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IMS Health Inc. Reports Operating Results (10-K)

February 17, 2010 | About:
10qk

10qk

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IMS Health Inc. (RX) filed Annual Report for the period ended 2009-12-31.

Ims Health Inc. has a market cap of $3.99 billion; its shares were traded at around $21.85 with a P/E ratio of 12.6 and P/S ratio of 1.8. The dividend yield of Ims Health Inc. stocks is 0.5%. Ims Health Inc. had an annual average earning growth of 11.3% over the past 10 years. GuruFocus rated Ims Health Inc. the business predictability rank of 4-star.RX is in the portfolios of John Paulson of Paulson & Co., Richard Perry of Perry Capital, Chase Coleman of TIGER GLOBAL MANAGEMENT LLC, Westport Asset Management, John Keeley of Keeley Fund Management, Chase Coleman of TIGER GLOBAL MANAGEMENT LLC, Edward Owens of Vanguard Health Care Fund, Richard Pzena of Pzena Investment Management LLC, David Dreman of Dreman Value Management, George Soros of Soros Fund Management LLC, Dodge & Cox.

Highlight of Business Operations:

The discount rate is the rate at which the benefit obligations could be effectively settled and is determined annually by management. For U.S. plans, the discount rate is based on results of a modeling process in which the plans' expected cash flow (determined on a projected benefit obligation basis) is matched with spot rates developed from a yield curve comprised of high-grade (Moody's Aa and above, or Standard and Poor's AA and above) non-callable corporate bonds to develop the present value of the expected cash flow, and then determining the single rate (discount rate) which when applied to the expected cash flow derives that same present value. In the U.K. specifically, the discount rate is set based on the yields available on a universe of approximately of 150 high quality (Aa rated) corporate bonds denominated in UK sterling, appropriate to the duration of the plan liabilities. For the other non-U.S. plans, the discount rate is based on the current yield of an index of high quality corporate bonds. At December 31, 2009, the discount rate was 6.0%, unchanged from December 31, 2008 for our U.S. pension plans and postretirement benefit plan. Similarly, the discount rate for our U.K. pension plan was unchanged at 6.0%. The U.S. and U.K. plans represent 97% of the consolidated benefit obligation as of December 31, 2009. The discount rate in other non-U.S. countries decreased, where the range of applicable discount rates at December 31, 2009 was 2.2%10.4%. These smaller non-U.S. plans constitute only 3% of the consolidated benefit obligation at December 31, 2009. As a sensitivity measure, a 25 basis point increase in the discount rate for our U.S. plan, absent any offsetting changes in other assumptions would result in a decrease of pension expense of approximately $95 within the Consolidated Statements of Income. For our U.K. plan, a 25 basis point increase in the discount rate, absent any offsetting changes in other assumptions, would result in a decrease in pension expense of approximately $668 within the Consolidated Statements of Income.

In selecting an expected return on plan asset assumption, we consider the returns being earned by each plan investment category in the fund, the rates of return expected to be available for reinvestment and long-term economic forecasts for the type of investments held by the plan. At January 1, 2010, the expected return on plan assets for the U.S. pension plans is 8.5%, which is unchanged versus January 1, 2009. Outside the U.S. the range of applicable expected rates of return is 1.5%7.25% as of January 1, 2010 versus a range of 1.5%7.5% as of January 1, 2009. The actual return on plan assets will vary from year to year versus this assumption. We believe it is appropriate to use long-term expected forecasts in selecting the expected return on plan assets. As such, there can be no assurance that our actual return on plan assets will approximate the long-term expected forecasts. The expected return on assets ("EROA") was $24,104 and $31,454 and the actual return on assets was $54,930 and ($90,414), respectively, for the years ended December 31, 2009 and 2008. As a sensitivity measure, a 25 basis point change in the EROA assumption for our U.S. plan, absent any offsetting changes in other assumptions, would result in approximately $397 of an increase or decrease in pension expense within the Consolidated Statements of Income. For our U.K. plan, a 25 basis point change in the EROA assumption, absent any offsetting changes in other assumptions, would result in approximately $374 of an increase or decrease in pension expense within the Consolidated Statements of Income. While we believe that the assumptions used are reasonable, differences in actual experience or changes in assumptions may materially affect our pension and postretirement obligations and future expense.

During fiscal 2009, we contributed $10,231 to our pension and postretirement benefit plans which included voluntary contributions above the minimum requirements for the pension plans. We currently expect to contribute $13,473 in required contributions and $274 in discretionary contributions to our pension and postretirement benefit plans during fiscal 2010. We may make additional contributions into our pension plans in fiscal 2010 depending on, among other factors, how the funded status of those plans changes and in order to meet minimum funding requirements as set forth in employee benefit and tax laws, plus additional amounts we may deem to be appropriate.

The payments and level of cash dividends by IMS are subject to the discretion of the Board of Directors of IMS. For the years ended December 31, 2009 and 2008, IMS declared quarterly dividends of $0.03 per share or $0.12 per share on an annual basis. Any future dividends declared by the Board of Directors of IMS will be based on, and affected by, a number of factors, including the operating results and financial requirements of IMS.

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