McKesson 2011 Annual Report Download - page 78

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McKESSON CORPORATION
FINANCIAL NOTES (Continued)
72
Employee Stock Purchase Plan (“ESPP”)
The Company has an ESPP under which 16 million shares have been authorized for issuance. The ESPP allows
eligible employees to purchase shares of our common stock through payroll deductions. The deductions occur over
three-month purchase periods and the shares are then purchased at 85% of the market price at the end of each
purchase period. Employees are allowed to terminate their participation in the ESPP at any time during the purchase
period prior to the purchase of the shares. The 15% discount provided to employees on these shares is included in
compensation expense. The shares related to funds outstanding at the end of a quarter are included in the calculation
of diluted weighted average shares outstanding. These amounts have not been significant. In 2011, 2010 and 2009,
1 million shares were issued under the ESPP and 2 million shares remain available for issuance at March 31, 2011.
4. Other Income, Net
Years Ended March 31,
(In millions)
2011
2010
2009
Interest income
$
18
$
16
$
31
Equity in (loss) earnings, net
(1)
(6)
6
7
Reimbursement of post-acquisition interest expense
16
—
—
Gain on sale of investment
(1)
—
17
24
Impairment of investments
(1)
—
—
(63)
Other, net
8
4
13
Total
$
36
$
43
$
12
(1) Recorded within our Distribution Solutions segment.
In 2011, other income, net included a credit of $16 million representing the reimbursement of post-acquisition
interest expense by the former shareholders of US Oncology, which is recorded in Corporate.
In 2010, we sold our 50% equity interest in McKesson Logistics Solutions LLC (“MLS”), a Canadian logistics
company, for a pre-tax gain of $17 million or $14 million after-tax.
In 2009, we sold our 42% equity interest in Verispan LLC, a data analytics company, for a pre-tax gain of
$24 million or $14 million after-tax.
We evaluate our investments for impairment when events or changes in circumstances indicate that the carrying
values of such investments may have experienced an other-than-temporary decline in value. In 2009, we determined
that the fair value of our interest in Parata Systems, LLC (“Parata”) was lower than its carrying value and that such
impairment was other-than-temporary. Fair value was determined using a discounted cash flow analysis based on
estimated future results and market capitalization rates. We determined the impairment was other-than-temporary
based on our assessment of all relevant factors including deterioration in the investee’s financial condition and weak
market conditions. As a result, we recorded a pre-tax impairment of $58 million ($55 million after-tax) on this
investment, which is recorded within other income, net in the consolidated statements of operations. Our investment
in Parata is accounted for under the equity method of accounting
In 2009, we also recorded a pre-tax impairment of $5 million ($5 million after-tax) on another equity-held
investment.