Jan 13, 2015 - J.P. Morgan Healthcare Conference ... The Company's SEC reports are available at www.mckesson.com under .
McKesson Corporation J.P. Morgan Healthcare Conference
John Hammergren Chairman and Chief Executive Officer
January 13, 2015
Forward-Looking Statements Some of the information in this presentation is not historical in nature and may constitute forward-looking statements, which are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. These statements may be identified by the use of forward-looking terminology such as “believes,” “expects,” “anticipates,” “may,” “will,” “should,” “seeks,” “approximately,” “intends,” “plans,” “estimates,” or the negative of these words or other comparable terminology. The discussion of financial trends, strategy, plans or intentions may also include forward-looking statements. These forward-looking statements involve risks and uncertainties that could cause actual results to differ materially from those projected, anticipated or implied by such statements. Although it is not possible to predict or identify all such risks and uncertainties, they may include, but are not limited to, those described in the Company’s annual, quarterly and current reports (i.e., Form 10-K, Form 10-Q and Form 8-K) as filed or furnished with the Securities and Exchange Commission (SEC). You are cautioned not to place undue reliance on any such forward-looking statements, which speak only as of the date such statements were first made. To the degree financial information is included in this presentation, it is in summary form only and must be considered in the context of the full details provided in the Company’s most recent annual, quarterly or current report as filed or furnished with the SEC. The Company’s SEC reports are available at www.mckesson.com under the “Investors” tab. Except to the extent required by law, the Company undertakes no obligation to publicly release the result of any revisions to these forward-looking statements to reflect events or circumstances after the date hereof, or to reflect the occurrence of unanticipated events.
GAAP / Non-GAAP Reconciliation In an effort to provide additional and useful information regarding the Company’s financial results and other financial information as determined by generally accepted accounting principles (GAAP), certain materials presented during this event include non-GAAP information. The rationale for management’s use of non-GAAP information, a reconciliation of that information to GAAP, and other related information is available in the supplemental material attached as an appendix to this presentation and posted to www.mckesson.com under the “Investors” tab.
2
McKesson At-A-Glance Driving Better Health for Over 180 Years
2
Core Segments
Founded in
1833
>$170B Distribution Solutions
2
Combined Revenues
85,000 Technology Solutions 1
3
Employees1 Worldwide
Operates in Over
20
Countries3 Serves
120K
Pharmacies and Hospitals Globally Daily1
>12K
Owned or Banner Pharmacies1
Approximated as of December 2, 2014; 2 Approximates reported revenues of McKesson and Celesio AG for the twelve months ended September 30, 2014 (USD); 3 As of December 2, 2014.
Global Healthcare Industry in Transformation Demand for Healthcare is
Growing Demographic Trends • Aging Population • Increase in Chronic Conditions
Convergence & Consolidation 4
Regulatory Environment Rising Healthcare
Costs
The Age of the `
Consumer
A Vision for Better Health… Payers Pharmaceutical Manufacturers
Regulatory Agencies/ Government
Consumer
Better Business We make healthcare businesses run better
Retail Pharmacy
Hospitals
Alternate Care
Physicians
Better Connectivity We connect healthcare stakeholders 5
Better Care We enable better clinical outcomes
…Delivering Solutions and Value Globally Market Leading Positions • U.S. and Canada – Pharmaceutical Distribution and Services • Specialty Distribution and Services • Medical-Surgical Distribution • European Retail Pharmacy, Distribution and Service Operations • Technology – connectivity and payer-provider solutions 6
OneStopSM
