Delaware
|
13-3757370
|
|
(State or other jurisdiction of incorporation or organization)
|
(I.R.S. Employer Identification No.)
|
358 South Main Street,
|
||
Burlington, North Carolina
|
27215
|
|
(Address of principal executive offices)
|
(Zip Code)
|
Large accelerated filer [X]
|
Accelerated Filer [ ]
|
Non-accelerated filer [ ] (Do not check if a smaller reporting company)
|
Smaller reporting company [ ]
|
Item 1
|
|
March 31, 2010 and December 31, 2009
|
|
Three month periods ended March 31, 2010 and 2009
|
|
Three months ended March 31, 2010 and 2009
|
|
Three months ended March 31, 2010 and 2009
|
|
Item 2
|
|
Condition and Results of Operations
|
|
Item 3
|
|
Item 4
|
Item 1
|
|
Item 1A
|
|
Item 2
|
|
Item 6
|
March 31,
|
December 31,
|
|||||||
2010
|
2009
|
|||||||
ASSETS
|
||||||||
Current assets:
|
||||||||
Cash and cash equivalents
|
$ | 172.2 | $ | 148.5 | ||||
Accounts receivable, net of allowance for doubtful
|
||||||||
accounts of $169.9 and $173.1 at March 31, 2010
|
||||||||
and December 31, 2009, respectively
|
614.3 | 574.2 | ||||||
Supplies inventories
|
82.5 | 90.0 | ||||||
Prepaid expenses and other
|
74.3 | 80.1 | ||||||
Deferred income taxes
|
37.7 | 42.8 | ||||||
Total current assets
|
981.0 | 935.6 | ||||||
Property, plant and equipment, net
|
488.4 | 500.8 | ||||||
Goodwill, net
|
1,911.1 | 1,897.1 | ||||||
Intangible assets, net
|
1,382.1 | 1,342.2 | ||||||
Investments in joint venture partnerships
|
69.2 | 71.4 | ||||||
Other assets, net
|
102.4 | 90.7 | ||||||
Total assets
|
$ | 4,934.2 | $ | 4,837.8 | ||||
LIABILITIES AND SHAREHOLDERS’ EQUITY
|
||||||||
Current liabilities:
|
||||||||
Accounts payable
|
$ | 169.3 | $ | 183.1 | ||||
Accrued expenses and other
|
347.1 | 275.7 | ||||||
Noncontrolling interest
|
-- | 142.4 | ||||||
Short-term borrowings and current portion of long-term debt
|
370.0 | 417.2 | ||||||
Total current liabilities
|
886.4 | 1,018.4 | ||||||
Long-term debt, less current portion
|
958.3 | 977.2 | ||||||
Deferred income taxes and other tax liabilities
|
604.0 | 577.7 | ||||||
Noncontrolling interest
|
145.6 | -- | ||||||
Other liabilities
|
161.3 | 158.4 | ||||||
Total liabilities
|
2,755.6 | 2,731.7 | ||||||
Commitments and contingent liabilities
|
-- | -- | ||||||
Noncontrolling interest
|
20.2 | -- | ||||||
Shareholders’ equity
|
||||||||
Common stock, 104.2 and 105.3 shares outstanding at
|
||||||||
March 31, 2010 and December 31, 2009, respectively
|
12.4 | 12.5 | ||||||
Additional paid-in capital
|
-- | 36.7 | ||||||
Retained earnings
|
3,002.7 | 2,927.9 | ||||||
Less common stock held in treasury
|
(934.9 | ) | (932.5 | ) | ||||
Accumulated other comprehensive income
|
78.2 | 61.5 | ||||||
Total shareholders’ equity
|
2,158.4 | 2,106.1 | ||||||
Total liabilities and shareholders’ equity
|
$ | 4,934.2 | $ | 4,837.8 |
Three Months Ended
|
||||||||
March 31,
|
||||||||
2010
|
2009
|
|||||||
Net sales
|
$ | 1,193.6 | $ | 1,155.7 | ||||
Cost of sales
|
686.7 | 666.3 | ||||||
Gross profit
|
506.9 | 489.4 | ||||||
Selling, general and administrative expenses
|
246.0 | 233.8 | ||||||
Amortization of intangibles and other assets
|
17.4 | 15.1 | ||||||
Restructuring and other special charges
|
9.3 | -- | ||||||
Operating income
|
234.2 | 240.5 | ||||||
Other income (expenses):
|
||||||||
Interest expense
|
(14.6 | ) | (17.0 | ) | ||||
Income from joint venture partnerships, net
|
3.8 | 2.8 | ||||||
Investment income
|
0.3 | 0.4 | ||||||
Other, net
|
(0.6 | ) | (0.5 | ) | ||||
Earnings before income taxes
