LabCorp 2008 Annual Report Download - page 21

Laboratory Corporation of America
Laboratory Corporation of America® Holdings 2008 19
Selected Financial Data (continued)
(a) During 2008, the Company recorded net restructuring charges of $32.4 primarily related to workforce reductions and the closing of redundant and underutilized facilities. During the third quarter
of 2008, the Company also recorded a special charge of $5.5 related to estimated uncollectible amounts primarily owed by patients in the areas of the Gulf Coast severely impacted by hurricanes
similar to losses incurred during the 2005 hurricane season.
In the fourth quarter of 2008, the Company recorded a $7.5 cumulative revenue adjustment relating to certain historic overpayments made by Medicare for claims submitted by a
subsidiary of the Company. In addition, the Company recorded a $7.1 favorable adjustment to its fourth quarter tax provision relating to tax treaty changes adopted by the United States
and Canada.
During the fourth quarter of 2008, the Company recorded charges of approximately $3.7, which related to the acceleration of the recognition of stock compensation and certain defined
benefit plan obligations due to the announced retirement of the Company’s Executive Vice President of Corporate Affairs, effective December 31, 2008.
In the second quarter of 2008, the Company recorded a $45.0 increase in its provision for doubtful accounts. The Company’s estimate of the allowance for doubtful accounts was
increased due to the impact of the economy, higher patient deductibles and copayments, and recent acquisitions on the collectibility of accounts receivable balances.
(b) During 2007, the Company recorded net restructuring charges of $50.6 related to reductions in workforce and consolidation of redundant and underutilized facilities.
(c) 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.
(d) 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.
(e) 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.
(f) Long-term obligations primarily includes the Company’s zero-coupon convertible subordinated notes, 5 1/2% senior notes due 2013, 5 5/8% senior notes due 2015, term loan, revolving credit
facility and other long-term obligations. The accreted balance of the zero-coupon convertible subordinated notes was $573.5, $564.4, $554.4, $544.4, and $533.7, at December 31, 2008,
2007, 2006, 2005 and 2004, respectively. The balance of the 5 1/2% senior notes, including principal and unamortized portion of a deferred gain on an interest rate swap agreement,
was $351.7, $352.2, $352.6, $353.0, and $353.4, at December 31, 2008, 2007, 2006, 2005, and 2004, respectively. The principal balance of the 5 5/8% senior notes was $250.0 at
December 31, 2008, 2007, 2006 and 2005 and $0 as of December 31, 2004. The term loan was $475.0 and $500.0 at December 31, 2008 and 2007, respectively, and $0 for all other
years presented. The revolving credit facility was $70.8 at December 31, 2008 and $0 for all other years presented. The remainder of other long-term obligations consisted primarily of mortgages
payable with balances of $0.3, $0.4, $0.4, $1.5, and $2.2, at December 31, 2008, 2007, 2006, 2005, and 2004, respectively. Long-term obligations exclude amounts due to affiliates.