TETERBORO, N.J., OCTOBER 11, 2000Quest
Diagnostics Incorporated (NYSE: DGX), the nations leading provider of diagnostic
testing, information and services, announced that it has received $95 million in cash from
SmithKline Beecham plc to settle certain outstanding items associated with the 1999
acquisition of SmithKline Beecham Clinical Laboratories (SBCL). The acquisition agreements between the parties contained a provision for
a reduction in the purchase price paid by Quest Diagnostics in the event that a review of
the SBCL financial statements showed that the net assets acquired, as of the acquisition
date, were below a prescribed level. Quest Diagnostics received a $98.6 million adjustment
in connection with this provision. The cash payment was reduced by $3.6 million for
amounts separately owed to SmithKline Beecham.
In connection with finalizing the purchase price adjustment, the historical financial
statements of SBCL and certain pro forma financial statements for the combined operations
of SBCL and Quest Diagnostics will be amended through the filing of a Form 8-K with the
Securities and Exchange Commission. The settlement has no impact on any of the actual
results reported for Quest Diagnostics, either before or after the acquisition. The
purchase price adjustment will be recorded as a reduction to goodwill and the proceeds
from the settlement will be used to pay down debt.
"This payment is a positive event for Quest Diagnostics shareholders," said
Kenneth W. Freeman, Chairman and Chief Executive Officer. "It enables us to further
strengthen our balance sheet and provides us additional financial flexibility to take
advantage of the many exciting growth opportunities available to our company. The
adjustment has no impact whatsoever on the historical financial statements of Quest
Diagnostics, and it certainly does not change our view of the expected performance of the
combined company. In fact, the benefits of the payment, in terms of reduced interest and
amortization expense, have been factored into the guidance we have provided for our
full-year performance."
Quest Diagnostics is the nation's leading provider of diagnostic testing, information
and services with annualized revenues of more than $3 billion. The testing performed on
human specimens helps doctors diagnose, treat and monitor disease; enables employers to
detect workplace drug abuse; and supports pharmaceutical and biotechnology companies in
clinical trials of new therapeutics worldwide. Quest Informatics analyzes laboratory and
other medical data to help health care providers improve the care of patients. Additional
company information can be found on the Internet at: www.questdiagnostics.com.
The statements in this press release which are not historical facts or information may
be forward-looking statements. These forward-looking statements involve risks and
uncertainties that could cause the outcome to be materially different. Certain of these
risks and uncertainties are listed in the Quest Diagnostics Incorporated 1999 Form 10-K
and subsequent filings.