McKesson Corporation (ticker: MCK, exchange: New York Stock Exchange (.N))
News Release -
23-Jan-2001
McKesson HBOC, Inc. Reports Third Quarter Results
SAN FRANCISCO--(BW HealthWire)--Jan. 23, 2001--McKesson HBOC, Inc.
(NYSE:MCK) today reported income and earnings per diluted share from
continuing operations before special items of $69.3 million and 24
cents, respectively, in its third quarter ended December 31, 2000,
compared to income and earnings per diluted share from continuing
operations before special items of $60.5 million and 21 cents in the
third quarter a year ago. Unless otherwise noted, all subsequent
financial discussion covers continuing operations and excludes special
items.
Including sales to customers' warehouses, McKesson HBOC, Inc.'s
revenues in the third quarter were $11.0 billion compared to $9.9
billion in the third quarter a year ago. Excluding sales to customers'
warehouses, the company's revenues in the third quarter were $8.0
billion compared to $7.5 billion in the third quarter a year ago.
In the supply management segment, operating profit grew 21 percent
and the operating margin rate expanded 25 basis points in the third
quarter compared to a year ago. This margin improvement follows
increases of four basis points in the first quarter and 12 basis
points in the second quarter, compared to the corresponding periods a
year ago. Supply management revenues were up seven percent compared to
the same period a year ago, reflecting the impact of Y2K-driven
ordering in December 1999.
In the information technology segment, total revenues and
operating margin both were up sequentially in the third quarter.
Bookings of one-time software orders increased in the third quarter
compared to a year ago, and backlog increased approximately $140
million from the second quarter, but neither yet reflects any orders
from the new HorizonWP(TM) products, which will become Generally
Available in the fourth fiscal quarter.
Revenues of the iMcKesson business segment were up sequentially
and versus last year's third quarter.
"McKessonHBOC's financial performance demonstrates continued
progress against the objectives we set for the business units at the
beginning of the fiscal year," said John H. Hammergren, chief
executive officer of McKessonHBOC. "Operating margin improvement in
our supply management business is accelerating as the year progresses,
and revenue growth remains solid. In particular, operating performance
improvements across the pharmaceutical distribution business in both
the United States and Canada are delivering increased profitability.
As a result, we enter the fourth quarter, historically our strongest
in terms of pharmaceutical distribution profitability, with
significant momentum."
"Interest continues to expand for the broad offering of
information technology products and services from McKessonHBOC. During
the quarter, ITB's sales focus has resulted in strong demand for the
company's new HorizonWP family of Web-based products. We also signed a
number of major outsourcing agreements. So we enter the fourth quarter
with positive momentum in this business as well, with revenues up
sequentially for the first time in six quarters."
David L. Mahoney, chief executive officer of iMcKesson, commented,
"The reorganization of our sales force, new solution-selling approach
and aggressive marketing campaign for our Medical Management services
to new and existing payor customers, initiated in the second quarter,
have stabilized the core Access Health Services business as the
foundation for future growth. During the past quarter, we signed six
new, multi-year medical management agreements that affirm the value of
our integrated service and product offering to plan sponsors,
employers and pharmaceutical companies. This enabled us to deliver
sequential revenue growth for the third consecutive quarter and
year-over-year revenue growth for the first time since iMcKesson was
formed earlier this fiscal year. In addition, strong financial
discipline has enabled us to generate positive cash flow from
operations year-to-date."
"At the same time, we continue to refine our strategy for
penetrating the physician market with our PracticePoint(SM) suite of
modular clinical, administrative and physician-patient communication
tools."
Including special items totaling $62.0 million after-tax ($101.7
million pre-tax, approximately $100 million of which is non-cash),
income from continuing operations was $7.3 million and earnings per
diluted share was three cents in the third quarter. A year ago,
McKesson HBOC, Inc. had income from continuing operations of $160.6
million and earnings per diluted share of 56 cents, including special
items that increased income by $100.1 million.
Including the results of discontinued operations, net income was
$1.7 million in the third quarter compared to $166.8 million in the
third quarter a year ago and earnings per diluted share was one cent
compared to 58 cents.
