Quest Diagnostics 2006 Annual Report Download - page 85

Contractual Obligations and Commitments
The following table summarizes certain of our contractual obligations as of December 31, 2006. See Notes
10 and 14 to the Consolidated Financial Statements for further details.
Contractual Obligations Total
Less than
1 year 1–3 years 3–5 years
After
5 years
(in thousands)
Payments due by period
Long-term debt . ................................... $1,239,046 $ - $462,999 $274,503 $501,544
Capital lease obligations . . .......................... 59 - 59 - -
Operating leases. ................................... 656,172 154,046 232,698 129,437 139,991
Purchase obligations ................................ 72,339 31,390 21,972 12,904 6,073
Total contractual obligations. . . ................. $1,967,616 $185,436 $717,728 $416,844 $647,608
See Note 10 to the Consolidated Financial Statements for a full description of the terms of our indebtedness
and related debt service requirements. See Note 17 to the Consolidated Financial Statements for a description of
our term loan entered into in January 2007. A full discussion and analysis regarding our minimum rental
commitments under noncancelable operating leases, noncancelable commitments to purchase products or services,
and reserves with respect to insurance and other legal matters is contained in Note 14 to the Consolidated
Financial Statements.
During 2006, we maintained two lines of credit with two financial institutions totaling $85 million for the
issuance of letters of credit. Standby letters of credit are obtained, principally in support of our risk management
program, to ensure our performance or payment to third parties and amounted to $67 million at December 31,
2006, all of which was issued against the $85 million letter of credit lines. The letters of credit, which are
renewed annually, primarily represent collateral for automobile liability and workers’ compensation loss payments.
Our credit agreements relating to our senior unsecured revolving credit facility and our term loan due
December 2008 contain various covenants and conditions, including the maintenance of certain financial ratios,
that could impact our ability to, among other things, incur additional indebtedness. We do not expect these
covenants to adversely impact our ability to execute our growth strategy or conduct normal business operations.
Unconsolidated Joint Ventures
We have investments in unconsolidated joint ventures in Phoenix, Arizona; Indianapolis, Indiana; and
Dayton, Ohio, which are accounted for under the equity method of accounting. We believe that our transactions
with our joint ventures are conducted at arm’s length, reflecting current market conditions and pricing. Total net
revenues of our unconsolidated joint ventures equal less than 6% of our consolidated net revenues. Total assets
associated with our unconsolidated joint ventures are less than 2% of our consolidated total assets. We have no
material unconditional obligations or guarantees to, or in support of, our unconsolidated joint ventures and their
operations.
Requirements and Capital Resources
We estimate that we will invest approximately $200 million during 2007 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 financial performance should provide us with access to additional financing, if
necessary, to fund growth opportunities that cannot be funded from existing sources.
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