Quest Diagnostics 2008 Annual Report Download - page 90

Download and view the complete annual report

Please find page 90 of the 2008 Quest Diagnostics annual report below. You can navigate through the pages in the report by either clicking on the pages listed below, or by using the keyword search tool below to find specific information within the annual report.

Page out of 128

  • 1
  • 2
  • 3
  • 4
  • 5
  • 6
  • 7
  • 8
  • 9
  • 10
  • 11
  • 12
  • 13
  • 14
  • 15
  • 16
  • 17
  • 18
  • 19
  • 20
  • 21
  • 22
  • 23
  • 24
  • 25
  • 26
  • 27
  • 28
  • 29
  • 30
  • 31
  • 32
  • 33
  • 34
  • 35
  • 36
  • 37
  • 38
  • 39
  • 40
  • 41
  • 42
  • 43
  • 44
  • 45
  • 46
  • 47
  • 48
  • 49
  • 50
  • 51
  • 52
  • 53
  • 54
  • 55
  • 56
  • 57
  • 58
  • 59
  • 60
  • 61
  • 62
  • 63
  • 64
  • 65
  • 66
  • 67
  • 68
  • 69
  • 70
  • 71
  • 72
  • 73
  • 74
  • 75
  • 76
  • 77
  • 78
  • 79
  • 80
  • 81
  • 82
  • 83
  • 84
  • 85
  • 86
  • 87
  • 88
  • 89
  • 90
  • 91
  • 92
  • 93
  • 94
  • 95
  • 96
  • 97
  • 98
  • 99
  • 100
  • 101
  • 102
  • 103
  • 104
  • 105
  • 106
  • 107
  • 108
  • 109
  • 110
  • 111
  • 112
  • 113
  • 114
  • 115
  • 116
  • 117
  • 118
  • 119
  • 120
  • 121
  • 122
  • 123
  • 124
  • 125
  • 126
  • 127
  • 128

In addition to the amortizable intangibles noted above, $226 million was allocated to certain tradenames,
which are not subject to amortization.
Of the amount allocated to goodwill and intangible assets, approximately $100 million is expected to be
deductible for tax purposes.
During 2008, the Company decreased the amount of goodwill recorded in connection with the acquisition of
AmeriPath by approximately $45 million, primarily as a result of changes in judgments regarding the realization
of certain pre-acquisition net operating loss carryforwards.
2006 Acquisitions
Acquisition of Focus Diagnostics
On July 3, 2006, the Company completed its acquisition of Focus Technologies Holding Company (“Focus
Diagnostics”) in an all-cash transaction valued at $208 million, including approximately $3 million of assumed
debt. Focus Diagnostics is a leading provider of infectious and immunologic disease testing and develops and
markets diagnostic products. It offers its reference testing services and diagnostic products to large academic
medical centers, hospitals and commercial laboratories. The Company financed the aggregate purchase price of
$205 million, which included $0.5 million of related transaction costs, and the repayment of substantially all of
Focus Diagnostics’ outstanding debt with $135 million of borrowings under its secured receivables credit facility
and with cash on-hand.
The acquisition of Focus Diagnostics was accounted for under the purchase method of accounting. As such,
the cost to acquire Focus Diagnostics was allocated to the respective assets and liabilities acquired based on their
estimated fair values as of the closing date. The consolidated financial statements include the results of operations
of Focus Diagnostics subsequent to the closing of the acquisition.
Of the aggregate purchase price of $205 million, $142 million was allocated to goodwill, $33 million was
allocated to customer relationships that are being amortized over 10-15 years and $9.1 million was allocated to
trade names that are not subject to amortization. Substantially all of the goodwill is not expected to be deductible
for tax purposes.
Supplemental pro forma combined financial information has not been presented as the acquisition is not
material to the Company’s consolidated financial statements.
Acquisition of Enterix
On August 31, 2006, the Company completed its acquisition of Enterix Inc. (“Enterix”), a privately held
Australia-based company that develops and manufactures the InSureFecal Immunochemical Test, a Food and
Drug Administration (“FDA”)-cleared test for use in screening for colorectal cancer and other sources of lower
gastrointestinal bleeding, for approximately $44 million in cash. The acquisition is not material to the Company’s
consolidated financial statements.
Pro Forma Combined Financial Information
The following unaudited pro forma combined financial information for the years ended December 31, 2007
and 2006 assumes that the AmeriPath acquisition and related financing, including the Company’s June 2007
senior notes offering, were completed on January 1, 2006. Supplemental pro forma combined financial
information for HemoCue, Focus and Enterix has not been presented as the acquisitions are not material to the
Company’s consolidated results of operations (in thousands, except per share data).
F-18
QUEST DIAGNOSTICS INCORPORATED AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
(dollars in thousands unless otherwise indicated)