-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, AyK1a2LjKnApQOxQMX7n//S/aYsNJIeGUuBYcLYUu8f+NYxUFvSmsRuQripJi5po 34Vje2RCPIfEcIpgI9elRQ== 0000950117-02-001557.txt : 20020628 0000950117-02-001557.hdr.sgml : 20020628 20020628122313 ACCESSION NUMBER: 0000950117-02-001557 CONFORMED SUBMISSION TYPE: 11-K PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 20011231 FILED AS OF DATE: 20020628 FILER: COMPANY DATA: COMPANY CONFORMED NAME: QUEST DIAGNOSTICS INC CENTRAL INDEX KEY: 0001022079 STANDARD INDUSTRIAL CLASSIFICATION: SERVICES-MEDICAL LABORATORIES [8071] IRS NUMBER: 161387862 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 11-K SEC ACT: 1934 Act SEC FILE NUMBER: 001-12215 FILM NUMBER: 02690687 BUSINESS ADDRESS: STREET 1: ONE MALCOLM AVE CITY: TETERBORO STATE: NJ ZIP: 07608 BUSINESS PHONE: 2013935000 MAIL ADDRESS: STREET 1: ONE MALCOLM AVE CITY: TETERBORO STATE: NJ ZIP: 07601 FORMER COMPANY: FORMER CONFORMED NAME: CORNING CLINICAL LABORATORIES INC DATE OF NAME CHANGE: 19960903 11-K 1 a32945.txt QUEST DIAGNOSTICS SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 Form 11-K (Mark One) [X] ANNUAL REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended December 31, 2001 OR [ ] TRANSITION REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from _______to _______ Commission file number: 333-17079 A. Full title of the plan and the address of the plan, if different from that of the issuer named below: THE PROFIT SHARING PLAN OF QUEST DIAGNOSTICS INCORPORATED B. Name of issuer of the securities held pursuant to the plan and the address of its principal executive office: QUEST DIAGNOSTICS INCORPORATED ONE MALCOLM AVENUE TETERBORO, NEW JERSEY 07608 The Profit Sharing Plan of Quest Diagnostics Incorporated Index to Financial Statements and Additional Information - --------------------------------------------------------------------------------
Page ---- Financial Statements Report of Independent Accountants 1 Statements of Net Assets Available for Benefits at December 31, 2001 and 2000 2 Statement of Changes in Net Assets Available for Benefits for the Year Ended December 31, 2001 3 Notes to Financial Statements 4-10 Additional Information* Schedule I - Schedule of Assets (Held at End of Year) at December 31, 2001 11 Signatures 12
* Other schedules required by Section 2520.103-10 of the Department of Labor's Rules and Regulations for Reporting and Disclosure under ERISA have been omitted because they are not applicable. Exhibit Exhibit 23 - Consent of Independent Accountants Report of Independent Accountants To the Participants and Administrator of The Profit Sharing Plan of Quest Diagnostics Incorporated In our opinion, the accompanying statements of net assets available for benefits and the related statement of changes in net assets available for benefits present fairly, in all material respects, the net assets available for benefits of The Profit Sharing Plan of Quest Diagnostics Incorporated (the "Plan") at December 31, 2001 and 2000, and the changes in net assets available for benefits for the year ended December 31, 2001 in conformity with accounting principles generally accepted in the United States of America. These financial statements are the responsibility of the Plan's management; our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits of these statements in accordance with auditing standards generally accepted in the United States of America, which require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. Our audits were conducted for the purpose of forming an opinion on the basic financial statements taken as a whole. The supplemental schedule of assets (held at end of year) at December 31, 2001 is presented for the purpose of additional analysis and is not a required part of the basic financial statements but is supplementary information required by the Department of Labor's Rules and Regulations for Reporting and Disclosure under the Employee Retirement Income Security Act of 1974. This supplemental schedule is the responsibility of the Plan's management. The supplemental schedule has been subjected to the auditing procedures applied in the audits of the basic financial statements and, in our opinion, is fairly stated in all material respects in relation to the basic financial statements taken as a whole. /s/ PricewaterhouseCoopers LLP New York, New York June 21, 2002 1 The Profit Sharing Plan of Quest Diagnostics Incorporated Statements of Net Assets Available for Benefits December 31, 2001 and 2000
