Quest Diagnostics 2005 Annual Report Download - page 102

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QUEST DIAGNOSTICS INCORPORATED AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
(dollars in thousands unless otherwise indicated)
Accumulated Other Comprehensive (Loss) Income
The components of accumulated other comprehensive (loss) income for 2005, 2004 and 2003 were as
follows:
Foreign Accumulated
Currency Market Other
Translation Value Deferred Comprehensive
Adjustment Adjustment Gain Income (Loss)
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
Translation adjustment .................... 1,650 - - 1,650
Market value adjustment, net of tax benefit
of $2,515 .............................. - (3,731) - (3,731)
Balance, December 31, 2004 .............. 1,339 2,527 - 3,866
Translation adjustment .................... (3,287) - - (3,287)
Market value adjustment, net of tax benefit
of $6,057 .............................. - (9,238) - (9,238)
Deferred gain, less reclassifications ........ - - 2,454 2,454
Balance, December 31, 2005 .............. $(1,948) $(6,711) $2,454 $(6,205)
The market value adjustments for 2005, 2004 and 2003 represented unrealized holding gains (losses), net of
taxes. The deferred gain for 2005 represented the $2.5 million the Company received upon the settlement of its
Treasury Lock Agreements, net of amounts reclassified as a reduction to interest expense (see Note 10).
Dividend Policy
On October 21, 2003, the Company’s Board of Directors declared its first payment of a quarterly cash
dividend of $0.075 per common share. During each of the quarters of 2005 and 2004, the Company’s Board of
Directors has declared a quarterly cash dividend of $0.09 and $0.075 per common share, respectively. On
January 26, 2006, the Company’s Board of Directors increased the quarterly cash dividend per common share to
$0.10.
Share Repurchase Plan
In 2003, the Company’s Board of Directors authorized a share repurchase program, which permitted the
Company to purchase up to $600 million of its common stock. In July 2004 and January 2005, the Company’s
Board of Directors authorized the Company to purchase up to an additional $300 million and $350 million,
respectively, of its common stock. Under a separate authorization from the Board of Directors, in December
2004 the Company repurchased 5.4 million shares of its common stock for approximately $254 million from
GlaxoSmithKline plc. For the year ended December 31, 2005, the Company repurchased approximately 7.8
million shares of its common stock at an average price of $49.98 per share for $390 million. For the year
ended December 31, 2005, the Company reissued approximately 5.6 million shares and 4.3 million shares,
respectively, in connection with the conversion of it’s Debentures and for employee benefit plans. At
December 31, 2005, $122 million of the share repurchase authorization remained available. In January 2006, the
Company’s Board of Directors expanded the share repurchase authorization by an additional $600 million,
bringing the total amount authorized and available for repurchases to $722 million.
12. STOCK OWNERSHIP AND COMPENSATION PLANS
Employee and Non-employee Directors Stock Ownership Programs
In 2005, the Company established the Amended and Restated Employee Long-Term Incentive Plan (the
“ELTIP’’) to replace the Company’s prior Employee Equity Participation Programs established in 1999 (the
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