Quest Diagnostics 2006 Annual Report Download - page 84

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Cash Flows from Investing Activities
Net cash used in investing activities in 2006 was $414 million, consisting primarily of $231 million related
to the acquisition of Focus Diagnostics and Enterix, (a privately held test kit manufacturer), and capital
expenditures of $193 million. These amounts were partially offset by $16 million of proceeds from the sale of an
investment. The decrease in capital expenditures compared to the prior year is principally due to the completion
of a new facility in California, for which there were substantial expenditures in the prior year.
Net cash used in investing activities in 2005 was $1.1 billion, consisting primarily of the acquisition of
LabOne and related transaction costs for $795 million, the acquisition of a small regional laboratory for $19
million, equity investments of $38 million in companies, which develop diagnostic tests, and capital expenditures
of $224 million.
Cash Flows from Financing Activities
Net cash used in financing activities in 2006 was $480 million. During 2006, we repaid $275 million
outstanding under our 6
3
⁄
4
% senior notes, $60 million of principal outstanding under our secured receivables
credit facility and $75 million under our senior unsecured revolving credit facility. Debt repayments and
acquisitions were funded with cash on hand and borrowings of $75 million under our senior unsecured revolving
credit facility and $300 million under our secured receivables credit facility. In addition, we purchased $472
million of treasury stock, which represents 8.9 million shares of our common stock purchased at an average price
of $53.23 per share, partially offset by $102 million in proceeds from the exercise of stock options, including
related tax benefits. We also paid dividends of $77 million. At December 31, 2006, we had $300 million
outstanding, and $500 million of available borrowing capacity under our combined credit facilities. Our credit
facilities and the 2005 Senior Notes, along with our other debt outstanding are more fully described in Note 10
to the Consolidated Financial Statements.
Net cash provided by financing activities in 2005 was $247 million, consisting primarily of proceeds from
borrowings of $1.1 billion and $98 million in proceeds from the exercise of stock options, reduced by repayments
of debt totaling $497 million, purchases of treasury stock totaling $390 million and dividend payments of $70
million. Proceeds from borrowings consisted primarily of $892 million net proceeds from the private placement
of $900 million of senior notes, or the 2005 Senior Notes, used to finance the acquisition of LabOne and $200
million of borrowings under our secured receivable credit facility to fund the repayment of $100 million of
principal outstanding under our senior unsecured revolving credit facility and seasonal cash flow requirements.
During 2005, we repaid $270 million of borrowings associated with our secured receivables credit facility and
$100 million of principal outstanding under our senior unsecured revolving credit facility. In addition, we repaid
approximately $127 million of principal, representing substantially all of LabOne’s outstanding debt that was
assumed by us in connection with the LabOne acquisition. The $390 million in treasury stock purchases
represents 7.8 million shares of our common stock purchased at an average price of $49.98 per share.
Dividend Program
During each of the quarters of 2006 and 2005, our Board of Directors has declared a quarterly cash dividend
of $0.10 and $0.09 per common share, respectively. We expect to fund future dividend payments with cash flows
from operations, and do not expect the dividend to have a material impact on our ability to finance future
growth.
Share Repurchase Plan
In January 2006, our Board of Directors expanded the share repurchase authorization by an additional $600
million, bringing the total amount authorized and available for purchases to $722 million. For the year ended
December 31, 2006, we repurchased approximately 8.9 million shares of our common stock at an average price
of $53.23 per share for $472 million. Through December 31, 2006, we have repurchased approximately 41.3
million shares of our common stock at an average price of $44.89 for $1.9 billion under our share repurchase
program. At December 31, 2006, the total available for repurchases under the remaining authorizations was $250
million.
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