SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q/A
(Amendment No. 2)
(Mark One)
[ X ] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For quarter ended September 30, 1996
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
------------ ------------
Commission file number 1-13252
-------
McKESSON CORPORATION
- - -----------------------------------------------------------------
(Exact name of Registrant as specified in its charter)
DELAWARE 94-3207296
- - ------------------------------- -------------------
(State or other jurisdiction of (IRS Employer
incorporation or organization) Identification No.)
One Post Street, San Francisco, California 94104
- - -----------------------------------------------------------------
(Address of principal executive offices) (Zip Code)
- - -------------------------------------------------------------
(415) 983-8300
- - -----------------------------------------------------------------
(Registrant's telephone number, including area code)
Indicate by check mark whether the Registrant (1) has filed all
reports required to be filed by Section 13 or 15(d) of the
Securities Exchange Act of 1934 during the preceding 12 months (or
for such shorter period that the Registrant was required to file
such reports), and (2) has been subject to such filing requirements
for the past 90 days.
Yes X No
----- -----
Indicate the number of shares outstanding of each of the issuer's
classes of common stock, as of the latest practicable date.
Class Outstanding at September 30, 1996
- - ---------------------------- ---------------------------------
Common stock, $.01 par value 41,941,126 shares
<PAGE>
The Registrant hereby amends the items, financial statements,
exhibits, or other portions of its Quarterly Report on Form 10-Q
for the quarter ended September 30, 1996 as set forth below.
LIST OF ITEMS AMENDED
PART I. FINANCIAL INFORMATION
==============================
Item Page
- - ---- ----
1. Condensed Financial Statements
Consolidated Balance Sheets
September 30, 1996 and March 31, 1996 3 - 4
Statements of Consolidated Income
Three and Six month periods ended
September 30, 1996 and 1995 5
Statements of Consolidated Cash Flows
Three and Six month periods ended
September 30, 1996 and 1995 6 - 7
Financial Notes 8 - 9
2. Management's Discussion and Analysis of
Financial Condition and Results of Operations
Financial Review 10 - 12
PART II. OTHER INFORMATION
===========================
6. Exhibits and Reports on Form 8-K 13
Exhibit Index 15
TEXT OF ITEMS AMENDED
Each of the above listed Items is hereby amended by deleting
the Item in its entirety and replacing it with the Items attached
hereto and filed herewith.
The purpose of this amendment is to reflect, in the first
quarter ended June 30, 1996, the $48.2 million charge to write off
the portion of the purchase price of Automated Healthcare, Inc.
("AHI") allocated to technology for which feasibility had not been
established as of the acquisition date of April 23, 1996. Such
charge was recorded in the third quarter ended December 31, 1996 in
the originally filed financial statements.
<PAGE>
PART I. FINANCIAL INFORMATION
===============================
McKESSON CORPORATION and SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
Restated
(unaudited)
September 30, March 31,
1996 1996
------ ------
(in millions)
ASSETS
- - ------
Current Assets
Cash and cash equivalents $ 133.3 $ 260.8
Marketable securities available for sale 57.0 195.4
Receivables 933.0 672.8
Inventories 1,283.8 1,317.0
Prepaid expenses and other 26.2 17.0
------- -------
Total 2,433.3 2,463.0
------- -------
Property, Plant and Equipment
Land 37.9 38.0
Buildings, machinery and equipment 709.0 675.7
------- -------
Total 746.9 713.7
Accumulated depreciation (380.2) (357.7)
------- -------
Net 366.7 356.0
Goodwill and other intangibles 192.5 183.7
Net assets of discontinued
operations (Note 3) 121.1 125.7
Other assets 271.9 231.8
------- -------
Total Assets $3,385.5 $3,360.2
======= =======
(Continued)
- 3 -
<PAGE>
McKESSON CORPORATION and SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
Restated
(unaudited)
September 30, March 31,
1996 1996
------ ------
(in millions)
LIABILITIES AND STOCKHOLDERS' EQUITY
- - ------------------------------------
Current Liabilities
Drafts payable $ 240.2 $ 194.0
Accounts payable - trade 1,176.1 1,149.2
Short-term borrowings 95.0 6.6
Current portion of long-term debt 23.8 27.9
Salaries and wages 27.1 26.3
Taxes 100.3 92.2
Interest and dividends 18.5 19.0
Other 122.6 127.3
------- -------
Total 1,803.6 1,642.5
------- -------
Postretirement Obligations and
Other Noncurrent Liabilities 212.7 216.6
------- -------
Long-Term Debt 439.5 436.5
------- -------
Stockholders' Equity
Common stock 0.4 0.4
Additional paid-in capital 330.9 332.0
Other capital (37.6) (36.2)
Retained earnings 959.2 968.9
Accumulated translation adjustment (42.8) (49.7)
ESOP notes and guarantee (120.2) (122.5)
Treasury shares, at cost (160.2) (28.3)
------- -------
Net 929.7 1,064.6
------- -------
Total Liabilities
and Stockholders' Equity $3,385.5 $3,360.2
======= =======
See Financial Notes.
