Post on 14-May-2015
DELIVERING ON OUR
VALUESMcKesson’s Corporate Citizenship Report 2005
DELIVERING ON OUR
VALUESMcKesson’s Corporate Citizenship Report 2007
COMMITMENT TO OUR EMPLOYEES
COMMITMENT TO OURSHAREHOLDERS
COMMITMENT TO IMPROVINGTHE QUALITY, SAFETY ANDEFFICIENCY OF HEALTHCARE
COMMITMENT TOOUR COMMUNITY
MCKESSON CORPORATE–Citizenship Report 2007
JOHN HAMMERGREN, CHAIRMAN AND CEO
“OUR RESPONSIBILITY TO IMPROVE THE HEALTH OF THE HEALTHCARE SYSTEM, SUPPORT THOSE IN NEED, TAKESTEPS TO PROTECT THE ENVIRONMENT, AND TREAT OUREMPLOYEES FAIRLY CARRIESOVER FROM THE WORKPLACE TO OUR ROLE AS MEMBERS OFTHE COMMUNITY.”
LETTER FROM THE CHAIRMAN
As one of the world’s leading healthcare companies, McKesson
touches millions of people every day. We also understand that
excellence is not an option; it’s an obligation. We are committed
to doing the right thing for healthcare providers and patients,
our employees, shareholders and the communities wherever we
do business.
This is our second annual McKesson Corporate Citizenship
Report. In these pages, you’ll get a snapshot of our company, an
overview of recent business highlights and a progress report on
the many programs that distinguish us as an employer and cor-
porate citizen.
Healthcare has been our business since McKesson was founded
in 1833. We are 32,000 people dedicated to making a differ-
ence. Our responsibility to improve the health of the healthcare
system, support those in need, take steps to protect the environ-
ment, and treat our employees fairly carries over from the
workplace to our role as members of the community.
These are very exciting times at McKesson. More than ever, we
have the resources, the relationships and the know-how to help
lead the much-needed transformation of healthcare. It is a chal-
lenge we welcome, and an opportunity that energizes all of the
men and women of our company.
John Hammergren
Chairman and Chief Executive Officer
7
MCKESSON CORPORATE–Citizenship Report 2007
OUR CORE VALUES, CALLED ICARE, DRIVE OUR CORPORATECULTURE. OUTLINED IN THISREPORT IS HOW WE BRING THESEPRINCIPLES TO BEAR ON OURDAILY OPERATIONS THROUGHPRACTICES THAT AFFECT OURCOMPANY,OUR PEOPLE AND OURWORLD.
9
COMPANY HISTORY
A commitment to corporate citizenship runs deep through the
company’s history. Almost 175 years ago, McKesson was found-
ed with the goal of helping people get access to vital medicines.
McKesson traces its roots back to 1833 when John McKesson
and Charles Olcott opened a small drug import and wholesale
shop in New York City’s financial district. The Olcott and
McKesson business thrived, providing clients with botanical
drugs - herbs, roots, leaves, bark and vegetable extracts. Early on
they brought Daniel Robbins on board and in 1853, after Olcott
passed away, the company was renamed McKesson and
Robbins.
By 1929, McKesson and Robbins’ profits had reached $4.1 mil-
lion on unprecedented sales of $140 million. Due to progressive
business strategies, the company achieved steady growth despite
the Great Depression.
Leveraging post-war opportunities, McKesson and Robbins creat-
ed McKesson Chemical Company, another major operating unit.
By 1955, McKesson Chemical Company had become a diversi-
fied national distribution leader.
In 1967, Foremost, a nationwide dairy distributor, and McKesson
and Robbins merged to become Foremost-McKesson. Foremost-
McKesson, Inc. was the largest U.S. distributor of
pharmaceuticals, alcoholic beverages and chemicals. It was the
nation’s largest supplier of milk-based products and was the
largest producer of processed water in the western half of the U.S.
Throughout the 1980s, Foremost-McKesson divested most of its
peripheral businesses and began the process of refocusing on its
core healthcare supply management businesses and investing in
new technologies. In 1984, McKesson Corporation became the
new name of the company.
In the second half of the 1990s, McKesson began expanding its
reach into additional healthcare areas. McKesson made a num-
ber of acquisitions during this period, diversifying its presence in
the healthcare industry and building a formidable presence in the
growing healthcare IT market.
For a time the company operated as McKesson HBOC — the
world's largest healthcare services company. In 2000, McKesson
divested its only remaining non-healthcare asset, McKesson
Water Products, and in 2001, the company changed its name
back to McKesson Corporation.
Today, McKesson is ranked 18th on the FORTUNE 500 with more
than $90 billion in annual revenue. The company delivers vital
medicines, medical supplies, and health information technology
MCKESSON CORPORATE–Citizenship Report 2007
solutions that touch patient lives in every healthcare setting. The
depth and breadth of the company’s product and service offer-
ings, coupled with the largest customer base in the healthcare
industry, uniquely position McKesson to meet the needs of its
customers:
– 300,000 physicians
– 26,000 retail pharmacies
– 10,000 long-term care sites
– 5,000 hospitals
– 2,000 medical-surgical manufacturers
– 750 homecare agencies
– 1,800 healthcare payors
– 450 pharmaceutical manufacturers
McKesson’s products and services empower healthcare by ensur-
ing the safe and timely delivery of vital medications, improving
patient safety and reducing medication errors, and making
healthcare systems more efficient for providers and more afford-
able for patients.
OUR COMPANY
Company Overview
McKesson is America's oldest and largest healthcare services
company, with its pharmaceutical wholesaling roots dating back
175 years. In fact, the company created the first national drug
distribution system. Since then, McKesson has grown by provid-
ing pharmaceutical and medical-surgical supply management
across the spectrum of care; healthcare information technology
for hospitals, physicians, homecare and payors; hospital and
retail pharmacy automation; and services for manufacturers and
payors designed to improve outcomes for patients.
By combining its industry-leading technology and scale with
unsurpassed clinical knowledge, McKesson is helping healthcare
providers deliver better, safer care while reducing unnecessary
costs.
Headquartered in San Francisco, Calif., McKesson employs over
32,000 people across the nation and around the world dedicated
to delivering vital medicines, medical supplies and health
information technology solutions that touch the lives of patients
in every healthcare setting.
McKesson’s Vision
McKesson’s vision is to bring together clinical knowledge,
process expertise, technology and the resources of a FORTUNE 18
company to fundamentally change the cost and quality of
healthcare.
