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QUEST DIAGNOSTICS INCORPORATED AND SUBSIDIARIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED(dollars in thousands unless otherwise indicated)
6. SUPPLEMENTAL CASH FLOW AND OTHER DATA
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Depreciation expense.............................................................................................
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$ 145,701 |
$ 123,018 |
$ 101,620 |
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Interest expense......................................................................................................
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(60,630) |
(56,347) |
(76,765) |
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Interest income........................................................................................................
|
841 |
2,674 |
6,242 |
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Interest, net..............................................................................................................
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(59,789) |
(53,673) |
(70,523) |
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Interest paid.............................................................................................................
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59,394 |
56,102 |
58,537 |
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Income taxes paid....................................................................................................
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211,966 |
83,710 |
26,384 |
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Businesses acquired: |
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Fair value of assets acquired................................................................................. |
$ 989,778 |
$ 561,267 |
$ 182,136 |
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Fair value of liabilities assumed............................................................................ |
291,422 |
215,810 |
29,272 |
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Non-cash financing activities: |
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Fair value of common stock issued to acquire
Unilab....................................... |
$ 372,464 |
- |
- |
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Fair value
of converted options issued in conjunction with the Unilab acquisition............................................................................................................ |
8,452 |
- |
- |
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7. LOSS
ON DEBT EXTINGUISHMENT
On
June 27, 2001, the Company refinanced a majority of its long-term debt on a
senior unsecured basis to reduce overall interest costs and obtain less
restrictive covenants. Specifically,
the Company completed a $550 million senior notes offering (the “Senior Notes”)
and entered into a new $500 million senior unsecured credit facility (the
“Credit Agreement”) which included a five-year $325 million revolving credit
agreement and a $175 million term loan. The Company used the net proceeds from
the senior notes offering and the term loan, together with cash on hand, to
repay all of the $584 million which was outstanding under its then existing
senior secured credit agreement, including the costs to settle existing
interest rate swap agreements, and to consummate a cash tender offer and
consent solicitation for its 10¾% senior subordinated notes due 2006 (the
“Subordinated Notes”). During the
remainder of 2001, the Company repaid the $175 million term loan under the
Credit Agreement.
In conjunction with its debt refinancing, the
Company recorded a loss on debt extinguishment of $42 million, $36 million of
which represented the write-off of $23 million of deferred financing costs,
associated with the Company’s debt which was refinanced, and $13 million of
payments related primarily to the tender premium incurred in connection with
the Company’s cash tender offer of the Subordinated Notes. The remaining $6 million of losses
represented amounts incurred in conjunction with the cancellation of certain
interest rate swap agreements, which were terminated in connection with the
debt that was refinanced. Prior to the
Company’s debt refinancing in June 2001, the Company’s senior secured credit
agreement required the Company to maintain interest rate swap agreements to
mitigate the risk of changes in interest rates associated with a portion of its
variable interest rate indebtedness. These interest rate swap agreements were considered a hedge against
changes in the amount of future cash flows associated with the interest
payments of the Company’s variable rate debt obligations. Accordingly, the interest rate swap
agreements were recorded at their estimated fair value in the Company’s
consolidated balance sheet and the related losses on these contracts were
deferred in stockholders’ equity as a component of comprehensive income. In conjunction with the debt refinancing,
the interest rate swap agreements were terminated and the losses reflected in
stockholders’ equity as a component of comprehensive income were reclassified
to earnings and reflected as a charge within the loss on debt extinguishment in
the consolidated statements of operations for the year ended December 31, 2001.
8. PROPERTY,
PLANT AND EQUIPMENT
Property, plant and equipment at December 31,
2003 and 2002 consisted of the following:
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Land....................................................................................................................................... |
$ 34,909 |
$ 33,148 |
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Buildings and improvements............................................................................................. |
273,548 |
277,565 |
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Laboratory equipment,
furniture and fixtures................................................................. |
670,671 |
569,982 |
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Leasehold improvements................................................................................................... |
148,508 |
119,397 |
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Computer software developed or obtained for internal use......................................... |
124,469 |
101,594 |
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Construction-in-progress................................................................................................... |
40,083 |
40,599 |
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1,292,188 |
1,142,285 |
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Less: accumulated
depreciation and amortization.......................................................... |
(684,883) |
(572,136) |
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Total................................................................................................................................... |
$ 607,305 |
$ 570,149 |
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