Quest Diagnostics 2005 Annual Report Download - page 75

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Requirements and Capital Resources
We estimate that we will invest approximately $225 million to $245 million during 2006 for capital
expenditures to support and expand our existing operations, principally related to investments in information
technology, equipment, and facility upgrades.
We believe that cash from operations and our borrowing capacity under our credit facilities will provide
sufficient financial flexibility to meet seasonal working capital requirements and to fund capital expenditures,
debt service requirements, cash dividends on common shares, share repurchases and additional growth
opportunities for the foreseeable future. Our investment grade credit ratings have had a favorable impact on our
cost of and access to capital, and we believe that our improved financial performance should provide us with
access to additional financing, if necessary, to fund growth opportunities that cannot be funded from existing
sources.
Outlook
As discussed in the Overview, we believe that the underlying fundamentals of the diagnostic testing
industry will continue to improve and that over the long term the industry will continue to grow. As the leading
provider of diagnostic testing, information and services with the most extensive network of laboratories and
patient service centers throughout the United States, we believe we are well positioned to benefit from the
growth expected in our industry.
We believe our focus on Six Sigma quality and the investments we are continuing to make in sales,
service, science and information technology will further differentiate us and strengthen our industry leadership
position. In addition, we plan to pursue selective acquisitions of regional and local laboratory testing providers.
We also expect to pursue opportunities to expand into other areas of diagnostics and other markets outside the
United States.
Our strong cash generation, balance sheet and credit profile position us well to take advantage of growth
opportunities.
Inflation
We believe that inflation generally does not have a material adverse effect on our results of operations or
financial condition because the majority of our contracts are short term.
Impact of New Accounting Standards
In December 2004, the Financial Accounting Standards Board issued Statement of Financial Accounting
Standards (“SFAS’’) No. 123, revised 2004, “Share-Based Payment’’ and in May 2005, issued SFAS No. 154,
“Accounting Changes and Error Corrections’’. The impact of these accounting standards is discussed in Note 2
to the Consolidated Financial Statements.
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