On July 3, 2006, we completed our previously announced acquisition of Focus Diagnostics, Inc., or Focus, in an all-cash transaction valued at $208 million, including approximately $3 million of assumed debt. See Note 3 to the interim consolidated financial statements for a full discussion of the Focus acquisition.
Focus is a leading provider of infectious and immunologic diseases testing and develops and markets diagnostic products. Focus offers its reference testing services to large academic medical centers, hospitals and commercial laboratories. We financed the acquisition and related transaction costs and the repayment of substantially all of Focus’s outstanding debt with $135 million of borrowings under our secured receivables credit facility and with cash on hand.
Our clinical testing business currently represents our one reportable business segment. The clinical testing business accounts for approximately 92% and 97% of revenues from continuing operations in 2006 and 2005, respectively. Our other operating segments consist of our risk assessment services business, our clinical trials testing business, our diagnostic products business, and our healthcare information technology business, MedPlus. On April 19, 2006, we decided to discontinue the operations of a test kit manufacturing subsidiary, NID. During the third quarter of 2006, we completed our wind down of NID and classified the operations of NID as discontinued operations. The results of NID are reported as discontinued operations for all periods presented. Our business segment information is disclosed in Note 10 to the interim consolidated financial statements.
Income from continuing operations for the three months ended September 30, 2006 increased to $164 million, or $0.82 per diluted share, compared to $140 million, or $0.68 per diluted share in 2005. For the nine months ended September 30, 2006, income from continuing operations increased to $474 million, or $2.37 per diluted share compared to $424 million or $2.06 per diluted share in 2005.
The increases in income from continuing operations for the three and nine months ended September 30, 2006 were principally associated with improved performance in our clinical testing business, driven by organic revenue growth and increases in operating efficiencies resulting from our Six Sigma, standardization and consolidation efforts. Results for the nine months ended September 30, 2006 include pre-tax charges of $27 million, or $0.08 per diluted share, associated with integration activities related to LabOne and our operations in California, and $16 million pre-tax, or $0.05 per diluted share, related to investment write-downs, which were offset by a pre-tax gain of $16 million, or $0.05 per diluted share, related to the sale of an investment in the first quarter of 2006. Also, results for the three and nine months ended September 30, 2006, included pre-tax expenses of $13 million, or $0.04 per share, and $53 million, or $0.16 per share, respectively, associated with stock-based compensation recorded in accordance with SFAS 123R.
Our results from continuing operations for the three and nine months ended September 30, 2005 were unfavorably impacted by hurricanes in the Gulf Cost. The effect of the hurricanes reduced revenues by approximately half a percent for the quarter and operating income by $11 million ($0.03 per share) for both periods. This includes a pre-tax charge of $6.2 million ($0.02 per share) included in other operating (income) expense, net, primarily related to forgiveness of amounts owed by patients and physicians in the areas affected by the hurricanes and related property damage. The results for the three and nine months ended September 30, 2005 also include a third quarter pre-tax charge of $7.1 million ($0.02 per share) to write down an investment.
Net revenues for the three and nine months ended September 30, 2006 grew by 16.3% and 17.1% over the prior year levels to $1.6 billion and $4.7 billion, respectively. The acquisition of LabOne contributed between 9% and 10% to revenue growth for each period. Our recently completed acquisition of Focus contributed about 1% to revenue growth for the three months ended September 30, 2006. Approximately 55% of LabOne’s net revenues are generated from risk assessment services provided to life insurance companies, with the remainder classified as clinical laboratory testing.
Our clinical testing business net revenues grew 10.5% and 11.4%, respectively, for the three and nine months ended September 30, 2006, with the acquisition of LabOne contributing almost 5% for both periods, principally reflected in volume. For the three and nine months ended September 30, 2006, clinical testing volume increased 4.9% and 6.4%, respectively, compared to the prior year periods. For the three months ended September 30, 2006, clinical testing revenues and volume comparisons were reduced by about 1% due to the number of business days in the quarter and were increased by approximately half a percent due to hurricanes in the prior year’s quarter. Average revenue per requisition increased 5.4% and 4.7% for the three and nine months ended September 30, 2006, respectively. The increase in revenue per requisition was principally driven by a shift to a more esoteric test mix and an increase in the number of tests ordered per requisition.
