| DOCUMENT AND ENTITY INFORMATION (USD $) | ||
| In Billions, except Share data | 6 Months Ended
Jun. 30, 2009 | Jun. 30, 2008
|
| Entity Information [Line Items] | ||
| Entity Registrant Name | Quest Diagnostics Incorporated | |
| Entity Central Index Key | 0001022079 | |
| Current Fiscal Year End Date | --12-31 | |
| Entity Well-known Seasoned Issuer | Yes | |
| Entity Voluntary Filers | No | |
| Entity Current Reporting Status | Yes | |
| Entity Filer Category | Large Accelerated Filer | |
| Entity Public Float | 7.7 | |
| Entity Common Stock, Shares Outstanding | 185,747,242 | |
| Document Information [Line Items] | ||
| Document Type | 10-Q | |
| Amendment Flag | false | |
| Document Period End Date | 2009-06-30 |
| CONSOLIDATED STATEMENTS OF OPERATIONS (USD $) | ||||
| In Thousands, except Per Share data | 3 Months Ended
Jun. 30, 2009 | 3 Months Ended
Jun. 30, 2008 | 6 Months Ended
Jun. 30, 2009 | 6 Months Ended
Jun. 30, 2008 |
| Net revenues | $1,901,818 | $1,837,901 | $3,709,824 | $3,622,538 |
| Operating costs and expenses: | ||||
| Cost of Services | 1,100,212 | 1,083,481 | 2,153,701 | 2,142,108 |
| Selling, general and administrative | 448,756 | 438,037 | 873,057 | 873,115 |
| Amortization of intangible assets | 9,377 | 9,916 | 18,382 | 19,180 |
| Other operating income, net | (15,902) | (1,656) | (15,754) | (249) |
| Total operating costs and expenses | 1,542,443 | 1,529,778 | 3,029,386 | 3,034,154 |
| Operating Income | 359,375 | 308,123 | 680,438 | 588,384 |
| Other income (expense): | ||||
| Interest expense, net | (36,846) | (45,432) | (76,254) | (93,049) |
| Equity earnings in unconsolidated joint ventures | 8,382 | 7,592 | 16,952 | 15,591 |
| Other (expense) income, net | (9,095) | 548 | (11,804) | (489) |
| Total non-operating expenses, net | (37,559) | (37,292) | (71,106) | (77,947) |
| Income from continuing operations before taxes | 321,816 | 270,831 | 609,332 | 510,437 |
| Income tax expense | 123,535 | 100,787 | 233,724 | 192,645 |
| Income from continuing operations | 198,281 | 170,044 | 375,608 | 317,792 |
| Income (loss) from discontinued operations, net of taxes | 88 | (890) | (1,583) | (1,977) |
| Net income | 198,369 | 169,154 | 374,025 | 315,815 |
| Less: Net income attributable to noncontrolling interests | 10,169 | 7,826 | 18,723 | 14,880 |
| Net income attributable to Quest Diagnostics | 188,200 | 161,328 | 355,302 | 300,935 |
| Amounts attributable to Quest Diagnostics' stockholders | ||||
| Income from continuing operations | 188,112 | 162,218 | 356,885 | 302,912 |
| Income (loss) from discontinued operations, net of taxes | 88 | (890) | (1,583) | (1,977) |
| Net income attributable to Quest Diagnostics | $188,200 | $161,328 | $355,302 | $300,935 |
| Earnings per share attributable to Quest Diagnostics' common stockholders - basic: | ||||
| Income from continuing operations | 1.01 | 0.83 | 1.9 | 1.56 |
| Income (loss) from discontinued operations | $0 | $0 | -0.01 | -0.01 |
| Net income | 1.01 | 0.83 | 1.89 | 1.55 |
| Earnings per share attributable to Quest Diagnostics' common stockholders - diluted: | ||||
| Income from continuing operations | $1 | 0.83 | 1.89 | 1.54 |
| Income (loss) from discontinued operations | $0 | -0.01 | -0.01 | -0.01 |
| Net income | $1 | 0.82 | 1.88 | 1.53 |
| Weighted average common shares outstanding: | ||||
| Basic | 185,266 | 194,527 | 187,318 | 194,335 |
| Diluted | 187,003 | 196,119 | 188,850 | 195,951 |
| Dividends per common share | 0.1 | 0.1 | 0.2 | 0.2 |
| CONSOLIDATED BALANCE SHEETS (USD $) | ||
| In Thousands | Jun. 30, 2009
| Dec. 31, 2008
|
| Current assets: | ||
| Cash and cash equivalents | $119,294 | $253,946 |
| Accounts receivable, net of allowance for doubtful accounts of $251,415 and $261,334 at June 30, 2009 and December 31, 2008, respectively | 896,535 | 832,873 |
| Inventories | 79,715 | 102,125 |
| Deferred income taxes | 154,017 | 218,419 |
| Prepaid expenses and other current assets | 89,537 | 89,456 |
| Total current assets | 1,339,098 | 1,496,819 |
| Property, plant and equipment, net | 843,757 | 879,687 |
| Goodwill, net | 5,067,267 | 5,054,926 |
| Intangible assets, net | 819,320 | 827,403 |
| Other assets | 141,993 | 144,995 |
| Total assets | 8,211,435 | 8,403,830 |
| Current liabilities: | ||
| Accounts payable and accrued expenses | 818,907 | 1,219,619 |
| Short-term borrowings and current portion of long-term debt | 204,969 | 5,142 |
| Total current liabilities | 1,023,876 | 1,224,761 |
| Long-term debt | 2,877,767 | 3,078,089 |
| Other liabilities | 544,150 | 475,846 |
| Stockholders' equity: | ||
| Common stock, par value $0.01 per share; 600,000 shares authorized at both June 30, 2009 and December 31, 2008; 214,118 and 214,113 shares issued at June 30, 2009 and December 31, 2008, respectively | 2,141 | 2,141 |
