LabCorp 2006 Annual Report Download - page 42

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Dollars and shares in millions, except per share data)
40 Laboratory Corporation of America® Holdings 2006
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A summary of intangible assets acquired during 2006, and their
respective weighted-average amortization periods are as follows:
Weighted-Average
Amount Amortization Period
Customer lists $14.5 10.0
Patents, licenses and technology 0.6 6.3
Non-compete agreements 1.8 5.0
$16.9 9.3
Amortization of intangible assets was $52.2, $51.4 and $42.7 in
2006, 2005 and 2004, respectively. Amortization expense of intangible
assets is estimated to be $51.8 in fiscal 2007, $49.2 in fiscal 2008,
$48.2 in fiscal 2009, $45.8 in fiscal 2010, $41.8 in fiscal 2011, and
$373.4 thereafter.
The Company paid approximately $0.6 in 2006 and $5.4 in 2005
for certain exclusive and non-exclusive licensing rights to diagnostic
testing technology. These amounts are being amortized over the life
of the licensing agreements.
9. ACCRUED EXPENSES AND OTHER
December 31, December 31,
2006 2005
Employee compensation and benefits $109.7 $ 78.0
Self-insurance reserves 46.1 46.1
Other tax accruals 53.0 44.4
Accrued taxes payable 1.6 9.2
Royalty and license fees payable 6.5 5.7
Accrued repurchases of common stock – 15.0
Restructuring reserves 3.3 5.8
Acquisition related reserves 6.5 9.1
Interest payable 8.6 8.6
Other 7.7 5.4
$243.0 $227.3
10. OTHER LIABILITIES
December 31, December 31,
2006 2005
Post-retirement benefit obligation $45.8 $46.1
Restructuring reserves 3.0 5.9
Self-insurance reserves 13.2 13.2
Acquisition related reserves 3.9 8.8
Other 14.6 14.6
$80.5 $88.6
11. DEBT
Short-term borrowings and current portion of long-term debt at
December 31, 2006 and 2005 consisted of the following:
December 31, December 31,
2006 2005
Zero-coupon convertible subordinated notes $554.4 $544.4
Current portion of long-term debt – 0.2
Total short-term borrowings and current portion
of long term debt $554.4 $544.6
Long-term debt at December 31, 2006 and 2005 consisted of
the following:
December 31, December 31,
2006 2005
Senior notes due 2013 $352.6 $353.0
Senior notes due 2015 250.0 250.0
Other long-term debt 0.4 1.5
Total long-term debt $603.0 $604.5
Revolving Credit Facility
On January 13, 2005, the Company entered into a 5 year $350.0
unsecured revolving credit facility with Credit Suisse First Boston and
UBS Securities LLC, acting as Co-Lead Arrangers, and a group of
financial institutions for borrowings of up to $350.0. The facility also
provides for an accordion feature whereby the Company can increase
the amounts available under the facility up to an additional $150.0,
with the consent of the lenders, if needed to support the Company’s
growth. There were no balances outstanding on the Company’s
revolving credit facility at December 31, 2006 and December 31, 2005.
The revolving credit facility bears interest at varying rates based upon
the Company’s credit rating with Standard & Poor’s Ratings Services.
As of December 31, 2006, the interest rate on the revolving credit
facility was 5.8%.
The senior credit facility is available for general corporate
purposes, including working capital, capital expenditures, funding of
share repurchases and other payments, and acquisitions. The agree-
ment contains certain debt covenants which require that the Company
maintain leverage and interest coverage ratios of 2.5 to 1.0 and 5.0
to 1.0, respectively. Both ratios are calculated in relation to EBITDA
(Earnings Before Interest, Taxes, Depreciation, and Amortization). The
covenants also restrict the payment of dividends. The Company is in
compliance with all covenants at December 31, 2006.