Our businesses other than clinical laboratory testing accounted for approximately 8% of our net revenues for the three and nine months ended September 30, 2006. These businesses include our clinical trials testing business, our diagnostics products business, and our healthcare information technology business (MedPlus), whose revenue growth rates did not significantly affect our overall growth rate. In addition, we consider the risk assessment business, acquired as part of the LabOne acquisition, to be a non-clinical laboratory testing business. The risk assessment business represents approximately 5% of our net revenues and is currently growing at between 1% and 2% per year. The growth in risk assessment services has slowed, and is being adversely impacted by an overall decline in the life insurance market, resulting in a decline in the number of life insurance applicants being tested, partially offset by growth in paramedical exams and various risk assessment activities outsourced by life insurance companies.
Operating Costs and Expenses
Total operating costs and expenses for the three and nine months ended September 30, 2006 increased $180 million and $588 million, respectively, from the prior year periods primarily due to the LabOne acquisition and, to a lesser degree, organic growth in our clinical testing business. The increased costs were primarily in the areas of employee compensation and benefits, which included $13 million and $53 million of stock-based compensation recorded in accordance with SFAS 123R, for the three and nine months ended September 30, 2006, respectively, and testing supplies. While our cost structure has been favorably impacted by efficiencies generated from our Six Sigma, standardization and consolidation initiatives, we continue to make investments in sales, service, science and information technology to further differentiate our company. During the first quarter of 2006, we recorded $27 million of pre-tax charges (included in “other operating (income) expense, net”) primarily associated with integration activities related to LabOne and our operations in California.
Cost of services, which includes the costs of obtaining, transporting and testing specimens, was 59.0% of net revenues for the three months ended September 30, 2006, increasing from 58.7% of net revenues in the prior year period. For the nine months ended September 30, 2006, cost of services, as a percentage of net revenues, was 58.8%, compared to 58.7% in the prior year period. The increases over the prior year are primarily due to the addition of the LabOne business, which carries a higher cost of sales percentage than the Company average. Partially offsetting these increases were improvements related to the increase in average revenue per requisition and efficiency gains resulting from our Six Sigma, standardization and consolidation initiatives.
Selling, general and administrative expenses, which include the costs of the sales force, billing operations, bad debt expense, and general management and administrative support, were 22.4% of net revenues for the three months ended September 30, 2006, compared to 22.3% in the prior year period. For the nine months ended September 30, 2006 and 2005, selling, general and administrative expenses, as a percentage of net revenues were 22.5%. Revenue growth which has allowed us to leverage our expense base, as well as continued benefits from our Six Sigma standardization and consolidation efforts, have reduced these expenses as a percentage of net revenues. Also serving to reduce the percentage is the addition of the LabOne business, which carries a lower selling, general and administrative expense percentage than the Company average. For the three and nine months ended September 30, 2006, bad debt expense was 3.8% and 3.9% of net revenues, respectively, compared to 4.3% and 4.4% of net revenues for the comparable prior year’s periods. The lower bad debt rate primarily relates to the improved collection of diagnosis, patient and insurance information necessary to more effectively bill for services performed. We believe that our Six Sigma and standardization initiatives and the increased use of electronic ordering by our customers is driving the improvement and will provide additional opportunities to further improve our overall collection experience and cost structure. Offsetting the improvement was stock-based compensation expense recorded in accordance with SFAS 123R, which increased selling, general and administrative expenses, as a percentage of net revenues by approximately 1% for both the three and nine months ended September 30, 2006.
Other operating (income) expense, net represents miscellaneous income and expense items related to operating activities, including gains and losses associated with the disposal of operating assets and provisions for restructurings and other special charges. For the nine months ended September 30, 2006, other operating (income) expense, net included pre-tax charges of $27 million principally associated with integration activities related to LabOne and our operations in California, which are more fully described in Note 4 to the interim consolidated financial statements.
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For the three and nine months ended September 30, 2005, other operating (income) expense, net includes a $6.2 million charge primarily related to forgiving amounts owed by patients and physicians, and related property damage as a result of hurricanes in the Gulf Coast.
Operating Income
Operating income for the three months ended September 30, 2006 was $293 million, or 18.5% of net revenues, compared to $250 million, or 18.4% of net revenues, in the prior year period. For the nine months ended September 30, 2006, operating income was $849 million, or 18.0% of net revenues, compared to $747 million or 18.5% of net revenues, in the prior year period. Improvements in operating income over the prior year were driven by the performance of our clinical testing business. Partially offsetting these improvements was $27 million of special charges recorded in the first quarter of 2006, primarily related to integration activities. Additionally, operating income for the three and nine months ended September 30, 2006 included $13 million and $53 million, respectively, of stock-based compensation expense recorded pursuant to SFAS 123R.
