Definitions related to Adjusted Earnings (Non-GAAP) Financial Information

Transcription

1 Definitions related to Financial Information represents income from continuing operations, excluding the effects of the following items from the Company s GAAP financial results, including the related income tax effects: of acquisition-related intangibles - expense of acquired intangible assets purchased in connection with acquisitions by the Company. expenses and related adjustments - Transaction and integration expenses that are directly related to acquisitions by the Company. Examples include transaction closing costs, professional service fees, restructuring or severance charges, retention payments, employee relocation expenses, facility or other exit-related expenses, recoveries of acquisition-related expenses or post-closing expenses, bridge loan fees, gains or losses related to foreign currency contracts, and gains or losses on business combinations. reserve adjustments - to the Company s reserves, including accrued interest, for estimated probable losses for its Average Wholesale Price litigation matter, as such term is defined in the Company s Annual Report on Form 10-K for the fiscal year ended March 31, LIFO-related adjustments - Last-In-First-Out ("LIFO") inventory-related adjustments. Income taxes on are calculated in accordance with Accounting Standards Codification ("ASC") 740, Income Taxes, which is the same accounting principle used by the Company when presenting its GAAP financial results. The Company believes the presentation of non-gaap measures such as provides useful supplemental information to investors with regard to its core operating performance, as well as assists with the comparison of its past financial performance to the Company s future financial results. Moreover, the Company believes that the presentation of assists investors ability to compare its financial results to those of other companies in the same industry. However, the Company's measure may be defined and calculated differently by other companies in the same industry. The Company internally uses non-gaap financial measures such as in connection with its own financial planning and reporting processes. Specifically, serves as one of the measures management utilizes when allocating resources, deploying capital and assessing business performance and employee incentive compensation. Nonetheless, non-gaap financial results and related measures disclosed by the Company should not be considered a substitute for, nor superior to, financial results and measures as determined or calculated in accordance with GAAP.

2 McKESSON CORPORATION RECONCILIATION OF RECAST ADJUSTED EARNINGS PER SHARE (ADJUSTED EPS, NON-GAAP) Schedule 7 The following are Fiscal 2014 Per Share, recast to reflect the reclassifications of the workforce business within our International business from discontinued operations to continuing operations: June 30, 2013 September 30, 2013 Quarters Ended December 31, 2013 March 31, 2014 Year Ended March 31, 2014 EPS, as previously reported due to the reclassifications of the workforce business from discontinued operations to continuing operations EPS, as recast $ 2.07 $ 2.27 $ 1.45 $ 2.55 $ $ 2.11 $ 2.30 $ 1.48 $ 2.67 $ 8.56 Certain computations may reflect rounding adjustments.

3 Schedule 8 McKESSON CORPORATION RECONCILIATION OF GAAP OPERATING RESULTS TO ADJUSTED EARNINGS (NON-GAAP) (in millions, except per share amounts) The following are Fiscal 2014, recast to reflect the reclassifications of the workforce business within our International business from discontinued operations to continuing operations: Quarter Ended June 30, 2013 LIFO- Revenues $ 32,239 $ - $ - $ - $ - $ 32,239 Gross profit $ 1,930 $ 6 $ - $ - $ - $ 1,936 Operating expenses (1,275) (1,182) Other income, net Interest expense (59) (59) Income tax expense (174) (27) (5) (6) - (212) tax, $ 428 $ 44 $ 8 $ 9 $ - $ 489 $ 1.84 $ 0.19 $ 0.04 $ 0.04 $ - $ 2.11 Diluted weighted average common shares Quarter Ended September 30, 2013 LIFO- Revenues $ 32,985 $ - $ - $ - $ - $ 32,985 Gross profit $ 2,021 $ 5 $ - $ - $ 44 $ 2,070 Operating expenses (1,335) (1,222) Other income, net Interest expense (59) (59) Income tax expense (213) (25) (5) (2) (17) (262) tax, $ 423 $ 45 $ 8 $ 33 $ 27 $ 536 $ 1.82 $ 0.19 $ 0.03 $ 0.14 $ 0.12 $ 2.30 Diluted weighted average common shares

4 Quarter Ended December 31, 2013 LIFO- Schedule 8 Revenues $ 34,336 $ - $ - $ - $ - $ 34,336 Gross profit $ 1,850 $ 4 $ 3 $ - $ 142 $ 1,999 Operating expenses (1,357) (1,233) Other income (expense), net (6) Interest expense (69) (59) Income tax expense (254) (27) (23) (7) (56) (367) tax, $ 164 $ 43 $ 43 $ 11 $ 86 $ 347 $ 0.70 $ 0.19 $ 0.17 $ 0.05 $ 0.37 $ 1.48 Diluted weighted average common shares Quarter Ended March 31, 2014 LIFO- Revenues $ 38,196 $ - $ - $ - $ - $ 38,196 Gross profit $ 2,573 $ (4) $ - $ - $ 125 $ 2,694 Operating expenses (1,980) (1,779) Other income, net Interest expense (116) (80) Income tax expense (111) (35) (36) - (48) (230) Income (loss) from continuing operations, net of tax, (7) (2) - - (4) $ 395 $ 66 $ 88 $ - $ 77 $ 626 $ 1.68 $ 0.28 $ 0.38 $ - $ 0.33 $ 2.67 Diluted weighted average common shares Year Ended March 31, 2014 LIFO- Revenues $ 137,756 $ - $ - $ - $ - $ 137,756 Gross profit $ 8,374 $ 11 $ 3 $ - $ 311 $ 8,699 Operating expenses (5,947) (5,416) Other income, net Interest expense (303) (257) 2, ,073 Income tax expense (752) (114) (69) (15) (121) (1,071) Income (loss) from continuing operations, net of tax, 1, ,002 5 (7) (2) - - (4) $ 1,410 $ 198 $ 147 $ 53 $ 190 $ 1,998 $ 6.04 $ 0.85 $ 0.63 $ 0.23 $ 0.81 $ 8.56 Diluted weighted average common shares (a) Certain computations may reflect rounding adjustments.

