McKesson 2005 Annual Report Download - page 36

McKESSON CORPORATION
FINANCIAL REVIEW (Continued)
Acquisitions and Investments
We made the following acquisitions and investments:
During the last three years we also completed several smaller acquisitions and investments within all three of our operating segments.
Purchase prices have been allocated based on estimated fair values at the date of acquisition and may be subject to change. Pro forma results of
operations for our business acquisitions have not been presented because the effects were not material to the consolidated financial statements
on either an individual or aggregate basis.
2006 Outlook
Information regarding the Company’s 2006 outlook, including business risks and opportunities, is contained in our Form 8-K dated May 5,
2005. This Form 8-K should be read in conjunction with the sections “Factors Affecting Forward-looking Statements” and “Additional Factors
That May Affect Future Results” included in this Financial Review.
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- In 2005, we invested $32.7 million in return for a 79.7% interest in Pahema, S.A. de C.V. (“Pahema”), a Mexican holding company. Two
additional investors, owners of approximately 30% of the outstanding shares of Nadro S.A. de C.V. (“Nadro”) (collectively, “investors”),
contributed $9.6 million for the remaining interest in Pahema. In December 2004, Pahema completed a 6.50 Mexican Pesos per share, or
approximately $164 million, tender offer for approximately 284 million shares (or approximately 46%) of the outstanding publicly held
shares of common stock of Nadro. Pahema financed the tender offer utilizing the cash contributed by us and the investors, and borrowings
totaling 1.375 billion Mexican Pesos, in the form of two notes with Mexican financial institutions. Subsequently, the common stock of
Pahema was exchanged for common stock of Nadro, resulting in the merger of the two companies. As a result, we currently own
approximately 49% of Nadro. Prior to the tender offer, we owned approximately 22% of the outstanding common shares of Nadro. We
continue to utilize the equity method in accounting for our investment in Nadro.
- In the first quarter of 2005, we acquired all of the issued and outstanding shares of Moore Medical Corp. (“MMC”), of New Britain,
Connecticut, for an aggregate cash purchase price of approximately $37 million. MMC is an Internet-enabled, multi-channel marketer and
distributor of medical-surgical and pharmaceutical products to non-hospital provider settings. Approximately $19 million of the purchase
price has been assigned to goodwill, none of which is deductible for tax purposes. The results of MMC’s operations have been included in
the consolidated financial statements within our Medical-Surgical Solutions segment since the acquisition date.
- In 2003, we acquired the outstanding stock of A.L.I. Technologies Inc. (“A.L.I.”) for an aggregate cash purchase price of $347.0 million.
A.L.I. provides digital medical imaging solutions, which are designed to streamline access to diagnostic information, automate clinical
workflow and eliminate the need for film purchase and storage. The acquisition of A.L.I. complemented our Horizon Clinicals™ offering by
incorporating medical images into a computerized patient record. Approximately $328 million of A.L.I.’s purchase price was assigned to
goodwill, none of which is deductible for tax purposes. The aggregate purchase price was financed through cash and short-term borrowings.
The results of A.L.I.’s operations have been included in the consolidated financial statements within our Provider Technologies segment
since its acquisition date.
- In 2003, we purchased the remaining interest in an investment of our Pharmaceutical Solutions segment for approximately $32 million,
retained a small portion of the business and subsequently sold the balance for approximately $40 million, the proceeds of which consisted of
an interest bearing ten-year note receivable, resulting in a nominal loss.