Healthcare Services Leader in North America
7
US Pharmaceutical: Operational Excellence…
99.98 %
OneStopSM
Order Accuracy
Generics
Operational Excellence Best-in-class network quality, efficiency and speed
21% CAGR Since FY031
A Broad Value Proposition Manufacturer Services 1 As
8
of March 31, 2014
…Creating Value for Our Customers Scale and supply chain excellence
Creating Value for Retail Pharmacy
Expanding Relationships with
Institutional Pharmacy
Partnering with
Independent Pharmacy More than 3,5001 stores 1,600+ new stores since 2008 1 As
9
of October 31, 2014
Canada: Innovation and Market Leadership
Banner Programs Best-in-class network
Generic Rx and speed Quality, efficiency
>1,700 stores in all 10 provinces and 2 territories Medicine Shoppe Canada
16 Distribution Centers 7 Specialty Pharmacies Specialty Pharmacies & Distribution As of March 31, 2014
10
85+ Infusion Clinics
Specialty Health: Positioned for Continued Growth A Broad Value Proposition • Oncology and Multi-Specialty Distribution and Practice Management • One of the largest community-based Oncology networks in the U.S. • Advanced technology solutions for patients, providers and manufacturers
We touch all aspects of Specialty patient care… Physicians
Pharmacies Pharma & Biotech
Hospitals
Patients
Payers 11
Government
Medical-Surgical: A Leader in Alternate Site Combined sales force of more than
1,400
Reps
Revenues 14% CAGR FY08 – FY14
Focus on Investments to drive growth
the customer while furthering PSS integration
Executing on supplier and sourcing opportunities As of March 31, 2014
12
Optimizing distribution network
Technology Solutions: Powering Connectivity McKesson’s Unique Value Proposition – 360° View • Expertise working with payers, hospitals, physicians, pharmacies • Scaled leadership positions
• Comprehensive portfolio
13
Global Sourcing Expertise A Valuable Generics Channel Partner with Global Scale NorthStar / Sivem Collaboration in Canada
Cypress Acquisition
2002
NorthStar Program Launch
14
2007
2012
2014
Sivem Launched / PSS Acquisition
Celesio: Executing Acquisition Synergies A Platform for International Expansion • Global procurement team • Experienced executive leadership teams • Shared values and goals to create opportunities for customers, business partners and shareholders
$275M – $325M Annual by FY19 Synergies
15
Celesio: Acquisition Milestones Priorities Post Operating Control FY15
FY16
Operating Control Secured Begin Execution on Synergies
• • • •
16
FY17
FY18
FY19
Annual Synergies $275M - $325M by FY19
Our current ownership remains 76% We continue to consolidate Celesio’s results Minority shareholders will receive an annual dividend of €0.83 per share Minority shareholders have a put right at €22.99 per share
In Business for Better Health Pharmaceutical Distribution
Medical Surgical Supplies
Global Reach Technology
Specialty 17
Strong Performance: First Half of FY15
$89B
36% Growth
Total Revenues
Total Revenues
20%
Adjusted EPS Growth
48%
% 26
Adjusted
Gross Profit Expansion
Growth
Adjusted Operating Profit
For the six months ended September 30, 2014. Percentage growth expressed on a year over year basis relative to the six month period ended September 30, 2013. Reflects non-GAAP information calculated on an Adjusted Earnings basis. A reconciliation to GAAP is available in the appendix to this presentation and on the Company’s website under the “Investors” tab.
18
We Have a Track Record of Steady Revenue Growth… ($ Billions)
19
$101
$106
$108
FY08
FY09
FY10
$112
FY11
$122
$122
FY12
FY13
$138
FY14
…That We Have Leveraged into Higher Adjusted EPS Growth
FY15 Guidance $10.50 - $10.90
$8.56 $3.45 FY08
$4.27
$4.70
$5.19
FY09
FY10
FY11
$6.35
$6.45
FY12
FY13
FY14
FY15
Reflects non-GAAP information calculated on an Adjusted Earnings basis. A reconciliation to GAAP is available in the appendix to this presentation and on the Company’s website under the “Investors” tab.
20
Our Operating Cash Flows Have Steadily Increased OCF ($ Billions)
7 Year Moving Average
$3.0
$2.5
$2.0
$1.5
$1.0
$0.5 FY08*
FY09
*FY08 excludes $962 million Securities Litigation payment.
