QUEST DIAGNOSTICS INCORPORATED AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED

(dollars in thousands unless otherwise indicated)

14.          RELATED PARTY TRANSACTIONS

As a result of the merger of Glaxo Wellcome and SmithKline Beecham in December 2000, GlaxoSmithKline plc (“GSK”) currently beneficially owns approximately 22% of the outstanding shares of Quest Diagnostics common stock.

As part of the SBCL acquisition agreements, SmithKline Beecham and Quest Diagnostics entered into data access agreements under which Quest Diagnostics granted SmithKline Beecham and certain affiliated companies certain non-exclusive rights and access to use Quest Diagnostics’ proprietary clinical laboratory information database, which were terminated as of December 31, 2002.

In addition to the contracts outlined above, GSK has a long-term contractual relationship with Quest Diagnostics under which Quest Diagnostics is the primary provider of testing to support GSK’s and SmithKline Beecham’s clinical trials testing requirements worldwide (the “Clinical Trials Agreements”).

Significant transactions with GSK and SmithKline Beecham during 2003, 2002 and 2001 included:

		2003		2002		2001
Net revenues, primarily derived under the Clinical Trials Agreements....		$50,060		$32,822		$27,806

In addition, under the SBCL acquisition agreements, SmithKline Beecham has agreed to indemnify Quest Diagnostics, on an after tax basis, against certain matters primarily related to taxes and billing and professional liability claims.

At December 31, 2003 and 2002, accounts payable and accrued expenses included $21 million and $26 million, respectively, due to SmithKline Beecham, primarily related to tax benefits associated with indemnifiable matters.

During 2001, the Company received $8.7 million from Corning related to certain indemnified billing-related claims settled in 2001 and 2000.