Quest Diagnostics 2011 Annual Report Download - page 95

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Early Extinguishment of Debt
For the year ended December 31, 2009, the Company recorded $20 million of pre-tax charges related to the
early extinguishment of debt, primarily related to the Company’s June 2009 and November 2009 debt tender
offers, the repayment of borrowings outstanding under the Term Loan due 2012 in 2009, and the 2009 repayment
of the remaining principal outstanding under certain debentures due June 2034.
June 2009 Debt Tender Offer
On May 19, 2009, the Company commenced a cash tender offer to purchase up to $200 million aggregate
principal amount of its 5.125% Senior Notes due 2010 and 7.50% Senior Notes due 2011. On June 16, 2009, the
Company finalized its cash tender offer (the “June 2009 Debt Tender Offer”) by purchasing $174 million
aggregate principal amount of its 5.125% Senior Notes due 2010 and $26 million aggregate principal amount of
its 7.50% Senior Notes due 2011 that resulted in pre-tax losses of $4.8 million and $1.5 million, respectively.
The aggregate pre-tax loss of $6.3 million includes the write-off of $0.5 million of deferred financing fees and
unamortized discounts, and cash payments of $5.8 million related to premiums and other costs to purchase the
5.125% Senior Notes due 2010 and the 7.50% Senior Notes due 2011 and is included in other income (expense),
net.
November 2009 Debt Tender Offer
In connection with the 2009 Senior Notes offering which is discussed below, on November 12, 2009, the
Company commenced a cash tender offer to purchase any and all of its outstanding 5.125% Senior Notes due
2010, and any and all of its outstanding 7.50% Senior Notes due 2011. On November 20, 2009, the Company
finalized its cash tender offer (the “November 2009 Debt Tender Offer”) by purchasing $61 million aggregate
principal amount of its 5.125% Senior Notes due 2010 and $89 million aggregate principal amount of its 7.50%
Senior Notes due 2011 that resulted in pre-tax losses of $2.6 million and $9.4 million, respectively. The
aggregate pre-tax loss of $12.1 million includes the write-off of $0.3 million of deferred financing fees and
unamortized discounts, and cash payments of $11.8 million related to premiums and other costs to purchase the
5.125% Senior Notes due 2010 and the 7.50% Senior Notes due 2011 and is included in other income (expense),
net.
Other Extinguishments
During the year ended December 31, 2009, the Company repaid $350 million of borrowings outstanding
under the Term Loan due 2012 and recorded pre-tax losses of $0.7 million related to the write-off of deferred
financing fees.
In connection with the Company’s repayment in 2009 of the remaining principal outstanding under certain
debentures due June 2034, the Company recorded a pre-tax charge of $1.3 million, primarily related to the write-
off of unamortized discounts.
2011 Senior Notes Offering
On March 24, 2011, the Company completed a $1.25 billion senior notes offering (the “2011 Senior Notes”).
The 2011 Senior Notes were sold in four tranches: (a) $200 million aggregate principal amount of three-month
LIBOR plus 0.85% floating rate senior notes due March 24, 2014 (the “Floating Rate Senior Notes due 2014”),
issued at par, (b) $300 million aggregate principal amount of 3.20% senior notes due April 1, 2016 (the “Senior
Notes due 2016”), issued at a discount of $0.3 million, (c) $550 million aggregate principal amount of 4.70%
senior notes due April 1, 2021 (the “Senior Notes due 2021”), issued at a discount of $0.9 million and (d) $200
million aggregate principal amount of 5.75% senior notes due January 30, 2040 (the “Senior Notes due 2040”),
issued at a discount of $5.5 million. The Senior Notes due 2040 are a reopening of the $250 million aggregate
principal amount of 5.75% Senior Notes due 2040 issued on November 17, 2009. After considering the discounts,
the effective interest rates on the Senior Notes due 2016, the Senior Notes due 2021 and the Senior Notes due
2040 are 3.2%, 4.7% and 5.9%, respectively. The Floating Rate Senior Notes due 2014 require quarterly interest
payments, which commenced on June 24, 2011. The three-month LIBOR was 0.58% at December 31, 2011. The
Senior Notes due 2016 and the Senior Notes due 2021 require semi-annual interest payments, which commenced
F-23
QUEST DIAGNOSTICS INCORPORATED AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
(dollars in thousands unless otherwise indicated)