McKesson 2013 Annual Report Download - page 94

Download and view the complete annual report

Please find page 94 of the 2013 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

88
McKESSON CORPORATION
FINANCIAL NOTES (Continued)
Cash and cash equivalents - Cash and cash equivalents include short-term investment funds that maintain daily liquidity
and aim to have constant unit values of $1.00. The funds invest in short-term fixed income securities and other securities with
debt-like characteristics emphasizing short-term maturities and high credit quality. Directly held cash and cash equivalents are
classified as Level 1 investments. Cash and cash equivalents include commingled funds, which have daily net asset values
derived from the underlying securities; 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
may not be 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 investments 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.
Fixed income securities - Government securities consist of bonds and debentures issued by central governments or
federal agencies; corporate bonds consist of bonds and debentures issued by corporations; mortgage-backed securities consist
of debt obligations secured by a mortgage or pool of mortgages; and asset-backed securities primarily consist of debt
obligations secured by an asset or pool of assets other than mortgages. Inputs to the valuation methodology include quoted
prices for similar assets in active markets, and inputs that are observable for the asset, either directly or indirectly, for
substantially the full term of the asset. Multiple prices and price types are obtained from pricing vendors whenever possible,
enabling cross-provider price validations. Fixed income securities are generally classified as Level 2 investments.
Fixed income commingled funds - Some fixed income investments are held in commingled funds, which have daily net
asset values derived from the underlying securities; these are classified as Level 2 investments.
Real estate funds - The value of the real estate funds is reported by the fund manager and is based on a valuation of the
underlying properties. Inputs used in the valuation include items such as cost, discounted future cash flows, independent
appraisals and market based comparable data. The real estate funds are classified as Level 3 investments.
Hedge funds - The hedge funds are invested in fund of fund structures and consist of multiple investments in interest and
currency funds designed to hedge the risk of rate fluctuations. Given the complex nature of valuation and the broad spectrums
of investments, hedge funds are classified as Level 3 investments.
Other commingled funds - The other commingled funds are invested in equities, bonds, commodities, other alternative
investments and cash and cash equivalents. These funds are valued based on the weekly net asset values derived from the
quoted prices for the underlying securities in active markets and, for alternative investments, based on other valuation
techniques. Other commingled funds are classified as Level 2 investments.
The following table represents a reconciliation of Level 3 plan assets held during the years ended March 31, 2013 and 2012:
(In millions)
Real Estate
Funds
Hedge
Funds Total
Balance at March 31, 2011 $ 5 $ 5 $ 10
Unrealized gain on plan assets still held 1
—
1
Purchases, sales and settlements 11 (5) 6
Balance at March 31, 2012 $17 $
—
$ 17
Unrealized gain on plan assets still held 1
—
1
Purchases, sales and settlements 1
—
1
Balance at March 31, 2013 $ 19 $
—
$ 19