(Concluded)
- 4 -
<PAGE>
McKESSON CORPORATION and SUBSIDIARIES
STATEMENTS OF CONSOLIDATED INCOME
Restated
(unaudited)
Three Months Ended Six Months Ended
September 30 September 30
--------------- ---------------
1996 1995 1996 1995
------ ------ ------ ------
(in millions - except
per share amounts)
REVENUES $2,730.9 $2,402.6 $5,401.5 $4,790.9
------- ------- ------- -------
COSTS AND EXPENSES
Cost of sales 2,499.9 2,173.3 4,938.6 4,340.4
Selling, distribution
and administration 179.0 171.4 356.5 333.9
Purchased in-process
technology (Note 2) - - 48.2 -
Interest 10.2 11.5 21.1 23.2
------- ------- ------- -------
Total 2,689.1 2,356.2 5,364.4 4,697.5
------- ------- ------- -------
INCOME BEFORE TAXES ON INCOME 41.8 46.4 37.1 93.4
TAXES ON INCOME (16.0) (18.2) (32.7) (37.2)
------- ------- ------- -------
INCOME AFTER TAXES
Continuing operations 25.8 28.2 4.4 56.2
Discontinued
operations (Note 3) 2.3 3.5 5.6 8.3
------- ------- ------- -------
NET INCOME $ 28.1 $ 31.7 $ 10.0 $ 64.5
======= ======= ======= =======
EARNINGS PER COMMON SHARE
Fully diluted earnings
Continuing operations $ 0.59 $ 0.61 $ 0.10 $ 1.21
Discontinued operations 0.05 0.07 0.12 0.17
------- ------- ------- -------
Total $ 0.64 $ 0.68 $ 0.22 $ 1.38
======= ======= ======= =======
Primary earnings
Continuing operations $ 0.59 $ 0.61 $ 0.10 $ 1.21
Discontinued operations 0.05 0.07 0.12 0.17
------- ------- ------- -------
Total $ 0.64 $ 0.68 $ 0.22 $ 1.38
======= ======= ======= =======
Dividends $ 0.25 $ 0.25 $ 0.50 $ 0.50
======= ======= ======= =======
SHARES ON WHICH EARNINGS
PER COMMON SHARE WERE BASED
Fully diluted 43.8 46.7 44.6 46.8
Primary 43.8 46.7 44.6 46.7
See Financial Notes.
- 5 -
<PAGE>
McKESSON CORPORATION and SUBSIDIARIES
STATEMENTS OF CONSOLIDATED CASH FLOWS
Restated
(unaudited)
Six Months Ended
September 30
------------------
1996 1995
------ ------
(in millions)
Operating Activities
Income from continuing operations $ 4.4 $ 56.2
Adjustments to reconcile to net cash
provided (used) by operating activities
Depreciation 31.3 27.5
Amortization 4.9 3.5
Provision for receivables reserves 3.6 4.6
Deferred taxes on income 2.0 (5.5)
Gain on sale of subsidiary - (11.2)
Other non-cash items (Note 2) 45.9 (1.3)
------- -------
Total 92.1 73.8
------- -------
Effects of changes in
Receivables (256.3) (96.4)
Inventories 35.1 48.1
Accounts and drafts payable 74.1 113.5
Taxes 17.1 (55.5)
Other (27.5) (79.2)
------- -------
Total (157.5) (69.5)
------- -------
Net cash provided (used) by
continuing operations (65.4) 4.3
------- -------
Discontinued operations 9.0 21.8
------- -------
Net cash provided (used) by
operating activities (56.4) 26.1
------- -------
Investing Activities
Purchases of marketable securities (0.2) (130.3)
Maturities of marketable securities 141.8 49.9
Property acquisitions (41.4) (37.7)
Properties sold 1.3 5.8
Acquisitions of businesses, less cash and
short-term investments acquired (61.4) (11.3)
Proceeds from sale of subsidiary - 36.1
Investing activities of
discontinued operations (0.9) 6.5
Other (23.9) (5.3)
------- -------
Net cash provided (used) by
investing activities 15.3 (86.3)
------- -------
(Continued)
- 6 -
<PAGE>
McKESSON CORPORATION and SUBSIDIARIES
STATEMENTS OF CONSOLIDATED CASH FLOWS
Restated
(unaudited)
Six Months Ended
September 30
------------------
1996 1995
------ ------
(in millions)
Financing Activities
Proceeds from issuance of debt $ 95.4 $ 72.2
Repayment of debt (24.5) (4.7)
Capital stock transactions
Treasury stock acquired (145.2) (25.7)
Issuances 6.6 3.8
ESOP notes and guarantee 2.4 2.2
Dividends paid (21.2) (21.8)