Highlights of the Quarter
-
The Health Care Supply Management third-quarter operating
profit was up 21 percent and as a percentage of sales
(operating margin) increased 25 basis points over the third
quarter a year ago. The operating margin improvement to 2.15
percent follows a 12 basis point year-over-year improvement in
the second quarter and four basis point improvement in the
first quarter, delivering on McKessonHBOC's commitment to show
continued year-over-year improvement in operating margin. This
improvement reflects the success of several initiatives
throughout the U.S. pharmaceutical distribution and services
business, and continued leverage of the pharmaceutical
distribution network. McKessonHBOC's Canadian pharmaceutical
business also showed strong results, which were offset by
reduced profits of the Mexican distribution business in which
the company owns a 22 percent interest.
-
The seven percent quarterly increase in Health Care Supply
Management revenues reflects the impact of heavy Y2K-induced
purchases in December 1999, which depressed the comparison in
both U.S. pharmaceutical and medical-surgical distribution
businesses. The reduced order rate by customers in early
calendar 2000 as they liquidated Y2K-related inventories
should have a positive impact on revenue growth in this
business in the fourth fiscal quarter this year compared to a
year ago. Also, McKessonHBOC is beginning to implement $450
million in net new pharmaceutical distribution agreements with
hospitals that are members of the Novation group purchasing
organization. Despite the Y2K effect, McKessonHBOC had strong
growth from its Canadian pharmaceutical distribution business
in the third quarter.
-
Health Care Information Technology segment revenues were up
sequentially for the first time in six quarters. Comparable
one-time software bookings were up seven percent in the
quarter and 52 percent year-to-date. During the quarter,
approximately $10 million in contracted one-time software
sales was deferred into future periods under percentage of
completion contracting. While selling activity continues to
increase, one-time software booking momentum slowed after two
strong quarters. The primary contributing factor was the
significant focus on the introduction of HorizonWP, which is
not yet Generally Available. Through calendar year-end, 56
customers signed pre-sales agreements to install HorizonWP.
-
Health Care Information Technology segment backlog increased
approximately $140 million, or 10 percent, to $1.54 billion at
December 31, 2000, compared to $1.40 billion at September 30,
2000, reflecting the impact of several large, long-term
outsourcing agreements, software bookings and the third
quarter renewal of annual maintenance fees for the coming
calendar year. The outsourcing agreements included a
seven-year agreement with Wellstar Health System, an
eight-year agreement for the Welsh hospital system and
agreements with Trover Foundation and Civista Medical Center.
The backlog represents the projected revenues to be realized
from the execution of signed contracts.
-
Usage of iMcKesson's products and services continues to
expand, reflecting accelerated marketing and sales of Medical
Management products and services, and the integration and
market launch of its PracticePoint(SM) suite. During the
quarter, iMcKesson diversified the Access Health Services
customer base to include a large, self-insured employer for
which it is providing integrated care management services to
approximately 100,000 employees and dependents. In one of the
industry's largest disease management contracts, Access Health
significantly expanded its Anthem Blue Cross and Blue Shield
congestive heart failure (CHF) pilot program to include asthma
and diabetes disease management for approximately 11,000
high-risk members. In addition, iMcKesson recently renewed its
largest care management contract, with the Blue Cross and Blue
Shield Association's Federal Employee Program. iMcKesson also
expanded usage of PracticePoint Connect(SM) during the
quarter, signing contracts under which physicians can provide
more than one million patients with secure, personalized web
pages. Since its introduction, 40,000 patients have become
active users of PracticePoint Connect(SM) for secure, timely
communications with their physicians' practices.
-
Both net interest expense and corporate expenses decreased in
the third quarter compared to the prior year. Net interest
expense decreased $2.3 million compared to the third quarter a
year ago, reflecting lower borrowings. Corporate expenses
decreased $3.8 million, primarily as a result of a reduced
receivable sale program.
