LabCorp 2009 Annual Report Download - page 62

60 LABORATORY CORPORATION OF AMERICA
LABORATORY CORPORATION OF AMERICA
Notes to Consolidated Financial Statements
Amounts included in accumulated other comprehensive
earnings consist of unamortized net gain of $5.2 and unrecog-
nized prior service credit of $0.7. The accumulated other com-
prehensive earnings that are expected to be recognized as
components of the post-retirement medical plan costs during
2010 are ($0.1) related to amortization of net gain and ($0.7)
related to recognition of prior service credits.
A summary of the changes in the accumulated post-retire-
ment benefit obligation follows:
2009 2008
Balance at January 1 $ 36.7 $ 42.8
Service cost for benefits earned 0.3 0.4
Interest cost on benefit obligation 2.3 2.7
Participants contributions 0.4 0.3
Actuarial loss (gain) 1.4 (7.9)
Benefits paid (1.5) (1.6)
Balance at December 31 $ 39.6 $ 36.7
The weighted-average discount rates used in the calculation
of the accumulated post-retirement benefit obligation was 6.0%
and 6.5% as of December 31, 2009 and 2008, respectively. The
health care cost trend rate was assumed to be 8.0% and 9.0%
as of December 31, 2009 and 2008, respectively, declining
gradually to 5.0% in the year 2016. The health care cost trend
rate has a significant effect on the amounts reported. The impact
of a percentage point change each year in the assumed health
care cost trend rates would change the accumulated post-
retirement benefit obligation as of December 31, 2009 by an
increase of $5.9 or a decrease of $4.9. The impact of a percentage
point change on the aggregate of the service cost and interest
cost components of the 2009 post-retirement benefit costs results
in an increase of $0.4 or decrease of $0.3.
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:
2010 $ 1.6
2011 1.7
2012 1.7
2013 1.8
2014 2.0
Years 2015-2019 12.3
17. Fair Value Measurements
The Company’s population of financial assets and liabilities
subject to fair value measurements as of December 31, 2009
and 2008 are as follows:
Fair Value Fair Value Measurements as of
as of December 31, 2009
December 31, Using Fair Value Hierarchy
2009 Level 1 Level 2 Level 3
Noncontrolling interest put $ 142.4 $ – $ 142.4 $ –
Derivatives
Embedded derivatives
related to the zero-coupon
subordinated notes $ – $ – $ – $ –
Interest rate swap liability 10.6 – 10.6 –
Total fair value of derivatives $ 10.6 $ – $ 10.6 $ –
Fair Value Fair Value Measurements as of
as of December 31, 2008
December 31, Using Fair Value Hierarchy
2008 Level 1 Level 2 Level 3
Noncontrolling interest put $ 121.3 $ – $ 121.3 $ –
Derivatives
Embedded derivatives
related to the zero-coupon
subordinated notes $ – $ – $ – $ –
Interest rate swap liability 13.5 – 13.5 –
Total fair value of derivatives $ 13.5 $ – $ 13.5 $ –
The noncontrolling interest put is valued at its contractually
determined value, which approximates fair value. The fair values
for the embedded derivatives and interest rate swap are based
on observable inputs or quoted market prices from various
banks for similar instruments.