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8-K - FORM 8-K - MCKESSON CORP | f59054e8vk.htm |
Exhibit 99.1
McKesson Corporation provides historical information on the
basis of Adjusted Earnings
(Non-GAAP) in preparation for fiscal 2012 reporting change
May 5, 2011
During its earnings conference call held on May 3, 2011,
McKesson Corporation (the Company) announced that beginning with its first-quarter results for the fiscal year ending
March 31, 2012, the Company will begin separately reporting financial results on the basis of
Adjusted Earnings in addition to U.S. generally accepted accounting principles (GAAP).
Adjusted Earnings is a non-GAAP measure defined as GAAP earnings from continuing operations,
excluding acquisition-related expenses, amortization of acquisition-related intangible assets and
litigation reserve adjustments. Other than the addition of a new non-GAAP reporting measure, there
will be no change to the Companys balance sheet or cash flow presentation.
The Company believes the presentation of Adjusted Earnings will provide useful information to
investors in understanding its core operating performance, as well as
assisting with the comparison of past financial
performance to future financial results. The Company also believes
that the presentations of Adjusted Earnings will assist
investors ability to compare the Companys financial
results to those of other companies. Finally, the Company uses Adjusted Earnings internally
when assessing the performance of the organization and its operating segments. However, any such
non-GAAP financial results and 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. Each and every GAAP to non-GAAP reconciliation of the Companys financial
results should be carefully evaluated.
In
addition to excluding financial results from discontinued operations, Adjusted Earnings will exclude the
effects of the following items from the Companys GAAP financial results, including the related
income tax effects:
Acquisition-related expenses are 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. |
Amortization of acquisition-related intangible assets represents amortization expense of acquired intangible assets purchased in connection with acquisitions by the Company. |
Litigation reserve adjustments consist of any adjustments to the Companys reserves for estimated probable losses for its Average Wholesale Price litigation and Securities Litigation matters as defined in the Companys 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 utilized by the
Company when presenting its GAAP financial results.
To facilitate the transition to the new quarterly presentation
of financial results, the Company is providing
investors the following historical views of its Adjusted Earnings:
Exhibit I: provides a reconciliation of certain line items from the Companys GAAP Condensed Consolidated Statement of Operations to Adjusted Earnings (Non-GAAP) for the fiscal year ended March 31, 2011; |
Exhibit II: provides a reconciliation of the Companys GAAP segment financial results to Adjusted Earnings (Non-GAAP) for the fiscal year ended March 31, 2011; |
Exhibit III: provides a reconciliation of certain line items from the Companys GAAP Condensed Consolidated Statement of Operations to Adjusted Earnings (Non-GAAP) for the fiscal years ended March 31, 2007 through March 31, 2011; and |
Exhibit IV: provides a reconciliation of the Companys GAAP segment financial results to Adjusted Earnings (Non-GAAP) for the fiscal years ended March 31, 2007 through March 31, 2011. |
Exhibit I
McKESSON CORPORATION
RECONCILIATION OF GAAP CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS TO ADJUSTED EARNINGS (NON-GAAP)
FOR FISCAL 2011
(unaudited)