-
The company generated $82 million cash from operations for the
first nine months including a significant tax payment made in
the current fiscal year resulting from the sale of the Water
Products business in the previous fiscal year. At December 31,
2000, McKesson HBOC, Inc.'s cash and marketable securities
totaled $352 million. Total debt at December 31, 2000, was
$1.2 billion, stockholders' equity was $3.7 billion and the
company's net debt-to-capital ratio was 18 percent.
-
Special charges in the third quarter totaled $101.7 million
pre-tax, $62.0 million after-tax. The total charge includes a
non-cash charge of approximately $100 million for the
impairment of investments, the largest of which results from
the revaluation of warrants in WebMD, and charges of $1.7
million for the closure of a pharmaceutical distribution
facility and $1.1 million for securities litigation costs.
-
Discontinued operations for the third quarter includes an
adjustment to the gain recorded on the sale of the Water
Products business in the fourth quarter of fiscal 2000.
McKesson HBOC, Inc., a Fortune 40 corporation, delivers unique
supply and information management solutions that reduce costs and
improve quality for its healthcare customers. More information about
McKesson HBOC, Inc. is available on the company's World Wide Website
at: http://www.mckhboc.com. A Webcast of the company's regular
quarterly conference call to review financial results with the
financial community is available through the Website, live at 11:30 AM
EDT today.
Except for the historical information contained herein, the
matters discussed in this press release may constitute forward-looking
statements within the meaning of the Private Securities Litigation
Reform Act of 1995 that involves risks and uncertainties that could
cause actual results to differ materially from those projected. These
statements may be identified by their use of forward-looking
terminology such as "believes," "expects," "may," "should," "intends,"
"plans," "estimates," "anticipates" and similar words. The most
significant of these risks and uncertainties are described in the
Company's Form 10-K, Form 10-Q and Form 8-K reports filed with the
Securities and Exchange Commission and include, but are not limited
to: the resolution or outcome of pending litigation and government
investigations relating to the Company's previously announced
financial restatement ("Restatement"); the effect of the events
relating to, or arising out of, the Restatement on the Company's
ability to attract and retain employees and management; the changing
U.S. healthcare environment, including potential changes in private
and governmental reimbursement for healthcare products and services,
the method by which such products and services are delivered,
legislation or regulations governing such products and services, or
mandated benefits or changes in manufacturer's pricing or distribution
policies; substantial defaults in payment or a material reduction in
purchases by large customers; the ability of the Company's Information
Technology Business to retain existing customers and to attract new
customers in light of rapid technological advances, challenges in
integrating the Company's software products, or the slowing or
deferral of demand for such products resulting from the impact of
current or pending government regulations; and the Company's ability
to successfully integrate and operate acquired businesses, and manage
the risks associated with such businesses, including the acquisition
that created McKesson HBOC. The Company assumes no obligation to
update information contained in this release.
Schedule I-1
McKESSON HBOC, INC.
CONDENSED INCOME INFORMATION
(unaudited)
(in millions except per share amounts)
Quarter Ended December 31
----------------------------------------
%
FY01 FY00 Chg.
---------- ---------- -----
Revenues
Excluding sales to
customers'
warehouses $ 8,014.0 $ 7,544.7 6.2 %
Sales to customers'
warehouses 3,015.1 2,346.2 28.5
Total 11,029.1 9,890.9 11.5
Costs and expenses
before special items 10,913.0 9,788.6 11.5
Special items (101.7)(1) 158.3(3)
Income before income
taxes 14.4 260.6
Income taxes (5.6) (98.5)
Dividends on preferred
securities of
subsidiary trust (1.5) (1.5)
Income after taxes
Continuing
operations 7.3 160.6
Discontinued
operations (5.6)(2) 6.2(4)
Net Income $ 1.7 $ 166.8
Net income
Continuing
operations
Before special
items $ 69.3 $ 60.5 14.5
Special items (62.0)(1) 100.1(3)
Total from
continuing
operations 7.3 160.6
Discontinued
operations (5.6)(2) 6.2(4)
Total $ 1.7 $ 166.8
Earnings per common
share
Diluted
Continuing
operations
Before special
items $ 0.24 $ 0.21 14.3
Special items (0.21)(1) 0.35(3)
Total from
continuing
operations 0.03 0.56
Discontinued
operations (0.02)(2) 0.02(4)
Total $ 0.01 $ 0.58
Basic
Continuing
operations
Before
special items $ 0.24 $ 0.21 14.3
Special items (0.21)(1) 0.36(3)
Total from
continuing
operations 0.03 0.57
Discontinued
operations (0.02)(2) 0.02(4)
Total $ 0.01 $ 0.59
Shares on which
earnings per common
share were based
Diluted 295.1 288.8 2.2
Basic 283.4 281.4 0.7
Nine Months Ended December 31
----------------------------------------
%
FY01 FY00 Chg.
