McKesson 2015 Annual Report Download - page 144

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Acquisition expenses and related adjustments—Transaction and integration expenses that are directly
related to business acquisitions by the Company. Examples include transaction closing costs, professional
service fees, restructuring or severance charges, retention payments, employee relocation expenses, facility
or other exit-related expenses, recoveries of acquisition-related expenses or post-closing expenses, bridge
loan fees, gains or losses related to foreign currency contracts, and gains or losses on business combinations.
Claim and litigation reserve adjustments—Adjustments to the Company’s reserves, including accrued
interest, for estimated probable losses for its Controlled Substance Distribution Claims and the Average
Wholesale Price litigation matters, as such terms are defined in the Company’s Annual Report on Form 10-
K for the fiscal year ended March 31, 2015.
LIFO-related adjustments—Last-In-First-Out (“LIFO”) inventory-related adjustments.
Income taxes on Adjusted Earnings are calculated in accordance with Accounting Standards Codification 740,
“Income Taxes,” which is the same accounting principle used by the Company when presenting its GAAP
financial results. The Company believes the presentation of Non-GAAP measures such as Adjusted Earnings
provides useful supplemental information to investors with regard to its core operating performance, as well as
assists with the comparison of its past financial performance to the Company’s future financial results. Moreover,
the Company believes that the presentation of Adjusted Earnings assists investors’ ability to compare its financial
results to those of other companies in the same industry. However, the Company’s Adjusted Earnings measure
may be defined and calculated differently by other companies in the same industry.
The Company internally uses Non-GAAP financial measures such as Adjusted Earnings in connection with its
own financial planning and reporting processes. Specifically, Adjusted Earnings serves as one of the measures
management utilizes when allocating resources, deploying capital and assessing business performance and
employee incentive compensation. Nonetheless, Non-GAAP financial results and related measures disclosed by
the Company should not be considered a substitute for, nor superior to, financial results and measures as
determined or calculated in accordance with GAAP.