| Additional paid-in capital | 2,273,170 | 2,262,065 |
| Retained earnings | 2,879,722 | 2,561,679 |
| Accumulated other comprehensive loss | (55,589) | (68,068) |
| Treasury stock, at cost; 28,434 shares and 23,739 shares at June 30, 2009 and December 31, 2008, respectively | (1,358,300) | (1,152,921) |
| Total Quest Diagnostics stockholders' equity | 3,741,144 | 3,604,896 |
| Noncontrolling interests | 24,498 | 20,238 |
| Total stockholders' equity | 3,765,642 | 3,625,134 |
| Total liabilities and stockholders' equity | $8,211,435 | $8,403,830 |
| CONSOLIDATED BALANCE SHEETS (Parenthetical) (USD $) | ||
| In Thousands | Jun. 30, 2009
| Dec. 31, 2008
|
| Consolidated Balance Sheets (Parenthetical) | ||
| Allowance for doubtful accounts | $251,415 | $261,334 |
| Common stock, par value | 0.01 | 0.01 |
| Common stock, shares authorized | 600,000 | 600,000 |
| Common stock, shares, issued | 214,118 | 214,113 |
| Treasury stock, shares | 28,434 | 23,739 |
| CONSOLIDATED STATEMENTS OF CASH FLOWS (USD $) | ||
| In Thousands | 6 Months Ended
Jun. 30, 2009 | 6 Months Ended
Jun. 30, 2008 |
| Cash flows from operating activities: | ||
| Net income | $374,025 | $315,815 |
| Adjustments to reconcile net income to net cash provided by operating activities: | ||
| Depreciation and amortization | 130,047 | 132,684 |
| Provision for doubtful accounts | 165,424 | 167,568 |
| Deferred income tax provision (benefit) | 57,021 | (6,061) |
| Stock-based compensation expense | 33,166 | 36,841 |
| Excess tax benefits from stock-based compensation arrangements | (1,790) | (1,223) |
| Other, net | 9,525 | (4,811) |
| Changes in operating assets and liabilities: | ||
| Accounts receivable | (228,385) | (213,615) |
| Accounts payable and accrued expenses | 4,136 | (40,065) |
| Integration, settlement and other special charges | (320,015) | (4,196) |
| Income taxes payable | 8,067 | 2,187 |
| Other assets and liabilities, net | 32,335 | (13,914) |
| Net cash provided by operating activities | 263,556 | 371,210 |
| Cash flows from investing activities: | ||
| Business acquisitions, net of cash acquired | (12,052) | 19,887 |
| Capital expenditures | (75,996) | (94,821) |
| (Increase) decrease in investments and other assets | (6,028) | 5,965 |
| Net cash used in investing activities | (94,076) | (68,969) |
| Cash flows from financing activities: | ||
| Proceeds from borrowings | 510,000 | 20,039 |
| Repayments of debt | (511,185) | (304,082) |
| Decrease in book overdrafts | (19,743) | (4,167) |
| Purchases of treasury stock | (250,000) | 0 |
| Exercise of stock options | 17,225 | 11,562 |
| Excess tax benefits from stock-based compensation arrangements | 1,790 | 1,223 |
| Dividends paid | (37,616) | (38,889) |
| Distributions to noncontrolling interests | (14,463) | (11,834) |
| Financing costs paid | (140) | (289) |
| Net cash used in financing activities | (304,132) | (326,437) |
| Net change in cash and cash equivalents | (134,652) | (24,196) |
| Cash and cash equivalents, beginning of period | 253,946 | 167,594 |
| Cash and cash equivalents, end of period | $119,294 | $143,398 |
| BASIS OF PRESENTATION | |
| 6 Months Ended
Jun. 30, 2009 USD / shares | |
| Basis of Presentation [Abstract] | |
| BASIS OF PRESENTATION | 1. BASIS OF PRESENTATION Background Quest Diagnostics Incorporated and its subsidiaries (Quest Diagnostics or the Company) is the worlds leading provider of diagnostic testing, information and services, providing insights that enable patients, physicians and others to make decisions to improve health. Quest Diagnostics offers patients and physicians the broadest access to diagnostic laboratory services through the Companys nationwide network of laboratories and patient service centers. The Company provides interpretive consultation through the largest medical and scientific staff in the industry, with approximately 900 M.D.s and Ph.D.s primarily located in the United States. Quest Diagnostics is the leading provider of clinical testing, including gene-based testing and other esoteric testing, anatomic pathology services and testing for drugs-of-abuse, and the leading provider of risk assessment services for the life insurance industry. The Company is also a leading provider of testing for clinical trials. The Companys diagnostics products business manufactures and markets diagnostic test kits and specialized point-of-care testing. Quest Diagnostics empowers healthcare organizations and clinicians with state-of-the-art information technology solutions that can improve patient care and medical practice. Basis of Presentation The interim consolidated financial statements reflect all adjustments which in the opinion of management are necessary for a fair statement of financial condition and results of operations for the periods presented. Except