LabCorp 2010 Annual Report Download - page 47

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The following assumed benefit payments under the Company
Plan and PEP, which were used in the calculation of projected
benefit obligations, are expected to be paid as follows:
2011 $ 23.2
2012 22.6
2013 22.9
2014 22.7
2015 23.3
Years 2016-2020 119.7
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:
Year ended December 31,
2010 2009 2008
Service cost for benefits earned $ 0.3 $ 0.3 $ 0.4
Interest cost on benefit obligation 2.3 2.3 2.7
Net amortization and deferral (0.9) (1.7) (1.7)
Post-retirement medical plan costs $ 1.7 $ 0.9 $ 1.4
Amounts included in accumulated other comprehensive
earnings consist of unamortized net gain of $4.3. The accumu-
lated other comprehensive earnings that are expected to be
recognized as components of the post-retirement medical plan
costs during 2011 are ($0.1) related to amortization of net gain.
A summary of the changes in the accumulated post-retirement
benefit obligation follows:
2010 2009
Balance at January 1 $ 39.6 $ 36.7
Service cost for benefits earned 0.3 0.3
Interest cost on benefit obligation 2.3 2.3
Participants contributions 0.4 0.4
Actuarial loss
0.8 1.4
Benefits paid
(1.4) (1.5)
Balance at December 31 $ 42.0 $ 39.6
The weighted-average discount rates used in the calculation
of the accumulated post-retirement benefit obligation was 5.4%
and 6.0% as of December 31, 2010 and 2009, respectively.
The health care cost trend rate was assumed to be 7.5% and
8.0% as of December 31, 2010 and 2009, 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, 2010
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 2010 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:
2011 $ 1.7
2012 1.7
2013 1.8
2014 1.9
2015 2.1
Years 2016-2020 12.3
17. Fair Value Measurements
The Company’s population of financial assets and liabilities
subject to fair value measurements as of December 31, 2010
and 2009 are as follows:
Fair Value Fair Value Measurements as of
as of December 31, 2010
December 31, Using Fair Value Hierarchy
2010 Level 1 Level 2 Level 3
Noncontrolling interest puts $ 168.7 $ – $ 168.7 $ –
Derivatives
Embedded derivatives
related to the zero-coupon
subordinated notes $ – $ – $ – $ –
Interest rate swap liability 2.4 – 2.4 –
Total fair value of derivatives $ 2.4 $ – $ 2.4 $ –
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 $ –
LABORATORY CORPORATION OF AMERICA
Notes to Consolidated Financial Statements