Quest Diagnostics 2010 Annual Report Download - page 62

second quarter of 2009 totaling $314 million in connection with the NID settlement, or $208 million net of an
associated reduction in estimated tax payments. After giving consideration to the net settlement payments,
underlying cash flows from operating activities exceeded the prior year level, primarily driven by higher earnings
in 2009.
Cash Flows from Investing Activities
Net cash used in investing activities in 2010 was $217 million, consisting principally of capital expenditures
of $205 million.
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.
Cash Flows from Financing Activities
Net cash used in financing activities in 2010 was $986 million, consisting primarily of debt repayment of
$169 million, purchases of treasury stock totaling $750 million, dividend payments of $71 million and
distributions to noncontrolling interests of $37 million, partially offset by $49 million in proceeds from the
exercise of stock options, including related tax benefits.
In December 2010, we extended our existing receivables securitization facility. 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 9, 2011 and (b) $250 million, which also matures on December 9,
2011. 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, 2010.
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 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 $314 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.
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