Revenues of $30.8 billion for the third quarter, up 9%.
Third-quarter GAAP earnings per diluted share of $1.20.
Third-quarter Adjusted Earnings per diluted share of $1.40, up 9%.
Announced definitive agreement to acquire the independent banner
and franchise businesses of Katz Group Canada Inc.
Board of Directors authorized an additional $650 million share
repurchase program, bringing the total authorization to $1.5 billion.
Fiscal 2012 Outlook: Adjusted Earnings of $6.19 to $6.39 per
diluted share.
McKesson Corporation (NYSE: MCK) today reported that revenues for the
third quarter ended December 31, 2011 were up 9% to $30.8 billion
compared to $28.2 billion a year ago. On the basis of U.S. generally
accepted accounting principles ("GAAP"), third-quarter earnings per
diluted share was $1.20 compared to $0.60 a year ago.
Third-quarter GAAP results included a pre-tax charge of $27 million
($15 million after-tax or six cents per diluted share), recorded in the
Distribution Solutions segment, to increase an existing litigation
reserve for claims against McKesson relating to First DataBank's
published drug reimbursement benchmarks, commonly referred to as Average
Wholesale Prices ("AWP"). Last year's third-quarter GAAP results also
included a pre-tax AWP litigation charge of $189 million ($133 million
after-tax or 52 cents per diluted share).
McKesson separately reports financial results on the basis of Adjusted
Earnings in addition to GAAP. Adjusted Earnings is a non-GAAP financial
measure defined as GAAP earnings from continuing operations, excluding
acquisition-related expenses, amortization of acquisition-related
intangible assets, and certain litigation reserve adjustments. A
reconciliation of McKesson's financial results determined in accordance
with GAAP to Adjusted Earnings is provided in Schedules 2, 3 and 4 of
the financial statement tables included with this release. Third-quarter
Adjusted Earnings per diluted share was $1.40 compared to $1.28 a year
ago.
For the first nine months of the fiscal year, McKesson generated cash
from operations of $1.7 billion and ended the quarter with cash and cash
equivalents of $4.2 billion. During the first nine months of the fiscal
year, the company deployed $204 million for acquisitions, repurchased
$650 million of common stock, and paid $146 million in dividends.
The Board of Directors authorized the repurchase of up to an additional
$650 million of common stock, bringing the total authorization to
approximately $1.5 billion.
"McKesson delivered another quarter of solid operating results, and I am
pleased with our accomplishments during the first nine months of our
fiscal year," said John H. Hammergren, chairman and chief executive
officer. "Our strong balance sheet and cash flow also provide us with
significant opportunities to create shareholder value. Today, we
announced a definitive agreement to purchase for approximately CAD $920
million the independent banner and franchise businesses of Katz Group
Canada Inc., a privately-owned company that operates an integrated
retail pharmacy network in Canada. We are excited about this acquisition
which, combined with our increased share repurchase authorization,
demonstrates our commitment to using a portfolio approach to deploy our
significant cash balances. Based on our year-to-date progress, we
continue to expect Adjusted Earnings between $6.19 and $6.39 per diluted
share for the fiscal year ending March 31, 2012."
Distribution Solutions revenues were up 9% in the third quarter, driven
mainly by strong growth in U.S. pharmaceutical direct distribution and
services revenues, reflecting market growth and our mix of business, as
well as the acquisition of US Oncology.
Canadian revenues, on a constant currency basis, were down 3% for the
quarter due in part to the impact of government imposed price reductions
on generic drugs. Including an unfavorable currency impact of 1%,
Canadian revenues were down 4% for the quarter. Medical-Surgical
distribution revenues increased 2% for the quarter.
In the third quarter, Distribution Solutions gross profit improved due
to the positive impact of the US Oncology acquisition.
Distribution Solutions GAAP operating profit was $510 million for the
quarter and the GAAP operating margin was 1.70%. Adjusted operating
profit was $572 million for the quarter and the adjusted operating
margin was 1.91%.
