McKesson 2016 Annual Report Download - page 49

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McKESSON CORPORATION
FINANCIAL REVIEW (Continued)
primarily due to higher compensation and benefit costs and asset impairments, partially offset by lower
acquisition-related expenses and lower costs associated with corporate initiatives.
Acquisition Expenses and Related Adjustments
Acquisition expenses and related adjustments, which include transaction and integration expenses that are
directly related to acquisitions by the Company were $114 million, $224 million and $218 million in 2016, 2015
and 2014. Expenses primarily related to our business acquisitions and integrations of our February 2014
acquisition of Celesio and February 2013 acquisition of PSS World Medical, Inc. (“PSSI”).
Years Ended March 31,
(Dollars in millions) 2016 2015 2014
Cost of Sales $— $ 1 $ 3
Operating Expenses
Transaction closing expenses 10 6 39
Restructuring, severance and relocation — 57 43
Outside service fees 27 66 27
Other 73 94 46
Total 110 223 155
Other Income, Net 4 — 14
Interest Expense—bridge loan fees — — 46
Total Acquisition Expenses and Related Adjustments $114 $224 $218
Acquisition expenses and related adjustments by segment were as follows:
Years Ended March 31,
(Dollars in millions) 2016 2015 2014
Cost of Sales $— $ 1 $ 3
Operating Expenses and Other Income, Net
Distribution Solutions 112 211 120
Technology Solutions — — 15
Corporate 2 12 34
Total 114 223 169
Corporate—Interest Expense — — 46
Total Acquisition Expenses and Related Adjustments $114 $224 $218
During 2016, 2015 and 2014, we incurred $9 million, $109 million and $129 million of acquisition-related
expenses for our acquisition of Celesio and $70 million, $110 million, and $68 million for our acquisition of
PSSI. These expenses primarily include restructuring, severance, employee retention incentives, outside service
fees and other costs to integrate the business, and bridge loan fees. Additionally, our acquisition-related expenses
for our PSSI acquisition include amounts associated with distribution center rationalization and information
technology conversions to common platforms. Integration activities for our PSSI acquisition are substantially
completed.
43