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Pension Benefits | 12 Months Ended
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Mar. 31, 2023
Retirement Benefits [Abstract] |
Pension Benefits | Pension Benefits The Company maintains a number of qualified and nonqualified defined benefit pension plans and defined contribution plans for eligible employees. Non-U.S. Defined Benefit Pension Plans As of March 31, 2023, the Company’s non-U.S. defined benefit pension plans cover eligible employees located predominantly in Norway and Canada. Benefits for these plans are based primarily on each employee’s final salary, with annual adjustments for inflation. The obligations in Norway are largely related to the state-regulated pension plan which is managed by the Norwegian Public Service Pension Fund (“SPK”). According to the terms of the SPK, the plan assets of state regulated plans in Norway must correspond very closely to the pension obligation calculated using the principles codified in Norwegian law. As part of the European divestiture activities discussed in more detail in Financial Note 2, “Business Acquisitions and Divestitures,” pension liabilities of $85 million, as part of the E.U. disposal group, and pension assets of $49 million, as part of the U.K. disposal group, were included under the captions “Liabilities held for sale” and “Assets held for sale,” respectively, in the Consolidated Balance Sheet as of March 31, 2022. During the third quarter of fiscal 2023, the Company divested pension liabilities totaling $75 million and released $13 million of gains from accumulated other comprehensive loss related to the divestiture of the E.U. disposal group. During the first quarter of fiscal 2023, the Company divested pension assets of $49 million and released $30 million of accumulated other comprehensive loss related to the divestiture of the U.K. disposal group. During the fourth quarter of fiscal 2022, the Company divested $43 million of pension liabilities and released $11 million of accumulated other comprehensive loss related to the sale of its Austrian business. During the third quarter of fiscal 2021, the Company divested $187 million of pension liabilities and released $33 million of accumulated other comprehensive loss related to its German pharmaceutical wholesale business contributed to a joint venture, as discussed in more detail in Financial Note 2, “Business Acquisitions and Divestitures.” Defined benefit plan assets and obligations are measured as of the Company’s fiscal year-end. The net periodic expense for the Company’s pension plans were as follows:
| Years Ended March 31,
(In millions) | 2023 |  | 2022 |  | 2021
Service cost - benefits earned during the year | $ | 5 |  |  | $ | 11 |  |  | $ | 15 |
Interest cost on projected benefit obligation | 7 |  |  | 14 |  |  | 19 |
Expected return on assets | (5) |  |  | (19) |  |  | (20) |
Amortization of unrecognized actuarial loss and prior service costs | 1 |  |  | 3 |  |  | 5 |
Curtailment/settlement gain | (1) |  |  | (5) |  |  | — |
Net periodic pension expense | $ | 7 |  |  | $ | 4 |  |  | $ | 19 |
The projected unit credit method is utilized in measuring net periodic pension expense over the employees’ service life for the pension plans. Unrecognized actuarial losses exceeding 10% of the greater of the projected benefit obligation or the market value of assets are amortized straight-line over the average remaining future service period of active employees. Information regarding the changes in benefit obligations and plan assets for the Company’s pension plans was as follows:
|  | Years Ended March 31,
(In millions) |  |  |  | 2023 |  | 2022
Change in benefit obligations |  |  |  |  |  |
Benefit obligation at beginning of period (1) |  |  |  | $ | 701 |  |  | $ | 875 |
Service cost |  |  |  | 5 |  |  | 11 |
Interest cost |  |  |  | 7 |  |  | 14 |
Actuarial gain |  |  |  | (65) |  |  | (55) |
Benefits paid |  |  |  | (11) |  |  | (35) |
Curtailment/settlement |  |  |  | (3) |  |  | (32) |
Expenses paid |  |  |  | (1) |  |  | (1) |
Divestitures (2) |  |  |  | (408) |  |  | (43) |
Foreign exchange impact and other |  |  |  | (53) |  |  | (33) |
Benefit obligation at end of period (1) |  |  |  | $ | 172 |  |  | $ | 701 |
Change in plan assets |  |  |  |  |  |
Fair value of plan assets at beginning of period |  |  |  | $ | 681 |  |  | $ | 735 |
Actual return on plan assets |  |  |  | (51) |  |  | (4) |