---------- ---------- -----
Revenues
Excluding sales to
customers'
warehouses $22,916.7 $20,781.8 10.3 %
Sales to customers'
warehouses 7,715.7 6,647.3 16.1
Total 30,632.4 27,429.1 11.7
Costs and expenses
before special items 30,306.3 27,090.3 11.9
Special items (99.5)(1) 108.1(3)
Income before income
taxes 226.6 446.9
Income taxes (89.2) (169.5)
Dividends on preferred
securities of
subsidiary trust (4.6) (4.6)
Income after taxes
Continuing
operations 132.8 272.8
Discontinued
operations (5.6)(2) 23.4(4)
Net Income $ 127.2 $ 296.2
Net income
Continuing
operations
Before special
items $ 194.3 $ 203.6 (4.6)
Special items (61.5)(1) 69.2(3)
Total from
continuing
operations 132.8 272.8
Discontinued
operations (5.6)(2) 23.4(4)
Total $ 127.2 $ 296.2
Earnings per common
share
Diluted
Continuing
operations
Before special
items $ 0.68 $ 0.72 (5.6)
Special items (0.21)(1) 0.24(3)
Total from
continuing
operations 0.47 0.96
Discontinued
operations (0.02)(2) 0.08(4)
Total $ 0.45 $ 1.04
Basic
Continuing
operations
Before
special items $ 0.69 $ 0.72 (4.2)
Special items (0.22)(1) 0.25(3)
Total from
continuing
operations 0.47 0.97
Discontinued
operations (0.02)(2) 0.08(4)
Total $ 0.45 $ 1.05
Shares on which
earnings per common
share were based
Diluted 292.3 289.8 0.9
Basic 283.0 281.1 0.7
(1) The quarter and nine months ended December 31, 2000 include
pre-tax charges of $98.9 million for equity investment
impairments. Also includes pre-tax charges of $1.7 million in the
quarter and $4.5 million in the nine months for asset impairments,
severance and exit-related costs, and $1.1 million in the quarter
and $1.8 million in the nine months for legal fees incurred in
connection with the pending securities litigation. In addition,
the nine months ended December 31, 2000 includes a $7.8 million
pre-tax gain on the liquidation of an investment and a $2.1
million charge for the write-off of purchased in-process
technology.
(2) The quarter and nine months ended December 31, 2000 include
charges primarily resulting from an adjustment to the previously
recorded gain on the sale of the Water Products business.
(3) The quarter and nine months ended December 31, 1999 include net
gains of $253.3 million primarily from the exchange and subsequent
sale of equity investments and a $5.7 million reduction in prior
year restructuring reserves. These gains are partially offset by
charges of $96.1 million primarily for accounts receivable and
customer reserves and asset impairments, and $1.5 million for the
write-off of purchased in-process technology. Also includes
charges of $2.4 million in the quarter and $17.4 million in the
nine months for accounting and legal fees and other costs incurred
in connection with the restatement of prior years' financial
results and resulting pending securities litigation, and
acquisition-related costs of $0.7 million in the quarter and $3.6
million in the nine months. In addition, the nine months ended
December 31, 1999 includes charges of $32.3 million for severance
and other costs associated with former employees.
(4) The quarter and nine months ended December 31, 1999 reflect the
results of the Water Products business that was sold in the fourth
quarter of fiscal 2000.
Schedule I-2
McKESSON HBOC, INC.
