LabCorp 2014 Annual Report Download - page 65

Download and view the complete annual report

Please find page 65 of the 2014 LabCorp annual report below. You can navigate through the pages in the report by either clicking on the pages listed below, or by using the keyword search tool below to find specific information within the annual report.

Page out of 128

  • 1
  • 2
  • 3
  • 4
  • 5
  • 6
  • 7
  • 8
  • 9
  • 10
  • 11
  • 12
  • 13
  • 14
  • 15
  • 16
  • 17
  • 18
  • 19
  • 20
  • 21
  • 22
  • 23
  • 24
  • 25
  • 26
  • 27
  • 28
  • 29
  • 30
  • 31
  • 32
  • 33
  • 34
  • 35
  • 36
  • 37
  • 38
  • 39
  • 40
  • 41
  • 42
  • 43
  • 44
  • 45
  • 46
  • 47
  • 48
  • 49
  • 50
  • 51
  • 52
  • 53
  • 54
  • 55
  • 56
  • 57
  • 58
  • 59
  • 60
  • 61
  • 62
  • 63
  • 64
  • 65
  • 66
  • 67
  • 68
  • 69
  • 70
  • 71
  • 72
  • 73
  • 74
  • 75
  • 76
  • 77
  • 78
  • 79
  • 80
  • 81
  • 82
  • 83
  • 84
  • 85
  • 86
  • 87
  • 88
  • 89
  • 90
  • 91
  • 92
  • 93
  • 94
  • 95
  • 96
  • 97
  • 98
  • 99
  • 100
  • 101
  • 102
  • 103
  • 104
  • 105
  • 106
  • 107
  • 108
  • 109
  • 110
  • 111
  • 112
  • 113
  • 114
  • 115
  • 116
  • 117
  • 118
  • 119
  • 120
  • 121
  • 122
  • 123
  • 124
  • 125
  • 126
  • 127
  • 128

63
The following table presents the percentage of the Company’s net accounts receivable outstanding by aging category at
December 31, 2014 and 2013:
Days Outstanding 2014 2013
0 – 30 48.4% 46.4%
31 – 60 18.6% 19.3%
61 – 90 11.9% 11.5%
91 – 120 7.1% 7.1%
121 – 150 3.8% 3.4%
151 – 180 3.6% 3.8%
181 – 270 5.7% 7.3%
271 – 360 0.7% 0.9%
Over 360 0.1% 0.3%
The above table excludes the percentage of net accounts receivable outstanding by aging category for the Other segment, and
its other smaller foreign operations. Combined, these foreign net accounts receivable balances comprise less than 6.0% of the
Company's total net accounts receivable balances. The Company believes that including the agings of the accounts receivable for
these foreign operations would not be representative of the majority of the accounts receivable by aging category for the Company.
The majority of the foreign accounts receivable are due from the provincial government and are generally paid within 30-60 days
of billing.
Pension Expense
The Company has a defined benefit retirement plan (the "Company Plan") and a non-qualified supplemental retirement plan
(the "PEP"). In October 2009, the Company received approval from its Board of Directors to freeze any additional service-based
credits for any years of service after December 31, 2009 on the Company Plan and the PEP. Both plans have been closed to new
participants. Employees participating in the Company Plan and the PEP no longer earn service-based credits, but continue to earn
interest credits. In addition, effective January 1, 2010, all employees eligible for the defined contribution retirement plan (the
“401K Plan”) receive a minimum 3% non-elective contribution (“NEC”) concurrent with each payroll period. The 401K Plan also
permits discretionary contributions by the Company of up to 1% and up to 3% of pay for eligible employees, based on service.
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 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.
The Company's net pension cost is developed from actuarial valuations. Inherent in these valuations are key assumptions,
including discount rates and expected return on plan assets, which are updated on an annual basis at the beginning of each year.
The Company is required to consider current market conditions, including changes in interest rates, in making these assumptions.
Changes in pension costs may occur in the future due to changes in these assumptions. The key assumptions used in accounting
for the defined benefit retirement plans were a 4.0% discount rate and a 7.0% expected long-term rate of return on plan assets as
of December 31, 2014.
Discount Rate
The Company evaluates several approaches toward setting the discount rate assumption that is used to value the benefit
obligations of its retirement plans. At year-end, priority was given to use of the Towers Watson Bond:Link model, which simulates
the purchase of investment-grade corporate bonds at current market yields with principal amounts and maturity dates closely
matching the Company's projected cash disbursements from its plans. This completed model represents the yields to maturity that
the Company could theoretically settle its plan obligations at year end. The weighted-average yield on the modeled bond portfolio
is then used to form the discount rate assumption used for each retirement plan. A one percentage point decrease or increase in
the discount rate would have resulted in a respective increase or decrease in 2014 retirement plan expense of $2.3.