
687
|
|
|
U.S. Plans
|
|
Non-U.S. Plans
|
||||||||||||||||||||||||||||
|
March 31, 2017
|
|
March 31, 2017
|
||||||||||||||||||||||||||||
(In millions)
|
Level 1
|
|
Level 2
|
|
Level 3
|
|
Total
|
|
Level 1
|
|
Level 2
|
|
Level 3
|
|
Total
|
||||||||||||||||
Cash and cash equivalents
|
$
|
8
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
8
|
|
|
$
|
2
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
2
|
|
Equity securities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Common and preferred stock
|
17
|
|
|
—
|
|
|
—
|
|
|
17
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||||
Equity commingled funds
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
13
|
|
|
40
|
|
|
—
|
|
|
53
|
|
||||||||
Fixed income securities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Government securities
|
—
|
|
|
27
|
|
|
—
|
|
|
27
|
|
|
24
|
|
|
68
|
|
|
—
|
|
|
92
|
|
||||||||
Corporate bonds
|
—
|
|
|
12
|
|
|
—
|
|
|
12
|
|
|
69
|
|
|
120
|
|
|
10
|
|
|
199
|
|
||||||||
Mortgage-backed securities
|
—
|
|
|
10
|
|
|
—
|
|
|
10
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||||
Asset-backed securities and other
|
—
|
|
|
19
|
|
|
—
|
|
|
19
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||||
Fixed income commingled funds
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
20
|
|
|
29
|
|
|
—
|
|
|
49
|
|
||||||||
Other:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Real estate funds
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
2
|
|
|
—
|
|
|
6
|
|
|
8
|
|
||||||||
Total
|
$
|
25
|
|
|
$
|
68
|
|
|
$
|
—
|
|
|
$
|
93
|
|
|
$
|
130
|
|
|
$
|
257
|
|
|
$
|
16
|
|
|
$
|
403
|
|
Assets held at NAV practical expedient
(1)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Equity commingled funds
|
|
|
|
|
|
|
131
|
|
|
|
|
|
|
|
|
94
|
|
||||||||||||||
Fixed income commingled funds
|
|
|
|
|
|
|
59
|
|
|
|
|
|
|
|
|
53
|
|
||||||||||||||
Real estate funds
|
|
|
|
|
|
|
10
|
|
|
|
|
|
|
|
|
13
|
|
||||||||||||||
Other
|
|
|
|
|
|
|
—
|
|
|
|
|
|
|
|
|
60
|
|
||||||||||||||
Total plan assets
|
|
|
|
|
|
|
|
|
|
$
|
293
|
|
|
|
|
|
|
|
|
|
|
|
$
|
623
|
|
(1)
|
Equity commingled funds, fixed income commingled funds, real estate funds and other investments for which fair value is measured using the NAV per share as a practical expedient are not leveled within the fair value hierarchy and are included as a reconciling item to total investments.
|
19.
|
Postretirement Benefits
|
|
Years Ended March 31,
|
||||||||||
(In millions)
|
2018
|
|
2017
|
|
2016
|
||||||
Service cost - benefits earned during the year
|
$
|
1
|
|
|
$
|
1
|
|
|
$
|
1
|
|
Interest cost on accumulated benefit obligation
|
2
|
|
|
2
|
|
|
4
|
|
|||
Amortization of unrecognized actuarial gain and prior service credit
|
(6
|
)
|
|
(1
|
)
|
|
—
|
|
|||
Net periodic postretirement (credit) expense
|
$
|
(3
|
)
|
|
$
|
2
|
|
|
$
|
5
|
|
|
Years Ended March 31,
|
||||||
(In millions)
|
2018
|
|
2017
|
||||
Benefit obligation at beginning of period
|
$
|
82
|
|
|
$
|
98
|
|
Service cost
|
1
|
|
|
1
|
|
||
Interest cost
|
2
|
|
|
2
|
|
||
Actuarial gain
|
(1
|
)
|
|
(13
|
)
|
||
Benefit payments
|
(6
|
)
|
|
(6
|
)
|
||
Benefit obligation at end of period
|
$
|
78
|
|
|
$
|
82
|
|
20.
|
Hedging Activities
|
|
Balance Sheet
Caption
|
March 31, 2018
|
|
March 31, 2017
|
||||||||||||||||
|
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
|
$
|
15
|
|
$
|
—
|
|
$
|
81
|
|
|
$
|
17
|
|
$
|
—
|
|
$
|
81
|
|
Foreign exchange
contracts (non-current)
|
Other Noncurrent Assets
|
14
|
|
—
|
|
81
|
|
|
32
|
|
—
|
|
162
|
|
||||||
Cross-currency
swaps (current)
|
Prepaid expenses and other/
Other Accrued Liabilities
|
—
|
|
7
|
|
504
|
|
|
17
|
|
—
|
|
174
|
|
||||||
Cross-currency
swaps (non-current)
|
Other Noncurrent Assets/Liabilities
|
—
|
|
222
|
|
3,508
|
|
|
90
|
|
—
|
|
2,489
|
|
||||||
Total
|
|
$
|
29
|
|
$
|
229
|
|
|
|
$
|
156
|
|
$
|
—
|
|
|
||||
Derivatives not designated for hedge accounting
|
|
|
|
|
|
|
|
|
||||||||||||
Foreign exchange
contracts (current)
|
Prepaid expenses and other
|
$
|
—
|
|
$
|
—
|
|
$
|
13
|
|
|
$
|
1
|
|
$
|
—
|
|
$
|
198
|
|
Foreign exchange
contracts (current)
|
Other accrued liabilities
|
—
|
|
—
|
|
16
|
|
|
—
|
|
—
|
|
37
|
|
||||||
Total
|
|
$
|
—
|
|
$
|
—
|
|
|
|
$
|
1
|
|
$
|
—
|
|
|
21.
