McKesson 2012 Annual Report Download - page 52

McKESSON CORPORATION
FINANCIAL REVIEW (Continued)
48
Credit Resources:
We fund our working capital requirements primarily with cash and cash equivalents, as well as, short-term
borrowings under the accounts receivable sales facility, revolving credit facility and from commercial paper
issuances.
Senior Bridge Term Loan Facility
In connection with our execution of an agreement to acquire US Oncology, in November 2010, we entered into
a $2.0 billion unsecured Senior Bridge Term Loan Agreement (“Bridge Loan”). In December 2010, we reduced the
Bridge Loan commitment to $1.0 billion. On January 31, 2011, we borrowed $1.0 billion under the Bridge Loan.
On February 28, 2011, we repaid the funds obtained under the Bridge Loan with long-term debt, as further described
below, and the Senior Bridge Term Loan Agreement was terminated. During the time it was outstanding, the Bridge
Loan bore interest of 1.76%, which was based on the London Interbank Offered Rate plus a margin based on the
Company’s credit rating. Bridge Loan fees in 2011 of $25 million were included in interest expense.
US Oncology Debt Acquired
Upon our purchase of US Oncology in December 2010, we assumed the outstanding debt of US Oncology
Holdings, Inc. and its wholly-owned subsidiary US Oncology, Inc. Immediately prior to our acquisition, US
Oncology Holdings, Inc. called for redemption all of its outstanding Senior Unsecured Floating Rate Toggle Notes
due 2012, and US Oncology, Inc. called for redemption all of its outstanding 9.125% Senior Secured Notes due
2017 and 10.75% Senior Subordinated Notes due 2014. In the fourth quarter of 2011, we paid interest of $50
million and redeemed these notes, including the remaining accrued interest, for $1,738 million using cash on hand
and borrowings under our Bridge Loan.
Long-Term Debt
On February 28, 2011, we issued 3.25% notes due March 1, 2016 in an aggregate principal amount of
$600 million, 4.75% notes due March 1, 2021 in an aggregate principal amount of $600 million and 6.00% notes
due March 1, 2041 in an aggregate principal amount of $500 million. Interest is payable on March 1 and September
1 of each year beginning on September 1, 2011. We utilized net proceeds, after discounts and offering expenses, of
$1,673 million from the issuance of these notes for general corporate purposes, including the repayment of
borrowings under the Bridge Loan.
We repaid our $400 million 7.75% Notes in February 2012 and our $215 million 9.13% Series C Senior notes
in March 2010, both of which had matured.
Accounts Receivable Sales Facility
In May 2011, we renewed our existing accounts receivable sales facility for a one year period under terms
substantially similar to those previously in place. The committed capacity of this facility is $1.35 billion, although,
from time-to-time, the available amount of this facility may be less than $1.35 billion based on accounts receivable
concentration limits and other eligibility requirements. During 2012, we borrowed $400 million under this facility.
There were no borrowings in 2011 under this facility. At March 31, 2012, there were $400 million in secured
borrowings and $400 million of related securitized accounts receivable outstanding, which are included in short-
term borrowings and receivables in the consolidated balance sheets, under this facility. At March 31, 2011 there
were no secured borrowings or related securitized accounts receivables outstanding under this facility. The current
accounts receivable sales facility will expire in May 2012. We anticipate renewing this facility before its expiration.
Additional information regarding our accounts receivable sales facility is included in Financial Notes 1 and 12,
“Significant Accounting Policies” and “Debt and Financing Activities,” to the consolidated financial statements
appearing in this Annual Report on Form 10-K.