LabCorp 2009 Annual Report Download - page 23

LABORATORY CORPORATION OF AMERICA 21
(a) During 2009, the Company recorded net restructuring charges of $13.5 primarily related to the closing of redundant and underutilized facilities.
In October 2009, the Company received approval from its Board of Directors to freeze any additional service-based credits for any years of
service after December 31, 2009 on the defined benefit retirement plan (the “Company Plan”) and the nonqualified supplemental retirement plan
(the “PEP”). As a result of the changes to the Company Plan and PEP, which were adopted in the fourth quarter of 2009, the Company recognized
a net curtailment charge of $2.8 due to remeasurement of the PEP obligation at December 31, 2009 and the acceleration of unrecognized prior
service for that plan. In addition, the Company recorded favorable adjustments of $21.5 to its tax provision relating to the resolution of certain
state income tax issues under audit, as well as the realization of foreign tax credits.
In connection with the Monogram Biosciences, Inc. acquisition, the Company incurred $2.7 in transaction fees and expenses in the third quarter
of 2009.
(b) During 2008, the Company recorded net restructuring charges of $32.4 primarily related to work force 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.
(c) During 2007, the Company recorded net restructuring charges of $50.6 related to reductions in work force and consolidation of redundant and
underutilized facilities.
(d) Effective January 1, 2006, the Company adopted authoritative guidance in connection with share-based payments, 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 the guidance, 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.
(e) 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.
(f) 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.
(g) Long-term obligations primarily include the Company’s zero-coupon convertible subordinated notes, 5½% senior notes due 2013, 55
/8% senior
notes due 2015, term loan, revolving credit facility and other long-term obligations. The accreted balance of the zero-coupon convertible subordi-
nated notes was $292.2, $573.5, $564.4, $554.4, and $544.4, at December 31, 2009, 2008, 2007, 2006 and 2005, respectively. The balance of
the 5½% senior notes, including principal and unamortized portion of a deferred gain on an interest rate swap agreement, was $351.3, $351.7,
$352.2, $352.6, and $353.0, at December 31, 2009, 2008, 2007, 2006, and 2005, respectively. The principal balance of the 55
/8% senior notes
was $250.0 at December 31, 2009, 2008, 2007, 2006 and 2005. The term loan was $425.0, $475.0 and $500.0 at December 31, 2009, 2008
and 2007, respectively, and $0 for all other years presented. The revolving credit facility was $75.0 and $70.8 at December 31, 2009 and 2008,
respectively, and $0 for all other years presented. The remainder of other long-term obligations consisted primarily of mortgages payable with
balances of $0.9, $0.3, $0.4, $0.4, and $1.5, at December 31, 2009, 2008, 2007, 2006, and 2005, respectively. Long-term obligations exclude
amounts due to affiliates.
LABORATORY CORPORATION OF AMERICA
Selected Financial Data (continued)