Operating income as a percentage of net revenues for the three and nine months ended September 30, 2006 compared to the prior year’s periods was reduced by approximately 1.0% due to stock-based compensation expense, and by 1.0% due to the results of the LabOne business, which we expect will continue to carry lower margins than the rest of our operations until we have realized most of the expected $40 million in synergies. Operating income as a percentage of net revenues for the nine months ended September 30, 2006 was also reduced by approximately 0.6% due to special charges, primarily related to integration activities.
Other Income (Expense)
Interest expense, net for the three and nine months ended September 30, 2006 increased $11 million and $32 million, respectively, over the prior year periods. The increases in interest expense, net were primarily due to additional interest expense associated with our $900 million senior notes offering in October 2005 used to fund the LabOne acquisition, as described more fully in Note 10 to the Consolidated Financial Statements contained in our 2005 Annual Report on Form 10-K.
Other income (expense), net represents miscellaneous income and expense items related to non-operating activities such as gains and losses associated with investments and other non-operating assets. For the three and nine months ended September 30, 2006 other income (expense), net includes a $4 million charge recorded in the third quarter associated with the write-down of an investment. In addition, for the nine months ended September 30, 2006, other income (expense), net includes a $12 million charge recorded during the second quarter related to a write-down of an investment and a first quarter gain of $16 million on the sale of an investment.
For the three and nine months ended September 30, 2005, other income (expense), net includes a $7 million charge associated with the write-down of an investment.
Income Taxes
The decrease in the effective tax rate for the three and nine months ended September 30, 2006, compared to the prior year periods, was primarily due to adjustments made in the third quarter of 2006 related to the resolution of certain income tax contingencies.
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, we evaluated a number of strategic options for NID. On April 19, 2006, we decided to discontinue NID’s operations. During the third quarter of 2006, we completed the wind down of NID’s operations. Results of NID are reported as discontinued operations for all periods presented.
Loss from discontinued operations, net of tax, for the three months ended September 30, 2006 decreased to $3 million, or $0.02 per diluted share, compared to $5 million, or $0.02 per diluted share in 2005. Results for the three months ended September 30, 2006 reflect pre-tax charges of $2.7 million, primarily related to facility closure charges and employee severance costs. Results for the three months ended September 30, 2005 also reflect losses from NID’s operations, due to its voluntary product hold instituted late in the second quarter of 2005 in connection with a quality review of all its products.
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Loss from discontinued operations, net of tax, for the nine months ended September 30, 2006, increased to $37 million, or $0.19 per diluted share, compared to $8 million, or $0.04 per diluted share, in 2005. Results for the nine months ended September 30, 2006, reflect pre-tax charges of $31 million, primarily related to the wind-down of NID’s operations. These charges included: inventory write-offs of $7 million; asset impairment charges of $5 million; employee severance costs of $6 million; estimated contract termination costs of $6 million; facility closure costs of $2 million; and costs to support activities to wind down the business, comprised primarily of employee costs and professional fees, of $5 million. Results for the nine months ended September 30, 2005 also include losses from NID’s operations due to its voluntary product hold.
The ongoing government investigation and regulatory review of NID continue. Any costs resulting from this review will be included in discontinued operations. While we do not believe that these matters will have a material adverse impact on our overall financial condition, their final resolution could be material to our results of operations or cash flows in the period in which the impact of such matters is determined or paid. See Note 6 to the interim consolidated financial statements for a further description of these matters.
Quantitative and Qualitative Disclosures About Market Risk
We address our exposure to market risks, principally the market risk of changes in interest rates, through a controlled program of risk management that may include the use of derivative financial instruments. We do not hold or issue derivative financial instruments for trading purposes. We do not believe that our foreign exchange exposure is material to our financial condition or results of operations. See Note 2 to the Consolidated Financial Statements in our 2005 Annual Report on Form 10-K for additional discussion of our financial instruments and hedging activities.
At September 30, 2006 and December 31, 2005, the fair value of our debt was estimated at approximately $1.6 billion using quoted market prices and yields for the same or similar types of borrowings, taking into account the underlying terms of the debt instruments. At September 30, 2006, the estimated fair value exceeded the carrying value of the debt by approximately $12 million. At December 31, 2005, the estimated fair value exceeded the carrying value of the debt by approximately $39 million. A hypothetical 10% increase in interest rates (representing approximately 45 and 59 basis points at September 30, 2006 and December 31, 2005, respectively) would potentially reduce the estimated fair value of our debt by approximately $34 million and $36 million at September 30, 2006 and December 31, 2005, respectively.
