McKesson 2011 Annual Report Download - page 106

McKESSON CORPORATION
FINANCIAL NOTES (Continued)
100
As previously reported, on January 26, 2007, the Company acquired Per-Se Technologies, Inc. (“Per-Se”),
which became a wholly-owned subsidiary. Prior to its acquisition, Per-Se had publicly disclosed that in
December 2004, the SEC issued a formal order of investigation relating to accounting matters at NDC, a then public
company, which was acquired by Per-Se in January 2006, prior to the Company’s acquisition of Per-Se. In
March 2005, NDC restated its financial statements for the fiscal years ended May 28, 2004, May 30, 2003 and
May 31, 2002, and for the fiscal quarters ended August 22, 2004, and August 29, 2005, to correct errors relating to
certain accounting matters. NDC produced documents to the SEC and fully cooperated with the SEC in its
investigation. The SEC has taken testimony from a number of current and former NDC employees. There has been
no activity in this matter for some time and the SEC has taken no action against NDC or its successor to date.
Prior to its recent acquisition by the Company, US Oncology was informed that the United States Federal Trade
Commission (“FTC”) and the Attorney General for the State of Texas had opened investigations to determine
whether a transaction in which certain Austin, Texas based oncology physicians became employees of an existing
Texas US Oncology affiliated oncology practice group violated relevant state or federal antitrust laws. US Oncology
has responded to requests for information from the government agencies and the Company has continued to
cooperate with the FTC and the Texas Attorney General regarding these investigations.
IV. Environmental Matters
Primarily as a result of the operation of the Company’s former chemical businesses, which were fully divested
by 1987, the Company is involved in various matters pursuant to environmental laws and regulations. The Company
has received claims and demands from governmental agencies relating to investigative and remedial actions
purportedly required to address environmental conditions alleged to exist at eight sites where it, or entities acquired
by it, formerly conducted operations and the Company, by administrative order or otherwise, has agreed to take
certain actions at those sites, including soil and groundwater remediation. In addition, the Company is one of
multiple recipients of a New Jersey Department of Environmental Protection Agency directive and a separate United
States Environmental Protection Agency directive relating to potential natural resources damages (“NRD”)
associated with one of these eight sites. Although the Company’s potential allocation under either directive cannot
be determined at this time, it has agreed to participate with a potentially responsible party (“PRP”) group in the
funding of an NRD assessment, the costs of which are reflected in the aggregate estimates set forth below.
Based on a determination by the Company’s environmental staff, in consultation with outside environmental
specialists and counsel, the current estimate of the Company’s probable loss associated with the remediation costs
for these eight sites is $7.5 million, net of approximately $1.9 million that third parties have agreed to pay in
settlement or is expected, based either on agreements or nonrefundable contributions which are ongoing, to be
contributed by third parties. The $7.5 million is expected to be paid out between April 2011 and March 2031. The
Company’s estimated probable loss for these environmental matters has been entirely accrued for in the
accompanying consolidated balance sheets.
In addition, the Company has been designated as a PRP under the Superfund law for environmental assessment
and cleanup costs as the result of its alleged disposal of hazardous substances at 19 sites. With respect to these sites,
numerous other PRPs have similarly been designated and while the current state of the law potentially imposes joint
and several liability upon PRPs, as a practical matter, costs of these sites are typically shared with other PRPs. The
Company’s estimated probable loss at those 19 sites is approximately $0.9 million, which has been entirely accrued
for in the accompanying consolidated balance sheets. The aggregate settlements and costs paid by the Company in
Superfund matters to date have not been significant.
V. Other Matters
The Company is involved in various other litigation and governmental proceedings, not described above, that
arise in the normal course of business. While it is not possible to determine with certainty the ultimate outcome or
the duration of any such litigation or governmental proceedings, the Company believes, based on current knowledge
and the advice of counsel, that such litigation and proceedings will not have a material impact on the Company’s
financial position or results of operations.