as otherwise disclosed, all such adjustments are of a normal recurring nature. The interim consolidated financial statements have been compiled without audit. Operating results for the interim periods are not necessarily indicative of the results that may be expected for the full year. These interim consolidated financial statements should be read in conjunction with the audited consolidated financial statements included in the Companys 2008 Annual Report on Form 10-K. On January 1, 2009, the Company adopted Statement of Financial Accounting Standard (SFAS) No. 160 Noncontrolling Interests in Consolidated Financial Statements, an Amendment of ARB No. 51 (SFAS 160). In accordance with the requirements of SFAS 160, the Company has provided a new presentation on the face of the consolidated financial statements to separately classify non-controlling interests within the equity section of the consolidated balance sheets and to separately report the amounts attributable to controlling and non-controlling interests in the consolidated statements of operations, comprehensive income and changes in equity for all periods presented. The adoption of SFAS 160 did not impact earnings per share attributable to Quest Diagnostics common stockholders. Use of Estimates The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial |
| FAIR VALUE MEASUREMENTS | |
| 6 Months Ended
Jun. 30, 2009 USD / shares | |
| Fair Value Measurements [Abstract] | |
| FAIR VALUE MEASUREMENTS | 2. FAIR VALUE MEASUREMENTS SFAS No. 157, Fair Value Measurements (SFAS 157) provides a single definition of fair value and a common framework for measuring fair value as well as new disclosure requirements for fair value measurements used in financial statements. Fair value measurements are based upon the exit price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants exclusive of any transaction costs, and are determined by either the principal market or the most advantageous market. The principal market is the market with the greatest level of activity and volume for the asset or liability. Absent a principal market to measure fair value, the Company has used the most advantageous market, which is the market that the Company would receive the highest selling price for the asset or pay the lowest price to settle the liability, after considering transaction costs. However, when using the most advantageous market, transactions costs are only considered to determine which market is the most advantageous and these costs are then excluded when applying a fair value measurement. On January 1, 2009, the Company adopted the provisions of SFAS 157 for applying fair value measurements to assets, liabilities and transactions on a non-recurring basis and the adoption did not have a material effect on the Companys financial position, results of operations or cash flows. SFAS 157 creates a three-level hierarchy to prioritize the inputs used in the valuation techniques to derive fair values. The basis for fair value measurements for each level within the hierarchy is described below with Level 1 having the highest priority and Level 3 having the lowest. Level 1: Quoted prices in active markets for identical assets or liabilities. Level 2: Quoted prices for similar assets or liabilities in active markets; quoted prices for identical or similar instruments in markets that are not active; and model-derived valuations in which all significant inputs are observable in active markets. Level 3: Valuations derived from valuation techniques in which one or more significant inputs are unobservable. The following table provides a summary of the recognized assets and liabilities that are measured at fair value on a recurring basis. Basis of Fair Value Measurements Quoted Prices in Active Markets for Identical Assets / Liabilities Significant Other Observable Inputs Significant Unobservable Inputs June 30, 2009 Level 1 Level 2 Level 3 Assets: Trading securities $ 27,297 $ 27,297 $ - $ - Cash surrender value of life insurance policies 13,272 - 13,272 - Foreign currency forward contracts 1,138 - 1,138 - Total $ 41,707 $ 27,297 $ 14,410 $ - Liabilities: Deferred compensation liabilities $ 43,682 $ - $ 43,682 $ - Interest rate swaps 3,923 - 3,923 - Forei |
| GOODWILL AND INTANGIBLE ASSETS | |
| 6 Months Ended
Jun. 30, 2009 USD / shares | |
| Goodwill and Intangible Assets [Abstract] | |