|
Fair Value Measurements
|
22.
|
Lease Obligations
|
(In millions)
|
Noncancelable
Operating
Leases
|
||
2019
|
$
|
502
|
|
2020
|
443
|
|
|
2021
|
383
|
|
|
2022
|
333
|
|
|
2023
|
277
|
|
|
Thereafter
|
1,134
|
|
|
Total minimum lease payments
(1)
|
$
|
3,072
|
|
(1)
|
Amount includes future minimum lease payments for the sale-leaseback transaction of
$62 million
. Minimum lease payments have not been reduced by minimum sublease income of
$147
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) (4)
|
|
Average Price
Paid Per Share
|
|
Approximate
Dollar Value of
Shares that May
Yet Be Purchased
Under the
Programs
|
||||
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
|
|
||
Shares repurchase plans authorized
|
|
|
|
|
|
|
||||
October 2016
|
|
|
|
|
|
4,000
|
|
|||
Shares repurchased
|
|
15.5
|
|
$
|
141.16
|
|
|
(2,250
|
)
|
|
Balance, March 31, 2017
|
|
|
|
|
|
$
|
2,746
|
|
||
Shares repurchased
|
|
10.5
|
|
$
|
151.06
|
|
(3)
|
(1,650
|
)
|
|
Balance, March 31, 2018
|
|
|
|
|
|
$
|
1,096
|
|
(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 average price paid per share computation includes the initial share settlement of
2.5 million
shares from the March 2018 ASR program, of which the actual average price of shares will be determined at the termination of the program.
|
(4)
|
The number of shares purchased reflects rounding adjustments.
|
|
Years Ended March 31,
|
||||||||||
(In millions)
|
2018
|
|
2017
|
|
2016
|
||||||
Foreign currency translation adjustments:
(1)
|
|
|
|
|
|
||||||
Foreign currency translation adjustments arising during period, net of income tax expense (benefit) of nil, ($1) and ($23)
(2) (3)
|
$
|
804
|
|
|
$
|
(644
|
)
|
|
$
|
113
|
|
Reclassified to income statement, net of income tax expense of nil, nil and nil
(4)
|
—
|
|
|
20
|
|
|
—
|
|
|||
|
804
|
|
|
(624
|
)
|
|
113
|
|
|||
Unrealized gains (losses) on net investment hedges
(5)
|
|
|
|
|
|
||||||
Unrealized gains (losses) on net investment hedges arising during period, net of income tax benefit of $95, $5 and nil
|
(180
|
)
|
|
(8
|
)
|
|
—
|
|
|||
Reclassified to income statement, net of income tax expense of nil, nil and nil
|
—
|
|
|
—
|
|
|
—
|
|
|||
|
(180
|
)
|
|
(8
|
)
|
|
—
|
|
|||
Unrealized gains (losses) on cash flow hedges:
|
|
|
|
|
|
||||||
Unrealized gains (losses) on cash flow hedges arising during period, net of income tax benefit of $9, nil and nil
|
(30
|
)
|
|
(19
|
)
|
|
6
|
|
|||
Reclassified to income statement, net of income tax expense of nil, nil and nil
|
—
|
|
|
—
|
|
|
3
|
|
|||
|
(30
|
)
|
|
(19
|
)
|
|
9
|
|
|||
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 $2, $4 and $13
(6)
|
25
|
|
|
(20
|
)
|
|
23
|
|
|||
Amortization of actuarial gain (loss), prior service cost and transition obligation, net of income tax expense (benefit) of $2, $4 and $18
(7)
|
5
|
|
|
9
|
|
|
30
|
|
|||
Foreign currency translation adjustments and other, net of income tax expense of nil, nil and nil
|
(15
|
)
|
|
3
|
|
|
(3
|
)
|
|||
Reclassified to income statement, net of income tax expense of nil, nil and nil
|
—
|
|
|
—
|
|
|
—
|
|
|||
|
15
|
|
|
(8
|
)
|
|
50
|
|
|||
|
|
|
|
|
|
|
|||||
Other Comprehensive Income (Loss), net of tax
|
$
|
609
|
|
|
$
|
(659
|
)
|
|
$
|
172
|
|
(1)
|
Foreign currency translation adjustments primarily result from the conversion of non-U.S. dollar financial statements of our foreign subsidiaries into the Company’s reporting currency, U.S. dollars.
|
(2)
|
The 2018 net foreign currency translation gains of
$804 million
were primarily due to the strengthening of the Euro, British pound sterling and Canadian dollar against the U.S. dollar from April 1, 2017 to March 31, 2018. The 2017 net foreign currency translation losses of
$644 million
were primarily due to the weakening of the Euro and British pound sterling against the U.S. dollar from April 1, 2016 to March 31, 2017.
|
(3)
|
2018 includes net foreign currency translation gains of
$189 million
and 2017 includes net foreign currency translation losses of
$74 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 our Brazilian pharmaceutical distribution business.
