LabCorp 2011 Annual Report Download - page 47

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The weighted average expected long-term rate of return for
the Company Plan’s assets is as follows:
Weighted-
Average
Expected
Target Long-Term Rate
Allocation of Return
Equity securities 50.0% 4.5%
Fixed income securities 45.0% 2.3%
Other assets 5.0% 0.5%
The fair values of the Company Plan’s assets at December 31,
2011 and 2010, by asset category are as follows:
Fair Value Fair Value Measurements as of
as of December 31, 2011
December 31, Using Fair Value Hierarchy
Asset Category 2011 Level 1 Level 2 Level 3
Cash $ 3.7 $ 3.7 $ – $ –
Equity securities:
U.S. large cap – blend(a)
58.6 – 58.6 –
U.S. mid cap – blend(b)
21.9 – 21.9 –
U.S. small cap – blend(c)
7.2 – 7.2 –
International – developed 26.9 – 26.9 –
International – emerging 6.1 – 6.1 –
Commodities index(d)
10.2 – 10.2 –
Fixed income securities:
U.S. fixed income(e)
109.9 – 109.9 –
Total fair value of the
Company Plan’s assets $ 244.5 $ 3.7 $ 240.8 $ –
Fair Value Fair Value Measurements as of
as of December 31, 2010
December 31, Using Fair Value Hierarchy
Asset Category 2010 Level 1 Level 2 Level 3
Cash $ 2.3 $ 2.3 $ – $ –
Equity securities:
U.S. large cap – blend(a) 62.7 – 62.7 –
U.S. mid cap – blend(b) 26.7 – 26.7 –
U.S. small cap – blend(c) 9.8 – 9.8 –
International – developed 37.5 – 37.5 –
International – emerging 8.2 – 8.2 –
Commodities index(d)
15.0 – 15.0 –
Fixed income securities:
U.S. fixed income(e) 102.2 – 102.2 –
Total fair value of the
Company Plan’s assets $ 264.4 $ 2.3 $ 262.1 $ –
(a) This category represents an equity index fund not actively managed that tracks the S&P 500.
(b) This category represents an equity index fund not actively managed that tracks the S&P mid-cap 400.
(c) This category represents an equity index fund not actively managed that tracks the Russell 2000.
(d) This category represents a commodities index fund not actively managed that tracks the
Dow Jones – UBS Commodity Index.
(e) This category primarily represents a bond index fund not actively managed that tracks the
Barclays Capital U.S. Aggregate Index.
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:
2012 $ 23.8
2013 23.2
2014 22.9
2015 23.2
2016 23.6
Years 2017-2021 119.3
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,
2011 2010 2009
Service cost for benefits earned $ 0.3 $ 0.3 $ 0.3
Interest cost on benefit obligation 2.2 2.3 2.3
Net amortization and deferral (0.2) (0.9) (1.7)
Post-retirement medical plan costs $ 2.3 $ 1.7 $ 0.9
Amounts included in accumulated other comprehensive
earnings consist of unamortized net gain of $5.6. The accumu-
lated other comprehensive earnings that are expected to be
recognized as components of the post-retirement medical plan
costs during 2012 are $0.0 related to amortization of net gain.
A summary of the changes in the accumulated post-retirement
benefit obligation follows:
2011 2010
Balance at January 1 $ 42.0 $ 39.6
Service cost for benefits earned 0.3 0.3
Interest cost on benefit obligation 2.2 2.3
Participants contributions 0.4 0.4
Actuarial loss
9.8 0.8
Benefits paid
(2.0) (1.4)
Balance at December 31 $ 52.7 $ 42.0
The weighted-average discount rates used in the calculation
of the accumulated post-retirement benefit obligation were 4.3%
and 5.4% as of December 31, 2011 and 2010, respectively.
The health care cost trend rate was assumed to be 7.0%
and 7.5% as of December 31, 2011 and 2010, respectively,
declining gradually to 5.0% in the year 2017. 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
LABORATORY CORPORATION OF AMERICA
Notes to Consolidated Financial Statements