Quest Diagnostics 2011 Annual Report Download - page 63

Download and view the complete annual report

Please find page 63 of the 2011 Quest Diagnostics annual report below. You can navigate through the pages in the report by either clicking on the pages listed below, or by using the keyword search tool below to find specific information within the annual report.

Page out of 123

  • 1
  • 2
  • 3
  • 4
  • 5
  • 6
  • 7
  • 8
  • 9
  • 10
  • 11
  • 12
  • 13
  • 14
  • 15
  • 16
  • 17
  • 18
  • 19
  • 20
  • 21
  • 22
  • 23
  • 24
  • 25
  • 26
  • 27
  • 28
  • 29
  • 30
  • 31
  • 32
  • 33
  • 34
  • 35
  • 36
  • 37
  • 38
  • 39
  • 40
  • 41
  • 42
  • 43
  • 44
  • 45
  • 46
  • 47
  • 48
  • 49
  • 50
  • 51
  • 52
  • 53
  • 54
  • 55
  • 56
  • 57
  • 58
  • 59
  • 60
  • 61
  • 62
  • 63
  • 64
  • 65
  • 66
  • 67
  • 68
  • 69
  • 70
  • 71
  • 72
  • 73
  • 74
  • 75
  • 76
  • 77
  • 78
  • 79
  • 80
  • 81
  • 82
  • 83
  • 84
  • 85
  • 86
  • 87
  • 88
  • 89
  • 90
  • 91
  • 92
  • 93
  • 94
  • 95
  • 96
  • 97
  • 98
  • 99
  • 100
  • 101
  • 102
  • 103
  • 104
  • 105
  • 106
  • 107
  • 108
  • 109
  • 110
  • 111
  • 112
  • 113
  • 114
  • 115
  • 116
  • 117
  • 118
  • 119
  • 120
  • 121
  • 122
  • 123

Interest expense, net for the year ended December 31, 2011 increased from the prior year period primarily
due to incremental debt of approximately $1.0 billion, used to partially fund $935 million of share repurchases
and approximately $1.1 billion paid for acquisitions. In addition, for the year ended December 31, 2011, interest
expense, net included $3.1 million of financing commitment fees related to the acquisition of Celera which were
expensed. See Note 11 to the Consolidated Financial Statements for further details regarding our senior notes
offering.
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. For the years
ended December 31, 2011 and 2010, other income (expense), net consisted of the following:
2011 2010
Change:
Increase (Decrease)
(dollars in millions)
Investment gains associated with investments in our supplemental deferred
compensation plans ..................................................... $ 0.3 $ 5.7 $(5.4)
Gain on an investment..................................................... 3.2 — 3.2
Other expense items, net................................................... (0.7) (0.4) (0.3)
Total other income (expense), net .......................................... $ 2.8 $ 5.3 $(2.5)
Income Tax Expense
2011 2010
Change:
Increase (Decrease)
(dollars in millions)
Income tax expense . ................................................... $349.0 $425.5 $(76.5)
Effective income tax rate ............................................... 40.8% 35.9% 4.9%
The increase in the effective income tax rate for the year ended December 31, 2011 is primarily due to the
Medi-Cal charge recorded in the first quarter of 2011 associated with the California Lawsuit (see Note 16 to the
Consolidated Financial Statements), a portion for which a tax benefit has not been recorded.
Income tax expense for the year ended December 31, 2011 included discrete income tax benefits of $18.2
million, primarily associated with certain state tax planning initiatives and the favorable resolution of certain tax
contingencies. For the year ended December 31, 2010, income tax expense included discrete income tax benefits
of $22.1 million, primarily associated with the favorable resolution of certain tax contingencies.
Discontinued Operations
Loss from discontinued operations, net of taxes, for the year ended December 31, 2011 was $1.6 million, or
$0.01 per diluted share. For the year ended December 31, 2010, loss from discontinued operations was $1.8
million, or $0.01 per diluted share. See Note 17 to the Consolidated Financial Statements for further details.
Year Ended December 31, 2010 Compared with Year Ended December 31, 2009
Continuing Operations
2010 2009
%
Change:
Increase
(Decrease)
(dollars in millions, except per
share data)
Net revenues................................................................ $7,368.9 $7,455.2 (1.2)%
Income from continuing operations........................................... 722.7 730.3 (1.0)%
Earnings per diluted share ................................................... $ 4.06 $ 3.88 4.6%
Results for the year ended December 31, 2010 reflect lower revenues, compared to the prior year, which
served to reduce income from continuing operations below the prior year level. Actions we took to adjust our
57