|
(5)
|
2018 and 2017 include foreign currency losses of
$268 million
and
$13 million
on the net investment hedges from the Euro and British pound sterling-denominated notes.
|
(6)
|
The net actuarial losses of
$4 million
and
$5 million
were attributable to noncontrolling and redeemable noncontrolling interests in 2018 and 2017.
|
(7)
|
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.
|
|
Foreign Currency Translation Adjustments
|
|
|
|
|
|
|
||||||||||||
(In millions)
|
Foreign Currency Translation Adjustments, Net of Tax
|
|
Unrealized Losses on Net Investment Hedges,
Net of Tax
|
|
Unrealized Gains (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, 2016
|
$
|
(1,323
|
)
|
|
$
|
—
|
|
|
$
|
(12
|
)
|
|
$
|
(226
|
)
|
|
$
|
(1,561
|
)
|
Other comprehensive income (loss) before reclassifications
|
(644
|
)
|
|
(8
|
)
|
|
(19
|
)
|
|
(17
|
)
|
|
(688
|
)
|
|||||
Amounts reclassified to earnings
|
20
|
|
|
—
|
|
|
—
|
|
|
9
|
|
|
29
|
|
|||||
Other comprehensive income (loss)
|
$
|
(624
|
)
|
|
$
|
(8
|
)
|
|
$
|
(19
|
)
|
|
$
|
(8
|
)
|
|
$
|
(659
|
)
|
Less: amounts attributable to noncontrolling and redeemable noncontrolling interests
|
(74
|
)
|
|
—
|
|
|
—
|
|
|
(5
|
)
|
|
(79
|
)
|
|||||
Other comprehensive income (loss) attributable to McKesson
|
$
|
(550
|
)
|
|
$
|
(8
|
)
|
|
$
|
(19
|
)
|
|
$
|
(3
|
)
|
|
$
|
(580
|
)
|
Balance at March 31, 2017
|
$
|
(1,873
|
)
|
|
$
|
(8
|
)
|
|
$
|
(31
|
)
|
|
$
|
(229
|
)
|
|
$
|
(2,141
|
)
|
Other comprehensive income (loss) before reclassifications
|
804
|
|
|
(180
|
)
|
|
(30
|
)
|
|
10
|
|
|
604
|
|
|||||
Amounts reclassified to earnings and other
|
—
|
|
|
—
|
|
|
—
|
|
|
5
|
|
|
5
|
|
|||||
Other comprehensive income (loss)
|
$
|
804
|
|
|
$
|
(180
|
)
|
|
$
|
(30
|
)
|
|
$
|
15
|
|
|
$
|
609
|
|
Less: amounts attributable to noncontrolling and redeemable noncontrolling interests
|
189
|
|
|
—
|
|
|
—
|
|
|
(4
|
)
|
|
185
|
|
|||||
Other comprehensive income (loss) attributable to McKesson
|
$
|
615
|
|
|
$
|
(180
|
)
|
|
$
|
(30
|
)
|
|
$
|
19
|
|
|
$
|
424
|
|
Balance at March 31, 2018
|
$
|
(1,258
|
)
|
|
$
|
(188
|
)
|
|
$
|
(61
|
)
|
|
$
|
(210
|
)
|
|
$
|
(1,717
|
)
|
26.
|
Related Party Balances and Transactions
|
27.
|
Sale-Leaseback
|
28.
|
Segments of Business
|
|
Years Ended March 31,
|
||||||||||
(In millions)
|
2018
|
|
2017
|
|
2016
|
||||||
Revenues
|
|
|
|
|
|
||||||
Distribution Solutions
(1)
|
|
|
|
|
|
||||||
North America pharmaceutical distribution and services
|
$
|
174,186
|
|
|
$
|
164,832
|
|
|
$
|
158,469
|
|
International pharmaceutical distribution and services
|
27,320
|
|
|
24,847
|
|
|
23,497
|
|
|||
Medical-Surgical distribution and services
|
6,611
|
|
|
6,244
|
|
|
6,033
|
|
|||
Total Distribution Solutions
|
208,117
|
|
|
195,923
|
|
|
187,999
|
|
|||
|
|
|
|
|
|
||||||
Technology Solutions - products and services
|
240
|
|
|
2,610
|
|
|
2,885
|
|
|||
Total Revenues
|
$
|
208,357
|
|
|
$
|
198,533
|
|
|
$
|
190,884
|
|
|
|
|
|
|
|
||||||
Operating profit
|
|
|
|
|
|
||||||
Distribution Solutions
(2) (3)
|
$
|
1,231
|
|
|
$
|
3,361
|
|
|
$
|
3,553
|
|
Technology Solutions
(4)
|
(23
|
)
|
|
$
|
4,215
|
|
|
$
|
519
|
|
|
Total
|
1,208
|
|
|
7,576
|
|
|
4,072
|
|
|||
Corporate Expenses, Net
(5)
|
(564
|
)
|
|
$
|
(377
|
)
|
|
$
|
(469
|
)
|
|
Loss on Debt Extinguishment
|
(122
|
)
|
|
—
|
|
|
$
|
—
|
|
||
Interest Expense
|
(283
|
)
|
|
$
|
(308
|
)
|
|
$
|
(353
|
)
|
|
Income From Continuing Operations Before Income Taxes
|
$
|
239
|
|
|
$
|
6,891
|
|
|
$
|
3,250
|
|
|
|
|
|
|
|
||||||
Depreciation and amortization
(6)
|
|
|
|
|
|
||||||
Distribution Solutions
|
$
|
831
|
|
|
$
|
735
|
|
|
$
|
669