(in millions, except per share amounts)
RECONCILIATION OF GAAP CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS TO ADJUSTED EARNINGS (NON-GAAP)
FOR FISCAL 2011
(unaudited)
(in millions, except per share amounts)
Quarter Ended June 30, 2010 | ||||||||||||||||||||
Amortization | ||||||||||||||||||||
Acquisition- | of Acquisition- | Litigation | Adjusted | |||||||||||||||||
As Reported | Related | Related | Reserve | Earnings | ||||||||||||||||
(GAAP) | Expenses | Intangibles | Adjustments | (Non-GAAP) | ||||||||||||||||
Gross profit |
$ | 1,392 | $ | | $ | 4 | $ | | $ | 1,396 | ||||||||||
Operating expenses |
(918 | ) | | 24 | | (894 | ) | |||||||||||||
Other income, net |
9 | | | | 9 | |||||||||||||||
Interest expense |
(43 | ) | | | | (43 | ) | |||||||||||||
Income from continuing operations before income taxes |
440 | | 28 | | 468 | |||||||||||||||
Income tax expense |
(142 | ) | | (11 | ) | | (153 | ) | ||||||||||||
Income from continuing operations |
$ | 298 | $ | | $ | 17 | $ | | $ | 315 | ||||||||||
Diluted earnings per common share from continuing operations (a) |
$ | 1.10 | $ | | $ | 0.06 | $ | | $ | 1.16 | ||||||||||
Quarter Ended September 30, 2010 | ||||||||||||||||||||
Acquisition- | Amortization of Acquisition- |
Litigation | Adjusted | |||||||||||||||||
As Reported | Related | Related | Reserve | Earnings | ||||||||||||||||
(GAAP) | Expenses | Intangibles | Adjustments | (Non-GAAP) | ||||||||||||||||
Gross profit |
$ | 1,366 | $ | | $ | 4 | $ | | $ | 1,370 | ||||||||||
Operating expenses |
(949 | ) | | 24 | 24 | (901 | ) | |||||||||||||
Other income, net |
3 | | | | 3 | |||||||||||||||
Interest expense |
(44 | ) | | | | (44 | ) | |||||||||||||
Income from continuing operations before income taxes |
376 | | 28 | 24 | 428 | |||||||||||||||
Income tax expense |
(121 | ) | | (11 | ) | (8 | ) | (140 | ) | |||||||||||
Income from continuing operations |
$ | 255 | $ | | $ | 17 | $ | 16 | $ | 288 | ||||||||||
Diluted earnings per common share from continuing operations (a) |
$ | 0.97 | $ | | $ | 0.06 | $ | 0.06 | $ | 1.10 | ||||||||||
Quarter Ended December 31, 2010 | ||||||||||||||||||||
Amortization | ||||||||||||||||||||
Acquisition- | of Acquisition- | Litigation | Adjusted | |||||||||||||||||
As Reported | Related | Related | Reserve | Earnings | ||||||||||||||||
(GAAP) | Expenses | Intangibles | Adjustments | (Non-GAAP) | ||||||||||||||||
Gross profit |
$ | 1,461 | $ | | $ | 4 | $ | | $ | 1,465 | ||||||||||
Operating expenses |
(1,154 | ) | 24 | 24 | 189 | (917 | ) | |||||||||||||
Other income, net |
7 | | | | 7 | |||||||||||||||
Interest expense |
(53 | ) | 10 | | | (43 | ) | |||||||||||||
Income from continuing operations before income taxes |
261 | 34 | 28 | 189 | 512 | |||||||||||||||
Income tax expense |
(106 | ) | (9 | ) | (11 | ) | (56 | ) | (182 | ) | ||||||||||
Income from continuing operations |
$ | 155 | $ | 25 | $ | 17 | $ | 133 | $ | 330 | ||||||||||
Diluted earnings per common share from continuing operations (a) |
$ | 0.60 | $ | 0.10 | $ | 0.07 | $ | 0.52 | $ | 1.28 | ||||||||||
Quarter Ended March 31, 2011 | ||||||||||||||||||||
Amortization | ||||||||||||||||||||
Acquisition- | of Acquisition- | Litigation | Adjusted | |||||||||||||||||
As Reported | Related | Related | Reserve | Earnings | ||||||||||||||||
(GAAP) | Expenses | Intangibles | Adjustments | (Non-GAAP) | ||||||||||||||||
Gross profit |
$ | 1,751 | $ | | $ | 4 | $ | | $ | 1,755 | ||||||||||
Operating expenses |
(1,128 | ) | 19 | 44 | | (1,065 | ) | |||||||||||||
Other income, net |
17 | (16 | ) | | | 1 | ||||||||||||||
Interest expense |
(82 | ) | 15 | | | (67 | ) | |||||||||||||
Income from continuing operations before income taxes |
558 | 18 | 48 | | 624 | |||||||||||||||
Income tax expense |
