Quest Diagnostics 2015 Annual Report Download - page 54

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50
(d) Operating income includes pre-tax charges of $121 million, primarily associated with workforce reductions and
professional fees incurred in connection with further restructuring and integrating our business. In addition, operating
income includes pre-tax charges of $24 million principally associated with costs related to legal matters, partially offset by
a pre-tax gain of $9 million associated with a decrease in the fair value of the contingent consideration accrual associated
with our Summit Health acquisition.
Income from continuing operations includes discrete income tax benefits of $44 million associated with the favorable
resolution of certain tax contingencies.
(e) On January 2, 2013, we completed the acquisition of the clinical outreach and anatomic pathology businesses of UMass.
On May 15, 2013, we completed the acquisition of the toxicology and clinical laboratory business of Advanced Toxicology
Network ("ATN") from Concentra, a subsidiary of Humana Inc. On June 22, 2013, we completed the acquisition of certain
lab-related clinical outreach service operations of Dignity Health ("Dignity"), a hospital system in California. On October
7, 2013, we completed the acquisition of ConVerge Diagnostic Services, LLC ("ConVerge"), a leading full-service
laboratory providing clinical, cytology and anatomic pathology testing services to patients, physicians and hospitals in
New England. Consolidated operating results for 2013 include the results of operations of UMass, ATN, Dignity and
ConVerge subsequent to the closing of the applicable acquisition. For further details regarding our acquisitions, see Note 5
to the consolidated financial statements.
(f) Operating income includes pre-tax charges of $115 million, primarily associated with workforce reductions and
professional fees incurred in connection with further restructuring and integrating our business. In addition, operating
income includes a pre-tax gain on sale of royalty rights of $474 million and a pre-tax loss of $40 million associated with
the sale of the Enterix. For further details regarding the sale of royalty rights and Enterix, see Note 6 to the consolidated
financial statements.
Income (loss) from discontinued operations, net of taxes includes a gain of $14 million (including foreign currency
translation adjustments, partially offset by income tax expense and transaction costs) associated with the sale of HemoCue.
In addition, income (loss) from discontinued operations, net of taxes includes discrete tax benefits of $20 million
associated with favorable resolution of certain tax contingencies related to our NID business. For further details regarding
our discontinued operations, see Note 18 to the consolidated financial statements.
Net cash provided by operating activities includes income tax payments of $175 million associated with the sale of royalty
rights. In addition, it includes approximately $70 million of income tax payments which were deferred from the fourth
quarter of 2012 under a program offered to companies whose principal place of business was in states most affected by
Hurricane Sandy.
Net cash provided by investing activities includes proceeds from the sale of the ibrutinib royalty rights of $474 million, net
of transaction costs, as well as proceeds from the sales of HemoCue and Enterix of $296 million.
(g) On January 6, 2012, we completed the acquisition of S.E.D. Medical Laboratories ("S.E.D.") from Lovelace Health
System. Consolidated operating results for 2012 include the results of operations of S.E.D. subsequent to the closing of
the acquisition.
(h) Operating income includes $106 million of pre-tax charges incurred in conjunction with further restructuring and
integrating our business. Results for 2012 also include pre-tax charges of $10 million, principally representing severance
and other separation benefits as well as accelerated vesting of certain equity awards in connection with the succession of
our prior CEO. In addition, we estimate that the impact of severe weather during the fourth quarter of 2012 adversely
affected operating income for 2012 by approximately $16 million.
Income (loss) from discontinued operations, net of taxes includes charges for the asset impairment associated with
HemoCue and the loss on sale associated with OralDNA totaling $86 million. Discontinued operations also includes a $8
million income tax expense related to the re-valuation of deferred tax assets associated with HemoCue and a $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. In February 2013, we entered into an agreement to sell HemoCue. The sale of
HemoCue was completed in April 2013. For further details regarding our discontinued operations, see Note 18 to the
consolidated financial statements.
QUEST DIAGNOSTICS 2015 ANNUAL REPORT ON FORM 10-K