McKesson 2016 Annual Report Download - page 114

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McKESSON CORPORATION
FINANCIAL NOTES (Continued)
Fixed income commingled funds—Some fixed income investments are held in exchange traded or
commingled funds, which have daily net asset values derived from the underlying securities; these are classified
as Level 1 or 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.
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, 2016 and 2015, this includes $40 million and $39 million of plan asset value relating
to the 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 who establishes an 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,
2016 and 2015:
U.S. Plans Non-U.S. Plans
(In millions)
Real
Estate
Funds Total
Real
Estate
Funds Other Total
Balance at March 31, 2014 $16 $16 $7 $5 $12
Acquisitions —————
Unrealized gain on plan assets still held 2 2 1 — 1
Purchases, sales and settlements — — 18 (1) 17
Balance at March 31, 2015 $18$18$26$4$30
Acquisitions —————
Unrealized gain on plan assets still held 1 1 (2) (1) (3)
Purchases, sales and settlements (2) (2) — — —
Balance at March 31, 2016 $17$17$24$3$27
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 2016, we also contributed to the
Pensjonsordningen for Apoteketaten (“POA”), a mandatory multiemployer pension scheme for our pharmacy
employees in Norway, managed by the association of Norwegian Pharmacies.
108