McKesson 2009 Annual Report Download - page 51

McKESSON CORPORATION
FINANCIAL REVIEW (Continued)
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FINANCIAL CONDITION, LIQUIDITY, AND CAPITAL RESOURCES
We expect our available cash generated from operations, together with our existing sources of liquidity from
our accounts receivable sales facility and short-term borrowings under the revolving credit facility and commercial
paper, will be sufficient to fund our long-term and short-term capital expenditures, working capital and other cash
requirements. In addition, from time to time, we may access the long-term debt capital markets to discharge our
other liabilities.
Net cash flow from operating activities was $1,351 million in 2009, compared with $869 million in 2008 and
$1,539 million in 2007. Operating activities for 2009 include a non-cash charge of $493 million and the related
income tax benefit of $182 million for the AWP Litigation. Operating activities for 2009 reflect an increase in
receivables primarily associated with our revenue growth as well as longer payment terms for customers and
improvement in our net financial inventory (inventory, net of accounts payable). Cash flows from operations can
also be significantly impacted by factors such as the timing of receipts from customers and payments to vendors.
Operating activities for 2008 were affected by a use of cash of $962 million due to the release of restricted cash
for our Consolidated Securities Litigation Action. In addition, operating activities in 2008 reflect changes in our
working capital accounts due to revenue growth.
Operating activities for 2007 benefited from improved accounts receivable management, reflecting changes in
our customer mix, our termination of a customer contract and an increase in accounts payable associated with
improved payment terms. These benefits were partially offset by increases in inventory needed to support our
growth and timing of inventory receipts. Operating activities for 2007 also include payments of $25 million for the
settlements of Securities Litigation cases.
Net cash used in investing activities was $727 million in 2009, compared with $5 million in 2008 and $2,108
million in 2007. Investing activities for 2009 include $358 million of cash payments for business acquisitions,
including the McQueary Brothers acquisition for approximately $190 million. Investing activities for 2008
benefited from the $962 million release of restricted cash for our Consolidated Securities Litigation Action.
Investing activities include $610 million in 2008 of cash paid for business acquisitions, including OTN. Investing
activities for 2007 reflect $1,938 million of cash paid for our business acquisitions (including $1.8 billion for Per-
Se). Investing activities for 2007 also reflect $179 million of cash proceeds from the sale of various businesses,
including net cash proceeds of $160 million for the sale of our Acute Care business.
Financing activities provided cash of $178 million in 2009, utilized cash of $1,470 million in 2008 and provided
cash of $379 million in 2007. Financing activities for 2009 include our February 2009 issuance of $350 million of
6.50% notes due 2014 and $350 million of 7.50% notes due 2019. Net proceeds of $699 million from the issuance
of the notes, after offering expenses, will be used by the Company for general corporate purposes. Financing
activities for 2009 were also impacted by $502 million of cash paid for share repurchases, $116 million of dividends
paid and $97 million of cash receipts from employees’ exercises of stock options.
Financing activities for 2008 include $1.7 billion of cash paid for stock repurchases and $70 million of
dividends paid, partially offset by $354 million of cash receipts from common stock issuances.