Quest Diagnostics 2008 Annual Report Download - page 100

variable-to-fixed interest rate swap agreements on $200 million of the Term Loan due May 2012 remain in place
through October 2009 with fixed interest rates ranging from 5.13% to 5.27%.
The Interest Rate Swap Agreements qualify as cash flow hedges under the requirements of SFAS 133. As
such, gains and losses on the Interest Rate Swap Agreements are deferred into “accumulated other comprehensive
(loss) income” until the hedged transaction impacts the Company’s earnings. During the year ended December
31, 2008 and 2007, the Company deferred losses of $0.9 million and $2.7 million, respectively, into
“accumulated other comprehensive (loss) income.” The cash flow hedges were effective during 2008 and 2007.
11. PREFERRED STOCK AND COMMON STOCKHOLDERS’ EQUITY
Series Preferred Stock
Quest Diagnostics is authorized to issue up to 10 million shares of Series Preferred Stock, par value $1.00
per share. The Company’s Board of Directors has the authority to issue such shares without stockholder approval
and to determine the designations, preferences, rights and restrictions of such shares. Of the authorized shares,
1,300,000 shares have been designated Series A Preferred Stock and 1,000 shares have been designated Voting
Cumulative Preferred Stock. No shares are currently outstanding.
Common Stock
On May 4, 2006, the Company’s Restated Certificate of Incorporation was amended to increase the number
of shares of common stock, par value $0.01 per share, from 300 million shares to 600 million shares.
Accumulated Other Comprehensive (Loss) Income
The components of accumulated other comprehensive (loss) income for 2008, 2007 and 2006 were as
follows:
Foreign
Currency
Translation
Adjustment
Market Value
Adjustment
Deferred
Gain
(Loss)
Accumulated
Other
Comprehensive
(Loss) Income
Balance, December 31, 2005................ $ (1,948) $(6,711) $ 2,454 $ (6,205)
Translation adjustment...................... 2,460 - - 2,460
Market value adjustment, net of tax benefit
of $2,501................................ - (3,815) - (3,815)
Reversal of market value adjustment, net of
tax expense of $(5,053) . . ................ - 7,707 - 7,707
Deferred gain reclassifications .............. - - (212) (212)
Balance, December 31, 2006................ 512 (2,819) 2,242 (65)
Translation adjustment...................... 30,820 - - 30,820
Market value adjustment, net of tax benefit
of $24. .................................. - (36) - (36)
Reversal of market value adjustment, net of
tax expense of $(510) .................... - 802 - 802
Deferred loss, less reclassifications . . . ....... - - (6,242) (6,242)
Balance, December 31, 2007................ 31,332 (2,053) (4,000) 25,279
Translation adjustment...................... (94,326) - - (94,326)
Market value adjustment, net of tax benefit
of $261 ................................. - (398) - (398)
Reversal of market value adjustment, net of
tax expense of $(1,257) . . ................ - 2,161 - 2,161
Deferred loss, less reclassifications . . . ....... - - (784) (784)
Balance, December 31, 2008................ $(62,994) $ (290) $(4,784) $(68,068)
The market value adjustments for 2008, 2007 and 2006 represented unrealized holding gains (losses), net of
taxes. The reversal of market value adjustments for 2008, 2007 and 2006 represented prior periods unrealized
F-28
QUEST DIAGNOSTICS INCORPORATED AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
(dollars in thousands unless otherwise indicated)