LabCorp 2009 Annual Report Download - page 53

LABORATORY CORPORATION OF AMERICA 51
of the Company’s common stock, subject to adjustment in
certain circumstances, if one of the following conditions occurs:
1) If the sales price of the Company’s common stock for at
least 20 trading days in a period of 30 consecutive trading
days ending on the last trading day of the preceding quarter
reaches specified thresholds (beginning at 120% and
declining 0.1282% per quarter until it reaches approximately
110% for the quarter beginning July 1, 2021 of the accreted
conversion price per share of common stock on the last
day of the preceding quarter). The accreted conversion
price per share will equal the issue price of a note plus the
accrued original issue discount and any accrued contingent
additional principal, divided by the number of shares of
common stock issuable upon conversion of a note on that
day. The conversion trigger price for the fourth quarter of
2009 was $68.21.
2) If the credit rating assigned to the notes by Standard & Poor’s
Ratings Services is at or below BB-.
3) If the notes are called for redemption.
4) If specified corporate transactions have occurred (such
as if the Company is party to a consolidation, merger or
binding share exchange or a transfer of all or substantially
all of its assets).
Holders of the notes may require the Company to purchase
in cash all or a portion of their notes on September 11, 2011
at $819.54 per note, plus any accrued contingent additional
principal and any accrued contingent interest thereon.
The Company may redeem for cash all or a portion of the
notes at any time on or after September 11, 2006 at specified
redemption prices per one thousand dollar principal amount
at maturity of the notes.
The Company has registered the notes and the shares of
common stock issuable upon conversion of the notes with the
Securities and Exchange Commission.
During the second quarter of 2009, the Company redeemed
approximately $369.5 principal amount at maturity of its zero-
coupon subordinated notes, equaling approximately 50% of
the principal amount at maturity outstanding of the zero-coupon
subordinated notes. The total cash used for these redemptions
was $289.4. As a result of certain holders of the zero-coupon
subordinated notes electing to convert their notes, the Company
also issued 0.4 additional shares of common stock and reversed
approximately $11.3 of deferred tax liability to reflect the tax
benefit realized upon issuance of these shares.
The Company’s common stock trading price contingent cash
interest feature of its zero-coupon subordinated notes was not
triggered by the average market price of the Company’s com-
mon stock for the five trading days ended September 9, 2009.
As a result, the zero-coupon subordinated notes will not accrue
contingent cash interest for the period of September 12, 2009
to March 11, 2010.
On January 5, 2010, the Company announced that its
zero-coupon subordinated notes may be converted into cash
and common stock at the conversion rate of 13.4108 per
$1,000 principal amount at maturity of the notes, subject to the
terms of the zero-coupon subordinated notes and the Indenture,
dated as of October 24, 2006 between the Company and The
Bank of New York Mellon, as trustee and conversion agent.
In order to exercise the option to convert all or a portion of the
zero-coupon subordinated notes, holders are required to
validly surrender their zero-coupon subordinated notes at any
time during the calendar quarter beginning January 1, 2010,
through the close of business on the last business day of the
calendar quarter, which is 5:00 p.m., New York City time, on
Wednesday, March 31, 2010.
Senior Notes
The Senior Notes due January 31, 2013 bear interest at the
rate of 5½% 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 55 /8% per annum from
December 14, 2005, payable semi-annually on June 15 and
December 15.
12. 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:
2009 2008
Issued 127.4 130.3
In treasury (22.1) (22.1)
Outstanding 105.3 108.2
LABORATORY CORPORATION OF AMERICA
Notes to Consolidated Financial Statements