Quest Diagnostics 2006 Annual Report Download - page 121

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Company and certain of its Subsidiary Guarantors transfer all private domestic receivables to QDRI. QDRI
utilizes the transferred receivables to collateralize borrowings under the Company’s Secured Receivables Credit
Facility. The Company and the Subsidiary Guarantors provide collection services to QDRI. QDRI uses cash
collections principally to purchase new receivables from the Company and the Subsidiary Guarantors.
The following condensed consolidating financial data illustrates the composition of the combined guarantors.
Investments in subsidiaries are accounted for by the parent using the equity method for purposes of the
supplemental consolidating presentation. Earnings (losses) of subsidiaries are therefore reflected in the parent’s
investment accounts and earnings. The principal elimination entries relate to investments in subsidiaries and
intercompany balances and transactions. LabOne and Focus have been included in the accompanying condensed
consolidating financial data, subsequent to the closing of the acquisitions, as Subsidiary Guarantors.
F-34
QUEST DIAGNOSTICS INCORPORATED AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
(dollars in thousands unless otherwise indicated)