LabCorp 2008 Annual Report Download - page 46

Notes to Consolidated Financial Statements
(Dollars and shares in millions, except per share data)
Laboratory Corporation of America
44 Laboratory Corporation of America® Holdings 2008
Senior Notes
The Senior Notes due January 31, 2013 bear interest at the rate of 5 1/2% per annum from
February 1, 2003, payable semi-annually on February 1 and August 1. The Senior Notes
due 2015 bear interest at the rate of 5 5/8% per annum from December 14, 2005, payable
semi-annually on June 15 and December 15.
13) Preferred Stock and Common
Shareholders’ Equity
The Company is authorized to issue up to 265.0 shares of common stock, par value $0.10 per
share. The Company’s treasury shares are recorded at aggregate cost. Common shares issued
and outstanding are summarized in the following table:
2008 2007
Issued 130.3 132.7
In treasury (22.1) (21.7)
Outstanding 108.2 111.0
The Company is authorized to issue up to 30.0 shares of preferred stock, par value
$0.10 per share. There were no preferred shares outstanding as of December 31, 2008.
The changes in common shares issued and held in treasury are summarized below:
Common Shares Issued
2008 2007 2006
Common stock issued at January 1 132.7 143.8 148.0
Common stock issued under employee stock plans 2.2 2.0 2.5
Retirement of common stock (4.6) (13.1) (6.7)
Common stock issued at December 31 130.3 132.7 143.8
Common Shares Held in Treasury
2008 2007 2006
Common shares held in treasury at January 1 21.7 21.6 21.5
Surrender of restricted stock and performance share awards 0.4 0.1 0.1
Common shares held in treasury at December 31 22.1 21.7 21.6
Share Repurchase Program
During fiscal 2008, the Company purchased 4.6 shares of its common stock at a total cost of
$330.6. As of December 31, 2008, the Company had outstanding authorization from the Board
of Directors to purchase approximately $95.2 of Company common stock.
On November 6, 2006, the Company executed an accelerated share repurchase transaction
with a bank for the acquisition of 3.4 shares of the Company’s outstanding common stock for
an initial purchase price of $73.40 per share. The Company used cash on hand to pay for the
shares. The purchase price for these shares was subject to an adjustment based on the volume
weighted average price of the Company’s stock during a period following execution of the
agreement. The total cost of the initial purchase was approximately $253.6, including a cap
premium of $3.5. The forward contract associated with the accelerated share repurchase trans-
action was accounted for in accordance with EITF 00-19, “Accounting for Derivative Financial
Instruments Indexed to, and Potentially Settled in, a Company’s Own Stock,” (“EITF 00-19”)
as an equity instrument. The purchase price adjustment was settled in the first quarter of 2007
and resulted in the receipt of 0.1 additional shares by the Company. The purchase price adjustment
did not require the Company to make any additional cash payment. The shares repurchased
under the accelerated share repurchase agreement were retired.
On December 7, 2005, the Company executed an overnight share repurchase transaction
with a bank for the acquisition of 4.8 shares of the Company’s outstanding common stock for
an initial purchase price of $52.04 per share. The transaction was financed with borrowings
under the Company’s revolving line of credit. The Company used cash on hand and the proceeds
of the Senior Notes due 2015 to repay borrowings under the Company’s revolving credit facility.
Pursuant to the agreement with the bank, the bank purchased 4.8 shares in the open market
over the period ended June 13, 2006. At the end of the purchase period, the Company made a
cash payment of $22.9 to the bank to settle its obligation for the purchase price adjustment
based on the volume weighted average purchase price of the shares acquired compared to the
initial purchase price. The total cost of the initial purchase was approximately $251.7, including
a $1.5 cap premium and $0.2 in commissions and other fees. The shares repurchased under
the overnight share repurchase agreement were immediately canceled and returned to the status
of authorized but unissued shares. The Company reduced common stock and additional paid in
capital by approximately $0.5 and $251.2, respectively to record the initial purchase price. The
forward contract associated with the overnight share repurchase transaction was accounted for
in accordance with EITF 00-19 as an equity instrument. The $22.9 paid in connection with the
price adjustment was recorded as a reduction to additional paid in capital. The diluted net income
per share calculation for the year ended December 31, 2006 includes the potential shares of
common stock that could have been issued to settle the overnight share repurchase transaction.