LabCorp 2009 Annual Report Download - page 44

42 LABORATORY CORPORATION OF AMERICA
LABORATORY CORPORATION OF AMERICA
Notes to Consolidated Financial Statements
The following table summarizes the components of the Company’s stock-based compensation expense for the years ended
December 31, 2009, 2008 and 2007:
2009 2008 2007
Pre-Tax Tax Pre-Tax Tax Pre-Tax Tax
Expense Benefit Net Expense Benefit Net Expense Benefit Net
Stock option and stock purchase plans $ 21.9 $ (8.8) $ 13.1 $ 20.0 $ (8.0) $ 12.0 $ 18.0 $ (7.2) $ 10.8
Restricted stock and performance share awards 14.5 (5.8) 8.7 14.2 (5.7) 8.5 17.4 (7.0) 10.4
Executive retirement charge – – – 2.0 (0.8) 1.2 – – –
Total share based compensation $ 36.4 $ (14.6) $ 21.8 $ 36.2 $ (14.5) $ 21.7 $ 35.4 $ (14.2) $ 21.2
During the fourth quarter of 2008, the Company recorded
charges of approximately $2.0, related to the acceleration of
the recognition of stock compensation due to the retirement of
the Company’s Executive Vice President of Corporate Affairs,
effective December 31, 2008.
See note 14 for assumptions used in calculating compen-
sation expense for the Company’s stock compensation plans.
Cash Equivalents
Cash equivalents (primarily investments in money market funds,
time deposits, municipal, treasury and government funds which
have original maturities of three months or less at the date of
purchase) are carried at cost which approximates market.
Inventories
Inventories, consisting primarily of purchased laboratory supplies,
are stated at the lower of cost (first-in, first-out) or market.
Property, Plant and Equipment
Property, plant and equipment are recorded at cost. The cost
of properties held under capital leases is equal to the lower of
the net present value of the minimum lease payments or the
fair value of the leased property at the inception of the lease.
Depreciation and amortization expense is computed on all
classes of assets based on their estimated useful lives, as
indicated below, using principally the straight-line method.
Years
Buildings and building improvements 35
Machinery and equipment 3-10
Furniture and fixtures 5-10
Leasehold improvements and assets held under capital
leases are amortized over the shorter of their estimated useful
lives or the term of the related leases. Expenditures for repairs
and maintenance are charged to operations as incurred.
Retirements, sales and other disposals of assets are recorded
by removing the cost and accumulated depreciation from the
related accounts with any resulting gain or loss reflected in the
consolidated statements of operations.
Capitalized Software Costs
The Company capitalizes purchased software which is ready
for service and capitalizes software development costs incurred
on significant projects starting from the time that the preliminary
project stage is completed and management commits to fund-
ing a project until the project is substantially complete and the
software is ready for its intended use. Capitalized costs include
direct material and service costs and payroll and payroll-related
costs. Research and development costs and other computer
software maintenance costs related to software development
are expensed as incurred. Capitalized software costs are
amortized using the straight-line method over the estimated
useful life of the underlying system, generally five years.
Long-Lived Assets
Goodwill is evaluated for impairment by applying a fair value
based test on an annual basis and more frequently if events
or changes in circumstances indicate that the asset might
be impaired.