11
McKesson is helping to create a healthcare system where quality
is higher, mistakes are fewer and costs are lower. As the nation's
leading healthcare services company, we provide pharmaceuti-
cals, medical supplies and technologies that make healthcare
safer while reducing costs. McKesson touches virtually every
aspect of healthcare. For instance, McKesson:
– Is the largest pharmaceutical distributor in North America.
Every day we distribute one-third of the medicines used in
North America, supplying more than 25,000 U.S. healthcare
locations from Wal-Mart to the Department of Veterans
Affairs to community pharmacies.
– Is the nation's leading healthcare IT company, with software
and hardware technology installed in more than 70% of the
nation's hospitals with greater than 200 beds.
– Provides decision support software to help physicians deter-
mine the best possible clinical diagnosis and treatment plans
for patients.
– Develops and installs electronic systems that eliminate the
need for paper prescriptions and paper medical records and
provides physicians with easy and secure online access to
patient information.
– Helps prevent more than 330,000 medication errors every
week through bar-code scanning technology that helps to
ensure the right patient gets the right drug at the right time.
TRANSFORMING HEALTHCARE
Today we are making healthcare transformation a reality in six
key ways.
Distribution Infrastructure and Expertise
We use our distribution system, scale and supply chain excel-
lence to ensure the safe and timely delivery of vital medications
and supplies.
Every day...
– Our people, processes and technology ensure that 1.5
million medicines and supplies reach patients every day,
when and where they need them, even in the face of
natural disasters and product recalls.
– Employees in over 30 McKesson pharmaceutical distribution
centers ensure efficient and timely delivery of medications
throughout North America, filling orders with an astounding
99.96% order accuracy.
– Our electronic pharmacy network is one of the nation’s
largest, connecting more than 90% of pharmacies and
processing approximately 70% of all pharmacy transactions
in the U.S. By connecting pharmacists with payors, we help
process more than eight billion healthcare transactions
annually.
– We operate the largest independent pharmacy franchise in
the country, a partnership that includes marketing and
12
– purchasing programs to help independent pharmacies thrive
in an increasingly competitive environment.
– Our online ordering system processes more sales than any of
the top four retail Internet sites in the world, including
Amazon.com.
– We distribute more than 150,000 medical-surgical products –
ranging from gloves and bandages to surgical lasers and flu
vaccines – to more than 300,000 physician offices as well as
many other customers.
– Through our knowledge and resources, we provide inventory
management solutions, robotics and software, and high
volume packaging to help our customers serve patients and
run their businesses more effectively and efficiently.
Patient Safety and Error Reduction
We develop processes and technologies that improve patient
safety and reduce medication errors.
Every day...
– We reduce errors by automating healthcare delivery. Our bar-
code scanning, electronic prescription, and medical imaging
solutions help eliminate manual and paper-based processes.
We also automate tasks like medication counting, packaging
and dispensing through pharmacy automation and mobile
workstations for nurses.
– We protect the integrity of pharmaceuticals and medical sup-
plies from the manufacturer to the pharmacy, hospital
bedside, and physician’s office, so patients are safeguarded
against counterfeit or damaged goods.
– To help prevent mistakes, we provide clinicians with clinical
information, decision support and an electronic view of their
patients’ entire medical record. More than 100,000
physicians log on to our physician portal three million times
per month to access electronic medical records.
Personal Health Management for Patients
We help make healthcare more convenient and personal for
patients.
Every day...
– We offer patients more convenient access to routine services,
providing home delivery of medical supplies and specialty
drugs, patient-friendly billing and scheduling solutions, and
numerous patient assistance programs.
– We improve communication among patients, providers, and
payors through secure, easy-to-use online services, Internet-
enabled home monitoring devices and insurer-reimbursed
online connections to the physician’s office.
– We provide personalized care for patients with cancer and
chronic illnesses such as asthma, diabetes, and heart disease
through personal health support and home delivery of medi-
cines and supplies. McKesson’s nursing call centers, specialty
drug distribution, and disease management serve 1.5 million
Medicaid and Medicare patients.
MCKESSON CORPORATE–Citizenship Report 2007
13
Smarter Healthcare Spending
We ensure that healthcare dollars are well spent
Every day...
– We provide support and medication to chronically ill patients,
whose illnesses account for 80% of today’s U.S. healthcare
costs. Our disease management solutions, specialty drug dis-
tribution and medication adherence programs provide higher
quality care and reduce cost by helping patients avoid emer-
gency room visits and hospital stays.
– We ensure healthcare dollars are well spent by improving rev-
enue and resource management in hospitals, physician
offices and pharmacies, ensuring more appropriate care that
is better managed and paid for.
– As the leading pharmaceutical distributor in North America,
we use our purchasing power and supply chain to increase
the availability of affordable medicines like generic drugs. For
example, our programs help retail pharmacies simplify pur-
chasing of cost-saving generics.
– We also help our customers effectively manage their limited
resources by automating and streamlining work, removing
paper and film costs, reducing re-work, and improving supply
chains.
Higher Quality Care and More Effective Clinicians
We help clinicians improve the quality of patient care.
Every day...
– Our clinical software improves doctors’ medical decisions by
providing evidence-based guidelines grounded in the latest
clinical research at the point of care.
– We help clinicians focus on what they do best – caring for
patients – by reducing administrative work and other manual
tasks.
– We ensure clinicians are better connected to patients and
payors. For example, we provide:
• software to help home care providers connect to their
patients and the hospital
• claims management solutions to help providers submit
more accurate claims, and health plans to pay them more
accurately
• internet-enabled home monitoring devices and online
connections to the physician’s office
Next Generation of Healthcare
We facilitate the next generation of healthcarents.
Every day...
– We are a leader in digitizing healthcare to connect payors,
pharmacies, hospitals, physician offices, and patients and
ultimately to deliver a better care experience for those who
need it most. Our goal is to enable care that is not just auto-
mated within a single setting, but fully connected across the
healthcare spectrum.
– We are also selectively exploring opportunities to take our
products and services abroad, participating in global trends
including generic drug sourcing, demand for healthcare IT
and preventive care.
– Additionally, we are providing the support required for
groundbreaking next-generation therapies and approaches.
