LabCorp 2015 Annual Report Download - page 109

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Index



through 2035. The utilization of the tax loss carryovers is limited due to change of ownership rules. However, at this time the Company expects to fully
utilize substantially all U.S. tax loss carryovers with the exception of approximately $3.9 for which a full valuation allowance has been provided. In addition
to the net operating losses, the Company has a foreign capital loss carryover of $6.8. The loss has an indefinite life and has a full valuation allowance.
The unrecognized income tax benefits were $24.2 and $16.7 at December 31, 2015 and 2014, respectively. The increase in the reserve is primarily due to
the beginning balances carried over in the Acquisition. It is anticipated that the amount of the unrecognized income tax benefits will change within the next
twelve months; however, these changes are not expected to have a significant impact on the results of operations, cash flows or the financial position of the
Company.
The Company recognizes interest and penalties related to unrecognized income tax benefits in income tax expense. Accrued interest and penalties related
to uncertain tax positions totaled $12.7 and $8.2 as of December 31, 2015 and 2014, respectively. During the years ended December 31, 2015, 2014 and
2013, the Company recognized $1.8, $2.2 and $2.4, respectively, in interest and penalties expense, which was offset by a benefit of $2.2, $3.3 and $2.9,
respectively.
The following table shows a reconciliation of the unrecognized income tax benefits from uncertain tax positions for the years ended December 31, 2015,
2014 and 2013:
2015
2014
2013
Balance as of January 1 $ 16.7
$ 25.6
$ 36.4
Increase in reserve for tax positions taken in the current year 4.1
—
1.9
Increase in reserve as a result of acquisition 8.5
—
—
Decrease in reserve as a result of settlements reached with tax authorities —
—
(4.4)
Decrease in reserve as a result of lapses in the statute of limitations (5.1)
(8.9)
(8.3)
Balance as of December 31 $ 24.2
$ 16.7
$ 25.6
As of December 31, 2015 and 2014, $24.2 and $16.7, 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 2011. Substantially all material state and local, and
foreign income tax matters have been concluded through 2010 and 2004, respectively.
The Internal Revenue Service concluded the examination of the Company's 2010 and 2011 income tax returns during 2013. The Company was notified
during the first quarter of 2016 that the 2014 income tax return is under examination. Canada Revenue Agency concluded its examination of 2009 and 2010
Canadian income tax returns during 2015. The Company has various state income tax examinations ongoing throughout the year. The Company believes
adequate provisions have been recorded related to all open tax years.
The Company changed its method for accounting for foreign earnings at the beginning of 2015 as a result of the Acquisition. Prior to the Acquisition, the
Company provided tax for substantially all of the foreign earnings. Other than certain amounts associated with the Acquisition, the Company considers its
foreign earnings are now permanently invested outside of the U.S. The Company intends to leave its future generated unremitted foreign earnings invested
indefinitely outside the U.S. given its expanded global profile. It is not practical to estimate the amount of additional tax that could be payable if
accumulated earnings were remitted. Total unremitted foreign earnings for which income tax has not been provided is approximately $662.0 as of
December 31, 2015.


There are currently 10.2 shares authorized for issuance under the Laboratory Corporation of America Holdings 2012 Omnibus Incentive Plan and at
December 31, 2015 there were 5.3 additional shares available for grant under the Plan. This Plan was approved by shareholders at the 2012 annual meeting.
An additional 1.2 authorized shares were acquired with the Acquisition under the Covance 2014 Employee Equity Participation Plan and were utilized for
the 2015 grant.
F-29