|
223.1 | 226.2 | ||||||
Provision for income taxes
|
86.9 | 90.4 | ||||||
Net earnings
|
136.2 | 135.8 | ||||||
Less: Net earnings attributable to the noncontrolling interest
|
(3.5 | ) | (3.0 | ) | ||||
Net earnings attributable to Laboratory Corporation of America Holdings
|
$ | 132.7 | $ | 132.8 | ||||
Basic earnings per common share
|
$ | 1.27 | $ | 1.23 | ||||
Diluted earnings per common share
|
$ | 1.25 | $ | 1.22 |
Accumulated
|
||||||||||||||||||||||||
Additional
|
Other
|
Total
|
||||||||||||||||||||||
Common
|
Paid-in
|
Retained
|
Treasury
|
Comprehensive
|
Shareholders’
|
|||||||||||||||||||
Stock
|
Capital
|
Earnings
|
Stock
|
Income (Loss)
|
Equity
|
|||||||||||||||||||
BALANCE AT DECEMBER 31, 2008
|
$ | 12.8 | $ | 237.4 | $ | 2,384.6 | $ | (929.8 | ) | $ | (16.7 | ) | $ | 1,688.3 | ||||||||||
Comprehensive earnings:
|
||||||||||||||||||||||||
Net earnings attributable to Laboratory
|
||||||||||||||||||||||||
Corporation of America Holdings
|
-- | -- | 132.8 | -- | -- | 132.8 | ||||||||||||||||||
Other comprehensive earnings:
|
||||||||||||||||||||||||
Foreign currency translation adjustments
|
-- | -- | -- | -- | (21.1 | ) | (21.1 | ) | ||||||||||||||||
Interest rate swap adjustments
|
-- | -- | -- | -- | 0.4 | 0.4 | ||||||||||||||||||
Tax effect of other comprehensive
|
||||||||||||||||||||||||
earnings adjustments
|
-- | -- | -- | -- | 7.8 | 7.8 | ||||||||||||||||||
Comprehensive earnings
|
119.9 | |||||||||||||||||||||||
Issuance of common stock under
|
||||||||||||||||||||||||
employee stock plans
|
-- | 5.7 | -- | -- | -- | 5.7 | ||||||||||||||||||
Surrender of restricted stock awards
|
-- | -- | -- | (2.7 | ) | -- | (2.7 | ) | ||||||||||||||||
Stock compensation
|
-- | 7.2 | -- | -- | -- | 7.2 | ||||||||||||||||||
Income tax benefit adjustments related to
|
||||||||||||||||||||||||
stock options exercised
|
-- | (0.4 | ) | -- | -- | -- | (0.4 | ) | ||||||||||||||||
BALANCE AT MARCH 31, 2009
|
$ | 12.8 | $ | 249.9 | $ | 2,517.4 | $ | (932.5 | ) | $ | (29.6 | ) | $ | 1,818.0 | ||||||||||
BALANCE AT DECEMBER 31, 2009
|
$ | 12.5 | $ | 36.7 | $ | 2,927.9 | $ | (932.5 | ) | $ | 61.5 | $ | 2,106.1 | |||||||||||
Comprehensive earnings:
|
||||||||||||||||||||||||
Net earnings attributable to Laboratory
|
||||||||||||||||||||||||
Corporation of America Holdings
|
-- | -- | 132.7 | -- | -- | 132.7 | ||||||||||||||||||
Other comprehensive earnings:
|
||||||||||||||||||||||||
Foreign currency translation adjustments
|
-- | -- | -- | -- | 25.5 | 25.5 | ||||||||||||||||||
Interest rate swap adjustments
|
-- | -- | -- | -- | 1.1 | 1.1 | ||||||||||||||||||
Tax effect of other comprehensive
|
||||||||||||||||||||||||
earnings adjustments
|
-- | -- | -- | -- | (9.9 | ) | (9.9 | ) | ||||||||||||||||
Comprehensive earnings
|
149.4 | |||||||||||||||||||||||
Issuance of common stock under
|
||||||||||||||||||||||||
employee stock plans
|
-- | 18.1 | -- | -- | -- | 18.1 | ||||||||||||||||||
Surrender of restricted stock awards
|
-- | -- | -- | (2.4 | ) | -- | (2.4 | ) | ||||||||||||||||
Stock compensation
|
-- | 8.7 | -- | -- | -- | 8.7 | ||||||||||||||||||
Value of noncontrolling interest put
|
-- | (17.2 | ) | -- | -- | -- | (17.2 | ) | ||||||||||||||||
Income tax benefit from stock
|
||||||||||||||||||||||||
options exercised
|
-- | 1.4 | -- | -- | -- | 1.4 | ||||||||||||||||||
Purchase of common stock
|
(0.1 | ) | (47.7 | ) | (57.9 | ) | -- | -- | (105.7 | ) | ||||||||||||||
BALANCE AT MARCH 31, 2010
|