OUR SHARED PRINCIPLES
McKesson Shared Principles
As part of the McKesson team, we all strive to work in ways that
reflect our Shared Principles and promote the success of our
company, our customers and each of us as individuals. Our
Shared Principles, reflected in the acronym ICARE, brings to life
the outcome that the Shared Principles seek to create, and aligns
our personal behaviors with the goal of our customers, to
improve healthcare and lives.
Integrity: We do what’s right
Customer-first: We succeed when they succeed
Accountability: We do what we say we will do
Respect: We treat people with dignity and consideration
Excellence: We insist upon quality
Manager Resources
We encourage employees to embody the ICARE Shared
Principles through a comprehensive set of manager meeting
materials as well as an ICARE Recognition Program.
Our employee portal (McKNet) provides the tools and resources
employees need to integrate ICARE into their daily management
practices.
MCKESSON CORPORATE–Citizenship Report 2007
By embracing the ICAREShared Principles, we havethe foundation necessaryto deliver on our vision.
15
Our Managers are encouraged to use the ICARE Guide to help
them:
– Reflect on ways to incorporate Shared Principles into themany aspects of managing their employees.
– Ensure that they’re not just talking the values, but that theyare living the values.
– Develop management skills through such things as ICAREcase studies and scenario assessment.
– Understand the history of our Shared Principles and the best practices that have made us successful.
COMPLIANCE AND INTEGRITY
As the largest pharmaceutical distributor in North America,
McKesson has an unwavering commitment to protect the integrity
of the distribution network while ensuring the safe, efficient and
cost-effective delivery of medicines to our customers and their
patients.
Compliance with laws and regulations is the foundation for eco-
nomic performance and customer and shareholder value
creation. McKesson focuses on developing, implementing and
continually refining systems and processes that enable compli-
ance with laws and regulations. We are especially aware of our
role in supporting the integrity of the pharmaceutical supply
chain and consumer and patient safety.
CORPORATE GOVERNANCE AND ETHICS
In January 2007, McKesson’s Board of Directors approved the
following significant corporate governance changes that
demonstrate the Board’s commitment to strong, stockholder-
focused, contemporary corporate governance practices which
we believe are consistent with our goal of creating long-term,
sustainable value for McKesson’s shareholders:
– Declassification of the Board so that all directors are elected
on an annual basis beginning with the 2008 Annual
Meeting of Stockholders. This replaced a Board divided into
three classes, elected in three successive years, each for a
term of three years.
– Implementation of a majority vote standard in uncontested
director elections, in place of the plurality vote standard,
with the result that a director nominee will be elected only if
the number of votes cast “for” the nominee exceeds the
number of votes cast against the nominee.
MCKESSON CORPORATE–Citizenship Report 2007
McKesson’s Corporate Governance Guidelines reflect the Board's
commitment to transparency and oversight both at the Board
and management level, and the Guidelines provide the frame-
work for the governance of the Company.
– McKesson currently has four standing committees: Audit,
Compensation, Finance and Governance. Each of the com-
mittees is composed entirely of independent directors,
satisfying applicable legal, regulatory and stock exchange
requirements.
– The Board is also responsible for assuring that McKesson’s
management and employees operate in a legal and ethically
responsible manner. To ensure transparent accounting and
reporting practices, independent board members have
access to the Company's outside advisors and meet in exec-
utive session without company management present on a
regularly scheduled basis.
EthicsLine
Speaking up about misconduct is an important part of McKesson’s
dedication to ethical behavior. To make it easier for employees to
voice their concerns about suspected illegal, unethical or unsafe
conduct, McKesson has established the McKesson EthicsLine,
which is a toll-free number, available 24 hours a day, 7 days a
week.
When an employee calls the EthicsLine, 1-888-475-4358, a trained
third-party communication specialist will ask a series of questions
to better understand the situation. A report is prepared and for-
warded to McKesson’s Law Department for review and
appropriate action.
Callers may remain anonymous if they choose to do so. Any
employee who chooses to reveal his or her identity and makes a
good faith complaint is protected by the company’s Code of
Business Conduct and Ethics from retaliation for making such a
complaint.
PUBLIC AFFAIRSAs the nation’s largest healthcare services company, McKesson
Corporation recognizes its responsibility to participate in the
public policy process on healthcare issues and concerns.
Through our Public Affairs Department, the company builds and
maintains working relationships with elected and appointed offi-
cials at every level of government, from Washington, D.C. to
COMPANY HISTORY
A commitment to corporate citizenship runs deep through
McKesson’s history. More than 170 years ago, the company was
founded with the goal of helping people receive the healthcare
they deserve. We trace our roots back to 1833 when John
McKesson and Charles Olcott opened a small drug import and
wholesale shop in New York City’s financial district. The
McKesson and Olcott business thrived, providing clients botani-
cal drugs, such as herbs, roots, leaves, bark and vegetable
extracts. Early on they brought Daniel Robbins on board and in
1853, after Olcott passed away, the company was renamed
McKesson & Robbins.
By 1929, McKesson & Robbins’s profits had reached $4.1 million
on unprecedented sales of $140 million. Due to progressive busi-
ness strategies, the company achieved steady growth despite the
Great Depression.
Leveraging post-war opportunities, McKesson & Robbins created
McKesson Chemical Company, another major operating unit. By
1955, McKesson Chemical Company had become a diversified
national distribution leader.
In 1967, Foremost, a nationwide dairy distributor, and McKesson
& Robbins merged to become Foremost-McKesson. Foremost-
McKesson, Inc. was the largest United States distributor of
pharmaceuticals, alcoholic beverages and chemicals. It was the
nation’s largest supplier of milk-based products and was the
largest producer of processed water in the western half of the
United States.
During the 1980s, Foremost-McKesson divested most of its
peripheral businesses and began the process of refocusing on its
core healthcare supply management businesses and investing in
new technologies. In 1984, McKesson Corporation became the
new name of the company.
In the 1990s, McKesson further focused its mission: To be the
world leader in healthcare supply management and information
technologies by advancing the success of its partners as they
restructure and improve healthcare. This focus led McKesson to
acquire medical technology company HBOC to bring innovative
software solutions to its broad base of retail, hospital, health sys-
tem, payor, long-term care, physician and home care customers.
With annual revenues of more than $80 billion, McKesson now
ranks as the 15th-largest publicly-traded industrial company in
the United States.
state capitals to city halls across America. More importantly, we
encourage these policymakers to visit our facilities and customer
sites to meet with our executives and to witness, firsthand, how
our healthcare businesses and innovative solutions improve the
quality and delivery of care while removing unnecessary costs.
