LabCorp 2007 Annual Report Download - page 21

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Laboratory Corporation of America® Holdings 2007 19
(a) During 2007, the Company recorded net restructuring charges of $50.6 related to reductions in work force and consolidation of redundant and underutilized facilities.
(b) Effective January 1, 2006, the Company adopted Statement of Financial Accounting Standards No. 123 (revised 2004), Share-Based Payment (“SFAS 123(R)”), which requires
the Company to measure the cost of employee services received in exchange for all equity awards granted, based on the fair market value of the award as of the grant date.
As a result of adopting SFAS 123(R), the Company recorded approximately $23.3 in stock compensation expense relating to its stock option and employee stock purchase
plans for the year ended December 31, 2006. Net earnings for the year ended December 31, 2006, were reduced by $13.9, net of tax.
(c) During the second half of 2006, the Company recorded charges of approximately $12.3, primarily related to the acceleration of the recognition of stock compensation due to
the announced retirement of the Company’s Chief Executive Officer, effective December 31, 2006. The Company also recorded net restructuring charges of $1.0 in the third
quarter of 2006, relating to certain expense-reduction initiatives undertaken across the Company’s corporate and divisional operations.
(d) During the third and fourth quarters of 2005, the Company began to implement its plan related to the integration of Esoterix and US LABS operations into the Company’s service
delivery network. The plan was directed at reducing redundant facilities while maintaining excellent customer service. The Company recorded $11.9 of costs associated with
the execution of the integration plan. The Company also recorded a special charge of $5.0 related to forgiveness of amounts owed by patients and clients as well as other costs
associated with the areas of the Gulf Coast severely impacted by hurricanes Katrina and Rita.
(e) Long-term obligations primarily includes the Company’s zero-coupon convertible subordinated notes, 5½% senior notes due 2013, 55
/
8% senior notes due 2015, term loan and
other long-term obligations. The accreted balance of the zero-coupon convertible subordinated notes was $564.4, $554.4, $544.4, $533.7, and $523.2, at December 31,
2007, 2006, 2005, 2004 and 2003, respectively. The balance of the 5½% senior notes, including principal and unamortized portion of a deferred gain on an interest rate
swap agreement, was $352.2, $352.6, $353.0, $353.4, and $353.8, at December 31, 2007, 2006, 2005, 2004, and 2003, respectively. The principal balance of the
55
/8% senior notes was $250.0 at December 31, 2007, 2006 and 2005 and $0 for all other years presented. The term loan was $500.0 at December 31, 2007 and $0 for all
other years presented. The remainder of other long-term obligations consisted primarily of mortgages payable with balances of $0.4, $0.4, $1.5, $2.2, and $2.5, at December 31,
2007, 2006, 2005, 2004, and 2003, respectively. Long-term obligations exclude amounts due to affiliates.
Five-Year Selected Financial Data
Laboratory Corporation of America