LabCorp 2013 Annual Report Download - page 51

47
to the plan. Non-elective and discretionary contributions were
$49.4, $49.0 and $44.3 in 2013, 2012 and 2011, 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 $8.4, $11.3
and $0.0 in 2013, 2012 and 2011, 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 decrease to $7.8 in 2014. This amount excludes any
accelerated recognition of pension cost due to the total lump-sum
payouts exceeding certain components of net periodic pension
cost in a fiscal year. If such levels were to be met in 2014, the
Company projects that it would result in an additional $6.4
of pension expense.
The Company plans to make contributions of $11.0 to the
Company Plan during 2014.
The effect on operations for both the Company Plan and the PEP
are summarized as follows:
Year ended December 31,
2013 2012 2011
Service cost for benefits earned $ 3.1 $ 2.4 $ 2.6
Interest cost on benefit obligation 14.7 14.9 17.1
Expected return on plan assets (17.3) (17.3) (18.9)
Net amortization and deferral 10.5 12.1 7.8
Defined benefit plan costs $ 11.0 $ 12.1 $ 8.6
Amounts included in accumulated other comprehensive
earnings consist of unamortized net loss of $99.6. The accumulated
other comprehensive earnings that are expected to be recognized
as components of the defined benefit plan costs during 2014 are
$6.2 related to amortization of the net loss.
A summary of the changes in the projected benefit obligations
of the Company Plan and the PEP are summarized as follows:
2013 2012
Balance at January 1 $ 380.7 $ 383.2
Service cost 3.1 2.4
Interest cost 14.7 14.9
Actuarial (gain)/loss (22.1) 5.8
Benefits and administrative expenses paid (26.7) (25.6)
Balance at December 31 $ 349.7 $ 380.7
The Accumulated Benefit Obligation was $349.7 and $380.7 at
December 31, 2013 and 2012, respectively.
A summary of the changes in the fair value of plan assets follows:
2013 2012
Fair value of plan assets at beginning of year $ 256.8 $ 244.5
Actual return on plan assets 28.1 25.0
Employer contributions 9.9 12.9
Benefits and administrative expenses paid (26.7) (25.6)
Fair value of plan assets at end of year $ 268.1 $ 256.8
The net funded status of the Company Plan and the PEP at
December 31:
Funded status $ 81.6 $ 123.9
Recorded as:
Accrued expenses and other $ 1.6 $ 1.4
Other liabilities 80.0 122.5
$ 81.6 $ 123.9
Weighted average assumptions used in the accounting for the
Company Plan and the PEP are summarized as follows:
2013 2012 2011
Discount rate 4.8% 4.0% 4.0%
Expected long-term rate of return 7.0% 7.0% 7.3%
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 indexed
funds that are comprised of equities of high-quality companies and
in high-quality fixed income securities which are broadly balanced
and represent all market sectors. The target allocations for plan
assets are 50% equity securities, 45% fixed income securities and
5% in other assets. Equity securities primarily include investments
in large-cap, mid-cap and small-cap companies located in the
U.S. and to a lesser extent international equities in developed and
emerging countries. Fixed income securities primarily include U.S.
Treasury securities, mortgage-backed bonds and corporate bonds
LABORATORY CORPORATION OF AMERICA
Notes to Consolidated Financial Statements