Employer and participant contributions |  |  |  | 7 |  |  | 43 |
Benefits paid |  |  |  | (11) |  |  | (35) |
Expenses paid |  |  |  | (1) |  |  | (1) |
Settlements |  |  |  | (3) |  |  | (24) |
Divestitures (2) |  |  |  | (393) |  |  | — |
Foreign exchange impact and other |  |  |  | (55) |  |  | (33) |
Fair value of plan assets at end of period |  |  |  | $ | 174 |  |  | $ | 681 |
Funded status at end of period |  |  |  | $ | 2 |  |  | $ | (20) |
Amounts recognized on the balance sheet |  |  |  |  |  |
Current assets (3) |  |  |  | $ | — |  |  | $ | 49 |
Long-term assets |  |  |  | 24 |  |  | 40 |
Current liabilities (3) |  |  |  | (1) |  |  | (90) |
Long-term liabilities |  |  |  | (21) |  |  | (19) |
Total |  |  |  | $ | 2 |  |  | $ | (20) |
(1)The benefit obligation is the projected benefit obligation. (2)Relates to the completed divestitures of the E.U. disposal group and U.K. disposal group in fiscal 2023 and the completed divestiture of the Company’s Austrian business in fiscal 2022 as discussed in more detail in Financial Note 2, “Business Acquisitions and Divestitures.” (3)Current assets at March 31, 2022 include $49 million reclassified from long-term assets to assets held for sale as part of the Company’s U.K. disposal group, which was divested in fiscal 2023. Current liabilities at March 31, 2022 include $85 million reclassified from long-term liabilities to liabilities held for sale as part of the Company’s E.U. disposal group, which was divested in fiscal 2023. Refer to Financial Note 2, “Business Acquisitions and Divestitures” for additional information. The actuarial gain of $65 million in fiscal 2023 was primarily attributable to: •Discount rates ($69 million gain): The weighted average discount rate for Non-U.S. plans increased to 4.54% as of March 31, 2023 from 2.67% as of March 31, 2022. •Demographic and assumption changes ($4 million loss): This represents the difference between actual and estimated participant data and demographic factors, including items such as inflation assumption, compensation changes, mortality, and other changes. The actuarial gain of $55 million in fiscal 2022 was primarily attributable to: •Discount rates ($69 million gain): The weighted average discount rate for Non-U.S plans increased to 2.67% as of March 31, 2022 from 1.89% as of March 31, 2021. •Demographic and assumption changes ($14 million loss): This represents the difference between actual and estimated participant data and demographic factors, including items such as inflation assumption, compensation changes, mortality, and other changes including losses related to the European divestitures in fiscal 2022. The following table provides the projected benefit obligation, accumulated benefit obligation, and fair value of plan assets for all the Company’s pension plans, including accumulated benefit obligation in excess of plan assets:
|  | March 31,
(In millions) |  |  |  | 2023 |  | 2022
Projected benefit obligation |  |  |  | $ | 172 |  |  | $ | 701 |
Accumulated benefit obligation |  |  |  | 171 |  |  | 689 |
Fair value of plan assets |  |  |  | 174 |  |  | 681 |
Amounts recognized in accumulated other comprehensive loss consist of:
|  | March 31,
(In millions) |  |  |  | 2023 |  | 2022
Net actuarial loss |  |  |  | $ | 49 |  |  | $ | 70 |
Prior service cost (credit) |  |  |  | 1 |  |  | (2) |
Total |  |  |  | $ | 50 |  |  | $ | 68 |
Other changes in accumulated other comprehensive loss were as follows:
|  | Years Ended March 31,
(In millions) |  |  |  |  |  | 2023 |  | 2022 |  | 2021
Net actuarial gain |  |  |  |  |  | $ | (7) |  |  | $ | (32) |  |  | $ | (9) |
Prior service cost |  |  |  |  |  | 1 |  |  | — |  |  | — |
Amortization of: |  |  |  |  |  |  |  |  |  |
Net actuarial loss |  |  |  |  |  | (9) |  |  | (14) |  |  | (35) |
Prior service credit |  |  |  |  |  | 2 |  |  | 1 |  |  | 1 |
Foreign exchange impact and other |  |  |  |  |  | (5) |  |  | (5) |  |  | 15 |
Total recognized in other comprehensive income |  |  |  |  |  | $ | (18) |  |  | $ | (50) |  |  | $ | (28) |