$ | 12.4 | $ | -- | $ | 3,002.7 | $ | (934.9 | ) | $ | 78.2 | $ | 2,158.4 |
Three Months Ended
|
||||||||
March 31,
|
||||||||
2010
|
2009
|
|||||||
CASH FLOWS FROM OPERATING ACTIVITIES:
|
||||||||
Net earnings
|
$ | 136.2 | $ | 135.8 | ||||
Adjustments to reconcile net earnings to net cash provided by
|
||||||||
operating activities:
|
||||||||
Depreciation and amortization
|
50.0 | 47.3 | ||||||
Stock compensation
|
8.7 | 7.2 | ||||||
Loss on sale of assets
|
0.5 | 0.3 | ||||||
Accreted interest on zero-coupon subordinated notes
|
1.5 | 2.8 | ||||||
Cumulative earnings less than distribution
|
||||||||
from joint venture partnerships
|
0.4 | 0.6 | ||||||
Deferred income taxes
|
10.0 | 10.3 | ||||||
Change in assets and liabilities (net of effects of acquisitions):
|
||||||||
Increase in accounts receivable (net)
|
(38.4 | ) | (38.4 | ) | ||||
Decrease in inventories
|
7.7 | 7.7 | ||||||
Decrease in prepaid expenses and other
|
5.0 | 13.7 | ||||||
Increase (decrease) in accounts payable
|
(14.8 | ) | 15.1 | |||||
Increase in accrued expenses and other
|
65.2 | 6.5 | ||||||
Net cash provided by operating activities
|
232.0 | 208.9 | ||||||
CASH FLOWS FROM INVESTING ACTIVITIES:
|
||||||||
Capital expenditures
|
(24.5 | ) | (30.7 | ) | ||||
Proceeds from sale of assets
|
1.6 | -- | ||||||
Deferred payments on acquisitions
|
(1.4 | ) | (0.4 | ) | ||||
Investment in equity affiliate
|
-- | (4.3 | ) | |||||
Acquisition of businesses, net of cash acquired
|
(32.2 | ) | (5.9 | ) | ||||
Net cash used for investing activities
|
(56.5 | ) | (41.3 | ) | ||||
CASH FLOWS FROM FINANCING ACTIVITIES:
|
||||||||
Proceeds from revolving credit facilities
|
65.0 | -- | ||||||
Payments on revolving credit facilities
|
(120.0 | ) | -- | |||||
Principal payments on term loan
|
(12.5 | ) | (12.5 | ) | ||||
Payments on vendor-financed equipment
|
(1.3 | ) | -- | |||||
Decrease in bank overdraft
|
-- | (3.9 | ) | |||||
Proceeds from sale of interest in consolidated subsidiary
|
137.5 | -- | ||||||
Cash paid to acquire an interest in a consolidated subsidiary
|
(137.5 | ) | -- | |||||
Noncontrolling interest distributions
|
(2.8 | ) | (2.0 | ) | ||||
Tax benefit adjustments related to stock based compensation
|
0.9 | (0.4 | ) | |||||
Net proceeds from issuance of stock to employees
|
18.1 | 5.7 | ||||||
Purchase of common stock
|
(100.3 | ) | -- | |||||
Net cash used for financing activities
|
(152.9 | ) | (13.1 | ) | ||||
Effect of exchange rate changes on cash and cash equivalents
|
1.1 | (1.0 | ) | |||||
Net increase in cash and cash equivalents
|
23.7 | 153.5 | ||||||
Cash and cash equivalents at beginning of period
|
148.5 | 219.7 | ||||||
Cash and cash equivalents at end of period
|
$ | 172.2 | $ | 373.2 |
Three months ended
|
Three months ended
|
|||||||||||||||||||||||
March 31, 2010
|
March 31, 2009
|
|||||||||||||||||||||||
Per Share
|
Per Share
|
|||||||||||||||||||||||
Income
|
Shares
|
Amount
|
Income
|
Shares
|
Amount
|
|||||||||||||||||||
Basic earnings per share:
|
||||||||||||||||||||||||
Net earnings
|
$ | 132.7 | 104.6 | $ | 1.27 | $ | 132.8 | 108.1 | $ | 1.23 | ||||||||||||||
Dilutive effect of employee
|
||||||||||||||||||||||||
stock options and awards
|
-- | 0.8 | -- | 0.6 | ||||||||||||||||||||
Effect of convertible debt,
|
||||||||||||||||||||||||
net of tax
|
-- | 1.1 | -- | 0.1 | ||||||||||||||||||||
Diluted earnings per share:
|
||||||||||||||||||||||||
Net earnings including impact
|
||||||||||||||||||||||||
of dilutive adjustments
|
$ | 132.7 | 106.5 | $ | 1.25 | $ | 132.8 | 108.8 | $ | 1.22 |
