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McKESSON CORPORATION
FINANCIAL NOTES (Continued)
Assets Measured at Fair Value on a Nonrecurring Basis
We measure certain long-lived assets and goodwill at fair value on a nonrecurring basis when they are deemed
to be other-than-temporarily impaired. If the cost of an investment exceeds its fair value, we evaluate, among other
factors, our intent to hold the investment, general market conditions, the duration and extent to which the fair value
is less than cost and the financial outlook for the industry and location. An impairment charge is recorded when the
cost of the asset exceeds its fair value and this condition is determined to be other-than-temporary.
Fiscal 2015
As discussed in Financial Note 9, “Discontinued Operations,” during the fourth quarter of 2015, we recorded a
$241 million pre-tax ($235 million after-tax) non-cash impairment charge to reduce the carrying value of our
Brazilian distribution business to its estimated fair value, less cost to sell. The fair value of this business was
determined using income and market valuation approaches. Under the income approach, we used a discounted cash
flow (“DCF”) analysis based on the estimated future results. This valuation approach is considered a Level 3 fair
value measurement due to the use of significant unobservable inputs related to the timing and amount of future cash
flows based on projections of revenues and operating costs and discounting those cash flows to their present value.
The key inputs and assumptions of the DCF method are the projected cash flows, the terminal value of the business
and the discount rate. Under the market approach, we apply valuation multiples of reasonably similar publicly
traded companies to the operating data of the subject business to derive the estimated fair value. This valuation
approach is also considered a Level 3 fair value measurement. The key inputs for the market valuation approach
were revenues and a selection of market multiples. The ultimate loss from the sale of the business may be higher or
lower than our current assessment of the business’ fair value.
Fiscal 2014
As discussed in Financial Note 9, “Discontinued Operations,” during 2014, we recorded an $80 million non-
cash pre-tax and after-tax impairment charge to reduce the carrying value of our International Technology
business to its estimated fair value, less costs to sell. The impairment charge was primarily the result of the terms
of the preliminary purchase offers received for this business during 2014. Accordingly, the fair value
measurement is classified as Level 3 in the fair value hierarchy.
22. Lease Obligations
We lease facilities and equipment almost solely under operating leases. At March 31, 2016, future minimum
lease payments required under operating leases that have initial or remaining noncancelable lease terms in excess
of one year for years ending March 31 are:
(In millions)
Noncancelable
Operating
Leases
2017 $ 363
2018 309
2019 252
2020 209
2021 168
Thereafter 669
Total minimum lease payments (1) $1,970
114