Borrowings under our senior unsecured revolving credit facility, our secured receivables credit facility and our term loan due December 2008, are subject to variable interest rates. Interest on our secured receivables credit facility is based on rates that are intended to approximate commercial paper rates for highly- rated issuers. Interest rates on our senior unsecured revolving credit facility and term loan due December 2008 are subject to a pricing schedule that can fluctuate based on changes in our credit ratings. As such, our borrowing cost under these credit arrangements will be subject to both fluctuations in interest rates and changes in our credit ratings. As of September 30, 2006, the borrowing rate for our revolving credit facility was LIBOR plus 0.375% and for our term loan the borrowing rate was LIBOR plus 0.50%. At September 30, 2006, the LIBOR rate was 5.33%. At September 30, 2006, there was $75 million outstanding under our term loan due December 2008, $300 million outstanding under our secured receivables credit facility and no borrowings outstanding under our $500 million senior unsecured revolving credit facility. Based on our net exposure to interest rate changes, a hypothetical 10% change in interest rates on our variable rate indebtedness (representing approximately 54 basis points) would impact annual net interest expense by approximately $2 million, assuming no changes to the debt outstanding at September 30, 2006. See Note 10 to the Consolidated Financial Statements in our 2005 Annual Report on Form 10-K for details regarding our outstanding debt.
Risk Associated with Investment Portfolio
Our investment portfolio includes equity investments in publicly held companies that are classified as available-for-sale securities and other strategic equity holdings in privately held companies. These securities are exposed to price fluctuations and are generally concentrated in the life sciences industry. The carrying values of our available-for-sale equity securities and privately held securities were $38 million at September 30, 2006.
We do not hedge our equity price risk. The impact of an adverse movement in equity prices on our holdings in privately held companies cannot be easily quantified, as our ability to realize returns on investments depends on, among other things, the enterprises’ ability to raise additional capital or derive cash inflows from continuing operations or through liquidity events such as initial public offerings, mergers or private sales.
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Liquidity and Capital Resources
Cash and Cash Equivalents
Cash and cash equivalents at September 30, 2006 totaled $105 million compared to $92 million at December 31, 2005. Cash flows from operating activities in 2006 were $646 million, which were used to fund investing and financing activities of $351 million and $282 million, respectively. Cash and cash equivalents at September 30, 2005 totaled $210 million, compared to $73 million at December 31, 2004. Cash flows from operating activities in 2005 were $548 million, which were used to fund investing and financing activities of $239 million and $172 million, respectively.
Cash Flows from Operating Activities
Net cash provided by operating activities for the nine months ended September 30, 2006 was $646 million compared to $548 million in the prior year period. This increase was primarily due to improved operating performance of our clinical testing business. Days sales outstanding, a measure of billing and collection efficiency, were 48 days at September 30, 2006 compared to 46 days at December 31, 2005. During the three months ended September 30, 2006, a temporary stoppage in Medicare payments and the timing of quarter end cash receipts each caused a one day increase in days sales outstanding. Subsequent to the end of the quarter, Medicare payments resumed and the impact of quarter end timing of cash receipts reversed, eliminating the impact of such items on days sales outstanding.
Cash Flows from Investing Activities
Net cash used in investing activities for the nine months ended September 30, 2006 was $351 million, consisting primarily of $231 million related to the acquisition of Focus and a privately held test kit manufacturer, and capital expenditures of $134 million. These amounts were partially offset by $16 million of proceeds from the sale of an investment. The decrease in capital expenditures compared to the prior year is principally due to the completion of a new facility in California, for which there were substantial expenditures in the prior year.
Net cash used in investing activities for the nine months ended September 30, 2005 was $239 million, consisting primarily of capital expenditures of $178 million, equity investments of $38 million in companies which develop diagnostic tests, and an acquisition of a small regional laboratory for $19 million.
Cash Flows from Financing Activities
Net cash used in financing activities for the nine months ended September 30, 2006 was $282 million. During 2006, we repaid $275 million outstanding under our 6¾% senior notes, $60 million of principal outstanding under our secured receivables credit facility and $75 million under our senior unsecured revolving credit facility. Debt repayments and acquisitions were funded with cash on hand and borrowings of $75 million under our senior unsecured revolving credit facility and $300 million under our secured receivables credit facility. In addition, we purchased $276 million of treasury stock, which represents 5 million shares of our common stock purchased at an average price of $55.53 per share, partially offset by $122 million in proceeds from the exercise of stock options, including related tax benefits. We also paid dividends of $57 million.
