8-KEarnings & ResultsMaterial Agreements

MCKESSON CORP 8-K Report, Material Agreement (Jan 18, 2005)

Filed January 18, 2005For Securities:MCK

Summary

McKesson Corporation (MCK) filed an 8-K report on January 18, 2005, to disclose a significant development regarding its legal proceedings. The company announced an agreement to settle a consolidated securities class action lawsuit related to its former subsidiary, HBO & Company (HBOC). This settlement involves a cash payment of $960 million to class members, subject to court approval. Furthermore, the company disclosed that this settlement, combined with a reserve for remaining litigation stemming from a 1999 financial restatement, will result in a substantial pre-tax charge of $1.2 billion, or $810 million after-tax, for the third fiscal quarter ended December 31, 2004. This charge translates to approximately $2.70 per share, which is a material impact on the company's financial results for the period.

Key Highlights

  • 1McKesson has reached an agreement to settle a consolidated securities class action lawsuit for $960 million in cash.
  • 2The lawsuit involves the company and its former subsidiary, HBO & Company (HBOC).
  • 3The settlement is contingent upon obtaining preliminary and final court approval.
  • 4The company will record an aggregate pre-tax charge of $1.2 billion for the third fiscal quarter of 2005.
  • 5The after-tax charge is estimated at $810 million, impacting earnings per share by approximately $2.70.
  • 6The charge is a result of both the class action settlement and a reserve for ongoing litigation related to a 1999 financial restatement.

Frequently Asked Questions

This 8-K filing is primarily to report McKesson's agreement to settle a significant securities class action lawsuit for $960 million and the associated financial impact on the company's third fiscal quarter results.

The company expects to incur an aggregate pre-tax charge of $1.2 billion ($810 million after-tax), which is approximately $2.70 per share, for the third fiscal quarter ended December 31, 2004, due to the settlement and reserves for remaining litigation.

No, the settlement agreement is subject to several conditions, including preliminary and final approval by the court, and notification to the class members.

The litigation, including the class action being settled, relates to a 1999 financial restatement and associated matters involving McKesson and its former subsidiary, HBO & Company (HBOC).