Quest Diagnostics 2005 Annual Report Download - page 61

Download and view the complete annual report

Please find page 61 of the 2005 Quest Diagnostics annual report below. You can navigate through the pages in the report by either clicking on the pages listed below, or by using the keyword search tool below to find specific information within the annual report.

Page out of 118

  • 1
  • 2
  • 3
  • 4
  • 5
  • 6
  • 7
  • 8
  • 9
  • 10
  • 11
  • 12
  • 13
  • 14
  • 15
  • 16
  • 17
  • 18
  • 19
  • 20
  • 21
  • 22
  • 23
  • 24
  • 25
  • 26
  • 27
  • 28
  • 29
  • 30
  • 31
  • 32
  • 33
  • 34
  • 35
  • 36
  • 37
  • 38
  • 39
  • 40
  • 41
  • 42
  • 43
  • 44
  • 45
  • 46
  • 47
  • 48
  • 49
  • 50
  • 51
  • 52
  • 53
  • 54
  • 55
  • 56
  • 57
  • 58
  • 59
  • 60
  • 61
  • 62
  • 63
  • 64
  • 65
  • 66
  • 67
  • 68
  • 69
  • 70
  • 71
  • 72
  • 73
  • 74
  • 75
  • 76
  • 77
  • 78
  • 79
  • 80
  • 81
  • 82
  • 83
  • 84
  • 85
  • 86
  • 87
  • 88
  • 89
  • 90
  • 91
  • 92
  • 93
  • 94
  • 95
  • 96
  • 97
  • 98
  • 99
  • 100
  • 101
  • 102
  • 103
  • 104
  • 105
  • 106
  • 107
  • 108
  • 109
  • 110
  • 111
  • 112
  • 113
  • 114
  • 115
  • 116
  • 117
  • 118

(c) On April 1, 2002, we completed the acquisition of American Medical Laboratories, Incorporated, or AML.
Consolidated operating results for 2002 include the results of operations of AML subsequent to the closing of the
acquisition.
(d) In July 2001, the FASB issued SFAS No. 142, “Goodwill and Other Intangible Assets’’, or SFAS 142, which we
adopted on January 1, 2002. The following table presents net income and basic and diluted earnings per common
share data adjusted to exclude the amortization of goodwill, assuming that SFAS 142 had been in effect for the
year ended December 31, 2001 (in thousands, except per share data):
2001
Net income ................................................................................. $162,303
Add back: Amortization of goodwill, net of taxes ............................................... 35,964
Adjusted net income ......................................................................... $198,267
Basic earnings per common share ............................................................. $ 0.87
Amortization of goodwill, net of taxes ......................................................... 0.20
Adjusted basic earnings per common share ..................................................... $ 1.07
Diluted earnings per common share ........................................................... $ 0.83
Amortization of goodwill, net of taxes ......................................................... 0.18
Adjusted diluted earnings per common share ................................................... $ 1.01
(e) During the third quarter of 2005, we recorded a $6.2 million charge primarily related to forgiveness of amounts
owed by patients and physicians, and related property damage as a result of hurricanes in the Gulf Coast. During
the fourth quarter of 2005, we recorded a $16 million charge to write-off certain assets in connection with a
product hold at NID.
(f) During the second quarter of 2004, we recorded a $10.3 million charge associated with the acceleration of certain
pension obligations in connection with the succession of our prior CEO.
(g) In conjunction with our debt refinancing in 2001, we recorded a loss on debt extinguishment of $42 million. The
loss represented the write-off of deferred financing costs of $23 million, associated with the debt which was
refinanced, and $13 million of payments related primarily to the tender premium incurred in connection with our
cash tender offer of our 10
3
⁄
4
% senior subordinated notes due 2006. The remaining $6 million of losses
represented amounts incurred in conjunction with the cancellation of certain interest rate swap agreements which
were terminated in connection with the debt that was refinanced.
(h) During the third quarter of 2005, we recorded a $7.1 million charge associated with the write-down of an
investment.
(i) During the second quarter of 2004, we recorded a $2.9 million charge to interest expense, net representing the
write-off of deferred financing costs associated with the refinancing of our bank debt and credit facility.
(j) Previously reported basic and diluted earnings per share have been restated to give retroactive effect of our two-
for-one stock split effected on June 20, 2005. See Note 2 to the Consolidated Financial Statements.
(k) Potentially dilutive common shares primarily include the dilutive effect of our 1
3
⁄
4
% contingent convertible
debentures issued November 26, 2001, which were redeemed principally through a conversion into common
shares as of January 18, 2005, and outstanding stock options and restricted common shares granted under our
Amended and Restated Employee Long-Term Incentive Plan and our Amended and Restated Director Long-Term
Incentive Plan.
44