2001 2000 Assets Investments, at Fair Value $ 818,972,509 $ 867,423,184 Investment Contracts, at Contract Value - 1,167,037 Participant Loans 27,231,351 22,525,682 ---------------- ---------------- Total Investments 846,203,860 891,115,903 ---------------- ---------------- Cash and Cash Equivalents 10,407,097 3,249,074 Other Assets 1,416,235 1,005,896 ---------------- ---------------- Net Assets Available for Benefits $ 858,027,192 $ 895,370,873 ================ ================
The accompanying notes are an integral part of these financial statements. 2 The Profit Sharing Plan of Quest Diagnostics Incorporated Statement of Changes in Net Assets Available for Benefits For the Year Ended December 31, 2001
2001 Additions to Net Assets Attributed to: Investment Income (Loss): Interest and Dividends $ 18,855,967 Net Depreciation in Fair Value of Investments (118,722,446) ----------------- Investment (Loss) (99,866,479) ----------------- Contributions: Employer 32,307,307 Participants 79,189,748 ---------------- Total Contributions 111,497,055 ---------------- Total Additions 11,630,576 ---------------- Deductions from Net Assets Attributed to: Benefits Paid to Participants 48,817,710 Other Fees 156,547 ---------------- Total Deductions 48,974,257 ---------------- Net Decrease (37,343,681) Net Assets Available for Benefits: Beginning of Year 895,370,873 ---------------- End of Year $ 858,027,192 ================
The accompanying notes are an integral part of these financial statements 3 The Profit Sharing Plan of Quest Diagnostics Incorporated Notes to Financial Statements - -------------------------------------------------------------------------------- 1. Description of the Plan Background - The Profit Sharing Plan of Quest Diagnostics Incorporated (the "Plan"), is a defined contribution plan established by Quest Diagnostics Incorporated (the "Company" or the "Plan Sponsor") to provide its eligible employees with retirement benefits. The Plan is subject to the provisions of the Employee Retirement Income Security Act of 1974 ("ERISA"). The following description of the Plan provides only general information. Participants should refer to the Summary Plan Description for a more complete description of the Plan's provisions. Eligibility and Participant Contributions - All employees who have completed six months of service are eligible to participate in the Plan. Eligible employees electing to participate in the Plan ("Participants") may elect to make a contribution to the Plan through pre-tax payroll deductions of between 1% and 4% of their compensation (their "Basic Contribution"). Effective June 24, 2002, the maximum Basic Contribution was increased from 4% to 6%. Prior to January 1, 2002, Participants could also elect to make a supplemental contribution of between 1% and 11% of their pre-tax compensation (their "Supplemental Contribution"), subject to certain limitations set forth in section 415(d) of the Internal Revenue Code. For the period of January 1, 2002 through June 23, 2002, the maximum Supplemental Contribution was increased from 11% to 31%. Effective June 24, 2002, Participants may elect to make a Supplemental Contribution of between 1% and 29%. Participants' contributions are generally remitted within two-to-three weeks from when the payroll deductions are made. Company Matching Contributions -The Company matches 100% of the Participants' Basic Contribution in cash. The Company may make additional contributions at the discretion of the Company's Board of Directors. Company Contributions are remitted at the same time that the corresponding Participants' contributions are made. Vesting - Participants immediately vest in their voluntary contributions and Company Contributions plus actual earnings thereon. Investment Options - Participants may elect to have their voluntary contributions and the Company Contributions invested in any or all of the open investment funds. Prior to January 1, 2002, any portion of the Company Contributions in the form of common stock of the Company had to be invested in the Quest Stock Fund and