LabCorp 2012 Annual Report Download - page 40

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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
2012 was $71.45.
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).
The Company may redeem for cash all or a portion of the
notes at any time 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 2012 and 2011, the Company settled notices
to convert $9.8 and $190.6 aggregate principal amount at
maturity of its zero-coupon subordinated notes with a
conversion value of $12.0 and $248.9, respectively. The total
cash used for these settlements was $8.2 and $155.1 and
the Company also issued 0.0 and 1.0 additional shares of
common stock, respectively. As a result of these conversions,
in 2012 and 2011 the Company also reversed approximately
$0.6 and $36.2, respectively, of deferred tax liability to
reflect the tax benefit realized upon issuance of the shares.
On August 11, 2011, the Company notified holders of
the zero-coupon subordinated notes that pursuant to the
Indenture for the notes they have the right to require the
Company to purchase in cash all or a portion of their zero-
coupon subordinated notes on September 12, 2011 at
$819.54 per note, plus any accrued contingent additional
principal and any accrued contingent interest thereon. On
September 12, 2011, the Company announced that none
of the zero-coupon subordinated notes were tendered by
holders for purchase by the Company.
On September 12, 2012, the Company announced that
for the period of September 12, 2012 to March 11, 2013, the
zero-coupon subordinated notes will accrue contingent
cash interest at a rate of no less than 0.125% of the average
market price of a zero-coupon subordinated note for the
five trading days ended September 7, 2012, in addition to
the continued accrual of the original issue discount.
On January 2, 2013, 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, 2013, 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 Friday, March 29, 2013.
If notices of conversion are received, the Company plans
to settle the cash portion of the conversion obligation with
cash on hand and/or borrowings under the revolving
credit facility.
Senior Notes
On August 23, 2012, the Company issued $1,000.0 in
new senior notes pursuant to the Company’s effective shelf
registration statement on Form S-3. The new senior notes
consisted of $500.0 aggregate principal amount of 2.20%
Senior Notes due 2017 and $500.0 aggregate principal
amount of 3.75% Senior Notes due 2022. The net proceeds
were used to repay $625.0 of the outstanding borrowings
under the Company’s Revolving Credit Facility. The remaining
proceeds are available for other general corporate purposes.
The Senior Notes due 2017 and Senior Notes due 2022
bear interest at the rate of 2.20% per annum and 3.75% per
annum, respectively, payable semi-annually on February 23
and August 23 of each year, commencing February 23, 2013.
LABORATORY CORPORATION OF AMERICA
Notes to Consolidated Financial Statements