What is the main event reported in this 8-K filing?

The main event is McKesson Corporation announcing that it will record an $80 million credit to income tax expense in its upcoming quarterly financial statements due to a favorable private letter ruling from the IRS regarding the tax deductibility of its securities class action settlement payment.

What was the settlement amount, and why is its tax deductibility important?

McKesson paid approximately $960 million to settle the "In re McKesson HBOC, Inc. Securities Litigation." The IRS ruling confirming the full tax deductibility of this large payment means the company can reduce its taxable income, directly leading to the $80 million tax credit being recognized.

Did McKesson anticipate this tax deduction?

No, McKesson had previously established tax reserves because there was uncertainty about whether the settlement payment would be tax-deductible. The private letter ruling from the IRS resolves this uncertainty and allows for the reversal of a portion of those reserves.

When will the impact of this ruling be reflected in McKesson's financials?

The $80 million credit to income tax expense will be reflected in McKesson's financial statements for the fiscal quarter ending September 30, 2006.

MCK 8-K SEC Disclosure — Sep 11, 2006

Summary

McKesson Corporation (MCK) filed an 8-K on September 11, 2006, to disclose a significant positive development regarding its tax position. The company announced it will record an $80 million credit to income tax expense in its fiscal quarter ending September 30, 2006. This credit is a direct result of receiving a private letter ruling from the U.S. Internal Revenue Service (IRS).

Key Highlights

1McKesson Corporation will record an $80 million credit to income tax expense in its quarter ending September 30, 2006.
2The credit is based on a private letter ruling from the U.S. Internal Revenue Service (IRS).
3The IRS ruling confirms that McKesson's payment of approximately $960 million to settle the "In re McKesson HBOC, Inc. Securities Litigation" is fully tax-deductible.
4Previously, McKesson had established tax reserves due to uncertainty regarding the tax deductibility of settlement payments.
5The reversal of $80 million of these reserves will positively impact the company's financial statements for the quarter.
6This ruling provides significant tax relief and improves the net financial impact of the previously disclosed settlement.

MCKESSON CORP 8-K Report, Corporate Update (Sep 11, 2006)

Summary

Key Highlights

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