McKesson 2016 Annual Report Download - page 59

McKESSON CORPORATION
FINANCIAL REVIEW (Continued)
decisions by third parties, such as regulatory agencies, the court system and other interested parties. Such factors
bear directly on whether it is possible to reasonably estimate a range of potential loss and boundaries of high and
low estimate.
FINANCIAL CONDITION, LIQUIDITY AND CAPITAL RESOURCES
We expect our available cash generated from operations and our short-term investment portfolio, together
with our existing sources of liquidity from our revolving credit facilities, accounts receivable factoring facilities
and commercial paper issuance, will be sufficient to fund our long-term and short-term capital expenditures,
working capital and other cash requirements. In addition, we may access the long-term debt capital markets from
time to time. We are in the process of acquiring certain businesses, and the cost of these acquisitions may be
partially funded through the issuance of debt.
Net cash flow from operating activities was $3,672 million in 2016 compared to $3,112 million in 2015 and
$3,136 million in 2014. Operating activities over the last three years were affected by an increase in drafts and
accounts payable reflecting longer payment terms for certain purchases and increases in receivables and
inventories primarily associated with our revenue growth. Cash flows from operations can be significantly
impacted by factors such as the timing of receipts from customers and payments to vendors. Additionally,
working capital is primarily a function of sales and purchase volumes, inventory requirements and vendor
payment terms.
Net cash used in investing activities was $1,557 million in 2016 compared to $677 million in 2015 and
$5,046 million in 2014. Investing activities for 2016 include $40 million of net cash payments for acquisitions,
$488 million and $189 million in capital expenditures for property, plant and equipment, and capitalized
software, and $210 million of net cash proceeds from sales of businesses. Additionally, we prepaid $939 million
for acquisitions that closed subsequent to year end.
Investing activities for 2015 included $170 million of net cash payments for acquisitions, $376 million and
$169 million in capital expenditures for property, plant and equipment, and capitalized software, and $15 million
of cash proceeds from sales of our automation business and an equity investment. Investing activities for 2014
included $4,634 million of net cash payments for acquisitions, including $4,497 million for our acquisition of
Celesio. Investing activities in 2014 also included $278 million and $141 million in capital expenditures for
property, plant and equipment, and capitalized software, and $97 million of cash proceeds from sales of our
automation business and equity investment.
Financing activities utilized $3,453 million and $968 million of cash in 2016 and 2015 and generated net
cash of $3,619 million in 2014. Financing activities for 2016 include cash receipts of $1,561 million and
payments of $1,688 million from short-term borrowings. We made repayments on long-term debt of
$1,598 million in 2016. Financing activities in 2016 also include $1,504 million of cash paid for stock
repurchases and $244 million of dividends paid.
Financing activities for 2015 include cash receipts of $3,100 million and payments of $3,152 million from
short-term borrowings. Long-term debt repayments in 2015 were primarily cash paid on promissory notes.
Financing activities in 2015 also reflect a cash payment of $32 million to acquire approximately 1 million
additional common shares of Celesio through the tender offers we completed in 2015. Additionally, financing
activities for 2015 include $340 million of cash paid for stock repurchases and $227 million of dividends paid.
Financing activities for 2014 include cash receipts of $6,080 million and cash paid of $6,132 million from
short-term borrowings, which includes $4,957 million in borrowings under a senior bridge loan facility in
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