McKesson 2014 Annual Report Download - page 99

McKESSON CORPORATION
FINANCIAL NOTES (Continued)
96
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 2 and 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 1 or Level 2 investments.
Other - At March 31, 2014, this includes $46 million of plan asset value relating to the Norwegian Public Service Pension
Fund (“SPK”). In principle, the SPK is organized as a pay-as-you-go system guaranteed by the Norwegian government as it holds
no Company-owned assets to back the pension liabilities. The Company pays a pension premium used to fund the plan, which is
paid directly to the Norwegian government and is accounted for as governmental income in the annual budget for Norway. To be
able to report back plan asset values for the participating employers, SPK has established an annual account for each participating
employer to keep track of the financial status of the plan, including managing the contributions and the payments. Further, the
investment return credited to this account is determined annually by the SPK based on the performance of long-term government
bonds.
The following table represents a reconciliation of Level 3 plan assets held during the years ended March 31, 2014 and 2013:
U.S. Plans Non-U.S. Plans
(In millions)
Real
Estate
Funds Other Total
Real
Estate
Funds Other Total
Balance at March 31, 2012 $ 12 $ — $ 12 $ 5 $ — $ 5
Unrealized gain on plan assets still held 1 — 1 — — —
Purchases, sales and settlements 1 — 1 — — —
Balance at March 31, 2013 $ 14 $ — $ 14 $ 5 $ — $ 5
Acquisitions — —— 1 56
Unrealized gain on plan assets still held 2 —2 1 —1
Purchases, sales and settlements — — — — — —
Balance at March 31, 2014 $ 16 $ — $ 16 $ 7 $ 5 $ 12
Multiemployer Plans
The Company contributes to a number of multiemployer pension plans under the terms of collective-bargaining agreements
that cover union-represented employees in the U.S. In 2014, as a result of our acquisition of Celesio, we also contribute to the
Pensjonsordningen for Apoteketaten (“POA”), a mandatory multiemployer pension scheme for our Pharmacy employees in
Norway, managed by the association of Norwegian Pharmacies.
The risks of participating in these multiemployer plans are different from single-employer pension plans in the following
aspects: (i) assets contributed to the multiemployer plan by one employer may be used to provide benefits to employees of other
participating employers; (ii) if a participating employer stops contributing to the plan, the unfunded obligations of the plan may
be borne by the remaining participating employers; and (iii) if the Company chooses to stop participating in some of its
multiemployer plans, the Company may be required to pay those plans an amount based on the underfunded status of the plan,
referred to as a withdrawal liability. Actions taken by other participating employers may lead to adverse changes in the financial
condition of a multiemployer benefit plan and our withdrawal liability and contributions may increase.