Quest Diagnostics 2010 Annual Report Download - page 59

Other Operating Expense (Income), net
Other operating expense (income), net represents miscellaneous income and expense items related to
operating activities and for the years ended December 31, 2009 and 2008, consisted of the following:
2009 2008 Change
(dollars in millions)
Insurance settlement for storm-related losses.......................................... $(15.5) $ — $(15.5)
Foreign currency transaction losses (gains), net . ...................................... 2.1 (2.7) 4.8
Other operating expense (income) items, net.......................................... 3.4 (0.6) 4.0
Total other operating expense (income), net...................................... $(10.0) $(3.3) $ (6.7)
Operating Income
$
% Net
Revenues $
% Net
Revenues $
% Net
Revenues
2009 2008
Change
Increase (decrease)
(dollars in millions)
Operating income . . ........................... $1,359.1 18.2% $1,222.4 16.9% $136.7 1.3%
The improvement in operating income, as a percentage of net revenues, for the year ended December 31,
2009 compared to the prior year, was primarily due to higher revenue per requisition and progress we are making
with our cost reduction program, as well as discrete cost containment actions we took during 2009. Operating
income for the year ended December 31, 2009 also includes a $15.5 million gain associated with an insurance
settlement for storm-related losses, which contributed 0.2% to the improvement. The operating income percentage
for the year ended December 31, 2009 also reflects the impact of the various items which served to reduce cost
of services and selling, general and administrative expenses as a percentage of net revenues. Results for the year
ended December 31, 2008 include a charge of $16.2 million, primarily associated with workforce reductions,
which reduced operating income, as a percentage of net revenues, by 0.2%. In addition, year-over-year
comparisons were adversely impacted by approximately $18 million, or 0.2%, associated with investment gains
and losses earned by employees on assets held in trust under our supplemental deferred compensation plans.
Interest Expense, net
2009 2008
Change
Increase
(decrease)
(dollars in millions)
Interest expense, net ............................................................ $144.1 $179.8 $(35.7)
The decrease in interest expense, net for the year ended December 31, 2009, compared to the prior year,
was primarily due to lower interest rates on our variable-interest rate debt.
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, 2009 and 2008, other income (expense), net
consisted of the following:
2009 2008 Change
(dollars in millions)
Investment gains (losses) associated with investments in our supplemental deferred
compensation plans .............................................................. $ 8.4 $ (9.9) $ 18.3
Write-down of an investment ....................................................... (7.0) (8.9) 1.9
Loss on early extinguishment of debt ............................................... (20.4) — (20.4)
Other expense items, net . .......................................................... (1.3) (2.9) 1.6
Total other income (expense), net. . ................................................. $(20.3) $(21.7) $ 1.4
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