Quest Diagnostics 2003 Annual Report Download - page 95

QUEST DIAGNOSTICS INCORPORATED AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—CONTINUED
(dollars in thousands unless otherwise indicated)
Accumulated Other Comprehensive Income (Loss)
The components of accumulated other comprehensive income (loss) for 2003, 2002 and 2001 were as
follows:
Foreign Accumulated
Currency Market Other
Translation Value Comprehensive
Adjustment Adjustment Income (Loss)
Balance, December 31, 2000 ............................. $(3,208) $(2,250) $(5,458)
Translation adjustment ................................... (1,178) - (1,178)
Market value adjustment, net of tax expense of $2,093 .... - 3,166 3,166
Balance, December 31, 2001 ............................. (4,386) 916 (3,470)
Translation adjustment ................................... 1,906 - 1,906
Market value adjustment, net of tax benefit of $2,627 ..... - (3,960) (3,960)
Balance, December 31, 2002 ............................. (2,480) (3,044) (5,524)
Translation adjustment ................................... 2,169 - 2,169
Market value adjustment, net of tax expense of $6,201 .... - 9,302 9,302
Balance, December 31, 2003 ............................. $ (311) $ 6,258 $ 5,947
The market value adjustments for 2003, 2002 and 2001 represented unrealized holding gains (losses), net of
taxes.
For the year ended December 31, 2001, other comprehensive income included the cumulative effect of the
change in accounting for derivative financial instruments upon adoption of SFAS 133, as amended, which
reduced comprehensive income by approximately $1 million. In addition, in conjunction with the Company’s
debt refinancing, the interest rate swap agreements were terminated and the losses reflected in stockholders’
equity as a component of comprehensive income were reclassified to earnings and reflected within the loss on
debt extinguishment in the consolidated statements of operations for the year ended December 31, 2001 (see
Note 7).
Dividend Policy
Through October 20, 2003, the Company never declared or paid cash dividends on its common stock. On
October 21, 2003, the Company’s Board of Directors declared a quarterly cash dividend of $0.15 per common
share. The initial $15.4 million quarterly dividend was paid on January 23, 2004 to shareholders of record on
January 8, 2004.
Share Repurchase Plan
In May 2003, the Company’s Board of Directors authorized a share repurchase program, which permits the
Company to purchase up to $300 million of its common stock. In October 2003, the Board of Directors
increased the share repurchase authorization by an additional $300 million. Through December 31, 2003, the
Company has repurchased 4.0 million shares of its common stock at an average price of $64.54 per share for a
total of $258 million under the program.
13. STOCK OWNERSHIP AND COMPENSATION PLANS
Employee and Non-employee Directors Stock Ownership Programs
In 1999, the Company established the 1999 Employee Equity Participation Program (the “1999 EEPP’’) to
replace the Company’s prior plan established in 1996 (the “1996 EEPP’’). The 1999 EEPP provides for three
types of awards: (a) stock options, (b) stock appreciation rights and (c) incentive stock awards. The 1999 EEPP
provides for the grant to eligible employees of either non-qualified or incentive stock options, or both, to
purchase shares of Quest Diagnostics common stock at no less than the fair market value on the date of grant.
The stock options are subject to forfeiture if employment terminates prior to the end of the prescribed vesting
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