Every day, McKesson actively works with industry colleagues,
government agencies, and elected officials to find solutions to
some of the most challenging problems facing the healthcare
system.
Protecting the Integrity of the Pharmaceutical Supply Chain
For 175 years, McKesson has led the industry in the delivery of
medicines to pharmacies. We purchase medicines from 450
manufacturers and supply more than 75,000 customer sites in all
50 states. McKesson has long been a leader in developing and
implementing cutting-edge technology to enhance the security
of the pharmaceutical supply chain. We were the first wholesaler
to fully automate our warehouses and distribution networks with
radio frequency and scanning technology. Today, we are again
taking the lead as we work with manufacturers and major retail-
ers to test radio frequency identification (RFID) technology that
will track pharmaceutical products from the manufacturer to the
wholesaler to the pharmacy. In addition to more stringent whole-
saler licensure standards and tougher criminal penalties for those
who counterfeit drugs, RFID technology will limit the ability and
opportunity for compromised or adulterated products to enter
the pharmaceutical distribution network.
Patient Safety
As the world’s largest provider of health information technology
(HIT), McKesson offers comprehensive solutions designed to
enhance patient safety at every touch point of the healthcare sys-
tem. Our barcoding technology promotes the safe delivery of
medicines from pharmacy robotic systems to bedside medication
administration. This unique medication management process
saves lives and time, removes rework, and reduces human error
and resulting costs. This is just the first step, however, on the
path to ensure patient safety through greater use of technology.
Digitizing the healthcare system through widespread adoption of
HIT will improve the quality of care for all Americans.
McKesson has developed solutions that enable healthcare pro-
fessionals to capture discrete patient data from disparate
sources, including the pharmacy, physician’s office, laboratory
and hospital, to form a comprehensive, portable and confidential
electronic patient record. Thousands of lives and millions of dol-
lars can be saved in reduced healthcare spending through the
rapid adoption of HIT. We continue to work with our govern-
ment partners to make this dream a reality.
17
Net revenues for our segments for the last two fiscal years were as follows:
$ BILLIONS 2007 2006
Distribution Solutions $ 90.7 98% $ 85.1 98% Technology Solutions 2.3 2% 1.9 2%
Total $ 93.0 100% $ 87.0 100%
MCKESSON CORPORATE–Citizenship Report 2007
Disease Management
McKesson provides disease management programs for com-
mercial, Medicaid and Medicare populations in which we
leverage our experience with patient services, pharmacy man-
agement and healthcare quality improvement activities. These
outcomes-focused, evidence-based interventions improve
patients’ abilities to participate in their care and help physicians
by reinforcing their medical recommendations.
As federal and state governments consider new ways to
improve the quality and delivery of healthcare to populations
with chronic illnesses, McKesson believes greater utilization of
disease management programs is vital to enhancing care out-
comes for the elderly and vulnerable populations, while
concurrently reducing the cost of care. In eight states where
we provide disease management services to Medicaid patients,
physician and patient satisfaction has improved along with
health outcomes. We estimate these states are saving approxi-
mately two dollars for every dollar spent with McKesson.
FINANCIALS
McKesson strives to be a leader in the corporate citizenship
efforts of our industry. We believe that through ethical corporate
governance, fair employment policies and sound environmental
practices, we will experience strong financial performance.
Business Segments
McKesson’s strategy is to create strong, value-based relationships
with customers. While we always remain focused on healthcare,
our diverse business segments allow us to offer our customers a
full range of products and services that reduce the cost of provid-
ing patients with quality care.
McKesson conducts business through two segments. Through
our Distribution Solutions segment, we are a leading distributor
of ethical and proprietary drugs, medical surgical supplies, first-
aid products and equipment, health and beauty care products
and provide logistics and other services throughout North
America. This segment also provides medical management and
specialty pharmaceutical solutions for biotech and pharmaceuti-
cal manufacturers, patient and other services for payors,
software and consulting and outsourcing services to pharmacies
and, through its investment in Parata Systems, LLC ("Parata"),
sells automated pharmaceutical dispensing systems for retail
pharmacies.
$93 billion in revenue
increase in revenues
$1.5 billion cash flow from operations
debt-to-capital ratio
$2.0 billion in cash
31,800 employees
Corporate Financial HighlightsFISCAL YEAR MARCH 31, 2007
7%
23.8%
19
Our Technology Solutions segment delivers enterprise-wide
patient care, clinical, financial, supply chain, and strategic man-
agement software solutions, pharmacy automation for hospitals,
as well as connectivity, outsourcing and other services, to health-
care organizations throughout North America, the United
Kingdom and other European countries. This segment also pro-
vides claims processing software to physicians and payors and
disease management services primarily to state Medicaid pro-
grams. Its customers include hospitals, physicians, homecare
providers, retail pharmacies, payors and state Medicaid pro-
grams.
OUR PEOPLEMcKesson believes that our most valuable and important asset is
our workforce. It is for this reason that McKesson continually
strives to be an employer of choice, by treating our employees
with respect, fairness and dignity.
McKesson employee compensation and benefits programs
reflect the wide-variety of needs faced by our employees. From
retirement planning to chronic disease management to adoption
assistance, McKesson is committed to offering our employees
the tools they need to manage the demands of both work and
family life.
COMPENSATION
McKesson believes that every employee has the potential to add
value to our business, which is why we follow a “pay-for-per-
formance” compensation philosophy. This compensation
philosophy rewards employees of all levels based on their contri-
bution to the company’s success. Depending on market pay
practice and company approach, and the supply and demand for
specific skills, these rewards generally include salary or draw, and
may include participation in incentive programs, such as bonus
or long term programs.
BENEFITS
McKesson’s benefits programs are another way of adding value
to our employees’ total compensation package and focus on
improving the long-term health and welfare of our employees.
Our benefits program can add as much as 27% percent or more
in value to an employee’s pay. According to our 2006 Employee
Survey, 75% of employees responded favorably to McKesson's
benefits offering. This score is five points higher than the global
high-performing benchmark. Due to the fact that McKesson has
grown over many years of mergers and acquisitions, our Human
Resources department has recently been focused on aligning the
entire employee benefits offered so that they are fair and equi-
table across the company.