(136 | ) | (7 | ) | (18 | ) | | (161 | ) | |||||||||||
Income from continuing operations |
$ | 422 | $ | 11 | $ | 30 | $ | | $ | 463 | ||||||||||
Diluted earnings per common share from continuing operations (a) |
$ | 1.62 | $ | 0.04 | $ | 0.12 | $ | | $ | 1.78 | ||||||||||
Year Ended March 31, 2011 | ||||||||||||||||||||
Amortization | ||||||||||||||||||||
Acquisition- | of Acquisition- | Litigation | Adjusted | |||||||||||||||||
As Reported | Related | Related | Reserve | Earnings | ||||||||||||||||
(GAAP) | Expenses | Intangibles | Adjustments | (Non-GAAP) | ||||||||||||||||
Gross profit |
$ | 5,970 | $ | | $ | 16 | $ | | $ | 5,986 | ||||||||||
Operating expenses |
(4,149 | ) | 43 | 116 | 213 | (3,777 | ) | |||||||||||||
Other income, net |
36 | (16 | ) | | | 20 | ||||||||||||||
Interest expense |
(222 | ) | 25 | | | (197 | ) | |||||||||||||
Income from continuing operations before income taxes |
1,635 | 52 | 132 | 213 | 2,032 | |||||||||||||||
Income tax expense |
(505 | ) | (16 | ) | (51 | ) | (64 | ) | (636 | ) | ||||||||||
Income from continuing operations |
$ | 1,130 | $ | 36 | $ | 81 | $ | 149 | $ | 1,396 | ||||||||||
Diluted earnings per common share from continuing operations (a) |
$ | 4.29 | $ | 0.14 | $ | 0.31 | $ | 0.57 | $ | 5.31 | ||||||||||
(a) | Certain computations may reflect rounding adjustments. |
Exhibit II
McKESSON CORPORATION
RECONCILIATION OF GAAP SEGMENT FINANCIAL RESULTS TO ADJUSTED EARNINGS (NON-GAAP)
FOR FISCAL 2011
(unaudited)
(in millions)
RECONCILIATION OF GAAP SEGMENT FINANCIAL RESULTS TO ADJUSTED EARNINGS (NON-GAAP)
FOR FISCAL 2011
(unaudited)
(in millions)
Quarter Ended June 30, 2010 | Quarter Ended September 30, 2010 | Quarter Ended December 31, 2010 | Quarter Ended March 31, 2011 | Year Ended March 31, 2011 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Corporate & | Corporate & | Corporate & | Corporate & | Corporate & | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Distribution | Technology | Interest | Distribution | Technology | Interest | Distribution | Technology | Interest | Distribution | Technology | Interest | Distribution | Technology | Interest | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Solutions | Solutions | Expense | TOTAL | Solutions | Solutions | Expense | TOTAL | Solutions | Solutions | Expense | TOTAL | Solutions | Solutions | Expense | TOTAL | Solutions | Solutions | Expense | TOTAL | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
As Reported (GAAP): |
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Revenues |
$ | 26,691 | $ | 759 | $ | | $ | 27,450 | $ | 26,764 | $ | 770 | $ | | $ | 27,534 | $ | 27,457 | $ | 790 | $ | | $ | 28,247 | $ | 27,977 | $ | 876 | $ | | $ | 28,853 | $ | 108,889 | $ | 3,195 | $ | | $ | 112,084 | ||||||||||||||||||||||||||||||||||||||||
Gross profit |
1,067 | 325 | | 1,392 | 1,090 | 276 | | 1,366 | 1,082 | 379 | | 1,461 | 1,326 | 425 | | 1,751 | 4,565 | 1,405 | | 5,970 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Operating expenses |
(568 | ) | (262 | ) | (88 | ) | (918 | ) | (598 | ) | (263 | ) | (88 | ) | (949 | ) | (797 | ) | (273 | ) | (84 | ) | (1,154 | ) | (710 | ) | (310 | ) | (108 | ) | (1,128 | ) | (2,673 | ) | (1,108 | ) | (368 | ) | (4,149 | ) | ||||||||||||||||||||||||||||||||||||||||
Other income (expense), net |
6 | 1 | 2 | 9 | (1 | ) | 1 | 3 | 3 | 4 | | 3 | 7 | (4 | ) | 2 | 19 | 17 | 5 | 4 | 27 | 36 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Operating pre-tax profit |
505 | 64 | (86 | ) | 483 | 491 | 14 | (85 | ) | 420 | 289 | 106 | (81 | ) | 314 | 612 | 117 | (89 | ) | 640 | 1,897 | 301 | (341 | ) | 1,857 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
Interest expense |
