LabCorp 2009 Annual Report Download - page 47

LABORATORY CORPORATION OF AMERICA 45
LABORATORY CORPORATION OF AMERICA
Notes to Consolidated Financial Statements
in 2009, the adoption of the authoritative guidance did not
impact the Company’s consolidated financial statements.
In May 2008, the FASB issued authoritative guidance in
connection with accounting for convertible debt instruments
that may be settled in cash upon conversion. The guidance
requires that the liability and equity components of convertible
debt instruments that may be settled in cash upon conversion
(including partial cash settlement) be separately accounted for in
a manner that reflects an issuer’s nonconvertible debt borrowing
rate. The resulting debt discount is amortized over the period
the convertible debt is expected to be outstanding as additional
non-cash interest expense. The guidance is effective for financial
statements issued for fiscal years beginning after December 15,
2008, and interim periods within those fiscal years. Retrospec-
tive application to all periods presented is required except for
instruments that were not outstanding during any of the periods
that will be presented in the annual financial statements for the
period of adoption but were outstanding during an earlier
period. The literature impacts the Company’s zero-coupon sub-
ordinated notes, and requires that additional interest expense
essentially equivalent to the portion of issuance proceeds retro-
actively allocated to the instrument’s equity component be rec-
ognized over the period from the zero-coupon subordinated
notes’ issuance in 2001 through September 2004 (the first date
holders of these notes had the ability to put them back to the
Company). As anticipated, the adoption of this authoritative
guidance and its retrospective application did not have an
impact on results of operations for periods following 2004, but it
did result in an increase of $215.4 in opening additional paid-in
capital and a corresponding decrease in opening retained earn-
ings as of January 1, 2007, net of deferred tax impacts, on
post-2004 consolidated balance sheets.
In December 2008, the FASB issued authoritative guidance
in connection with employers’ disclosures about postretirement
benefit plan assets. The objectives of the disclosures about
plan assets in an employers’ defined benefit pension or other
postretirement plan are to provide users of financial statements
with an understanding of: (1) how investment allocation decisions
are made, including the factors that are pertinent to an under-
standing of investment policies and strategies, (2) the major
categories of plan assets, (3) the inputs and valuation techniques
used to measure the fair value of plan assets, (4) the effect of
fair value measurements using significant unobservable
inputs (Level 3) on changes in plan assets for the period, and
(5) significant concentrations of risk within plan assets. The
guidance is effective for years ending after December 15, 2009.
Upon initial application, the provisions of the literature are not
required for earlier periods that are presented for comparative
periods. The Company is providing the additional disclosures
in accordance with the authoritative guidance (see Note 16 to
the notes to consolidated financial statements).
In April 2009, the FASB issued authoritative guidance in
connection with determining fair value when the volume and
level of activity for an asset or liability have significantly decreased
and identifying transactions that are not orderly. The literature
provides authoritative guidance in determining whether a market
is active or inactive, and whether a transaction is distressed. The
guidance is applicable to all assets and liabilities (i.e. financial
and nonfinancial) and requires enhanced disclosures, including
interim and annual disclosure of the input and valuation tech-
niques (or changes in techniques) used to measure fair value
and the defining of the major security types comprising debt
and equity securities held based upon the nature and risk of the
security. The literature is effective for interim and annual periods
ending after June 15, 2009. The adoption of the authoritative
guidance did not have a material impact on the Company’s
consolidated financial statements and related disclosures in
the notes thereto.
In May 2009, the FASB issued authoritative guidance related
to the accounting for and disclosure of subsequent events,
which is effective for interim and annual periods ending after
June 15, 2009. This new guidance establishes general standards
of accounting for and disclosure of events that occur after the
balance sheet date but before financial statements are issued
or are available to be issued. This guidance introduces new
terminology but is based on the same principles that previously
existed in the auditing standards. Under this new guidance, the
Company is required to provide disclosure of the date through
which it has evaluated subsequent events and whether that
date represents the date the financial statements were issued
or the date the financial statements were available to be issued.
For the financial statements related to the years ended Decem-
ber 31, 2009, 2008 and 2007 contained herein, the Company
has evaluated subsequent events through February 24, 2010
representing the date these financial statements were issued.
In June 2009, the FASB issued authoritative guidance in
connection with adding qualified special purpose entities into
the scope of guidance for consolidation of variable interest entities.