21
FY10
FY11
FY12
FY13
FY14
We Remain Committed to Our Historical Portfolio Approach to Capital Deployment… FY08 - FY14 ($ Billions)
$1.1
Dividends
Internal Capital Spending
$25B
$2.6
$7.8 Share Repurchases
$13.7 Acquisitions
22
of capital deployed from FY08 – FY14
…And We are Well Positioned to Drive Continued Growth • Making key capital investments internally to support long-term growth • Pursuing strategic acquisitions and managing our portfolio of assets • Maintaining investment grade ratings • Maintaining our long-term and balanced approach to capital deployment to create shareholder value
23
McKesson Drives Sustained Value Creation Attractive Healthcare Markets • Public policy agenda supports greater access and improved efficiency • Demographics drive long-term demand in North America and globally
Strong operating profit, cash flow growth and a portfolio approach to capital deployment
24
Experienced and tenured management team with a steady track record of delivering results
Well-Positioned Businesses with Margin Expansion Opportunities • Leading positions • Operational excellence • Focus on higher-margin products and services • Global sourcing expertise
RECONCILIATION OF GAAP OPERATING RESULTS TO ADJUSTED EARNINGS (NON-GAAP) FOR FISCAL 2008 THROUGH SIX MONTHS ENDED SEPTEMBER 30, 2014 (unaudited) (in millions, except per share amounts)
Six Months Ended September 30, 2014 Acquisition Expenses and Litigation Related Reserve LIFO-Related Adjustments Adjustments Adjustments
As Reported (GAAP)
Amortization of AcquisitionRelated Intangibles
Revenues
$
88,816
$
-
$
-
$
-
$
-
$
88,816
Gross profit Operating expenses Other income, net Impairment of equity investment Interest expenses Income from continuing operations before income taxes Income tax expense Income from continuing operations after tax
$
5,720 (4,244) 44 (200)
$
5 256 -
$
111 -
$
-
$
192 -
$
5,917 (3,877) 44 (200)
Income (loss) from continuing operations, net of tax, attributable to noncontrolling interests Income from continuing operations, net of tax, attributable to McKesson Corporation Diluted earnings per common share from continuing operations, net of tax, attributable to McKesson Corporation (a)
1,320 (404)
261 (80)
111 (37)
-
192 (75)
1,884 (596)
916
181
74
-
117
1,288
(16)
(23)
(6)
-
-
900
$
158
$
68
$
-
$
117
$
1,243
$
3.83
$
0.66
$
0.30
$
-
$
0.50
$
5.29
235
As Recast (GAAP) Revenues
$
Gross profit Operating expenses Other income, net Impairment of equity investment Interest expense Income from continuing operations before income taxes Income tax expense Income from continuing operations after tax
$
Income (loss) from continuing operations, net of tax, attributable to noncontrolling interests
Diluted earnings per common share from continuing operations, net of tax, attributable to McKesson Corporation (a) Diluted weighted average common shares
(a) Certain computations may reflect rounding adjustments
(45)
$
Diluted weighted average common shares
Income from continuing operations, net of tax, attributable to McKesson Corporation
Adjusted Earnings (Non-GAAP)
137,756 8,374 (5,947) 33 (303)