Financing activities of
discontinued operations 0.1 0.1
------- -------
Net cash provided (used) by
financing activities (86.4) 26.1
------- -------
Net Decrease in Cash
and Cash Equivalents (127.5) (34.1)
Cash and Cash Equivalents
at beginning of period 260.8 363.1
------- -------
Cash and Cash Equivalents
at end of period $ 133.3 $ 329.0
======= =======
See Financial Notes.
(Concluded)
- 7 -
<PAGE>
McKESSON CORPORATION and SUBSIDIARIES
FINANCIAL NOTES
1. Interim Financial Statements
----------------------------
In the opinion of the Company, these unaudited condensed
consolidated financial statements include all adjustments necessary
to a fair presentation of its financial position as of September
30, 1996 and the results of its operations and its cash flows for
the six months ended September 30, 1996 and 1995. Such adjustments
were of a normal recurring nature.
Revenues and cost of sales have been restated to change the
classification of sales and cost of sales associated with sales to
customers' warehouses to present only the gross profit on such
sales in revenues.
The results of operations for the six months ended September
30, 1996 and 1995 are not necessarily indicative of the results for
the full years.
It is suggested that these interim financial statements be
read in conjunction with the annual audited financial statements,
accounting policies and financial notes thereto included in the
Appendix to the Company's 1996 Proxy Statement which has previously
been filed with the Securities and Exchange Commission. Such
document was amended in February 1997 to reflect the
discontinuance of Armor All Products Corporation ("Armor All") and
Millbrook Distribution Services Inc. ("Service Merchandising").
2. Acquisitions
------------
In April 1996, the Company acquired Automated Healthcare, Inc.
("AHI") for $61.4 million in cash and the assumption of $3.2
million of employee stock incentives. AHI designs, manufactures,
sells and installs automated pharmaceutical dispensing equipment
for use by health care institutions. The acquisition was accounted
for as a purchase and accordingly, AHI's results are included in
the consolidated financial statements since the date of
acquisition. The results of operations of AHI were not material in
relation to the Company's consolidated results of operations. The
goodwill related to the acquisition of approximately $13.4 million
is being amortized on a straight-line basis over a ten year period.
A $48.2 million charge was recorded to write off the portion of the
purchase price of AHI allocated to technology for which
technological feasibility had not been established as of the
acquisition date and for which there were no alternative uses.
Existing technology was valued at $.4 million and is being
amortized on a straight-line basis over a three year period. The
Company utilized a discounted cash flow methodology by product line
to value in-process and existing technologies as of the acquisition
date. The resulting valuations represent management's best
estimate of the respective fair values as of that date. As of the
acquisition date, further costs necessary to develop the purchased
technologies into commercially viable products were approximately
$3.4 million, based on current estimates. Such costs are expected
to be incurred during fiscal 1997 and 1998 and are associated with
the following activities: engineering required to advance the
design of products to the point that they meet specific functional
and economic requirements and are ready for manufacture, prototype
development, and product testing.
