McKesson 2012 Annual Report Download - page 40

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McKESSON CORPORATION
FINANCIAL REVIEW (Continued)
36
Other Income, Net:
Years Ended March 31, Change
(Dollars in millions) 2012 2011 2010 2012 2011
Other Income, Net
Distribution Solutions $ 16 $ 5 $ 29 220% (83)%
Technology Solutions 5 4 5 25 (20)
Corporate — 27 9 (100) 200
Total $ 21 $ 36 $ 43 (42) (16)
In 2011, other income, net included the receipt of $16 million representing the reimbursement of post-
acquisition interest expense by the former shareholders of US Oncology, which is recorded in Corporate. In 2010,
other income, net included a $17 million pre-tax gain ($14 million after-tax) from the sale of our 50% equity interest
in MLS. The gain on sale of our investment in MLS was recorded within our Distribution Solutions segment.
Segment Operating Profit and Corporate Expenses:
Years Ended March 31, Change
(Dollars in millions) 2012 2011 2010 2012 2011
Segment Operating Profit
(
1
)
Distribution Solutions
(
2
)
$ 2,219 $ 1,897 $ 1,988 17% (5)%
Technology Solutions 364 301 385 21 (22)
Subtotal 2,583 2,198 2,373 18 (7)
Corporate Expenses, Net (413) (341) (342) 21 —
Litigation Credit, Net — — 20 — —
Interest Expense (251) (222) (187) 13 19
Income from Continuing Operations Before
Income Taxes $ 1,919 $ 1,635 $ 1,864 17 (12)
Segment Operating Profit Margin
Distribution Solutions 1.86% 1.74% 1.88% 12bp (14)bp
Technology Solutions 11.00 9.42 12.32 158 (290)
(1) Segment operating profit includes gross profit, net of operating expenses, plus other income, net for our two operating
segments.
(2) Operating expenses for 2012 and 2011 for our Distribution Solutions segment included $149 million and $213 million of
AWP litigation charges.
Operating profit margin for our Distribution Solutions segment increased in 2012 compared to 2011 primarily
due to higher gross profit margin, which included a full year of results from US Oncology, and lower operating
expenses as a percentage of revenues, which included a lower AWP litigation charge. Operating profit margin for
our Distribution Solutions segment decreased in 2011 compared to 2010 primarily due to higher operating expenses
as a percentage of revenue, including a $213 million AWP litigation charge, partially offset by a higher gross profit
margin, which included the receipt of $51 million representing our share of an antitrust class action lawsuit brought
against a drug manufacturer.
Operating profit margin in our Technology Solutions segment increased in 2012 compared to 2011 primarily
reflecting an increase in gross profit margin, partially offset by an increase in operating expenses as a percentage of
revenues. Operating profit margin in our Technology Solutions segment decreased in 2011 compared to 2010
primarily reflecting a decrease in gross profit margin, which included the $72 million asset impairment charge, and
an increase in operating expenses as a percentage of revenues.