Technology Solutions revenues were up 4% in the third quarter. GAAP
operating profit was $69 million and the GAAP operating margin was
8.38%. Adjusted operating profit in the third quarter was $89 million
and the adjusted operating margin was 10.81%. In the third quarter, we
recorded a pre-tax product alignment charge of $42 million. This charge
related to Technology Solutions' strategy to converge core clinical and
revenue cycle information technology solutions for the Horizon and
Paragon® product lines onto Paragon's Microsoft®
platform over time.
Fiscal Year 2012 Outlook
McKesson expects Adjusted Earnings between $6.19 and $6.39 per diluted
share for the fiscal year ending March 31, 2012, which excludes the
following GAAP items:
Amortization of acquisition-related intangible assets of approximately
48 cents per diluted share in Fiscal 2012.
Acquisition-related expenses of approximately seven cents per diluted
share in Fiscal 2012.
Litigation reserve adjustments of 37 cents per diluted share.
Risk Factors
Except for historical information contained in this press release,
matters discussed may constitute "forward-looking statements" within the
meaning of Section 27A of the Securities Act of 1933 and Section 21E of
the Securities Exchange Act of 1934, as amended, that involve risks and
uncertainties that could cause actual results to differ materially from
those projected, anticipated or implied. These statements may be
identified by their use of forward-looking terminology such as
"believes", "expects", "anticipates", "may", "will", "should", "seeks",
"approximately", "intends", "plans", "estimates" or the negative of
these words or other comparable terminology. The discussion of financial
trends, strategy, plans or intentions may also include forward-looking
statements. It is not possible to predict or identify all such risks and
uncertainties; however, the most significant of these risks and
uncertainties are described in the company's Form 10-K, Form 10-Q and
Form 8-K reports filed with the Securities and Exchange Commission and
include, but are not limited to: material adverse resolution of pending
legal proceedings; changes in the U.S. healthcare industry and
regulatory environment; changes in the Canadian healthcare industry and
regulatory environment; competition; substantial defaults in payment or
a material reduction in purchases by, or the loss of, a large customer
or group purchasing organization; the loss of government contracts as a
result of compliance or funding challenges; public health issues in the
U.S. or abroad; implementation delay, malfunction or failure of internal
information systems; the adequacy of insurance to cover property loss or
liability claims; the company's failure to attract and retain customers
for its software products and solutions due to integration and
implementation challenges, or due to an inability to keep pace with
technological advances; the company's proprietary products and services
may not be adequately protected, and its products and solutions may be
found to infringe on the rights of others; system errors or failure of
our technology products and solutions to conform to specifications;
disaster or other event causing interruption of customer access to data
residing in our service centers; the delay or extension of our sales or
implementation cycles for external software products; changes in
circumstances that could impair our goodwill or intangible assets;
foreign currency fluctuations or disruptions to our foreign operations;
new or revised tax legislation or challenges to our tax positions; the
company's ability to successfully identify, consummate and integrate
strategic acquisitions; general economic conditions, including changes
in the financial markets that may affect the availability and cost of
credit to the company, its customers or suppliers; and changes in
accounting principles generally accepted in the United States of
America. The reader should not place undue reliance on forward-looking
statements, which speak only as of the date they are first made. Except
to the extent required by law, the company undertakes no obligation to
publicly release the result of any revisions to these forward-looking
statements to reflect events or circumstances after the date hereof, or
to reflect the occurrence of unanticipated events.
The company has scheduled a conference call for 5 PM ET. The dial-in
number for individuals wishing to participate on the call is
719-234-7317. Ana Schrank, vice president, Investor Relations, is the
leader of the call, and the password to join the call is 'McKesson'. A
replay of this conference call will be available for five calendar days.
The dial-in number for individuals wishing to listen to the replay is
888-203-1112 and the passcode is 9240566. A webcast of the conference
call will also be available live and archived on the company's Investor
Relations website at www.mckesson.com/investors.
