Fitch: McKesson Ratings Unaffected by D&K Healthcare Resources Announcement

Business Wire, July 11, 2005

CHICAGO -- Fitch's ratings on McKesson's (MCK) debt are not affected by McKesson's intention to acquire D&K Healthcare Resources for approximately $207 million in cash. Fitch rates McKesson's senior unsecured debt and the unsecured bank loan 'BBB', subordinated debt 'BBB-', and commercial paper 'F2'. The ratings apply to approximately $1.2 billion of debt.

The ratings reflect the firm's size, solid cash position, strong cash flow, modest leverage, and manageable capital needs. The acquisition of a regional drug distributor is well within MCK's core competency, and McKesson should be able to generate operating efficiencies in the acquired business.

McKesson has ample liquidity to accommodate the cash acquisition and assumed debt (approximately $270 million). At March 31, 2005, MCK had approximately $1.8 billion in cash, $1.2 billion of debt ($420 million maturing through 2009), $1.4 billion availability under a receivables facility, and $1.3 billion availability under bank revolvers. LTM at March 31, 2005, interest coverage (EBITDA/interest) was 10.1 times (x) and leverage (total debt/EBITDA) was 1.2x.

McKesson is one of three largest pharmaceutical distribution companies in the U.S. In total, the three main players account for approximately 90% of the U.S. market.

Fitch's rating definitions are available on the agency's public site, www.fitchratings.com. Published ratings, criteria and methodologies and relevant policies and procedures are also available from this site, at all times. This document will remain on the public site for seven days.