RESULTS BY BUSINESS SEGMENT
(unaudited)
(in millions)
Quarter Ended December 31
--------------------------------------
%
FY01 FY00(1) Chg.
---------- ---------- ------
REVENUES
Health Care Supply
Management
Pharmaceutical
Distribution &
Services(2)
U.S. Health Care $ 6,333.5 $ 5,931.5 6.8 %
International 694.2 610.6 13.7
Total
Pharmaceutical
Distribution &
Services 7,027.7 6,542.1 7.4
Medical/Surgical
Distribution &
Services 710.8 704.6 0.9
Total Health
Care Supply
Management 7,738.5 7,246.7 6.8
Health Care Information
Technology
Software 27.8 37.2 (25.3)
Services 150.9 165.8 (9.0)
Hardware 21.1 20.6 2.4
Total Health
Care
Information
Technology 199.8 223.6 (10.6)
iMcKesson 72.3 70.6 2.4
Corporate 3.4 3.8
Total $ 8,014.0 $ 7,544.7 6.2
OPERATING PROFIT
Health Care Supply
Management
Before special items $ 166.5 $ 137.9 20.7
Special items (1.7)(3) (24.6)(6)
Total Health Care
Supply Management 164.8 113.3
Health Care Information
Technology
Before special items 12.4 16.7 (25.7)
Special items -- (58.8)(7)
Total Health Care
Information
Technology 12.4 (42.1)
iMcKesson
Before special items (12.5) 4.1
Special items (98.9)(4) 244.8 (8)
Total iMcKesson (111.4) 248.9
Total Operating
Profit 65.8 320.1
Interest -- net (24.8) (27.1)
Corporate and other
Before special items (25.5) (29.3)
Special items (1.1)(5) (3.1)(9)
Total Corporate
and other (26.6) (32.4)
Income from continuing
operations before
income taxes
Before special items 116.1 102.3 13.5
Special items (101.7)(3)-(5) 158.3(6)-(9)
Income from
continuing
operations before
income taxes $ 14.4 $ 260.6
Nine Months Ended December 31
---------------------------------------
%
FY01 FY00(1) Chg.
---------- ---------- ------
REVENUES
Health Care Supply
Management
Pharmaceutical
Distribution &
Services(2)
U.S. Health Care $17,981.9 $16,101.9 11.7 %
International 1,974.9 1,713.8 15.2
Total
Pharmaceutical
Distribution &
Services 19,956.8 17,815.7 12.0
Medical/Surgical
Distribution &
Services 2,145.1 2,032.3 5.6
Total Health
Care Supply
Management 22,101.9 19,848.0 11.4
Health Care Information
Technology
Software 85.0 96.8 (12.2)
Services 454.6 538.4 (15.6)
Hardware 55.4 67.3 (17.7)
Total Health
Care Information
Technology 595.0 702.5 (15.3)
iMcKesson 210.2 221.8 (5.2)
Corporate 9.6 9.5
Total $22,916.7 $20,781.8 10.3
OPERATING PROFIT
Health Care Supply
Management
Before special items $ 466.8 $ 390.7 19.5
Special items (2.2)(3) (24.6)(6)
Total Health Care
Supply Management 464.6 366.1
Health Care Information
Technology
Before special items 30.9 72.7 (57.5)
Special items -- (58.8)(7)
Total Health Care
Information
Technology 30.9 13.9
iMcKesson
Before special items (28.6) 33.7
Special items (95.5)(4) 244.8 (8)
Total iMcKesson (124.1) 278.5
Total Operating
Profit 371.4 658.5
Interest -- net (76.6) (81.5)
Corporate and other
Before special items (66.4) (76.8)
Special items (1.8)(5) (53.3)(9)
Total Corporate
and other (68.2) (130.1)
Income from continuing
operations before
income taxes
Before special items 326.1 338.8 (3.7)
Special items (99.5)(3)-(5) 108.1 (6)-(9)
Income from
continuing
operations before
income taxes $ 226.6 $ 446.9
(1) Reflects the reclassification of the results of certain business
units which were previously included in the Health Care Supply
Management and Health Care Information Technology segments into
iMcKesson.