Three Months Ended
|
||||||||
March 31,
|
||||||||
2010
|
2009
|
|||||||
Stock options
|
3.6 | 4.0 |
Severance
|
Lease
|
|||||||||||
and Other
|
and Other
|
|||||||||||
Employee
|
Facility
|
|||||||||||
Costs
|
Costs
|
Total
|
||||||||||
Balance as of December 31, 2009
|
$ | 6.6 | $ | 19.0 | $ | 25.6 | ||||||
Net restructuring charges
|
3.9 | (0.8 | ) | 3.1 | ||||||||
Cash payments and other adjustments
|
(2.6 | ) | (1.1 | ) | (3.7 | ) | ||||||
Balance as of March 31, 2010
|
$ | 7.9 | $ | 17.1 | $ | 25.0 | ||||||
Current
|
$ | 15.5 | ||||||||||
Non-current
|
9.5 | |||||||||||
$ | 25.0 |
March 31,
|
December 31,
|
|||||||
2010
|
2009
|
|||||||
Balance as of January 1
|
$ | 1,897.1 | $ | 1,772.2 | ||||
Goodwill acquired during the period
|
14.1 | 124.1 | ||||||
Adjustments to goodwill
|
(0.1 | ) | 0.8 | |||||
Balance at end of period
|
$ | 1,911.1 | $ | 1,897.1 |
March 31, 2010
|
December 31, 2009
|
|||||||||||||||
Gross
|
Gross
|
|||||||||||||||
Carrying
|
Accumulated
|
Carrying
|
Accumulated
|
|||||||||||||
Amount
|
Amortization
|
Amount
|
Amortization
|
|||||||||||||
Customer relationships
|
$ | 827.1 | $ | (334.6 | ) | $ | 839.8 | $ | (337.1 | ) | ||||||
Patents, licenses and technology
|
144.1 | (65.7 | ) | 119.2 | (62.4 | ) | ||||||||||
Non-compete agreements
|
15.4 | (5.9 | ) | 39.4 | (30.7 | ) | ||||||||||
Trade name
|
117.7 | (43.9 | ) | 117.7 | (41.8 | ) | ||||||||||
Canadian licenses
|
727.9 | -- | 698.1 | -- | ||||||||||||
$ | 1,832.2 | $ | (450.1 | ) | $ | 1,814.2 | $ | (472.0 | ) |
|
March 31,
|
December 31,
|
||||||
|
2010
|
2009
|
||||||
Zero-coupon convertible subordinated notes
|
$ | 293.7 | $ | 292.2 | ||||
Term loan, current
|
56.3 | 50.0 | ||||||
Revolving credit facility
|
20.0 | 75.0 | ||||||
Total short-term borrowings and current portion
|
||||||||
of long-term debt
|
$ | 370.0 | $ | 417.2 |
|
March 31,
|
December 31,
|
||||||
|
2010
|
2009
|
||||||
Senior notes due 2013
|
$ | 351.2 | $ | 351.3 | ||||
Senior notes due 2015
|
250.0 | 250.0 | ||||||
Term loan, non-current
|
356.2 | 375.0 | ||||||
Other long-term debt
|
0.9 | 0.9 | ||||||
Total long-term debt
|
$ | 958.3 | $ | 977.2 |
Held in
|
||||||||||||
Issued
|
Treasury
|
Outstanding
|
||||||||||
Common shares at December 31, 2009
|
127.4 | (22.1 | ) | 105.3 | ||||||||
Common stock issued under employee stock plans
|
0.4 | -- | 0.4 | |||||||||
Retirement of common stock
|
(1.5 | ) | -- | (1.5 | ) | |||||||
Common shares at March 31, 2010
|
126.3 | (22.1 | ) | 104.2 |
Three Months Ended
|
||||||||
March 31,
|
||||||||
2010
|
2009
|
|||||||
Service cost for benefits earned
|
$ | 0.7 | $ | 5.2 | ||||
Interest cost on benefit obligation
|
4.6 | 4.6 | ||||||
Expected return on plan assets
|
(4.7 | ) | (4.3 | ) | ||||
Net amortization and deferral
|
2.0 | 3.1 | ||||||
Defined benefit plan costs
|
$ | 2.6 | $ | 8.6 |
Three Months Ended
|
||||||||
March 31,
|
||||||||
2010
|
2009
|
|||||||
Service cost for benefits earned
|
$ | 0.1 | $ | 0.1 | ||||
Interest cost on benefit obligation
|
0.6 | 0.6 | ||||||
Net amortization and deferral
|
(0.2 | ) | (0.4 | ) | ||||
Post-retirement medical plan costs
|
$ | 0.5 | $ | 0.3 |
Fair value
|
Fair Value Measurements as of
|
|||||||||||||||
as of
|
March 31, 2010
|
|||||||||||||||
March 31,
|
Using Fair Value Hierarchy
|
|||||||||||||||
2010
|
Level 1
|
Level 2
|
Level 3
|
|||||||||||||
Noncontrolling interest puts
|
$ | 165.8 | $ | -- | $ | 165.8 | $ | -- | ||||||||
Derivatives
|
||||||||||||||||