could not be diversified into other funds until a Participant reached age 55. Effective January 1, 2002, these trading restrictions have been eliminated. Contributions and transfers into the Covance Stock Fund and the Corning Stock Fund are prohibited. Participants are permitted to transfer money invested in these funds into other funds. Distribution Options - On termination of service, Participants may elect to have their benefit distributions paid in the form of a lump sum distribution, an annuity contract, or by monthly, quarterly or annual installments. For Participants who do not make a distribution election, and who have reached the age of 65 or whose individual account does not exceed $5,000, a lump sum distribution may be made automatically. Effective January 1, 2002, regardless of a Participant's age, a lump sum distribution may be made automatically for Participants who do not make a distribution election and whose individual account does not exceed $5,000. 4 The Profit Sharing Plan of Quest Diagnostics Incorporated Notes to Financial Statements - -------------------------------------------------------------------------------- Withdrawals - Withdrawals may be made for qualified emergencies and hardships, as defined in the Internal Revenue Code. Depending upon the type of withdrawal and the status of the contribution, penalties upon withdrawal may apply. Effective January 1, 2002, Participants may also begin to make withdrawals at age 59 1/2. Participant benefit claims which have been processed and approved but not paid (i.e., distributions payable) are recorded as a reduction to net assets available for plan benefits when paid. Reconciliation of Financial Statements to Form 5500 The following is a reconciliation of net assets available for benefits per the financial statements to the Form 5500:
December 31, --------------------------------------------------- 2001 2000 ----------------------- ------------------------ Net assets available for benefits per the financial statements $ 858,027,192 $ 895,370,873 Amounts allocated to withdrawing Participants (497,487) (924,146) -------------------- ------------------ Net assets available for benefits per the Form 5500 $ 857,529,705 $ 894,446,727 =================== ==================
The following is a reconciliation of benefits paid to Participants per the financial statements to the Form 5500:
Year Ended December 31, 2001 ---------------------------- Benefits paid to Participants per the financial statements $ 48,817,710 Add: Amounts allocated to withdrawing Participants at December 31, 2001 497,487 Less: Amounts allocated to withdrawing Participants at December 31, 2000 (924,146) --------------- Benefits paid to Participants per the Form 5500 $ 48,391,051 ===============
Plan Administration - The Plan Administrator is the Employee Benefits Administration Committee, which is appointed by the Company's Board of Directors. The Plan's trustee and recordkeeper is Fidelity Management Trust Company. Loans to Participants - Participants are permitted to obtain loans that have as collateral their account values in amounts not less than $1,000 and not greater than the lesser of (1) $50,000, subject to certain limitations as defined by the Plan, or (2) 50% of the Participants' vested portion of their account values. These loans bear interest at prevailing market interest rates at the time the loans are issued. 5 The Profit Sharing Plan of Quest Diagnostics Incorporated Notes to Financial Statements - -------------------------------------------------------------------------------- Tax Status - The Internal Revenue Service has determined and informed the Company by letter dated May 17, 2002, that the Plan is designed in accordance with applicable sections of the Internal Revenue Code. The Plan has subsequently been amended. However, the Plan Sponsor and the Plan's tax counsel believe that the Plan is currently designed and being operated in compliance with the applicable requirements of the Internal Revenue Code. Therefore, no provision for income taxes has been included in the Plan's financial statements. Termination - The Company intends to continue the Plan indefinitely, but reserves the right to change or discontinue the Plan at its discretion. 