FORMER CHIEF EXECUTIVE OFFICER OF McKESSON'S INFORMATION TECHNOLOGY SUBSIDIARY PLEADS GUILTY TO CRIMINAL SECURITIES FRAUD AND CONSPIRACY

The United States Attorney's Office for the Northern District of California and the Federal Bureau of Investigation announced today that Albert J. Bergonzi, the former chief executive of McKesson, Inc.'s information technology subsidiary, pled guilty today to securities fraud in violation of 15 U.S.C. §§ 78j(b) and 78ff, and conspiracy in violation of 18 U.S.C. § 371.

Mr. Bergonzi, age 53, of Atlanta, Georgia, was first indicted by a federal Grand Jury on September 27, 2000.  The grand jury recently returned a second superseding indictment on June 3, 2003, charging Mr. Bergonzi with conspiracy, numerous violations of the securities laws, and wire fraud.  Today, Mr. Bergonzi pled guilty to the first two counts of the second superseding indictment and agreed to cooperate with the United States Attorney's Office, the Federal Bureau of Investigation, and the Securities and Exchange Commission, in their on-going investigation and prosecution of former officers HBO & Company ("HBOC") and McKessonHBOC, Inc.

Mr. Bergonzi was the chief executive officer of the information technology subsidiary of McKessonHBOC, a company formed in January 1999 by the merger of McKesson, the country's largest healthcare supplier, and HBOC, the leading healthcare information technology business.  Mr. Bergonzi had been the president and chief operating officer of HBOC prior to the merger.

Mr. Bergonzi specifically admitted his involvement in a fraudulent $20 million contract between McKessonHBOC and Data General, Inc.  After the close of the quarter ending March 31, 1999, Bergonzi was aware that McKesson's HBOC subsidiary had failed to meet its $120 million software revenue goal for the quarter.  In a belated attempt to achieve that goal, which would permit McKessonHBOC to meet Wall Street earnings expectations, Mr. Bergonzi conspired with others at McKessonHBOC to fraudulently recognize revenue of $20 million in the March quarter from a transaction with Data General that was conceived and negotiated, in its entirety, after the close of the quarter.  The agreement consisted of two separate, reciprocal contracts, the first contract was improperly backdated to March 31, 1999.  The second contract was dated April 5, 1999.  Both contracts were contingent upon each other and negotiated contemporaneously as part of the same transaction.  The second contract contained a provision requiring McKessonHBOC to buy back any software that Data General was unable to resell.  Mr. Bergonzi admitted that he knew that these conditions precluded revenue recognition.

When the conduct of Mr. Bergonzi and the other executives was discovered by McKessonHBOC's audit committee and revealed to the public, the reaction was swift and devastating.  On April 28, 1999, McKessonHBOC issued a press release announcing that it was investigating accounting irregularities in HBOC-related software sales and that the company would restate its financial results.  On the day of that announcement, the share price of McKessonHBOC stock fell more than 40% from the prior day, from $65.75 to $34.50.  As a result, the value of stock held by McKessonHBOC shareholders fell by more than $9 billion.

In addition to Mr. Bergonzi, five HBOC and McKessonHBOC executives have been charged in connection with the revenue recognition and earnings management scheme. To date, three have pled guilty and are cooperating with the government's investigation.  Former HBOC co-president and chief financial officer Jay Gilbertson pled guilty on April 24, 2003, to conspiracy to commit securities fraud and falsifying the company's books and records.  On May 16, 2000, former sales vice president Dominick DeRosa pled guilty to conspiracy to commit securities fraud, and on January 5, 2001, former finance vice president Timothy Heyerdahl pled guilty to insider trading.

Charges against two other defendants remain pending.  In the superseding indictment in which Mr. Bergonzi was charged, Charles McCall, HBOC's chief executive officer and chairman of McKessonHBOC's board of directors, and Jay Lapine, HBOC's general counsel, were charged with conspiracy and securities fraud.  The investigation in this matter is continuing.

In announcing the charges, U.S. Attorney Kevin V. Ryan, a member of President Bush's Corporate Fraud Task Force said, "Today's guilty plea and our continuing effort to prosecute fraudulent conduct at McKessonHBOC provide additional examples of this Office's commitment to vigorous criminal enforcement of the securities laws.  Whenever the facts justify, officers of public corporations who choose to mislead investors will be made to answer criminal charges.  In addition, this case represents another example of superb investigative work by the white collar squad of the San Francisco FBI."

FBI Special Agent in Charge Mark Mershon said, "The FBI continues to aggressively investigate corporate fraud at all levels.  Mr. Bergonzi's actions violated the trust required between corporate executives and the investing public.  This plea demonstrates the FBI's commitment to hold corporate executives who abuse their positions and defraud the public, accountable for their actions."

Mr. Bergonzi's sentencing hearing has not yet been scheduled.  The maximum statutory penalty for a violation of 18 U.S.C. § 371 is five years in prison and a fine of $250,000, plus restitution.  The maximum penalty for securities fraud is ten years in prison and a fine of $1,000,000, as well as restitution.  However, the actual sentence be dictated by the Federal Sentencing Guidelines, which take into account a number of factors, and will be imposed in the discretion of the Court.  The criminal case is being prosecuted by Assistant U.S. Attorneys John H. Hemann and William H. Kimball.