LabCorp 2007 Annual Report Download - page 45

Notes to Consolidated Financial Statements
(Dollars and shares in millions, except per share data)
Laboratory Corporation of America® Holdings 2007 43
The Company paid approximately $0.7 in 2007 and $0.6 in 2006
for certain exclusive and non-exclusive licensing rights to diagnostic
testing technology. These amounts are being amortized over the life
of the licensing agreements.
ACCRUED EXPENSES AND OTHER
December 31, December 31,
2007 2006
Employee compensation and benefi ts $124.5 $109.7
Self-insurance reserves 48.7 46.1
Other tax accruals – 53.0
Accrued taxes payable 13.4 1.6
Royalty and license fees payable 14.2 6.5
Accrued repurchases of common stock 3.0 –
Restructuring reserves 15.8 3.3
Acquisition related reserves 6.1 6.5
Interest payable 8.6 8.6
Other 5.3 7.7
$239.6 $243.0
OTHER LIABILITIES
December 31, December 31,
2007 2006
Postretirement benefi t obligation $42.8 $45.8
Restructuring reserves 11.8 3.0
Self-insurance reserves 12.1 13.2
Acquisition related reserves 2.8 3.7
Other 21.2 14.9
$90.7 $80.6
DEBT
Short-term borrowings and current portion of long-term debt at
December 31, 2007 and 2006 consisted of the following:
December 31, December 31,
2007 2006
Zero-coupon convertible subordinated notes $564.4 $554.4
Term loan, current 25.0 –
Current portion of long-term debt 0.1 –
Total short-term borrowings and
current portion of long term debt $589.5 $554.4
Long-term debt at December 31, 2007 and 2006 consisted of
the following:
December 31, December 31,
2007 2006
Senior notes due 2013 $ 352.2 $352.6
Senior notes due 2015 250.0 250.0
Term loan, non-current 475.0 –
Other long-term debt 0.3 0.4
Total long-term debt $1,077.5 $603.0
Credit Facilities
On October 26, 2007, the Company entered into new senior unsecured
credit facilities with Credit Suisse, acting as Administrative Agent, and
a group of fi nancial institutions totaling $1,000.0. The new facilities
consist of a fi ve-year Revolving Facility in the principal amount of $500.0
and a fi ve-year, $500.0 Term Loan Facility. On October 26, 2007, the
Company borrowed $500.0 under the Term Loan Facility, and outstanding
Letters of Credit totaling $110.5 were extended under the new facilities.
The Company’s previous revolving credit facility was terminated upon
the closing of the new facilities. The balance outstanding on the
Company’s new Revolving Facility at December 31, 2007 was $0.0.
The senior unsecured credit facilities bear interest at varying rates
based upon the Company’s credit rating with Standard & Poor’s Ratings
Services. As of December 31, 2007, the interest rates on the Term Loan
Facility and the new Revolving Facility were 5.6% and 5.1%, respectively.
The quarterly principal repayments of the Term Loan Facility range from
$6.25 to $18.75 beginning on March 31, 2008 to September 30, 2012
with $243.75 due on the maturity date of October 26, 2012. At December 31,
2007, future principal repayments under the Term Loan facility are as
follows: 2008 – $25.0, 2009 – $50.0, 2010 – $50.0, 2011 – $75.0
and 2012 – $300.0.
The new senior credit facilities are available for general corporate
purposes, including working capital, capital expenditures, acquisitions,
funding of share repurchases and other payments, and repayment
of all amounts outstanding under the Company’s previous revolving
credit facility. The agreement 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 pay-
ment of dividends. The Company is in compliance with all covenants
at December 31, 2007.
Laboratory Corporation of America