Embedded derivatives related to the zero-coupon subordinated notes
|
$ | -- | $ | -- | $ | -- | $ | -- | ||||||||
Interest rate swap liability
|
9.5 | -- | 9.5 | -- | ||||||||||||
Total fair value of derivatives
|
$ | 9.5 | $ | -- | $ | 9.5 | $ | -- |
Fair value
|
Fair Value Measurements as of
|
|||||||||||||||
as of
|
December 31, 2009
|
|||||||||||||||
December 31,
|
Using Fair Value Hierarchy
|
|||||||||||||||
2009
|
Level 1
|
Level 2
|
Level 3
|
|||||||||||||
Noncontrolling interest put
|
$ | 142.4 | $ | -- | $ | 142.4 | $ | -- | ||||||||
Derivatives
|
||||||||||||||||
Embedded derivatives related to the zero-coupon subordinated notes
|
$ | -- | $ | -- | $ | -- | $ | -- | ||||||||
Interest rate swap liability
|
10.6 | -- | 10.6 | -- | ||||||||||||
Total fair value of derivatives
|
$ | 10.6 | $ | -- | $ | 10.6 | $ | -- |
1)
|
The Company will pay contingent cash interest on the zero-coupon subordinated notes after September 11, 2006, if the average market price of the notes equals 120% or more of the sum of the issue price, accrued original issue discount and contingent additional principal, if any, for a specified measurement period.
|
2)
|
Holders may surrender zero-coupon subordinated notes for conversion during any period in which the rating assigned to the zero-coupon subordinated notes by Standard & Poor’s Ratings Services is BB- or lower.
|
Fair Value as of
|
||||||||
March 31,
|
December 31,
|
|||||||
Balance Sheet Location
|
2010
|
2009
|
||||||
Other liabilities
|
$ | 9.5 | $ | 10.6 |
2010
|
2009
|
|||||||
Effective portion of derivative gain
|
$ | 1.1 | $ | 0.4 |
Three Months Ended
|
||||||||
March 31,
|
||||||||
2010
|
2009
|
|||||||
Supplemental schedule of cash flow information:
|
||||||||
Cash paid during period for:
|
||||||||
Interest
|
$ | 13.5 | $ | 14.1 | ||||
Income taxes, net of refunds
|
10.6 | 7.6 | ||||||
Disclosure of non-cash financing and investing activities:
|
||||||||
Accrued repurchases of common stock
|
$ | 5.4 | $ | -- | ||||
Purchase of equipment in accrued expenses
|
-- | 2.8 |
1.
|
changes in federal, state, local and third party payer regulations or policies or other future reforms in the health care system (or in the interpretation of current regulations), new insurance or payment systems, including state or regional insurance cooperatives, new public insurance programs or a single-payer system, affecting governmental
and third-party coverage or reimbursement for clinical laboratory testing;
|
2.
|
adverse results from investigations or audits of clinical laboratories by the government, which may include significant monetary damages, refunds and/or exclusion from the Medicare and Medicaid programs;
|
3.
|
loss or suspension of a license or imposition of a fine or penalties under, or future changes in, or interpretations of, the law or regulations of the Clinical Laboratory Improvement Act of 1967, and the Clinical Laboratory Improvement Amendments of 1988, or those of Medicare, Medicaid, the False Claims Act or other federal, state or local
agencies;
|
4.
|
failure to comply with the Federal Occupational Safety and Health Administration requirements and the Needlestick Safety and Prevention Act, which may result in penalties and loss of licensure;
|
5.
|
failure to comply with HIPAA, including changes to federal and state privacy and security obligations and changes to HIPAA, including those changes included within HITECH, which could result in increased costs, denial of claims and/or significant penalties;
|
6.
