Quest Diagnostics 2005 Annual Report Download - page 101

QUEST DIAGNOSTICS INCORPORATED AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
(dollars in thousands unless otherwise indicated)
In December 2004, the Company called for redemption all of its outstanding Debentures. Under the terms
of the Debentures, the holders of the Debentures had an option to submit their Debentures for redemption at
par plus accrued and unpaid interest or convert their Debentures into shares of the Company’s common stock at
a conversion price of $43.75 per share. Through December 31, 2004, $3.2 million of principal of the
Debentures were converted into less than 0.1 million shares of the Company’s common stock. The outstanding
principal of the Debentures at December 31, 2004 was classified as a current liability within short-term
borrowings and current portion of long-term debt on the Company’s consolidated balance sheet. As of January
18, 2005, the redemption was completed and $0.4 million of principal was redeemed for cash and $249.6
million of principal was converted into approximately 5.7 million shares of the Company’s common stock.
Letter of Credit Lines
The Company has two lines of credit with two financial institutions totaling $85 million for the issuance of
letters of credit (the “letter of credit lines’’). The letter of credit lines mature in December 2006 and are
guaranteed by the Subsidiary Guarantors. As of December 31, 2005, there are $69 million of outstanding letters
of credit under the letter of credit lines.
As of December 31, 2005 long-term debt, including capital leases, maturing in each of the years
subsequent to December 31, 2006, is as follows:
Year ending December 31,
2007........................................................................ $ 16,829
2008........................................................................ 61,806
2009........................................................................ 1,800
2010........................................................................ 399,273
2011........................................................................ 274,392
Thereafter ................................................................... 501,286
Total long-term debt ....................................................... $1,255,386
11. PREFERRED STOCK AND COMMON 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. Of the authorized
shares, 1,300,000 shares have been designated Series A Preferred Stock and 1,000 shares have been designated
Voting Cumulative Preferred Stock. No shares are currently outstanding.
Preferred Share Purchase Rights
Each share of Quest Diagnostics common stock trades with a preferred share purchase right, which entitles
stockholders to purchase one-hundredth of a share of Series A Preferred Stock upon the occurrence of certain
events. In conjunction with the SBCL acquisition, the Board of Directors of the Company approved an
amendment to the preferred share purchase rights. The amended rights entitle stockholders to purchase shares of
Series A Preferred Stock at a predefined price in the event a person or group (other than SmithKline Beecham)
acquires 20% or more of the Company’s outstanding common stock. The preferred share purchase rights expire
December 31, 2006.
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