Quest Diagnostics 2012 Annual Report Download - page 63

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60
The following table summarizes our income (loss) from discontinued operations, net of taxes:
Increase
(Decrease) 2012 2011
(dollars in millions)
Net revenues $ 116.9 $ 118.6 $ (1.7)
Income (loss) from discontinued operations before taxes (73.7) 7.1 (80.8)
Income tax expense (benefit) 0.6 (4.5) 5.1
Income (loss) from discontinued operations, net of taxes $ (74.3) $ 11.6 $ (85.9)
Income (loss) from discontinued operations before taxes for the year ended December 31, 2012 includes a $78 million
asset impairment charge associated with HemoCue and $8.4 million loss on sale associated with OralDNA. Income tax expense
for the year ended December 31, 2012 includes a $7.5 million income tax expense related to the re-valuation of certain deferred
tax assets associated with HemoCue and was partially offset by a $4.4 million income tax benefit related to the remeasurement
of deferred taxes associated with HemoCue as a result of an enacted income tax rate change in Sweden.
Year Ended December 31, 2011 Compared with Year Ended December 31, 2010
Continuing Operations
% Increase
(Decrease)2011 2010
(dollars in millions, except per share data)
Net revenues $ 7,391.9 $ 7,260.1 1.8 %
Income from continuing operations 459.0 708.7 (35.2)%
Earnings per diluted share $ 2.85 $ 3.98 (28.4)%
Results for the year ended December 31, 2011 were affected by a number of items which impacted earnings per
diluted share by $1.53. During the first quarter of 2011, we recorded the Medi-Cal charge of $236 million, or $1.22 per diluted
share, in other operating (income) expense, net. In addition, results for the year ended December 31, 2011 included $52 million
of pre-tax charges, or $0.20 per diluted share, incurred in conjunction with further restructuring and integrating our business
consisting of $42 million of pre-tax charges, principally associated with workforce reductions, with the remainder principally
professional fees. We also recorded fourth quarter pre-tax charges of $5.6 million, or $0.02 per diluted share, associated with
severance and other separation benefits as well as accelerated vesting of certain equity awards in connection with the
succession of our prior CEO. Results for the year ended December 31, 2011 also included pre-tax transaction costs of $20
million, or $0.09 per diluted share, associated with the acquisitions of Athena and Celera. Of these costs, $16.9 million,
primarily related to professional fees, were recorded in selling, general and administrative expenses and $3.1 million of
financing related costs were included in interest expense, net.
Results for the year ended December 31, 2011 also included discrete income tax benefits of $0.11 per diluted share,
primarily associated with certain state tax planning initiatives and the favorable resolution of certain tax contingencies. In
addition, lower outstanding share counts, resulting from share repurchases, contributed $0.28 of earnings per share
improvement, compared to the prior year.
Results for the year ended December 31, 2010 were affected by a number of items which impacted earnings per
diluted share by $0.12. During 2010, we recorded pre-tax charges of $26.8 million, or $0.09 per diluted share, principally
associated with workforce reductions in the first and fourth quarters. Results for the year ended December 31, 2010 also
included a $9.6 million fourth quarter pre-tax charge, or $0.03 per diluted share, associated with the settlement of employment
litigation.
Results for the year ended December 31, 2010 also included discrete income tax benefits of $0.12 per diluted share,
primarily associated with the favorable resolution of certain tax contingencies.
After considering the impact of the items noted above on the year-over-year comparisons, operating performance in
2011 declined compared to the prior year due to reduced revenues (before acquisitions) and higher costs principally associated
with employee compensation and benefits, and investments we have made in our sales and service capabilities.