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McKESSON CORPORATION
FINANCIAL REVIEW (Continued)
38
Weighted Average Diluted Common Shares Outstanding: Diluted earnings per common share was calculated
based on a weighted average number of shares outstanding of 251 million, 263 million and 273 million for 2012,
2011 and 2010. The decreases in the number of weighted average diluted common shares outstanding primarily
reflect the cumulative effect of share repurchases over the past three years, partially offset by the exercise and
settlement of share-based awards.
International Operations
International operations accounted for 8.6%, 8.9% and 8.6% of 2012, 2011 and 2010 consolidated revenues.
International operations are subject to certain risks, including currency fluctuations. We monitor our operations and
adopt strategies responsive to changes in the economic and political environment in each of the countries in which
we operate. Additional information regarding our international operations is also included in Financial Note 22,
“Segments of Business,” to the consolidated financial statements appearing in this Annual Report on Form 10-K.
Business Combinations
On December 30, 2010, we acquired all of the outstanding shares of US Oncology for approximately $2.1
billion, consisting of cash consideration of $0.2 billion, net of cash acquired, and the assumption of liabilities with a
fair value of $1.9 billion. The cash paid at acquisition was funded from cash on hand. As an integrated oncology
company, US Oncology is affiliated with community-based oncologists, and works with patients, hospitals, payers
and the medical industry across all phases of the cancer research and delivery continuum. The acquisition of US
Oncology expands our existing specialty pharmaceutical distribution business and adds practice management
services for oncologists. Financial results for US Oncology have been included in the results of operations within
our Distribution Solutions segment beginning in the fourth quarter of 2011.
On March 25, 2012, we acquired substantially all of the assets of Drug Trading Company Limited, the
independent banner business of the Katz Group Canada Inc. (“Katz Group”), and Medicine Shoppe Canada Inc., the
franchise business of the Katz Group (collectively, “Katz Assets”) for approximately $919 million, net of cash
acquired. The total purchase price is subject to change due to working capital adjustments within 60 days of closing.
The cash paid at acquisition was funded from cash on hand. The acquisition of the assets from the Drug Trading
Company Limited consists of a marketing and purchasing arm of more than 850 independently owned pharmacies in
Canada. The acquisition of Medicine Shoppe Canada Inc. consists of the franchise business of providing services to
more than 160 independent pharmacies in Canada. Financial results for this acquisition were not included in the
results of operations for 2012 as they were not material. These results will be included in the results of operations
within our Canadian pharmaceutical distribution and services, which is part of our Distribution Solutions segment,
beginning in the first quarter of 2013.
In April 2012, we purchased the remaining 50% interest in our corporate headquarters building located in San
Francisco, California, for total cash of $90 million. The cash paid was funded from cash on hand. We previously
held a 50% ownership interest and are the primary tenant in this building. This transaction will be accounted for as
a step acquisition, which requires that we re-measure our previously held 50% interest to fair value and record the
difference between the fair value and carrying value as a gain in the consolidated statements of operations. The re-
measurement to fair value is anticipated to result in a pre-tax gain of approximately $75 million ($46 million after-
tax). The pre-tax gain will be recorded within Corporate in the consolidated statements of operations during the
quarter ending June 30, 2012.
During the last three years, we also completed a number of other smaller acquisitions within both of our
operating segments. Financial results for our business acquisitions have been included in our consolidated financial
statements since their respective acquisition dates. Purchase prices for our business acquisitions have been allocated
based on estimated fair values at the date of acquisition.