McKesson 2009 Annual Report Download - page 39

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McKESSON CORPORATION
FINANCIAL REVIEW (Continued)
33
Over the last three years, we recorded the following reduction in workforce and restructuring charges:
Years Ended March 31,
(In millions) 2009 2008 2007
Reduction in workforce charges (1)
Distribution Solutions $ 7 $ - $ -
Technology Solutions 25 8 -
Total 32 8 -
Restructuring charges (credits)
Distribution Solutions (2) 4 8 2
Technology Solutions (3) (4) (2) 9 13
Corporate (1) 2 -
Total 1 19 15
Total reduction in workforce and restructuring charges $ 33 $ 27 $ 15
Cost of sales (5) $ 5 $ 7 $ -
Operating expenses 28 20 15
Total reduction in workforce and restructuring charges $ 33 $ 27 $ 15
(1) Although reductions in workforce actions do not constitute a restructuring plan (as defined under U.S. generally accepted
accounting principles (“GAAP,”)) they do represent independent actions taken from time to time, as appropriate.
(2) In 2008, we incurred $4 million of severance costs associated with the closure of two facilities and $1 million and $3 million
of severance and asset impairments associated with the integration of OTN.
(3) In 2008, we incurred $5 million of severance and exit-related costs and a $4 million asset impairment charge for the write-
off of capitalized software costs associated with the termination of a software project.
(4) Expenses for 2007 primarily consisted of $8 million for employee severance costs associated with the reallocation of
product development and marketing resources and the realignment of an international business within our Technology
Solutions segment.
(5) Amounts recorded to cost of sales pertain solely to our Technology Solutions segment.
Up to 2009, we have provided contributions for our profit sharing investment plan (“PSIP”) for U.S. employees
primarily through a leveraged employee stock ownership plan (“ESOP”). In 2008 and 2007, we granted 1 million
shares per year to plan participants. ESOP expense and other contribution expense, including interest expense on
ESOP debt, was $53 million, $13 million and $13 million in 2009, 2008 and 2007. ESOP expense for 2008 and
2007 was significantly lower than 2009 due to the utilization of lower cost basis shares in the ESOP to fund the
Company’s matching contributions. At March 31, 2009, almost all of the 24 million common shares in the ESOP
had been allocated to plan participants. As a result, we will need to fund most of our future PSIP contributions with
cash or treasury shares.
As previously reported on the PSIP’s Annual Report on Form 11-K for the year ended March 31, 2008, the
PSIP is a member of the settlement class in the Consolidated Securities Litigation Action (refer to Financial Note 18,
“Other Commitments and Contingent Liabilities,” to the consolidated financial statements appearing in this Annual
Report on Form 10-K). On April 27, 2009, the court issued an order approving the distribution of the settlement
funds. At this time, we do not know the date on which the distribution of settlement funds to the PSIP will occur.