2. Summary of Significant Accounting Policies Method of Accounting - The Plan maintains its financial records on the accrual basis of accounting. Benefits - Benefits are recorded when paid. Valuation of Investments - Investments in mutual funds, common stock and common/collective trusts are stated at fair value as determined by quoted market prices. Investment contracts are stated at contract value, which represents contributions and interest earned less benefit payments. Participants' loans are valued at cost which approximates fair value. Administrative Expenses - Administrative expenses and accounting fees of the Plan are paid by the Company. Security Transactions and Investment Income - Realized and unrealized gains (losses) on securities are included in Net Appreciation/(Depreciation) in Fair Value of Investments in the Statement of Changes in Net Assets Available for Benefits. Dividend income is recorded on the ex-dividend date. Interest income from other investments is recorded as earned on the accrual basis. Cash and Cash Equivalents - Cash and cash equivalents include highly-liquid investments with maturities of three months or less. 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 (if any) at the date of the financial statements and the reported amounts of additions to and deductions from net assets during the reporting period. Actual results could differ from those estimates. Risks and Uncertainties - The Plan provides for Participant-directed investment of their voluntary contributions and the Company Contributions in a number of investment funds. Certain underlying investment securities are exposed to various risks, such as interest rate, market and credit risk. Due to the level of risk associated with certain investment securities and the level of uncertainty related to 6 The Profit Sharing Plan of Quest Diagnostics Incorporated Notes to Financial Statements - -------------------------------------------------------------------------------- changes in the value of investment securities, it is at least reasonably possible that changes in risks in the near term could materially affect Participants' account balances and the amounts reported in the Statements of Net Assets Available for Benefits and the Statement of Changes in Net Assets Available for Benefits. 3. Net Depreciation in Fair Value of Investments For the year ended December 31, 2001, the Plan's investments (including gains and losses on investments bought and sold, as well as held during the year) (depreciated) in value as follows:
Type of investment 2001 Mutual Funds $ (45,911,680) Common Stock (72,810,766) -------------- Net Depreciation in Fair Value of Investments $(118,722,446) ==============
7 The Profit Sharing Plan of Quest Diagnostics Incorporated Notes to Financial Statements - -------------------------------------------------------------------------------- 4. Investments The following presents investments that represented 5 percent or more of the Plan's net assets available for benefits at December 31, 2001 and 2000:
2001 2000 Quest Diagnostics Incorporated Common Stock Nonparticipant-Directed Portion of Investment (1,619,242 and 1,025,185 shares, respectively) $ 116,165,484 $ 145,576,331 Participant-Directed Portion of Investment (1,768,293 and 781,741 shares, respectively) 126,754,651 111,007,161 ---------------- ---------------- Total Investment in Quest Diagnostics Incorporated Common Stock 242,920,135 256,583,492 Fidelity Magellan (1,667,952 and 1,585,390 shares, respectively) 173,834,044 189,137,078 Fidelity Puritan (7,792,798 and 5,723,441 shares, respectively) 137,698,743 107,772,399 Corning Incorporated Common Stock (1,764,357 shares) * 93,180,104 Fidelity Managed Income Portfolio (104,268,962 and 86,131,983 shares, respectively) 104,268,692 86,131,983 Fidelity Contrafund (1,159,055 and 1,116,581 shares, respectively) 49,572,762 54,902,283
* Investment did not represent 5 percent of the Plan's net assets available for benefits at December 31, 2001. 8 The Profit Sharing Plan of Quest Diagnostics Incorporated Notes to Financial Statements - -------------------------------------------------------------------------------- 5. Nonparticipant-Directed Investments Net assets available for benefits at December 31, 2001 and 2000 related to nonparticipant-directed investments were as follows:
