McKesson 2006 Annual Report Download - page 89

McKESSON CORPORATION
FINANCIAL NOTES (Continued)
Environmental Matters
Primarily as a result of the operation of our former chemical businesses, which were fully divested by 1987, we are involved in various
matters pursuant to environmental laws and regulations. We have received claims and demands from governmental agencies relating to
investigative and remedial actions purportedly required to address environmental conditions alleged to exist at six sites where we, or entities
acquired by us, formerly conducted operations and we, by administrative order or otherwise, have agreed to take certain actions at those sites,
including soil and groundwater remediation. In addition, we are one of multiple recipients of a New Jersey Department of Environmental
Protection Agency directive and a separate United States Environmental Protection Agency directive relating to potential natural resources
damages (“NRD”) associated with one of these six sites. Although the Company’s potential allocation under either directive cannot be
determined at this time, we have agreed to participate with a potentially responsible party (“PRP”) group in the funding of an NRD assessment,
the costs of which are reflected in the aggregate estimates set forth below.
Based on a determination by our environmental staff, in consultation with outside environmental specialists and counsel, the current
estimate of reasonably possible remediation costs for these six sites is $10 million, net of approximately $2 million that third parties have
agreed to pay in settlement or we expect, based either on agreements or nonrefundable contributions which are ongoing, to be contributed by
third parties. The $10 million is expected to be paid out between April 2006 and March of 2035. Our estimated liability for these environmental
matters has been accrued in the accompanying balance sheets.
In addition, we have been designated as a PRP under the Comprehensive Environmental Compensation and Liability Act of 1980 (as
amended, the “Superfund” law or its state law equivalent) for environmental assessment and cleanup costs as the result of our alleged disposal
of hazardous substances at 28 sites. With respect to each of these sites, numerous other PRPs have similarly been designated and, while the
current state of the law potentially imposes joint and several liability upon PRPs, as a practical matter costs of these sites are typically shared
with other PRPs. Our estimated liability at those 28 sites is approximately $2 million. The aggregate settlements and costs paid by us in
Superfund matters to date have not been significant. The accompanying consolidated balance sheets include this environmental liability.
The potential costs to us related to environmental matters are uncertain due to such factors as: the unknown magnitude of possible pollution
and cleanup costs; the complexity and evolving nature of governmental laws and regulations and their interpretations, the timing, varying costs
and effectiveness of alternative cleanup technologies; the determination of our liability in proportion to that of other PRPs; and the extent, if
any, to which such costs are recoverable from insurance or other parties.
While it is not possible to determine with certainty the ultimate outcome or the duration of any of the litigation or governmental proceedings
discussed under this section II, “Other Litigation and Claims”, we believe based on current knowledge and the advice of our counsel that such
litigation and proceedings will not have a material adverse effect on our financial position, results of operations or cash flows.
19. Stockholders’ Equity
Each share of the Company’s outstanding common stock is permitted one vote on proposals presented to stockholders and is entitled to
share equally in any dividends declared by the Company’s Board of Directors (“Board”).
The Board approved share repurchase plans in October 2003, August 2005, December 2005 and January 2006. The plans permitted the
Company to repurchase up to a total of $1 billion ($250 million per plan) of the Company’s common stock. Under these plans, we repurchased
19 million shares for $958 million during 2006, made no repurchases in 2005 and repurchased 5 million shares for $157 million in 2004. As a
result of these repurchases, less than $1 million of the plans remain available. Repurchased shares will be used to support our stock-based
employee compensation plans and for other general corporate purposes. Stock repurchases may be made in open market or private transactions.
In April 2006, the Board approved an additional share repurchase plan of up to $500 million of the Company’s common stock.
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