LabCorp 2009 Annual Report Download - page 49

LABORATORY CORPORATION OF AMERICA 47
venture’s partnership agreement. These units were acquired
on February 8, 2010 for CN$147.8. On February 17, 2010,
the Company completed a transaction to sell the units acquired
from the previous noncontrolling interest holder to a new
Canadian partner for the same price. Upon the completion
of these two transactions, the Company’s financial ownership
percentage in the joint venture partnership remained unchanged
at 85.6%. Concurrent with the sale to the new partner, the
partnership agreement for the Ontario Canada joint venture
was amended and restated with substantially the same terms
as the previous agreement.
Net sales of the Ontario joint venture were $247.5
(CN$281.3) and $249.0 (CN$264.4) for the twelve months
ended December 31, 2009 and 2008, respectively.
During the year ended December 31, 2007, the Company
acquired various medical reference laboratories and related
assets for approximately $222.3 in cash. These acquisitions
were primarily done to extend the Company’s geographic
reach in important market areas or acquire scientific differentia-
tion and esoteric testing capabilities.
3. Restructuring and Other Special Charges
During 2009, the Company recorded net restructuring
charges of $13.5 primarily related to the closing of redundant
and underutilized facilities. The majority of these costs related
to severance and other employee costs and contractual
obligations associated with leased facilities and other facility
related costs. Of this amount, $10.5 related to severance and
other employee costs for employees primarily in the affected
facilities, and $12.5 related to contractual obligations associ-
ated with leased facilities and other facility related costs. The
Company also reduced its prior restructuring accruals by
$9.5, comprised of $7.3 of previously recorded facility costs
and $2.2 of employee severance benefits as a result of incur-
ring less cost than planned on those restructuring initiatives
primarily resulting from favorable settlements on lease buy-
outs and severance payments that were not required to
achieve the planned reduction in work force.
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. Of this
amount, $20.9 related to severance and other employee costs
in connection with the general work force reductions and
$13.4 related to contractual obligations associated with leased
facilities and equipment. The Company also recorded a credit
of $1.9, comprised of $1.2 of previously recorded facility costs
and $0.7 of employee severance benefits relating to changes
in cost estimates accrued in prior periods.
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.
During 2007, the Company recorded net restructuring charges
of $50.6 primarily related to reductions in work force and
consolidation of redundant and underutilized facilities. Of this
amount, $24.8 related to employee severance benefits for
employees primarily in management, administrative, technical,
service and support functions and $19.4 related to contractual
obligations and other costs associated with the closure of facilities.
The charges also included a write-off of approximately $6.5 of
accounts receivable balances remaining on a subsidiary’s billing
system that was abandoned during the year and $0.9
related to settlement of a preacquisition employment liability.
The Company also recorded a credit of $1.0, comprised of
$0.7 of previously recorded facility costs and $0.3 of employee
severance benefits.
4. Restructuring Reserves
The following represents the Company’s restructuring activities
for the period indicated:
Severance Lease
and Other and Other
Employee Facility
Costs Costs Total
Balance as of January 1, 2009 $ 11.3 $ 22.4 $ 33.7
Net restructuring charges 8.3 5.2 13.5
Cash payments and other adjustments (13.0) (8.6) (21.6)
Balance as of December 31, 2009 $ 6.6 $ 19.0 $ 25.6
Current $ 15.2
Non-current 10.4
$ 25.6
5. Investments in Joint Venture Partnerships
As disclosed in note 2 (Business Acquisitions), effective
January 1, 2008 the Company acquired additional partnership
units in its Ontario, Canada joint venture bringing the Company’s
percentage interest owned to 85.6%. Concurrent with this acqui-
sition, the terms of the joint venture’s partnership agreement were
LABORATORY CORPORATION OF AMERICA
Notes to Consolidated Financial Statements