235
Amortization of AcquisitionRelated Intangibles
235
-
Year Ended March 31, 2014 Acquisition Expenses and Litigation Related Reserve Adjustments Adjustments
235
235
LIFO-Related Adjustments
As Recast Adjusted Earnings (Non-GAAP)
$
-
$
-
$
-
$
-
$
$
11 308 -
$
3 155 14 46
$
-
$
311 -
$
68 -
137,756 8,699 (5,416) 47 (257)
2,157 (752)
319 (114)
218 (69)
68 (15)
311 (121)
3,073 (1,071)
1,405
205
149
53
190
2,002
5
(7)
(2)
-
-
(4)
$
1,410
$
198
$
147
$
53
$
190
$
1,998
$
6.04
$
0.85
$
0.63
$
0.23
$
0.81
$
8.56
233
233
233
233
233
233
RECONCILIATION OF GAAP OPERATING RESULTS TO ADJUSTED EARNINGS (NON-GAAP) FOR FISCAL 2008 THROUGH SIX MONTHS ENDED SEPTEMBER 30, 2014 (unaudited) (in millions, except per share amounts)
Year Ended March 31, 2013 Acquisition Expenses and Litigation Related Reserve Adjustments Adjustments
As Reported (GAAP)
Amortization of AcquisitionRelated Intangibles
Revenues
$
$
-
$
-
$
Gross profit Operating expenses Other income, net Impairment of equity investment Interest expense
$
$
13 196 -
$
(10) 11
$
Income from continuing operations before income taxes Income tax expense Income from continuing operations after tax Income from continuing operations, net of tax, attributable to noncontrolling interests Income from continuing operations, net of tax, attributable to McKesson Corporation Diluted earnings per common share from continuing operations, net of tax, attributable to McKesson Corporation (a) Diluted weighted average common shares
122,196 6,881 (4,534) 34 (191) (240)
$
$
-
$ 72
13
$
-
-
122,196 6,907 (4,276) 34 (191) (229)
1 (6)
72 (27)
13 (5)
2,245 (701)
1,363
133
(5)
45
8
1,544
-
-
-
-
-
-
$
1,363
$
133
$
(5)
$
45
$
8
$
1,544
$
5.69 239
$
0.56 239
$
(0.02) 239
$
0.19 239
$
0.03 239
$
6.45 239
Year Ended March 31, 2012 Acquisition Expenses and Litigation Related Reserve Adjustments Adjustments
Revenues
$
$
-
$
-
Gross profit Operating expenses Other income, net Impairment of equity investment Interest expense Income from continuing operations before income taxes Income tax expense
$
$
17 167 -
$
-
Income from continuing operations after tax Income from continuing operations, net of tax, attributable to noncontrolling interests
(a) Certain computations may reflect rounding adjustments
-
209 (76)
As Reported (GAAP)
Diluted earnings per common share from continuing operations, net of tax, attributable to McKesson Corporation (a) Diluted weighted average common shares
Adjusted Earnings (Non-GAAP)
1,950 (587)
Amortization of AcquisitionRelated Intangibles
Income from continuing operations, net of tax, attributable to McKesson Corporation
LIFO-Related Adjustments
122,453 6,435 (4,289) 20 (251)
LIFO-Related Adjustments
Adjusted Earnings (Non-GAAP) $
$
-
$
$
$
-
149 -
26
11
$
-
122,453 6,463 (3,947) 20 (251)
1,915 (521)
184 (71)
26 (10)
149 (89)
11 (4)
2,285 (695)
1,394
113
16
60
7
1,590
-
-
-
-
-
-
$
1,394
$
113
$
16
$
60
$
7
$
1,590
$
5.56 251
$
0.45 251
$
0.07 251
$
0.24 251
$
0.03 251
$
6.35 251
RECONCILIATION OF GAAP OPERATING RESULTS TO ADJUSTED EARNINGS (NON-GAAP) FOR FISCAL 2008 THROUGH SIX MONTHS ENDED SEPTEMBER 30, 2014 (unaudited) (in millions, except per share amounts)
