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36
McKESSON CORPORATION
FINANCIAL REVIEW (Continued)
Segment Operating Profit and Corporate Expenses, Net:
Years Ended March 31, Change
(Dollars in millions) 2013 2012 2011 2013 2012
Segment Operating Profit (1)
Distribution Solutions (2) (3) (4) (5) $ 2,197 $ 2,219 $ 1,897 (1) % 17 %
Technology Solutions (6) (7) (8) 297 364 301 (18) 21
Subtotal 2,494 2,583 2,198 (3) 18
Corporate Expenses, Net (9) (335) (413) (341) (19) 21
Interest Expense (240) (251) (222) (4) 13
Income From Continuing Operations Before
Income Taxes $ 1,919 $1,919 $1,635
—
17
Segment Operating Profit Margin
Distribution Solutions 1.85 % 1.86 % 1.74 % (1) bp 12 bp
Technology Solutions 8.73 11.00 9.42 (227) 158
(1) Segment operating profit includes gross profit, net of operating expenses, plus other income (expense), net for our two operating segments.
(2) Operating profit for 2013 includes a $191 million charge for impairment of our equity investment in Nadro.
(3) Operating profit for 2013, 2012 and 2011 includes AWP litigation charges of $72 million, $149 million and $213 million.
(4) Operating profit for 2013 includes a $40 million charge for a legal dispute in our Canadian business.
(5) Operating profit for 2013 and 2011 includes the receipt of $44 million and $51 million representing our share of settlements of antitrust class
action lawsuits brought against drug manufacturers.
(6) Operating profit for 2013 includes asset impairment charges of $46 million.
(7) Operating profit for 2012 includes product alignment charges of $51 million.
(8) Operating profit for 2011 includes $72 million asset impairment charges from capitalized software held for sale.
(9) Corporate expenses for 2013 are net of an $81 million pre-tax gain on business combination.
Operating profit margin for our Distribution Solutions segment decreased in 2013 compared to 2012 primarily due to a
$191 million impairment charge on an equity investment and higher operating expenses as a percentage of revenues, which
includes our business acquisitions. These increases were partially offset by an increase in gross profit margin and lower AWP
litigation charges. Operating profit margin for our Distribution Solutions segment increased in 2012 compared to 2011
primarily due to higher gross profit margin, which included a full year of results from US Oncology, and lower operating
expenses as a percentage of revenues, which included lower AWP litigation charges.
Operating profit margin in our Technology Solutions segment decreased in 2013 compared to 2012 primarily due to an
increase in operating expenses as a percentage of revenues and a decrease in gross profit margin. Operating profit margin in
our Technology Solutions segment increased in 2012 compared to 2011 primarily reflecting an increase in gross profit
margin, partially offset by an increase in operating expenses as a percentage of revenues.
Corporate expenses, net of other income decreased in 2013 compared to 2012 primarily due to the gain on business
combination and an increase in other income. Corporate expenses, net of other income increased in 2012 compared to 2011
primarily due an increase in operating expenses and a decrease in other income.
Interest Expense: Interest expense decreased in 2013 compared to 2012 primarily due to the repayment of $400 million
of long-term debt in February 2012, partially offset by $11 million of bridge loan fees paid in connection with our acquisition
of PSS World Medical. Interest expense increased in 2012 compared to 2011 primarily due to $1.7 billion of long-term debt
issued in February 2011 in connection with our acquisition of US Oncology. Refer to our discussion under the caption “Credit
Resources” within this Financial Review for additional information regarding our financing activities.