Shareholders are encouraged to review SEC filings and more information
about McKesson, which are located on the company's website.
About McKesson
McKesson Corporation, currently ranked 15th on the FORTUNE 500, is a
healthcare services and information technology company dedicated to
making the business of healthcare run better. We partner with payers,
hospitals, physician offices, pharmacies, pharmaceutical companies and
others across the spectrum of care to build healthier organizations that
deliver better care to patients in every setting. McKesson helps its
customers improve their financial, operational, and clinical performance
with solutions that include pharmaceutical and medical-surgical supply
management, healthcare information technology, and business and clinical
services. For more information, visit http://www.mckesson.com.
Schedule 1
McKESSON CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS - GAAP
(unaudited)
(in millions, except per share amounts)
Quarter Ended December 31,
Nine Months Ended December 31,
2011
2010
Change
2011
2010
Change
Revenues (1)
$
30,839
$
28,247
9
%
$
91,035
$
83,231
9
%
Cost of sales (2) (3)
29,273
26,786
9
86,313
79,012
9
Gross profit
1,566
1,461
7
4,722
4,219
12
Operating expenses (2)
1,047
965
8
3,135
2,808
12
Litigation charges (4)
27
189
(86
)
145
213
(32
)
Total operating expenses
1,074
1,154
(7
)
3,280
3,021
9
Operating income
492
307
60
1,442
1,198
20
Other income (expense), net
(2
)
7
(129
)
12
19
(37
)
Interest expense
(64
)
(53
)
21
(192
)
(140
)
37
Income from continuing operations before income taxes
426
261
63
1,262
1,077
17
Income tax expense
(126
)
(106
)
19
(380
)
(369
)
3
Income from continuing operations
300
155
94
882
708
25
Discontinued operation - gain on sale, net of tax (5)
-
-
-
-
72
-
Net income
$
300
$
155
94
$
882
$
780
13
Earnings per common share (6)
Diluted
Continuing operations
$
1.20
$
0.60
100
%
$
3.51
$
2.69
30
%
Discontinued operation - gain on sale
-
-
-
-
0.27
-
Total
$
1.20
$
0.60
100
$
3.51
$
2.96
19
Basic
Continuing operations
$
1.22
$
0.61
100
%
$
3.57
$
2.73
31
%
Discontinued operation - gain on sale
-
-
-
-
0.28
-
Total
$
1.22
$
0.61
100
$
3.57
$
3.01
19
Shares on which earnings per common share were based
Diluted
251
258
(3
)
%
252
264
(5
)
%
Basic
246
254
(3
)
247
259
(5
)
(1)
Revenues for fiscal year 2011 include the recognition of $23 million
of revenue for a disease management contract for which the related
expenses were previously recognized as incurred.
(2)
Technology Solutions segment results for the fiscal year 2012
include a charge of $42 million for a product alignment plan, of
which $26 million and $16 million were included in cost of sales
and operating expenses.
(3)
Cost of sales for the first nine months of 2011 includes an asset
impairment charge of $72 million in our Technology Solutions segment
for capitalized software held for sale and a credit of $51 million
in our Distribution Solutions segment representing our share of a
settlement of an antitrust class action lawsuit brought against a
drug manufacturer.
(4)
Operating expenses includes charges for the Average Wholesale Price
("AWP") litigation.
(5)
In the second quarter of 2011 we sold a Technology Solutions
business for $109 million of net sales proceeds. The after-tax gain
on sale of $72 million has been recorded as a discontinued
operation. Financial operating results for this business were
immaterial.
(6)
Certain computations may reflect rounding adjustments.