|
failure to maintain the security of customer-related information could damage the Company’s reputation with customers, cause it to incur substantial additional costs and become subject to litigation;
|
7.
|
failure of the Company, third party payers or physicians to comply with Version 5010 Transactions by January 1, 2012 or the ICD-10-CM Code Set issued by the Department of Health and Human Services and effective for claims submitted as of October 1, 2013;
|
8.
|
increased competition, including competition from companies that do not comply with existing laws or regulations or otherwise disregard compliance standards in the industry;
|
9.
|
increased price competition, competitive bidding for laboratory tests and/or changes or reductions to fee schedules;
|
10.
|
changes in payer mix, including an increase in capitated managed-cost health care or the impact of a shift to consumer-driven health plans;
|
11.
|
failure to obtain and retain new customers and alliance partners, or a reduction in tests ordered or specimens submitted by existing customers;
|
12.
|
failure to retain or attract managed care business as a result of changes in business models, including new risk based or network approaches, or other changes in strategy or business models by managed care companies;
|
13.
|
failure to effectively integrate and/or manage newly acquired businesses and the cost related to such integration;
|
14.
|
adverse results in litigation matters;
|
15.
|
inability to attract and retain experienced and qualified personnel;
|
16.
|
failure to maintain the Company’s days sales outstanding and/or bad debt expense levels;
|
17.
|
decrease in the Company’s credit ratings by Standard & Poor’s and/or Moody’s;
|
18.
|
discontinuation or recalls of existing testing products;
|
19.
|
failure to develop or acquire licenses for new or improved technologies, or if customers use new technologies to perform their own tests;
|
20.
|
inability to commercialize newly licensed tests or technologies or to obtain appropriate coverage or reimbursement for such tests, which could result in impairment in the value of certain capitalized licensing costs;
|
21.
|
changes in government regulations or policies affecting the approval, availability of, and the selling and marketing of diagnostic tests;
|
22.
|
inability to obtain and maintain adequate patent and other proprietary rights for protection of the Company’s products and services and successfully enforce the Company’s proprietary rights;
|
23.
|
the scope, validity and enforceability of patents and other proprietary rights held by third parties which might have an impact on the Company’s ability to develop, perform, or market the Company’s tests or operate its business;
|
24.
|
failure in the Company’s information technology systems resulting in an increase in testing turnaround time or billing processes or the failure to meet future regulatory or customer information technology, data security and connectivity requirements;
|
25.
|
failure of the Company’s financial information systems resulting in failure to meet required financial reporting deadlines;
|
26.
|
failure of the Company's disaster recovery plans to provide adequate protection against the interruption of business and/or to permit the recovery of business operations;
|
27.
|
business interruption or other impact on the business due to adverse weather (including hurricanes), fires and/or other natural disasters, terrorism or other criminal acts, and for widespread outbreak of influenza or other pandemic;
|
28.
|
liabilities that result from the inability to comply with corporate governance requirements;
|
29.
|
significant deterioration in the economy or financial markets which could negatively impact the Company’s testing volumes, cash collections and the availability of credit for general liquidity or other financing needs; and
|
30.
|
changes in reimbursement by foreign governments and foreign currency fluctuations.
|
Net Sales |
Quarter ended March 31,
|
|||||||||||
2010
|
2009
|
% Change
|
||||||||||
Net sales
|
||||||||||||
Routine Testing
|
$ | 718.3 | $ | 714.0 | 0.6 | % | ||||||
Genomic and Esoteric Testing
|
406.4 | 386.1 | 5.2 | % | ||||||||
Ontario, Canada
|
68.9 | 55.6 | 24.0 | % | ||||||||
Total
|
$ | 1,193.6 | $ | 1,155.7 | 3.3 | % |
Number of Requisitions
|
||||||||||||
Quarter ended March 31,
|
||||||||||||
2010
|
2009
|
% Change
|
||||||||||
Volume
|
||||||||||||
Routine Testing
|
20.3 | 21.5 | (5.7 | )% | ||||||||