| | (43 | ) | (43 | ) | | | (44 | ) | (44 | ) | | | (53 | ) | (53 | ) | (1 | ) | | (81 | ) | (82 | ) | (1 | ) | | (221 | ) | (222 | ) | ||||||||||||||||||||||||||||||||||||||||||||||||
Income from continuing operations
before income taxes |
$ | 505 | $ | 64 | $ | (129 | ) | $ | 440 | $ | 491 | $ | 14 | $ | (129 | ) | $ | 376 | $ | 289 | $ | 106 | $ | (134 | ) | $ | 261 | $ | 611 | $ | 117 | $ | (170 | ) | $ | 558 | $ | 1,896 | $ | 301 | $ | (562 | ) | $ | 1,635 | |||||||||||||||||||||||||||||||||||
Gross profit margin |
4.00 | % | 42.82 | % | | 5.07 | % | 4.07 | % | 35.84 | % | | 4.96 | % | 3.94 | % | 47.97 | % | | 5.17 | % | 4.74 | % | 48.52 | % | | 6.07 | % | 4.19 | % | 43.97 | % | | 5.33 | % | |||||||||||||||||||||||||||||||||||||||||||||
Operating expenses as a % of revenues |
2.13 | % | 34.52 | % | | 3.34 | % | 2.23 | % | 34.16 | % | | 3.45 | % | 2.90 | % | 34.56 | % | | 4.09 | % | 2.54 | % | 35.39 | % | | 3.91 | % | 2.45 | % | 34.68 | % | | 3.70 | % | |||||||||||||||||||||||||||||||||||||||||||||
Operating pre-tax profit as a % of revenues |
1.89 | % | 8.43 | % | | 1.76 | % | 1.83 | % | 1.82 | % | | 1.53 | % | 1.05 | % | 13.42 | % | | 1.11 | % | 2.19 | % | 13.36 | % | | 2.22 | % | 1.74 | % | 9.42 | % | | 1.66 | % | |||||||||||||||||||||||||||||||||||||||||||||
Adjustments: |
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Operating expenses |
$ | | $ | | $ | | $ | | $ | | $ | | $ | | $ | | $ | 24 | $ | | $ | | $ | 24 | $ | 17 | $ | | $ | 2 | $ | 19 | $ | 41 | $ | | $ | 2 | $ | 43 | ||||||||||||||||||||||||||||||||||||||||
Other income (expense), net |
| | | | | | | | | | | | | | (16 | ) | (16 | ) | | | (16 | ) | (16 | ) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Interest expense |
| | | | | | | | | | 10 | 10 | | | 15 | 15 | | | 25 | 25 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Acquisition-related expenses |
| | | | | | | | 24 | | 10 | 34 | 17 | | 1 | 18 | 41 | | 11 | 52 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Gross profit |
| 4 | | 4 | | 4 | | 4 | | 4 | | 4 | | 4 | | 4 | | 16 | | 16 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Operating expenses |
12 | 12 | | 24 | 13 | 11 | | 24 | 13 | 11 | | 24 | 32 | 12 | | 44 | 70 | 46 | | 116 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Amortization of acquisition-
related intangibles |
12 | 16 | | 28 | 13 | 15 | | 28 | 13 | 15 | | 28 | 32 | 16 | | 48 | 70 | 62 | | 132 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Operating expenses |
| | | | 24 | | | 24 | 189 | | | 189 | | | | | 213 | | | 213 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Litigation reserve adjustments |
| | | | 24 | | | 24 | 189 | | | 189 | | | | | 213 | | | 213 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Adjustments total |
$ | 12 | $ | 16 | $ | | $ | 28 | $ | 37 | $ | 15 | $ | | $ | 52 | $ | 226 | $ | 15 | $ | 10 | $ | 251 | $ | 49 | $ | 16 | $ | 1 | $ | 66 | $ | 324 | $ | 62 | $ | 11 | $ | 397 | ||||||||||||||||||||||||||||||||||||||||
Adjusted Earnings (Non-GAAP): |
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Gross profit |
$ | 1,067 | $ | 329 | $ | | $ | 1,396 | $ | 1,090 | $ | 280 | $ | | $ | 1,370 | $ | 1,082 | $ | 383 | $ | | $ | 1,465 | $ | 1,326 | $ | 429 | $ | | $ | 1,755 | $ | 4,565 | $ | 1,421 | $ | | $ | 5,986 | ||||||||||||||||||||||||||||||||||||||||
Operating expenses |
(556 | ) | (250 | ) | (88 | ) | (894 | ) | (561 | ) | (252 | ) | (88 | ) | (901 | ) | (571 | ) | (262 | ) | (84 | ) | (917 | ) | (661 | ) | (298 | ) | (106 | ) | (1,065 | ) | (2,349 | ) | (1,062 | ) | (366 | ) | (3,777 | ) | ||||||||||||||||||||||||||||||||||||||||
Other income (expense), net |
6 | 1 | 2 | 9 | (1 | ) | 1 | 3 | 3 | 4 | | 3 | 7 | (4 | ) | 2 | 3 | 1 | 5 | 4 | 11 | 20 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Operating pre-tax profit |