(2) Excludes sales to customers' warehouses of $3,015.1 million and
$2,346.2 million in the quarters and $7,715.7 million and $6,647.3
million in the nine months ended December 31, 2000 and 1999,
respectively.
(3) The quarter and nine months ended December 31, 2000 include
charges for asset impairments, severance and facility closing
costs.
(4) The quarter and nine months ended December 31, 2000 include a
charge of $98.9 million for asset impairments of certain equity
investments. The nine months also includes a $7.8 million gain on
the liquidation of an investment, a charge of $2.1 million for the
write-off of purchased in-process technology and a $2.3 million
charge for severance and facility closing costs.
(5) Reflects charges for legal costs incurred in connection with the
pending securities litigation.
(6) Includes $30.3 million in charges for receivable reserves and
asset impairments, partially offset by a $5.7 million reduction in
prior year restructuring reserves.
(7) Reflects primarily a charge for a change in estimate of reserve
requirements for accounts receivable and customer reserves.
(8) Includes net gains totaling $253.3 million primarily from the
exchange and subsequent sale of equity investments. The gains are
offset, in part, by a charges of $7.0 million for accounts
receivable and customer reserves and $1.5 million for the
write-off of purchased in-process technology.
(9) Includes accounting and legal fees and other costs totaling $2.4
million in the quarter and $17.4 million in the nine months ended
December 31, 1999 incurred in connection with the restatement of
prior years' financial statements and resulting pending securities
litigation. Also includes acquisition-related costs of $0.7
million in the quarter and $3.6 million in the nine months. In
addition, the nine months ended December 31, 1999 includes $32.3
million in severance and other costs associated with former
employees.
Schedule II-1
McKESSON HBOC, INC.
PRO FORMA CONDENSED INCOME INFORMATION
Income From Continuing Operations Before Special Items
(unaudited)
(in millions except per share amounts)
Quarter Ended Nine Months Ended
December 31 December 31
-------------------------- --------------------------
% %
FY01 FY00 Chg. FY01 FY00 Chg.
--------- --------- ---- --------- --------- ----
Revenues
Excluding
sales to
customers'
warehouses $ 8,014.0 $ 7,544.7 6.2% $22,916.7 $20,781.8 10.3%
Sales to
customers'
warehouses 3,015.1 2,346.2 28.5 7,715.7 6,647.3 16.1
Total 11,029.1 9,890.9 11.5 30,632.4 27,429.1 11.7
Costs and
expenses 10,913.0 9,788.6 11.5 30,306.3 27,090.3 11.9
Income before
income taxes 116.1 102.3 13.5 326.1 338.8 (3.7)
Income taxes (45.3) (40.3) (127.2) (130.6)
Dividends on
preferred
securities
of subsidiary
trust (1.5) (1.5) (4.6) (4.6)
Income from
continuing
operations
before
special
items $ 69.3 $ 60.5 14.5 $ 194.3 $ 203.6 (4.6)
Earnings per
common share
Diluted $ 0.24 $ 0.21 14.3 $ 0.68 $ 0.72 (5.6)
Basic 0.24 0.21 14.3 0.69 0.72 (4.2)
Shares on
which
earnings per
common share
were based
Diluted 295.1 288.8 2.2 292.3 289.8 0.9
Basic 283.4 281.4 0.7 283.0 281.1 0.7
Schedule II-2
McKESSON HBOC, INC.
PRO FORMA RESULTS BY BUSINESS SEGMENT
Income From Continuing Operations Before Special Items
(unaudited)
(in millions)
Quarter Ended December 31
-------------------------------
%
FY01 FY00(1) Chg.