Schedule 2A
McKESSON CORPORATION
RECONCILIATION OF GAAP OPERATING RESULTS TO ADJUSTED EARNINGS
(NON-GAAP)
(unaudited)
(in millions, except per share amounts)
Change
Quarter Ended December 31, 2011
Vs. Prior Quarter
As Reported (GAAP)
Amortization
of Acquisition- Related Intangibles
Acquisition- Related Expenses
Litigation Reserve Adjustments
Adjusted Earnings (Non-GAAP)
As Reported (GAAP)
Adjusted Earnings (Non-GAAP)
Revenues
$
30,839
$
-
$
-
$
-
$
30,839
9
%
9
%
Gross profit
$
1,566
$
5
$
-
$
-
$
1,571
7
7
Operating expenses
(1,074
)
44
8
27
(995
)
(7
)
9
Other income (expense), net
(2
)
-
-
-
(2
)
(129
)
(129
)
Interest expense
(64
)
-
-
-
(64
)
21
49
Income from continuing operations before income taxes
426
49
8
27
510
63
-
Income tax expense
(126
)
(18
)
(3
)
(12
)
(159
)
19
(13
)
Income from continuing operations
$
300
$
31
$
5
$
15
$
351
94
6
Diluted earnings per common share from continuing operations (1)
$
1.20
$
0.12
$
0.02
$
0.06
$
1.40
100
%
9
%
Diluted weighted average shares
251
251
251
251
251
(3
)
%
(3
)
%
Quarter Ended December 31, 2010
As Reported (GAAP)
Amortization of Acquisition- Related Intangibles
Acquisition- Related Expenses
Litigation Reserve Adjustments
Adjusted Earnings (Non-GAAP)
Revenues
$
28,247
$
-
$
-
$
-
$
28,247
Gross profit
$
1,461
$
4
$
-
$
-
$
1,465
Operating expenses
(1,154
)
24
24
189
(917
)
Other income (expense), net
7
-
-
-
7
Interest expense
(53
)
-
10
-
(43
)
Income from continuing operations before income taxes
261
28
34
189
512
Income tax expense
(106
)
(11
)
(9
)
(56
)
(182
)
Income from continuing operations
$
155
$
17
$
25
$
133
$
330
Diluted earnings per common share from continuing operations (1)
$
0.60
$
0.07
$
0.10
$
0.52
$
1.28
Diluted weighted average shares
258
258
258
258
258
(1)
Certain computations may reflect rounding adjustments.
Adjusted Earnings (Non-GAAP) Financial
Information
Adjusted Earnings represents income from continuing operations,
excluding the effects of the following items from the Company's GAAP
financial results, including the related income tax effects:
Amortization of acquisition-related
intangibles - Amortization expense of acquired intangible
assets purchased in connection with acquisitions by the Company.
Acquisition-related expenses -
Transaction and integration expenses that are directly related to
acquisitions by the Company. Examples include transaction closing
costs, professional service fees, restructuring or severance
charges, retention payments, employee relocation expenses,
facility or other exit-related expenses, recoveries of
acquisition-related expenses or post-closing expenses, or bridge
loan fees.
Litigation reserve adjustments -
Adjustments to the Company's reserves for estimated probable
losses for its Average Wholesale Price and Securities Litigation
matters, as such terms were defined in the Company's Annual
Reports on Form 10-K for the fiscal years ended March 31, 2011 and
2009, respectively.
Income taxes on Adjusted Earnings are calculated in accordance with
Accounting Standards Codification 740, "Income Taxes," which is the
same accounting principles used by the Company when presenting its
GAAP financial results.
The Company believes the presentation of non-GAAP measures such as
Adjusted Earnings provides useful supplemental information to
investors with regard to its core operating performance, as well as
assists with the comparison of its past financial performance to the
Company's future financial results. Moreover, the Company believes
that the presentation of Adjusted Earnings assists investors'
ability to compare its financial results to those of other companies
in the same industry. However, the Company's Adjusted Earnings
measure may be defined and calculated differently by other companies
in the same industry.
The Company internally uses non-GAAP financial measures such as
Adjusted Earnings in connection with its own financial planning and
reporting processes. Specifically, Adjusted Earnings serves as one
of the measures management utilizes when allocating resources,
deploying capital and assessing business performance and employee
incentive compensation. Nonetheless, non-GAAP financial results and
related measures disclosed by the Company should not be considered a
substitute for, nor superior to, financial results and measures as
determined or calculated in accordance with GAAP.
