Quest Diagnostics 2014 Annual Report Download - page 107

Download and view the complete annual report

Please find page 107 of the 2014 Quest Diagnostics annual report below. You can navigate through the pages in the report by either clicking on the pages listed below, or by using the keyword search tool below to find specific information within the annual report.

Page out of 121

  • 1
  • 2
  • 3
  • 4
  • 5
  • 6
  • 7
  • 8
  • 9
  • 10
  • 11
  • 12
  • 13
  • 14
  • 15
  • 16
  • 17
  • 18
  • 19
  • 20
  • 21
  • 22
  • 23
  • 24
  • 25
  • 26
  • 27
  • 28
  • 29
  • 30
  • 31
  • 32
  • 33
  • 34
  • 35
  • 36
  • 37
  • 38
  • 39
  • 40
  • 41
  • 42
  • 43
  • 44
  • 45
  • 46
  • 47
  • 48
  • 49
  • 50
  • 51
  • 52
  • 53
  • 54
  • 55
  • 56
  • 57
  • 58
  • 59
  • 60
  • 61
  • 62
  • 63
  • 64
  • 65
  • 66
  • 67
  • 68
  • 69
  • 70
  • 71
  • 72
  • 73
  • 74
  • 75
  • 76
  • 77
  • 78
  • 79
  • 80
  • 81
  • 82
  • 83
  • 84
  • 85
  • 86
  • 87
  • 88
  • 89
  • 90
  • 91
  • 92
  • 93
  • 94
  • 95
  • 96
  • 97
  • 98
  • 99
  • 100
  • 101
  • 102
  • 103
  • 104
  • 105
  • 106
  • 107
  • 108
  • 109
  • 110
  • 111
  • 112
  • 113
  • 114
  • 115
  • 116
  • 117
  • 118
  • 119
  • 120
  • 121

