Quest Diagnostics 2000 Annual Report Download - page 96

QUEST DIAGNOSTICS INCORPORATED AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(dollars in thousands unless otherwise indicated)
F-26
Significant transactions with SmithKline Beecham during 2000 and 1999 included (in addition to the acquisition
of SBCL during 1999):
2000 1999
Clinical trials testing revenues............................................ $ 31,334 $ 10,261
Revenues under Data Access Agreements ......................... 650 -
Purchases, primarily related to services rendered by
SmithKline Beecham under the Transitional Services
Agreement........................................................................ 15,901 4,577
In addition, under the SBCL acquisition agreements, SmithKline Beecham has agreed to indemnify Quest
Diagnostics, on an after tax basis, against certain matters primarily related to taxes and billing and professional liability
claims (see Note 17).
At December 31, 2000 and 1999, net amounts due from SmithKline Beecham totaled $58.6 million and $46.0
million, respectively; $44.5 million and $18.0 million, respectively, was classified in prepaid expenses and other current
assets at December 31, 2000 and 1999; and $14.1 million and $28.0 million, respectively, was classified in other assets at
December 31, 2000 and 1999.
At December 31, 2000 and 1999, the amount due from Corning, classified in prepaid expenses and other current
assets, was $8.1 million and $14.0 million, respectively. The receivable from Corning was decreased in 2000, 1999 and
1998 by $5.9 million, $2.0 million, and $0.7 million, respectively, through an adjustment to additional paid-in capital,
based on management's best estimate of amounts which are probable of being received from Corning to satisfy the
remaining indemnified government claims. In January 2001, the Company received $8.1 million from Corning related to
certain indemnified government claims settled in December 2000 (see Note 17).
17. COMMITMENTS AND CONTINGENCIES
Minimum rental commitments under noncancelable operating leases, primarily real estate, in effect at
December 31, 2000 are as follows:
Year ending December 31,
2001..................................................................................................... $ 70,821
2002..................................................................................................... 56,742
2003..................................................................................................... 42,902
2004..................................................................................................... 30,103
2005..................................................................................................... 23,745
2006 and thereafter.............................................................................. 58,672
Minimum lease payments ................................................................... 282,985
Noncancelable sub-lease income........................................................ (36,254)
Net minimum lease payments............................................................. $ 246,731
Operating lease rental expense for 2000, 1999 and 1998 aggregated $76.5 million, $59.1 million, and $46.3
million, respectively.
The Company is substantially self-insured for all casualty losses and maintains excess coverage primarily on a
claims made basis. The basis for insurance reserves at December 31, 2000 and 1999 is the actuarially determined
projected losses for each program (limited by its self-insured retention) based upon the Company's loss experience.
The Company has entered into several settlement agreements with various governmental and private payers
during recent years relating to industry-wide billing and marketing practices that had been substantially discontinued by
early 1993. In addition, the Company is aware of several pending lawsuits filed under the qui tam provisions of the civil