Quest Diagnostics 2010 Annual Report Download - page 89

Secured Receivables Credit Facility
On December 10, 2010, the Company extended its $525 million secured receivables securitization facility
(the “Secured Receivables Credit 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. At
December 31, 2010 and 2009, the Company’s borrowing rate under the Secured Receivables Credit Facility was
1.2% and 1.4%, respectively. At December 31, 2010 and 2009, there were no borrowings under the Secured
Receivables Credit Facility.
In April 2009, the Company borrowed $310 million under its Secured Receivables Credit Facility primarily
to fund payments totaling $314 million in connection with the previously disclosed settlement of the federal
government investigation related to NID (see Note 16). In addition, the Company borrowed $150 million to fund
debt repayments in connection with the June 2009 Debt Tender Offer. All 2009 borrowings under the Secured
Receivables Credit Facility were repaid prior to December 31, 2009.
Term Loan due 2012
On May 31, 2007, the Company entered into a five-year term loan facility (the “Term Loan due 2012”). The
Term Loan due 2012 matures on May 31, 2012 and requires principal repayments of $182 million, $280 million
and $280 million on December 31, 2011, March 31, 2012 and May 31, 2012, respectively. The Term Loan due
2012 is guaranteed by the Subsidiary Guarantors. Interest under the Term Loan due 2012 is based on certain
published rates plus an applicable margin that will vary over a range from 40 basis points to 125 basis points
based on changes in the Company’s public debt ratings. At the Company’s option, it may elect to enter into
LIBOR-based interest rate contracts for periods up to six months. Interest on any outstanding amounts not
covered under LIBOR-based interest rate contracts is based on an alternate base rate, which is calculated by
reference to the prime rate or federal funds rate. As of December 31, 2010, the Company’s borrowing rate for
LIBOR-based loans was LIBOR (0.3%) plus 0.40%. As of December 31, 2009, the Company’s borrowing rate
for LIBOR-based loans was LIBOR (0.2%) plus 0.50%.
The Company incurred $7 million of costs associated with the Term Loan due 2012, which is being
amortized over the term of the related debt.
During the years ended December 31, 2009 and 2008, the Company repaid $350 million and $293 million,
respectively, of borrowings outstanding under the Term Loan due 2012.
Other Senior Notes
In 2001, the Company issued $275 million aggregate principal amount of 7.50% senior notes due 2011
(“Senior Notes due 2011”), issued at a discount of $1.1 million. After considering the discount, the effective
interest rate on the Senior Notes due 2011 is 7.6%. The Senior Notes due 2011 require semiannual interest
payments. The Senior Notes due 2011 are unsecured obligations of the Company and rank equally with the
Company’s other unsecured senior obligations. The Senior Notes due 2011 are guaranteed by the Subsidiary
Guarantors and do not have a sinking fund requirement. In connection with the Company’s June 2009 Debt
Tender Offer and November 2009 Debt Tender Offer, the Company repaid $26 million and $89 million,
respectively, outstanding under the Senior Notes due 2011.
On October 31, 2005, the Company completed its $900 million private placement of senior notes (the “2005
Senior Notes”). The 2005 Senior Notes were priced in two tranches: (a) $400 million aggregate principal amount
of 5.125% senior notes due November 2010 (“Senior Notes due 2010”); and (b) $500 million aggregate principal
amount of 5.45% senior notes due November 2015 (“Senior Notes due 2015”). The Senior Notes due 2010 and
2015 were issued at a discount of $0.8 million and $1.6 million, respectively. After considering the discounts, the
effective interest rates on the Senior Notes due 2010 and 2015 are 5.3% and 5.6%, respectively. The 2005 Senior
Notes require semiannual interest payments, which commenced on May 1, 2006. The 2005 Senior Notes are
unsecured obligations of the Company and rank equally with the Company’s other unsecured senior obligations.
The 2005 Senior Notes are guaranteed by the Subsidiary Guarantors. In connection with the Company’s June
2009 Debt Tender Offer and November 2009 Debt Tender Offer, the Company repaid $174 million and $61
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QUEST DIAGNOSTICS INCORPORATED AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
(dollars in thousands unless otherwise indicated)