QUEST DIAGNOSTICS INCORPORATED AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – CONTINUED
(in millions unless otherwise indicated)
)
 2SHUDWLQJOHDVHUHQWDOH[SHQVHIRUDQGWRWDOHGPLOOLRQPLOOLRQDQGPLOOLRQ
UHVSHFWLYHO\5HQWH[SHQVHDVVRFLDWHGZLWKRSHUDWLQJOHDVHVWKDWLQFOXGHVFKHGXOHGUHQWLQFUHDVHVDQGWHQDQWLQFHQWLYHV
VXFKDVUHQWKROLGD\VDQGLPSURYHPHQWDOORZDQFHVLVUHFRUGHGRQDVWUDLJKWOLQHEDVLVRYHUWKHWHUPRIWKHOHDVH
 7KH&RPSDQ\KDVFHUWDLQQRQFDQFHODEOHFRPPLWPHQWVWRSXUFKDVHSURGXFWVRUVHUYLFHVIURPYDULRXVVXSSOLHUV
PDLQO\IRUFRQVXOWLQJDQGRWKHUVHUYLFHDJUHHPHQWVDQGVWDQGLQJRUGHUVWRSXUFKDVHUHDJHQWVDQGRWKHUODERUDWRU\VXSSOLHV
$W'HFHPEHUWKHDSSUR[LPDWHWRWDOIXWXUHSXUFKDVHFRPPLWPHQWVDUHPLOOLRQRIZKLFKPLOOLRQDUH
H[SHFWHGWREHLQFXUUHGLQPLOOLRQDUHH[SHFWHGWREHLQFXUUHGLQWKURXJKDQGWKHEDODQFHWKHUHDIWHU
Contingent Lease Obligations
 7KH&RPSDQ\UHPDLQVVXEMHFWWRFRQWLQJHQWREOLJDWLRQVXQGHUFHUWDLQUHDOHVWDWHOHDVHVWKDWZHUHHQWHUHGLQWRE\
FHUWDLQSUHGHFHVVRUFRPSDQLHVRIDVXEVLGLDU\SULRUWRWKH&RPSDQ\VDFTXLVLWLRQRIWKHVXEVLGLDU\:KLOHRYHUWKHFRXUVH
RIPDQ\\HDUVWKHWLWOHWRWKHSURSHUWLHVDQGLQWHUHVWLQWKHVXEMHFWOHDVHVKDYHEHHQWUDQVIHUUHGWRWKLUGSDUWLHVDQGWKH
VXEMHFWOHDVHVKDYHEHHQDPHQGHGVHYHUDOWLPHVE\VXFKWKLUGSDUWLHVWKHOHVVRUVKDYHQRWIRUPDOO\UHOHDVHGWKHVXEVLGLDU\
SUHGHFHVVRUFRPSDQLHVIURPWKHLURULJLQDOREOLJDWLRQVXQGHUWKHOHDVHVDQGWKHUHIRUHUHPDLQFRQWLQJHQWO\OLDEOHLQWKHHYHQW
RIGHIDXOW7KHUHPDLQLQJWHUPVRIWKHOHDVHREOLJDWLRQVDQGWKH&RPSDQ\VFRUUHVSRQGLQJLQGHPQLILFDWLRQVUDQJHIURPWR
\HDUV7KHOHDVHSD\PHQWVXQGHUFHUWDLQOHDVHVDUHVXEMHFWWRPDUNHWYDOXHDGMXVWPHQWVDQGFRQWLQJHQWUHQWDOSD\PHQWV
DQGWKHUHIRUHWKHWRWDOFRQWLQJHQWREOLJDWLRQVXQGHUWKHOHDVHVFDQQRWEHSUHFLVHO\GHWHUPLQHGEXWDUHOLNHO\WRWRWDOVHYHUDO
KXQGUHGPLOOLRQGROODUV$FODLPDJDLQVWWKH&RPSDQ\ZRXOGEHPDGHRQO\XSRQWKHFXUUHQWOHVVHHVGHIDXOWDQGDIWHUD
VHULHVRIFODLPVDQGFRUUHVSRQGLQJGHIDXOWVE\WKLUGSDUWLHVWKDWSUHFHGHWKH&RPSDQ\LQWKHRUGHURIOLDELOLW\7KH
&RPSDQ\DOVRKDVFHUWDLQLQGHPQLILFDWLRQULJKWVIURPRWKHUSDUWLHVWRUHFRYHUORVVHVLQWKHHYHQWRIGHIDXOWRQWKHOHDVH
REOLJDWLRQV7KH&RPSDQ\EHOLHYHVWKDWWKHOLNHOLKRRGRILWVSHUIRUPDQFHXQGHUWKHVHFRQWLQJHQWREOLJDWLRQVLVUHPRWHDQG
QROLDELOLW\KDVEHHQUHFRUGHGIRUDQ\SRWHQWLDOSD\PHQWVXQGHUWKHFRQWLQJHQWOHDVHREOLJDWLRQV
Settlements
 ,QDSXUSRUWHGFODVVDFWLRQHQWLWOHGIn re Celera Corp. Securities LitigationZDVILOHGLQWKH8QLWHG6WDWHV'LVWULFW
