Quest Diagnostics 2014 Annual Report Download - page 78

Download and view the complete annual report

Please find page 78 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)
)
Concentration of Credit Risk
 )LQDQFLDOLQVWUXPHQWVWKDWSRWHQWLDOO\VXEMHFWWKH&RPSDQ\WRFRQFHQWUDWLRQVRIFUHGLWULVNDUHSULQFLSDOO\FDVKFDVK
HTXLYDOHQWVVKRUWWHUPLQYHVWPHQWVDFFRXQWVUHFHLYDEOHDQGGHULYDWLYHILQDQFLDOLQVWUXPHQWV7KH&RPSDQ\VSROLF\LVWRSODFH
LWVFDVKFDVKHTXLYDOHQWVDQGVKRUWWHUPLQYHVWPHQWVLQKLJKO\UDWHGILQDQFLDOLQVWUXPHQWVDQGLQVWLWXWLRQV&RQFHQWUDWLRQRI
FUHGLWULVNZLWKUHVSHFWWRDFFRXQWVUHFHLYDEOHLVPLWLJDWHGE\WKHGLYHUVLW\RIWKH&RPSDQ\VSD\HUVDQGWKHLUGLVSHUVLRQDFURVV
PDQ\GLIIHUHQWJHRJUDSKLFUHJLRQVDQGLVOLPLWHGWRFHUWDLQSD\HUVZKRDUHODUJHEX\HUVRIWKH&RPSDQ\VVHUYLFHV7RUHGXFH
ULVNWKH&RPSDQ\URXWLQHO\DVVHVVHVWKHILQDQFLDOVWUHQJWKRIWKHVHSD\HUVDQGFRQVHTXHQWO\EHOLHYHVWKDWLWVDFFRXQWV
UHFHLYDEOHFUHGLWULVNH[SRVXUHZLWKUHVSHFWWRWKHVHSD\HUVLVOLPLWHG:KLOHWKH&RPSDQ\KDVUHFHLYDEOHVGXHIURPIHGHUDO
DQGVWDWHJRYHUQPHQWDODJHQFLHVWKH&RPSDQ\GRHVQRWEHOLHYHWKDWVXFKUHFHLYDEOHVUHSUHVHQWDFUHGLWULVNVLQFHWKHUHODWHG
KHDOWKFDUHSURJUDPVDUHIXQGHGE\IHGHUDODQGVWDWHJRYHUQPHQWVDQGSD\PHQWLVSULPDULO\GHSHQGHQWRQVXEPLWWLQJ
DSSURSULDWHGRFXPHQWDWLRQ$W'HFHPEHUDQGUHFHLYDEOHVGXHIURPJRYHUQPHQWSD\HUVXQGHUWKH0HGLFDUHDQG
0HGLFDLGSURJUDPVUHSUHVHQWDSSUR[LPDWHO\DQGUHVSHFWLYHO\RIWKH&RPSDQ\VFRQVROLGDWHGQHWDFFRXQWV
UHFHLYDEOH7KHSRUWLRQRIWKH&RPSDQ\VDFFRXQWVUHFHLYDEOHGXHIURPSDWLHQWVFRPSULVHVWKHODUJHVWSRUWLRQRIFUHGLWULVN$W
'HFHPEHUDQGUHFHLYDEOHVGXHIURPSDWLHQWVUHSUHVHQWDSSUR[LPDWHO\DQGUHVSHFWLYHO\RIWKH
&RPSDQ\VFRQVROLGDWHGQHWDFFRXQWVUHFHLYDEOH7KH&RPSDQ\DSSOLHVDVVXPSWLRQVDQGMXGJPHQWVLQFOXGLQJKLVWRULFDO
FROOHFWLRQH[SHULHQFHIRUDVVHVVLQJFROOHFWLELOLW\DQGGHWHUPLQLQJDOORZDQFHVIRUGRXEWIXODFFRXQWVIRUDFFRXQWVUHFHLYDEOHIURP
SDWLHQWV
Accounts Receivable and Allowance for Doubtful Accounts
 $FFRXQWVUHFHLYDEOHDUHUHSRUWHGDWUHDOL]DEOHYDOXHQHWRIDOORZDQFHVIRUGRXEWIXODFFRXQWVZKLFKLVHVWLPDWHGDQG
UHFRUGHGLQWKHSHULRGWKHUHODWHGUHYHQXHLVUHFRUGHG7KH&RPSDQ\KDVDVWDQGDUGL]HGDSSURDFKWRHVWLPDWHDQGUHYLHZWKH
FROOHFWLELOLW\RILWVUHFHLYDEOHVEDVHGRQDQXPEHURIIDFWRUVLQFOXGLQJWKHSHULRGWKH\KDYHEHHQRXWVWDQGLQJ+LVWRULFDO