5 Schedule 9 McKESSON CORPORATION RECONCILIATION OF GAAP SEGMENT FINANCIAL RESULTS TO ADJUSTED EARNINGS (NON-GAAP) (in millions) The following are Fiscal 2014, recast to reflect the reclassifications of the workforce business within our International business from discontinued operations to continuing operations: : Revenues $ 31,403 $ 836 $ - $ 32,239 $ 32,169 $ 816 $ - $ 32,985 $ 33,522 $ 814 $ - $ 34,336 $ 37,332 $ 864 $ - $ 38,196 $ 134,426 $ 3,330 $ - $ 137,756 Gross profit $ 1,520 $ 410 $ - $ 1,930 $ 1,623 $ 398 $ - $ 2,021 $ 1,499 $ 351 $ - $ 1,850 $ 2,125 $ 448 $ - $ 2,573 $ 6,767 $ 1,607 $ - $ 8,374 Operating expenses (905) (283) (87) (1,275) (944) (278) (113) (1,335) (950) (305) (102) (1,357) (1,536) (295) (149) (1,980) (4,335) (1,161) (451) (5,947) Other income (expense), net (10) (6) interest expense and (85) (110) (112) (142) 617 2, (449) 2,460 Interest expense - - (59) (59) - - (59) (59) - - (69) (69) - - (116) (116) - - (303) (303) Quarter Ended June 30, 2013 Quarter Ended September 30, 2013 Quarter Ended December 31, 2013 Quarter Ended March 31, 2014 Year Ended March 31, 2014 $ 619 $ 127 $ (144) $ 602 $ 685 $ 120 $ (169) $ 636 $ 552 $ 47 $ (181) $ 418 $ 605 $ 154 $ (258) $ 501 $ 2,461 $ 448 $ (752) $ 2,157 Gross profit margin 4.84% 49.04% % 5.05% 48.77% % 4.47% 43.12% % 5.69% 51.85% % 5.03% 48.26% % Operating expenses as a % of revenues 2.88% 33.85% % 2.93% 34.07% % 2.83% 37.47% % 4.11% 34.14% % 3.22% 34.86% % Operating pre-tax profit as a % of revenues 1.97% 15.19% % 2.13% 14.71% % 1.65% 5.77% % 1.62% 17.82% % 1.83% 13.45% % Pre-Tax : Gross profit $ - $ 6 $ - $ 6 $ 1 $ 4 $ - $ 5 $ - $ 4 $ - $ 4 $ - $ (4) $ - $ (4) $ 1 $ 10 $ - $ 11 Operating expenses of acquisition-related intangibles Gross profit Operating expenses Other income, net Interest expense (1) expenses and related adjustments Operating expenses - reserve adjustments Gross profit - LIFO-related adjustments pre-tax adjustments $ 81 $ 18 $ - $ 99 $ 142 $ 19 $ 1 $ 162 $ 231 $ 30 $ 35 $ 296 $ 299 $ 13 $ 47 $ 359 $ 754 $ 80 $ 82 $ 916 : Revenues $ 31,403 $ 836 $ - $ 32,239 $ 32,169 $ 816 $ - $ 32,985 $ 33,522 $ 814 $ - $ 34,336 $ 37,332 $ 864 $ - $ 38,196 $ 134,426 $ 3,330 $ - $ 137,756 Gross profit $ 1,520 $ 416 $ - $ 1,936 $ 1,668 $ 402 $ - $ 2,070 $ 1,641 $ 358 $ - $ 1,999 $ 2,250 $ 444 $ - $ 2,694 $ 7,079 $ 1,620 $ - $ 8,699 Operating expenses (824) (271) (87) (1,182) (847) (263) (112) (1,222) (861) (282) (90) (1,233) (1,361) (278) (140) (1,779) (3,893) (1,094) (429) (5,416) Other income, net interest expense and (85) (109) (87) (132) 940 3, (413) 3,330 Interest expense - - (59) (59) - - (59) (59) - - (59) (59) (1) - (79) (80) - - (257) (257) $ 700 $ 145 $ (144) $ 701 $ 827 $ 139 $ (168) $ 798 $ 783 $ 77 $ (146) $ 714 $ 904 $ 167 $ (211) $ 860 $ 3,215 $ 528 $ (670) $ 3,073 Gross profit margin 4.84% 49.76% % 5.19% 49.26% % 4.90% 43.98% % 6.03% 51.39% % 5.27% 48.65% % Operating expenses as a % of revenues 2.62% 32.42% % 2.63% 32.23% % 2.57% 34.64% % 3.65% 32.18% % 2.90% 32.85% % Operating pre-tax profit as a % of revenues 2.23% 17.34% % 2.57% 17.03% % 2.34% 9.46% % 2.42% 19.33% % 2.39% 15.86% %