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McKESSON CORPORATION
FINANCIAL NOTES (Continued)
88
13. 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. Defined
benefit plan obligations are measured as of the Company’s fiscal year-end.
The net periodic expense (income) for our postretirement welfare benefits is as follows:
Years Ended March 31,
(In millions)
2011
2010
2009
Service cost—benefits earned during the year
$
1
$
1
$
1
Interest cost on projected benefit obligation
8
9
10
Amortization of unrecognized actuarial loss (gain) and
prior service costs
(4)
(25)
(14)
Net periodic postretirement expense (income)
$
5
$
(15)
$
(3)
Information regarding the changes in benefit obligations for our postretirement welfare plans is as follows:
Years Ended March 31,
(In millions)
2011
2010
Change in benefit obligations
Benefit obligation at beginning of period
$
154
$
133
Service cost
1
1
Interest cost
8
9
Actuarial loss
2
26
Benefit payments
(13)
(15)
Benefit obligation at end of period
$
152
$
154
The components of the amount recognized in accumulated other comprehensive income for the Company’s
other postretirement benefits at March 31, 2011 and 2010 were net actuarial loss of $5 million and net actuarial gain
of $1 million and net prior service credits of $2 million and $2 million. Other changes in benefit obligations
recognized in other comprehensive income were net actuarial losses of $6 million for 2011 and $51 million for 2010
and net actuarial gain of $12 million for 2009.
We estimate that the amortization of the actuarial loss from stockholders’ equity to other postretirement expense
in 2012 will be $1 million ($4 million of actuarial gain in 2011).
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 $1 million annually, are as follows: $12 million
annually for 2012 to 2016 and $56 million cumulatively for 2017 through 2021. 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 $14 million for 2012.
Weighted-average discount rates used to estimate postretirement welfare benefit expenses were 5.33%, 7.86%
and 6.19% for 2011, 2010 and 2009. Weighted-average discount rates for the actuarial present value of benefit
obligations were 5.09%, 5.33% and 7.86% for 2011, 2010 and 2009.