517 | 80 | (86 | ) | 511 | 528 | 29 | (85 | ) | 472 | 515 | 121 | (81 | ) | 555 | 661 | 133 | (103 | ) | 691 | 2,221 | 363 | (355 | ) | 2,229 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
Interest expense |
| | (43 | ) | (43 | ) | | | (44 | ) | (44 | ) | | | (43 | ) | (43 | ) | (1 | ) | | (66 | ) | (67 | ) | (1 | ) | | (196 | ) | (197 | ) | ||||||||||||||||||||||||||||||||||||||||||||||||
Income from continuing operations
before income taxes |
$ | 517 | $ | 80 | $ | (129 | ) | $ | 468 | $ | 528 | $ | 29 | $ | (129 | ) | $ | 428 | $ | 515 | $ | 121 | $ | (124 | ) | $ | 512 | $ | 660 | $ | 133 | $ | (169 | ) | $ | 624 | $ | 2,220 | $ | 363 | $ | (551 | ) | $ | 2,032 | |||||||||||||||||||||||||||||||||||
Gross profit margin |
4.00 | % | 43.35 | % | | 5.09 | % | 4.07 | % | 36.36 | % | | 4.98 | % | 3.94 | % | 48.48 | % | | 5.19 | % | 4.74 | % | 48.97 | % | | 6.08 | % | 4.19 | % | 44.48 | % | | 5.34 | % | |||||||||||||||||||||||||||||||||||||||||||||
Operating expenses as a % of revenues |
2.08 | % | 32.94 | % | | 3.26 | % | 2.10 | % | 32.73 | % | | 3.27 | % | 2.08 | % | 33.16 | % | | 3.25 | % | 2.36 | % | 34.02 | % | | 3.69 | % | 2.16 | % | 33.24 | % | | 3.37 | % | |||||||||||||||||||||||||||||||||||||||||||||
Operating pre-tax profit as a % of revenues |
1.94 | % | 10.54 | % | | 1.86 | % | 1.97 | % | 3.77 | % | | 1.71 | % | 1.88 | % | 15.32 | % | | 1.96 | % | 2.36 | % | 15.18 | % | | 2.39 | % | 2.04 | % | 11.36 | % | | 1.99 | % |
Exhibit III
McKESSON CORPORATION
RECONCILIATION OF GAAP CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS TO ADJUSTED EARNINGS (NON-GAAP)
FOR FISCAL 2007 THROUGH 2011
(unaudited)
(in millions, except per share amounts)
RECONCILIATION OF GAAP CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS TO ADJUSTED EARNINGS (NON-GAAP)
FOR FISCAL 2007 THROUGH 2011
(unaudited)
(in millions, except per share amounts)
Year Ended March 31, 2011 | ||||||||||||||||||||
Amortization | ||||||||||||||||||||
Acquisition- | of Acquisition- | Litigation | Adjusted | |||||||||||||||||
As Reported | Related | Related | Reserve | Earnings | ||||||||||||||||
(GAAP) | Expenses | Intangibles | Adjustments | (Non-GAAP) | ||||||||||||||||
Gross profit |
$ | 5,970 | $ | | $ | 16 | $ | | $ | 5,986 | ||||||||||
Operating expenses |
(4,149 | ) | 43 | 116 | 213 | (3,777 | ) | |||||||||||||
Other income, net |
36 | (16 | ) | | | 20 | ||||||||||||||
Interest expense |
(222 | ) | 25 | | | (197 | ) | |||||||||||||
Income from continuing operations before income taxes |
1,635 | 52 | 132 | 213 | 2,032 | |||||||||||||||
Income tax (expense) benefit |
(505 | ) | (16 | ) | (51 | ) | (64 | ) | (636 | ) | ||||||||||
Income from continuing operations |
$ | 1,130 | $ | 36 | $ | 81 | $ | 149 | $ | 1,396 | ||||||||||
Diluted earnings per common share from continuing operations (a) |
$ | 4.29 | $ | 0.14 | $ | 0.31 | $ | 0.57 | $ | 5.31 | ||||||||||
Year Ended March 31, 2010 | ||||||||||||||||||||
Amortization | ||||||||||||||||||||
Acquisition- | of Acquisition- | Litigation | Adjusted | |||||||||||||||||
As Reported | Related | Related | Reserve | Earnings | ||||||||||||||||
(GAAP) | Expenses | Intangibles | Adjustments | (Non-GAAP) | ||||||||||||||||
Gross profit |
$ | 5,676 | $ | | $ | 21 | $ | | $ | 5,697 | ||||||||||
Operating expenses |
(3,668 | ) | | 97 | (20 | ) | (3,591 | ) | ||||||||||||
Other income, net |
43 | | | | 43 | |||||||||||||||
Interest expense |
(187 | ) | | | | (187 | ) | |||||||||||||
Income from continuing operations before income taxes |
1,864 | | 118 | (20 | ) | 1,962 | ||||||||||||||
Income tax (expense) benefit |
(601 | ) | | (46 | ) | 8 | (639 | ) | ||||||||||||
Income from continuing operations |
$ | 1,263 | $ | | $ | 72 | $ | (12 | ) | $ | 1,323 | |||||||||