The financial statements have been restated to reflect in the first
quarter ended June 30, 1996, the $48.2 million charge to write off
the portion of the purchase price of AHI allocated to technology
for which feasibility had not been established as of the
acquisition date of April 23, 1996. Such charge was recorded in
the third quarter ended December 31, 1996 in the originally filed
financial statements. The effects of the restatement on the
financial statements as of and for the periods ended September 30,
1996 are as follows:
As Previously Reported As Restated
---------------------- -----------
(in millions, except per share amounts)
Total Assets $3,433.7 $3,385.5
Stockholders' Equity 977.9 929.7
Quarter Ended
September 30, 1996:
Net Income 28.1 28.1
Fully Diluted
Earnings Per Share .64 .64
Six Months Ended
September 30, 1996:
Net Income 58.2 10.0
Fully Diluted
Earnings Per Share 1.30 .22
- 8 -
<PAGE>
McKESSON CORPORATION and SUBSIDIARIES
FINANCIAL NOTES
3. Discontinued Operations
-----------------------
On December 31, 1996, the Company sold its 55% equity interest
in Armor All to The Clorox Company for $221.9 million and
recognized an after-tax gain of $120.2 million. In addition, in
December 1996 the Company made the decision to divest the net
assets of its Service Merchandising Division for which no loss on
disposition is anticipated. All of the net assets and results of
operations of both Armor All and Service Merchandising have been
reclassified as discontinued operations for all periods presented.
The net assets of discontinued operations at September 30,
1996 and March 31, 1996 were as follows:
September 30 March 31
1996 1996
------ ------
(in millions)
Total assets $ 256.1 $ 275.5
Total liabilities (135.0) (149.8)
------ ------
Net assets $ 121.1 $ 125.7
====== ======
Assets of discontinued operations consist primarily of cash,
receivables, inventory, property plant and equipment, and goodwill
of Armor All and Service Merchandising at September 30, 1996 and
March 31, 1996. Liabilities of discontinued operations consist
primarily of accounts payable and other accrued liabilities of
Armor All and Service Merchandising at September 30, 1996 and March
31, 1996.
The results of discontinued operations for the six months
ended September 30, 1996 and 1995 were as follows:
September 30 September 30
1996 1995
------ ------
(in millions)
Revenues $ 329.9 $ 380.2
====== ======
Income from discontinued
operations before taxes $ 15.7 $ 18.8
Provision for taxes on income (6.6) (7.6)
Less: Minority interest (3.5) (2.9)
------ ------
Net income from
discontinued operations $ 5.6 $ 8.3
====== ======
Discontinued operations include $4.3 million and $3.5 million
after-tax from the operations of Armor All and $1.3 million and
$4.8 million after-tax from the operations of Service Merchandising
for the six months ended September 30, 1996 and 1995, respectively.
4. Subsequent Event
----------------
On November 11, 1996, the Company announced the completion of
its acquisition of the healthcare business of FoxMeyer Corporation
("FoxMeyer"), pursuant to an expedited auction process in the
FoxMeyer bankruptcy proceeding in Wilmington, Delaware. The
Company received regulatory clearance and court approval enabling
the transaction to close on November 8, 1996. Through an amended
sale agreement, the Company paid approximately $23 million in cash
to the debtors, paid off approximately $500 million in secured debt
and assumed an additional $75 million in other liabilities. The
Company acquired assets consisting primarily of accounts receivable
and inventories of approximately $650 million, customer contracts
and fixed assets. The Company utilized proceeds from commercial
paper issuances and a note payable to a bank to fund the
transaction. The commercial paper issuances were backed by the
Company's revolving credit agreements that were recently increased
to provide borrowing availability of $500 million.
- 9 -
<PAGE>
McKESSON CORPORATION and SUBSIDIARIES
FINANCIAL REVIEW
Segment Results
- - ---------------
The Company's Armor All and Service Merchandising segments
have been classified as discontinued operations in the current
quarter, and prior periods have been restated accordingly (see
Financial Note 3). The revenues and operating profit of the
Company's continuing operations by business segment are as follows:
Three Months Ended Six Months Ended
September 30 September 30
-------------------- --------------------
% %
1996 1995 Chg. 1996 1995 Chg.