Year Ended March 31, 2011 Acquisition Expenses and Litigation Related Reserve Adjustments Adjustments
As Reported (GAAP)
Amortization of AcquisitionRelated Intangibles
Revenues
$
$
-
$
-
$
Gross profit Operating expenses Other income, net Impairment of equity investment Interest expense Income from continuing operations before income taxes Income tax expense Income from continuing operations after tax Income from continuing operations, net of tax, attributable to noncontrolling interests
$
$
16 115 -
$
-
$
Income from continuing operations, net of tax, attributable to McKesson Corporation Diluted earnings per common share from continuing operations, net of tax, attributable to McKesson Corporation (a) Diluted weighted average common shares
111,804 5,828 (4,041) 35 (222)
$
$
$
43 (16) 25
213 -
3
$
-
111,804 5,847 (3,670) 19 (197)
52 (16)
213 (64)
3 (1)
1,999 (635)
1,097
80
36
149
2
1,364
-
-
-
-
-
-
$
1,097
$
80
$
36
$
149
$
2
$
1,364
$
4.17 263
$
0.30 263
$
0.14 263
$
0.57 263
$
0.01 263
$
5.19 263
Revenues
$
$
Gross profit Operating expenses Other income, net Impairment of equity investment Interest expense Income from continuing operations before income taxes Income tax expense
$
Income from continuing operations after tax Income from continuing operations, net of tax, attributable to noncontrolling interests
(a) Certain computations may reflect rounding adjustments
-
131 (51)
As Reported (GAAP)
Diluted earnings per common share from continuing operations, net of tax, attributable to McKesson Corporation (a) Diluted weighted average common shares
Adjusted Earnings (Non-GAAP)
1,600 (503)
Amortization of AcquisitionRelated Intangibles
Income from continuing operations, net of tax, attributable to McKesson Corporation
LIFO-Related Adjustments
108,425 5,527 (3,558) 43 (187)
-
$
21 97
Year Ended March 31, 2010 Acquisition Expenses and Litigation Related Reserve Adjustments Adjustments
LIFO-Related Adjustments
Adjusted Earnings (Non-GAAP) $
$
-
$
-
$
$
-
$
(20) -
$
-
8
$
-
108,425 5,556 (3,481) 43 (187)
1,825 (605)
118 (46)
-
(20) 8
8 (3)
1,931 (646)
1,220
72
-
(12)
5
1,285
-
-
-
-
-
-
$
1,220
$
72
$
-
$
(12)
$
5
$
1,285
$
4.46 273
$
0.26 273
$
-
$
(0.04) 273
$
0.02 273
$
4.70 273
RECONCILIATION OF GAAP OPERATING RESULTS TO ADJUSTED EARNINGS (NON-GAAP) FOR FISCAL 2008 THROUGH SIX MONTHS ENDED SEPTEMBER 30, 2014 (unaudited) (in millions, except per share amounts)
As Reported (GAAP)
Amortization of AcquisitionRelated Intangibles
Revenues
$
$
Gross profit Operating expenses Other income, net Impairment of equity investment Interest expense Income from continuing operations before income taxes Income tax expense Income from continuing operations after tax
$
Income from continuing operations, net of tax, attributable to noncontrolling interests Income from continuing operations, net of tax, attributable to McKesson Corporation Diluted earnings per common share from continuing operations, net of tax, attributable to McKesson Corporation (a) Diluted weighted average common shares
106,376 5,251 (4,080) 74 (63) (144)
-
$
29 97
$
-
$
