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Exhibit 99.1
QUEST DIAGNOSTICS INCORPORATED AND SUBSIDIARIES
SELECTED HISTORICAL FINANCIAL DATA
(RESTATED TO REFLECT THE TWO-FOR-ONE STOCK SPLIT EFFECTIVE MAY 31, 2001. SEE
FOOTNOTE (h) ON ACCOMPANYING PAGES)
THREE MONTHS ENDED
MARCH 31, YEAR ENDED DECEMBER 31,
----------------------- --------------------------------------------------------------------------
2001 2000 2000 1999 (a) 1998 1997 1996
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(IN THOUSANDS, EXCEPT PER SHARE DATA)
OPERATIONS DATA:
Net revenues ............... $ 882,553 $ 857,479 $3,421,162 $ 2,205,243 $1,458,607 $1,528,695 $1,616,296
Provisions for
restructuring
and other special
charges ................. -- -- 2,100 (b) 73,385 (c) -- 48,688 (d) 668,544 (e)
Income (loss) before
extraordinary loss ...... 35,748 17,809 104,948 (f) (1,274)(g) 26,885 (22,260) (625,960)
Net income (loss) .......... 35,748 17,809 102,052 (f) (3,413)(g) 26,885 (22,260) (625,960)
Basic net income (loss)
per common share:
(h), (i) ................
Income (loss) before
extraordinary loss ...... 0.39 0.20 1.17 (0.02) 0.45 (0.38) (10.86)
Net income (loss) .......... 0.39 0.20 1.14 (0.05) 0.45 (0.38) (10.86)
Diluted net income (loss)
per common share:
(h), (i), (j) ...........
Income (loss) before
extraordinary loss ...... 0.37 0.19 1.11 (0.02) 0.44 (0.38) (10.86)
Net income (loss) .......... 0.37 0.19 1.08 (0.05) 0.44 (0.38) (10.86)
BALANCE SHEET DATA (AT
END OF PERIOD):
Accounts receivable, net ... $ 509,272 $ 484,225 $ 485,573 $ 539,256 $ 220,861 $ 238,369 $ 297,743
Total assets ............... 2,903,235 2,838,635 2,864,536 2,878,481 1,360,240 1,400,928 1,395,066
Short-term borrowings and
current portion of
long-term debt .......... 265,030 47,729 265,408 45,435 51,444 32,648 20,785
Long-term debt ............. 758,481 1,157,899 760,705 1,171,442 413,426 482,161 515,008
Preferred stock ............ 1,000 1,000 1,000 1,000 1,000 1,000 1,000
Common stockholders'
equity .................. 1,099,216 896,030 1,030,795 862,062 566,930 540,660 537,719
OTHER DATA:
Net cash provided by
(used in) operating
activities .............. $ 40,731 $ 33,157 $ 369,455 $ 249,535 $ 141,382 $ 176,267 $ (88,486)(k)
Net cash used in investing
activities .............. (90,268) (20,477) (48,015) (1,107,990) (39,720) (35,101) (63,674)
Net cash provided by
(used in) financing
activities .............. (1,210) (11,477) (177,247) 682,831 (60,415) (21,465) 157,674
Bad debt expense ........... 55,283 62,646 234,694 142,333 89,428 118,223 (l) 111,238
Rent expense ............... 19,950 19,259 76,515 59,073 46,259 47,940 49,713
Capital expenditures ....... 43,615 17,613 116,450 76,029 39,575 30,836 70,396
Adjusted EBITDA (m) ........ 122,438 98,144 459,380 237,038 158,609 153,800 166,358
See footnotes on accompanying pages
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(a) On August 16, 1999, we completed the acquisition of SBCL. Consolidated
operating results for 1999 include the results of operations of SBCL
subsequent to the closing of the acquisition. See Note 3 to our
consolidated financial statements included in our Form 10-K for the year
ended December 31, 2000 (the "Consolidated Financial Statements") filed
with the SEC.
(b) During the second quarter of 2000, we recorded a net special charge of
$2.1 million. This net charge resulted from a $13.4 million charge related
to the costs to cancel certain contracts that we believed were not
economically viable as a result of the SBCL acquisition, and which were
principally associated with the cancellation of a co-marketing agreement
for clinical trials testing services, which charges were in large part
offset by a reduction in reserves attributable to a favorable resolution
of outstanding claims for reimbursements associated with billings of
certain tests.