Diluted earnings per common share from continuing operations (a) |
$ | 4.62 | $ | | $ | 0.26 | $ | (0.04 | ) | $ | 4.85 | |||||||||
Year Ended March 31, 2009 | ||||||||||||||||||||
Amortization | ||||||||||||||||||||
Acquisition- | of Acquisition- | Litigation | Adjusted | |||||||||||||||||
As Reported | Related | Related | Reserve | Earnings | ||||||||||||||||
(GAAP) | Expenses | Intangibles | Adjustments | (Non-GAAP) | ||||||||||||||||
Gross profit |
$ | 5,378 | $ | | $ | 29 | $ | | $ | 5,407 | ||||||||||
Operating expenses |
(4,182 | ) | | 99 | 493 | (3,590 | ) | |||||||||||||
Other income, net |
12 | | | | 12 | |||||||||||||||
Interest expense |
(144 | ) | | | | (144 | ) | |||||||||||||
Income from continuing operations before income taxes |
1,064 | | 128 | 493 | 1,685 | |||||||||||||||
Income tax (expense) benefit |
(241 | ) | | (49 | ) | (182 | ) | (472 | ) | |||||||||||
Income from continuing operations |
$ | 823 | $ | | $ | 79 | $ | 311 | $ | 1,213 | ||||||||||
Diluted earnings per common share from continuing operations (a) |
$ | 2.95 | $ | | $ | 0.28 | $ | 1.11 | $ | 4.35 | ||||||||||
Year Ended March 31, 2008 | ||||||||||||||||||||
Amortization | ||||||||||||||||||||
Acquisition- | of Acquisition- | Litigation | Adjusted | |||||||||||||||||
As Reported | Related | Related | Reserve | Earnings | ||||||||||||||||
(GAAP) | Expenses | Intangibles | Adjustments | (Non-GAAP) | ||||||||||||||||
Gross profit |
$ | 5,009 | $ | | $ | 27 | $ | | $ | 5,036 | ||||||||||
Operating expenses |
(3,531 | ) | 4 | 79 | (5 | ) | (3,453 | ) | ||||||||||||
Other income, net |
121 | | | | 121 | |||||||||||||||
Interest expense |
(142 | ) | | | | (142 | ) | |||||||||||||
Income from continuing operations before income taxes |
1,457 | 4 | 106 | (5 | ) | 1,562 | ||||||||||||||
Income tax (expense) benefit |
(468 | ) | (2 | ) | (41 | ) | 2 | (509 | ) | |||||||||||
Income from continuing operations |
$ | 989 | $ | 2 | $ | 65 | $ | (3 | ) | $ | 1,053 | |||||||||
Diluted earnings per common share from continuing operations (a) |
$ | 3.32 | $ | 0.01 | $ | 0.22 | $ | (0.01 | ) | $ | 3.53 | |||||||||
Year Ended March 31, 2007 | ||||||||||||||||||||
Amortization | ||||||||||||||||||||
Acquisition- | of Acquisition- | Litigation | Adjusted | |||||||||||||||||
As Reported | Related | Related | Reserve | Earnings | ||||||||||||||||
(GAAP) | Expenses | Intangibles | Adjustments | (Non-GAAP) | ||||||||||||||||
Gross profit |
$ | 4,332 | $ | | $ | 12 | $ | | $ | 4,344 | ||||||||||
Operating expenses |
(3,068 | ) | 7 | 41 | (6 | ) | (3,026 | ) | ||||||||||||
Other income, net |
132 | | | | 132 | |||||||||||||||
Interest expense |
(99 | ) | 4 | | | (95 | ) | |||||||||||||
Income from continuing operations before income taxes |
1,297 | 11 | 53 | (6 | ) | 1,355 | ||||||||||||||
Income tax (expense) benefit |
(329 | ) | (4 | ) | (20 | ) | (81 | ) | (434 | ) | ||||||||||
Income from continuing operations |
$ | 968 | $ | 7 | $ | 33 | $ | (87 | ) | $ | 921 | |||||||||
Diluted earnings per common share from continuing operations (a) |
$ | 3.17 | $ | 0.02 | $ | 0.11 | $ | (0.29 | ) | $ | 3.02 | |||||||||
(a) | Certain computations may reflect rounding adjustments. |
Exhibit IV
McKESSON CORPORATION
RECONCILIATION OF GAAP SEGMENT FINANCIAL RESULTS TO ADJUSTED EARNINGS (NON-GAAP)
FOR FISCAL 2007 THROUGH 2011
(unaudited)
(in millions)
RECONCILIATION OF GAAP SEGMENT FINANCIAL RESULTS TO ADJUSTED EARNINGS (NON-GAAP)
FOR FISCAL 2007 THROUGH 2011
(unaudited)
(in millions)