Schedule 2B
McKESSON CORPORATION
RECONCILIATION OF GAAP OPERATING RESULTS TO ADJUSTED EARNINGS
(NON-GAAP)
(unaudited)
(in millions, except per share amounts)
Change
Nine Months Ended December 31, 2011
Vs. Prior Period
As Reported (GAAP)
Amortization of Acquisition- Related Intangibles
Acquisition- Related Expenses
Litigation Reserve Adjustments
Adjusted Earnings (Non-GAAP)
As Reported (GAAP)
Adjusted Earnings (Non-GAAP)
Revenues
$
91,035
$
-
$
-
$
-
$
91,035
9
%
9
%
Gross profit
$
4,722
$
16
$
-
$
-
$
4,738
12
12
Operating expenses
(3,280
)
131
26
145
(2,978
)
9
10
Other income, net
12
-
-
-
12
(37
)
(37
)
Interest expense
(192
)
-
-
-
(192
)
37
48
Income from continuing operations before income taxes
1,262
147
26
145
1,580
17
12
Income tax expense
(380
)
(56
)
(9
)
(53
)
(498
)
3
5
Income from continuing operations
$
882
$
91
$
17
$
92
$
1,082
25
16
Diluted earnings per common share from continuing operations (1)
$
3.51
$
0.36
$
0.06
$
0.37
$
4.30
30
%
21
%
Diluted weighted average shares
252
252
252
252
252
(5
)
%
(5
)
%
Nine Months Ended December 31, 2010
As Reported (GAAP)
Amortization of Acquisition- Related Intangibles
Acquisition- Related Expenses
Litigation Reserve Adjustments
Adjusted Earnings (Non-GAAP)
Revenues
$
83,231
$
-
$
-
$
-
$
83,231
Gross profit
$
4,219
$
12
$
-
$
-
$
4,231
Operating expenses
(3,021
)
72
24
213
(2,712
)
Other income, net
19
-
-
-
19
Interest expense
(140
)
-
10
-
(130
)
Income from continuing operations before income taxes
1,077
84
34
213
1,408
Income tax expense
(369
)
(33
)
(9
)
(64
)
(475
)
Income from continuing operations
$
708
$
51
$
25
$
149
$
933
Diluted earnings per common share from continuing operations (1)
$
2.69
$
0.19
$
0.09
$
0.57
$
3.54
Diluted weighted average shares
264
264
264
264
264
(1)
Certain computations may reflect rounding adjustments.
Schedule 3A
McKESSON CORPORATION
RECONCILIATION OF GAAP SEGMENT FINANCIAL RESULTS TO ADJUSTED
EARNINGS (NON-GAAP)
(unaudited)
(in millions)
Quarter Ended December 31, 2011
Quarter Ended December 31, 2010
Change
As Reported (GAAP)
Adjust.
Adjusted Earnings (Non-GAAP)
As Reported (GAAP)
Adjust.
