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

On May 4, 2006, the Company's Restated Certificate of Incorporation was amended to increase the number of authorized shares of common stock, par value $0.01 per share, from 300 million shares to 600 million shares.

Changes in Accumulated Other Comprehensive Income (Loss) by Component

Comprehensive income (loss) includes:


•	Foreign currency translation adjustments;


•	Net deferred loss on cash flow hedges, which represents deferred 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).

Prior to adoption of the new accounting guidance on recognition and measurement of financial assets and liabilities, comprehensive income (loss) also included investment adjustments, which represented unrealized holding gains (losses), net of tax on available for sale securities, net of other-than-temporary impairment amounts reclassified to other (expense) income, net. Refer to Note 2 for details regarding the adoption of the new accounting standard related to the recognition and measurement of financial assets and liabilities.

For the years ended December 31, 2018, 2017 and 2016, the tax effects related to investment adjustments, deferred losses on cash flow hedges and other 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 income (loss) by component for 2018, 2017 and 2016 were as follows:



	Foreign Currency Translation Adjustment			Investment Adjustments			Net Deferred Loss on Cash Flow Hedges			Other			Accumulated Other Comprehensive Income (Loss)

Balance, December 31, 2015	$	(24	)	$	(1	)	$	(12	)	$	(1	)	$	(38	)
Other comprehensive loss before reclassifications	(34		)	(2		)	—			—			(36		)
Amounts reclassified from accumulated other comprehensive loss	—			—			2			—			2
Net current period other comprehensive (loss) income	(34		)	(2		)	2			—			(34		)
Balance, December 31, 2016	(58		)	(3		)	(10		)	(1		)	(72		)
Other comprehensive income before reclassifications	20			—			—			—			20
Amounts reclassified from accumulated other comprehensive loss	—			3			1			—			4
Net current period other comprehensive income	20			3			1			—			24
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	(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	)

For the years ended December 31, 2018, 2017 and 2016, the gross deferred losses on cash flow hedges were reclassified from accumulated other comprehensive loss to interest expense, net.

For the year ended December 31, 2018, foreign currency translation adjustment amounts were reclassified from accumulated other comprehensive loss to loss (gain) on disposition of business as a result of the sale of a foreign subsidiary.

For the year ended December 31, 2017, the other-than-temporary impairment amount included in investment adjustments were reclassified from accumulated other comprehensive loss to other (expense) income, net.

Dividend Program

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. During each of the four quarters of 2017 and during the fourth quarter of 2016, the Company's Board of Directors declared a quarterly cash dividend of $0.45 per common share. During each of the first three quarters of 2016, the Company's Board of Directors declared a quarterly cash dividend of $0.40 per common share.

Share Repurchase Program

In December 2016, the Company’s Board of Directors authorized the Company to repurchase an additional $1 billion of the Company's common stock.

As of December 31, 2018, $592 million remained available under the Company’s share repurchase authorization. The share repurchase authorization has no set expiration or termination date.

Share Repurchases

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

For the year ended December 31, 2017, the Company repurchased 4.6 million shares of its common stock for $465 million.

For the year ended December 31, 2016, the Company repurchased 7.4 million shares of its common stock for $590 million, which included 3.1 million shares repurchased under an accelerated share repurchase agreement ("ASR") as follows:

In May 2016, the Company entered into an ASR with a financial institution to repurchase $250 million of the Company's common stock as part of the Company's share repurchase program. The ASR was structured as a combination of two transactions: (1) a treasury stock repurchase; and (2) a forward contract, which permitted the Company to purchase shares immediately with the final purchase price of those shares determined by the volume weighted average price of the Company's common stock during the repurchase period, less a fixed discount. Under the ASR, the Company paid $250 million to the financial institution and received 3.1 million shares of common stock, resulting in a final price per share of $81.04. The Company initially received 2.8 million shares of its common stock during the second quarter of 2016 and received an additional 0.3 million shares upon completion of the ASR during the third quarter of 2016.

Shares Reissued from Treasury Stock

For the years ended December 31, 2018, 2017 and 2016 the Company reissued 3 million shares, 2 million shares and 2 million shares, respectively, from treasury stock for shares issued under the ESPP and stock option plans.

Redeemable Noncontrolling Interest

In connection with the sale of an 18.9% noncontrolling interest in a subsidiary to UMass Memorial Medical Center ("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, 2018 and 2017, the redeemable noncontrolling interest was $77 million and $80 million, respectively, and was presented at its fair value. The fair value measurement of the redeemable noncontrolling interest is classified within Level 3 of the fair value hierarchy because the fair value is based on a discounted cash flow analysis that takes into account, among other items, the Company's expected future cash flows, long term growth rates, and a discount rate commensurate with economic risk.