-
$
$
-
$
493 -
$
8
$
-
106,376 5,288 (3,490) 74 (63) (144)
126 (49)
-
493 (182)
8 (3)
1,665 (474)
798
77
-
311
5
1,191
-
-
-
-
-
-
$
798
$
77
$
-
$
311
$
5
$
1,191
$
2.86 279
$
0.28 279
$
-
$
1.11 279
$
0.02 279
$
4.27 279
Revenues
$
$
Gross profit Operating expenses Other income, net Impairment of equity investment Interest expense Income from continuing operations before income taxes Income tax expense Income from continuing operations after
$
101,454 4,888 (3,427) 119 (142)
-
$
27 78
Year Ended March 31, 2008 Acquisition Expenses and Litigation Related Reserve Adjustments Adjustments $
-
$
-
-
$
-
Adjusted Earnings (Non-GAAP)
$
-
$
$
(14) -
$
4 (2) 2
-
LIFO-Related Adjustments
(5)
-
105 (40) 65
-
$
4
-
1,438 (466) 972
Income from continuing operations, net of tax, attributable to noncontrolling interests
(a) Certain computations may reflect rounding adjustments
Adjusted Earnings (Non-GAAP)
1,038 (240)
As Reported (GAAP)
Diluted earnings per common share from continuing operations, net of tax, attributable to McKesson Corporation (a) Diluted weighted average common shares
LIFO-Related Adjustments
$
-
Amortization of AcquisitionRelated Intangibles
Income from continuing operations, net of tax, attributable to McKesson Corporation
Year Ended March 31, 2009 Acquisition Expenses and Litigation Related Reserve Adjustments Adjustments
(5) 2 (3)
-
(14) 5 (9)
-
101,454 4,901 (3,350) 119 (142) 1,528 (501) 1,027
-
-
$
972
$
65
$
2
$
(3)
$
(9)
$
1,027
$
3.26 298
$
0.22 298
$
0.01 298
$
(0.01) 298
$
(0.03) 298
$
3.45 298
RECONCILIATION OF GAAP SEGMENT FINANCIAL RESULTS TO ADJUSTED EARNINGS (NON-GAAP) FOR FISCAL 2008 THROUGH SIX MONTHS ENDED SEPTEMBER 30, 2014 (unaudited) (in millions)
Six Months Ended September 30, 2014
As Reported (GAAP): Revenues Gross profit Operating expenses Other income, net Impairment of equity investment Income from continuing operations before interest expense Interest expense Income from continuing operations before income taxes
Distribution Solutions
Technology Solutions
Corporate & Interest Expense
$
87,278
$
$
$
4,998 (3,494) 37 1,541 1,541
$
$
Gross profit margin Operating expenses as a % of revenues Operating pre-tax profit as a % of revenues Pre-Tax Adjustments: Gross profit Operating expenses Amortization of acquisition-related intangibles
$
5.73% 4.00% 1.77%
$
236 236
1,538 722 (531) 2 193 193
$
$
46.94% 34.53% 12.55%
$
5 20 25
Gross profit Operating expenses Other income, net Interest expense Acquisition expenses and related adjustments
100 100
-
Operating expenses - Litigation reserve adjustments
-
Gross profit - LIFO-related adjustments
192
$
$
87,278
$
1,538
$
$
5,190 (3,158) 37 2,069 2,069
$
$
727 (510) 2 219 219
$
$
47.27% 33.16% 14.24%
(a) Certain computations may reflect rounding adjustments
(209) 5 (204) (200) (404) -
1,607 (1,161) 2 448 448
$
$
6.44% 4.78% 1.71%
$
5 256 261
192
Adjusted Earnings (Non-GAAP): Revenues
5.95% 3.62% 2.37%
$
10
$
$
$
$
5,720 (4,244) 44 1,520 (200) 1,320
-
26
3,330
$
-
$
$
$
-
1
Corporate & Interest Expense
88,816
111 111
528
$
-
Technology Solutions
$
10 10
1 -
$
