Quest Diagnostics 2015 Annual Report Download - page 106

QUEST DIAGNOSTICS INCORPORATED AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – CONTINUED
(in millions unless otherwise indicated)
F- 31
Senior Unsecured Revolving Credit Facility
In April 2014, the Company amended and restated the agreement for the $750 million senior unsecured revolving
credit facility (the “Credit Facility” or "Senior Unsecured Revolving Credit Facility") entered into in September 2011. The
amended and restated Credit Facility matures in April 2019. Under the Credit Facility, the Company can issue letters of credit
totaling $150 million (see Note 17). Issued letters of credit reduce the available borrowing capacity under the facility. Interest
on the Credit Facility is based on certain published rates plus an applicable margin that will vary over a range from 75 basis
points to 163 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, 2015 and 2014, 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, 2015 and 2014, there were no outstanding borrowings under the Credit Facility.
Senior Notes Offerings
In March 2015, the Company completed a $1.2 billion senior notes offering (the “2015 Senior Notes”) that was sold in
three tranches: (a) $300 million aggregate principal amount of 2.50% senior notes due March 2020, issued at a discount of $1
million; (b) $600 million aggregate principal amount of 3.50% senior notes due March 2025; and (c) $300 million aggregate
principal amount of 4.70% senior notes due March 2045. The Company incurred $11 million of costs associated with the 2015
Senior Notes, which is included as a reduction to the carrying amount of long-term debt and is being amortized over the term of
the related debt.
In March 2014, the Company completed a $600 million senior notes offering (the “2014 Senior Notes”) that was sold
in two tranches: (a) $300 million aggregate principal amount of 2.70% senior notes due April 2019; and (b) $300 million
aggregate principal amount of 4.25% senior notes due April 2024, issued at a discount of $1 million. The Company incurred $5
million of costs associated with the 2014 Senior Notes, which is included as a reduction to the carrying amount of long-term
debt and is being amortized over the term of the related debt.
All of the 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.
Retirement of Debt
In March 2015, the Company commenced a cash tender offer to purchase up to $250 million aggregate principal
amount of its 6.95% Senior Notes due July 2037 and 5.75% Senior Notes due January 2040 using a portion of the proceeds
from the 2015 Senior Notes. The Company repurchased $176 million of its 6.95% Senior Notes due July 2037 and $74 million
of its 5.75% Senior Notes due January 2040. In April 2015, the Company redeemed all of the 5.45% Senior Notes due
November 2015, $150 million of the 3.2% Senior Notes due April 2016 and all of the 6.4% Senior Notes due July 2017 with
the remaining proceeds from the 2015 Senior Notes. For the year ended December 31, 2015, the Company recorded a loss on
retirement of debt in other (expense) income, net of $144 million, principally comprised of premiums paid in connection with
these transactions.
QUEST DIAGNOSTICS 2015 ANNUAL REPORT ON FORM 10-K