| GOODWILL AND INTANGIBLE ASSETS | 3. GOODWILL AND INTANGIBLE ASSETS The changes in goodwill, net for the six months ended June 30, 2009 and for the year ended December 31, 2008 are as follows: June 30, 2009 December 31, 2008 Balance at beginning of period $ 5,054,926 $ 5,220,104 Goodwill acquired during the year 8,242 9,260 Other purchase accounting adjustments (323) (120,105) Increase (decrease) related to foreign currency translation 4,422 (54,333) Balance at end of period $ 5,067,267 $ 5,054,926 Approximately 90% of the Companys goodwill as of June 30, 2009 and December 31, 2008 was associated with its clinical testing business. For the six months ended June 30, 2009 and for the year ended December 31, 2008, goodwill acquired during the year was associated with several immaterial acquisitions. For the year ended December 31, 2008, other purchase accounting adjustments were primarily due to changes in estimates regarding the realization of certain pre-acquisition net operating loss carryforwards, the reduction in certain acquired pre-acquisition tax loss contingencies, and a payment received in 2008 from an escrow fund established at the time of an acquisition in 2007. Intangible assets at June 30, 2009 and December 31, 2008 consisted of the following: Weighted Average Amortiz-ation Period June 30, 2009 December 31, 2008 Amortizing intangible assets: Cost Accumulated Amortization Net Cost Accumulated Amortization Net Customer-related intangibles 19 years $588,254 $(114,354) $473,900 $585,963 $(99,384) $486,579 Non-compete agreements 5 years 54,553 (49,256) 5,297 54,382 (48,298) 6,084 Other 12 years 61,225 (15,990) 45,235 53,934 (13,258) 40,676 Total 19 years 704,032 (179,600) 524,432 694,279 (160,940) 533,339 Intangible assets not subject to amortization: Tradenames 294,888 - 294,888 294,064 - 294,064 Total intangible assets $998,920 $(179,600) $819,320 $988,343 $(160,940) $827,403 Amortization expense related to intangible assets was $9.4 million and $9.9 million for the three months ended June 30, 2009 and 2008, respectively. For the six months ended June 30, 2009 and 2008, amortization expense related to intangible assets was $18.4 million and $19.2 million, respectively. The estimated amortization expense related to intangible assets for each of the five succeeding fiscal years and thereafter as of June 30, 2009 is as follows: Fiscal Year Ending December 31, Remainder of 2009................ $ 18,609 2010........................................ 36,962 2011........................................ 36,699 2012.................................. |
| FINANCIAL INSTRUMENTS | |
| 6 Months Ended
Jun. 30, 2009 USD / shares | |
| Financial Instruments [Abstract] | |
| FINANCIAL INSTRUMENTS | 4. FINANCIAL INSTRUMENTS The Company uses derivative financial instruments to manage its exposure to market risks for changes in interest rates and foreign currency. This includes the use of interest rate swap agreements and foreign currency forward contracts to manage its exposure to movements in interest and currency rates. The Company has established policies and procedures for risk assessment and the approval, reporting and monitoring of derivative financial instrument activities. These policies prohibit holding or issuing derivative financial instruments for speculative or trading purposes. The Company does not enter into derivative financial instruments that contain credit-risk-related contingent features or requirements to post collateral. Interest Rate Risk The Company is exposed to interest rate risk on its cash and cash equivalents and its debt obligations. Interest income earned on cash and cash equivalents may fluctuate as interest rates change, however, due to their relatively short maturities, the Company does not hedge these assets and the impact of interest rate risk is not material. The Companys debt obligations consist of fixed-rate and variable-rate debt instruments. The Companys objective is to mitigate the variability in cash outflows that result from changes in interest rates by maintaining a balanced mix of fixed-rate and variable-rate debt obligations. In order to achieve these objectives, the Company has entered into interest rate swaps on a portion of one of its variable-rate debt obligations to make that portion a fixed-rate debt instrument. As of June 30, 2009, the interest rate swaps allowed the Company to receive variable rates of interest based on three-month LIBOR plus an agreed upon spread of 50 basis points and pay fixed rates of interest ranging from 5.13% to 5.27% on notional amounts aggregating $200 million. As of June 30, 2009, the three-month LIBOR rate on these financial instruments was 1.05%. These interest rate swaps are accounted for as cash flow hedges and the Company records the derivatives as either an asset or liability measured at its fair value. The effective portion of changes in the fair value of the derivatives is recorded in accumulated other comprehensive loss. If it is determined that a derivative ceases to be a highly effective hedge, the Company discontinues hedge accounting, and any deferred gains or losses are recorded in the consolidated statement of operations. The total loss, net of tax benefit, recognized in accumulated other comprehensive loss on the interest rate swaps as of June 30, 2009 and December 31, 2008 was $2.4 million and $3.6 million, respectively. There was no gain or loss recognized on the swap agreements for the three or six months ended June 30, 2009 and 2008 as a result of ineffectiveness. The periodic net cash settlements under the interest rate swaps are recorded in interest expense, net. Foreign Currency Risk The Company is exposed to market risk for changes in foreign exchange rates primarily under certain inter-company receivables and payables. Foreign exchange forward contracts are used to mitigate the exposure of the eventual ne |
