McKesson 2010 Annual Report Download - page 53

McKESSON CORPORATION
FINANCIAL REVIEW (Continued)
47
Credit Resources:
We fund our working capital requirements primarily with cash and cash equivalents, our accounts receivable
sales facility, short-term borrowings under the revolving credit facility and commercial paper.
Long-Term Debt
In March 2010, we repaid our $215 million 9.13% Series C Senior notes, which had matured.
On February 12, 2009, we issued 6.50% notes due February 15, 2014, (the “2014 Notes”) in an aggregate
principal amount of $350 million and 7.50% notes due February 15, 2019, (the “2019 Notes”) in an aggregate
principal amount of $350 million. Interest is payable on February 15 and August 15 of each year beginning on
August 15, 2009. The 2014 Notes will mature on February 15, 2014 and the 2019 Notes will mature on February
15, 2019. We utilized net proceeds, after discounts and offering expenses, of $693 million from the issuance of the
2014 Notes and 2019 Notes for general corporate purposes.
Our senior debt credit ratings from S&P, Fitch, and Moody’s are currently A-, BBB+ and Baa3, and our
commercial paper ratings are currently A-2, F-2 and P-3. Our ratings outlook is stable with S&P, Fitch, and
Moody’s.
Accounts Receivable Sales Facility
In May 2009, we renewed our accounts receivable sales facility for an additional one-year period under terms
similar to those previously in place. The renewed facility will expire in mid-May 2010. Based on our existing
accounts receivable sales facility agreement, we anticipate that activity under this facility may, for U.S. GAAP
purposes, be considered as a secured borrowing rather than a sale under accounting standards that will become
effective for us on April 1, 2010. We anticipate renewing this facility before its expiration. The aggregate
commitment of the purchasers under this facility is $1.1 billion, although from time-to-time, the available amount
may be less than that amount based on concentration limits and receivable eligibility requirements.
Through this facility, McKesson Corporation, the parent company, sells certain U.S. pharmaceutical trade
accounts receivable on a non-recourse basis to a wholly-owned and consolidated subsidiary, which then sells these
receivables to a special purpose entity (“SPE”), which is a wholly-owned, bankruptcy-remote subsidiary of
McKesson Corporation that is consolidated in our financial statements. This SPE then sells undivided interests in
the receivables to third-party purchaser groups, each of which includes commercial paper conduits, which are
special purpose legal entities administered by financial institutions.
Additional information regarding our accounts receivable sales facility is included in Financial Notes 1 and 12,
“Significant Accounting Policies” and “Long-Term Debt and Other Financing,” to the consolidated financial
statements appearing in this Annual Report on Form 10-K.
Revolving Credit Facility
We have a syndicated $1.3 billion five-year senior unsecured revolving credit facility, which expires in June
2012. Borrowings under this credit facility bear interest based upon either a Prime rate or the London Interbank
Offering Rate. There were no borrowings under this facility in 2010 and $279 million for 2009. As of
March 31, 2010 and 2009, there were no amounts outstanding under this facility.