McKesson 2011 Annual Report Download - page 53

McKESSON CORPORATION
FINANCIAL REVIEW (Continued)
47
Our ratio of net debt to net capital employed increased at March 31, 2011, compared to March 31, 2010,
primarily due to an increase in total debt as a result of the US Oncology acquisition. This ratio decreased at March
31, 2010, compared to March 31, 2009, primarily reflecting an increase in cash and cash equivalents and repayment
of $215 million of our long-term debt in March 2010.
The Company paid quarterly cash dividends at the rate of $0.06 per share on its common stock from the fourth
quarter of 1999 through the fourth quarter of 2008. In April 2008, the quarterly dividend was raised from $0.06 to
$0.12 per share and in May 2010, the quarterly dividend was raised to $0.18 per common share. In April 2011, the
Board approved an increase in the quarterly dividend from $0.18 to $0.20 per share, applicable to ensuing quarterly
dividend declarations. 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. In 2011, 2010 and
2009, we paid total cash dividends of $171 million, $131 million and $116 million.
Contractual Obligations:
The table below presents our significant financial obligations and commitments at March 31, 2011:
Years
(In millions)
Total
Within 1
Over 1 to 3
Over 3 to 5
After 5
On balance sheet
Long-term debt
$
(1)
4,004
$
417
$
861
$
606
$
2,120
Other
(2)
413
32
83
162
136
Off balance sheet
Interest on borrowings
(3)
2,012
224
361
293
1,134
Purchase obligations
(4)
3,730
3,610
89
31
—
Operating lease obligations
(5)
844
178
258
167
241
Customer guarantees
(6)
176
119
24
5
28
Total
$
11,179
$
4,580
$
1,676
$
1,264
$
3,659
(1) Represents maturities of the Company’s long-term obligations including an immaterial amount of capital lease obligations.
(2) Represents our estimated benefit payments for the unfunded benefit plans and minimum funding requirements for the
pension plans.
(3) Primarily represents interest that will become due on our fixed rate long-term debt obligations.
(4) A purchase obligation is defined as an arrangement to purchase goods or services that is enforceable and legally binding on
the Company. These obligations primarily relate to inventory purchases, capital commitments and service agreements.
(5) Represents minimum rental payments for operating leases.
(6) Represents primarily agreements with certain of our Canadian customers’ financial institutions under which we have
guaranteed the repurchase of our customers’ inventory or our customers’ debt in the event these customers are unable to
meet their obligations to those financial institutions. We also have an agreement with one software customer that, under
limited circumstances, may require us to secure standby financing. Because the amount of the standby financing is not
explicitly stated, the overall amount of this guarantee cannot reasonably be estimated. At March 31, 2011, the maximum
amounts of inventory repurchase guarantees and customers’ debt guarantees were $138 million and $38 million, none of
which had been accrued.
At March 31, 2011, the liability recorded for uncertain tax positions, excluding associated interest and penalties,
was approximately $485 million. Since the ultimate amount and timing of any future cash settlements cannot be
predicted with reasonable certainty, the estimated liability has been excluded from the contractual obligations table.