Quest Diagnostics 2009 Annual Report Download - page 103

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by the mirrored rate of return on investments elected by plan participants. Each plan participant is fully vested in
all deferred compensation, Company match and earnings credited to their account. The amounts accrued under
this plan were $34 million and $25 million at December 31, 2009 and 2008, respectively. Although the Company
is currently contributing all participant deferrals and matching amounts to a trust, the funds in the trust, totaling
$34 million and $25 million at December 31, 2009 and 2008, respectively, are general assets of the Company
and are subject to any claims of the Company’s creditors. The Company’s expense for matching contributions to
this plan were approximately $1 million for 2009, 2008 and 2007.
14. RELATED PARTY TRANSACTIONS
At December 31, 2009, GlaxoSmithKline plc (“GSK”), the parent company of SmithKline Beecham,
beneficially owned approximately 17% of the outstanding shares of Quest Diagnostics common stock.
Quest Diagnostics is the primary provider of testing to support GSK’s clinical trials testing requirements
under worldwide agreements (the “Clinical Trials Agreements”). Net revenues, primarily derived under the
Clinical Trials Agreements were $72 million, $71 million and $79 million for 2009, 2008 and 2007, respectively.
At December 31, 2009 and 2008, accounts receivable due from GSK were $17.3 million and $9.1 million,
respectively.
In addition, in connection with the acquisition of SBCL, SmithKline Beecham agreed to indemnify Quest
Diagnostics, on an after tax basis, against certain matters primarily related to taxes and billing and professional
liability claims.
At December 31, 2009 and December 31, 2008, liabilities included $1 million and $13 million, respectively,
due to SmithKline Beecham, primarily related to tax benefits associated with certain pre-acquisition tax loss
carryforwards. During 2009, the Company paid SmithKline Beecham approximately $10 million related to the
realization of certain pre-acquisition net loss carryforwards that were payable to SmithKline Beecham pursuant to
a tax indemnification arrangement.
15. COMMITMENTS AND CONTINGENCIES
Letter of Credit Lines and Contractual Obligations
The Company has a line of credit with a financial institution totaling $85 million for the issuance of letters
of credit (the “Letter of Credit Line”). The Letter of Credit Line, which is renewed annually, matures on
November 19, 2010 and is guaranteed by the Subsidiary Guarantors.
In support of its risk management program, to ensure the Company’s performance or payment to third
parties, $74 million in letters of credit were outstanding at December 31, 2009. The letters of credit primarily
represent collateral for current and future automobile liability and workers’ compensation loss payments. In
addition, $6.6 million of bank guarantees were outstanding at December 31, 2009 in support of certain foreign
operations.
Minimum rental commitments under noncancelable operating leases, primarily real estate, in effect at
December 31, 2009 are as follows:
Year ending December 31,
2010................................................................................... $174,787
2011................................................................................... 133,621
2012................................................................................... 94,842
2013................................................................................... 66,743
2014................................................................................... 47,214
2015 and thereafter..................................................................... 153,800
Minimum lease payments . . . ............................................................ 671,007
Noncancelable sub-lease income ........................................................ (5,875)
Net minimum lease payments ........................................................... $665,132
F-33
QUEST DIAGNOSTICS INCORPORATED AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
(dollars in thousands unless otherwise indicated)