|
|
Technology Solutions
|
9
|
|
|
65
|
|
|
107
|
|
|||
Corporate
|
111
|
|
|
110
|
|
|
109
|
|
|||
Total
|
$
|
951
|
|
|
$
|
910
|
|
|
$
|
885
|
|
|
|
|
|
|
|
||||||
Expenditures for long-lived assets
(7)
|
|
|
|
|
|
||||||
Distribution Solutions
|
$
|
306
|
|
|
$
|
276
|
|
|
$
|
306
|
|
Technology Solutions
|
—
|
|
|
30
|
|
|
15
|
|
|||
Corporate
|
99
|
|
|
98
|
|
|
167
|
|
|||
Total
|
$
|
405
|
|
|
$
|
404
|
|
|
$
|
488
|
|
|
|
|
|
|
|
||||||
Revenues, net by geographic area
(8)
|
|
|
|
|
|
||||||
United States
|
$
|
169,943
|
|
|
$
|
164,428
|
|
|
$
|
158,255
|
|
Foreign
|
38,414
|
|
|
34,105
|
|
|
32,629
|
|
|||
Total
|
$
|
208,357
|
|
|
$
|
198,533
|
|
|
$
|
190,884
|
|
(1)
|
Revenues derived from services represent less than
2%
of this segment’s total revenues.
|
(2)
|
Distribution Solutions segment’s operating profit for 2018 includes non-cash pre-tax goodwill impairment charges of
$1,283 million
for our McKesson Europe reporting unit and
$455 million
for our Rexall Health reporting unit. This segment’s operating profit for 2018 also includes non-cash pre-tax asset impairment charges of
$446 million
and pre-tax restructuring charges of
$74 million
for our McKesson Europe business. Operating profit for 2017 and 2016 includes
$144 million
and
$76 million
of net cash proceeds representing our share of net settlements of antitrust class action lawsuits, and for 2016 also includes a pre-tax gain of
$52 million
recognized from the sale of our ZEE Medical business.
|
(3)
|
Distribution Solutions segment’s operating profit for 2018 and 2017 includes pre-tax credits of
$99 million
and
$7 million
and for 2016 a pre-tax charge of
$244 million
related to our LIFO method of accounting for inventories. LIFO credits were higher in 2018 compared to 2017 due to higher net effect of price declines, partially offset by lower inventory level. LIFO expense was recognized in 2016 primarily due to net effects of price increases.
|
(4)
|
Technology Solutions segment’s operating profit for 2018 includes a pre-tax gain of
$109 million
from the 2018 third quarter sale of our EIS business. Operating profit for 2017 includes a pre-tax gain of
$3,947 million
recognized from the Healthcare Technology Net Asset Exchange, net of transaction and related expenses and a non-cash pre-tax charge of
$290 million
for goodwill impairment related to the EIS reporting unit. Operating profit for 2016 includes a pre-tax gain of
$51 million
recognized from the sale of our nurse triage business.
|
(5)
|
In 2016, the Company implemented the Cost Alignment Plan to reduce its operating expenses and recorded pre-tax restructuring charges of
$229 million
. Pre-tax charges for 2016 were recorded as follows:
$161 million
,
$51 million
and
$17 million
within our Distribution Solutions segment, Technology Solutions segment and Corporate.
|
(6)
|
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.
|
(7)
|
Long-lived assets consist of property, plant and equipment.
|
(8)
|
Net revenues were attributed to geographic areas based on the customers’ shipment locations.
|
|
March 31,
|
||||||
(In millions)
|
2018
|
|
2017
|
||||
Segment assets
|
|
|
|
||||
Distribution Solutions
|
$
|
53,915
|
|
|
$
|
52,322
|
|
Technology Solutions
|
3,735
|
|
|
4,995
|
|
||
Corporate
|
2,731
|
|
|
3,652
|
|
||
Total
|
$
|
60,381
|
|
|
$
|
60,969
|
|
|
|
|
|
||||
Property, plant and equipment, net
|
|
|
|
|
|
||
United States
|
$
|
1,529
|
|
|
$
|
1,383
|
|
Foreign
|
935
|
|
|
909
|
|
||
Total
|
$
|
2,464
|
|
|
$
|
2,292
|
|
•
|
U.S. Pharmaceutical and Specialty Solutions;
|
•
|
European Pharmaceutical Solutions; and
|
•
|
Medical-Surgical Solutions.
|
29.