Net cash used in financing activities for the nine months ended September 30, 2005 was $172 million, consisting primarily of purchases of treasury stock totaling $190 million and dividend payments totaling $51 million, partially offset by $85 million in proceeds from the exercise of stock options. In addition, we repaid the remaining $100 million of principal outstanding under our senior unsecured revolving credit facility with $100 million of borrowings under our secured receivables credit facility. The $190 million in treasury stock purchases represents 3.8 million shares of our common stock purchased at an average price of $50.52 per share.
Dividend Policy
During each of the quarters of 2006, our Board of Directors has declared a quarterly cash dividend per common share of $0.10. During each of the quarters of 2005, our Board of Directors declared a quarterly cash dividend of $0.09 per common share. We expect to fund future dividend payments with cash flows from operations, and do not expect the dividend to have a material impact on our ability to finance future growth.
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Share Repurchase Plan
For the three months ended September 30, 2006, we repurchased 362 thousand shares of our common stock at an average price of $60.59 per share for $22 million. For the nine months ended September 30, 2006, we repurchased 5 million shares of our common stock at an average price of $55.53 for $276 million. Through September 30, 2006, we have repurchased approximately 37.4 million shares of our common stock at an average price of $44.32 for $1.7 billion under our share repurchase program. At September 30, 2006, the total available for repurchases under the remaining authorizations was $446 million.
Contractual Obligations and Commitments
A full description of the terms of our indebtedness and related debt service requirements and our future payments under certain of our contractual obligations is contained in Note 10 to the Consolidated Financial Statements in our 2005 Annual Report on Form 10-K. A full discussion and analysis regarding our minimum rental commitments under noncancelable operating leases and noncancelable commitments to purchase products or services at December 31, 2005 is contained in Note 14 to the Consolidated Financial Statements in our 2005 Annual Report on Form 10-K. See Note 6 to the interim consolidated financial statements for information regarding the status of legal matters involving the Company.
Our credit agreements relating to our senior unsecured revolving credit facility and our term loan due December 2008 contain various covenants and conditions, including the maintenance of certain financial ratios, that could impact our ability to, among other things, incur additional indebtedness. We do not expect these covenants to adversely impact our ability to execute our growth strategy or conduct normal business operations.
Unconsolidated Joint Ventures
We have investments in unconsolidated joint ventures in Phoenix, Arizona; Indianapolis, Indiana; and Dayton, Ohio, which are accounted for under the equity method of accounting. We believe that our transactions with our joint ventures are conducted at arm’s length, reflecting current market conditions and pricing. Total net revenues of our unconsolidated joint ventures equal less than 6% of our consolidated net revenues. Total assets associated with our unconsolidated joint ventures are less than 2% of our consolidated total assets. We have no material unconditional obligations or guarantees to, or in support of, our unconsolidated joint ventures and their operations.
Requirements and Capital Resources
We estimate that we will invest approximately $180 million to $200 million during 2006 for capital expenditures to support and expand our existing operations, principally related to investments in information technology, equipment, and facility upgrades.
As of September 30, 2006, $500 million of borrowing capacity was available under our existing credit facilities.
We believe that cash from operations and our borrowing capacity under our credit facilities will provide sufficient financial flexibility to meet seasonal working capital requirements and to fund capital expenditures, debt service requirements, cash dividends on common shares, share repurchases and additional growth opportunities for the foreseeable future. Our investment grade credit ratings have had a favorable impact on our cost of and access to capital, and we believe that our strong financial performance should provide us with access to additional financing, if necessary, to fund growth opportunities that cannot be funded from existing sources.
Impact of New Accounting Standards
Effective January 1, 2006, we adopted SFAS 123R using the modified prospective approach. See Notes 1 and 2 to the interim consolidated financial statements for further details.
In July 2006, the Financial Accounting Standards Board (“FASB”) issued FASB Interpretation No. 48 “Accounting for Uncertainty in Income Taxes”. In September 2006, the FASB issued SFAS No. 157 “Fair Value Measurements” and SFAS No. 158 “Employers’ Accounting for Defined Benefit Pension and Other Post-Retirement Plans”.
In August 2006, the Securities and Exchange Commission (“SEC”) issued new requirements for “Executive Compensation and Related Person Disclosure”, and in September 2006 the SEC released Staff Accounting Bulletin No. 108 “Considering the Effects of Prior Year Misstatements When Quantifying Misstatements in Current Year Financial Statements”.
