Medco 2014 Annual Report Download - page 67

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Express Scripts 2014 Annual Report
Foreign currency translation.ThefinancialstatementsofourforeignsubsidiariesaretranslatedintoUnitedStates
dollarsusingtheexchangerateateachbalancesheetdateforassetsandliabilitiesandaweighted-averageexchangeratefor
eachperiodforrevenues,expenses,gainsandlosses.Thefunctionalcurrencyforourforeignsubsidiariesisthelocalcurrency
andcumulativetranslationadjustments(creditbalancesof$2.1millionand$11.7millionatDecember31,2014and2013,
respectively)arerecordedwithintheaccumulatedothercomprehensiveincomecomponentofstockholders’equity.
Comprehensive income.Inadditiontonetincome,comprehensiveincome(netoftaxes)includesforeigncurrency
translationadjustments.Werecognizedforeigncurrencytranslationadjustmentsof$(9.6)million,$(7.2)millionand$1.9
millionfortheyearsendingDecember31,2014,2013and2012,respectively.
New accounting guidance.InMay2014,theFinancialAccountingStandardsBoard(“FASB”)issuedAccounting
StandardsCodification(“ASC”)Topic606,RevenuefromContractswithCustomerswhichsupersedesASC605,Revenue
Recognition.Thenewstandardrequirescompaniestorecognizerevenuesupontransferofgoodsorservicestocustomersin
amountsthatreflecttheconsiderationwhichthecompanyexpectstoreceiveinexchangeforthosegoodsorservices.Thenew
guidanceiseffectiveforfinancialstatementsissuedforannualreportingperiodsbeginningafterDecember15,2016andearly
applicationisnotpermitted.Wearecurrentlyevaluatingtheimpactofthisstandardonourconsolidatedfinancialstatements.
InApril2014,theFASBissuedauthoritativeguidancecontainingchangestothecriteriafordeterminingwhich
disposalscanbepresentedasdiscontinuedoperationsandmodifyingrelateddisclosurerequirements.Thisstatementis
effectiveforfinancialstatementsissuedforannualperiodsbeginningafterDecember15,2014.Adoptionofthestandardisnot
expectedtohaveamaterialimpactonourconsolidatedfinancialposition,resultsofoperationsorcashflows.
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2. Fair value measurements
FASBguidanceregardingfairvaluemeasurementestablishesathree-tierfairvaluehierarchy,whichprioritizesthe
inputsusedinmeasuringfairvalue.Thesetiersinclude:Level1,definedasobservableinputssuchasquotedpricesinactive
marketsforidenticalassetsorliabilities;Level2,definedasinputsotherthanquotedpricesforsimilarassetsandliabilitiesin
activemarketsthatareeitherdirectlyorindirectlyobservable;andLevel3,definedasunobservableinputsforwhichlittleor
nomarketdataexists,thereforerequiringanentitytodevelopitsownassumptions.
Financialassetsaccountedforatfairvalueonarecurringbasisincludecashequivalentsof$427.8millionand
$845.2million,restrictedcashandinvestmentsof$9.1millionand$22.8million,andtradingsecurities(includedinother
assets)of$25.3millionand$18.7million,atDecember31,2014and2013,respectively.Theseassetsarecarriedatfairvalue
basedonquotedmarketpricesinactivemarketsforidenticalsecurities(Level1inputs).Cashequivalentsincludeinvestments
inAAA-ratedmoneymarketmutualfundswithmaturitiesoflessthan90days.
FASBguidanceallowsacompanytoelecttomeasureeligiblefinancialassetsandfinancialliabilitiesatfairvalue.
Unrealizedgainsandlossesonitemsforwhichthefairvalueoptionhasbeenelectedarereportedinearningsateach
subsequentreportingdate.Eligibleitemsinclude,butarenotlimitedto,accountsandloansreceivable,equitymethod
investments,accountspayable,guarantees,issueddebtandfirmcommitments.Currently,wehavenotelectedtoaccountfor
anyofoureligibleitemsusingthefairvalueoption.