|
Quarterly Financial Information (Unaudited)
|
(In millions, except per share amounts)
|
First
Quarter
|
|
Second
Quarter
|
|
Third
Quarter
|
|
Fourth
Quarter
|
||||||||
Fiscal 2018
|
|
|
|
|
|
|
|
||||||||
Revenues
|
$
|
51,051
|
|
|
$
|
52,061
|
|
|
$
|
53,617
|
|
|
$
|
51,628
|
|
Gross profit
(1)
|
2,560
|
|
|
2,834
|
|
|
2,715
|
|
|
3,075
|
|
||||
Income (loss) after income taxes:
|
|
|
|
|
|
|
|
||||||||
Continuing operations
(1) (2) (3) (4) (5)
|
$
|
363
|
|
|
$
|
56
|
|
|
$
|
960
|
|
|
$
|
(1,087
|
)
|
Discontinued operations
|
2
|
|
|
—
|
|
|
1
|
|
|
2
|
|
||||
Net income (loss)
|
$
|
365
|
|
|
$
|
56
|
|
|
$
|
961
|
|
|
$
|
(1,085
|
)
|
Net income (loss) attributable to McKesson
|
$
|
309
|
|
|
$
|
1
|
|
|
$
|
903
|
|
|
$
|
(1,146
|
)
|
Earnings (loss) per common share attributable
to McKesson
(6)
|
|
|
|
|
|
|
|
||||||||
Diluted
(7)
|
|
|
|
|
|
|
|
||||||||
Continuing operations
|
$
|
1.44
|
|
|
$
|
0.01
|
|
|
$
|
4.32
|
|
|
$
|
(5.58
|
)
|
Discontinued operations
|
0.01
|
|
|
—
|
|
|
0.01
|
|
|
—
|
|
||||
Total
|
$
|
1.45
|
|
|
$
|
0.01
|
|
|
$
|
4.33
|
|
|
$
|
(5.58
|
)
|
Basic
|
|
|
|
|
|
|
|
||||||||
Continuing operations
|
$
|
1.46
|
|
|
$
|
0.01
|
|
|
$
|
4.34
|
|
|
$
|
(5.58
|
)
|
Discontinued operations
|
—
|
|
|
—
|
|
|
0.01
|
|
|
—
|
|
||||
Total
|
$
|
1.46
|
|
|
$
|
0.01
|
|
|
$
|
4.35
|
|
|
$
|
(5.58
|
)
|
(1)
|
Gross profit for the first, second, third and fourth quarters of 2018 includes pre-tax charge of
$26 million
, pre-tax credits of
$29 million
,
$2 million
and
$94 million
related to our last-in-first-out (“LIFO”) method of accounting for inventories.
|
(2)
|
Financial results for the second and fourth quarter of 2018 include non-cash goodwill impairment charges (pre-tax and after-tax) of
$350 million
and
$933 million
for our McKesson Europe reporting unit. In addition, financial results for the fourth quarter of 2018 include a non-cash goodwill impairment charge of
$455 million
for our Rexall Health reporting unit. These charges were recorded within our Distribution Solutions segment.
|
(3)
|
Financial results for the second and fourth quarter of 2018 include non-cash pre-tax asset impairment charges of
$189 million
and
$257 million
for our McKesson Europe business.
|
(4)
|
Financial results for the third quarter of 2018 include a pre-tax gain of
$109 million
from the sale of our EIS business.
|
(5)
|
Financial results for the first, second, third and fourth quarters of 2018 include our proportionate share of loss from Change Healthcare of
$120 million
,
$61 million
,
$90 million
and income of
$23 million
.
|
(6)
|
Certain computations may reflect rounding adjustments.
|
(7)
|
As a result of our reported net loss for the fourth quarter of 2018, potentially dilutive securities were excluded from the 2018 fourth quarter per share computations due to their antidilutive effect.
|
(In millions, except per share amounts)
|
First
Quarter
|
|
Second
Quarter
|
|
Third
Quarter
|
|
Fourth
Quarter
|
||||||||
Fiscal 2017
|
|
|
|
|
|
|
|
||||||||
Revenues
|
$
|
49,733
|
|
|
$
|
49,957
|
|
|
$
|
50,130
|
|
|
$
|
48,713
|
|
Gross profit
(1) (2) (3)
|
2,907
|
|
|
2,756
|
|
|
2,812
|
|
|
2,796
|
|
||||
Income (loss) after income taxes:
|
|
|
|
|
|
|
|
||||||||
Continuing operations
(1) (2) (3) (4)
|
$
|
673
|
|
|
$
|
325
|
|
|
$
|
649
|
|
|
$
|
3,630
|
|
Discontinued operations
|
(113
|
)
|
|
(1
|
)
|
|
(3
|
)
|
|
(7
|
)
|
||||
Net income
|
$
|
560
|
|
|
$
|
324
|
|
|
$
|
646
|
|
|
$
|
3,623
|
|
Net income attributable to McKesson
|
$
|
542
|
|
|
$
|
307
|
|
|
$
|
633
|
|
|
$
|
3,588
|
|
Earnings (loss) per common share attributable
to McKesson
(5)
|
|
|
|
|
|
|
|
||||||||
Diluted
|
|
|
|
|
|
|
|
||||||||
Continuing operations
|
$
|
2.88
|
|
|
$
|
1.35
|
|
|
$
|
2.86
|
|
|
$
|
16.79
|
|
Discontinued operations
|
(0.50
|
)
|
|
(0.01
|
)
|
|
(0.01
|
)
|
|
(0.03
|
)
|
||||
Total
|
$
|
2.38
|
|
|
$
|
1.34
|
|
|
$
|
2.85
|
|
|
$
|
16.76
|
|
Basic
|
|
|
|
|
|
|
|
||||||||
Continuing operations
|
$
|
2.91
|
|
|
$
|
1.36
|
|
|
$
|
2.89
|
|
|
$
|
16.95
|
|
Discontinued operations
|
(0.50
|
)
|
|
—
|
|
|
(0.02
|
)
|
|
(0.03
|
)
|
||||
Total
|
$
|
2.41
|
|
|
$
|
1.36
|
|
|
$
|
2.87
|
|
|
$
|
16.92
|
|
(1)
|
Gross profit for the first, second, third and fourth quarters of 2017 includes pre-tax charge of
$47 million
, pre-tax credits of
$43 million
,
$155 million
and pre-tax charge of
$144 million
related to our LIFO method of accounting for inventories.