0
500
1000
1500
2000
2500
3000
3500
4000
4500
Net Income**
Gross Profit
070605
FISCAL YEAR ENDED MARCH 31
Gross Profit & Net Income$ MILLIONS
** Excludes impact of the shareholder litigation charge
70000
80000
90000
100000
070605
FISCAL YEAR ENDED MARCH 31
Revenues$ MILLIONS
Revenues
0
5000
10000
15000
20000
25000
Total Debt
Total Assets
Stockholders' Equity
070605
FISCAL YEAR ENDED MARCH 31
Total Assets, Equity, Debt$ MILLIONS
0
50
100
150
200
Value Line HealthCare Sector Index
McKesson Corporation
S & P 500 Index
070605040302
FISCAL YEAR ENDED MARCH 31
Five Year CumulativeTotal Return*$ DOLLARS
* Assumes $100 invested in McKesson Common Stock and in each index on March 31, 2002 and that all dividends are reinvested.
MCKESSON CORPORATE–Citizenship Report 2007
Employee benefits include a wide variety of life services, including:
– Help with medical, dental and vision care costs
– Domestic partner benefits
– Retirement savings
– Disability coverage
– Life insurance
– Tuition reimbursement
– Adoption assistance
– Access to a triage nurse call-in center
– Learning opportunities focused on healthy living and
work-life balance
– Enhanced eldercare assessment and referral
Through “My McKesson HR,” the company’s human resources
intranet, employees have access to detailed information on ben-
efit plans, along with contact information and features to help
employees make the most of the available programs.
Health Benefits
McKesson is dedicated to providing employees with access to
quality healthcare through a wide variety of programs and servic-
es. McKesson strives to provide employees with the tools they
need to proactively manage their own health by offering a wide
range of subsidized health options, discounts for use of high per-
formance physicians, incentives for participation in the
HealthMedia health risk assessment and healthy living programs,
and the McKesson CareEnhance Disease Management program
and 24/7 nurse line.
Through a Section 125 cafeteria plan, McKesson offers employee
the opportunity to pay their portion of benefit costs on a pre-tax
basis. In addition, employees can set aside a designated amount
in pre-tax dollars for out of pocket healthcare expenses and/or
dependent childcare needs through Flexible Spending Accounts.
Eligible McKesson employees are offered employer-sponsored
health coverage in the United States and Canada, and state
sponsored health coverage in Europe, which is partly funded
through required contributions. U. S. employees are given the
opportunity to “Build Your Own Point of Service (POS) medical
option.” Employees choose the deductible, copays, coinsurance
and out of pocket maximum that meets their individual needs for
coverage and the right balance of between cost of deductions
versus cost at time of treatment. All medical plans cover office
visits, hospital stays, surgery and other common medical services.
Through HealthMedia, employees can take a free, confidential
health risk assessment. Employees answer a simple health ques-
tionnaire and provide their basic health history to receive
personalized information about their risk factors and guidance
about which HealthMedia healthy living programs they might
find helpful. HealthMedia offers online programs on nutrition,
weight management, stress management, back care, overcom-
ing depression and overcoming sleep problems. Employees are
21
encouraged to participate in all HealthMedia activities to earn
discounts on their portion of health plan coverage.
Preventive health management is encouraged. Company spon-
sored benefits include 100% coverage for preventive care
services, 100% reimbursement for in-home and on-site Weight
Watchers programs, and 100% reimbursement for the American
Cancer Society smoking cessation program, which includes tele-
phonic counseling and nicotine replacement. In some locations,
gym memberships are also subsidized.
McKesson Health Solutions offers employees disease manage-
ment programs for control of asthma, diabetes, cardiac
problems, dyslipidemia and hypertension. In addition, employees
enrolled in the POS plan can contact the nurse line for guidance
and information. Employees can also research a medical concern,
read articles online and listen to audio health information on the
Health Solutions web site.
Pharmacy customers make up a large part of our business, and
those relationships allow our Company to offer a generous
employee prescription benefit plan. There are over 55,000 phar-
macies in McKesson’s drug benefit plan network, allowing our
employees maximum choice. Our employees also have the
option to maximize savings by ordering prescriptions by mail for
a three-month supply of any brand name medication. Whether
our employees visit a pharmacy or fill their prescriptions online,
there is an annual cap on out-of-pocket costs.
Basic life, AD&D and short term disability coverage are automati-
cally provided to McKesson employees. Employees may purchase
reduced cost vision, dental, long term disability, supplemental life
and AD&D coverage, as well as dependent life insurance for a
spouse, domestic partner and children.
EAP
The McKesson Employee Assistance Program (EAP) provides toll-
free, 24-hour, 365-day support services at no cost to our
employees. EAP representatives can help with everyday prob-
lems, including referrals for locating child care, getting advice on
legal matters and help with financial planning to more serious
problems related to stress, marital and relationship concerns and
alcohol or other drug problems. An Enhanced Eldercare program
offers assessment of elderly relatives capabilities to live independ-
ently and referrals to appropriate assisted living
accommodations.
Retirement Savings
McKesson’s Profit-Sharing Investment Plan is a 401(k) plan that
affords employees a smart, convenient way to save for a secure
financial future. It offers financial choice and flexibility, and gives
employees the opportunity to become a Company shareholder.
Approximately 70% of our employees are currently taking
advantage of the plan.
McKesson believes strongly in providing our employees with the
tools they need to be financially prepared for retirement.
Beginning April 1, 2005, McKesson’s matching contribution is
100% on the first 3% of pay contributed and 50% on the next
2% of pay. Since the plan’s inception in 1972, McKesson has
matched employee contributions, up to the first six percent of
salary. Company contributions for the past three years were as
follows:
Plan Year Ended Company Match
March 31, 2007 4% of pay
March 31, 2006 4% of pay
March 31, 2005 3.6% of pay
Stock purchase planThe Employee Stock Purchase Plan (ESPP) allows eligible employ-
ees to participate in the plan and purchase shares of the
Company's common stock at a 15% discount through payroll
deductions. Each participating employee receives shares of the
Company's common stock based on their contributions over a
three-month Purchase Period.
Adoption Assistance
Adoption Assistance is available to help our employees with the
cost of adoption. This program reimburses up to $2,000 in
expenses for adoptions.
Educational Assistance
McKesson believes in life-long learning, and the Company offers
an education reimbursement program that pays 100% of eligible
expenses for approved courses. All course required fees (such as
tuition, lab fees, and registration fees) are considered eligible
expenses. The lifetime maximum for undergraduate courses is
$21,000 and the graduate lifetime maximum is $10,500.