--------- --------- -----
REVENUES
Health Care Supply Management
Pharmaceutical Distribution
& Services(2)
U.S. Health Care $ 6,333.5 $ 5,931.5 6.8%
International 694.2 610.6 13.7
Total Pharmaceutical
Distribution
& Services 7,027.7 6,542.1 7.4
Medical/Surgical
Distribution & Services 710.8 704.6 0.9
Total Health Care
Supply Management 7,738.5 7,246.7 6.8
Health Care Information
Technology
Software 27.8 37.2 (25.3)
Services 150.9 165.8 (9.0)
Hardware 21.1 20.6 2.4
Total Health Care
Information
Technology 199.8 223.6 (10.6)
iMcKesson 72.3 70.6 2.4
Corporate 3.4 3.8
Total $ 8,014.0 $ 7,544.7 6.2
OPERATING PROFIT
Health Care Supply
Management $ 166.5 $ 137.9 20.7
Health Care Information
Technology 12.4 16.7 (25.7)
iMcKesson (12.5) 4.1
Total 166.4 158.7 4.9
Interest -- net (24.8) (27.1)
Corporate and other (25.5) (29.3)
Income before income taxes 116.1 102.3 13.5
Income taxes (45.3) (40.3)
Dividends on preferred
securities of
subsidiary trust (1.5) (1.5)
Income from continuing
operations before
special items $ 69.3 $ 60.5 14.5
STATISTICS ($ in millions)
Operating Profit as a
% of revenues(2)
Health Care Supply
Management 2.15 % 1.90 % 25 bp
Health Care Information
Technology 6.21 % 7.47 % (126)
iMcKesson (17.29)% 5.81 %
Earnings before interest
and income taxes $ 140.9 $ 129.4 8.9 %
as a % of revenues(2) 1.76 % 1.72 % 4 bp
Diluted earnings per share $ 0.24 $ 0.21 14.3 %
Return on committed
capital -- 12 months
ended 17.4 % 22.0 %
Return on equity -- 12
months ended 7.0 % 12.2 %
Nine Months Ended December 31
-------------------------------
%
FY01 FY00(1) Chg.
--------- --------- -----
REVENUES
Health Care Supply Management
Pharmaceutical Distribution
& Services(2)
U.S. Health Care $17,981.9 $16,101.9 11.7%
International 1,974.9 1,713.8 15.2
Total Pharmaceutical
Distribution
& Services 19,956.8 17,815.7 12.0
Medical/Surgical
Distribution & Services 2,145.1 2,032.3 5.6
Total Health Care
Supply Management 22,101.9 19,848.0 11.4
Health Care Information
Technology
Software 85.0 96.8 (12.2)
Services 454.6 538.4 (15.6)
Hardware 55.4 67.3 (17.7)
Total Health Care
Information
Technology 595.0 702.5 (15.3)
iMcKesson 210.2 221.8 (5.2)
Corporate 9.6 9.5
Total $22,916.7 $20,781.8 10.3
OPERATING PROFIT
Health Care Supply
Management $ 466.8 $ 390.7 19.5
Health Care Information
Technology 30.9 72.7 (57.5)
iMcKesson (28.6) 33.7
Total 469.1 497.1 (5.6)
Interest -- net (76.6) (81.5)
Corporate and other (66.4) (76.8)
Income before income taxes 326.1 338.8 (3.7)
Income taxes (127.2) (130.6)
Dividends on preferred
securities of
subsidiary trust (4.6) (4.6)
Income from continuing
operations before
special items $ 194.3 $ 203.6 (4.6)
STATISTICS ($ in millions)
Operating Profit as a
% of revenues(2)
Health Care Supply
Management 2.11 % 1.97 % 14 bp
Health Care Information
Technology 5.19 % 10.35 % (516)
iMcKesson (13.61)% 15.19 %
Earnings before interest
and income taxes $ 402.7 $ 420.3 (4.2)%
as a % of revenues(2) 1.76 % 2.02 % (26) bp
Diluted earnings per share $ 0.68 $ 0.72 (5.6)%
(1) Reflects the reclassification of the results of certain business
units which were previously included in the Health Care Supply
Management and Health Care Information Technology segments into
iMcKesson.
(2) Excludes sales to customers' warehouses of $3,015.1 million and
$2,346.2 million in the quarters and $7,715.7 million and $6,647.3
million in the nine months ended December 31, 2000 and 1999,
respectively.