|
(2)
|
Gross profit for the first and third quarters of 2017 includes
$142 million
and
$2 million
of cash proceeds representing our share of net settlements of antitrust class action lawsuits.
|
(3)
|
Financial results for the fourth quarter of 2017 include a pre-tax gain of
$3,947 million
(
$3,018 million
after-tax) recognized from the Healthcare Technology Net Asset Exchange, net of transaction and related expenses.
|
(4)
|
Financial results for the second quarter of 2017 include a non-cash pre-tax charge of
$290 million
for goodwill impairment related to the EIS reporting unit within our Technology Solutions segment.
|
(5)
|
Certain computations may reflect rounding adjustments.
|
30.
|
Subsequent Events
|
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
|
4.0
(2)
|
|
$
|
161.27
|
|
|
31.2
(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 3,462,328 shares available for purchase under the 2000 Employee Stock Purchase Plan and 27,706,614 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.
|
|
|
|
|
|
|
|
|
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, 2018
|
|
|
|
|
|
|
|
|
|
||||||||||
Allowances for doubtful
accounts
|
$
|
243
|
|
|
$
|
44
|
|
|
$
|
13
|
|
|
$
|
(113
|
)
|
|
$
|
187
|
|
Other allowances
|
42
|
|
|
—
|
|
|
(3
|
)
|
|
—
|
|
|
39
|
|
|||||
|
$
|
285
|
|
|
$
|
44
|
|
|
$
|
10
|
|
|
$
|
(113
|
)
|
|
$
|
226
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Year Ended March 31, 2017
|
|
|
|
|
|
|
|
|
|
||||||||||
Allowances for doubtful
accounts
|
$
|
212
|
|
|
$
|
93
|
|
|
$
|
7
|
|
|
$
|
(69
|
)
|
|
$
|
243
|
|
Other allowances
|
41
|
|
|
—
|
|
|
2
|
|
|
(1
|
)
|
|
42
|
|
|||||
|
$
|
253
|
|
|
$
|
93
|
|
|
$
|
9
|
|
|
$
|
(70
|
)
|
|
$
|
285
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
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
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2018
|
|
2017
|
|
2016
|
||||||
(1)
|
Deductions:
|
|
|
|
|
|
|
||||||
|
Written off
|
|
$
|
(113
|
)
|
|
$
|
(70
|
)
|
|
$
|
(33
|
)
|
|
Credited to other accounts
|
|
—
|
|
|
—
|
|
|
—
|
|
|||
|
Total
|
|
$
|
(113
|
)
|
|
$
|
(70
|
)
|
|
$
|
(33
|
)
|
|
|
|
|
|
|
|
|
||||||
(2)
|
Amounts shown as deductions from current and non-current receivables
|
|
$
|
226
|
|
|
$
|
285
|
|
|
$
|
253
|
|
|
|
|
|
|
|
|
|
||||||
(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
|
4.6
|
8-K
|
1-13252
|
4.2
|
February 28, 2011
|
|
4.7
|
8-K
|
1-13252
|
4.1
|
December 4, 2012
|
|
4.8
|
8-K
|
1-13252
|
4.2
|
December 4, 2012
|
|
4.9
|
8-K
|
1-13252
|
4.2
|
March 8, 2013
|
|
4.10
|
8-K
|
1-13252
|
4.2
|
March 10, 2014
|
|
4.11
|
8-K
|
1-13252
|
4.1
|
February 17, 2017
|
|
4.12
|
8-K
|
1-13252
|
4.1
|
February 13, 2018
|
|
4.13
|
8-K
|
1-13252
|
4.1
|
February 21, 2018
|
|
10.1*
|
10-K
|
1-13252
|
10.4
|
June 10, 2004
|
|
10.2*
|
10-K
|
1-13252
|
10.6
|
June 6, 2003
|
|
10.3*
|
10-Q
|
1-13252
|
10.1
|
October 28, 2014
|
|
10.4*
|
10-K
|
1-13252
|
10.6
|
May 13, 2005
|
|
10.5*
|
10-K
|
1-13252
|
10.7
|
May 7, 2008
|
|
10.6*
|
10-Q
|
1-13252
|
10.2
|
October 28, 2014
|
|
10.7*
|
10-Q
|
1-13252
|
10.3
|
October 29, 2008
|
|
10.8*
|
8-K
|
1-13252
|
10.1
|
January 25, 2010
|
|
10.9*
|
10-K
|
1-13252
|
10.11
