Quest Diagnostics 2006 Annual Report Download - page 108

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10. DEBT
Short-term borrowings and current portion of long-term debt at December 31, 2006 and 2005 consisted of
the following:
2006 2005
Borrowings under Secured Receivables Credit Facility .......................... $300,000 $ 60,000
Senior Notes due July 2006 ................................................... - 274,844
Current portion of long-term debt.............................................. 16,874 1,995
Total short-term borrowings and current portion of long-term debt . . . ......... $316,874 $336,839
Long-term debt at December 31, 2006 and 2005 consisted of the following:
2006 2005
Industrial Revenue Bonds due September 2009.............................. $ 5,376 $ 7,200
Term loan due December 2008............................................. 75,000 75,000
Senior Notes due November 2010 . . ........................................ 399,423 399,273
Senior Notes due July 2011 ................................................ 274,503 274,392
Senior Notes due November 2015 . . ........................................ 498,587 498,427
Debentures due June 2034 ................................................. 2,957 2,858
Other . . ................................................................... 133 231
Total ................................................................... 1,255,979 1,257,381
Less: current portion....................................................... 16,874 1,995
Total long-term debt . . . ................................................. $1,239,105 $1,255,386
2004 Debt Refinancings
On April 20, 2004, the Company entered into a $500 million senior unsecured revolving credit facility (the
“Credit Facility”) which replaced a $325 million unsecured revolving credit facility. Under the Credit Facility,
which matures in April 2009, interest is based on certain published rates plus an applicable margin that will vary
over an approximate range of 90 basis points based on changes in the Company’s public debt rating. At the
option of the Company, it may elect to enter into LIBOR-based interest rate contracts for periods up to 180 days.
Interest on any outstanding amounts not covered under the LIBOR-based interest rate contracts is based on an
alternate base rate, which is calculated by reference to the prime rate or federal funds rate. As of December 31,
2006 and 2005, the Company’s borrowing rate for LIBOR-based loans was LIBOR plus 0.50%. The Credit
Facility is guaranteed by the Company’s wholly owned subsidiaries that operate clinical laboratories in the United
States (the “Subsidiary Guarantors”). The Credit Facility contains various covenants, including the maintenance of
certain financial ratios, which could impact the Company’s ability to, among other things, incur additional
indebtedness. At both December 31, 2006 and 2005, there are no borrowings outstanding under the Credit
Facility.
In addition, on April 20, 2004, the Company entered into a new $300 million receivables securitization
facility (the “Secured Receivables Credit Facility”) which replaced a $250 million receivables securitization
facility that matured in April 2004. The Secured Receivables Credit Facility matures in July 2007. Interest on the
Secured Receivables Credit Facility is based on rates that are intended to approximate commercial paper rates for
highly rated issuers. At December 31, 2006 and 2005, the Company’s borrowing rate under the Secured
Receivables Credit Facility was 5.6% and 4.7%, respectively. The Secured Receivables Credit Facility is
supported by one-year back-up facilities provided by two banks on a committed basis. Borrowings outstanding
under the Secured Receivables Credit Facility, if any, are classified as a current liability on the Company’s
consolidated balance sheets due to the term of the one-year back-up facilities described above.
In conjunction with the debt refinancings, the Company recorded a $2.9 million charge to earnings in the
second quarter of 2004 representing the write-off of deferred financing costs associated with the debt that was
refinanced. The $2.9 million charge was included in interest expense, net within the consolidated statements of
operations for the year ended December 31, 2004.
F-21
QUEST DIAGNOSTICS INCORPORATED AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
(dollars in thousands unless otherwise indicated)