Gross profit margin Operating expenses as a % of revenues Operating pre-tax profit as a % of revenues
(219) 5 (214) (200) (414)
Total
-
Total pre-tax adjustments
Gross profit Operating expenses Other income, net Impairment of equity investment Income from continuing operations before interest expense Interest expense Income from continuing operations before income taxes
-
Year ended March 31, 2014 Distribution Solutions 134,426 6,767 (4,335) 29 2,461 2,461
$
5.03% 3.22% 1.83%
$
1 255 256
$
48.26% 34.86% 13.45%
$
$
$
137,756
$ 119,046
$
3,150
$
$
$
1,446 (1,120) 4 330 330
$
8,374 (5,947) 33 2,460 (303) 2,157
$
6.08% 4.32% 1.79%
47 47
-
68
-
-
68
72
-
311
-
-
311
13
-
80
$
$
88,816
$
134,426
$
3,330
$
$
5,917 (3,877) 44 2,084 (200) 1,884
$
$
1,620 (1,094) 2 528 528
$
7,079 (3,893) 29 3,215 3,215 5.27% 2.90% 2.39%
$
48.65% 32.85% 15.86%
$
82
(429) 16 (413) (257) (670) -
$
916
$
137,756
$
$
8,699 (5,416) 47 3,330 (257) 3,073 6.31% 3.93% 2.42%
$
$
2 146 148
$
45.90% 35.56% 10.48%
3 155 14 46 218
$
$
$
4.57% 2.58% 1.84%
21 14 46 81
754
-
5,435 (3,068) 19 (191) 2,195 2,195
3 15 18
$
$
$
Corporate & Interest Expense
11 308 319
564
6.66% 4.37% 2.35%
(451) 2 (449) (303) (752) -
$
$
$
Total
Technology Solutions
1 1
119 119
10 52 62
-
Year ended March 31, 2013 Distribution Solutions
$
11 49 60
(346) 11 (335) (240) (575)
Year ended March 31, 2012
Total
Distribution Solutions
Technology Solutions
Corporate & Interest Expense
$ 122,196
$ 119,424
$
3,029
$
$
$
$
1,378 (1,022) 4 360 360
$
$
-
$
7 7
-
$
24 24
-
-
72
149
-
-
-
13
11
-
-
$
$ 119,046
$
3,150
$
-
$
$
1,457 (1,064) 4 397 397
$
46.25% 33.78% 12.60%
$
(409) 11 (398) (229) (627) -
16 47 63
$
1
1
$ 122,196
$ 119,424
$
3,029
$
$
$
$
1,394 (974) 4 424 424
$
$
4.24% 2.14% 2.11%
$
46.02% 32.16% 14.00%
$
149 11 1
(412) (412) (251) (663) -
17 167 184 26 26
1 -
$
5.65% 3.50% 2.02%
$
-
64
5,069 (2,561) 16 2,524 2,524
$
6,435 (4,289) 20 2,166 (251) 1,915 5.26% 3.50% 1.77%
-
1 -
$
6,907 (4,276) 34 (191) 2,474 (229) 2,245
$
$
305
$
295
1 120 121
$
-
(10) 11 1
(52)
$
$
45.49% 33.74% 11.89%
(64) 11 (53)
$
$
$
4.23% 2.39% 1.86%
Total $ 122,453
(413) (413) (251) (664)
13 196 209
67
4.58% 2.35% 2.08%
5,057 (2,854) 16 2,219 2,219
1 1
$
$
$
5.63% 3.71% 1.79%
280
5,450 (2,803) 19 (191) 2,475 2,475
6,881 (4,534) 34 (191) 2,190 (240) 1,950
-
$
370
$ 122,453 $
$
6,463 (3,947) 20 2,536 (251) 2,285 5.28% 3.22% 2.07%
RECONCILIATION OF GAAP SEGMENT FINANCIAL RESULTS TO ADJUSTED EARNINGS (NON-GAAP) FOR FISCAL 2008 THROUGH SIX MONTHS ENDED SEPTEMBER 30, 2014 (unaudited) (in millions)
As Reported (GAAP): Revenues Gross profit Operating expenses Other income (expense), net Impairment of equity investment Income from continuing operations before interest expense Interest expense Income from continuing operations before income taxes
Year ended March 31, 2010
Year ended March 31, 2009
Distribution Solutions
Technology Solutions
Corporate & Interest Expense
$
$
2,915
$
$
1,263 (1,000) 3 266 266
$
$
$
Gross profit margin Operating expenses as a % of revenues Operating pre-tax profit as a % of revenues Pre-Tax Adjustments: Gross profit Operating expenses Amortization of acquisition-related intangibles