| DEBT | |
| 6 Months Ended
Jun. 30, 2009 USD / shares | |
| Debt [Abstract] | |
| DEBT | 5. DEBT Short-term borrowings and current portion of long-term debt at June 30, 2009 and December 31, 2008 consisted of the following: June 30, 2009 December 31, 2008 Borrowings under Secured Receivables Credit Facility $ 200,000 $ - Current portion of long-term debt 4,969 5,142 Total short-term borrowings and current portion of long-term debt $ 204,969 $ 5,142 Long-term debt at June 30, 2009 and December 31, 2008 consisted of the following: June 30, 2009 December 31, 2008 Industrial Revenue Bonds due September 2009 $ 1,800 $ 1,800 Senior Notes due November 2010 226,243 399,724 Senior Notes due July 2011 248,432 274,724 Term Loan due May 2012 1,092,000 1,092,000 Senior Notes due November 2015 498,987 498,907 Senior Notes due July 2017 374,361 374,320 Senior Notes due July 2037 420,604 420,526 Debentures due June 2034 3,098 3,070 Other 17,211 18,160 Total 2,882,736 3,083,231 Less: current portion 4,969 5,142 Total long-term debt $ 2,877,767 $ 3,078,089 June 2009 Debt Tender On May 19, 2009, the Company commenced a cash tender offer to purchase up to $200 million aggregate principal amount of its 5.125% Senior Notes due 2010 and 7.50% Senior Notes due 2011 (collectively, the Notes). On June 16, 2009, The Company finalized its cash tender offer (the June 2009 Debt Tender) by purchasing approximately $174 million aggregate principal amount of its 5.125% Senior Notes Due 2010 and approximately $26 million aggregate principal amount of its 7.50% Senior Notes due 2011 that resulted in pre-tax losses of $4.8 million and $1.5 million, respectively. The aggregate pre-tax loss of $6.3 million includes the write-off of $0.5 million of deferred financing fees and unamortized discounts and cash payments of $5.8 million related to premiums and other costs to purchase the Notes and is included in other (expense) income, net. The June 2009 Debt Tender was financed with cash on-hand and $150 million of borrowings under the Secured Receivables Credit Facility. Secured Receivables Credit Facility For the six months ended June 30, 2009, the Company borrowed $510 million under its Secured Receivables Credit Facility primarily to fund second quarter payments totaling $308 million in connection with the previously disclosed settlement of the federal government investigation related to NID (see Note 8) and to fund $150 million of debt repayments in connection with the June 2009 Debt Tender. During the six months ended June 30, 2009, the Company repaid $310 million on its Secured Receivables Credit Facility. At June 30, 2009, borrowings outstanding under the Secured Receivables Credit Facility totaled $200 million. As of June 30, 2009, long-term debt maturing in each of the years subsequent to June 30, 2010 is as follows: Fiscal Year ending December 31, |
| STOCKHOLDERS' EQUITY | |
| 1/1/2009 - 6/30/2009
USD / shares | |
| Stockholders' Equity [Abstract] | |
| STOCKHOLDERS' EQUITY | 6. STOCKHOLDERS EQUITY Changes in stockholders equity for the six months ended June 30, 2009 were as follows: Quest Diagnostics Stockholders Equity Shares of Common Stock Outstand-ing Common Stock Additional Paid-In Capital Retained Earnings Accumulated Other Compre-hensive Loss Treasury Stock, at Cost Compre-hensive Income Noncontroll-ing Interests Total Stockholders Equity Balance, December 31, 2008 190,374 $ 2,141 $ 2,262,065 $ 2,561,679 $ (68,068) $ (1,152,921) $ 20,238 $ 3,625,134 Net income 355,302 $ 355,302 18,723 374,025 Currency translation 10,955 10,955 10,955 Reversal of market valuation, net of tax expense of $190 290 290 290 Deferred loss, less reclassifications 1,234 1,234 1,234 Comprehensive income $ 367,781 Dividends declared (37,259) (37,259) Distributions to noncontrolling interests (14,463) (14,463) Issuance of common stock under benefit plans 500 368 9,402 9,770 Stock-based compensation expense 20,878 12,288 33,166 Exercise of stock options 559 (9,701) 26,926 17,225 Shares to cover employee payroll tax withholdings on stock issued under benefit plans (129) (1,822) (3,995) (5,817) Tax