McKesson 2010 Annual Report Download - page 50

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McKESSON CORPORATION
FINANCIAL REVIEW (Continued)
44
Net cash used in investing activities was $309 million in 2010 compared to $727 million in 2009 and $5 million
in 2008. Investing activities for 2010 include $199 million and $179 million in capital expenditures for property
acquisitions and capitalized software and the release of $55 million of restricted cash from escrow related to the
AWP litigation settlement payments. Investing activities for 2009 included $358 million of cash payments for
business acquisitions, including the McQueary Brothers acquisition for approximately $190 million. Investing
activities for 2008 benefited from the $962 million release of restricted cash for our Consolidated Securities
Litigation Action. Investing activities included $610 million in 2008 of cash paid for business acquisitions,
including OTN.
Financing activities utilized cash of $421 million in 2010, provided cash of $178 million in 2009 and utilized
cash of $1,470 million in 2008. Financing activities for 2010 include $323 million in cash paid for share
repurchases and $218 million in cash paid on our long-term debt, which primarily consisted of $215 million paid on
the maturity of our 9.13% Series C Senior Notes in March 2010. Financing activities for 2009 include our February
2009 issuance of $350 million of 6.50% notes due 2014 and $350 million of 7.50% notes due 2019. Net proceeds of
$693 million from the issuance of the notes, after discounts and offering expenses, were used by the Company for
general corporate purposes. Financing activities for 2009 were also impacted by $502 million of cash paid for share
repurchases, $116 million of dividends paid and $97 million of cash receipts from employees’ exercises of stock
options.
Financing activities for 2008 included $1.7 billion of cash paid for stock repurchases and $70 million of
dividends paid, partially offset by $354 million of cash receipts from common stock issuances.
The Company’s Board has authorized the repurchase of McKesson’s common stock from time-to-time in open
market transactions, privately negotiated transactions, through accelerated share repurchase programs, or by any
combination of such methods. The timing of any repurchases and the actual number of shares repurchased will
depend on a variety of factors, including our stock price, corporate and regulatory requirements, restrictions under
our debt obligations and other market and economic conditions. This authorization is described in more detail in
Financial Note 19, “Stockholders’ Equity,” to the consolidated financial statements appearing in this Annual Report
on Form 10-K. During 2010, 2009 and 2008, the Company repurchased $299 million, $484 million and
$1,686 million of its common stock at average prices of $41.47, $50.52 and $59.48. As of March 31, 2010,
$531 million remained available for future repurchases under the outstanding April 2008 Board approved share
repurchase plan. In April 2010, the Board authorized the repurchase of up to an additional $1.0 billion of the
Company’s common stock.
In July 2008, the Board authorized the retirement of shares of the Company’s common stock that may be
repurchased from time-to-time pursuant to its stock repurchase program. During the second quarter of 2009, all of
the 4 million repurchased shares, which we purchased for $204 million, were formally retired by the Company. The
retired shares constitute authorized but unissued shares. We elected to allocate any excess of share repurchase price
over par value between additional paid-in capital and retained earnings. As such, $165 million was recorded as a
decrease to retained earnings.
The Company anticipates that it will continue to pay quarterly cash dividends in the future. However, the
payment and amount of future dividends remain within the discretion of the Board and will depend upon the
Company’s future earnings, financial condition, capital requirements and other factors.
Although we believe that our operating cash flow, financial assets, current access to capital and credit markets,
as evidenced by our debt issuance in February 2009, 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.