Quest Diagnostics 2007 Annual Report Download - page 67

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.
Cash Flows from Financing Activities
Net cash provided by financing activities in 2007 was $850 million, primarily associated with new
borrowings and repayments related to the acquisitions of AmeriPath and HemoCue.
During the first quarter of 2007, we entered into an interim credit facility (the “Interim Credit Facility”) and
borrowed $450 million to finance the acquisition of HemoCue and to repay substantially all of HemoCue’s
outstanding debt.
During the second quarter of 2007, we borrowed $1.6 billion under a new five-year term loan facility and
$780 million under a new bridge loan facility to finance the acquisition of AmeriPath and repay the Interim
Credit Facility used to finance the HemoCue acquisition.
In connection with the acquisition of AmeriPath, we repaid substantially all of AmeriPath’s outstanding debt
and related accrued interest. On May 21, 2007, we commenced a cash tender offer and consent solicitation for
the $350 million 10.5% Senior Subordinated Notes of AmeriPath, Inc. due 2013 (“the AmeriPath subordinated
senior notes”). In conjunction with the cash tender offer, approximately $348 million in aggregate principal
amount, or 99.4% of the $350 million of outstanding senior subordinated notes, was tendered. We made
payments of $386 million to holders with respect to the cash tender offer and consent solicitation, including
tender premium and related solicitation fees and accrued interest.
We completed an $800 million senior notes offering in June 2007 (the “2007 Senior Notes”). The 2007
Senior Notes were sold in two tranches: (a) $375 million of 6.40% senior notes due 2017; and (b) $425 million
of 6.95% senior notes due 2037. We used the net proceeds from the 2007 Senior Notes offering to repay the
$780 million of borrowings under the bridge loan facility. The 2007 Senior Notes, term loans and the bridge loan
are further described in Note 10 to the Consolidated Financial Statements.
Since the completion of the AmeriPath acquisition in May 2007, the point during the year at which our total
debt balance was at its highest level, we have reduced our total debt by $417 million.
Net cash provided by financing activities for the year ended December 31, 2007, also included $95 million
in proceeds from the exercise of stock options, including related tax benefits, offset by purchases of treasury
stock totaling $146 million and dividend payments of $77 million. The $146 million of treasury stock purchases
represents 2.8 million shares of our common stock purchased at an average price of $52.14 per share.
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 $135 million in proceeds from the exercise of stock options, including
related tax benefits. We also paid dividends of $77 million.
Dividend Program
During each of the quarters of 2007 and 2006, our Board of Directors declared a quarterly cash dividend of
$0.10 per common share. 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
For the year ended December 31, 2007, we repurchased approximately 2.8 million shares of our common
stock at an average price of $52.14 per share for $146 million. Through December 31, 2007, we have
repurchased approximately 44.1 million shares of our common stock at an average price of $45.35 for $2.0
billion under our share repurchase program. At December 31, 2007, the total available for repurchases under the
remaining authorization was $104 million.
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