McKesson 2016 Annual Report Download - page 62

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McKESSON CORPORATION
FINANCIAL REVIEW (Continued)
Contractual Obligations:
The table and information below presents our significant financial obligations and commitments at
March 31, 2016:
Years
(In millions) Total Within 1 Over 1 to 3 Over 3 to 5 After 5
On balance sheet
Long-term debt (1) $ 8,147 $1,612 $2,550 $ 5 $3,980
Other (2) (3) 643 198 269 54 122
Off balance sheet
Interest on borrowings (4) 2,725 298 456 322 1,649
Purchase obligations (5) 4,750 4,668 68 14 —
Operating lease obligations (6) 1,970 363 561 377 669
Other (7) 340 194 18 24 104
Total $18,575 $7,333 $3,922 $796 $6,524
(1) Represents maturities of the Company’s long-term obligations including an immaterial amount of capital
lease obligations.
(2) Includes our estimated benefit payments, including assumed executive lump sum payments, for the
unfunded benefit plans and minimum funding requirements for the pension plans. Actual lump sum
payments could significantly differ from the estimated amounts depending on the timing of executive
retirements and the lump sum interest rate in effect upon retirement.
(3) Includes our estimated severance payments associated with the Cost Alignment Plan.
(4) Primarily represents interest that will become due on our fixed rate long-term debt obligations.
(5) A purchase obligation is defined as an arrangement to purchase goods or services that is enforceable and
legally binding on the Company. These obligations primarily relate to inventory purchases, capital
commitments and outsourcing service agreements.
(6) Represents minimum rental payments for operating leases.
(7) Includes agreements under which we have guaranteed the repurchase of our customers’ inventory and our
customers’ debt in the event these customers are unable to meet their obligations to those financial
institutions.
The contractual obligations table above excludes the following obligations:
At March 31, 2016, the liability recorded for uncertain tax positions, excluding associated interest and
penalties, was approximately $409 million. The ultimate amount and timing of any related future cash
settlements cannot be predicted with reasonable certainty.
Our banks and insurance companies have issued $142 million of standby letters of credit and surety bonds at
March 31, 2016. These were issued on our behalf and are mostly related to our customer contracts and to meet
the security requirements for statutory licenses and permits, court and fiduciary obligations and our workers’
compensation and automotive liability programs.
As of March 31, 2016, we have entered into agreements to acquire companies of which approximately
$3.4 billion is anticipated to be paid in 2017; of this amount, $0.7 billion was paid in April 2017.
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