Adjusted Earnings (Non-GAAP)
As Reported (GAAP)
Adjusted Earnings (Non-GAAP)
REVENUES
Distribution Solutions
Direct distribution & services
$
21,585
$
-
$
21,585
$
19,408
$
-
$
19,408
11
%
11
%
Sales to customers' warehouses
5,198
-
5,198
4,731
-
4,731
10
10
Total U.S. pharmaceutical distribution & services
26,783
-
26,783
24,139
-
24,139
11
11
Canada pharmaceutical distribution & services
2,473
-
2,473
2,574
-
2,574
(4
)
(4
)
Medical-Surgical distribution & services
760
-
760
744
-
744
2
2
Total Distribution Solutions
30,016
-
30,016
27,457
-
27,457
9
9
Technology Solutions
Services (1)
643
-
643
629
-
629
2
2
Software & software systems
152
-
152
135
-
135
13
13
Hardware
28
-
28
26
-
26
8
8
Total Technology Solutions
823
-
823
790
-
790
4
4
Revenues
$
30,839
$
-
$
30,839
$
28,247
$
-
$
28,247
9
9
GROSS PROFIT
Distribution Solutions
$
1,201
$
-
$
1,201
$
1,082
$
-
$
1,082
11
11
Technology Solutions (1) (2)
365
5
370
379
4
383
(4
)
(3
)
Gross profit
$
1,566
$
5
$
1,571
$
1,461
$
4
$
1,465
7
7
OPERATING EXPENSES
Distribution Solutions
$
(690
)
$
62
$
(628
)
$
(797
)
$
226
$
(571
)
(13
)
10
Technology Solutions (2)
(297
)
15
(282
)
(273
)
11
(262
)
9
8
Corporate
(87
)
2
(85
)
(84
)
-
(84
)
4
1
Operating expenses
$
(1,074
)
$
79
$
(995
)
$
(1,154
)
$
237
$
(917
)
(7
)
9
OTHER INCOME (EXPENSE), NET
Distribution Solutions
$
(1
)
$
-
$
(1
)
$
4
$
-
$
4
(125
)
(125
)
Technology Solutions
1
-
1
-
-
-
-
-
Corporate
(2
)
-
(2
)
3
-
3
(167
)
(167
)
Other income (expense), net
$
(2
)
$
-
$
(2
)
$
7
$
-
$
7
(129
)
(129
)
OPERATING PROFIT
Distribution Solutions
$
510
$
62
$
572
$
289
$
226
$
515
76
11
Technology Solutions (1) (2)
69
20
89
106
15
121
(35
)
(26
)
Operating profit
579
82
661
395
241
636
47
4
Corporate
(89
)
2
(87
)
(81
)
-
(81
)
10
7
Income from continuing operations before interest expense and
income taxes
$
490
$
84
$
574
$
314
$
241
$
555
56
3
STATISTICS
Operating profit as a % of revenues
Distribution Solutions
1.70
%
1.91
%
1.05
%
1.88
%
65
bp
3
bp
Technology Solutions (1) (2)
8.38
10.81
13.42
15.32
(504
)
(451
)
(1)
Revenues and results for the third quarter of fiscal year 2011
include the recognition of $23 million of revenue for a disease
management contract for which the related expenses were previously
recognized as incurred.
(2)
For the third quarter of fiscal year 2012, segment results include
a charge of $42 million for a product alignment plan, of which $26
million and $16 million were included in cost of sales and
operating expenses.
Schedule 3B
McKESSON CORPORATION
RECONCILIATION OF GAAP SEGMENT FINANCIAL RESULTS TO ADJUSTED
EARNINGS (NON-GAAP)
(unaudited)
(in millions)
Nine Months Ended December 31, 2011
Nine Months Ended December 31, 2010
Change
As Reported (GAAP)
Adjust.
Adjusted Earnings (Non-GAAP)
As Reported (GAAP)
Adjust.
