LabCorp 2007 Annual Report Download - page 54

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Notes to Consolidated Financial Statements
(Dollars and shares in millions, except per share data)
52 Laboratory Corporation of America® Holdings 2007
A summary of the changes in the projected benefi t obligations of
the defi ned benefi t retirement plan and the nonqualifi ed supplemental
retirement plan are summarized as follows:
2007 2006
Balance at January 1 $278.5 $263.4
Service cost 19.1 17.1
Interest cost 16.0 14.5
Actuarial gain (2.2) (1.4)
Amendments – 1.4
Benefi ts and administrative expenses paid (24.2) (17.2)
CEO retirement charge – 0.7
Balance at December 31 $287.2 $278.5
The Accumulated Benefi t Obligation was $283.0 and $273.3 at
December 31, 2007 and 2006, respectively.
A summary of the changes in the fair value of plan assets follows:
2007 2006
Fair value of plan assets at beginning of year $274.7 $259.1
Actual return on plan assets 19.5 32.4
Employer contributions 0.7 0.4
Benefi ts and administrative expenses paid (24.2) (17.2)
Fair value of plan assets at end of year $270.7 $274.7
Weighted average assumptions used in the accounting for the
defi ned benefi t retirement plan and the nonqualifi ed supplemental
retirement plan are summarized as follows:
2007 2006 2005
Discount rate 6.1% 6.0% 5.6%
Compensation increases 3.5% 3.0% 3.0%
Expected long term rate of return 8.5% 8.5% 8.5%
The Company maintains an investment policy for the management
of the Company Plan’s assets. The objective of this policy is to build a
portfolio designed to achieve a balance between investment return
and asset protection by investing in equities of high quality companies
and in high quality fi xed income securities which are broadly balanced
and represent all market sectors. The Company’s plan asset allocations
at December 31, 2007 and 2006 for the defi ned benefi t retirement
plan and the nonqualifi ed supplemental retirement plan are summarized
as follows, target allocation for 2008, and expected long-term rate of
return by asset category are as follows:
Weighted
Average
Percentage of Expected
Target Plan Assets Long-Term Rate
Asset Allocation at December 31, of Return
Category 2008 2007 2006 2007
Equity Securities 70.0% 69.5% 69.9% 6.8%
Debt Securities 30.0% 29.6% 30.1% 1.7%
Other 0.0% 0.9% 0.0% 0.0%
The following assumed benefi t payments under the Company’s
defi ned benefi t and nonqualifi ed supplemental retirement plans, which
refl ect expected future service, and were used in the calculation of
projected benefi t obligations, are expected to be paid as follows:
2008 $ 19.3
2009 20.5
2010 21.7
2011 23.3
2012 26.7
Years 2013-2017 155.2
Laboratory Corporation of America