PENSION AND POST-RETIREMENT PLANS

The Company’s defined contribution retirement plan (401K Plan) covers substantially all pre-Acquisition employees. All employees eligible for the 401K Plan receive a minimum 3% non-elective contribution 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 years of service with the Company. The cost of this plan was $14.1 and $13.8 for the three months ended June 30, 2017 and 2016, respectively, and was $28.7 and $27.2 during the six months ended June 30, 2017 and 2016, respectively. As a result of the Acquisition, the Company also incurred expense of $13.6 and $12.8 for the Covance 401K plan during the three months ended June 30, 2017 and 2016, respectively, and $28.6 and $26.5 during six months ended June 30, 2017 and 2016, respectively. All of the Covance U.S. employees are eligible to participate in the discretionary Covance 401K plan, which features a maximum 4.5% Company match, based upon a percentage of the employee’s contributions.

The Company also maintains a frozen defined benefit retirement plan (Company Plan), which as of December 31, 2009 covered substantially all employees. The benefits to be paid under the Company Plan are based on years of credited service through December 31, 2009 and ongoing interest credits. Effective January 1, 2010, the Company Plan was closed to new participants. The Company’s policy is to fund the Company Plan with at least the minimum amount required by applicable regulations.

The Company maintains a second, unfunded, non-contributory, non-qualified defined benefit retirement plan (PEP), which as of December 31, 2009 covered substantially all of its senior management group. The PEP supplements the Company Plan and was closed to new participants effective January 1, 2010.

The effect on operations for the Company Plan and the PEP is summarized as follows:



	Three Months Ended June 30,						Six Months Ended June 30,
	2017			2016			2017			2016
Service cost for administrative expenses	$	1.4		$	1.2		$	2.8		$	2.4
Interest cost on benefit obligation	3.5			3.9			7.2			7.8
Expected return on plan assets	(4.1		)	(4.2		)	(8.2		)	(8.4		)
Net amortization and deferral	2.7			2.8			5.5			5.6
Defined benefit plan costs	$	3.5		$	3.7		$	7.3		$	7.4

During the three and six months ended June 30, 2017, the Company contributed $3.2 and $5.6, respectively, to the Company Plan.

As a result of the Acquisition, the Company also has a frozen non-qualified Supplemental Executive Retirement Plan (SERP). The SERP, which is not funded, is intended to provide retirement benefits for certain executive officers of the Company who were formerly employees of Covance. Benefit amounts are based upon years of service and compensation of the participating employees. The components of the net periodic pension cost for the three and six months ended June 30, 2017 and June 30, 2016 are as follows:



	Three Months Ended June 30,					Six Months Ended June 30,
	2017			2016		2017			2016
Interest cost	$	0.1		$	0.2	$	0.1		$	0.4
Settlement gain	(0.1		)	—		(0.2		)	—
Net periodic pension cost	$	—		$	0.2	$	(0.1	)	$	0.4

The Company has assumed the obligations under a subsidiary’s post-retirement medical plan. Coverage under this plan is restricted to a limited number of existing employees of the subsidiary. The Company funds the plan through monthly contributions to a Health Reimbursement Arrangement, which can be used by eligible participants to purchase health care insurance through insurance exchanges. Effective January 1, 2017, Health Reimbursement Arrangement contributions for Medicare eligible participants ceased. The effect on operations of the post-retirement medical plan is shown in the following table:



	Three Months Ended June 30,						Six Months Ended June 30,
	2017			2016			2017			2016
Interest cost on benefit obligation	0.1			0.1			0.2			0.2
Net amortization and deferral	(1.7		)	(4.2		)	(3.4		)	(8.0		)
Post-retirement medical plan benefits	$	(1.6	)	$	(4.1	)	$	(3.2	)	$	(7.8	)

Also 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. Effective January 1, 2017, this Plan ceased directly providing medical, prescription drug and dental coverage options previously available to eligible participants. Instead, the Company will fund the plan through monthly contributions to a Health Reimbursement Arrangement, which can be used by non-Medicare eligible participants to purchase health care insurance through insurance exchanges. The net periodic post-retirement benefit cost for the three months ended June 30, 2017 and 2016 was $0.5 and $0.4, respectively, and was $1.0 and $0.8 for the six months ended June 30, 2017 and 2016, respectively.

As a result of the Acquisition, the Company sponsors two defined benefit pension plans for the benefit of its employees at two United Kingdom subsidiaries and one defined benefit pension plan for the benefit of its employees at a German subsidiary, all of which are legacy plans of previously acquired companies. Benefit amounts for all three plans are based upon years of service and compensation. The German plan is unfunded while the United Kingdom pension plans are funded. The Company’s funding policy has been to contribute annually amounts at least equal to the local statutory funding requirements.



	United Kingdom Plans
	Three Months Ended June 30,						Six Months Ended June 30,
	2017			2016			2017			2016
Service cost for administrative expenses	$	0.9		$	0.8		$	1.8		$	1.6
Interest cost on benefit obligation	1.9			2.2			3.7			4.4
Expected return on plan assets	(2.9		)	(3.1		)	(5.6		)	(6.2		)
Net (gain) from prior periods	0.2			—			0.4			—
Defined benefit plan costs	$	0.1		$	(0.1	)	$	0.3		$	(0.2	)

Assumptions used to determine defined benefit plan cost
Discount rate	2.7		%	3.8		%	2.7		%	3.8		%
Expected return on assets	4.7		%	5.6		%	4.7		%	5.6		%
Salary increases	3.8		%	3.6		%	3.8		%	3.6		%



	German Plan
	Three Months Ended June 30,						Six Months Ended June 30,
	2017			2016			2017			2016
Service cost for administrative expenses	$	0.3		$	0.2		$	0.5		$	0.5
Interest cost on benefit obligation	0.1			0.2			0.3			0.3
Net amortization and deferral	—			(0.1		)	—			(0.1		)
Defined benefit plan costs	$	0.4		$	0.3		$	0.8		$	0.7

Assumptions used to determine defined benefit plan cost
Discount rate	1.7		%	2.5		%	1.7		%	2.5		%
Expected return on assets	N/A			N/A			N/A			N/A
Salary increases	2.0		%	2.0		%	2.0		%	2.0		%