FROOHFWLRQDQGSD\HUUHLPEXUVHPHQWH[SHULHQFHLVDQLQWHJUDOSDUWRIWKHHVWLPDWLRQSURFHVVUHODWHGWRDOORZDQFHVIRUGRXEWIXO
DFFRXQWV,QDGGLWLRQWKH&RPSDQ\UHJXODUO\DVVHVVHVWKHVWDWHRILWVELOOLQJRSHUDWLRQVLQRUGHUWRLGHQWLI\LVVXHVZKLFKPD\
LPSDFWWKHFROOHFWLELOLW\RIWKHVHUHFHLYDEOHVRUUHVHUYHHVWLPDWHV&KDQJHVWRWKHDOORZDQFHVIRUGRXEWIXODFFRXQWVHVWLPDWHV
DUHUHFRUGHGDVDQDGMXVWPHQWWREDGGHEWH[SHQVHZLWKLQVHOOLQJJHQHUDODQGDGPLQLVWUDWLYHH[SHQVHV5HFHLYDEOHVGHHPHGWR
EHXQFROOHFWLEOHDUHFKDUJHGDJDLQVWWKHDOORZDQFHIRUGRXEWIXODFFRXQWVDWWKHWLPHVXFKUHFHLYDEOHVDUHZULWWHQRII
5HFRYHULHVRIUHFHLYDEOHVSUHYLRXVO\ZULWWHQRIIDUHUHFRUGHGDVFUHGLWVWRWKHDOORZDQFHIRUGRXEWIXODFFRXQWV
Inventories
 ,QYHQWRULHVZKLFKFRQVLVWSULQFLSDOO\RIWHVWLQJVXSSOLHVDQGUHDJHQWVDUHYDOXHGDWWKHORZHURIFRVWILUVWLQILUVWRXW
PHWKRGRUPDUNHW
Property, Plant and Equipment
 3URSHUW\SODQWDQGHTXLSPHQWLVUHFRUGHGDWFRVW0DMRUUHQHZDOVDQGLPSURYHPHQWVDUHFDSLWDOL]HGZKLOH
PDLQWHQDQFHDQGUHSDLUVDUHH[SHQVHGDVLQFXUUHG&RVWVLQFXUUHGIRUFRPSXWHUVRIWZDUHGHYHORSHGRUREWDLQHGIRULQWHUQDOXVH
DUHFDSLWDOL]HGIRUDSSOLFDWLRQGHYHORSPHQWDFWLYLWLHVDQGH[SHQVHGDVLQFXUUHGIRUSUHOLPLQDU\SURMHFWDFWLYLWLHVDQGSRVW
LPSOHPHQWDWLRQDFWLYLWLHV&DSLWDOL]HGFRVWVLQFOXGHH[WHUQDOGLUHFWFRVWVRIPDWHULDOVDQGVHUYLFHVFRQVXPHGLQGHYHORSLQJRU
REWDLQLQJLQWHUQDOXVHVRIWZDUHSD\UROODQGSD\UROOUHODWHGFRVWVIRUHPSOR\HHVZKRDUHGLUHFWO\DVVRFLDWHGZLWKWKHLQWHUQDO
XVHVRIWZDUHSURMHFWDQGLQWHUHVWFRVWVLQFXUUHGZKHQPDWHULDOZKLOHGHYHORSLQJLQWHUQDOXVHVRIWZDUH&DSLWDOL]DWLRQRIVXFK
FRVWVFHDVHVZKHQWKHSURMHFWLVVXEVWDQWLDOO\FRPSOHWHDQGUHDG\IRULWVLQWHQGHGSXUSRVH&RVWVIRUPDLQWHQDQFHDQGWUDLQLQJ
DUHH[SHQVHGDVLQFXUUHG7KH&RPSDQ\FDSLWDOL]HVLQWHUHVWRQERUURZLQJVGXULQJWKHDFWLYHFRQVWUXFWLRQSHULRGRIPDMRU
FDSLWDOSURMHFWV&DSLWDOL]HGLQWHUHVWLVDGGHGWRWKHFRVWRIWKHXQGHUO\LQJDVVHWVDQGLVDPRUWL]HGRYHUWKHH[SHFWHGXVHIXOOLYHV
RIWKHDVVHWV'HSUHFLDWLRQDQGDPRUWL]DWLRQDUHSURYLGHGRQWKHVWUDLJKWOLQHPHWKRGRYHUH[SHFWHGXVHIXODVVHWOLYHVDV
IROORZVEXLOGLQJVDQGLPSURYHPHQWVUDQJLQJXSWRWKLUW\RQHDQGDKDOI\HDUVODERUDWRU\HTXLSPHQWDQGIXUQLWXUHDQGIL[WXUHV
UDQJLQJIURPWKUHHWRVHYHQ\HDUVOHDVHKROGLPSURYHPHQWVWKHOHVVHURIWKHXVHIXOOLIHRIWKHLPSURYHPHQWRUWKHUHPDLQLQJ
OLIHRIWKHEXLOGLQJRUOHDVHDVDSSOLFDEOHDQGFRPSXWHUVRIWZDUHGHYHORSHGRUREWDLQHGIRULQWHUQDOXVHUDQJLQJIURPWKUHHWR
ILYH\HDUV
48(67',$*1267,&6)250
.