Schedule III
McKESSON HBOC, INC.
CONDENSED BALANCE SHEET INFORMATION
(unaudited)
(in millions)
December 31, March 31,
2000 2000
------------ -------------
ASSETS
Current Assets
Cash and cash equivalents $ 333.2 $ 548.9
Marketable securities available
for sale 19.0 57.0
Receivables 3,541.9 3,034.5
Inventories 4,922.9 4,149.3
Prepaid expenses 120.8 175.8
Total 8,937.8 7,965.5
Property, Plant and Equipment, net 559.7 555.4
Capitalized Software 105.4 92.2
Notes Receivable 126.7 100.9
Goodwill and Other Intangibles 1,199.6 1,185.6
Other Assets 507.6 473.3
Total Assets $ 11,436.8 $ 10,372.9
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities
Drafts payable $ 600.4 $ 205.6
Accounts payable -- trade 4,413.6 3,678.3
Deferred revenue 405.3 368.7
Short-term borrowings 1.3 --
Current portion of long-term debt 18.0 16.2
Salaries and wages 91.5 115.5
Taxes 132.7 354.8
Interest and dividends 53.2 33.9
Other 345.8 348.8
Total 6,061.8 5,121.8
Postretirement Obligations and
Other Noncurrent Liabilities 255.2 245.7
Long-Term Debt 1,207.5 1,243.8
McKesson HBOC -- Obligated
Mandatorily Redeemable Convertible
Preferred Securities of Subsidiary
Grantor Trust Whose Sole Assets Are
Junior Subordinated Debentures of
McKesson HBOC 195.9 195.8
Stockholders' Equity 3,716.4 3,565.8
Total $ 11,436.8 $ 10,372.9
Schedule IV
McKESSON HBOC, INC.
CONDENSED CASH FLOW INFORMATION
(unaudited)
(in millions)
Nine Months Ended
December 31
---------------------------
2000 1999
------------ ------------
OPERATING ACTIVITIES
Income From Continuing Operations $ 132.8 $ 272.8
Adjustments to Reconcile Net Cash
Provided By Operating Activities
Depreciation 85.4 86.3
Amortization 92.4 74.1
Provision for bad debts 37.3 92.3
Other non-cash items 69.8 (144.4)
Total 417.7 381.1
Effects of Changes In
Receivables (566.6) (314.5)
Inventories (780.9) (538.8)
Accounts and drafts payable 1,136.4 583.9
Deferred revenue 36.4 (32.7)
Taxes (145.6) 102.6
Other (9.1) 10.3
Total (329.4) (189.2)
Net cash provided by continuing
operations 88.3 191.9
Discontinued Operations (6.7) (25.3)
Net cash provided by operating
activities 81.6 166.6
INVESTING ACTIVITIES
Maturities/(Purchases) of Marketable
Securities 7.7 (4.7)
Property Acquisitions (96.0) (106.1)
Properties Sold 6.1 8.5
Acquisition of Businesses, Less Cash
and Short-Term Investments Acquired (50.7) (123.7)
Other (93.5) (156.7)
Net cash provided (used) by investing
activities (226.4) (382.7)
FINANCING ACTIVITIES
Proceeds From the Issuance of Debt 5.6 772.3
Repayment of Debt (38.8) (564.7)
Dividends Paid on Preferred Securities
of Subsidiary Trust (7.5) (7.5)
Capital Stock Transactions
Issuances 34.2 24.8
Repurchases (25.7) --
ESOP notes and guarantees 10.9 15.6
Dividends paid (51.3) (50.6)
Other 1.7 (2.7)
Net cash provided (used) by investing
activities (70.9) 187.2
Net Decrease in Cash and Cash
Equivalents (215.7) (28.9)
Cash and Cash Equivalents at Beginning
of Period 548.9 233.7
Cash and Cash Equivalents at End of
Period $ 333.2 $ 204.8
CONTACT:
McKesson HBOC, Inc.
Larry Kurtz, 415/983-8418
larry.kurtz@mckhboc.com
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McKesson Corporation