Year Ended March 31, 2011 | Year Ended March 31, 2010 | Year Ended March 31, 2009 | Year Ended March 31, 2008 | Year Ended March 31, 2007 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Corporate | Corporate | Corporate | Corporate | Corporate | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Distribution | Technology | & Interest | Distribution | Technology | & Interest | Distribution | Technology | & Interest | Distribution | Technology | & Interest | Distribution | Technology | & Interest | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Solutions | Solutions | Expense | TOTAL | Solutions | Solutions | Expense | TOTAL | Solutions | Solutions | Expense | TOTAL | Solutions | Solutions | Expense | TOTAL | Solutions | Solutions | Expense | TOTAL | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
As Reported (GAAP): |
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Revenues |
$ | 108,889 | $ | 3,195 | $ | | $ | 112,084 | $ | 105,578 | $ | 3,124 | $ | | $ | 108,702 | $ | 103,568 | $ | 3,064 | $ | | $ | 106,632 | $ | 98,719 | $ | 2,984 | $ | | $ | 101,703 | $ | 90,738 | $ | 2,239 | $ | | $ | 92,977 | ||||||||||||||||||||||||||||||||||||||||
Gross profit |
4,565 | 1,405 | | 5,970 | 4,219 | 1,457 | | 5,676 | 3,955 | 1,423 | | 5,378 | 3,586 | 1,423 | | 5,009 | 3,252 | 1,080 | | 4,332 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Operating expenses |
(2,673 | ) | (1,108 | ) | (368 | ) | (4,149 | ) | (2,260 | ) | (1,077 | ) | (331 | ) | (3,668 | ) | (2,777 | ) | (1,096 | ) | (309 | ) | (4,182 | ) | (2,138 | ) | (1,115 | ) | (278 | ) | (3,531 | ) | (1,896 | ) | (884 | ) | (288 | ) | (3,068 | ) | ||||||||||||||||||||||||||||||||||||||||
Other income (expense), net |
5 | 4 | 27 | 36 | 29 | 5 | 9 | 43 | (20 | ) | 7 | 25 | 12 | 35 | 11 | 75 | 121 | 39 | 10 | 83 | 132 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Operating pre-tax profit |
1,897 | 301 | (341 | ) | 1,857 | 1,988 | 385 | (322 | ) | 2,051 | 1,158 | 334 | (284 | ) | 1,208 | 1,483 | 319 | (203 | ) | 1,599 | 1,395 | 206 | (205 | ) | 1,396 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
Interest expense |
(1 | ) | | (221 | ) | (222 | ) | (2 | ) | (2 | ) | (183 | ) | (187 | ) | 2 | (4 | ) | (142 | ) | (144 | ) | 4 | (4 | ) | (142 | ) | (142 | ) | | (4 | ) | (95 | ) | (99 | ) | ||||||||||||||||||||||||||||||||||||||||||||
Income from continuing operations
before income taxes |
$ | 1,896 | $ | 301 | $ | (562 | ) | $ | 1,635 | $ | 1,986 | $ | 383 | $ | (505 | ) | $ | 1,864 | $ | 1,160 | $ | 330 | $ | (426 | ) | $ | 1,064 | $ | 1,487 | $ | 315 | $ | (345 | ) | $ | 1,457 | $ | 1,395 | $ | 202 | $ | (300 | ) | $ | 1,297 | |||||||||||||||||||||||||||||||||||
Gross profit margin |
4.19 | % | 43.97 | % | | 5.33 | % | 4.00 | % | 46.64 | % | | 5.22 | % | 3.82 | % | 46.44 | % | | 5.04 | % | 3.63 | % | 47.69 | % | | 4.93 | % | 3.58 | % | 48.24 | % | | 4.66 | % | |||||||||||||||||||||||||||||||||||||||||||||
Operating expenses as a % of revenues |
2.45 | % | 34.68 | % | | 3.70 | % | 2.14 | % | 34.48 | % | | 3.37 | % | 2.68 | % | 35.77 | % | | 3.92 | % | 2.17 | % | 37.37 | % | | 3.47 | % | 2.09 | % | 39.48 | % | | 3.30 | % | |||||||||||||||||||||||||||||||||||||||||||||
Operating pre-tax profit as a % of revenues |
1.74 | % | 9.42 | % | | 1.66 | % | 1.88 | % | 12.32 | % | | 1.89 | % | 1.12 | % | 10.90 | % | | 1.13 | % | 1.50 | % | 10.69 | % | | 1.57 | % | 1.54 | % | 9.20 | % | | 1.50 | % | |||||||||||||||||||||||||||||||||||||||||||||
Adjustments: |
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Operating expenses |
$ | 41 | $ | | $ | 2 | $ | 43 | $ | | $ | | $ | | $ | | $ | | $ | | $ | | $ | | $ | 4 | $ | | $ | | $ | 4 | $ | 3 | $ | 4 | $ | | $ | 7 | ||||||||||||||||||||||||||||||||||||||||
Other income (expense), net |
| | (16 | ) | (16 | ) | | | | | | | | | | | | | | | | | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Interest expense |
| | 25 | 25 | | | | | | | | | | | | | | | 4 | 4 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Acquisition-related expenses |
