McKesson 2014 Annual Report Download - page 48

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McKESSON CORPORATION
FINANCIAL REVIEW (Continued)
45
Disclosure also is provided when it is reasonably possible that a loss will be incurred or when it is reasonably possible that
the amount of a loss will exceed the recorded provision. We review all contingencies at least quarterly to determine whether the
likelihood of loss has changed and to assess whether a reasonable estimate of the loss or range of the loss can be made. As discussed
above, development of a meaningful estimate of loss or a range of potential loss is complex when the outcome is directly dependent
on negotiations with or decisions by third parties, such as regulatory agencies, the court system and other interested parties. Such
factors bear directly on whether it is possible to reasonably estimate a range of potential loss and boundaries of high and low
estimate.
FINANCIAL CONDITION, LIQUIDITY AND CAPITAL RESOURCES
We expect our available cash generated from operations, together with our existing sources of liquidity from our accounts
receivable sales facilities, revolving credit facilities and commercial paper issuance, will be sufficient to fund our long-term and
short-term capital expenditures, working capital and other cash requirements. In addition, we may access the long-term debt capital
markets from time-to-time.
Net cash flow from operating activities was $3,136 million in 2014 compared to $2,483 million in 2013 and $2,950 million
in 2012. Operating activities for 2014 were affected by an increase in drafts and accounts payable reflecting longer payment terms
for certain purchases. Operating activities for 2014 also reflect increases in receivables and inventories primarily associated with
our revenue growth. Cash flows from operations can be significantly impacted by factors such as the timing of receipts from
customers and payments to vendors.
Operating activities for 2013 were primarily affected by $483 million of payments made for AWP litigation settlements.
Operating activities for 2012 reflect an increase in drafts and accounts payable primarily associated with longer payment terms
for certain purchases, partially offset by an increase in receivables and higher inventories primarily associated with revenue growth.
Net cash used in investing activities was $5,046 million in 2014 compared to $2,209 million in 2013 and $1,502 million in
2012. Investing activities for 2014 included $4,634 million of net cash payments for acquisitions, including $4,497 million for
our acquisition of Celesio. Investing activities in 2014 also included $274 million and $141 million in capital expenditures for
property acquisitions and capitalized software. Investing activities for 2014 also reflect $97 million of cash proceeds from sales
of our automation business and an equity investment.
Investing activities for 2013 included $1,873 million of net cash payments for acquisitions, including $1,299 million for our
acquisition of PSS World Medical. Investing activities in 2013 also included $232 million and $153 million in capital expenditures
for property acquisitions and capitalized software.
Investing activities for 2012 included $1,051 million of net cash payments for acquisitions, including $919 million for our
acquisition of the Katz Assets. Investing activities in 2012 also included $221 million and $177 million in capital expenditures
for property acquisitions and capitalized software.
Financing activities generated cash of $3,619 million in 2014 compared to net cash usage of $956 million in 2013 and $1,905
million in 2012. Financing activities for 2014 include cash receipts of $788 million and cash paid of $765 million from short-
term borrowings. In connection with our acquisition of Celesio, we also borrowed $4,957 billion million under a senior bridge
loan facility and $400 million under our accounts receivable sales facility in February 2014. These borrowings were fully repaid
in March 2014. Financing activities for 2014 also include cash receipts of $4,114 million from the issuance of long-term debt in
March 2014 and cash paid of $356 for repayments of long-term debt, primarily consisting of $350 million paid on the maturity of
our 6.50% Notes due in February 2014. Additionally, financing activities for 2014 included $130 million of cash paid for stock
repurchases and $214 million of dividends paid.