In fiscal 2023, the Company recognized $17 million in actuarial losses for pension plans to stockholders’ deficit as a result of the sale of its E.U. disposal group and U.K. disposal group. In fiscal 2022, the Company recognized $11 million in actuarial losses for pension plans to stockholders’ deficit as a result of the sale of its Austrian business. In fiscal 2021, the Company recognized $33 million in actuarial losses for pension plans to stockholders’ equity as a result of the contribution of its German pharmaceutical wholesale business to a joint venture. Refer to Financial Note 2, “Business Acquisitions and Divestitures,” for more information on the Company’s European divestiture activities. Projected benefit obligations related to the Company’s unfunded plans were $18 million and $101 million at March 31, 2023 and 2022, respectively. Funding obligations for its plans vary based on the laws of each jurisdiction. Expected benefit payments for the Company’s pension plans were as follows: $8 million, $9 million, $9 million, $9 million, and $9 million for fiscal 2024 to fiscal 2028, respectively, and $50 million for fiscal 2029 through fiscal 2033. 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 the Company’s pension plans are $3 million for fiscal 2024. Weighted-average assumptions used to estimate the net periodic pension expense and the actuarial present value of benefit obligations were as follows:
|  | Years Ended March 31,
|  |  |  |  |  | 2023 |  | 2022 |  | 2021
Net periodic pension expense |  |  |  |  |  |  |  |  |  |
Discount rates |  |  |  |  |  | 2.67 | % |  | 1.89 | % |  | 1.89 | %
Rate of increase in compensation |  |  |  |  |  | 3.67 |  |  | 3.20 |  |  | 3.20 |
Expected long-term rate of return on plan assets |  |  |  |  |  | 1.63 |  |  | 2.56 |  |  | 2.56 |
Benefit obligation |  |  |  |  |  |  |  |  |  |
Discount rates |  |  |  |  |  | 4.54 | % |  | 2.67 | % |  | 1.89 | %
Rate of increase in compensation |  |  |  |  |  | 3.21 |  |  | 3.67 |  |  | 3.20 |
The Company’s defined benefit pension plan liabilities are valued using a discount rate based on a yield curve developed from a portfolio of high quality corporate bonds rated AA or better whose maturities are aligned with the expected benefit payments of its plans. The Company’s defined benefit pension plan liabilities are valued using a weighted-average discount rate of 4.54%, which represents an increase of 187 basis points from its fiscal 2022 weighted-average discount rate of 2.67%. Plan Assets Investment Strategy: For plan assets, the investment strategies are subject to local regulations and the asset/liability profiles of the plans in each individual country. Plan assets are broadly invested in a manner appropriate to the nature and duration of the expected future retirement benefits payable under the plans. Plan assets are primarily invested in high-quality corporate and government bond funds and equity securities. Assets are properly diversified to avoid excessive reliance on any particular asset, issuer, or group of undertakings so as to avoid accumulations of risk in the portfolio as a whole. The Company develops the expected long-term rate of return assumption based on the projected performance of the asset classes in which plan assets are invested. The target asset allocation was determined based on the liability and risk tolerance characteristics of the plans and at times may be adjusted to achieve overall investment objectives. Fair Value Measurements: The fair value hierarchy has three levels based on the reliability of the inputs used to determine fair value. Level 1 refers to fair values determined based on unadjusted quoted prices in active markets for identical assets. Level 2 refers to fair values estimated using significant other observable inputs and Level 3 includes fair values estimated using significant unobservable inputs. The following tables represent the Company’s plan assets as of March 31, 2023 and 2022, using the fair value hierarchy by asset class:
| March 31, 2023 |  | March 31, 2022
(In millions) | Level 1 |  | Level 2 |  | Level 3 |  | Total |  | Level 1 |  | Level 2 |  | Level 3 |  | Total
Cash and cash equivalents | $ | 7 |  |  | $ | — |  |  | $ | — |  |  | $ | 7 |  |  | $ | 15 |  |  | $ | — |  |  | $ | — |  |  | $ | 15 |
Equity securities: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Equity commingled funds | — |  |  | 18 |  |  | — |  |  | 18 |  |  | — |  |  | 38 |  |  | — |  |  | 38 |
Fixed income securities: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Government securities | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | 6 |  |  | — |  |  | 6 |
Corporate bonds | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | 11 |  |  | — |  |  | 11 |
Fixed income commingled funds | — |  |  | 7 |  |  | — |  |  | 7 |  |  | 336 |  |  | 25 |  |  | — |  |  | 361 |
