Quest Diagnostics 2009 Annual Report Download - page 65

driven by higher earnings in the current year. Days sales outstanding, a measure of billing and collection
efficiency, were 43 days at December 31, 2009 compared to 44 days at December 31, 2008.
Net cash provided by operating activities for 2008 was $1.1 billion compared to $927 million in 2007. This
increase was primarily due to higher earnings during 2008. Net cash provided by operating activities for the year
ended December 31, 2007 was reduced by $57 million of fees and other expenses paid in connection with the
acquisition of AmeriPath.
Cash Flows from Investing Activities
Net cash used in investing activities in 2009 was $196 million, consisting principally of capital expenditures
of $167 million. In addition, we completed several small acquisitions for a total of $39 million, which was
partially offset by $21 million related to the receipt of a payment from an escrow fund established at the time of
an acquisition in 2007.
Net cash used in investing activities in 2008 was $199 million, consisting principally of capital expenditures
of $213 million, partially offset by $23 million related to the receipt of a payment from an escrow fund
established at the time of an acquisition in 2007 and $6 million of proceeds from the sale of an investment in
the first quarter of 2008.
Cash Flows from Financing Activities
Net cash used in financing activities in 2009 was $521 million, consisting primarily of purchases of treasury
stock totaling $500 million, dividend payments of $75 million and $10.5 million in payments to settle certain
forward-starting interest rate swap agreements, partially offset by $93 million in proceeds from the exercise of
stock options, including related tax benefits, and net increases in debt of $27 million. The $500 million in
treasury stock purchases represents 10 million of our common shares purchased at an average price of $49.83 per
share. The net increase in debt consists of $1.25 billion of borrowings and $1.22 billion of repayments.
During 2009, borrowings under our secured receivables credit facility totaled $510 million and were used
primarily to fund the NID settlement payments totaling $308 million and $150 million to fund the retirement of
debt in connection with our debt tender offer in June 2009. In addition, we completed a $750 million senior
notes offering in November 2009 (the “2009 Senior Notes”). We issued the notes principally to repay certain
debt maturing through 2011 and refinance it over a longer term. The 2009 Senior Notes were sold in two
tranches: (a) $500 million of 4.75% senior notes due 2020 issued at a discount of $7.5 million; and $250 million
of 5.75% senior notes due 2040, issued at a discount of $6.9 million. We used the net proceeds from the 2009
Senior Notes offering to fund the retirement of $150 million of debt in connection with our debt tender offer in
November 2009, and the repayment of $100 million outstanding under our secured receivables credit facility and
$350 million outstanding under our term loan due May 2012. The 2009 Senior Notes are further described in
Note 10 to the Consolidated Financial Statements.
Debt repayments of $1.22 billion primarily consisted of $510 million on our secured receivables credit
facility, $350 million on our term loan due May 2012 and $350 million of repayments in connection with our
debt tender offers in June 2009 and November 2009.
In connection with our June 2009 debt tender offer, we repaid $174 million of aggregate principal amount
outstanding under our 5.125% senior notes due 2010 and $26 million of aggregate principal amount outstanding
under our 7.50% senior notes due 2011. Total cash payments of $206 million, including approximately $6 million
related to premiums and other costs incurred to purchase the notes, were funded with cash on-hand and $150
million of borrowings under our secured receivables credit facility.
In connection with our November 2009 debt tender offer, we repaid $61 million of aggregate principal
amount outstanding under our 5.125% senior notes due 2010 and $89 million of aggregate principal amount
outstanding under our 7.50% senior notes due 2011. Total cash payments of $162 million, including
approximately $12 million related to premiums and other costs incurred to purchase the notes, were funded with
a portion of the net proceeds from our 2009 Senior Notes offering.
In December 2009, we amended our existing receivables securitization facility and increased it from $500
million to $525 million. The secured receivables credit facility continues to be supported by back-up facilities
provided on a committed basis by two banks: (a) $275 million, which matures on December 10, 2010 and (b)
$250 million, which also matures on December 10, 2010. Interest on the secured receivables credit facility is
based on rates that are intended to approximate commercial paper rates for highly-rated issuers. There were no
borrowings outstanding under this facility at December 31, 2009.
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