|
May 7, 2013
|
|
10.10*
|
10-Q
|
1-13252
|
10.2
|
February 1, 2011
|
|
10.11*
|
8-K
|
1-13252
|
10.1
|
July 31, 2015
|
|
10.12*
|
10-Q
|
1-13252
|
10.1
|
July 29, 2015
|
|
|
Incorporated by Reference
|
|||
Exhibit Number
|
Description
|
Form
|
File Number
|
Exhibit
|
Filing Date
|
10.13*
|
10-Q
|
1-13252
|
10.2
|
July 29, 2015
|
|
10.14*
|
10-K
|
1-13252
|
10.14
|
May 5, 2016
|
|
10.15*
|
10-Q
|
1-13252
|
10.4
|
July 30, 2010
|
|
10.16*
|
10-Q
|
1-13252
|
10.2
|
July 26, 2012
|
|
10.17*
|
8-K
|
1-13252
|
10.1
|
August 2, 2013
|
|
10.18*
|
10-K
|
1-13252
|
10.18
|
May 5, 2016
|
|
10.19
|
8-K
|
1-13252
|
10.1
|
March 7, 2017
|
|
10.20
|
10-K
|
1-13252
|
10.19
|
May 5, 2016
|
|
10.21
|
8-K
|
1-13252
|
10.1
|
October 23, 2015
|
|
10.22
|
8-K
|
1-3252
|
10.1
|
February 5, 2014
|
|
10.23*
|
10-Q
|
1-13252
|
10.10
|
October 29, 2008
|
|
10.24*
|
8-K
|
1-13252
|
10.1
|
April 2, 2012
|
|
|
Incorporated by Reference
|
|||
Exhibit Number
|
Description
|
Form
|
File Number
|
Exhibit
|
Filing Date
|
10.25*
|
8-K
|
1-13252
|
10.1
|
February 28, 2014
|
|
10.26*
|
10-Q
|
1-13252
|
10.12
|
October 29, 2008
|
|
10.27*
|
10-K
|
1-13252
|
10.27
|
May 4, 2010
|
|
12†
|
—
|
—
|
—
|
—
|
|
21†
|
—
|
—
|
—
|
—
|
|
23†
|
—
|
—
|
—
|
—
|
|
24†
|
—
|
—
|
—
|
—
|
|
31.1†
|
—
|
—
|
—
|
—
|
|
31.2†
|
—
|
—
|
—
|
—
|
|
32††
|
—
|
—
|
—
|
—
|
|
101†
|
The following materials from the McKesson Corporation Annual Report on Form 10-K for the fiscal year ended March 31, 2018, 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.
|
|
|
|
M
C
K
ESSON
C
ORPORATION
|
|
|
|
|
Date: May 24, 2018
|
|
/s/ Britt J. Vitalone
|
|
|
|
|
Britt J. Vitalone
|
|
|
|
Executive Vice President and Chief Financial Officer
|
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
|
|
Britt J. Vitalone
|
Chairman of the Board,
|
|
Executive Vice President and Chief Financial Officer
|
Intel Corporation
|
|
|
|
|
Jorge L. Figueredo
|
N. Anthony Coles, M. D.
|
|
Executive Vice President, Human Resources
|
Chairman and Chief Executive Officer,
|
|
|
Yumanity Therapeutics, LLC
|
|
Kathleen D. McElligott
|
|
|
Executive Vice President, Chief Information Officer and
|
M. Christine Jacobs
|
|
Chief Technology Officer
|
Chairman of the Board, President and
|
|
|
Chief Executive Officer, Retired,
|
|
Bansi Nagji
|
Theragenics Corporation
|
|
Executive Vice President,
|
|
|
Corporate Strategy and Business Development
|
Donald R. Knauss
|
|
|
Executive Chairman of the Board, Retired,
|
|
Lori A. Schechter
|
The Clorox Company
|
|
Executive Vice President, General Counsel and
|
|
|
Chief Compliance Officer
|
Marie L. Knowles
|
|
|
Executive Vice President and
|
|
Erin M. Lampert
|
Chief Financial Officer, Retired,
|
|
Senior Vice President and Chief Accounting Officer
|
Atlantic Richfield Company
|
|
|
|
|
Brian P. Moore
|
Bradley E. Lerman
|
|
Senior Vice President and Treasurer
|
Senior Vice President, General Counsel and
|
|
|
Corporate Secretary,
|
|
Paul A. Smith
|
Medtronic plc
|
|
Senior Vice President, Taxes
|
|
|
|
Edward A. Mueller
|
|
Michele Lau
|
Chairman of the Board and
|
|
Corporate Secretary
|
Chief Executive Officer, Retired,
|
|
|
Qwest Communications International Inc.