MCKESSON CORPORATE–Citizenship Report 2007
23
McKesson also offers two scholarship programs for employees’
children.
National Merit™ Scholarships
Up to 20 four-year college scholarships, ranging from $1,000 to
$2,500 per year are awarded to employees’ children each year.
This is a competitive academic scholarship and winners are deter-
mined by an independent scholarship administrator.
Scholarship America
Up to 20 four-year awards ranging from $1,000 to $2,500 are
made each year to employees’ children enrolled full-time in
accredited colleges or vocational schools. This scholarship is
awarded based upon the student’s overall potential to succeed,
rather than strictly focusing on academic achievement. Winners
are determined by an independent scholarship administrator.
Total Rewards
McKesson provides employees with a Total Rewards web site
which explains the value of both pay and benefits. The personal-
ized web site includes compensation, retirement and health care
coverage, as well as life and disability insurance. Total Rewards
even embodies life, career and community opportunities, as well
as other compelling rewards. Every day on the job, each employee
makes a significant contribution to McKesson's success.
Compensation represents the pay and incentives, as well as other
financial payments we make in return for this contribution. Other
rewards include company-sponsored programs that can make an
employee’s life easier and more enjoyable.
Award and Recognition Programs
McKesson also recognizes outstanding achievement through a
wide variety of awards programs, such as the company-wide
ICARE and President’s Awards. The ICARE Award is for employees
who continually display behaviors exemplifying the Shared
Principles. The President’s Award recognizes consistently excellent
records of sustained contributions having significant impact on
McKesson’s pharmaceutical division.
Additionally, the Community Relations department offers two
award programs for employees showing leadership involvement
in the community. The President’s Award is a quarterly award
given by each business unit president to employees that have
demonstrated outstanding community service, and the Neil
Harlan Award, an annual national employee volunteer recognition
program, provides five award winners with cash grants ranging
from $1,000 to $5,000 to the non-profits of their choice.
MCKESSON CORPORATE–Citizenship Report 2007
WORKPLACE SAFETY
McKesson takes employee safety very seriously, and is constantly
striving to improve the safety of our workplaces.
In addition to complying with all Occupational Safety and Health
Administration (OSHA) regulations, McKesson also provides each
of our facility managers with emergency preparedness courses,
fire drills, automatic defibrillators, first aid kits, and emergency
preparedness posters for all break rooms. The Corporate Safety
Department has also developed and tailored an OSHA 10-Hour
Course for General Industry for McKesson’s operations. The
training provides McKesson managers, supervisors and mainte-
nance personal information on workplace safety, accident
prevention and investigation, and OSHA standards.
In 2007, McKesson received six OSHA violations and $2,700 in
OSHA fines.
DIVERSITY
When you hear the word “diversity” at McKesson, we are not
only speaking of gender, age and race. We believe that diversity
can be found everywhere - a diverse upbringing or life experi-
ence can cause diversity of thought and enable employees to
bring a new perspective to the workplace. McKesson believes
that valuing diversity gives us a competitive advantage and is a
cornerstone of our reputation as a great company. To that end,
we promote a business model of diversity excellence.
McKesson was voted number one in workplace diversity by
Computer World Magazine in 2003, was voted one of the best
places for minorities in Atlanta by The Atlanta Business Times,
and was voted number 14 of the top 25 companies for women
in the Bay Area by the San Francisco Chronicle. As a company,
McKesson is acknowledged internationally as one of the top ten
companies related to women on the Board of Directors by the
National Association of Women Business Leaders. McKesson was
in the top 10 in a recent study published by the University of
California at Davis Graduate School of Management that looked
at the presence of director and officer roles held by women in
the 200 largest publicly held companies headquartered in
California.
25
McKesson employees, under the guidance of the EVP of HR,
have formed Diversity Councils in four of the company’s offices
around the country. In January 2006, The Dubuque office accept-
ed the CommUNITY Award for Diversity Initiatives. The award,
sponsored by the Faces & Voices Awards Committee in conjunc-
tion with the Dubuque Human Rights Department, is given to a
local business that is a recognized leader in promoting and sup-
porting events and programs that embrace diversity.
The purpose of these Councils is to:
– Create awareness by conveying the company’s diversity
message.
– Help create the environment for living diversity daily.
– Recommend diversity management implementation
strategies to senior management.
– Share information across business units and local councils.
– Lead development of and alignment with local council
tactical objectives.
– Create change-agents in our individual business units in
support of the diversity vision.
– Empower McKesson’s workforce to meet business
objectives through a diversity focus.
McKesson is in the process of rolling out a virtual mentoring pro-
gram throughout the company in an effort to ensure consistent
development opportunities to all employees. This program is
mentee-driven with the mentee identifying his or her individual
development needs and utilizing the system to help find a men-
tor to fit that development need. The program allows traditional
advocacy based relationships, as well as peer-to-peer relation-
ships for skills building or information sharing.
In addition to our focus on existing employees, McKesson is
involved in diversity outreach efforts, specifically networking and
recruitment for diverse talent. We have enterprise-wide efforts to
find talent throughout the country and have specific localized ini-
tiatives in place as well. In the San Francisco Bay Area, for
example, we participate in the “Bay Area Diversity Summit” –
sponsoring monthly receptions for various primary demographics
of diversity such as race, gender, and sexual orientation. These
receptions allow networking with other bay area companies for
best practice sharing and with associations representing specific
demographic groups.
Supplier Diversity
Our belief in diversity extends to our suppliers as well. McKesson
recognizes and promotes the outstanding contributions made by
diverse businesses to the economic health and diversity of com-
munities throughout the US. Our business partners include small,
MCKESSON CORPORATE–Citizenship Report 2007
disadvantaged, historically underutilized, minority-owned,
women-owned, veteran-owned, service-disabled and Historically
Underutilized Business Zones (HUB) businesses, as well as Javits-
Wagner-O’Day Act (JWOD) non-profit agencies.
Through our company-wide subcontracting and purchasing pro-
grams, McKesson encourages and facilitates small and diverse
business sales opportunities for qualified businesses. In addition
to subcontracting opportunities, McKesson’s supplier diversity
program supports the viability and growth of diverse businesses
through contractual mentoring relationships that advance mean-
ingful growth opportunities. Since 1994, McKesson has
maintained a mentoring program that provides extraordinary
support and guidance to its business protégés.
