LabCorp 2006 Annual Report Download - page 41

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Dollars and shares in millions, except per share data)
Laboratory Corporation of America® Holdings 2006 39
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the Ontario, Canada partnership, are accounted for under the equity
method of accounting, as the Company does not have control of
these three partnerships, due to the participating rights afforded to all
partners in each agreement. The Company has no material obligations
or guarantees to, or in support of, these unconsolidated joint ventures
and their operations.
Condensed unconsolidated financial information for the joint
venture partnerships is shown in the following table.
2006 2005
As of December 31:
Current assets $ 54.6 $ 55.0
Other assets 133.6 132.0
Total assets $188.2 $187.0
Current liabilities $ 24.6 $ 24.4
Other liabilities 0.6 1.4
Total liabilities 25.2 25.5
Partners’ equity 163.0 161.5
Total liabilities and Partners equity $188.2 $187.0
2006 2005 2004
For the period January 1 – December 31:
Net sales $361.7 $321.4 $280.8
Gross profit 165.3 144.6 127.2
Net earnings 102.0 93.1 77.8
The Company’s recorded investments in the Ontario and Alberta
joint venture partnerships at December 31, 2006, include $417.6
and $46.5, respectively of value assigned to these two partnerships’
Canadian licenses (with an indefinite life and deductible for tax), to
conduct diagnostic testing services in their respective provinces.
6. ACCOUNTS RECEIVABLE, NET
December 31, December 31,
2006 2005
Gross accounts receivable $ 643.6 $ 618.0
Less allowance for doubtful accounts (102.3) (124.6)
$ 541.3 $ 493.4
The provision for doubtful accounts was $176.5, $179.3 and
$192.7 in 2006, 2005 and 2004 respectively. In addition, in 2005
the Company recorded a special charge of $4.7 related to forgiveness
of amounts owed by patients and clients in the areas of the Gulf Coast
severely impacted by hurricanes Katrina and Rita.
7. PROPERTY, PLANT AND EQUIPMENT, NET
December 31, December 31,
2006 2005
Land $ 14.6 $ 14.2
Buildings and building improvements 93.6 91.4
Machinery and equipment 421.1 382.9
Software 239.5 202.0
Leasehold improvements 100.1 94.3
Furniture and fixtures 25.9 24.1
Construction in progress 36.2 33.3
Buildings under capital leases 5.4 5.4
Equipment under capital leases 3.5 3.5
939.9 851.1
Less accumulated depreciation
and amortization of capital lease assets (546.7) (469.6)
$ 393.2 $ 381.5
Depreciation expense and amortization of capital lease assets
was $102.2, $97.2 and $93.0 for 2006, 2005 and 2004, respec-
tively. Depreciation of software was $33.8, $30.2, and $28.9 for
2006, 2005 and 2004, respectively.
8. GOODWILL AND INTANGIBLE ASSETS
The changes in the carrying amount of goodwill (net of accumulated
amortization) for the years ended December 31, 2006 and 2005 are
as follows:
2006 2005
Balance as of January 1 $1,477.0 $1,300.4
Goodwill acquired during the year 19.6 171.0
Adjustments to goodwill (12.6) 5.6
Goodwill, net $1,484.0 $1,477.0
The components of identifiable intangible assets are as follows:
December 31, 2006 December 31, 2005
Gross Gross
Carrying Accumulated Carrying Accumulated
Amount Amortization Amount Amortization
Customer lists $690.3 $(215.7) $675.8 $(181.6)
Patents, licenses
and technology 89.1 (38.0) 88.5 (28.0)
Non-compete agreements 27.4 (23.9) 25.6 (22.5)
Trade name 100.5 (19.5) 100.7 (12.8)
$907.3 $(297.1) $890.6 $(244.9)