LabCorp 2012 Annual Report Download - page 49

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The Company’s 401K Plan covers substantially all
employees. Prior to 2010, Company contributions to the plan
were based on a percentage of employee contributions.
In 2012, 2011 and 2010, the Company made non-elective
and discretionary contributions to the plan. The cost of this
plan was $49.0, $44.3 and $40.6 in 2012, 2011 and 2010,
respectively.
In addition, the Company Plan covers substantially all
employees hired prior to December 31, 2009. The benefits
to be paid under the Company Plan are based on years of
credited service through December 31, 2009, interest
credits and average compensation. The Company’s policy
is to fund the Company Plan with at least the minimum
amount required by applicable regulations. The Company
made contributions to the Company Plan of $11.3, $0.0
and $0.0 in 2012, 2011 and 2010, respectively.
The PEP covers the Company’s senior management
group. Prior to 2010, the PEP provided for the payment of
the difference, if any, between the amount of any maximum
limitation on annual benefit payments under the Employee
Retirement Income Security Act of 1974 and the annual
benefit that would be payable under the Company Plan but
for such limitation. Effective January 1, 2010, employees
participating in the PEP no longer earn service-based
credits. The PEP is an unfunded plan.
Projected pension expense for the Company Plan
and the PEP is expected to remain at $12.1 in 2013.
The Company plans to make contributions of $6.5 to
the Company Plan during 2013.
The effect on operations for both the Company Plan and
the PEP are summarized as follows:
Year ended December 31,
2012 2011 2010
Service cost for benefits earned $ 2.4 $ 2.6 $ 2.6
Interest cost on benefit obligation 14.9 17.1 18.1
Expected return on plan assets (17.3) (18.9) (18.5)
Net amortization and deferral 12.1 7.8 7.4
Curtailment cost – – –
Defined benefit plan costs $ 12.1 $ 8.6 $ 9.6
Amounts included in accumulated other comprehensive
earnings consist of unamortized net loss of $143.0. The
accumulated other comprehensive earnings that are expected
to be recognized as components of the defined benefit plan
costs during 2013 are $10.8 related to amortization of net loss.
A summary of the changes in the projected benefit
obligations of the Company Plan and the PEP are summarized
as follows:
2012 2011
Balance at January 1 $ 383.2 $ 348.2
Service cost 2.4 2.6
Interest cost 14.9 17.1
Actuarial loss 5.8 39.8
Benefits and administrative expenses paid (25.6) (24.5)
Balance at December 31 $ 380.7 $ 383.2
The Accumulated Benefit Obligation was $380.7 and
$383.2 at December 31, 2012 and 2011, respectively.
A summary of the changes in the fair value of plan assets
follows:
2012 2011
Fair value of plan assets at beginning of year $ 244.5 $ 264.4
Actual return on plan assets 25.0 3.5
Employer contributions 12.9 1.1
Benefits and administrative expenses paid (25.6) (24.5)
Fair value of plan assets at end of year $ 256.8 $ 244.5
The net funded status of the Company Plan and the PEP
at December 31:
Funded status $ 123.9 $ 138.7
Recorded as:
Accrued expenses and other $ 1.4 $ 1.2
Other liabilities 122.5 137.5
$ 123.9 $ 138.7
Weighted-average assumptions used in the accounting for
the Company Plan and the PEP are summarized as follows:
2012 2011 2010
Discount rate 4.0% 4.0% 5.1%
Expected long term rate of return 7.0% 7.3% 7.5%
LABORATORY CORPORATION OF AMERICA
Notes to Consolidated Financial Statements