------ ------ --- ------ ------ ---
(in millions)
REVENUES
Health Care Services
Direct Delivery
U.S. (1) $2,272.4 $1,935.9 17.4 $4,491.9 $3,864.9 16.2
International 375.0 387.1 (3.1) 751.8 770.2 (2.4)
------- ------- ------- -------
Total Health
Care Services 2,647.4 2,323.0 14.0 5,243.7 4,635.1 13.1
Water Products 77.6 74.1 4.7 148.0 138.1 7.2
Corporate 5.9 5.5 9.8 17.7
------- ------- ------- -------
Total $2,730.9 $2,402.6 13.7 $5,401.5 $4,790.9 12.7
======= ======= ======= =======
OPERATING PROFIT
Health Care Serv.(2) $ 45.3 $ 45.1 0.4 $ 48.6 $ 94.0 (48.3)
Water Products 14.4 13.6 5.9 24.0 22.5 6.7
------ ------ ------ ------
Total 59.7 58.7 1.7 72.6 116.5 (37.7)
Interest - net (3) (7.5) (2.2) (15.2) (4.8)
Corporate and other (10.4) (10.1) (20.3) (18.3)
------ ------ ------ ------
Income before taxes $ 41.8 $ 46.4 (9.9) $ 37.1 $ 93.4 (60.3)
====== ====== ====== ======
(1) U.S. Health Care revenues reflect the reclassification of
sales and cost of sales associated with sales to customers'
warehouses and include only the gross margin on such sales in
revenues.
(2) Health Care Services operating profit for the six months ended
September 30, 1996, includes a charge for $48.2 million to
write off the portion of the purchase price of AHI allocated
to technology for which feasibility had not been established
as of the acquisition date.
(3) Interest expense is shown net of corporate interest income.
- 10 -
<PAGE>
McKESSON CORPORATION and SUBSIDIARIES
FINANCIAL REVIEW
Overview of Results
- - -------------------
Net income for the second quarter decreased to $28.1 million,
$.64 per fully-diluted share, from $31.7 million, $.68 per share in
the prior year. For the six month period, net income decreased to
$10.0 million, $.22 per share, from $64.5 million, $1.38 per share
for the comparable period in the prior year. Results for the six
month period include a $48.2 million charge to write off the
portion of the purchase price of AHI allocated to technology for
which feasibility had not been established as of the acquisition
date. The results also included income from the discontinued Armor
All and Service Merchandising segments of $2.3 million, $.05 per
share and $3.5 million, $.07 per share in the second quarter and
$5.6 million, $.12 per share, and $8.3 million, $.17 per share for
the six month periods of fiscal 1997 and 1996, respectively. The
increase in earnings in the Health Care Services segment (before
the $48.2 million charge noted above), including costs associated
with strategic initiatives, was more than offset by lower earnings
from the discontinued Service Merchandising segment and higher net
interest expense.
The effective income tax rate applicable to continuing
operations for the six months ended September 30, 1996 differed
from the effective tax rate for the comparable period in fiscal
1996 primarily due to the write-off in the first quarter period of
purchased in-process technology acquired with AHI of $48.2 million,
which had no associated tax benefit.
HEALTH CARE SERVICES
The Health Care Services segment includes the operations of
the Company's U.S. pharmaceutical and health care products
distribution businesses and its international pharmaceutical
operations (Canada and Mexico). This segment accounted for 97% of
consolidated revenues for the second quarter and for the six month
period ended September 30, 1996.
Segment revenues increased by 14% and 13% for the three and
six month periods, respectively, from the comparable periods in the
prior year. U.S. Health Care revenue growth of 17% in the second
quarter and 16% for the six month period was partially offset by
declines in international sales. Year to year comparisons for
international operations were affected by the sale of the Company's
Central American pharmaceutical manufacturing operation in the
second quarter of fiscal 1996.
Operating profit for the quarter was flat with the prior year
but decreased by 48.3% for the six month period. Excluding the
effect of the $48.2 million charge noted above, operating profit
increased by 3% for the six-month period. Results for the three
and six month periods include $4.0 million and $8.2 million,
respectively, of costs associated with a series of strategic
initiatives designed to improve the Company's competitiveness in
the retail and institutional market segments. These costs were
partially offset by continued growth in the Company's U.S. Health
Care business in every customer segment (independents, chain stores
and hospitals) and operating expense efficiencies. The prior year
second quarter results included a pretax gain of $11.2 million from
the sale of the Central American operation. This gain was offset
by research and development costs associated with retail and
institutional initiatives and expenses incurred to further
streamline operating and administrative functions.
- 11 -
<PAGE>
McKESSON CORPORATION and SUBSIDIARIES
FINANCIAL REVIEW
WATER PRODUCTS
Segment revenues increased by 5% and 7% for the three and six
month periods, respectively, from the comparable periods in the
prior year. Operating profit for the quarter increased by 6% and
by 7% for the six month period. This improvement reflects sales
growth in the direct delivery and grocery products businesses which
have more than offset the costs of continuing geographic expansion
into Washington and Texas.
