Quest Diagnostics 2011 Annual Report Download - page 69

Cash Flows from Financing Activities
Net cash provided by financing activities for the year ended December 31, 2011 was $64 million, consisting
primarily of net increases in debt of $1.0 billion, and proceeds from the exercise of stock options and related tax
benefits totaling $141 million, partially offset by purchases of treasury stock of $935 million, dividend payments
of $65 million, distributions to noncontrolling interests of $36 million and $13 million of payments primarily
related to debt issuance costs incurred in connection with our senior notes offering in the first quarter of 2011
and our senior unsecured revolving credit facility in the third quarter of 2011. The net increase in debt consists
of $2.7 billion of borrowings and $1.7 billion of repayments.
In February 2011, borrowings of $500 million under our secured receivables credit facility and $75 million
under our senior unsecured credit facility, together with $260 million of cash on hand, were used to fund
purchases of treasury stock totaling $835 million. In addition, we completed a $1.25 billion senior notes offering
in March 2011 (the “2011 Senior Notes”). We used $485 million of the $1.24 billion in net proceeds from the
2011 Senior Notes offering, together with $90 million of cash on hand, to fund the repayment of $500 million
outstanding under our secured receivables credit facility, and the repayment of $75 million outstanding under our
senior unsecured revolving credit facility. The remaining portion of the net proceeds from the 2011 Senior Notes
offering were used to fund our acquisition of Athena in April 2011 (see Note 4 and Note 11 to the Consolidated
Financial Statements for further details).
During the second quarter of 2011, $585 million and $30 million of borrowings under our secured
receivables credit facility and our senior unsecured revolving credit facility, respectively, together with cash on
hand, were used to fund the acquisition of Celera in May 2011 (see Note 4 to the Consolidated Financial
Statements for further details). During the second quarter of 2011, proceeds from the sale of short-term
marketable securities acquired as part of the Celera acquisition totaling $214 million, together with cash on hand,
were used to fund $500 million and $30 million of debt repayments under our secured receivables credit facility
and our senior unsecured revolving credit facility, respectively.
During the third quarter of 2011, $225 million of borrowings under our secured receivables credit facility
were used primarily to fund $159 million of debt repayments under our senior notes due July 2011 and purchases
of treasury stock totaling $50 million. Later in the quarter, we repaid $225 million of borrowings outstanding
under our secured receivables credit facility with cash on hand.
During the fourth quarter of 2011, $31 million of borrowings under our secured receivables credit facility,
together with cash on hand, were used primarily to fund $182 million of debt repayments under our term loan
due May 2012 and purchases of treasury stock totaling $50 million. Later in the quarter, we repaid $31 million
of borrowings outstanding under our secured receivables credit facility with cash on hand.
In September 2011, we entered into a $750 million senior unsecured revolving credit facility which replaced
our prior $750 million senior unsecured revolving credit facility that was scheduled to mature in May 2012. See
Note 11 to the Consolidated Financial Statements for further details.
In December 2011, 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 7, 2012 and (b) $250 million, which also matures on December 7,
2012. 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 $85 million of borrowings outstanding under this
facility at December 31, 2011.
Net cash used in financing activities in 2010 was $986 million, consisting primarily of debt repayments 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.
Dividends
Through the third quarter of 2011 and during each of the quarters of 2010, our Board of Directors declared
a quarterly cash dividend of $0.10 per common share. In October 2011, our Board of Directors declared an
increase in our quarterly cash dividend from $0.10 per common share to $0.17 per common share, which was
paid on January 24, 2012, to shareholders of record on January 9, 2012. We expect to fund future dividend
payments with cash flows from operations, and do not expect the dividend to have a material impact on our
ability to finance future growth.
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