McKesson 2009 Annual Report Download - page 41

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McKESSON CORPORATION
FINANCIAL REVIEW (Continued)
35
In 2009, we also recorded a pre-tax impairment of $5 million ($5 million after-tax) on another equity-held
investment within our Distribution Solutions segment.
Segment Operating Profit and Corporate Expenses:
Years Ended March 31,
(Dollars in millions) 2009 2008 2007
Segment Operating Profit
Distribution Solutions (1) $ 1,158 $ 1,483 $ 1,395
Technology Solutions 334 319 206
Subtotal 1,492 1,802 1,601
Corporate Expenses, net (284) (208) (211)
Securities Litigation credits, net - 5 6
Interest Expense (144) (142) (99)
Income from Continuing Operations Before Income
Taxes $ 1,064 $ 1,457 $ 1,297
Segment Operating Profit Margin
Distribution Solutions 1.12% 1.50% 1.54%
Technology Solutions 10.90 10.69 9.20
(1) Operating profit for 2009 for our Distribution Solutions segment includes the $493 million pre-tax AWP Litigation charge,
$63 million of pre-tax charges to write-down two equity-held investments and a $24 million pre-tax gain on the sale of our
equity investment in Verispan.
Segment operating profit includes gross profit, net of operating expenses, and other income for our two
operating segments.
In 2009, operating profit margin in our Distribution Solutions segment decreased compared with 2008 primarily
reflecting an increase in operating expenses as a percentage of revenues and a decrease in other income, partially
offset by a higher gross profit margin. Operating profit in 2009 included the $493 million AWP Litigation charge,
$63 million of pre-tax charges to write-down two equity-held investments and a $24 million pre-tax gain on the sale
of the segment’s 42% equity investment in Verispan. In 2008, operating profit margin in our Distribution Solutions
segment decreased slightly compared with 2007 primarily reflecting higher operating expenses as a percentage of
revenues, partially offset by an improved gross profit margin.
Operating profit margin in our Technology Solutions segment increased over the last two years primarily due to
a decrease in operating expenses as a percentage of revenues, partially offset by a decrease in gross profit margin.
Operating profit margin for this segment has benefited from cost containment efforts.
Corporate expenses, net of other income, increased in 2009 compared with 2008 primarily due to a decrease in
interest income and an increase in operating expenses. Corporate expenses, net of other income, decreased in 2008
compared with 2007 primarily due to a decrease in operating expenses, partially offset by a decrease in interest
income.
Securities Litigation Credits, Net: In 2008 and 2007, we recorded net credits of $5 million and $6 million
relating to various settlements for our Securities Litigation. Recent developments pertaining to our Securities
Litigation are described in Financial Note 18, “Other Commitments and Contingent Liabilities,” to the
accompanying consolidated financial statements.