LabCorp 2006 Annual Report Download - page 51

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Dollars and shares in millions, except per share data)
Laboratory Corporation of America® Holdings 2006 49
............................... ........
.......................................
Post-Retirement Medical Plan
The Company assumed obligations under a subsidiary’s post-retirement
medical plan. Coverage under this plan is restricted to a limited number
of existing employees of the subsidiary. This plan is unfunded and
the Company’s policy is to fund benefits as claims are incurred. The
effect on operations of the post-retirement medical plan is shown in
the following table:
Years Ended December 31,
2006 2005 2004
Service cost for benefits earned $ 0.6 $ 0.7 $ 0.8
Interest cost on benefit obligation 2.2 2.6 3.1
Actuarial loss (2.1) (2.2) (1.9)
Net amortization and deferral – 0.3 0.7
Post-retirement medical plan costs $ 0.7 $ 1.4 $ 2.7
Amounts included in accumulated other comprehensive earnings
consist of unamortized net loss of $5.9 and unrecognized prior service
credit of $5.8. The accumulated other comprehensive earnings that
are expected to be recognized as components of the post-retirement
medical plan cost during 2007 are $0.1 related to amortization of net
loss and ($2.1) related to recognition of prior service credits.
A summary of the changes in the accumulated post-retirement
benefit obligation follows:
2006 2005
Balance at January 1 $43.3 $43.6
Service cost for benefits earned 0.6 0.6
Interest cost on benefit obligation 2.3 2.6
Participants contributions 0.4 0.4
Actuarial gain 0.8 (2.3)
Benefits paid (1.6) (1.6)
Balance at December 31 $45.8 $43.3
The weighted-average discount rates used in the calculation of
the accumulated post-retirement benefit obligation was 6.0% and
5.6% as of December 31, 2006 and 2005, respectively. The health
care cost trend rate-medical was assumed to be 10.0% and 10.0%
as of December 31, 2006 and 2005, respectively, and the trend rate-
prescription was assumed to be 12.0% and 12.0% as of December 31,
2006 and 2005, respectively, declining gradually to 5.0% in the year
2014. The health care cost trend rate has a significant effect on the
amounts reported. Increasing the assumed health care cost trend rates
by a percentage point in each year would increase the accumulated
post-retirement benefit obligation as of December 31, 2006 by $6.9.
The impact of a percentage point change on the aggregate of the
service cost and interest cost components of the 2006 post-retirement
benefit costs results in an increase of $0.5 or decrease of $0.4.
The following assumed benefit payments under the Company’s
post-retirement benefit plan, which reflect expected future service,
as appropriate, and were used in the calculation of projected benefit
obligations, are expected to be paid as follows:
2007 $1.5
2008 1.6
2009 1.7
2010 1.9
2011 2.1
Years 2012 – 2016 13.1
17. SUPPLEMENTAL CASH FLOW
INFORMATION
Years Ended December 31,
2006 2005 2004
Supplemental schedule of cash flow information:
Cash paid during period for:
Interest $ 33.3 $ 19.3 $ 19.3
Income taxes, net of refunds 223.2 233.3 170.7
Disclosure of non-cash financing
and investing activities:
Issuance of restricted stock awards 8.9 7.3 0.7
Surrender of restricted stock awards 3.1 7.3 6.8
Accrued repurchases of common stock – 15.0 10.0