LabCorp 2014 Annual Report Download - page 89

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F-10
The following represents a reconciliation of basic earnings per share to diluted earnings per share:
2014 2013 2012
Income Shares
Per
Share
Amount Income Shares
Per
Share
Amount Income Shares
Per
Share
Amount
Basic earnings per share $ 511.2 84.8 $ 6.03 $ 573.8 90.2 $ 6.36 $ 583.1 95.7 $ 6.09
Stock options — 1.1 — 1.1 — 0.8
Restricted stock awards and other — — — — — 0.3
Effect of convertible debt, net of tax — 0.5 — 0.5 — 0.6
Diluted earnings per share $ 511.2 86.4 $ 5.91 $ 573.8 91.8 $ 6.25 $ 583.1 97.4 $ 5.99
The following table summarizes the potential common shares not included in the computation of diluted earnings per share
because their impact would have been antidilutive:
Years Ended December 31,
2014 2013 2012
Stock options — 0.1 2.4
Stock Compensation Plans
The Company measures stock compensation cost for all equity awards at fair value on the date of grant and recognizes
compensation expense over the service period for awards expected to vest. The fair value of restricted stock units and performance
share awards is determined based on the number of shares granted and the quoted price of the Company’s common stock on the
grant date. Such value is recognized as expense over the service period, net of estimated forfeitures. The estimation of equity
awards that will ultimately vest requires judgment and the Company considers many factors when estimating expected forfeitures,
including types of awards, employee class, and historical experience. The cumulative effect on current and prior periods of a
change in the estimated forfeiture rate is recognized as compensation expense in earnings in the period of the revision. Actual
results and future estimates may differ substantially from the Company’s current estimates.
See Note 14 for assumptions used in calculating compensation expense for the Company’s stock compensation plans.
Cash Equivalents
Cash and cash equivalents consist of highly liquid instruments, such as commercial paper, time deposits, and other money
market instruments, which have original maturities of three months or less.
Inventories
Inventories, consisting primarily of purchased laboratory and client 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 the
straight-line method.
LABORATORY CORPORATION OF AMERICA HOLDINGS AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Dollars and shares in millions, except per share data)