Other: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Annuity contracts | — |  |  | — |  |  | 110 |  |  | 110 |  |  | — |  |  | — |  |  | 173 |  |  | 173 |
Real estate funds and Other | — |  |  | 2 |  |  | — |  |  | 2 |  |  | 31 |  |  | 4 |  |  | 2 |  |  | 37 |
Total | $ | 7 |  |  | $ | 27 |  |  | $ | 110 |  |  | $ | 144 |  |  | $ | 382 |  |  | $ | 84 |  |  | $ | 175 |  |  | $ | 641 |
Assets held at NAV practical expedient (1): |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Other |  |  |  |  |  |  | 30 |  |  |  |  |  |  |  |  | 40 |
Total plan assets |  |  |  |  |  |  | $ | 174 |  |  |  |  |  |  |  |  | $ | 681 |
(1) Equity commingled funds, fixed income commingled funds, real estate funds, and other investments for which fair value is measured using the NAV per share as a practical expedient are not leveled within the fair value hierarchy and are included as a reconciling item to total investments. 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 money market funds and other commingled funds, which have daily net asset values derived from the underlying securities; these are classified as Level 1 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 1 or 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. 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 1 or Level 2 investments. 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, 2, or 3 investments. Annuity contracts - The value of the annuity contracts is reported by the Trustee and is based on a valuation of the remaining contracted cash flow of the contract. Inputs in the valuation include discounted future cash flows; these are classified as Level 3 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 1, 2, or 3 investments. Other - At March 31, 2023 and 2022, this includes $30 million and $35 million, respectively, 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 presents the changes in the Level 3 plan assets measured on a recurring basis for the years ended March 31, 2023 and 2022:
(In millions) | Level 3 |
Balance, March 31, 2021 | $ | 4 |  |
Purchases | 196 |  |
Return on assets | (25) |  |
Balance, March 31, 2022 | $ | 175 |  |
Purchases | — |  |
Return on assets | (65) |  |
Balance, March 31, 2023 | $ | 110 |  |
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 2017, it also contributed to the Pensjonsordningen for Apoteketaten (“POA”), a mandatory multiemployer pension scheme for its 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 the Company’s withdrawal liability and contributions may increase. Contributions and amounts accrued for U.S. multiemployer pension plans were not material for the years ended March 31, 2023, 2022, and 2021. Contributions to the POA for non-U.S. plans exceeding 5% of total plan contributions were $19 million, $20 million, and $22 million for the years ended March 31, 2023, 2022, and 2021, respectively. Based on actuarial calculations, the Company estimates the funded status for its non-U.S. Plans to be approximately 85% as of March 31, 2023. No amounts were accrued for liability associated with the POA as the Company has no intention to withdraw from the plan. Defined Contribution Plans The Company has a contributory retirement savings plan (“RSP”) for U.S. eligible employees. Eligible employees may contribute to the RSP up to 75% of their eligible compensation on a pre-tax or post-tax basis not to exceed IRS limits. The Company makes matching contributions in an amount equal to 100% of the employee’s first 3% of pay contributed and 50% for the next 2% of pay contributed. The Company also may make an additional annual matching contribution for each plan year to enable participants to receive a full match based on their annual contribution. The Company also contributed to non-U.S. plans that are available in certain countries. Contribution expenses for the RSP and non-U.S. plans were $125 million, $116 million, and $102 million for the years ended March 31, 2023, 2022, and 2021, respectively. Postretirement Benefits The Company maintains a number of postretirement benefit plans, 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. It also provides postretirement benefits for certain U.S. executives. Defined benefit plan obligations are measured as of the Company’s fiscal year-end. The net periodic (credit) expense for the Company’s postretirement welfare benefits was not material for the years ended March 31, 2023, 2022, and 2021. The benefit obligation at March 31, 2023 and 2022 was $45 million and $56 million, respectively.

