McKesson 2014 Annual Report Download - page 38

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McKESSON CORPORATION
FINANCIAL REVIEW (Continued)
35
Corporate
Corporate expenses increased in 2014 compared to 2013 primarily due to higher compensation and benefit costs,
expenses and the 2013 $81 million gain on business combination. Corporate expenses decreased in 2013
compared to 2012 primarily due to the gain on business combination and a charitable contribution in 2012. These decreases were
partially offset by an increase in a reserve for an environmental liability, acquisition-related expenses and other corporate initiatives.
In 2013, we purchased the remaining 50% ownership interest in our corporate headquarters building located in San Francisco,
California for $90 million, which was funded from cash on hand. We previously held a 50% ownership interest and were the
primary tenant in this building. This transaction was accounted for as a step acquisition, which requires that we re-measure our
previously held 50% ownership interest to fair value and record the difference between the fair value and carrying value as a gain
in the consolidated statements of operations. The re-measurement to fair value resulted in a non-cash pre-tax gain of $81 million
($51 million after-tax), which was recorded as a gain on business combination within Corporate in the consolidated statements of
operations.
Acquisition Expenses and Related Adjustments
Acquisition expenses and related adjustments, which include transaction and integration expenses that are directly related to
acquisitions by the Company and gains and losses related to business combinations were $218 million, $1 million and $26 million
in 2014, 2013 and 2012. Expenses for 2014 were primarily related to our acquisition of Celesio and integration of PSS World
Medical. Expenses for 2013 primarily pertained to PSS World Medical and a $81 million gain on business combination from our
acquisition of the remaining 50% ownership interest in our Corporate headquarters building. Expenses for 2012 were
primarily incurred to integrate a 2011 acquisition. Additional acquisition-related expenses are expected to be incurred as we
integrate our businesses.
Acquisition expenses and related adjustments were as follows:
Years Ended March 31,
(In millions) 2014 2013 2012
Cost of Sales $ 3 $ — $ —
Operating Expenses
Transaction closing expenses 39 16 3
Restructuring, severance and relocation 43 30 3
Other integration related expenses 73 25 20
Gain on business combination — (81) —
Total 155 (10) 26
Other Income, Net 14 — —
Interest Expense - bridge loan fees 46 11 —
Total Acquisition Expenses and Related Adjustments $ 218 $ 1 $ 26