LabCorp 2007 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 2007
Effective January 1, 2008 the Company acquired additional
partnership units in its Ontario, Canada joint venture, bringing the
Company’s percentage interest owned up to 85.6%. Concurrent with
this acquisition, the terms of the joint venture’s partnership agreement
were amended. Based upon the amended terms of this agreement, the
Company began including the consolidated operating results, fi nancial
position and cash fl ows of the Ontario, Canada joint venture in the
Company’s consolidated fi nancial statements on January 1, 2008.
The amended joint venture’s partnership agreement also enables the
minority interest to put the remaining partnership units to the Company
in defi ned future periods, at an initial amount equal to the consideration
paid by the Company in 2008, and subject to adjustment based on market
value formulas contained in the agreement.
ACCOUNTS RECEIVABLE, NET
December 31, December 31,
2007 2006
Gross accounts receivable $715.7 $ 643.6
Less allowance for doubtful accounts (92.5) (102.3)
$623.2 $ 541.3
The provision for doubtful accounts was $196.2, $176.5 and
$179.3 in 2007, 2006 and 2005 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.
PROPERTY, PLANT
AND EQUIPMENT, NET
December 31, December 31,
2007 2006
Land $ 19.6 $ 14.6
Buildings and building improvements 95.9 93.6
Machinery and equipment 484.4 421.1
Software 256.4 239.5
Leasehold improvements 111.8 100.1
Furniture and fi xtures 30.0 25.9
Construction in progress 59.9 36.2
Buildings under capital leases – 5.4
Equipment under capital leases 3.5 3.5
1,061.5 939.9
Less accumulated depreciation
and amortization of capital lease assets (622.3) (546.7)
$ 439.2 $ 393.2
Depreciation expense and amortization of capital lease assets was
$106.5, $102.2 and $97.2 for 2007, 2006 and 2005, respectively.
Depreciation of software was $34.8, $33.8, and $30.2 for 2007, 2006
and 2005, respectively.
GOODWILL AND INTANGIBLE ASSETS
The changes in the carrying amount of goodwill (net of accumulated
amortization) for the years ended December 31, 2007 and 2006 are
as follows:
2007 2006
Balance as of January 1 $1,484.0 $1,477.0
Goodwill acquired during the year 157.7 19.6
Adjustments to goodwill (2.2) (12.6)
Goodwill, net $1,639.5 $1,484.0
The components of identifi able intangible assets are as follows:
December 31, 2007 December 31, 2006
Gross Gross
Carrying Accumulated Carrying Accumulated
Amount Amortization Amount Amortization
Customer lists $734.9 $(253.0) $690.3 $(215.7)
Patents, licenses
and technology 94.0 (47.1) 89.1 (38.0)
Non-compete
agreements 34.4 (25.9) 27.4 (23.9)
Trade name 102.1 (26.0) 100.5 (19.5)
$965.4 $(352.0) $907.3 $(297.1)
A summary of intangible assets acquired during 2007, and their
respective weighted average amortization periods are as follows:
Weighted Average
Amount Amortization Period
Customer lists $44.6 11.5
Patents, licenses and technology 4.9 4.3
Non-compete agreements 7.0 5.0
Trade name 1.6 5.0
$58.1 9.9
Amortization of intangible assets was $54.9, $52.2 and $51.4 in
2007, 2006 and 2005, respectively. Amortization expense of intangible
assets is estimated to be $56.1 in fi scal 2008, $55.1 in fi scal 2009,
$54.3 in fi scal 2010, $49.6 in fi scal 2011, $45.2 in fi scal 2012, and
$353.1 thereafter.
Laboratory Corporation of America