Long-Term Debt Maturities

Debt and Financing Activities

Information regarding long-term debt is as follows:



	March 31,
(In millions)	2014			2013
Denominated in U.S. Dollars
6.50% Notes due February 15, 2014	$	—		$	350
Floating Rate Notes due September 10, 2015	400			—
0.95% Notes due December 4, 2015	499			499
3.25% Notes due March 1, 2016	599			599
5.70% Notes due March 1, 2017	500			500
1.29% Notes due March 10, 2017	700			—
1.40% Notes due March 15, 2018	499			499
7.50% Notes due February 15, 2019	349			349
2.28% Notes due March 15, 2019	1,100			—
4.75% Notes due March 1, 2021	598			598
2.70% Notes due December 15, 2022	400			400
2.85% Notes due March 15, 2023	400			400
3.80% Notes due March 15, 2024	1,100			—
7.65% Debentures due March 1, 2027	175			175
6.00% Notes due March 1, 2041	493			493
4.88% Notes due March 15, 2044	800			—
Other	27			11
Denominated in Euro and other foreign currencies
4.00% Bonds due October 18, 2016	507			—
4.50% Bonds due April 26, 2017	737			—
Promissory Notes	297			—
Bank liabilities and other	193			—
Total debt	10,373			4,873
Less current portion	(1,424		)	(352		)
Total long-term debt	$	8,949		$	4,521

Senior Bridge Term Loan Facilities

In connection with our acquisition of Celesio, in January 2014, we entered into a $5.5 billion 364‑day unsecured Senior Bridge Term Loan Agreement (the “2014 Bridge Loan”) under terms substantially similar to those in our existing revolving credit facility. On February 4, 2014, we borrowed $4,957 million under this facility, with such proceeds and cash on hand used to fund the acquisition of Celesio. On March 10, 2014, we repaid $4,076 million of the 2014 Bridge Loan borrowings with funds obtained from the issuance of long-term debt. On March 11, 2014, we repaid the remaining balance of the 2014 Bridge Loan borrowings using funds drawn on our Accounts Receivable Sales Facility and cash on hand. On April 30, 2014, the commitments under the 2014 Bridge Loan automatically terminated upon the settlement of the tender offers for the remaining common shares of Celesio. During the time it was outstanding, the 2014 Bridge Loan borrowings bore interest at 1.39% per annum, based on the London Interbank Offered Rate plus a margin based on the Company’s credit rating. Interest expense for 2014 included a total of $46 million of fees related to the 2014 Bridge Loan and a bridge loan agreement entered into during the third quarter of 2014 in anticipation of an earlier acquisition of Celesio.

In connection with our acquisition of PSS World Medical, in December 2012 we entered into a $2.1 billion unsecured Senior Bridge Term Loan Agreement (“2013 Bridge Loan”). In February 2013, we reduced the 2013 Bridge Loan commitment to $900 million. On February 22, 2013, we borrowed $900 million under the 2013 Bridge Loan, with such proceeds and cash on hand were used to redeem the assumed debt from PSS World Medical and pay the equity shareholders of PSS World Medical. On March 8, 2013, we repaid the 2013 Bridge Loan borrowings with funds obtained from the issuance of long-term debt and the bridge loan agreement was subsequently terminated. During the time it was outstanding, the 2013 Bridge Loan borrowings bore interest at 1.20% per annum, based on the London Interbank Offered Rate plus a margin based on the Company’s credit rating. Interest expense for 2013 included $11 million of fees related to the 2013 Bridge Loan.

Celesio Debt

Upon the acquisition of Celesio, as required, we consolidated Celesio’s outstanding debt arrangements:

•

Accounts receivable factoring facility arrangements with a committed balance of $308 million. Transactions under these facilities are accounted for as secured borrowings with interest rates ranging 1.33% to 2.31%. These facilities will expire through September 2015 and Celesio may renew certain facilities before their expiration. Between February 7, 2014 and March 31, 2014, Celesio borrowed and repaid $570 million and $575 million under these facilities. At March 31, 2014, there were $246 million in secured borrowings and related securitized accounts receivable outstanding under these facilities, which were included in short-term borrowings and receivables in the consolidated balance sheets.

•

Bilateral credit lines with a total committed balance of $1,662 million. As of March 31, 2014, there were $100 million and $88 million in outstanding short-term and long-term borrowings with interest payable monthly and principal payments due through October 31, 2023. The outstanding long-term borrowings are included in the caption “Bank liabilities and other” within the long-term debt table. Bank liabilities also include Celesio’s $100 million term loan outstanding as of March 31, 2014, with a current variable interest rate of 2.35% and principal repayments due through December 15, 2019. Celesio also has a syndicated €500 million five-year senior unsecured revolving credit facility, which expires in February 2018. Borrowings under this credit facility bear interest based on the Euro Interbank Offered Rate plus an agreed margin. From February 7, 2014 through March 31, 2014, there were no amounts outstanding under this credit facility.

