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25
LABORATORY CORPORATION OF AMERICA
Management’s Discussion and Analysis
of Financial Condition and Results of Operations
25
LABORATORY CORPORATION OF AMERICA
Consolidated Statements of Cash Flows
Years Ended December 31,
(In Millions) 2010 2009 2008
Cash Flows From Operating Activities:
Net earnings $ 571.6 $ 555.6 $ 477.8
Adjustments to reconcile net earnings to net cash provided by operating activities:
Depreciation and amortization 203.6 195.1 179.7
Stock compensation 40.0 36.4 36.2
Loss on sale of assets 4.1 2.6 1.1
Accreted interest on zero-coupon subordinated notes 5.8 8.3 11.3
Cumulative earnings less than (in excess of) distribution from
equity method investments 6.3 2.2 (0.6)
Deferred income taxes 12.9 9.6 69.6
Change in assets and liabilities (net of effects of acquisitions):
(Increase) decrease in accounts receivable (net) (25.3) 74.0 28.0
Increase in inventories (5.8) (4.3) (8.6)
(Increase) decrease in prepaid expenses and other (13.5) 5.9 (15.1)
Increase in accounts payable 50.1 22.8 15.9
Increase (decrease) in accrued expenses and other 33.8 (45.8) (14.4)
Net cash provided by operating activities 883.6 862.4 780.9
Cash Flows From Investing Activities:
Capital expenditures (126.1) (114.7) (156.7)
Proceeds from sale of assets 4.8 0.9 0.5
Deferred payments on acquisitions (4.5) (3.3) (4.1)
Purchases of short-term investments – – (72.8)
Proceeds from sale of short-term investments – – 182.7
Acquisition of licensing technology (0.4) – (0.8)
Investments in equity affiliates (10.0) (4.3) –
Acquisition of businesses, net of cash acquired (1,181.3) (212.6) (344.8)
Net cash used for investing activities (1,317.5) (334.0) (396.0)
Cash Flows From Financing Activities:
Proceeds from senior notes offerings 925.0 – –
Proceeds from revolving credit facilities 160.0 4.2 145.2
Payments on revolving credit facilities (235.0) – (74.4)
Principal payments on term loan (50.0) (50.0) (25.0)
Payments on zero-coupon subordinated notes (11.4) (289.4) (2.1)
Payments on vendor-financed equipment (1.3) (1.5) –
Increase (decrease) in bank overdraft – (5.0) 5.0
Payments on long-term debt (0.1) (0.1) (0.1)
Payment of debt issuance costs (9.7) (0.1) (0.1)
Proceeds from sale of interest in a consolidated subsidiary 137.5 – –
Cash paid to acquire an interest in a consolidated subsidiary (137.5) – –
Noncontrolling interest distributions (12.6) (11.3) (14.0)
Excess tax benefits from stock based compensation 5.1 0.5 16.2
Net proceeds from issuance of stock to employees 83.4 24.8 64.4
Purchase of common stock (338.1) (273.0) (333.6)
Net cash provided by (used for) financing activities 515.3 (600.9) (218.5)
Effect of exchange rate changes on cash and cash equivalents 0.8 1.3 (3.1)
Net increase (decrease) in cash and cash equivalents 82.2 (71.2) 163.3
Cash and cash equivalents at beginning of period 148.5 219.7 56.4
Cash and cash equivalents at end of period $ 230.7 $ 148.5 $ 219.7
The accompanying notes are an integral part of these consolidated financial statements.