Quest Diagnostics 2009 Annual Report Download - page 91

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In conjunction with its acquisition of SmithKline Beecham Clinical Laboratories, Inc. (“SBCL”), which
operated the clinical testing business of SmithKline Beecham plc (“SmithKline Beecham”), the Company entered
into a tax indemnification arrangement with SmithKline Beecham that provides the parties with certain rights of
indemnification against each other. 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 the tax indemnification arrangement.
6. SUPPLEMENTAL CASH FLOW AND OTHER DATA
2009 2008 2007
Depreciation expense................................................ $ 219,625 $ 227,300 $ 209,975
Interest expense. . ................................................... (146,586) (185,476) (186,329)
Interest income . . ................................................... 2,518 5,712 8,015
Interest, net......................................................... (144,068) (179,764) (178,314)
Interest paid ........................................................ 146,352 189,294 157,502
Income taxes paid .................................................. 362,524 359,336 315,745
Businesses acquired:
Fair value of assets acquired ........................................ $2,954,728
Fair value of liabilities assumed ..................................... 1,395,867
The fair value of assets acquired and liabilities assumed in connection with businesses acquired in 2009 and
2008 were not material.
7. PROPERTY, PLANT AND EQUIPMENT
Property, plant and equipment at December 31, 2009 and 2008 consisted of the following:
2009 2008
Land . . .................................................................. $ 35,786 $ 35,786
Buildings and improvements.............................................. 360,684 365,481
Laboratory equipment, furniture and fixtures .............................. 1,140,862 1,105,801
Leasehold improvements . ................................................ 374,922 348,821
Computer software developed or obtained for internal use.................. 376,004 336,426
Construction-in-progress . . ................................................ 51,124 57,478
2,339,382 2,249,793
Less: accumulated depreciation and amortization........................... (1,513,436) (1,370,106)
Total.................................................................. $ 825,946 $ 879,687
Computer software developed for internal use as of December 31, 2008 includes $76.6 million of assets,
which were previously classified as laboratory equipment, furniture and fixtures.
8. GOODWILL AND INTANGIBLE ASSETS
The changes in goodwill, net for the years ended December 31, 2009 and 2008 are as follows:
2009 2008
Balance as of January 1 . . ................................................. $5,054,926 $5,220,104
Goodwill acquired during the year . ........................................ 25,973 9,260
Other purchase accounting adjustments ..................................... (21,195) (120,105)
Increase (decrease) related to foreign currency translation.................... 24,240 (54,333)
Balance as of December 31 ................................................ $5,083,944 $5,054,926
For the years ended December 31, 2009 and 2008, goodwill acquired was associated with several immaterial
acquisitions. For the year ended December 31, 2009, other purchase accounting adjustments were primarily
related to a payment received from an escrow fund established at the time of the HemoCue acquisition in 2007
F-21
QUEST DIAGNOSTICS INCORPORATED AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
(dollars in thousands unless otherwise indicated)