OUR WORLD
The Environment
Today’s most pressing environmental issues are issues that are
important to all of us, both as individuals and as business leaders.
McKesson’s dedication to reducing our energy, water and fuel
consumption drives us to continue the complex task of measur-
ing these resources.
Electricity and CO2 Emissions
In this third year of data gathering and consolidation, we have
monitored nearly 4.8 million square feet of real estate for pur-
chased electricity usage and resultant carbon dioxide emissions.
To calculate carbon dioxide emissions from our purchased elec-
tricity and from our fleet fuel usage, we used the highly
esteemed GHG Protocol, a corporate accounting and reporting
standard for greenhouse gas (GHG) emissions.
Fleet Fuel Usage and CO2 Emissions
McKesson’s CO2 emissions are mainly derived from the impact of
our delivery vehicles and those of our outsourced carriers. We
have begun to measure our fleet fuel usage statistics in order to
monitor, manage and reduce our CO2 emissions. The average
CO2 emissions per vehicle in FY07 was 18.4 metric tons, up from
16.7 in FY06 and 17.4 in FY05.
Electricity and Water Consumption
Fiscal Year 05 Fiscal Year 06 Fiscal Year 07
Facilities monitored for kWh 21 20 20
sq ft monitored for kWh 4,580,233 4,724,099 4,722,893
Total MWh (kWh/1000) 65,421 66,565 70,570
kWh/sq ft 14.28 14.09 14.94
lbs. CO2/sq ft (resulting from consumption of electricity) 20.72 19.53 19.98
lbs. SO2/sq ft (resulting from consumption of electricity) 0.10 0.10 0.07
lbs. NOx /sq ft (resulting from consumption of electricity) 0.04 0.04 0.03
% of RE monitored for kWh/sq ft and CO2/sq ft 29% 31% 28%
Facilities monitored for gallons of water 23 23 22
sq ft monitored for gallons of water 5,091,510 5,265,880 5,134,429
Gallons /sq ft 6.66 9.01 8.71
% of RE monitored for gallons /sq ft 32% 35% 30%
Total Fleet Fuel Usage in Thousands of Gallons 3,408 3,513 3,480
Total Fleet CO2 Emissions in Metric Tons 31,673 32,022 31,635
Average CO2 emissions per Vehicle in Metric Tons 17.35 17.63 18.35
27
ECO-EFFICIENCY INITIATIVES
In addition to beginning to measure and reduce our water, fuel
and electricity consumption, we are also committed to a variety of
eco-efficiency initiatives aimed at conserving natural resources,
which in turn, saves money and adds shareholder value.
McKesson’s Commitment to Recycling
McKesson has established recycling programs in a majority of our
locations. Additionally, McKesson’s Procurement Department
strives to source recycled products whenever possible. In FY06,
we began to track the percentage of post-consumer recycled
materials that we purchase compared to total spending on office
products. According to Corporate Express, the largest supplier of
office products to American corporations, McKesson’s recycled
office products spending is 12.5%. In addition, our enterprise
wide online supply purchasing system highlights items with recy-
cled content for easy ordering.
McKesson’s Environmental Council
In 2006, a group of employees formed McKesson’s first
Environmental Council. This group presented to and received
support from the Executive Committee to further pursue envi-
ronmental initiatives within McKesson. The group meets monthly
to discuss best practices and encourage sustainability within the
company.
McKesson’s Environmental Council Mission Statement
McKesson's Environmental Council advocates for an environ-
mental strategy that supports the company’s business objectives,
increases employee engagement and strengthens our position as
a good corporate citizen. The Council researches, develops and
implements initiatives that preserve natural resources and reduce
environmental risks while furthering our competitive advantage.
LEED Certification
The Leadership in Energy and Environmental Design (LEED)
Green Building Rating System™ is the nationally accepted
benchmark for the design, construction, and operation of high
performance green buildings. McKesson is currently working to
secure LEED certification for its headquarter facility and is build-
ing its newest distribution center to LEED certification standards.
Green Facilities
McKesson has a wide variety of environmental initiatives in place
in facilities around the country. Here is a small example of what
we are doing:
– We use energy-efficient lighting and many facilities have
lighting on motion sensors
– We use non-toxic cleaning products
– We purchase and install recycled carpeting and certified
environmentally friendly office products
– We are working to replace all ozone depleting cooling, air
conditioning and fire suppression systems
– We have drinking water filtration systems
MCKESSON CORPORATE–Citizenship Report 2007
Headquarters Sustainability
McKesson's headquarters building's ENERGY STAR Rating is an
84 which means it is in the top 25% of the nation in terms of
energy efficiency. Buildings that qualify for the ENERGY STAR
typically use 35% less energy than average buildings. In 2006,
the building was awarded 2nd place in the Commercial Recycler
of the Year Awards (the CoRY) in the medium building category.
In 2007, the building was awarded 1st place in the medium
building category for the 2007 BOMA SF Earth Award (formerly
the CoRY award).
The Earth Award acknowledges the efforts by local commercial
properties to reduce water and energy usage, reduce or elimi-
nate use of toxics that affect indoor air quality, educate
commercial tenants in sustainable operating practices, promote
the use of public transportation and bicycling in daily commut-
ing, and recycle everything from paper, bottles, cans, cardboard
and food waste to construction debris.
In addition, building management offers used battery drop-off
locations, desk side recycling bins and uses fresh air in the build-
ing until the temperature reaches 74 degrees.
COMMUNITY INVOLVEMENT
The McKesson Foundation was established in 1943 and the com-
pany’s commitment to giving back has grown deeper ever since.
Investing in the communities where we live and work truly brings
our ICARE Shared Principles to life.
In addition to cash grants from the McKesson Foundation,
McKesson employees donate their time to the causes most
important to them. Our employees volunteered an incredible
28,039 hours in FY07, which, according to The Independent
Sector, has a cash value of $526,292.
The McKesson Foundation and the Community Relations
Department are committed to building healthier communities by
investing our company’s resources in non-profit agencies and
supporting employees in their volunteer activities.
Employee Volunteer Support:
McKesson’s AngelPoints Program
McKesson’s AngelPoints Program promotes employee participa-
tion at non-profit organizations by providing grants linked to
individual volunteer involvement with no personal monetary
donation required. Employees earn one AngelPoint for every
hour of completed volunteer work. McKesson’s volunteer web
portal allows employees to search for volunteer opportunities,
29
read stories and view photos from volunteer events, log their vol-
unteer hours and download grant application forms. This web
portal can be accessed from employees’ home or work comput-
ers, giving them the flexibility they need to find the perfect
volunteer event.
