McKesson 2006 Annual Report Download - page 74

McKESSON CORPORATION
FINANCIAL NOTES (Continued)
Amortization expense of intangible assets was $28 million, $24 million and $21 million for 2006, 2005 and 2004. The weighted average
remaining amortization period for customer lists, technology, and trademarks and intangible assets at March 31, 2006 was: 9 years, 3 years and
3 years. Estimated future annual amortization expense of these assets is as follows: $33 million, $22 million, $12 million, $7 million and
$6 million for 2007 through 2011, and $28 million thereafter. At March 31, 2006, there were $20 million of intangible assets not subject to
amortization.
11. Long-Term Debt and Other Financing
Convertible Junior Subordinated Debentures
In February 1997, we issued 5% Convertible Junior Subordinated Debentures (the “Debentures”) in an aggregate principal amount of
$206 million. The Debentures were purchased by McKesson Financing Trust (the “Trust”) with proceeds from its issuance of four million
shares of preferred securities to the public and 123,720 common securities to us. The Debentures represented the sole assets of the Trust and
bore interest at an annual rate of 5%, payable quarterly. These preferred securities of the Trust were convertible into our common stock at the
holder’s option.
Holders of the preferred securities were entitled to cumulative cash distributions at an annual rate of 5% of the liquidation amount of $50 per
security. Each preferred security was convertible at the rate of 1.3418 shares of our common stock, subject to adjustment in certain
circumstances. The preferred securities were to be redeemed upon repayment of the Debentures and were callable by us on or after March 4,
2000, in whole or in part, initially at 103.5% of the liquidation preference per share, and thereafter at prices declining at 0.5% per annum to
100% of the liquidation preference on and after March 4, 2007 plus, in each case, accumulated, accrued and unpaid distributions, if any, to the
redemption date.
During the first quarter of 2006, we called for the redemption of the Debentures, which resulted in the exchange of the preferred securities
for 5 million shares of our newly issued common stock.
Other Financing
We have a $1.3 billion five-year, senior unsecured revolving credit facility that expires in September 2009. Borrowings under this credit
facility bear interest at a fixed base rate, a floating rate based on the London Interbank Offering Rate (“LIBOR”) or a Eurodollar rate. We also
have a $1.4 billion accounts receivable sales facility, which was renewed in June 2005, with terms substantially similar to those previously in
place. This renewed facility is currently scheduled to expire in June 2006. No amounts were utilized or outstanding under any of these facilities
at March 31, 2006 and 2005.
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March 31,
(In millions) 2006 2005
8.95% Series B Senior Notes due February, 2007 $ 20 $ 20
9.13% Series C Senior Notes due February, 2010 215 215
6.40% Notes due March, 2008 150 150
7.75% Notes due February, 2012 399 399
7.65% Debentures due March, 2027 175 175
5.00% Convertible Junior Subordinated Debentures due June 2027 — 206
ESOP related debt (see Financial Note 14) 25 36
Other 7 10
Total debt 991 1,211
Less current portion 26 9
Total long-term debt $965 $1,202