(c) Represents charges principally incurred in conjunction with the
acquisition and planned integration of SBCL as discussed in Note 7 to the
Consolidated Financial Statements.
(d) Includes a charge of $16 million to write-down goodwill reflecting the
estimated impairment related to our consolidation plan announced in the
fourth quarter of 1997.
(e) Includes a charge of $445 million to reflect the impairment of goodwill
upon the adoption of a new accounting policy in 1996 for evaluating the
recoverability of goodwill and measuring possible impairment under a fair
value method. See Note 2 to the Consolidated Financial Statements.
Includes charges totaling $188 million to increase reserves related to
claims by the Department of Justice for certain payments received by Damon
Corporation, prior to its acquisition by Quest Diagnostics, and other
similar claims.
(f) During the fourth quarter of 2000, we prepaid $155.0 million of debt under
our senior secured credit facility. The extraordinary loss represented
$4.8 million ($2.9 million, net of tax) of deferred financing costs which
were written-off in connection with the prepayment of the related debt.
(g) In conjunction with the acquisition of SBCL, we repaid the entire amount
outstanding under our then existing credit agreement. The extraordinary
loss recorded in the third quarter of 1999 represented $3.6 million ($2.1
million, net of tax) of deferred financing costs which were written-off in
connection with the extinguishment of the credit agreement.
(h) On February 21, 2001, the Board of Directors approved a two-for-one stock
split of the Company's common stock which was effected by the issuance on
May 31, 2001, of a stock dividend of one new share of common stock for
each share of common stock held by stockholders of record on May 16, 2001.
All references to the number of common shares and per common share
amounts, including income (loss) per common share calculations, have been
restated to reflect the stock split.
(i) Historical income (loss) per share data for periods prior to 1997 have
been restated to reflect common shares outstanding as a result of Quest
Diagnostics' recapitalization in 1996. In December 1996, 57.6 million
common shares were issued to effectuate the Spin-Off Distribution and
establish Quest Diagnostics' employee stock ownership plan.
(j) Potentially dilutive common shares primarily include stock options and
restricted common shares granted under our Employee Equity Participation
Program. During periods in which net income available for common
stockholders is a loss, diluted weighted average common shares outstanding
will equal basic weighted average common shares outstanding, since under
these circumstances, the incremental shares would have an anti-dilutive
effect.
(k) Includes the payment of Damon Corporation and other billing related
settlements totaling approximately $144 million and the settlement of
amounts owed to Corning Incorporated of $45 million.
(l) Includes a fourth quarter charge of $5.3 million, which was part of the
$6.8 million charge recorded in the same quarter, to increase the
provision for doubtful accounts to recognize the reduced recoverability of
certain receivables from accounts which will no longer be served as a
result of our consolidation plan announced in the fourth quarter of 1997.
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(m) Adjusted EBITDA represents income (loss) before extraordinary loss, income
taxes, net interest expense, depreciation, amortization and special items.
Special items include the provisions for restructuring and other special
charges reflected in the selected historical financial data above, $8.9
million of costs related to the integration of SBCL which were included in
operating costs and expensed as incurred in 2000, a $3.0 million gain
related to the sale of an investment in 1999 and charges of $2.5 million
and $6.8 million recorded in selling, general and administrative expenses
in 1998 and 1997, respectively, related to Quest Diagnostics'
consolidation of its laboratory network announced in the fourth quarter of
1997. Adjusted EBITDA is presented and discussed because management
believes that Adjusted EBITDA is a useful adjunct to net income and other
measurements under accounting principles generally accepted in the United
States of America since it is a meaningful measure of a company's
performance and ability to meet its future debt service requirements, fund
capital expenditures and meet working capital requirements. Adjusted
EBITDA is not a measure of financial performance under accounting
principles generally accepted in the United States of America and should
not be considered as an alternative to (i) net income (or any other
measure of performance under generally accepted accounting principles) as
a measure of performance or (ii) cash flows from operating, investing or
financing activities as an indicator of cash flows or as a measure of
liquidity.
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