PENSION AND POSTRETIREMENT PLANS

The Company’s defined contribution retirement plan (the “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 $13.2 and $12.6 for the three months ended September 30, 2015 and 2014, respectively, and $39.4 and $38.8 for the nine months ended September 30, 2015 and 2014, respectively. As a result of the Acquisition, the Company also incurred expense of $11.4 and $27.1 for the Covance 401K Plan during the three and nine months ended September 30, 2015, respectively.

The Company also maintains a frozen defined benefit retirement plan (the “Company Plan”), that 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 (the “PEP”), that 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 September 30,						Nine Months Ended September 30,
	2015			2014			2015			2014
Service cost for administrative expenses	$	1.0		$	0.8		$	2.9		$	2.5
Interest cost on benefit obligation	3.8			4.2			11.4			12.3
Expected return on plan assets	(4.5		)	(4.6		)	(13.7		)	(13.6		)
Net amortization and deferral	2.9			1.6			8.3			5.0
Defined benefit plan costs	$	3.2		$	2.0		$	8.9		$	6.2

During the nine months ended September 30, 2015, the Company contributed $7.1 to the Company Plan.

The Company has assumed 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. This plan is unfunded and the Company’s policy is to fund benefits as claims are incurred. The effect on operations of the post-retirement medical plan is shown in the following table:



	Three Months Ended September 30,						Nine Months Ended September 30,
	2015			2014			2015			2014
Service cost for benefits earned	$	—		$	0.1		$	0.1		$	0.2
Interest cost on benefit obligation	0.2			0.4			0.7			1.3
Net amortization and deferral	(2.9		)	(2.0		)	(7.5		)	(5.9		)
Post-retirement medical plan benefits	$	(2.7	)	$	(1.5	)	$	(6.7	)	$	(4.4	)

In addition to the PEP, 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 Covance. Benefit amounts are based upon years of service and compensation of the participating employees. The pension benefit obligation as of the Acquisition date was $32.8. The components of the net periodic pension cost are as follows:



	Three Months Ended September 30, 2015			Nine Months Ended September 30, 2015
Service cost	$	0.1		$	0.1
Interest cost	0.2			0.6
Net amortization and deferral	—			—
Curtailment gain	(0.7		)	(0.7		)
Net periodic pension cost	$	(0.4	)	$	—

The SERP was frozen effective August 1, 2015, which resulted in a curtailment gain of $0.7.

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. This plan is funded on a pay-as-you-go basis and the cost of providing these benefit is shared with the retirees. The net periodic post-retirement benefit cost for the three and nine months ended September 30, 2015 was $0.1 and $0.2, respectively, and the pension benefit obligation as of the Acquisition date was $6.3.

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 a fixed percentage of the eligible employee’s salary at least equal to the local statutory funding requirements.



	United Kingdom Plans						German Plan
	Three Months Ended September 30, 2015			Nine Months Ended September 30, 2015			Three Months Ended September 30, 2015			Nine Months Ended September 30, 2015
Service cost for administrative expenses	$	0.9		$	1.9		$	0.4		$	0.8
Interest cost on benefit obligation	2.3			5.4			0.1			0.3
Expected return on plan assets	(3.3		)	(7.6		)	—			—
Net amortization and deferral	—			—			—			—
Defined benefit plan costs	$	(0.1	)	$	(0.3	)	$	0.5		$	1.1

Assumptions used to determine defined benefit plan cost
Discount rate	3.6		%	3.6		%	1.5		%	1.5		%
Expected return on assets	5.4		%	5.4		%	N/A			N/A
Salary increases	3.5		%	3.5		%	2.0		%	2.0		%