Quest Diagnostics 2009 Annual Report Download - page 88

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refinancing of the term loan used to finance the acquisition of HemoCue, with $1.6 billion of borrowings under a
five-year term loan facility, $780 million of borrowings under a one-year bridge loan, and cash on-hand. In June
2007, the Company completed an $800 million senior notes offering. The net proceeds of the senior notes
offering were used to repay the $780 million bridge loan. See Note 10 for further descriptions of the Company’s
debt outstanding.
The consolidated financial statements include the results of operations of AmeriPath subsequent to the
closing of the acquisition.
During 2008, the Company decreased the amount of goodwill recorded in connection with the acquisition of
AmeriPath by approximately $45 million from $1.46 billion to $1.42 billion, primarily as a result of changes in
judgments regarding the realization of certain pre-acquisition net operating loss carryforwards.
Pro Forma Combined Financial Information
The following unaudited pro forma combined financial information for the year ended December 31, 2007
assumes that the AmeriPath acquisition and related financing, including the Company’s June 2007 senior notes
offering, were completed on January 1, 2007. Supplemental pro forma combined financial information for
HemoCue has not been presented as this acquisition is not material to the Company’s consolidated results of
operations (in thousands, except per share data).
Net revenues . .......................................................................... $7,038,781
Net income . . .......................................................................... 289,735
Less: Net income attributable to noncontrolling interests.................................. 26,510
Net income attributable to Quest Diagnostics ............................................ $ 263,225
Basic earnings per common share attributable to Quest Diagnostics’ common
stockholders:
Net income . . .......................................................................... $ 1.36
Weighted average common shares outstanding – basic.................................... 193,241
Diluted earnings per common share attributable to Quest Diagnostics common
stockholders:
Net income . . .......................................................................... $ 1.35
Weighted average common shares outstanding – diluted .................................. 195,262
The unaudited pro forma combined financial information presented above reflects certain reclassifications to
the historical financial statements of AmeriPath to conform the acquired company’s accounting policies and
classification of certain costs and expenses to that of Quest Diagnostics. These adjustments had no impact on pro
forma net income. Pro forma results for the year ended December 31, 2007 exclude transaction related costs of
$44 million, which were incurred and expensed by AmeriPath in conjunction with its acquisition by Quest
Diagnostics.
5. TAXES ON INCOME
The Company’s pre-tax income (loss) from continuing operations consisted of $1.23 billion, $1.05 billion
and $946 million from U.S. operations and $1.8 million, $(1.2) million and $(7.1) million from foreign operations
for the years ended December 31, 2009, 2008 and 2007, respectively.
F-18
QUEST DIAGNOSTICS INCORPORATED AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
(dollars in thousands unless otherwise indicated)