McKesson 2009 Annual Report Download - page 107

Download and view the complete annual report

Please find page 107 of the 2009 McKesson annual report below. You can navigate through the pages in the report by either clicking on the pages listed below, or by using the keyword search tool below to find specific information within the annual report.

Page out of 128

  • 1
  • 2
  • 3
  • 4
  • 5
  • 6
  • 7
  • 8
  • 9
  • 10
  • 11
  • 12
  • 13
  • 14
  • 15
  • 16
  • 17
  • 18
  • 19
  • 20
  • 21
  • 22
  • 23
  • 24
  • 25
  • 26
  • 27
  • 28
  • 29
  • 30
  • 31
  • 32
  • 33
  • 34
  • 35
  • 36
  • 37
  • 38
  • 39
  • 40
  • 41
  • 42
  • 43
  • 44
  • 45
  • 46
  • 47
  • 48
  • 49
  • 50
  • 51
  • 52
  • 53
  • 54
  • 55
  • 56
  • 57
  • 58
  • 59
  • 60
  • 61
  • 62
  • 63
  • 64
  • 65
  • 66
  • 67
  • 68
  • 69
  • 70
  • 71
  • 72
  • 73
  • 74
  • 75
  • 76
  • 77
  • 78
  • 79
  • 80
  • 81
  • 82
  • 83
  • 84
  • 85
  • 86
  • 87
  • 88
  • 89
  • 90
  • 91
  • 92
  • 93
  • 94
  • 95
  • 96
  • 97
  • 98
  • 99
  • 100
  • 101
  • 102
  • 103
  • 104
  • 105
  • 106
  • 107
  • 108
  • 109
  • 110
  • 111
  • 112
  • 113
  • 114
  • 115
  • 116
  • 117
  • 118
  • 119
  • 120
  • 121
  • 122
  • 123
  • 124
  • 125
  • 126
  • 127
  • 128

McKESSON CORPORATION
FINANCIAL NOTES (Continued)
101
14. Postretirement Benefits
We maintain a number of postretirement benefits, primarily consisting of healthcare and life insurance
(“welfare”) benefits, for certain eligible U.S. employees. Eligible employees consist of those who retired before
March 31, 1999 and those who retired after March 31, 1999, but were an active employee as of that date, after
meeting other age-related criteria. We also provide postretirement benefits for certain U.S. executives. We adopted
the measurement provisions of SFAS No. 158 in the fourth quarter of 2009. As required, our defined benefit plan
obligations are now measured as of the Company’s fiscal year-end. We previously performed this measurement at
December 31.
The net periodic expense for our postretirement welfare benefits is as follows:
Years Ended March 31,
(In millions) 2009 2008 2007
Service cost—benefits earned during the year $ 1 $ 2 $ 2
Interest cost on projected benefit obligation 10 10 11
Amortization of unrecognized actuarial loss (gain) and
prior service costs (14) 4 16
Net periodic postretirement expense $ (3) $ 16 $ 29
Information regarding the changes in benefit obligations for our postretirement welfare plans is as follows:
(In millions)
15 Month
Period Ending
March
31, 2009
12 Month
Period Ending
December
31, 2007
Change in benefit obligations
Benefit obligation at beginning of period $ 157 $ 183
SFAS No. 158 measurement date adjustment 3 -
Service cost 1 2
Interest cost 10 10
Plan amendments and other 6 5
Actuarial gain (30) (27)
Benefit payments (14) (16)
Benefit obligation at end of period $ 133 $ 157
We estimate that we will amortize $24 million of actuarial gain for the other postretirement plans from
shareholders’ equity to other postretirement expense in 2010. The comparable 2009 amount was $13 million of
actuarial gain. The increase in this benefit is primarily due to favorable healthcare cost trends.
Other postretirement benefits are funded as claims are paid. Expected benefit payments for our postretirement
welfare benefit plans, net of expected Medicare subsidy receipts of $16 million, are as follows: $15 million annually
for 2010 to 2014, and $67 million cumulatively for 2015 through 2019. Expected benefit payments are based on the
same assumptions used to measure the benefit obligations and include estimated future employee service. Expected
contributions to be made for our postretirement welfare benefit plans are $15 million for 2010.
Weighted-average discount rates used to estimate postretirement welfare benefit expenses were 6.19%, 5.78%
and 5.55% for 2009, 2008 and 2007. Weighted-average discount rates for the actuarial present value of benefit
obligations were 7.86%, 6.19% and 5.78% for 2009, 2008 and 2007.