McKesson 2009 Annual Report Download - page 97

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McKESSON CORPORATION
FINANCIAL NOTES (Continued)
91
The following table summarizes the activity related to our gross unrecognized tax benefits for the two years
ended March 31, 2009
(In millions)
Unrecognized
Tax Benefits
Balance at March 31, 2007 $ 465
Additions based on tax positions related to current year 58
Reductions based on settlements (27)
Balance at March 31, 2008 496
Additions based on tax positions related to prior years 77
Additions based on tax positions related to current year 61
Reductions based on settlements (41)
Reductions based on the lapse of the applicable statutes of limitations (67)
Balance at March 31, 2009 $ 526
Of the total $526 million in unrecognized tax benefits at March 31, 2009, $325 million would reduce income
tax expense and the effective tax rate if recognized. During the next twelve months, it is reasonably possible that
audit resolutions and the expiration of statutes of limitations could potentially reduce our unrecognized tax benefits
by up to $27 million. However, this amount may change because we continue to have ongoing negotiations with
various taxing authorities throughout the year.
We continue to report interest and penalties on tax deficiencies as income tax expense. At March 31, 2009,
before any tax benefits, our accrued interest on unrecognized tax benefits amounted to $101 million. We recognized
an income tax benefit of $29 million, before any tax effect, related to interest in our consolidated statements of
operations during 2009. We have no material amounts accrued for penalties.
7. Discontinued Operations
Results from discontinued operations were as follows:
Years Ended March 31, (1)
(In millions) 2008 2007
Income (loss) from discontinued operations
Acute Care $ 1 $ (9)
Other 1 -
Income taxes (1) 4
Total $ 1 $ (5)
Loss on sales of discontinued operations
Acute Care $ - $ (49)
Other - 10
Income taxes - (11)
Total $ - $ (50)
Discontinued operations, net of taxes
Acute Care $ 1 $ (66)
Other - 11
Total $ 1 $ (55)
(1) No charges for discontinued operations were incurred during 2009.
In 2007, we sold our Distribution Solutions segment’s Medical-Surgical Acute Care business to Owens &
Minor, Inc. (“OMI”) for net cash proceeds of approximately $160 million. Revenues associated with the Acute Care
business prior to its disposition were $597 million for 2007.