•

Convertible bonds consisting of 1,857 of 2014 Bonds and 1,104 of 2018 Bonds held by third parties as of the Acquisition date, totaling $344 million as of the Acquisition date. As previously disclosed in Financial Note 2, “Business Combinations,” these bonds were either converted to Celesio common shares or redeemed in cash between February 7, 2014 and March 31, 2014. At March 31, 2014, a total of $5 million of 2014 Bonds and 2018 Bonds were outstanding and included in the caption “Bank liabilities and other” within the long-term debt table.


•	Promissory notes, with interest rates ranging from 1.23% to 5.35%, original maturities of 4-7 years and are due through June 17, 2019. At March 31, 2014, $297 million of promissory notes were outstanding.

•

Corporate bonds consisting of 4.00% bonds due October 18, 2016 and 4.50% bonds due April 26, 2017. Interest on these bonds is due annually each year. At March 31, 2014, $507 million and $737 million of the 4.00% and 4.50% bonds, for a total of $1,244 million, were outstanding. According to certain terms and conditions of these bonds effective May 7, 2014 bondholders have the option to ask for repayment of the bonds at par value plus accrued interest. If bondholders do not exercise this option by May 19, 2014, the bonds will remain outstanding until their respective maturity dates. Accordingly, as at March 31, 2014, these bonds have been classified as a current liability. As of May 7, 2014, the fair value of these bonds of $1,272 million was more than their par value of $1,184 million.

PSS World Medical Debt

Upon our purchase of PSS World Medical in February 2013, we assumed the outstanding debt of PSS World Medical. Prior to our acquisition, PSS World Medical called for redemption of all of its outstanding 6.375% Senior Notes due 2022. Due to the change in control provisions of the 3.125% Senior Convertible Notes due 2014, the notes were convertible to cash at the option of the note holders. All the note holders opted to receive cash. In the fourth quarter of 2013, we redeemed both of these notes, including accrued interest for $643 million using cash on hand and borrowings under our 2013 PSS Bridge Loan.

Long-Term Debt

In connection with the acquisition of Celesio, on March 5, 2014, we issued floating rate notes (“Floating Rate Notes”) due September 10, 2015 in an aggregate principal amount of $400 million, 1.29% notes due March 10, 2017 in an aggregate principal amount of $700 million (“2017 Notes”), 2.28% notes due March 15, 2019 in an aggregate principal amount of $1,100 million (“2019 Notes”), 3.80% notes due March 15, 2024 in an aggregate principal amount of $1,100 million (“2024 Notes”) and 4.88% notes due March 15, 2044 in an aggregate principal amount of $800 million (“2044 Notes”). The Floating Rate Notes bear interest at a floating rate equal to the three-month London Interbank Offered Rate plus 0.40% (0.64% at March 31, 2014) with interest payable quarterly on March 10, June 10, September 10 and December 10 of each year, beginning on June 10, 2014. Interest on the 2017 Notes is payable on March 10 and September 10 of each year, beginning on September 10, 2014. Interest on the 2019 Notes, the 2024 Notes and the 2044 Notes is payable on March 15 and September 15 of each year, beginning on September 15, 2014. We utilized net proceeds, after discounts and offering expenses of $4,068 million from the issuance of these notes (each note constitutes a “Series”) to repay borrowings under the 2014 Bridge Loan.

On March 8, 2013, we issued 1.40% notes due March 15, 2018 in an aggregate principal amount of $500 million and 2.85% notes due March 15, 2023 in an aggregate principal amount of $400 million. Interest on these notes is payable on March 15 and September 15 of each year beginning on September 15, 2013. We utilized net proceeds, after discounts and offering expenses of $891 million from the issuance of these notes (each note constitutes a “Series”) to repay borrowings under the 2013 Bridge Loan.

On December 4, 2012, we issued 0.95% notes due December 4, 2015 in an aggregate principal amount of $500 million (“2015 Notes”) and 2.70% notes due December 15, 2022 in an aggregate principal amount of $400 million (“2022 Notes”). Interest on the 2015 Notes is payable on June 4 and December 4 of each year beginning on June 4, 2013 and on the 2022 Notes is payable on June 15 and December 15 of each year beginning on June 15, 2013. We utilized net proceeds, after discounts and offering expenses, of $892 million from the issuance of these notes (each note constitutes a “Series”) for general corporate purposes and replenishing working capital that was used to repay long-term debt that matured.

Each Series constitutes an unsecured and unsubordinated obligation of the Company and ranks equally with all of the Company’s existing and future unsecured and unsubordinated indebtedness outstanding from time-to-time. Each Series is governed by materially similar indentures and officers’ certificate specifying certain terms of each Series.

