McKesson 2015 Annual Report Download - page 85

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McKESSON CORPORATION
FINANCIAL NOTES (Continued)
4. Discontinued Operations
During the fourth quarter of 2015, we committed to a plan to sell our Brazilian pharmaceutical distribution
business and a small business from our Distribution Solutions segment, as well as a small business from our
Technology Solutions segment. We acquired the Brazilian distribution business through our February 2014
acquisition of Celesio.
In 2014, we committed to a plan to sell our International Technology and our Hospital Automation
businesses from our Technology Solutions segment and certain businesses from our Distribution Solutions
segment. During the first quarter of 2015, we decided to retain the workforce business within our International
Technology business. This business consists of workforce management solutions for the National Health Service
in the United Kingdom, which we will transition to another service provider during the first quarter of 2016. As a
result, the workforce business, which had been designated as a discontinued operation since the first quarter of
2014, was reclassified to continuing operations in the first quarter of 2015. During the first quarter of 2015, we
also recorded a non-cash pre-tax charge of $34 million ($27 million after-tax) primarily relating to depreciation
and amortization expense for the period in 2014 while the business was classified as held for sale. The non-cash
charge was recorded in our consolidated statement of operations primarily in cost of sales.
As required, we classified the results of operations and cash flows of these businesses as discontinued
operations for all applicable periods presented in our consolidated financial statements. Depreciation and
amortization expense is not recognized from the date the businesses are classified as held for sale.
A summary of results of discontinued operations is as follows:
Years Ended March 31,
(In millions) 2015 2014 2013
Revenues $2,196 $ 637 $ 259
Loss from discontinued operations $ (321) $ (177) $ (32)
Loss on sale (6) (5) —
Loss from discontinued operations before income tax (327) (182) (32)
Income tax benefit 28 26 7
Loss from discontinued operations, net of tax $ (299) $ (156) $ (25)
Fiscal 2015
During the second quarter of 2015, we completed the sale of a software business within our International
Technology business and recorded a pre-tax and after-tax loss of $6 million.
During the fourth quarter of 2015, we recorded $241 million pre-tax ($235 million after-tax) non-cash
impairment charges to reduce the carrying value of our Brazilian distribution business to its estimated fair value,
less cost to sell. The impairment charge reduced the carrying value of property, plant and equipment, other long-
lived assets and goodwill by $31 million. The remaining difference between the business’ fair value and carrying
value of $210 million was recorded as a liability and was included in other accrued liabilities in our consolidated
balance sheet. Cumulative foreign currency translation losses of $17 million were included in the assessment of
this business’ carrying value for purposes of calculating the impairment charge. Cumulative foreign currency
translation losses (net of tax) are included in Accumulated Other Comprehensive Income on our consolidated
balance sheet at March 31, 2015. The ultimate loss from the sale may be higher or lower than our current
assessment of the business’ fair value.
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