Quest Diagnostics 2010 Annual Report Download - page 56

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Interest Expense, net
2010 2009
Change
Increase
(decrease)
(dollars in millions)
Interest expense, net ............................................................ $146.1 $144.1 $2.0
Interest expense, net for the year ended December 31, 2010 increased from the prior year primarily due to
higher average outstanding debt in 2010 compared to the prior year.
Other Income (Expense), net
Other income (expense), net represents miscellaneous income and expense items related to non-operating
activities, such as gains and losses associated with investments and other non-operating assets, and losses on the
early extinguishment of debt. For the years ended December 31, 2010 and 2009, other income (expense), net
consisted of the following:
2010 2009 Change
(dollars in millions)
Investment gains associated with investments in our supplemental deferred
compensation plans ............................................................... $ 5.7 $ 8.4 $(2.7)
Write-down of an investment ........................................................ — (7.0) 7.0
Loss on early extinguishment of debt . ............................................... — (20.4) 20.4
Other expense items, net ............................................................ (0.4) (1.3) 0.9
Total other income (expense), net ............................................... $ 5.3 $(20.3) $25.6
Income Tax Expense
2010 2009 Change
(dollars in millions)
Income tax expense . . ............................................................. $425.5 $460.5 $(35.0)
Effective income tax rate .......................................................... 35.9% 37.5% (1.6)%
The decrease in income tax expense for the year ended December 31, 2010 compared to the prior year was
primarily due to a reduction in income from continuing operations before income taxes of $43.6 million and a
decrease in the effective income tax rate. The effective income tax rate for the year ended December 31, 2010
decreased compared to the prior year primarily due to the favorable resolution of certain tax contingencies.
Results for the year ended December 31, 2010 included $22.1 million of income tax benefits, primarily associated
with the favorable resolution of certain tax contingencies. Results for the year ended December 31, 2009 included
$7.0 million of income tax benefits, primarily associated with certain discrete tax benefits.
Discontinued Operations
Loss from discontinued operations, net of taxes, for the year ended December 31, 2010 was $1.8 million, or
$0.01 per diluted share, compared to $1.2 million, or $0.01 per diluted share, in 2009. On April 15, 2009, the
Company entered into a final settlement agreement with the federal government and paid $308 million, which
had been previously reserved in connection with the final settlement. See Note 16 to the Consolidated Financial
Statements for further details.
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