DISCONTINUED OPERATIONS
The after tax results of the discontinued operations of Armor
All and Service Merchandising decreased to $2.3 million in the
quarter from $3.5 million in the second quarter of fiscal 1996, and
to $5.6 million from $8.2 million in the comparable six month
periods. Revenues of Armor All decreased by 6% for the quarter but
increased 3% for the six month period, compared to the prior year
primarily attributable to sales growth of Armor All Protectant and
to sales of two new products introduced in December 1995. In the
quarter, sales were down across all product lines. Pre-tax income
increased by 23% in the quarter and six month period due primarily
to a focus on controlling selling and marketing costs. Sales in
the Service Merchandising segment decreased by 18% for both the
three and six month periods from the comparable periods in the
prior year. Strong competitive pressures and customer
consolidations resulted in the loss of volume from several large
customers in late fiscal 1996. Pre-tax income for the quarter
decreased by 76% and by 70% for the six month period due primarily
to the impact of fixed expenses over a lower revenue base.
Liquidity and Capital Resources
- - -------------------------------
Cash and cash equivalents decreased $127.5 million during the
six months to $133.3 million primarily due to a temporary increase
in certain customer receivable balances, stock repurchase activity,
the cost of the acquisition referred to in Financial Note 2 and
investments in technology associated with strategic initiatives.
During the first six months of fiscal 1997, the Company
repurchased 3.2 million shares of its common stock for $145 million
under a share repurchase program initiated in June 1995 and
expanded in May 1996. As of September 30, 1996, authorization to
purchase up to an additional 2.4 million shares remained.
The Company's debt-to-capital ratio increased from 31% at
March 31, 1996 to 38% at September 30, 1996 largely as a result of
short-term borrowings by its health care products distribution
operations in Canada.
On November 11, 1996, the Company announced the completion of
the FoxMeyer acquisition referred to in Financial Note 4.
- 12 -
<PAGE>
PART II. OTHER INFORMATION
===========================
Item 6. Exhibits and Reports on Form 8-K
- - -----------------------------------------
(a) Exhibits
27 Financial Data Schedule
(b) Reports on Form 8-K
1. There were no reports on Form 8-K filed during the
quarter ended September 30, 1996.
2. The following report on Form 8-K was filed October 9,
1996:
Item 5. Other Events
---------------------
The registrant announced that it had executed a
definitive agreement to acquire substantially all of the
assets of the healthcare distribution business of
FoxMeyer Corporation.
- 13 -
<PAGE>
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of
1934, the Registrant has duly caused this report to be signed on
its behalf by the undersigned thereunto duly authorized.
McKESSON CORPORATION
(Registrant)
Dated: June 6, 1997 By /s/ Richard H. Hawkins
----------------------------
Richard H. Hawkins
Vice President and
Chief Financial Officer
By /s/ Heidi E. Yodowitz
----------------------------
Heidi E. Yodowitz
Controller
- 14 -
<PAGE>
EXHIBIT INDEX
Exhibit
Number Description
- - ------- -----------
27 Financial Data Schedule
- 15 -
<TABLE> <S> <C>
<ARTICLE> 5
<CIK> 0000927653
<NAME> MCKESSON
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> MAR-31-1997
<PERIOD-START> APR-01-1996
<PERIOD-END> SEP-30-1996
<CASH> 133,300
<SECURITIES> 57,000
<RECEIVABLES> 977,300
<ALLOWANCES> 44,300
<INVENTORY> 1,283,800
<CURRENT-ASSETS> 2,433,300
<PP&E> 746,900
<DEPRECIATION> 380,200
<TOTAL-ASSETS> 3,385,500
<CURRENT-LIABILITIES> 1,803,600
<BONDS> 439,500
0
0
<COMMON> 400
<OTHER-SE> 929,300
<TOTAL-LIABILITY-AND-EQUITY> 3,385,500
<SALES> 5,401,500
<TOTAL-REVENUES> 5,401,500
<CGS> 4,938,600
<TOTAL-COSTS> 5,364,400
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 3,600
<INTEREST-EXPENSE> 21,100
<INCOME-PRETAX> 37,100
<INCOME-TAX> 32,700
<INCOME-CONTINUING> 4,400
<DISCONTINUED> 5,600
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 10,000
<EPS-PRIMARY> 0.22
<EPS-DILUTED> 0.22
</TABLE>