EX-12 2 mck_exhibit12x3312018.htm COMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES
Exhibit 12
McKESSON CORPORATION
COMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES

| Years Ended March 31,
(Dollars in millions) | 2018 |  | 2017 |  | 2016 |  | 2015 |  | 2014
Earnings: |  |  |  |  |  |  |  |  |
Income from continuing operations before income taxes (a) | $ | 239 |  |  | $ | 6,891 |  |  | $ | 3,250 |  |  | $ | 2,657 |  |  | $ | 2,171 |
Adjustment for equity in net income of and dividends from equity investees | 239 |  |  | 1 |  |  | (1 | ) |  | (1 | ) |  | 2 |
Fixed charges - below | 475 |  |  | 468 |  |  | 498 |  |  | 520 |  |  | 400 |
Amortization of capitalized interest | 1 |  |  | 1 |  |  | 1 |  |  | 1 |  |  | 2 |
Less: Capitalized interest | (3 | ) |  | (2 | ) |  | (1 | ) |  | — |  |  | — |
Earnings as adjusted | $ | 951 |  |  | $ | 7,359 |  |  | $ | 3,747 |  |  | $ | 3,177 |  |  | $ | 2,575 |
Fixed charges: |  |  |  |  |  |  |  |  |
Interest expense (b) (c) | $ | 283 |  |  | $ | 308 |  |  | $ | 353 |  |  | $ | 374 |  |  | $ | 300 |
Capitalized interest | 3 |  |  | 2 |  |  | 1 |  |  | — |  |  | — |
Portion of rental expense representative of the interest factor (d) | 189 |  |  | 158 |  |  | 144 |  |  | 146 |  |  | 100 |
Total fixed charges | $ | 475 |  |  | $ | 468 |  |  | $ | 498 |  |  | $ | 520 |  |  | $ | 400 |
Ratio: |  |  |  |  |  |  |  |  |
Ratio of earnings to fixed charges | 2.0 |  |  | 15.7 |  |  | 7.5 |  |  | 6.1 |  |  | 6.4 |

(a) | 2018 includes non-cash goodwill impairment charges (pre-tax and after-tax) of $1,283 million for our McKesson Europe reporting unit and $455 million for our Rexall Health reporting unit within our Distributions Solutions segment. 2018 also includes pre-tax restructuring and asset impairment charges of $567 million primarily within our Distribution Solutions segment. 2017 includes a pre-tax gain of $3,947 million from the contribution of the majority of our Technology Solutions businesses and a non-cash pre-tax goodwill impairment charge of $290 million for our EIS reporting unit within our Technology Solutions segment.

(b) | 2018 excludes a pre-tax loss on debt extinguishment of $122 million. Interest expense includes amortization of debt discounts and deferred loan costs.

(c) | Interest expense on uncertain tax liabilities is excluded from interest expense as the Company records these amounts within income tax expense.

(d) | One-third of net rent expense is the portion of rental expense deemed representative of the interest factor.