McKesson 2010 Annual Report Download - page 27

McKESSON CORPORATION
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Tax legislation initiatives or challenges to our tax positions could have a material adverse impact on our results
of operations.
We are a large multinational corporation with operations in the United States and international jurisdictions. As
such, we are subject to the tax laws and regulations of the United States federal, state and local governments and of
many international jurisdictions. From time-to-time, various legislative initiatives may be proposed that could
adversely affect our tax positions. There can be no assurance that our effective tax rate will not be adversely
affected by these initiatives. In addition, United States federal, state and local, as well as international, tax laws and
regulations are extremely complex and subject to varying interpretations. Although we believe that our historical
tax positions are sound and consistent with applicable laws, regulations and existing precedent, there can be no
assurance that these tax positions will not be challenged by relevant tax authorities or that we would be successful in
any such challenge.
Our business could be hindered if we are unable to complete and integrate acquisitions successfully.
An element of our strategy is to identify, pursue and consummate acquisitions that either expand or complement
our business. Integration of acquisitions involves a number of risks including the diversion of management’s
attention to the assimilation of the operations of businesses we have acquired; difficulties in the integration of
operations and systems; the realization of potential operating synergies; the assimilation and retention of the
personnel of the acquired companies; accounting, regulatory or compliance issues that could arise, including internal
control over financial reporting; challenges in retaining the customers of the combined businesses and a potential
material adverse impact on operating results. In addition, we may potentially require additional financing in order to
fund future acquisitions, which may or may not be attainable. If we are unable to successfully complete and
integrate strategic acquisitions in a timely manner, our business and our growth strategies could be negatively
affected.
Continued volatility and disruption to the global capital and credit markets may adversely affect our ability to
access credit, our cost of credit and the financial soundness of our customers and suppliers.
Volatility and disruption in the global capital and credit markets, including the bankruptcy or restructuring of
certain financial institutions, reduced lending activity by other financial institutions, decreased liquidity and
increased costs in the commercial paper market and the reduced market for securitizations, may adversely affect the
availability and cost of credit already arranged and the availability, terms and cost of credit in the future, including
any arrangements to renew or replace our current credit or financing arrangements. Although we believe that our
operating cash flow, financial assets, current access to capital and credit markets, including our existing credit and
sales facilities, will give us the ability to meet our financing needs for the foreseeable future, there can be no
assurance that continued or increased volatility and disruption in the global capital and credit markets will not impair
our liquidity or increase our costs of borrowing.
Our $1.1 billion accounts receivable sales facility is generally renewed annually and will expire in mid-May
2010. Although we did not use this facility in 2010, we have historically used it to fund working capital
requirements, as needed. We anticipate renewing this facility before its expiration. If our use of the current
accounts receivable sales facility is characterized as a secured borrowing rather than a sale for U.S. GAAP purposes
under accounting pronouncements that will become effective for us in 2011, we may be required to consider the
funds obtained by us under this facility and the related liens in the covenant compliance calculations for certain of
our other financing arrangements. Although we believe we will be able to renew this facility, there is no assurance
that we will be able to do so.
Our business could also be negatively impacted if our customers or suppliers experience disruptions resulting
from tighter capital and credit markets or a slowdown in the general economy. As a result, customers may modify,
delay or cancel plans to purchase or implement our products or services and suppliers may increase their prices,
reduce their output or change their terms of sale. Additionally, if customers’ or suppliers’ operating and financial
performance deteriorates or if they are unable to make scheduled payments or obtain credit, customers may not be
able to pay, or may delay payment of accounts receivable owed to us and suppliers may restrict credit, impose
different payment terms or be unable to make payments due to us for fees, returned products or incentives. Any
inability of customers to pay us for our products and services or any demands by suppliers for different payment
terms may have a material adverse impact on our results of operations and cash flow.