benefits associated with stock-based compensation plans 1,382 1,382 Purchases of treasury stock (5,620) (250,000) (250,000) Balance, June 30, 2009 185,684 $ 2,141 $ 2,273,170 $ 2,879,722 $ (55,589) $ (1,358,300) $ 24,498 $ 3,765,642 For the three months ended June 30, 2009, total comprehensive income was $220 million. The market valuation adjustment represents the reversal of prior period unrealized holding losses for investments, net of taxes, where the decline in fair value was deemed to be other than temporary and the resulting loss was recognized in the consolidated statement of operations. The deferred loss primarily represents deferred losses on the Companys interest rate swap agreements, net of amounts reclassified to interest expense. Foreign currency translation adjustments are not adjusted for income taxes since they relate to indefinite investments in non-U.S. subsidiaries. Dividend Program During each of the quarters of 2009 and 2008, the Companys Board of Directors has declared a quarterly cash dividend of $0.10 per common share. Share Repurchase Plan In January 2009, the Companys Board of Directors authorized the Company to repurchase an additional $500 million of the Companys common stock. The share repurchase authorization has no set expiration or termination date. The Company did not purchase any shares of its common stock during the second quarter of 2009. For the six months end |
| SUPPLEMENTAL CASH FLOW & OTHER DATA | |
| 6 Months Ended
Jun. 30, 2009 USD / shares | |
| Supplemental Cash Flow & Other Data [Abstract] | |
| SUPPLEMENTAL CASH FLOW & OTHER DATA | 7. SUPPLEMENTAL CASH FLOW OTHER DATA Three Months Ended Six Months Ended June 30, June 30, 2009 2008 2009 2008 Depreciation expense $ 55,811 $ 57,509 $ 111,665 $ 113,504 Interest expense (36,961) (46,876) (76,805) (96,521) Interest income 115 1,444 551 3,472 Interest expense, net (36,846) (45,432) (76,254) (93,049) Interest paid 29,720 40,702 76,857 99,631 Income taxes paid 136,153 168,371 167,500 193,213 |
| COMMITMENTS AND CONTINGENCIES | |
| 6 Months Ended
Jun. 30, 2009 USD / shares | |
| Commitments and Contingencies [Abstract] | |
| COMMITMENTS AND CONTINGENCIES | 8. COMMITMENTS AND CONTINGENCIES The Company has a line of credit with a financial institution totaling $85 million for the issuance of letters of credit (the letter of credit line). The letter of credit line, which is renewed annually, matures on November 19, 2009 and is guaranteed by certain of the Companys domestic, wholly-owned subsidiaries (the Subsidiary Guarantors). In support of its risk management program, to ensure the Companys performance or payment to third parties, $74 million in letters of credit were outstanding at June 30, 2009. The letters of credit primarily represent collateral for current and future automobile liability and workers compensation loss payments. In addition, $5.4 million of bank guarantees were outstanding at June 30, 2009 in support of certain foreign operations. Contingent Lease Obligations The Company is subject to contingent obligations under certain leases and other instruments incurred in connection with real estate activities and other operations associated with LabOne, Inc., which the Company acquired in 2005, and certain of its predecessor companies. No liability has been recorded for any of these potential contingent obligations. See Note 14 to the Consolidated Financial Statements contained in the Companys 2008 Annual Report on Form 10-K for further details. Legal Matters The Company is involved in various legal proceedings. Some of the proceedings against the Company involve claims that are substantial in amount. NID Investigation On April 15, 2009, the Company finalized the resolution of the previously disclosed federal government investigation related to NID, a test kit subsidiary voluntarily closed in 2006, and entered into a final settlement agreement with the federal government. Pursuant to the settlement agreement, in the second quarter of 2009, the Company paid $268 million to settle the civil allegations. As part of the settlement agreement, the Company was released from all federal civil claims underlying the investigation and the United States Department of Health and Human Services agreed to refrain from seeking the Companys exclusion from Medicare, Medicaid or other federal healthcare programs. The Company also entered into a five-year corporate integrity agreement with the Office of Inspector General for the United States Department of Health and Human Services. In addition, NID pled guilty to a single count of felony misbranding and paid a $40 million fine. These second quarter payments totaling $308 million, which had been previously reserved, were funded out of cash on-hand and available credit facilities. The Company also expects to enter into separate settlement agreements with certain states totaling approximately $6 million which are fully reserved for. In June 2009, a shareholder plaintiff filed a purported derivative action in the Superior Court of New Jersey, Morris County, on behalf of the Company against certain present and former directors and officers of the Company based on, among other things, their alleged breaches of fiduciary duties in connection with the manufacture, marketing, sale and billing related to certain test kits |