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- Definition The entire disclosure for retirement benefits. + References Reference 1: http://www.xbrl.org/2003/role/exampleRef -Publisher FASB -Name Accounting Standards Codification -Topic 715 -SubTopic 20 -Section 55 -Paragraph 17 -URI https://asc.fasb.org/extlink&oid=123450688&loc=d3e4179-114921 Reference 2: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 715 -SubTopic 20 -Section S99 -Paragraph 2 -URI https://asc.fasb.org/extlink&oid=21916913&loc=d3e273930-122802 Reference 3: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 715 -SubTopic 20 -Section 50 -Paragraph 1 -Subparagraph (d)(i) -URI https://asc.fasb.org/extlink&oid=123447040&loc=d3e1928-114920 Reference 4: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 715 -SubTopic 20 -Section 50 -Paragraph 1 -Subparagraph (o) -URI https://asc.fasb.org/extlink&oid=123447040&loc=d3e1928-114920 Reference 5: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 715 -SubTopic 20 -Section 50 -Paragraph 1 -Subparagraph (p) -URI https://asc.fasb.org/extlink&oid=123447040&loc=d3e1928-114920 Reference 6: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 715 -SubTopic 70 -Section 50 -Paragraph 1 -URI https://asc.fasb.org/extlink&oid=49170846&loc=d3e28014-114942 Reference 7: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 715 -URI https://asc.fasb.org/topic&trid=2235017 Reference 8: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 715 -SubTopic 60 -Section 50 -Paragraph 3 -Subparagraph (c) -URI https://asc.fasb.org/extlink&oid=6414203&loc=d3e39689-114964 Reference 9: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 715 -SubTopic 20 -Section 50 -Paragraph 1 -Subparagraph (d)(iv)(03) -URI https://asc.fasb.org/extlink&oid=123447040&loc=d3e1928-114920 Reference 10: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 715 -SubTopic 20 -Section 50 -Paragraph 1 -Subparagraph (q) -URI https://asc.fasb.org/extlink&oid=123447040&loc=d3e1928-114920 Reference 11: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 715 -SubTopic 20 -Section 50 -Paragraph 1 -Subparagraph (r)(1) -URI https://asc.fasb.org/extlink&oid=123447040&loc=d3e1928-114920 Reference 12: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 715 -SubTopic 20 -Section 50 -Paragraph 1 -Subparagraph (d)(iii) -URI https://asc.fasb.org/extlink&oid=123447040&loc=d3e1928-114920 Reference 13: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 715 -SubTopic 20 -Section 50 -Paragraph 1 -Subparagraph (l) -URI https://asc.fasb.org/extlink&oid=123447040&loc=d3e1928-114920 Reference 14: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 715 -SubTopic 20 -Section 50 -Paragraph 1 -Subparagraph (r)(2) -URI https://asc.fasb.org/extlink&oid=123447040&loc=d3e1928-114920 + Details
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