AngelPoints Volunteer Grants
For every 25 hours (25 AngelPoints) of volunteer work completed
per calendar year, a $250 grant will be made to the employee’s
charity of choice. In order to encourage employees to volunteer
with any cause that they are connected to, employees do not
need to volunteer with the same agency each month.
AngelPoints Board of Director’s Grants
McKesson values the leadership role played by the Board of
Directors of non-profit organizations. In order to recognize these
leaders, employees that serve on the Board of Directors of a qual-
ifying non-profit organization are eligible for a $500 grant.
AngelPoints Team Volunteer Grants
In order to encourage teamwork among McKesson employees
and to support volunteer projects that require a long-term com-
mitment, we offer employees AngelPoints Team Volunteer Grants.
These grants require a minimum of four employees participating,
and each must volunteer a minimum of 25 hours (earn 25
AngelPoints) with the same organization before receiving a grant.
Volunteer Recognition
Neil Harlan Award
The Neil Harlan Award, named after a former Chairman and
champion of community involvement, is presented each year to
five outstanding employee volunteers. The first prize is a $5000
grant to the employee’s non-profit choice, and the four other
winners receive grants ranging from $1000-$2500. Over the
years, employees have won this award for their outstanding
achievements with a variety of non-profits, from Habitat for
Humanity to the Humane Society to grassroots non-profits that
train immigrants for professional work in the U.S.
Volunteer Leaders
Regional Volunteer Coordinators
In 74 McKesson offices around the country, 105 outstanding
employee volunteers serve as Regional Volunteer Coordinators
(RVCs). These RVCs have volunteered to serve in a leadership
capacity in their area to motivate employee volunteers and organ-
ize group volunteer activities. Our Regional Volunteer
Coordinators allow us to foster a sense of “One McKesson” by
bringing company-wide initiatives into our regional offices.
30
Community Day
In spring of 2006, San Francisco headquarter employees celebrated
the 9th annual Community Day, and the program was expanded to
forty-seven regional offices. Employees volunteered at community
health clinics and hospitals painting murals to spruce up the patient
areas, furthering the impact of our giving beyond cash and
strengthening our commitment to these important healthcare
agencies. In addition, 2006 marked the launch of our in-house vol-
unteer projects, allowing employees with mission-critical jobs to
participate throughout the day. Employees gathered in break
rooms around the country and painted canvas mural panels which
were then donated to local community clinics and children’s hospi-
tals. Around the country, nearly 2,050 McKesson employees
participated in Community Day and painted more than 200 murals.
In 2007, our employee participation increased by 107% and 71 dif-
ferent sites created nearly 800 fleece blankets which were donated
to foster youth agencies in the communities where we live and
work.
Heart Walk
As a healthcare company, McKesson understands the importance
of taking preventative measures to preserve good health. That is
why our company encourages all employees to participate in the
American Heart Association’s Heart Walks. In FY07, 1,528
McKesson employees in offices around the country focused on
their own heart health by participating in their local Heart Walk
and helped fight heart disease and stroke by raising money for
the cause.
Educational Support
The McKesson Foundation supports education through a variety
of educational grants, scholarships for employees’ children and
our educational matching gift program. Each year, the McKesson
Foundation awards 160 scholarships to employees’ children and
gives over $250,000 in cash grants to employees’ favorite schools
through our matching gifts program.
Educational Matching Gifts
The Foundation matches gifts made by employees dollar for dollar to
accredited educational institutions (elementary through graduate) for
educational purposes up to a total of $2,500 per employee per year.
In FY07, 552 McKesson employees took advantage of this company
match to their favorite schools.
Pharmacy Scholarships
In order to help address the need for more pharmacists, fifty
$1,000 McKesson Pharmacy Scholarships are awarded annually to
pharmacy students who are nominated by one of our company's
pharmacy customers. Once awarded, scholarships can be
renewed for an additional three years.
MCKESSON CORPORATE–Citizenship Report 2007
31
Nursing Scholarships
In order to help address the need for more nurses, twenty-five
$1,000 McKesson Nursing Scholarships are awarded annually to
low-income nursing students. Once awarded, scholarships can be
renewed for an additional year.
Philanthropic Programs
McKesson Foundation
We believe that healthy communities are tied to the health of our
company. If people are well educated, provided with job training,
have access to the childcare and healthcare they need, then
McKesson will have access to a qualified, healthy and diverse tal-
ent pool that is focused on work. To that end, the McKesson
Foundation contributes more than $5 million every year to non-
profit organizations working to improve the health of our
communities. Grants are focused on organizations and programs
providing access to healthcare services for low-income children
and are made in cities where we have the greatest concentration
of employees.
Quest for Quality Award
This cash award is a joint effort by the American Hospital
Association (AHA), McKesson Corporation and the McKesson
Foundation to recognize hospitals or health systems for leadership
and innovation in quality, safety and commitment to patient care.
Winning hospitals gain recognition as a leader in patient safety
and receive a $75,000 cash grant to continue their work.
Regional Grant Committees
The McKesson Foundation’s philosophy is one of decentralized
grantmaking—the Foundation staff in the San Francisco head-
quarters is not as intimately aware of the needs of the grassroots
organizations in cities across the country as the employees who
live and work in those regions. To support this philosophy, we
have created 20 Regional Grant Committees around the country
to determine where grants will be given on a local level. The com-
mittee members are volunteers and come from various business
units throughout the organization, allowing for an opportunity to
build relationships across different parts of the organization.
Areas with Regional Grant Committees:
Alpharetta, GA
Broomfield/Louisville, CO
Canada
Carrollton, TX
Charlotte, NC
Chicago, IL
Delran, NJ/Philadelphia, PA
Dubuque, IA
Hadley, MA
Hartford, CT
Livonia, MI
Los Angeles, CA
Memphis, TN
Newton, MA
Pittsburgh, PA
Richmond, VA
San Francisco, CA
Scottsdale/Phoenix, AZ
Springfield, MO
Twin Cities, MN
For further information, or to provide us with your feedback on
this report, please contact community.relations@mckesson.com
or call (415) 983-9478.
MCKESSON CORPORATE–Citizenship Report 2007