McKesson 2014 Annual Report Download - page 85

McKESSON CORPORATION
FINANCIAL NOTES (Continued)
82
Of the total $647 million in unrecognized tax benefits at March 31, 2014, $490 million would reduce income tax expense and
the effective tax rate if recognized. During the next twelve months, it is reasonably possible that audit resolutions and the expiration
of statutes of limitations could potentially reduce our unrecognized tax benefits by up to $230 million. However, this amount may
change because we continue to have ongoing negotiations with various taxing authorities throughout the year.
We report interest and penalties on unrecognized tax benefits as income tax expense. In 2014 and 2013, we recognized income
tax expense of $48 million and a reduction to income tax expense of $8 million, related to interest and penalties in our consolidated
statements of operations. The income tax expense for interest and penalties recognized in 2014 was primarily due to the additional
interest resulting from the increase of our Canadian gross unrecognized tax benefits. The reduction to income tax expense in 2013
was primarily due to the reversal of accrued interest resulting from the reduction of our gross unrecognized tax benefits. At
March 31, 2014 and 2013, we had $179 million and $131 million, accrued for the payment of interest and penalties on unrecognized
tax benefits.
9. Earnings Per Common Share
Basic earnings per common share attributable to McKesson are computed by dividing net income attributable to McKesson
by the weighted average number of common shares outstanding during the reporting period. Diluted earnings per common share
are computed similar to basic earnings per common share except that it reflects the potential dilution that could occur if dilutive
securities or other obligations to issue common stock were exercised or converted into common stock.
The computations for basic and diluted earnings per common share are as follows:
Years Ended March 31,
(In millions, except per share amounts) 2014 2013 2012
Income from continuing operations $ 1,354 $ 1,347 $ 1,379
Net loss attributable to noncontrolling interests 5 — —
Income from continuing operations attributable to McKesson 1,359 1,347 1,379
Income (loss) from discontinued operations, net of tax (96)(9) 24
Net income attributable to McKesson $ 1,263 $ 1,338 $ 1,403
Weighted average common shares outstanding:
Basic 229 235 246
Effect of dilutive securities:
Options to purchase common stock 1 1 2
Restricted stock units 3 3 3
Diluted 233 239 251
Earnings (loss) per common share attributable to McKesson: (1)
Diluted
Continuing operations $ 5.83 $ 5.62 $ 5.49
Discontinued operations (0.42)(0.03) 0.10
Total $ 5.41 $ 5.59 $ 5.59
Basic
Continuing operations $ 5.93 $ 5.74 $ 5.60
Discontinued operations (0.42)(0.03) 0.10
Total $ 5.51 $ 5.71 $ 5.70
(1) Certain computations may reflect rounding adjustments.
Potentially dilutive securities primarily include outstanding stock options, RSUs and PeRSUs. Approximately 2 million,
2 million and 4 million of potentially dilutive securities were excluded from the computations of diluted net earnings per common
share in 2014, 2013 and 2012, as they were anti-dilutive.