LabCorp 2015 Annual Report Download - page 117

Index
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
Operating
2016 $ 73.4
2017 63.8
2018 44.2
2019 31.4
2020 28.2
Thereafter 105.0
Total minimum lease payments 346.0
Less:
Amounts included in restructuring and acquisition related accruals (25.9)
Non-cancelable sub-lease income —
Total minimum operating lease payments $ 320.1
Rental expense, which includes rent for real estate, equipment and automobiles under operating leases, amounted to $287.1, $235.7 and $226.0 for the
years ended December 31, 2015, 2014 and 2013, respectively.


The Company has a defined benefit retirement plan (Company Plan) and a nonqualified supplemental retirement plan (PEP). Both plans have been closed
to new participants since December 31, 2009. 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 (401K Plan) receive a
minimum 3% non-elective contribution (NEC) concurrent with each payroll period. Employees are not required to make a contribution to the 401K Plan to
receive the NEC. The NEC is non-forfeitable and vests immediately. 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’s 401K Plan covers substantially all pre-Acquisition employees. Prior to 2010, Company contributions to the plan were based on a
percentage of employee contributions. In 2013, 2012 and 2011, the Company made non-elective and discretionary contributions to the plan. In 2015, 2014,
and 2013, non-elective and discretionary contributions were $43.3, $51.6 and $49.4, respectively. As a result of the Acquisition, the Company also incurred
expense of $37.8 for the Covance 401K Plan during the year ended December 31, 2015. Under the Covance 401K Plan, which is available on a voluntary
basis to substantially all US employees, the Company matches employee contributions up to a maximum Company contribution of 4.5%.
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 $9.5, $12.4 and $8.4 in
2015, 2014 and 2013, 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 increase to $12.9 in 2016. 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
2016, the Company projects that it would result in additional pension expense of several million dollars. The actual amount would be determined in the
fiscal quarter when the lump-sum payments cross the threshold and would be based upon the plan's funded status and actuarial assumptions in effect at that
time.
The Company plans to make contributions of $12.7 to the Company Plan during 2016.
The effect on operations for both the Company Plan and the PEP are summarized as follows:
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