McKesson 2014 Annual Report Download - page 39

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McKESSON CORPORATION
FINANCIAL REVIEW (Continued)
36
Acquisition expenses and related adjustments by segment were as follows:
Years Ended March 31,
(In millions) 2014 2013 2012
Cost of Sales - Technology Solutions $ 3 $ — $ —
Operating Expenses
Distribution Solutions 119 47 24
Technology Solutions 15 7 1
Corporate 21 (64) 1
Total 155 (10) 26
Corporate - Other Income, Net 14 — —
Corporate - Interest Expense 46 11 —
Total Acquisition Expenses and Related Adjustments $ 218 $ 1 $ 26
Amortization expenses of acquired intangible assets purchased in connection with acquisitions recorded in operating expenses
were $308 million, $196 million and $167 million in 2014, 2013 and 2012. The increases in amortization expense reflect our
recent business acquisitions. Additionally, certain intangible assets associated with a 2007 acquisition were fully amortized in
2012.
Other Income, Net:
Years Ended March 31, Change
(Dollars in millions) 2014 2013 2012 2014 2013
Distribution Solutions $ 29 $ 19 $ 16 53 % 19 %
Technology Solutions 1 4 4 (75) —
Corporate 2 11 — (82) 100
Total $ 32 $ 34 $ 20 (6) 70
Other income, net decreased slightly in 2014 compared to 2013 primarily due to our acquisition of Celesio including
expenses. Other income, net increased in 2013 compared to 2012 primarily due to an impairment of an asset
in 2012.
Impairment of an Equity Investment:
In 2013, we committed to a plan to sell our 49% equity interest in Nadro, S.A. de C.V. (“Nadro”) and in the fourth quarter of
2013 recorded a pre-tax impairment charge of $191 million reducing the investment’s carrying value to its estimated fair value.
The charge reflected deterioration in Nadro’s market position, projected lower revenue growth rates and operating margins and
continued business challenges in the wholesale pharmaceutical distribution business in Mexico. Cumulative foreign currency
translation losses of $69 million were included in the assessment of the investment’s carrying value for purposes of calculating
the impairment charge. Cumulative foreign currency translation losses (net of tax), were included in Accumulated Other
Comprehensive Income on our consolidated balance sheet at March 31, 2013. The charge was recorded in impairment of an equity
investment in the consolidated statements of operations within our Distribution Solutions segment. In September 2013, we
completed the sale of our 49% equity interest in Nadro. Under the terms of the agreement, we received $41 million in total cash
consideration. There was no material gain or loss on the disposition based on the adjusted net realizable value of the investment
at the time of the sale.