McKesson 2013 Annual Report Download - page 54

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McKESSON CORPORATION
FINANCIAL REVIEW (Continued)
On February 28, 2011, we issued 3.25% notes due March 1, 2016 in an aggregate principal amount of $600 million,
4.75% notes due on March 1, 2021 in an aggregate principal amount of $600 million and 6.00% notes dues March 1, 2041 in
an aggregate principal amount of $500 million. Interest on these notes is paid on March 1 and September 1 of each year. We
utilized net proceeds, after discounts and offering expenses, of $1,673 million from the issuance of these notes for general
corporate purposes, including the repayment of borrowings under the 2011 Bridge Loan.
We repaid our $500 million 5.25% Notes on March 1, 2013 and our $400 million 7.75% Notes on February 1, 2012, both
of which had matured.
Accounts Receivable Sales Facility
In May 2012, we renewed our existing accounts receivable sales facility (the “Facility”) for a one year period under
terms substantially similar to those previously in place. The committed balance of the Facility is $1.35 billion, although from
time-to-time, the available amount of the Facility may be less than $1.35 billion based on accounts receivable concentration
limits and other eligibility requirements. The renewed Facility will expire in May 2013. We anticipate extending or renewing
the Facility before its expiration.
There were no borrowings in 2011 under the Facility. During 2012, we borrowed $400 million under the Facility. At
March 31, 2012, there were $400 million in secured borrowings and $400 million of related securitized accounts receivable
outstanding under the Facility, which are included in short-term borrowings and receivables in the consolidated balance
sheets. During the first quarter of 2013, these short-term borrowings were repaid using cash on hand. In addition, during
2013, we borrowed a total of $1,325 million under the Facility, all of which was repaid during the year using cash on hand. At
March 31, 2013, there were no secured borrowings and related securitized accounts receivable outstanding under the Facility.
Revolving Credit Facility
In September 2011, we renewed our existing syndicated $1.3 billion five-year senior unsecured revolving credit facility.
This renewed credit facility has terms and conditions substantially similar to those previously in place and matures in
September 2016. Borrowings under this renewed credit facility bear interest based upon either the London Interbank Offered
Rate or a prime rate. There were no borrowings under this credit facility during 2013, 2012 and 2011. As of March 31, 2013
and 2012, there were no borrowings outstanding under this credit facility.
Commercial Paper
There were no commercial paper issuances during 2013, 2012 and 2011 and no amounts outstanding at March 31, 2013
and 2012.
Debt Covenants
Our various borrowing facilities and long-term debt are subject to certain covenants. Our principal debt covenant is our
debt to capital ratio under our unsecured revolving credit facility, which cannot exceed 56.5%. For the purpose of calculating
this ratio, borrowings under the accounts receivable sales facility are excluded. If we exceed this ratio, repayment of debt
outstanding under the revolving credit facility could be accelerated. As of March 31, 2013, we were in compliance with our
financial covenants. A reduction in our credit ratings, or the lack of compliance with our covenants, could negatively impact
our ability to finance operations or issue additional debt at acceptable interest rates.
Funds necessary for future debt maturities and our other cash requirements are expected to be met by existing cash
balances, cash flow from operations, existing credit sources and other capital market transactions.
Additional information regarding our accounts receivable sales facility is included in Financial Notes 1 and 14,
“Significant Accounting Policies” and “Debt and Financing Activities,” to the consolidated financial statements appearing in
this Annual Report on Form 10-K.