McKesson 2009 Annual Report Download - page 66

McKESSON CORPORATION
FINANCIAL REVIEW (Continued)
60
Our operating results and our financial condition may be adversely affected by foreign operations.
We have operations based in foreign countries, including Canada, the United Kingdom, other European
countries, Asia Pacific and Israel and we have a large investment in Mexico. In the future, we look to continue to
grow our foreign operations both organically and through acquisitions and investments; however, increasing our
foreign operations carries additional risks. Operations outside of the United States may be affected by changes in
trade protection laws, policies, measures and other regulatory requirements affecting trade and investment;
unexpected changes in regulatory requirements for software, social, political, labor or economic conditions in a
specific country or region; import/export regulations in both the United States and foreign countries and difficulties
in staffing and managing foreign operations. Political changes and natural disasters, some of which may be
disruptive, can interfere with our supply chain, our customers and all of our activities in a particular location.
Additionally, foreign operations expose us to foreign currency fluctuations that could adversely impact our results of
operations based on the movements of the applicable foreign currency exchange rates in relation to the U.S. dollar.
Tax legislation initiatives or challenges to our tax positions could adversely affect our net earnings.
We are a large multinational corporation with operations in the United States and international jurisdictions. As
such, we are subject to the tax laws and regulations of the United States federal, state and local governments and of
many international jurisdictions. From time to time, various legislative initiatives may be proposed that could
adversely affect our tax positions. There can be no assurance that our effective tax rate will not be adversely
affected by these initiatives. In addition, United States federal, state and local, as well as international, tax laws and
regulations are extremely complex and subject to varying interpretations. Although we believe that our historical
tax positions are sound and consistent with applicable laws, regulations and existing precedent, there can be no
assurance that these tax positions will not be challenged by relevant tax authorities or that we would be successful in
any such challenge.
Our business could be hindered if we are unable to complete and integrate acquisitions successfully.
An element of our strategy is to identify, pursue and consummate acquisitions that either expand or complement
our business. Integration of acquisitions involves a number of risks including the diversion of management’s
attention to the assimilation of the operations of businesses we have acquired, difficulties in the integration of
operations and systems, the realization of potential operating synergies, the assimilation and retention of the
personnel of the acquired companies, challenges in retaining the customers of the combined businesses and potential
adverse effects on operating results. In addition, we may potentially require additional financing in order to fund
future acquisitions, which may or may not be attainable. If we are unable to successfully complete and integrate
strategic acquisitions in a timely manner, our business and our growth strategies could be negatively affected.
Continued volatility and disruption to the global capital and credit markets may adversely affect our ability
to access credit, our cost of credit and the financial soundness of our customers and suppliers.
Recent volatility and disruption in the global capital and credit markets, including the bankruptcy or
restructuring of certain financial institutions, reduced lending activity by other financial institutions, decreased
liquidity and increased costs in the commercial paper market and the reduced market for securitizations, may
adversely affect the availability and cost of credit already arranged and the availability, terms and cost of credit in
the future, including any arrangements to renew or replace our current credit or financing arrangements. Although
we believe that our operating cash flow, financial assets, current access to capital and credit markets, including our
existing credit and sales facilities, will give us the ability to meet our financing needs for the foreseeable future,
there can be no assurance that continued or increased volatility and disruption in the global capital and credit
markets will not impair our liquidity or increase our costs of borrowing.