Quest Diagnostics 2013 Annual Report Download - page 94

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F- 22
7. FAIR VALUE MEASUREMENTS
The following table provides a summary of the recognized assets and liabilities that are measured at fair value on a
recurring basis:
Basis of Fair Value Measurements
Quoted
Prices in
Active
Markets for
Identical
Assets /
Liabilities
Significant
Other
Observable
Inputs
Significant
Unobservable
Inputs
December 31, 2013 Total Level 1 Level 2 Level 3
Assets:
Trading securities $ 50 $ 50 $ — $ —
Cash surrender value of life insurance policies 29 — 29 —
Put Option 4 — — 4
Forward starting interest rate swaps 2 — 2 —
Total $ 85 $ 50 $ 31 $ 4
Liabilities:
Deferred compensation liabilities $ 84 $ — $ 84 $ —
Interest rate swaps 34 — 34 —
Call option 8 — — 8
Total $ 126 $ — $ 118 $ 8
December 31, 2012
Assets:
Trading securities $ 52 $ 52 $ — $ —
Cash surrender value of life insurance policies 25 — 25 —
Interest rate swaps 1 — 1 —
Available-for-sale equity securities 1 — — 1
Total $ 79 $ 52 $ 26 $ 1
Liabilities:
Deferred compensation liabilities $ 82 $ — $ 82 $ —
Interest rate swaps 3 — 3 —
Total $ 85 $ — $ 85 $ —
The Company offers certain employees the opportunity to participate in non-qualified supplemental deferred
compensation plans. A participant's deferrals, together with Company matching credits, are invested in a variety of participant-
directed stock and bond mutual funds that are classified as trading securities. Changes in the fair value of these securities are
measured using quoted prices in active markets based on the market price per unit multiplied by the number of units held
exclusive of any transaction costs. A corresponding adjustment for changes in fair value of the trading securities is also
reflected in the changes in fair value of the deferred compensation obligation. The deferred compensation liabilities are
classified within Level 2 because their inputs are derived principally from observable market data by correlation to the trading
securities.
QUEST DIAGNOSTICS INCORPORATED AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – CONTINUED
(in millions unless otherwise indicated)