LabCorp 2008 Annual Report Download - page 44

Notes to Consolidated Financial Statements
(Dollars and shares in millions, except per share data)
Laboratory Corporation of America
42 Laboratory Corporation of America® Holdings 2008
A summary of amortizable intangible assets acquired during 2008, and their respective
weighted average amortization periods are as follows:
Weighted Average
Amount Amortization Period
Customer lists $ 58.3 11.6
Patents, licenses and technology 0.8 0.1
Non-compete agreements 2.6 0.2
Trade name 13.2 2.4
$ 74.9 14.3
Amortization of intangible assets was $57.9, $54.9 and $52.2 in 2008, 2007 and 2006,
respectively. Amortization expense of intangible assets is estimated to be $59.1 in fiscal 2009,
$58.1 in fiscal 2010, $53.4 in fiscal 2011, $49.0 in fiscal 2012, $46.1 in fiscal 2013, and
$364.6 thereafter.
The Company paid approximately $0.8 in 2008 and $0.7 in 2007 for certain exclusive
and non-exclusive licensing rights to diagnostic testing technology. These amounts are being
amortized over the life of the licensing agreements.
As of December 31, 2008, the Ontario operation has $592.3 of value assigned to the
partnership’s indefinite lived Canadian licenses to conduct diagnostic testing services in the province.
10) Accrued Expenses and Other
December 31, December 31,
2008 2007
Employee compensation and benefits $ 140.7 $ 124.5
Self-insurance reserves 48.0 48.7
Accrued taxes payable 10.5 13.4
Royalty and license fees payable 7.7 14.2
Accrued repurchases of common stock – 3.0
Restructuring reserves 24.3 15.8
Acquisition related reserves 8.1 6.1
Interest payable 8.6 8.6
Other 18.5 5.3
$ 266.4 $ 239.6
11) Other Liabilities
December 31, December 31,
2008 2007
Post-retirement benefit obligation $ 36.7 $ 42.8
Defined benefit plan obligation 94.8 –
Restructuring reserves 9.4 11.8
Self-insurance reserves 12.1 12.1
Interest rate swap liability 13.5 –
Acquisition related reserves 1.2 2.8
Other 21.9 21.2
$ 189.6 $ 90.7
12) Debt
Short-term borrowings and current portion of long-term debt at December 31, 2008 and 2007
consisted of the following:
December 31, December 31,
2008 2007
Zero-coupon convertible subordinated notes $ – $ 564.4
Term loan, current 50.0 25.0
Revolving credit facility 70.8 –
Current portion of long-term debt – 0.1
Total short-term borrowings and
current portion of long term debt $ 120.8 $ 589.5
Long-term debt at December 31, 2008 and 2007 consisted of the following:
December 31, December 31,
2008 2007
Senior notes due 2013 $ 351.7 $ 352.2
Senior notes due 2015 250.0 250.0
Term loan, non-current 425.0 475.0
Zero-coupon convertible subordinated notes 573.5 –
Other long-term debt 0.3 0.3
Total long-term debt $ 1,600.5 $ 1,077.5
Credit Facilities
On October 26, 2007, the Company entered into senior unsecured credit facilities with Credit
Suisse, acting as Administrative Agent, and a group of financial institutions totaling $1,000.0.
The credit facilities consist of a five-year Revolving Facility in the principal amount of $500.0
and a five-year, $500.0 Term Loan Facility. The balances outstanding on the Company’s Term
Loan Facility at December 31, 2008 and 2007 were $475.0 and $500.0, respectively. The
balances outstanding on the Company’s Revolving Facility at December 31, 2008 and 2007
were $70.8 and $0.0, respectively. The senior unsecured credit facilities bear interest at varying
rates based upon LIBOR plus a percentage based on the Company’s credit rating with Standard &
Poor’s Ratings Services. The remaining quarterly principal repayments of the Term Loan Facility
range from $12.5 to $18.8 from March 31, 2009 to September 30, 2012 with $243.8 due on
the maturity date of October 26, 2012. At December 31, 2008, future principal repayments
under the Term Loan facility are as follows: 2009 – $50.0, 2010 – $50.0, 2011 – $75.0
and 2012 – $300.0.
The senior credit facilities are available for general corporate purposes, including working
capital, capital expenditures, acquisitions, funding of share repurchases and other payments.
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 payment of dividends. The Company is in compliance with all covenants at
December 31, 2008.