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The impact of these accounting standards is discussed in Note 1 to the interim consolidated financial statements.
Forward-Looking Statements
Some statements and disclosures in this document are forward-looking statements. Forward-looking statements include all statements that do not relate solely to historical or current facts and can be identified by the use of words such as “may”, “believe”, “will”, “expect”, “project”, “estimate”, “anticipate”, “plan” or “continue”. These forward-looking statements are based on our current plans and expectations and are subject to a number of risks and uncertainties that could significantly cause our plans and expectations, including actual results, to differ materially from the forward-looking statements. The Private Securities Litigation Reform Act of 1995, or the Litigation Reform Act, provides a “safe harbor” for forward-looking statements to encourage companies to provide prospective information about their companies without fear of litigation.
We would like to take advantage of the “safe harbor” provisions of the Litigation Reform Act in connection with the forward-looking statements included in this document. The risks and other factors that could cause our actual financial results to differ materially from those projected, forecasted or estimated by us in forward-looking statements may include, but are not limited to, unanticipated expenditures, changing relationships with customers, payers, suppliers and strategic partners, competitive environment, changes in government regulations, conditions of the economy and other factors described in our 2005 Annual Report on Form 10-K and subsequent filings.
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Item 3.Quantitative and Qualitative Disclosures About Market Risk |
See Item 2. “Management’s Discussion and Analysis of Financial Condition and Results of Operations”.
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Item 4.Controls and Procedures |
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(a) | Our Chief Executive Officer and Chief Financial Officer have evaluated the effectiveness of the design and operation of our disclosure controls and procedures (as defined under Rules 13a-15(e) and 15d-15(e) of the Securities Exchange Act of 1934, as amended) as of the end of the period covered by this report. Based upon that evaluation, our Chief Executive Officer and Chief Financial Officer have concluded that our disclosure controls and procedures are adequate and effective. |
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(b) | During the third quarter of 2006, there were no changes in our internal control over financial reporting that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting. |
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PART II - OTHER INFORMATION
See Note 6 to the interim consolidated financial statements for information regarding the status of legal proceedings involving the Company.
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Item 2.Unregistered Sales of Equity Securities and Use of Proceeds |
ISSUER PURCHASES OF EQUITY SECURITIES
| | | | | | | | | | | | | |
Period | | (a) Total
Number of
Shares
Purchased | | (b) Average
Price Paid per
Share | | (c) Total Number of
Shares Purchased as
Part of Publicly
Announced Plans or
Programs | | (d) Approximate Dollar
Value of Shares that May
Yet Be Purchased Under the
Plans or Programs
(in thousands) | |
| |
| |
| |
| |
| |
July 1, 2006 – July 31, 2006 | | 143,000 | | | $ | 59.84 | | 143,000 | | | $ | 459,490 | |
August 1, 2006 – August 31, 2006 | | 219,300 | | | $ | 61.08 | | 219,300 | | | $ | 446,095 | |
September 1, 2006 - September 30, 2006 | | — | | | | — | | — | | | $ | 446,095 | |
Total | | 362,300 | | | $ | 60.59 | | 362,300 | | | $ | 446,095 | |
In 2003, our Board of Directors authorized a share repurchase program, which permitted us to purchase up to $600 million of our common stock. In July 2004, our Board of Directors authorized us to purchase up to an additional $300 million of our common stock. Under a separate authorization from our Board of Directors, in December 2004 we repurchased 5.4 million shares of our common stock for approximately $254 million from GlaxoSmithKline plc. In January 2005, our Board of Directors expanded the share repurchase authorization by an additional $350 million. In January 2006, our Board of Directors expanded the share repurchase authorization by an additional $600 million.
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Item 6.Exhibits |
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| Exhibits: |
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| 31.1 | Certification of Chief Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 |
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| 31.2 | Certification of Chief Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 |
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| 32.1 | Certification of Chief Executive Officer Pursuant to 18 U.S.C. §1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 |
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| 32.2 | Certification of Chief Financial Officer Pursuant to 18 U.S.C. §1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 |
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Signatures
Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
October 27, 2006
Quest Diagnostics Incorporated
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By | /s/ | Surya N. Mohapatra |
|
|
| |
| | Surya N. Mohapatra, Ph.D. |
| | Chairman, President and |
| | Chief Executive Officer |
| | |
By | /s/ | Robert A. Hagemann |
|
|
| |
| | Robert A. Hagemann |
| | Senior Vice President and |
| | Chief Financial Officer |
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