McKesson 2009 Annual Report Download - page 119

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McKESSON CORPORATION
FINANCIAL NOTES (Continued)
113
We incurred $10 million in 2009 and 2008 and $8 million in 2007 of annual rental expense paid to an equity-
held investment. In addition, in 2007 we purchased $3 million of services from an equity-held investment.
21. Supplemental Cash Flow Information
Years Ended March 31,
(In millions) 2009 2008 2007
Cash paid for:
Interest $ 139 $ 146 $ 100
Income taxes, net of refunds 235 (66) 27
22. Segments of Business
We report our operations in two operating segments: McKesson Distribution Solutions and McKesson
Technology Solutions. The factors for determining the reportable segments included the manner in which
management evaluates the performance of the Company combined with the nature of the individual business
activities. We evaluate the performance of our operating segments based on operating profit before interest expense,
income taxes and results from discontinued operations.
The Distribution Solutions segment distributes ethical and proprietary drugs, medical-surgical supplies and
equipment, and health and beauty care products throughout North America. This segment also provides specialty
pharmaceutical solutions for biotech and pharmaceutical manufacturers, sells pharmacy software and provides
consulting, outsourcing and other services. This segment includes a 49% interest in Nadro, S.A. de C.V. (“Nadro”),
one of the leading pharmaceutical distributors in Mexico and a 39% interest in Parata, which sells automated
pharmaceutical dispensing systems to retail pharmacies.
The Technology Solutions segment delivers enterprise-wide clinical, patient care, financial, supply chain,
strategic management software solutions, pharmacy automation for hospitals, as well as connectivity, outsourcing
and other services, to healthcare organizations. The segment also includes our Payor group of businesses, which
includes our InterQual®, clinical auditing and compliance software businesses and our disease and medical
management programs. The segment’s customers include integrated delivery networks, hospitals, physician
practices, home healthcare providers, retail pharmacies and payors from North America, the United Kingdom,
Ireland, other European countries, Asia Pacific and Israel.
Revenues for our Technology Solutions segment are classified in one of three categories: services, software and
software systems and hardware. Services revenues primarily include fees associated with installing our software
and software systems, as well as revenues associated with software maintenance and support, remote processing,
disease and medical management, and other outsourcing and professional services. Software and software systems
revenues primarily include revenues from licensing our software and software systems, including the segment’s
clinical auditing and compliance and InterQual® businesses.
Our Corporate segment includes expenses associated with Corporate functions and projects, certain employee
benefits and the results of certain joint venture investments. Corporate expenses are allocated to the operating
segments to the extent that these items can be directly attributable to the segment.