41 | | 11 | 52 | | | | | | | | | 4 | | | 4 | 3 | 4 | 4 | 11 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Gross profit |
| 16 | | 16 | 1 | 20 | | 21 | 1 | 28 | | 29 | 1 | 26 | | 27 | | 12 | | 12 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Operating expenses |
70 | 46 | | 116 | 50 | 47 | | 97 | 50 | 49 | | 99 | 28 | 51 | | 79 | 15 | 26 | | 41 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Amortization of acquisition-related intangibles |
70 | 62 | | 132 | 51 | 67 | | 118 | 51 | 77 | | 128 | 29 | 77 | | 106 | 15 | 38 | | 53 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Gross profit |
| | | | | | | | | | | | | | | | | | | | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Operating expenses |
213 | | | 213 | | | (20 | ) | (20 | ) | 493 | | | 493 | | | (5 | ) | (5 | ) | | | (6 | ) | (6 | ) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
Litigation reserve adjustments |
213 | | | 213 | | | (20 | ) | (20 | ) | 493 | | | 493 | | | (5 | ) | (5 | ) | | | (6 | ) | (6 | ) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
Adjustments total |
$ | 324 | $ | 62 | $ | 11 | $ | 397 | $ | 51 | $ | 67 | $ | (20 | ) | $ | 98 | $ | 544 | $ | 77 | $ | | $ | 621 | $ | 33 | $ | 77 | $ | (5 | ) | $ | 105 | $ | 18 | $ | 42 | $ | (2 | ) | $ | 58 | |||||||||||||||||||||||||||||||||||||
Adjusted Earnings (Non-GAAP): |
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Gross profit |
$ | 4,565 | $ | 1,421 | $ | | $ | 5,986 | $ | 4,220 | $ | 1,477 | $ | | $ | 5,697 | $ | 3,956 | $ | 1,451 | $ | | $ | 5,407 | $ | 3,587 | $ | 1,449 | $ | | $ | 5,036 | $ | 3,252 | $ | 1,092 | $ | | $ | 4,344 | ||||||||||||||||||||||||||||||||||||||||
Operating expenses |
(2,349 | ) | (1,062 | ) | (366 | ) | (3,777 | ) | (2,210 | ) | (1,030 | ) | (351 | ) | (3,591 | ) | (2,234 | ) | (1,047 | ) | (309 | ) | (3,590 | ) | (2,106 | ) | (1,064 | ) | (283 | ) | (3,453 | ) | (1,878 | ) | (854 | ) | (294 | ) | (3,026 | ) | ||||||||||||||||||||||||||||||||||||||||
Other income (expense), net |
5 | 4 | 11 | 20 | 29 | 5 | 9 | 43 | (20 | ) | 7 | 25 | 12 | 35 | 11 | 75 | 121 | 39 | 10 | 83 | 132 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Operating pre-tax profit |
2,221 | 363 | (355 | ) | 2,229 | 2,039 | 452 | (342 | ) | 2,149 | 1,702 | 411 | (284 | ) | 1,829 | 1,516 | 396 | (208 | ) | 1,704 | 1,413 | 248 | (211 | ) | 1,450 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
Interest expense |
(1 | ) | | (196 | ) | (197 | ) | (2 | ) | (2 | ) | (183 | ) | (187 | ) | 2 | (4 | ) | (142 | ) | (144 | ) | 4 | (4 | ) | (142 | ) | (142 | ) | | (4 | ) | (91 | ) | (95 | ) | ||||||||||||||||||||||||||||||||||||||||||||
Income from continuing operations
before income taxes |
$ | 2,220 | $ | 363 | $ | (551 | ) | $ | 2,032 | $ | 2,037 | $ | 450 | $ | (525 | ) | $ | 1,962 | $ | 1,704 | $ | 407 | $ | (426 | ) | $ | 1,685 | $ | 1,520 | $ | 392 | $ | (350 | ) | $ | 1,562 | $ | 1,413 | $ | 244 | $ | (302 | ) | $ | 1,355 | |||||||||||||||||||||||||||||||||||
Gross profit margin |
4.19 | % | 44.48 | % | | 5.34 | % | 4.00 | % | 47.28 | % | | 5.24 | % | 3.82 | % | 47.36 | % | | 5.07 | % | 3.63 | % | 48.56 | % | | 4.95 | % | 3.58 | % | 48.77 | % | | 4.67 | % | |||||||||||||||||||||||||||||||||||||||||||||
Operating expenses as a % of revenues |
2.16 | % | 33.24 | % | | 3.37 | % | 2.09 | % | 32.97 | % | | 3.30 | % | 2.16 | % | 34.17 | % | | 3.37 | % | 2.13 | % | 35.66 | % | | 3.40 | % | 2.07 | % | 38.14 | % | | 3.25 | % | |||||||||||||||||||||||||||||||||||||||||||||
Operating pre-tax profit as a % of revenues |
2.04 | % | 11.36 | % | | 1.99 | % | 1.93 | % | 14.47 | % | | 1.98 | % | 1.64 | % | 13.41 | % | | 1.72 | % | 1.54 | % | 13.27 | % | | 1.68 | % | 1.56 | % | 11.08 | % | | 1.56 | % |