Quest Diagnostics 2012 Annual Report Download - page 85

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F- 12
The annual impairment test of goodwill was performed at the end of each of the Company's fiscal years and indicated
that there was no impairment of the remaining goodwill as of December 31, 2012 or the goodwill as of December 31, 2011.
Recoverability and Impairment of Intangible Assets and Other Long-Lived Assets
The Company reviews the recoverability of its long-lived assets when events or changes in circumstances occur that
indicate that the carrying value of the asset may not be recoverable. Evaluation of possible impairment is based on the
Company's ability to recover the asset from the expected future pre-tax cash flows (undiscounted and without interest charges)
of the related operations. If the expected undiscounted pre-tax cash flows are less than the carrying amount of such asset, an
impairment loss is recognized for the difference between the estimated fair value and carrying amount of the asset.
Investments
The Company accounts for investments in trading and available-for-sale equity securities, which are included in other
assets in the consolidated balance sheets at fair value. Both realized and unrealized gains and losses for trading securities are
recorded currently in earnings as a component of non-operating expenses within other income, net in the consolidated
statements of operations. Unrealized gains and losses, net of tax, for available-for-sale securities are recorded as a component
of accumulated other comprehensive income (loss) within stockholders' equity. Recognized gains and losses for available-for-
sale securities are recorded in other income, net in the consolidated statements of operations. Gains and losses on securities
sold are based on the average cost method.
The Company periodically reviews its investments to determine whether a decline in fair value below the cost basis is
other than temporary. The primary factors considered in the determination are: the length of time that the fair value of the
investment is below carrying value; the financial condition, operating performance and near term prospects of the investee; and
the Company's intent and ability to hold the investment for a period of time sufficient to allow for a recovery in fair value. If
the decline in fair value is deemed to be other than temporary, the cost basis of the security is written down to fair value.
Investments at December 31, 2012 and 2011 consisted of the following:
2012 2011
Available-for-sale equity securities $ 612 $ 646
Trading equity securities 52,283 46,926
Cash surrender value of life insurance policies 25,018 20,936
Other investments 11,578 11,579
Total $ 89,491 $ 80,087
Investments in available-for-sale equity securities consist of equity securities in public corporations. Investments in
trading equity securities represent participant-directed investments of deferred employee compensation and related Company
matching contributions held in trusts pursuant to the Company's supplemental deferred compensation plans (see Note 15). The
Company purchases life insurance policies, with the Company named as beneficiary of the policies, for the purpose of funding
a non-qualified deferred compensation program. Changes in the cash surrender value of the life insurance policies are based
upon earnings and changes in the value of the underlying investments. Other investments do not have readily determinable fair
values and consist of investments in preferred and common shares of privately held companies and are accounted for under the
cost method.
At both December 31, 2012 and 2011, the Company had gross unrealized gains from available-for-sale equity
securities of approximately $0.6 million. For the year ended December 31, 2011, other income, net within the consolidated
statements of operations, includes a $3.2 million pre-tax gain associated with the sale of an investment accounted for under the
cost method. For the years ended December 31, 2012, 2011 and 2010, gains from trading equity securities totaled $4.9 million,
$0.1 million and $3.3 million, respectively, and are included in other income, net. For the years ended December 31, 2012,
2011 and 2010, gains from changes in the cash surrender value of life insurance policies totaled $1.6 million, $0.2 million and
$2.4 million, respectively, and are included in other income, net.
QUEST DIAGNOSTICS INCORPORATED AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – CONTINUED
(dollars in thousands unless otherwise indicated)