|
|
|
|
|
|
Susan R. Salka
|
|
|
Chief Executive Officer and President,
|
|
|
AMN Healthcare Services, Inc.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Years Ended March 31,
|
||||||||||||||||||
(Dollars in millions)
|
2018
|
|
2017
|
|
2016
|
|
2015
|
|
2014
|
||||||||||
|
|
|
|
|
|
|
|
|
|
||||||||||
Earnings:
|
|
|
|
|
|
|
|
|
|
||||||||||
|
|
|
|
|
|
|
|
|
|
||||||||||
Income from continuing operations before income taxes
(a)
|
$
|
239
|
|
|
$
|
6,891
|
|
|
$
|
3,250
|
|
|
$
|
2,657
|
|
|
$
|
2,171
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Adjustment for equity in net income of and
dividends from equity investees
|
239
|
|
|
1
|
|
|
(1
|
)
|
|
(1
|
)
|
|
2
|
|
|||||
|
|
|
|
|
|
|
|
|
|
||||||||||
Fixed charges - below
|
475
|
|
|
468
|
|
|
498
|
|
|
520
|
|
|
400
|
|
|||||
|
|
|
|
|
|
|
|
|
|
||||||||||
Amortization of capitalized interest
|
1
|
|
|
1
|
|
|
1
|
|
|
1
|
|
|
2
|
|
|||||
|
|
|
|
|
|
|
|
|
|
||||||||||
Less: Capitalized interest
|
(3
|
)
|
|
(2
|
)
|
|
(1
|
)
|
|
—
|
|
|
—
|
|
|||||
|
|
|
|
|
|
|
|
|
|
||||||||||
Earnings as adjusted
|
$
|
951
|
|
|
$
|
7,359
|
|
|
$
|
3,747
|
|
|
$
|
3,177
|
|
|
$
|
2,575
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Fixed charges:
|
|
|
|
|
|
|
|
|
|
||||||||||
|
|
|
|
|
|
|
|
|
|
||||||||||
Interest expense
(b) (c)
|
$
|
283
|
|
|
$
|
308
|
|
|
$
|
353
|
|
|
$
|
374
|
|
|
$
|
300
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Capitalized interest
|
3
|
|
|
2
|
|
|
1
|
|
|
—
|
|
|
—
|
|
|||||
|
|
|
|
|
|
|
|
|
|
||||||||||
Portion of rental expense representative of the interest
factor
(d)
|
189
|
|
|
158
|
|
|
144
|
|
|
146
|
|
|
100
|
|
|||||
|
|
|
|
|
|
|
|
|
|
||||||||||
Total fixed charges
|
$
|
475
|
|
|
$
|
468
|
|
|
$
|
498
|
|
|
$
|
520
|
|
|
$
|
400
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Ratio:
|
|
|
|
|
|
|
|
|
|
||||||||||
|
|
|
|
|
|
|
|
|
|
||||||||||
Ratio of earnings to fixed charges
|
2.0
|
|
|
15.7
|
|
|
7.5
|
|
|
6.1
|
|
|
6.4
|
|
(a)
|
2018 includes non-cash goodwill impairment charges (pre-tax and after-tax) of $1,283 million for our McKesson Europe reporting unit and $455 million for our Rexall Health reporting unit within our Distributions Solutions segment. 2018 also includes pre-tax restructuring and asset impairment charges of $567 million primarily within our Distribution Solutions segment. 2017 includes a pre-tax gain of $3,947 million from the contribution of the majority of our Technology Solutions businesses and a non-cash pre-tax goodwill impairment charge of $290 million for our EIS reporting unit within our Technology Solutions segment.
|
(b)
|
2018 excludes a pre-tax loss on debt extinguishment of $122 million. 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 International Financial Holdings (Barbados) SRL
|
Barbados
|
McKesson UK Finance I Limited
|
United Kingdom
|
McKesson UK Finance II Limited
|
United Kingdom
|
McKesson Strategic Services Limited
|
United Kingdom
|
ClarusONE Sourcing Services LLP
|
United Kingdom
|
McKesson Global Procurement & Sourcing Limited
|
United Kingdom
|
McKesson Europe Holdings GmbH & Co KGaA
|
Germany
|
US Specialty Care Distribution Corporation
|
United States
|
McKesson International Bermuda IP5A Limited
|
Bermuda
|
PF2 McKesson Technologies Inc.
|
United States
|
McKesson Sourcing Services Inc.
|
United States
|
McKesson Medical-Surgical Inc.
|
United States
|
McKesson Medical Surgical Supply Chain Services LLC
|
United States
|
|
/s/ Deloitte & Touche LLP
|
San Francisco, California
|
May 24, 2018
|
/s/ John H. Hammergren
|
|
/s/ Donald R. Knauss
|
John H. Hammergren
Chairman of the Board,
President and Chief Executive Officer
(Principal Executive Officer)
|
|
Donald R. Knauss, Director
|
|
|
|
/s/ Britt J. Vitalone
|
|
/s/ Marie L. Knowles
|
Britt J. Vitalone
Executive Vice President and Chief Financial Officer
(Principal Financial Officer)
|
|
Marie L. Knowles, Director
|
|
|
|
/s/ Erin M. Lampert
|
|
/s/ Bradley E. Lerman
|
Erin M, Lampert
Senior Vice President and Chief Accounting Officer
(Principal Accounting Officer)
|
|
Bradley E. Lerman, Director
|
|
|
|
/s/ Andy D. Bryant
|
|
/s/ Edward A. Mueller
|
Andy D. Bryant, Director
|
|
Edward A. Mueller, Director
|
|
|
|
/s/ N. Anthony Coles, M.D.
|
|
/s/ Susan R. Salka
|
N. Anthony Coles, M.D., Director
|
|
Susan R. Salka, Director
|
|
|
|
/s/ M. Christine Jacobs
|
|
|
M. Christine Jacobs, Director
|
|
|
|
|
|
Dated: May 24, 2018
|
|
|
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 24, 2018
|
|
/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 24, 2018
|
|
/s/ Britt J. Vitalone
|
|
|
|
|
Britt J. Vitalone
|
|
|
|
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 24, 2018
|
|
|
|
|
|
/s/ Britt J. Vitalone
|
|
|
Britt J. Vitalone
|
|
|
Executive Vice President and Chief Financial Officer
|
|
|
May 24, 2018
|
|
|
|
|
|