LabCorp 2011 Annual Report Download - page 40

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respectively. During the years ended December 31, 2011,
2010 and 2009, the Company recognized $3.5, $4.5 and
$5.4, respectively, in interest and penalties expense, which
was offset by a benefit of $4.9, $5.4 and $4.9, respectively.
The following table shows a reconciliation of the unrecog-
nized income tax benefits from uncertain tax positions for the
years ended December 31, 2011, 2010 and 2009:
2011 2010 2009
Balance as of January 1 $ 53.6 $ 59.0 $ 72.5
Increase in reserve for tax positions
taken in the current year 8.6 9.1 10.9
Increase (decrease) in reserve for
tax positions taken in a prior period – (0.6) (4.2)
Decrease in reserve as a result of
settlements reached with tax authorities (0.2) (1.3) (15.7)
Decrease in reserve as a result of lapses
in the statute of limitations (9.3) (12.6) (4.5)
Balance as of December 31 $ 52.7 $ 53.6 $ 59.0
As of December 31, 2011 and 2010, $53.3 and $54.6,
respectively, is the approximate amount of unrecognized
income tax benefits that, if recognized, would favorably affect
the effective income tax rate in any future periods.
The Company has substantially concluded all U.S. federal
income tax matters for years through 2007. Substantially all
material state and local, and foreign income tax matters have
been concluded through 2006 and 2001, respectively.
The Company has various state income tax examinations
ongoing throughout the year. Canada Revenue Agency is
conducting an audit of the 2009 and 2010 Canadian income
tax return. The Company believes adequate provisions have
been recorded related to all open tax years.
The Company provided for taxes on substantially all
undistributed earnings of foreign subsidiaries.
14. Stock Compensation Plans
Stock Incentive Plans
There are currently 23.8 shares authorized for issuance under
the 2008 Stock Incentive Plan and the 2000 Stock Incentive
Plan. Each of these plans was approved by shareholders. At
December 31, 2011, there were 1.7 additional shares available
for grant under the Company’s stock option plans.
Stock Options
The following table summarizes grants of non-qualified
options made by the Company to officers, key employees,
and non-employee directors under all plans. Stock options
are generally granted at an exercise price equal to or greater
than the fair market price per share on the date of grant. Also,
for each grant, options vest ratably over a period of three years
on the anniversaries of the grant date, subject to their earlier
expiration or termination.
Weighted- Weighted-
Average Average
Exercise Remaining Aggregate
Number of Price Contractual Intrinsic
Options per Option Term Value
Outstanding at December 31, 2010 6.6 $ 67.84
Granted 1.5 90.86
Exercised (1.6) 65.67
Cancelled (0.2) 77.06
Outstanding at December 31, 2011 6.3 $ 73.66 7.2 $ 84.9
Vested and expected to vest
at December 31, 2011 6.2 $ 73.52 7.2 $ 84.5
Exercisable at December 31, 2011 3.2 $ 69.44 6.0 $ 53.1
The aggregate intrinsic value in the table above represents
the total pre-tax intrinsic value (the difference between the
Company’s closing stock price on the last trading day of 2011
and the exercise price, multiplied by the number of in-the-
money options) that would have been received by the option
holders had all option holders exercised their options on
December 31, 2011. The amount of intrinsic value will change
based on the fair market value of the Company’s stock.
Cash received by the Company from option exercises, the
actual tax benefit realized for the tax deductions and the aggre-
gate intrinsic value of options exercised from option exercises
under all share-based payment arrangements during the years
ended December 31, 2011, 2010, and 2009 were as follows:
2011 2010 2009
Cash received by the Company $ 106.1 $ 73.7 $ 14.3
Tax benefits realized $ 17.8 $ 13.2 $ 2.7
Aggregate intrinsic value $ 45.5 $ 33.4 $ 7.0
LABORATORY CORPORATION OF AMERICA
Notes to Consolidated Financial Statements