LabCorp 2015 Annual Report Download - page 123
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Index
Fair Value Measurements as of
December 31, 2015
December 31,
2015
Using Fair Value Hierarchy
Level 1
Level 2
Level 3
Cash $0.9
$0.9
$0.0
$0.0
Mutual funds (a) 193.3
—
193.3
—
Annuities (b) 32.0
—
—
32.0
Total fair value of the Company Plan’s assets $ 226.2
$ 0.9
$ 193.3
$ 32.0
a) Mutual funds represent pooled investment vehicles offered by investment managers, which are generally comprised of investments in equities,
bonds, property and cash. The plans’ trustees hold units in these funds, the value of which is determined by the number of units held multiplied by
the unit price calculated by the investment managers. That unit price is derived based on the market value of the securities that comprise the fund,
which are determined by quoted prices in active markets. No element of the valuation is based on inputs made by the plans’ trustees.
b) Annuities represent annuity buy-in insurance policies, whereby the insurer pays the pension payments for the lifetime of the members covered. The
annuities are assets of the plan and payments from the insurer are made to the plans’ trustees, who then use those proceeds to pay the pensioners. The
cash flows from the annuities are intended to effectively match the payments to the pensioners covered by the policy. As such, these assets are
valued actuarially based upon the value of the liabilities with which they are associated. As the valuation of these assets is judgmental, and there are
no observable inputs associated with the valuation, these assets are classified as Level 3 in the fair value hierarchy.
Expected future benefit payments are as follows:
U.K. Plans
German Plan
2016
$ 3.7
$ 0.2
2017
3.5
0.2
2018
4.3
0.3
2019
4.1
0.3
2020
5.3
0.5
Years 2021-2025
34.1
3.0
As a result of the Acquisition, the Company sponsors a post-employment retiree health and welfare plan for the benefit of eligible employees at certain
U.S. subsidiaries who retire after satisfying service and age requirements. This plan is funded on a pay-as-you-go basis and the cost of providing these
benefits is shared with the retirees. The net periodic post-retirement benefit cost for the year ended December 31, 2015 was $0.2, and the pension benefit
obligation as of the Acquisition date was $6.3.
The components of net periodic post-retirement benefit cost for 2015 are as follows:
Year Ended
December 31, 2015
Service cost $ —
Interest cost 0.2
Net periodic post-retirement benefit cost $ 0.2
Assumptions used to determine net periodic post-retirement benefit cost:
Discount rate 3.8%
Healthcare cost trend rate 6.5%
The change in the projected post-retirement benefit obligation, the funded status of the plan and the reconciliation of such funded status to the amounts
reported in the consolidated balance sheets as of December 31, 2015 is as follows:
F-43