STOCKHOLDERS’ EQUITY AND REDEEMABLE NONCONTROLLING INTEREST

12 Months Ended

Dec. 31, 2020

STOCKHOLDERS’ EQUITY AND REDEEMABLE NONCONTROLLING INTEREST

Stockholders' Equity

Series Preferred Stock

Quest Diagnostics is authorized to issue up to 10 million shares of Series Preferred Stock, par value $1.00 per share. The Company's Board of Directors has the authority to issue such shares without stockholder approval and to determine the designations, preferences, rights and restrictions of such shares. No shares are currently outstanding.

Common Stock

Under the Company's Restated Certificate of Incorporation the number of authorized shares of common stock, par value $0.01 per share, is 600 million shares.

Changes in Accumulated Other Comprehensive Loss by Component

Comprehensive income (loss) includes:

•Foreign currency translation adjustments;

•Net changes in available-for-sale debt securities, which represent unrealized holding gains (losses), net of tax, on available-for-sale debt securities; and

•Net deferred gains (losses) on cash flow hedges, which represent deferred gains (losses), net of tax, on interest rate-related derivative financial instruments designated as cash flow hedges, net of amounts reclassified to interest expense (see Note 15).

For the years ended December 31, 2020, 2019, and 2018, the tax effects related to the deferred gains (losses) on cash flow hedges and net changes in available-for-sale debt securities were not material. Foreign currency translation adjustments related to indefinite investments in non-U.S. subsidiaries are not adjusted for income taxes.

The changes in accumulated other comprehensive loss by component for 2020, 2019 and 2018 were as follows:


	Foreign Currency Translation Adjustments		Net Changes in Available-for-Sale Debt Securities		Net Deferred Losses on Cash Flow Hedges, net of tax		Other		Accumulated Other Comprehensive Loss

Balance, December 31, 2017	$	(38)	$	—	$	(9)	$	(1)	$	(48)
Other comprehensive loss before reclassifications	(15)		—		—		—		(15)
Amounts reclassified from accumulated other comprehensive loss	4		—		2		—		6
Net current period other comprehensive (loss) income	(11)		—		2		—		(9)
Reclassification of stranded tax effects resulting from enactment of the Tax Cuts and Jobs Act	—		—		(2)		—		(2)
Balance, December 31, 2018	(49)		—		(9)		(1)		(59)
Other comprehensive income before reclassifications	7		8		3		—		18
Amounts reclassified from accumulated other comprehensive loss	—		—		2		—		2
Net current period other comprehensive income	7		8		5		—		20

Balance, December 31, 2019	(42)		8		(4)		(1)		(39)
Other comprehensive income before reclassifications	12		—		1		—		13
Amounts reclassified from accumulated other comprehensive loss	3		—		2		—		5
Net current period other comprehensive income	15		—		3		—		18

Balance, December 31, 2020	$	(27)	$	8	$	(1)	$	(1)	$	(21)

For the years ended December 31, 2020, 2019 and 2018, the gross deferred losses on cash flow hedges were reclassified from accumulated other comprehensive loss to interest expense, net.

For the years ended December 31, 2020 and 2018, foreign currency translation adjustment amounts were reclassified from accumulated other comprehensive loss to other operating expense (income), net as a result of the sale of foreign subsidiaries.

Dividend Program

During each of the four quarters of 2020, the Company's Board of Directors declared a quarterly cash dividend of $0.56 per common share. During each of the four quarters of 2019, the Company's Board of Directors declared a quarterly cash dividend of $0.53 per common share. During each of the first three quarters of 2018, the Company's Board of Directors declared a quarterly cash dividend of $0.50 per common share. During the fourth quarter of 2018, the Company's Board of Directors declared a quarterly cash dividend of $0.53 per common share. On February 4, 2021, the Company announced that its Board of Directors authorized a 10.7% increase in its quarterly cash dividend from $0.56 to $0.62 per share, or $2.48 per share annually, commencing with the dividend payable in April 2021.

Share Repurchase Program

As of December 31, 2020, $0.9 billion remained available under the Company’s share repurchase authorization. In February 2021, the Company's Board of Directors authorized the Company to repurchase an additional $1 billion of the Company's common stock. The share repurchase authorization has no set expiration or termination date.

Share Repurchases

For the year ended December 31, 2020, the Company repurchased 2.7 million shares of its common stock for $325 million.

For the year ended December 31, 2019, the Company repurchased 3.5 million shares of its common stock for $350 million.

For the year ended December 31, 2018, the Company repurchased 3.4 million shares of its common stock for $325 million, which included an accrual of $3 million recorded in accounts payable and accrued expenses in the consolidated balance sheet for share repurchases not settled until after December 31, 2018.

Shares Reissued from Treasury Stock

For the years ended December 31, 2020, 2019 and 2018 the Company reissued 3 million shares, 2 million shares and 3 million shares, respectively, from treasury stock for shares issued under the Employee Stock Purchase Plan ("ESPP") and stock option plans.

Redeemable Noncontrolling Interest

In connection with the sale of an 18.9% noncontrolling interest in a subsidiary to UMass on July 1, 2015, the Company granted UMass the right to require the Company to purchase all of its interest in the subsidiary at fair value commencing July 1, 2020. The subsidiary performs diagnostic information services in a defined territory within the state of Massachusetts. Since the redemption of the noncontrolling interest is outside of the Company's control, it has been presented outside of stockholders' equity at the greater of its carrying amount or its fair value. The Company records changes in the fair value of the noncontrolling interest immediately as they occur. As of December 31, 2020 and 2019, the redeemable noncontrolling interest was $82 million and $76 million, respectively, and was presented at its fair value.