Adjusted Earnings (Non-GAAP)
As Reported (GAAP)
Adjusted Earnings (Non-GAAP)
REVENUES
Distribution Solutions
Direct distribution & services
$
63,484
$
-
$
63,484
$
57,094
$
-
$
57,094
11
%
11
%
Sales to customers' warehouses
14,998
-
14,998
14,133
-
14,133
6
6
Total U.S. pharmaceutical distribution & services
78,482
-
78,482
71,227
-
71,227
10
10
Canada pharmaceutical distribution & services
7,739
-
7,739
7,485
-
7,485
3
3
Medical-Surgical distribution & services
2,364
-
2,364
2,200
-
2,200
7
7
Total Distribution Solutions
88,585
-
88,585
80,912
-
80,912
9
9
Technology Solutions
Services (1)
1,916
-
1,916
1,828
-
1,828
5
5
Software & software systems
449
-
449
408
-
408
10
10
Hardware
85
-
85
83
-
83
2
2
Total Technology Solutions
2,450
-
2,450
2,319
-
2,319
6
6
Revenues
$
91,035
$
-
$
91,035
$
83,231
$
-
$
83,231
9
9
GROSS PROFIT
Distribution Solutions (3)
$
3,590
$
1
$
3,591
$
3,239
$
-
$
3,239
11
11
Technology Solutions (1) (2) (4)
1,132
15
1,147
980
12
992
16
16
Gross profit
$
4,722
$
16
$
4,738
$
4,219
$
12
$
4,231
12
12
OPERATING EXPENSES
Distribution Solutions
$
(2,136
)
$
258
$
(1,878
)
$
(1,963
)
$
275
$
(1,688
)
9
11
Technology Solutions (2)
(857
)
42
(815
)
(798
)
34
(764
)
7
7
Corporate
(287
)
2
(285
)
(260
)
-
(260
)
10
10
Operating expenses
$
(3,280
)
$
302
$
(2,978
)
$
(3,021
)
$
309
$
(2,712
)
9
10
OTHER INCOME, NET
Distribution Solutions
$
8
$
-
$
8
$
9
$
-
$
9
(11
)
(11
)
Technology Solutions
2
-
2
2
-
2
-
-
Corporate
2
-
2
8
-
8
(75
)
(75
)
Other income, net
$
12
$
-
$
12
$
19
$
-
$
19
(37
)
(37
)
OPERATING PROFIT
Distribution Solutions (3)
$
1,462
$
259
$
1,721
$
1,285
$
275
$
1,560
14
10
Technology Solutions (1) (2) (4)
277
57
334
184
46
230
51
45
Operating profit
1,739
316
2,055
1,469
321
1,790
18
15
Corporate
(285
)
2
(283
)
(252
)
-
(252
)
13
12
Income from continuing operations before interest expense and
income taxes
$
1,454
$
318
$
1,772
$
1,217
$
321
$
1,538
19
15
STATISTICS
Operating profit as a % of revenues
Distribution Solutions (3)
1.65
%
1.94
%
1.59
%
1.93
%
6
bp
1
bp
Technology Solutions (1) (2) (4)
11.31
13.63
7.93
9.92
338
371
(1)
Revenues and results for the first nine months of 2011 include the
recognition of $23 million of revenue for a disease management
contract for which the related expenses were previously recognized
as incurred.
(2)
For the first nine months of fiscal year 2012, segment results
include a charge of $42 million for a product alignment plan, of
which $26 million and $16 million were included in cost of sales
and operating expenses.
(3)
Results for the first nine months of fiscal year 2011 include a
credit of $51 million representing our share of a settlement of an
antitrust class action lawsuit brought against a drug manufacturer.
(4)
Results for the first nine months of fiscal year 2011 include a $72
million asset impairment charge for capitalized software held for
sale.
Schedule 4A
McKESSON CORPORATION
RECONCILIATION OF GAAP SEGMENT FINANCIAL RESULTS TO ADJUSTED
EARNINGS (NON-GAAP) - BY ADJUSTMENT TYPE
(unaudited)
(in millions)
Quarter Ended December 31, 2011
Quarter Ended December 31, 2010
Distribution Solutions
Technology Solutions
Corporate & Interest Expense
Total
Distribution Solutions
Technology Solutions
Corporate & Interest Expense
Total
As Reported (GAAP):
Revenues
$
30,016
$
823
$
-
$
30,839
$
27,457
$
790
$
-
$
28,247
Gross profit
$
1,201
$
365
$
-
$
1,566
$
1,082
$
379
$
-
$
1,461
Operating expenses
(690
)
(297
)
(87
)
(1,074
)
(797
)
(273
)
(84
)
(1,154
)
Other income (expense), net
(1
)
1
(2
)
(2
)
4
-
3
7
Income from continuing operations before interest expense and
income taxes
510
69
(89
)
490
289
106
(81
)
314
Interest expense
-
-
(64
)
(64
)
-
-
(53
)
(53
)
Income from continuing operations before income taxes
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