Genomic and Esoteric Testing
|
6.5 | 6.2 | 5.3 | % | ||||||||
Ontario, Canada
|
2.3 | 2.2 | 0.8 | % | ||||||||
Total
|
29.1 | 29.9 | (3.0 | )% |
Quarter ended March 31,
|
||||||||||||
2010
|
2009
|
% Change
|
||||||||||
Revenue Per Requisition
|
||||||||||||
Routine Testing
|
$ | 35.40 | $ | 33.18 | 6.7 | % | ||||||
Genomic and Esoteric Testing
|
62.64 | 62.67 | -- | % | ||||||||
Ontario, Canada
|
30.14 | 24.50 | 23.0 | % | ||||||||
Total
|
$ | 41.07 | $ | 38.59 | 6.4 | % |
Cost of Sales
|
Quarter ended March 31,
|
|||||||||||
2010
|
2009
|
% Change
|
||||||||||
Cost of sales
|
$ | 686.7 | $ | 666.3 | 3.1 | % | ||||||
Cost of sales as a % of sales
|
57.5 | % | 57.7 | % |
Quarter ended March 31,
|
||||||||||||
2010
|
2009
|
% Change
|
||||||||||
Selling, general and administrative
|
||||||||||||
expenses
|
$ | 246.0 | $ | 233.8 | 5.2 | % | ||||||
SG&A as a % of sales
|
20.6 | % | 20.2 | % |
Quarter ended March 31,
|
||||||||||||
2010
|
2009
|
% Change
|
||||||||||
Amortization of intangibles and
|
|
|||||||||||
other assets
|
$ | 17.4 | $ | 15.1 | 15.2 | % |
Quarter ended March 31,
|
||||||||||||
2010
|
2009
|
% Change
|
||||||||||
Restructuring and other special charges
|
$ | 9.3 | $ | -- | N/A |
Interest Expense
|
Quarter ended March 31,
|
|||||||||||
2010
|
2009
|
% Change
|
||||||||||
Interest expense
|
$ | 14.6 | $ | 17.0 | (14.1 | )% |
Quarter ended March 31,
|
||||||||||||
2010
|
2009
|
% Change
|
||||||||||
Income from joint venture partnerships
|
$ | 3.8 | $ | 2.8 | 35.7 | % |
Income Tax Expense
|
Quarter ended March 31,
|
|||||||||||
2010
|
2009
|
% Change
|
||||||||||
Income tax expense
|
$ | 86.9 | $ | 90.4 | (3.9 | )% | ||||||
Income tax expense as a %
|
||||||||||||
of income before tax
|
39.0 | % | 40.0 | % |
1)
|
The Company will pay contingent cash interest on the zero-coupon subordinated notes after September 11, 2006, if the average market price of the notes equals 120% or more of the sum of the issue price, accrued original issue discount and contingent additional principal, if any, for a specified measurement period.
|
2)
|
Holders may surrender zero-coupon subordinated notes for conversion during any period in which the rating assigned to the zero-coupon subordinated notes by Standard & Poor’s Ratings Services is BB- or lower.
|
|
Maximum
|
|||||||||||||||
|
Total Number
|
Dollar Value
|
||||||||||||||
|
Average
|
of Shares
|
of Shares
|
|||||||||||||
Total
|
Price
|
Repurchased as
|
that May Yet Be
|
|||||||||||||
Number | Paid | Part of Publicly | Repurchased | |||||||||||||
of Shares
|
Per
|
Announced
|
Under
|
|||||||||||||
Repurchased
|
Share
|
Program
|
the Program
|
|||||||||||||
January 1 – January 31
|
0.4 | $ | 73.46 | 0.4 | $ | 46.5 | ||||||||||
February 1 – February 28
|
0.5 | 72.09 | 0.5 | 258.6 | ||||||||||||
March 1 - March 31
|
0.6 | 74.44 | 0.6 | 216.1 | ||||||||||||
1.5 | $ | 73.35 | 1.5 |
Exhibits
|
(a)
|
Exhibits
|
10.1*
|
First Amendment to the Laboratory Corporation of America Holdings Master Senior Executive Change in Control Severance Plan
|
10.2* | Second Amendment to the Laboratory Corporation of America Holdings Master Senior Executive Change in Control Severance Plan |
12.1*
|
Ratio of earnings to fixed charges
|
31.1*
|
Certification by the Chief Executive Officer pursuant to Rule 13a-14(a) or Rule 15d-14(a)
|
31.2*
|
Certification by the Chief Financial Officer pursuant to Rule 13a-14(a) or Rule 15d-14(a)
|
32*
|
Written Statement of Chief Executive Officer and Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (18 U.S.C. Section 1350)
|
101.INS*
|
XBRL Instance Document
|
101.SCH*
|
XBRL Taxonomy Extension Schema
|
101.CAL*
|
XBRL Taxonomy Calculation Linkbase
|
101.DEF*
|
XBRL Taxonomy Extension Definition Linkbase
|
101.LAB*
|
XBRL Taxonomy Extension Label Linkbase
|
101.PRE*
|
XBRL Taxonomy Extension Presentation Linkbase
|
*
|
filed herewith
|
By:
|
/s/ DAVID P. KING
|
|
David P. King
|
||
Chairman of the Board, President
|
||
and Chief Executive Officer
|
By:
|
/s/ WILLIAM B. HAYES
|
|
William B. Hayes
|
||
Executive Vice President,
|
||
Chief Financial Officer and Treasurer
|
1. | Effective January 1, 2010, Section 5.2 of the Plan shall be amended by adding as the first two sentences to that Section the following: |
This section shall apply only to Covered Employees who have been participants in the Plan on or before December 31, 2009. Covered Employees who become participants on or after January 1, 2010 shall not be entitled to a Gross-Up Payment as defined within this Section.