| DISCONTINUED OPERATIONS | |
| 6 Months Ended
Jun. 30, 2009 USD / shares | |
| Discontinued Operations [Abstract] | |
| DISCONTINUED OPERATIONS | 9. DISCONTINUED OPERATIONS During the fourth quarter of 2005, NID instituted its second voluntary product hold within a six-month period due to quality issues, which adversely impacted the operating performance of NID. As a result, the Company evaluated a number of strategic options for NID. On April 19, 2006, the Company decided to discontinue NIDs operations. During the third quarter of 2006, the Company completed its wind down of NID and classified the operations of NID as discontinued operations. Results of operations for NID have been reported as discontinued operations in the accompanying consolidated statements of operations and related disclosures for all periods presented. During the third quarter of 2007, the government and the Company began settlement discussions with respect to the governments investigation involving NID and the Company. Based on the status of settlement discussions, during 2007 the Company established a reserve, in accordance with generally accepted accounting principles, reflected in discontinued operations, of $241 million in connection with these claims. During the third quarter of 2008, the Company and NID reached an agreement in principle with the United States Attorneys Office to settle the federal government investigation involving NID and the Company regarding NID test kits and tests performed using those test kits. As a result of the agreement in principle in 2008, the Company recorded charges of $75 million in discontinued operations to increase its reserve for the settlement and related matters. On April 15, 2009, the Company finalized the resolution of the federal government investigation related to NID and entered into a final settlement agreement with the federal government. In the second quarter of 2009, the Company paid $268 million to settle the civil allegations. In addition, NID pled guilty to a single count of felony misbranding and paid a $40 million fine. These second quarter payments totaling $308 million, which had been previously reserved, were funded out of cash on-hand and available credit facilities. The Company also expects to enter into separate settlement agreements with certain states totaling approximately $6 million which are fully reserved for. See Note 8 for further details. Summarized financial information for the discontinued operations of NID is set forth below: Three Months Ended June 30, Six Months Ended June 30, 2009 2008 2009 2008 Net revenues $ - $ - $ - $ - Income (loss) from discontinued operations before income taxes 148 (1,500) (2,672) (3,093) Income tax (expense) benefit (60) 610 1,089 1,116 Income (loss) from discontinued operations, net of taxes $ 88 $ (890) $ (1,583) $ (1,977) At June 30, 2009 and December 31, 2008, the settlement reserve totaling $7 million and $316 million, respectively, is included in accounts payable and accrued expenses in the consolidated balance sheet. The deferred tax asset recorded in connection w |
| BUSINESS SEGMENT INFORMATION | |
| 6 Months Ended
Jun. 30, 2009 USD / shares | |
| Business Segment Information [Abstract] | |
| BUSINESS SEGMENT INFORMATION | 10. BUSINESS SEGMENT INFORMATION Clinical testing is an essential element in the delivery of healthcare services. Physicians use clinical tests to assist in the detection, diagnosis, evaluation, monitoring and treatment of diseases and other medical conditions. Clinical testing is generally categorized as clinical laboratory testing and anatomic pathology services. Clinical laboratory testing is performed on blood and body fluids, such as urine. Anatomic pathology services are performed on tissues, such as biopsies, and other samples, such as human cells. Customers of the clinical testing business include patients, physicians, hospitals, employers, governmental institutions and other commercial clinical laboratories. The clinical testing business accounted for greater than 90% of net revenues from continuing operations in 2009 and 2008. All other operating segments include the Companys non-clinical testing businesses and consist of its risk assessment services business, its clinical