Year ended March 31, 2011
108,889 4,565 (2,673) 5 1,897 (1) 1,896
$
4.19% 2.45% 1.74%
$
70 70
$
43.33% 34.31% 9.13%
$
16 45 61
(368) 27 (341) (221) (562)
$ $
$
-
$
-
Total
Distribution Solutions
Technology Solutions
Corporate & Interest Expense
111,804
$
$
2,847
$
$
1,308 (967) 5 346 (2) 344
$
5,828 (4,041) 35 1,822 (222) 1,600
$
$
5.21% 3.61% 1.63%
$
16 115 131
105,578 4,219 (2,260) 29 1,988 (2) 1,986
$
4.00% 2.14% 1.88%
$
1 50 51
$
45.94% 33.97% 12.15%
$
20 47 67
(331) 9 (322) (183) (505)
$ $
$
-
$
-
Total
Distribution Solutions
Technology Solutions
Corporate & Interest Expense
108,425
$ 103,568
$
2,808
$
$
$
1,296 (994) 6 308 (4) 304
$
5,527 (3,558) 43 2,012 (187) 1,825
$
5.10% 3.28% 1.86%
$
21 97 118
3,955 (2,777) 43 (63) 1,158 2 1,160
$
3.82% 2.68% 1.12%
$
1 50 51
$
46.15% 35.40% 10.97%
$
28 47 75
(309) 25 (284) (142) (426)
Year ended March 31, 2008
Distribution Solutions
Technology Solutions
Corporate & Interest Expense
$ 106,376
$
98,719
$
2,735
$
$
$
3,586 (2,138) 35 1,483 4 1,487
$
1,302 (1,011) 9 300 (4) 296
$
Total
$
-
$
-
5,251 (4,080) 74 (63) 1,182 (144) 1,038
$
4.94% 3.84% 1.11%
$
29 97 126
$
1 28 29
Gross profit Operating expenses Other income, net Interest expense Acquisition expenses and related adjustments
41 41
-
-
43 (16) 25 52
-
-
-
-
-
-
-
-
-
2 (16) 25 11
Operating expenses - Litigation reserve adjustments
213
-
-
213
-
-
(20)
(20)
493
-
-
493
-
Gross profit - LIFO-related adjustments
3
-
-
Total pre-tax adjustments
$
327
$
61
$
Adjusted Earnings (Non-GAAP): Revenues
$
108,889
$
2,915
$
$
1,279 (955) 3 327 327
$
Gross profit Operating expenses Other income, net Impairment of equity investment Income from continuing operations before interest expense Interest expense Income from continuing operations before income taxes Gross profit margin Operating expenses as a % of revenues Operating pre-tax profit as a % of revenues
$
$
4,568 (2,349) 5 2,224 (1) 2,223 4.20% 2.16% 2.04%
$
$
43.88% 32.76% 11.22%
(a) Certain computations may reflect rounding adjustments
11
(366) 11 (355) (196) (551) -
3
8
-
-
8
$
399
$
59
$
67
$
(20)
$
106
$
111,804
$
105,578
$
2,847
$
-
$
108,425
$
1,328 (920) 5 413 (2) 411
$
$
$
5,847 (3,670) 19 2,196 (197) 1,999 5.23% 3.28% 1.96%
$
$
4,228 (2,210) 29 2,047 (2) 2,045 4.00% 2.09% 1.94%
$
46.65% 32.31% 14.51%
$
(351) 9 (342) (183) (525) -
$
$
5,556 (3,481) 43 2,118 (187) 1,931 5.12% 3.21% 1.95%
8 $
-
-
$
3.63% 2.17% 1.50%
$
26 50 76
4
$
-
$
-
$
627
$
19
$
76
$
$ 103,568
$
2,808
$
-
$ 106,376
$
98,719
$
2,735
$
$
$
1,324 (947) 6 383 (4) 379
$
$
$
3,573 (2,106) 35 1,502 4 1,506
$
1,328 (961) 9 376 (4) 372
$
$
3.83% 2.16% 1.65%
$
47.15% 33.73% 13.64%
$
-
$
4.97% 3.28% 1.70%
$
3.62% 2.13% 1.52%
$
48.56% 35.14% 13.75%
$
-
$
27 78 105 4 4 (5) (14)
(5)
(283) 75 (208) (142) (350) -
4,888 (3,427) 119 1,580 (142) 1,438 4.82% 3.38% 1.56%
-
75
5,288 (3,490) 74 (63) 1,809 (144) 1,665
$
(5)
$
(309) 25 (284) (142) (426)
$
-
552
3,964 (2,234) 43 (63) 1,710 2 1,712
(278) 75 (203) (142) (345)
-
(14)
Total $ 101,454
-
-
4 -
8
$
47.61% 36.97% 10.97%
-
$
90
$ 101,454 $
$
4,901 (3,350) 119 1,670 (142) 1,528 4.83% 3.30% 1.65%