|
LABORATORY CORPORATION OF
|
|
AMERICA HOLDINGS
|
|
By:
/S/ F. SAMUEL EBERTS III
|
|
F. Samuel Eberts III
|
|
Title: Senior Vice President and Chief Legal
|
|
Officer
|
1.
|
Section 5.1 of the Plan shall be amended by deleting from the beginning of the first sentence the phrase “Subject to Sections 3.2 and 3.3,” and replacing it with the phrase “Subject to Sections 3.2, 3.3 and 5.2,”; and
|
2.
|
Section 5.2 of the Plan including all prior amendments thereto is hereby deleted in its entirety and shall be replaced with the following:
|
Section 280G of the Code.
Notwithstanding the application of the calculation of benefits hereunder, in the event that the payments or distributions to be made by the Company to or for the benefit of the Covered Employee (whether paid or payable or distributed or distributable pursuant
to the terms of this Plan, under some other plan, agreement, or arrangement, or otherwise) (a “Payment”) constitute “parachute payments” within the meaning of Section 280G of the Code, then the Payment to the Covered Employee shall be reduced to $1 below the safe harbor limit (as described in Section 280G(b)(2)(A)(ii) of the Code) if said reduction in Payment would result in the Covered Employee retaining a larger amount, on an after-tax basis, taking into account the excise and income
taxes imposed on the payments and benefits.
|
LABORATORY CORPORATION OF
|
|
AMERICA HOLDINGS
|
|
By:
/S/ F. SAMUEL EBERTS III
|
|
F. Samuel Eberts III
|
|
Title: Senior Vice President and Chief Legal
|
|
Officer
|
EXHIBIT 12.1
|
||||||||||||||||||||||||
STATEMENT OF COMPUTATION OF RATIOS OF EARNINGS TO FIXED CHARGES
|
||||||||||||||||||||||||
(dollars in millions, except ratio information)
|
||||||||||||||||||||||||
Three Months | ||||||||||||||||||||||||
Ended | ||||||||||||||||||||||||
Fiscal Years Ended December 31,
|
March 31,
|
|||||||||||||||||||||||
2005
|
2006
|
2007
|
2008
|
2009
|
2010
|
|||||||||||||||||||
Income from continuing operations
|
||||||||||||||||||||||||
before income taxes
|
640.7 | 720.9 | 802.3 | 785.7 | 884.6 | 223.1 | ||||||||||||||||||
Fixed Charges:
|
||||||||||||||||||||||||
Interest on long-term and
|
||||||||||||||||||||||||
short-term debt including
|
||||||||||||||||||||||||
amortization of debt expense
|
34.4 | 47.8 | 56.6 | 72.0 | 62.9 | 14.6 | ||||||||||||||||||
Portion of rental expense as can be
|
||||||||||||||||||||||||
demonstrated to be representative
|
||||||||||||||||||||||||
of the interest factor
|
39.9 | 43.6 | 53.0 | 58.4 | 61.0 | 16.1 | ||||||||||||||||||
Total fixed charges
|
74.3 | 91.4 | 109.6 | 130.4 | 123.9 | 30.7 | ||||||||||||||||||
Earnings before income taxes and
|
||||||||||||||||||||||||
fixed charges
|
715.0 | 812.3 | 911.9 | 916.1 | 1,008.5 | 253.8 | ||||||||||||||||||
Ratio of earnings to fixed charges
|
9.62 | 8.89 | 8.32 | 7.03 | 8.14 | 8.27 | ||||||||||||||||||
Date: April 26, 2010
|
||
By:
|
/s/ DAVID P. KING
|
|
David P. King
|
||
Chief Executive Officer
|
||
(Principal Executive Officer)
|
Date: April 26, 2010
|
||
By:
|
/s/ WILLIAM B. HAYES
|
|
William B. Hayes
|
||
Chief Financial Officer
|
||
(Principal Financial Officer)
|
By:
|
/s/ DAVID P. KING
|
|
David P. King
|
||
Chief Executive Officer
|
||
April 26, 2010
|
By:
|
/s/ WILLIAM B. HAYES
|
|
William B. Hayes
|
||
Chief Financial Officer
|
||
April 26, 2010
|