McKesson 2011 Annual Report Download - page 91

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McKESSON CORPORATION
FINANCIAL NOTES (Continued)
85
March 31, 2010
(In millions)
Level 1
Level 2
Level 3
Total
Cash and cash equivalents
$
10
$
17
$
—
$
27
Equity securities:
Common and preferred stock
104
1
—
105
Equity commingled funds
—
126
—
126
Fixed income securities:
Government securities
—
23
—
23
Corporate bonds
—
41
—
41
Mortgage-backed securities
—
17
1
18
Asset-backed securities and other
—
15
1
16
Fixed income commingled funds
—
22
—
22
Other:
Real estate funds
—
—
19
19
Hedge funds
—
—
5
5
Total
$
114
$
262
$
26
$
402
Receivables
(1)
6
Payables
(1)
(17)
Total
$
391
(1) Represents pending trades at March 31, 2010.
Cash and cash equivalents – Cash and cash equivalents consist of short-term investment funds that maintain
daily liquidity and have a constant unit value of $1.00. The funds invest in short-term domestic fixed income
securities and other securities with debt-like characteristics emphasizing short-term maturities and quality. Cash and
cash equivalents are generally classified as Level 1 investments. Some cash and cash equivalents are held in
commingled funds, which have a daily net value derived from quoted prices for the underlying securities in active
markets; these are classified as Level 2 investments.
Common and preferred stock – This investment class consists of common and preferred shares issued by U.S.
and non-U.S. corporations. Common shares are traded actively on exchanges and price quotes are readily available.
Preferred shares are not actively traded. Holdings of common shares are generally classified as Level 1 investments.
Preferred shares are classified as Level 2 investments.
Equity commingled funds – Some equity securities consisting of common and preferred stock are held in
commingled funds, which have daily net asset values derived from quoted prices for the underlying securities in
active markets; these are classified as Level 2 investments.
Government securities – This investment class consists of bonds and debentures issued by central governments
or federal agencies. Multiple prices and price types are obtained from pricing vendors whenever possible, which
enables cross-provider validations. We have obtained an understanding of how these prices are derived, including
the nature and observability of the inputs used in deriving such prices. These securities are classified as Level 2
investments.
Corporate bonds – This investment class consists of bonds and debentures issued by corporations. Multiple
prices and price types are obtained from pricing vendors whenever possible, which enables cross-provider
validations. We have obtained an understanding of how these prices are derived, including the nature and
observability of the inputs used in deriving such prices. When inputs are observable, securities are classified as
Level 2 investments; otherwise, securities are classified as Level 3 investments.