QUEST DIAGNOSTICS INCORPORATED AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
(dollars in thousands, unless otherwise indicated)

 


     The following relates to options outstanding at December 31, 2002:

 

 

 

Options Outstanding

 

Options Exercisable

 

 

 

 

 

 

 

 

 

 

Range of

Exercise Price

 

 

 

Shares

(in thousands)

Weighted Average Remaining Contractual Life

(in years)

 

 

Weighted Average Exercise Price

 

 

 

 

Shares

(in thousands)

 

 

Weighted Average Exercise Price

 

 

 

 

 

 

 

  $5.26 - $11.28

           716

4.9

        $ 7.93

 

716

         $      7.93

$12.92 - $19.16

           3,369

6.7

           13.72

 

2,185

               13.76

$28.53 - $35.64

           523

7.4

           30.35

 

288

               30.40

$44.00 - $60.00

          1,956

8.2

           53.56

 

575

               53.67

$60.06 - $75.94

          1,983

9.1

           70.09

 

178

               65.83

$80.95 - $94.99

          375

9.3

           93.22

 

1

               82.55

 

The following summarizes the activity relative to incentive stock awards granted in 2002, 2001 and 2000 (shares in thousands):

         

 

2002

 

2001

 

2000

 

 

 

 

 

 

 

Incentive shares, beginning of year..........................................

 

         1,320

 

         1,788

 

         1,136

Incentive shares granted............................................................

 

                -

 

                -

 

            920

Incentive shares vested..............................................................

 

          (570)

 

          (439)

 

          (224)

Incentive shares forfeited and canceled...................................

 

             (15)

 

             (29)

 

             (44)

Incentive shares, end of year.....................................................

 

            735

 

        1,320

 

        1,788

 

 

 

 

 

 

 

Weighted average fair value of incentive shares

at grant date .............................................................................

 

 

      $         -

 

 

      $         -

 

 

      $23.54

 

The balance of the incentive stock awards at December 31, 2002 are subject to forfeiture if employment terminates prior to the end of the prescribed vesting period.

Employee Stock Purchase Plan

Under the Company’s Employee Stock Purchase Plan (“ESPP”), substantially all employees can elect to have up to 10% of their annual wages withheld to purchase Quest Diagnostics’ common stock.  The purchase price of the stock is 85% of the lower of its beginning-of-quarter or end-of-quarter market price.  Under the ESPP, the maximum number of shares of Quest Diagnostics’ common stock which may be purchased by eligible employees is 4 million.  Approximately 236, 203 and 463 thousand shares of common stock were purchased by eligible employees in 2002, 2001 and 2000, respectively. 

Employee Stock Ownership Plan

Prior to 1999, the Company maintained its Employee Stock Ownership Plan (“ESOP”) to account for certain shares of Quest Diagnostics’ common stock which had been issued for the account of all active regular employees of the Company as of December 31, 1996.  Effective with the closing of the SBCL acquisition, the Company modified certain provisions of the ESOP to provide an additional benefit to employees through ownership of the Company’s common stock.  During the year ended December 31, 2002, the ESOP was merged into the Company’s defined contribution plan.  Prior to the merger of the ESOP into the Company’s defined contribution plan, substantially all of the Company’s employees were eligible to participate in the ESOP.  The Company’s contributions to the ESOP trust were based on 2% of eligible employee compensation for those employees who were actively employed or on a leave of absence on the last day of the Plan year.  Company contributions to the trust were made in the form of shares of Quest Diagnostics’ common stock. The Company’s contributions to this plan aggregated $10.4 million, $19.7 million and $21 million for 2002, 2001 and 2000, respectively.