LabCorp 2006 Annual Report Download - page 44

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Dollars and shares in millions, except per share data)
42 Laboratory Corporation of America® Holdings 2006
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to convert all or a portion of the LYONs or Zero-Coupon Notes, holders
must validly surrender their LYONs or Zero-Coupon Notes at any time
during the calendar quarter through the close of business at 5:00p.m.,
New York City time, on Monday, April 2, 2007.
Senior Notes due 2013
On January 17, 2003, in conjunction with the acquisition of DIANON,
the Company borrowed $350.0 under a bridge loan agreement with
Credit Suisse First Boston, acting as Administrative Agent. On January 31,
2003, the Company sold $350.0 aggregate principal amount of Senior
Notes due January 31, 2013. The Notes bear interest at the rate of
5½% per annum from February 1, 2003, payable semi-annually on
February 1 and August 1, commencing on August 1, 2003. Proceeds
from the issuance of these Notes ($345.1), together with cash on hand
was used to repay the $350.0 principal amount of the Company’s
bridge loan, and as a result, such bridge loan was terminated.
Senior Notes due 2015
On December 7, 2005, in conjunction with the execution of an overnight
share repurchase agreement with a bank, the Company borrowed
$250.0 under its revolving credit facility. On December 12, 2005, the
Company sold $250.0 aggregate principal amount of Senior Notes due
2015. The Notes bear interest at the rate of 5 5/8% per annum from
December 14, 2005, payable semi-annually on June 15 and December
15, commencing on June 15, 2006. Proceeds from the issuance of
these Notes ($247.6), together with cash on hand, were used to repay
the borrowings under the revolving credit facility.
12. PREFERRED STOCK AND COMMON
SHAREHOLDERS’ EQUITY
The Company is authorized to issue up to 265.0 shares of common
stock, par value $0.10 per share. The Company’s treasury shares are
recorded at aggregate cost. Common shares issued and outstanding
are summarized in the following table:
2006 2005
Issued 143.8 148.0
In treasury (21.6) (21.5)
Outstanding 122.2 126.5
The Company is authorized to issue up to 30.0 shares of preferred
stock, par value $0.10 per share. There are no preferred shares
outstanding as of December 31, 2006.
The changes in common shares issued and held in treasury are
summarized below:
Common shares issued
2006 2005 2004
Common stock issued at January 1 148.0 150.7 148.9
Common stock issued under employee stock plans 2.5 2.1 1.8
Retirement of common stock (6.7) (4.8) –
Common stock issued at December 31 143.8 148.0 150.7
Common shares held in treasury
2006 2005 2004
Common shares held in treasury at January 1 21.5 14.5 5.5
Purchase of common stock – 6.8 8.9
Surrender of restricted stock awards 0.1 0.2 0.1
Common shares held in treasury at December 31 21.6 21.5 14.5
Share Repurchase Program
During fiscal 2006, the Company purchased 6.7 shares of its common
stock (including 3.4 shares acquired in an accelerated share repurchase
transaction) at a total cost of $438.6. As of December 31, 2006, the
Company had outstanding authorizations from the Board of Directors to
purchase approximately $350.2 of Company common stock.
On November 6, 2006, the Company executed an accelerated
share repurchase transaction with an affiliate of Lehman Brothers
Inc. for the acquisition of 3.4 shares of the Company’s outstanding
common stock for an initial purchase price of $73.40 per share. The
Company used cash on hand to pay for the shares. The purchase
price for these shares is subject to an adjustment based on the
volume weighted-average price of the Company’s stock during a
period following execution of the agreement. The total cost of the
initial purchase was approximately $253.6, including a cap premium
of $3.5. The forward contract associated with the accelerated share
repurchase transaction was accounted for in accordance with EITF
00-19, “Accounting for Derivative Financial Instruments Indexed to,
and Potentially Settled in, a Company’s Own Stock,” (“EITF 0019”) as
an equity instrument. The purchase price adjustment was settled in
the first quarter of 2007 and resulted in the receipt of 0.1 additional
shares by the Company. The purchase price adjustment did not
require the Company to make any additional cash payment. The initial
shares repurchased under the accelerated share repurchase agree-
ment were retired.