&RXUWIRUWKH1RUWKHUQ'LVWULFWRI&DOLIRUQLDDJDLQVW&HOHUD&RUSRUDWLRQDQGFHUWDLQRILWVGLUHFWRUVDQGFXUUHQWDQGIRUPHU
RIILFHUV$QDPHQGHGFRPSODLQWILOHGLQ2FWREHUDOOHJHVWKDWIURP$SULOWKURXJK-XO\WKHGHIHQGDQWVPDGH
IDOVHDQGPLVOHDGLQJVWDWHPHQWVUHJDUGLQJ&HOHUDVEXVLQHVVDQGILQDQFLDOUHVXOWVZLWKDQLQWHQWWRGHIUDXGLQYHVWRUV7KH
FRPSODLQWZDVIXUWKHUDPHQGHGLQWRDGGDOOHJDWLRQVUHJDUGLQJDILQDQFLDOUHVWDWHPHQW7KHDPHQGHGFRPSODLQWVHHNV
XQVSHFLILHGGDPDJHVRQEHKDOIRIDQDOOHJHGFODVVRISXUFKDVHUVRI&HOHUDVVWRFNGXULQJWKHSHULRGLQZKLFKWKHDOOHJHG
PLVUHSUHVHQWDWLRQVZHUHPDGH7KH&RPSDQ\VPRWLRQWRGLVPLVVWKHFRPSODLQWZDVGHQLHG&HOHUDDQGWKHGLUHFWRUDQG
RIILFHUGHIHQGDQWVKDYHUHDFKHGDQDJUHHPHQWWRVHWWOHWKLVDFWLRQZKLFKLVVXEMHFWWRFRXUWDSSURYDO7KHVHWWOHPHQWLV
H[SHFWHGWREHIXOO\FRYHUHGE\LQVXUDQFH
 ,Q6HSWHPEHUWKH&RPSDQ\UHFHLYHGDVXESRHQDIURPWKH0LFKLJDQ$WWRUQH\*HQHUDOV2IILFHVHHNLQJ
GRFXPHQWVUHODWLQJWRWKH&RPSDQ\VSULFLQJDQGELOOLQJSUDFWLFHVDVWKH\UHODWHWR0LFKLJDQV0HGLFDLGSURJUDP7KH
&RPSDQ\FRRSHUDWHGZLWKWKHUHTXHVWV,Q-DQXDU\WKH6WDWHRI0LFKLJDQLQWHUYHQHGDVDSODLQWLIILQDFLYLOODZVXLW
Michigan ex rel. Hunter Laboratories LLC v. Quest Diagnostics Incorporated, et al.ILOHGLQ0LFKLJDQ6XSHULRU&RXUW7KH
VXLWRULJLQDOO\ILOHGE\DFRPSHWLWRUODERUDWRU\DOOHJHVWKDWWKH&RPSDQ\RYHUFKDUJHG0LFKLJDQV0HGLFDLGSURJUDP7KH
&RPSDQ\VPRWLRQIRUVXPPDU\MXGJPHQWZDVJUDQWHGDQGWKHFDVHZDVGLVPLVVHG3ODLQWLIIVILOHGDQDSSHDO7KHSDUWLHVKDYH
VHWWOHGWKLVPDWWHU
 ,Q-XO\%LRWHFKQRORJ\9DOXH)XQG/3DQGRWKHUVILOHGDODZVXLWLQWKH8QLWHG6WDWHV'LVWULFW&RXUWIRUWKH
1RUWKHUQ'LVWULFWRI&DOLIRUQLDDJDLQVWWKH&RPSDQ\&HOHUDIRUPHUGLUHFWRUVRI&HOHUDDQG&UHGLW6XLVVH6HFXULWLHV86$
//&³&UHGLW6XLVVH´DOOHJLQJDPRQJRWKHUWKLQJVIHGHUDOVHFXULWLHVODZVYLRODWLRQVDQGEUHDFKRIILGXFLDU\GXW\FODLPV
DJDLQVW&HOHUDLWVGLUHFWRUVDQG&UHGLW6XLVVH)ROORZLQJPRWLRQVE\WKHSDUWLHVWKHSODLQWLIIVILOHGDQDPHQGHGFRPSODLQW
7KHSDUWLHVKDYHVHWWOHGWKLVPDWWHU
 ,Q2FWREHUWKH&RPSDQ\FRPPHQFHGDODZVXLWLQWKH86'LVWULFW&RXUWIRUWKH&HQWUDO'LVWULFWRI&DOLIRUQLD
VHHNLQJDGHFODUDWLRQWKDWWKH&RPSDQ\¶V%5&$DQGWHVWVGRQRWLQIULQJHVHYHUDOSDWHQWVRI0\ULDG*HQHWLFV,QFRUWKDW
WKHSDWHQWVDUHLQYDOLG/DWHUWKDWPRQWK0\ULDGDQGLWVSDUWQHUVFRPPHQFHGDODZVXLWLQWKH86'LVWULFW&RXUWIRUWKH
&HQWUDO'LVWULFWRI8WDKDJDLQVWWKH&RPSDQ\DOOHJLQJWKDWWKH&RPSDQ\¶V%5&$DQGWHVWVLQIULQJHG0\ULDG¶VSDWHQWV
0\ULDGPRYHGWRGLVPLVVWKH&RPSDQ\¶VODZVXLWDQGWRWUDQVIHUDOOFDVHVLQYROYLQJLWV%5&$DQGSDWHQWVWRWKHIHGHUDO
48(67',$*1267,&6)250.