Quest Diagnostics 2012 Annual Report Download - page 102

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F- 29
Secured Receivables Credit Facility
The Company has a $525 million secured receivables credit facility (the “Secured Receivables Credit Facility”) that is
supported by back-up facilities provided on a committed basis by two banks in the amounts of $275 million and $250 million,
which mature on December 6, 2013. 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, 2012 and 2011, the Company's borrowing rate
under the Secured Receivables Credit Facility was 0.97% and 1.02%, respectively. Borrowings under the Secured Receivables
Credit Facility are collateralized by certain domestic receivables.
Senior Unsecured Revolving Credit Facility
In September 2011, the Company entered into a $750 million senior unsecured revolving credit facility (the “Credit
Facility”) which replaced the Company's then existing $750 million senior unsecured revolving credit facility that was
scheduled to mature in May 2012. Under the Credit Facility, the Company can issue letters of credit totaling $150 million,
which reduce the available borrowing capacity. At December 31, 2012, letters of credit totaling $0.3 million were issued under
the Credit Facility. Interest on the Credit Facility, which matures in September 2016, is based on certain published rates plus an
applicable margin that will vary over a range from 75 basis points to 175 basis points based on changes in the Company's public
debt ratings. At the option of the Company, it may elect to lock into LIBOR-based interest rates 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, the federal funds rate or an adjusted LIBOR rate. At both December 31,
2012 and 2011, the Company's borrowing rate for LIBOR-based loans under the Credit Facility was LIBOR plus 1.125%. The
Credit Facility contains various covenants, including the maintenance of certain financial ratios, which could impact the
Company's ability to, among other things, incur additional indebtedness. At both December 31, 2012 and 2011, there were no
outstanding borrowings under the Company's senior unsecured revolving credit facility.
2011 Senior Notes Offering
In March 2011, the Company completed a $1.25 billion senior notes offering (the “2011 Senior Notes”) that was 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, (b) $300 million aggregate principal amount of 3.20% senior notes due April 1, 2016, (c) $550 million
aggregate principal amount of 4.70% senior notes due April 1, 2021, and (d) $200 million aggregate principal amount of 5.75%
senior notes due January 30, 2040. The Senior Notes due 2040 were a reopening of the $250 million aggregate principal
amount of 5.75% senior notes due 2040 that were originally issued on November 17, 2009. The three-month LIBOR on the
floating rate senior notes at December 31, 2012 and 2011 was 0.31% and 0.58%, respectively. These senior notes are unsecured
obligations of the Company and rank equally with the Company's other senior unsecured obligations. None of the Company's
senior notes have a sinking fund requirement.
The Company used $750 million of the net proceeds from the 2011 Senior Notes to fund the purchase price and related
transaction costs associated with its acquisition of Athena, which closed on April 4, 2011 (see Note 5), and $485 million of the
net proceeds, together with $90 million of cash on hand, to repay outstanding indebtedness under the Company's senior
unsecured revolving credit facility and its secured receivables credit facility.
Term Loan due 2012
The Term Loan due 2012 matured on May 31, 2012 and required principal repayments of $280 million on both March
31, 2012 and May 31, 2012. Interest under the Term Loan due 2012 was based on certain published rates plus an applicable
margin that varied over a range from 40 basis points to 125 basis points based on changes in the Company's public debt ratings.
Interest on any outstanding amounts not covered under LIBOR-based interest rate contracts was based on an alternate base rate,
which was calculated by reference to the prime rate or federal funds rate. As of December 31, 2011, the Company's borrowing
rate for LIBOR-based loans was LIBOR plus 0.40%.
QUEST DIAGNOSTICS INCORPORATED AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – CONTINUED
(dollars in thousands unless otherwise indicated)