trials testing business, its healthcare information technology business, MedPlus and its diagnostics products businesses. The Companys risk assessment business provides underwriting support services to the life insurance industry including teleunderwriting, paramedical examinations, laboratory testing and medical record retrieval. The Companys clinical trials testing business provides clinical testing performed in connection with clinical research trials on new drugs and vaccines. MedPlus is a developer and integrator of clinical connectivity and data management solutions for healthcare organizations, physicians and clinicians. The Companys diagnostics products business manufactures and markets diagnostic test kits. On April 19, 2006, the Company decided to discontinue NIDs operations and results of operations for NID have been classified as discontinued operations for all years presented (see Note 9). At June 30, 2009, substantially all of the Companys services are provided within the United States, and substantially all of the Companys assets are located within the United States. The following table is a summary of segment information for the three and six months ended June 30, 2009 and 2008. Segment asset information is not presented since it is not reported to or used by the chief operating decision maker at the operating segment level. Operating earnings (loss) of each segment represents net revenues less directly identifiable expenses to arrive at operating income for the segment. General management and administrative corporate expenses, including amortization of intangible assets, are included in general corporate expenses below. The accounting policies of the segments are the same as those of the Company as set forth in Note 2 to the Consolidated Financial Statements contained in the Companys 2008 Annual Report on Form 10-K and Note 1 to the interim consolidated financial statements. Three Months Ended June 30, Six Months Ended June 30, 2009 2008 2009 2008 Net revenues: Clinical laboratory testing business $ 1,742,292 $ 1,675,530 $ 3,405, |
| SUMMARIZED FINANCIAL INFORMATION | |
| 6 Months Ended
Jun. 30, 2009 USD / shares | |
| Summarized Financial Information [Abstract] | |
| SUMMARIZED FINANCIAL INFORMATION | 11. SUMMARIZED FINANCIAL INFORMATION The Companys senior notes due 2010, senior notes due 2011, senior notes due 2015, senior notes due 2017 and senior notes due 2037 are fully and unconditionally guaranteed by the Subsidiary Guarantors. With the exception of Quest Diagnostics Receivables Incorporated (see paragraph below), the non-guarantor subsidiaries are primarily foreign subsidiaries and less than wholly-owned subsidiaries. In conjunction with the Companys secured receivables credit facility, the Company maintains a wholly-owned non-guarantor subsidiary, Quest Diagnostics Receivables Incorporated (QDRI). The Company and certain of its Subsidiary Guarantors transfer certain domestic receivables to QDRI. QDRI utilizes the transferred receivables to collateralize borrowings under the Companys secured receivables credit facility. The Company and the Subsidiary Guarantors provide collection services to QDRI. QDRI uses cash collections principally to purchase new receivables from the Company and the Subsidiary Guarantors. The following condensed consolidating financial data illustrates the composition of the combined guarantors. Investments in subsidiaries are accounted for by the parent using the equity method for purposes of the supplemental consolidating presentation. Earnings (losses) of subsidiaries are therefore reflected in the parents investment accounts and earnings. The principal elimination entries relate to investments in subsidiaries and intercompany balances and transactions. Condensed Consolidating Statement of Operations Three Months Ended June 30, 2009 Parent Subsidiary Guarantors Non-Guarantor Subsidiaries Eliminations Consolidated Net revenues $ 230,634 $ 1,560,418 $ 198,806 $ (88,040) $ 1,901,818 Operating costs and expenses: Cost of services 144,405 894,932 60,875 - 1,100,212 Selling, general and administrative 51,704 309,371 95,337 (7,656) 448,756 Amortization of intangible assets 21 7,777 1,579 - 9,377 Royalty (income) expense (104,117) 104,117 - - - Other operating income, net (15,217) (395) (290) - (15,902) Total operating costs and expenses 76,796 1,315,802 157,501 (7,656) 1,542,443 Operating income 153,838 244,616 41,305 (80,384) 359,375 Non-operating (expense) income, net (48,829) (73,781) 4,667 80,384 (37,559) Income from continuing operations before taxes 105,009 170,835 45,972 - 321,816 Income tax expense 41,069 68,488 13,978 - 123,535 Income from continuing operations 63,940 102,347 31,994 - 198,281 Income from discontinued operations, net of taxes - 88 - - 88 Equity earn |