With the exception of the Floating Rate Notes, upon 30 days notice to holders of a Series, we may redeem that Series at any time prior to maturity, in whole or in part, for cash at redemption prices that include accrued and unpaid interest and a make-whole premium, as specified in the indenture and officers’ certificate relating to that Series. In the event of the occurrence of both (1) a change of control of the Company and (2) a downgrade of a Series below an investment grade rating by each of Fitch Ratings, Moody’s Investors Service, Inc. and Standard & Poor’s Ratings Services within a specified period, an offer must be made to purchase that Series from the holders at a price in cash equal to 101% of the then outstanding principal amount of that Series, plus accrued and unpaid interest to, but not including, the date of repurchase. The indenture and the related officers’ certificate for each Series, subject to the exceptions and in compliance with the conditions as applicable, specify that we may not incur liens, enter into sale and leaseback transactions or consolidate, merge or sell all or substantially all of our assets. The indentures also contain customary events of default provisions.

We repaid our $350 million 6.50% Notes due February 15, 2014 and our $500 million 5.25% Notes due March 1, 2013, at maturity.

Scheduled future payments of long-term debt are $1,424 million in 2015, $1,535 million in 2016, $1,277 million in 2017, $520 million in 2018, $1,485 million in 2019 and $4,132 million thereafter.

Accounts Receivable Sales Facility

We have an Accounts Receivable Sales facility (the “Facility”) with a committed balance of $1.35 billion, although from time-to-time, the available amount of the Facility may be less than $1.35 billion based on accounts receivable concentration limits and other eligibility requirements. Prior to the Celesio acquisition, we amended the Facility to extend the term for an additional year, increased the maximum debt to capital ratio from 56.5% to 65% and added an extended cure period with respect to defaults under the facility relating to Celesio. The Facility will expire in November 2014 and we anticipate renewing the Facility before its expiration.

In 2014, 2013 and 2012, we borrowed $550 million $1,325 million and $400 million under the Facility and we repaid $550 million, $1,725 million and nil. At March 31, 2014 and March 31, 2013, there were no secured borrowings and related securitized accounts receivable outstanding under the Facility.

The Facility contains requirements relating to the performance of the accounts receivable and covenants relating to the Company. If we do not comply with these covenants, our ability to use the Facility may be suspended and repayment of any outstanding balances under the Facility may be required. At March 31, 2014 and March 31, 2013, we were in compliance with all covenants.

Revolving Credit Facility

We have a syndicated $1.3 billion five-year senior unsecured revolving credit facility, which expires in September 2016. Prior to the Celesio acquisition, we amended this facility to increase the maximum debt to capital ratio from 56.5% to 65%, and added an extended cure period with respect to defaults under the credit facility relating to Celesio. Borrowings under this renewed credit facility bear interest based upon either the London Interbank Offered Rate or a prime rate. There were no borrowings under this credit facility during 2014, 2013 and 2012. As of March 31, 2014 and 2013, there were no borrowings outstanding under this credit facility.

Commercial Paper

There were no commercial paper issuances during 2014, 2013 and 2012 and no amounts outstanding at March 31, 2014 and 2013.

Debt Covenants

Our various borrowing facilities and long-term debt are subject to certain covenants. Our principal debt covenant is our U. S. dollar denominated debt to capital ratio under our $1.3 billion unsecured revolving credit facility, which cannot exceed 65%. For the purpose of calculating this ratio, borrowings under the $1.35 billion Accounts Receivable Sales facility are excluded. If we exceed this ratio, repayment of debt outstanding under the revolving credit facility could be accelerated. As of March 31, 2014, we were in compliance with our financial covenants.

Entity Registrant Name	McKESSON CORPORATION
CIK	0000927653
Accession number	0001445305-14-002132
Link to XBRL instance	http://www.sec.gov/Archives/edgar/data/927653/000144530514002132/mck-20140331.xml
Fiscal year end	--03-31
Fiscal year focus	2014
Fiscal period focus	FY
Current balance sheet date	2014-03-31
Current year-to-date income statement start date	2013-04-01

Description	Fact value	US GAAP XBRL Concept
Year 1 (Current portion)	1,424,000,000	us-gaap:LongTermDebtMaturitiesRepaymentsOfPrincipalInNextTwelveMonths
Year 2	1,535,000,000	us-gaap:LongTermDebtMaturitiesRepaymentsOfPrincipalInYearTwo
Year 3	1,277,000,000	us-gaap:LongTermDebtMaturitiesRepaymentsOfPrincipalInYearThree
Year 4	520,000,000	us-gaap:LongTermDebtMaturitiesRepaymentsOfPrincipalInYearFour
Year 5	1,485,000,000	us-gaap:LongTermDebtMaturitiesRepaymentsOfPrincipalInYearFive
Thereafter	4,132,000,000	us-gaap:LongTermDebtMaturitiesRepaymentsOfPrincipalAfterYearFive
Total Long-term Debt	10,373,000,000	us-gaap:LongTermDebt
CHECK	0	*

Description	Fact value	US GAAP XBRL Concept
Current portion	1,424,000,000	us-gaap:LongTermDebtAndCapitalLeaseObligationsCurrent
Noncurrent portion	8,949,000,000	us-gaap:LongTermDebtAndCapitalLeaseObligations
Total Long-Term Debt	10,373,000,000	us-gaap:LongTermDebt
CHECK	0	*