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38
McKESSON CORPORATION
FINANCIAL REVIEW (Continued)
Business Combinations
Fiscal 2013
In addition to our April 2012 acquisition of the remaining 50% ownership interest in our corporate headquarters building
located in San Francisco, California, on February 22, 2013, we acquired all of the outstanding shares of PSS World Medical,
Inc. (“PSS World Medical”) of Jacksonville, Florida for $29.00 per share plus the assumption of PSS World Medical's debt,
or approximately $1.9 billion in aggregate, consisting of cash consideration of $1.3 billion, net of cash acquired, and the
assumption of long-term debt with a fair value of $0.6 billion. The cash paid at acquisition was funded from cash on hand and
the issuance of long-term debt. PSS World Medical markets and distributes medical products and services throughout the
United States. The acquisition of PSS World Medical expands our existing Medical-Surgical business. Financial results for
PSS World Medical since the acquisition date are included in the results of operations for the fourth quarter and year ended
March 31, 2013 within our Medical-Surgical distributions and services business, which is part of our Distribution Solutions
segment.
Fiscal 2012
On March 25, 2012, we acquired substantially all of the assets of Drug Trading Company Limited, the independent
banner business of the Katz Group Canada Inc. (“Katz Group”), and Medicine Shoppe Canada Inc., the franchise business of
the Katz Group (collectively, “Katz Assets”) for $925 million, which was funded from cash on hand. The acquisition of the
assets from the Drug Trading Company Limited consists of a marketing and purchasing arm of independently owned
pharmacies in Canada. The acquisition of Medicine Shoppe Canada Inc. consists of the franchise business of providing
services to independent pharmacies in Canada. Financial results for the acquired Katz Assets have been included in the results
of operations within our Canadian pharmaceutical distribution and services business, which is part of our Distribution
Solutions segment, beginning in the first quarter of 2013.
Fiscal 2011
On December 30, 2010, we acquired all of the outstanding shares of US Oncology for approximately $2.1 billion,
consisting of cash consideration of $0.2 billion, net of cash acquired, and the assumption of liabilities with a fair value of $1.9
billion. The cash paid at acquisition was funded from cash on hand. As an integrated oncology company, US Oncology is
affiliated with community-based oncologists, and works with patients, hospitals, payers and the medical industry across all
phases of the cancer research and delivery continuum. The acquisition of US Oncology expands our existing specialty
pharmaceutical distribution business and adds practice management services for oncologists. Financial results for US
Oncology have been included in the results of operations within our Distribution Solutions segment beginning in the fourth
quarter of 2011.
During the last three years, we also completed a number of other smaller acquisitions within both of our operating
segments. Financial results for our business acquisitions have been included in our consolidated financial statements since
their respective acquisition dates. Purchase prices for our business acquisitions have been allocated based on estimated fair
values at the date of acquisition.
Goodwill recognized for our business acquisitions is generally not expected to be deductible for tax purposes. However,
if we acquire the assets of a company, the goodwill may be deductible for tax purposes. The pro forma results of operations
for our business acquisitions and the results of operations for these acquisitions since the acquisition date have not been
presented because the effects were not material to the consolidated financial statements on either an individual or an aggregate
basis.
Refer to Financial Notes 2 and 14, “Business Combinations” and “Debt and Financing Activities,” to the consolidated
financial statements appearing in this Annual Report on Form 10-K for additional information.
2014 Outlook
Information regarding the Company's 2014 outlook is contained in our Form 8-K dated May 7, 2013. This Form 8-K
should be read in conjunction with the sections Item 1 - Business - Forward-Looking Statements and Item 1A - Risk Factors
in Part 1 of this Annual Report on Form 10-K.