2001 2000 Assets Investments, at Fair Value: Common Stock $ 116,165,484 $ 145,576,331 Cash 4,105,550 - Other Assets 675,683 560,443 --------------- --------------- Net Assets Available for Benefits $ 120,946,717 $ 146,136,774 =============== ===============
Changes in net assets available for benefits for the year ended December 31, 2001 related to nonparticipant-directed investments were as follows:
2001 Additions to Net Assets Attributed to: Investment Income: Interest and Dividends $ 65,113 Net Appreciation in Fair Value of Investments 1,363,541 --------------- Investment Income 1,428,654 Deductions from Net Assets Attributed to: Benefits Paid to Participants 7,293,723 Other Fees 7,171 Interfund Transfers 19,317,817 --------------- Total Deductions 26,618,711 --------------- Net Decrease (25,190,057) Net Assets Available for Benefits: Beginning of Year 146,136,774 --------------- End of Year $ 120,946,717 ===============
9 The Profit Sharing Plan of Quest Diagnostics Incorporated Notes to Financial Statements - -------------------------------------------------------------------------------- 6. Subsequent Event Effective October 1, 2002, the Quest Diagnostics Incorporated Employee Stock Ownership Plan (the "ESOP") will be merged into the Plan. At that time, all Participant accounts in the ESOP will be merged into their existing Plan account. For those Participants who do not already have a Plan account, one will be established. The ESOP investments will be placed into the Plan's Company stock fund. Once the plans are merged, there will be no investment restrictions. ESOP contributions will continue to be subject to their three-year vesting requirements. 10 The Profit Sharing Plan of Quest Diagnostics Incorporated Schedule I Schedule of Assets (Held at End of Year) December 31, 2001 - --------------------------------------------------------------------------------
Current Identity of Issue Description Shares/Units Cost Value ----------------- ----------- ------------ ---- ------ Quest Diagnostics Incorporated** Common Stock 3,387,535 $ 76,858,313 $ 242,920,135 Fidelity Magellan Fund Mutual Fund 1,667,952 166,976,836 173,834,044 Fidelity Puritan Mutual Fund 7,792,798 147,471,322 137,698,743 Fidelity Managed Income Common/Collective Portfolio Trust 104,268,692 104,268,692 104,268,692 Fidelity Contrafund Mutual Fund 1,159,055 58,529,955 49,572,762 Fidelity Equity-Income Fund Mutual Fund 500,977 25,123,390 24,432,646 Spartan US Equity Index Mutual Fund 432,989 19,746,414 17,596,677 Fidelity Growth & Income Fund Mutual Fund 432,544 18,447,489 16,168,486 Corning Incorporated Common Stock 1,719,863 12,899,668 15,341,178 Fidelity Low Priced Stock Mutual Fund 488,444 12,037,980 13,393,130 Fidelity Diversified International Mutual Fund 679,445 14,304,615 12,963,803 Fidelity US Bond Index Mutual Fund 499,492 5,381,683 5,394,532 Covance Inc. Common Stock 133,749 1,900,283 3,035,899 Fidelity Over-the-Counter Portfolio Mutual Fund 75,450 2,841,796 2,351,782 Participant Loans** *** - 27,231,351 Fidelity Institutional Money Market Cash Portfolio Fund 10,407,097 10,407,097 10,407,097 --------------- ---------------- $ 677,195,533 $ 856,610,957 =============== ================
** "Party-in-interest" to the Plan. *** Rates approximate prime plus 1%; maturities vary by participant. 11 Signatures Pursuant to the requirements of the Securities Exchange Act of 1934, the plan sponsor of The Profit Sharing Plan of Quest Diagnostics Incorporated has duly caused this annual report to be signed on its behalf by the undersigned, hereunto duly authorized. June 21, 2002 The Profit Sharing Plan of Quest Diagnostics Incorporated By: /s/ Robert A. Hagemann Vice President and Chief Financial Officer ---------------------- Robert A. Hagemann Quest Diagnostics Incorporated 12 EX-23 3 ex23.txt EXHIBIT 23 Exhibit 23 Consent of Independent Accountants We hereby consent to the incorporation by reference in the Registration Statement on Form S-8 (No. 333-17079) of Quest Diagnostics Incorporated of our report dated June 21, 2002 relating to the financial statements of The Profit Sharing Plan of Quest Diagnostics Incorporated, which appears on page 1 of this Form 11-K. /s/ PricewaterhouseCoopers LLP New York, New York June 21, 2002 -----END PRIVACY-ENHANCED MESSAGE-----