LabCorp 2012 Annual Report Download - page 52

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zero-coupon subordinated notes contain features that are
considered to be embedded derivative instruments (see
Embedded Derivatives section below), the Company does
not hold or issue derivative financial instruments for trading
purposes. The Company does not believe that its exposure
to market risk is material to the Company’s financial position
or results of operations.
Interest Rate Swap
The interest rate swap agreement to hedge variable interest
rate risk on the Company’s variable interest rate term loan
expired on March 31, 2011. On a quarterly basis under the
swap, the Company paid a fixed rate of interest 2.92% and
received a variable rate of interest based on the three-
month LIBOR rate on an amortizing notional amount of
indebtedness equivalent to the term loan balance outstand-
ing. The swap was designated as a cash flow hedge.
Accordingly, the Company recognized the fair value of the
swap in the condensed consolidated balance sheets and any
changes in the fair value were recorded as adjustments to
accumulated other comprehensive income (loss), net of tax.
Embedded Derivatives Related to the Zero-Coupon
Subordinated Notes
The Company’s zero-coupon subordinated notes contain
the following two features that are considered to be
embedded derivative instruments under authoritative
guidance in connection with accounting for derivative
instruments and hedging activities:
1) The Company will pay contingent cash interest on the
zero-coupon subordinated notes after September 11,
2006, if the average market price of the notes equals
120% or more of the sum of the issue price, accrued
original issue discount and contingent additional principal,
if any, for a specified measurement period.
2) Holders may surrender zero-coupon subordinated notes
for conversion during any period in which the rating
assigned to the zero-coupon subordinated notes by
Standard & Poor’s Ratings Services is BB- or lower.
The Company believes these embedded derivatives had no
fair value at December 31, 2012 and 2011. These embedded
derivatives also had no impact on the consolidated statements
of operations for the years ended December 31, 2012, 2011
and 2010.
The following table summarizes the effect of the interest
rate swap on other comprehensive income for the years ended
December 31, 2012 and 2011:
2012 2011
Effective portion of derivative gain $ – $ 2.4
19. Supplemental Cash Flow Information
Years Ended December 31,
2012 2011 2010
Supplemental schedule of cash flow information:
Cash paid during period for:
Interest $ 77.5 $ 99.6 $ 55.5
Income taxes, net of refunds 306.2 309.4 355.0
Disclosure of non-cash financing and
investing activities:
Surrender of restricted stock awards and
performance shares 10.9 6.0 2.4
Conversion of zero-coupon convertible debt 3.8 36.2 1.1
Accrued repurchases of common stock – – (0.5)
LABORATORY CORPORATION OF AMERICA
Notes to Consolidated Financial Statements
20. Quarterly Data (Unaudited)
The following is a summary of unaudited quarterly data:
Year Ended December 31, 2012
1st Quarter 2nd Quarter 3rd Quarter 4th Quarter Full Year
Net sales $1,423.3 $1,423.4 $1,419.4 $1,405.3 $5,671.4
Gross profit 576.1 579.5 556.1 538.0 2,249.7
Net earnings attributable to Laboratory Corporation of America Holdings 161.6 153.3 148.0 120.2 583.1
Basic earnings per common share 1.66 1.59 1.56 1.28 6.09
Diluted earnings per common share 1.63 1.56 1.53 1.26 5.99
Year Ended December 31, 2011
1st Quarter 2nd Quarter 3rd Quarter 4th Quarter Full Year
Net sales $1,368.4 $1,403.3 $1,404.5 $1,366.1 $5,542.3
Gross profit 568.4 588.2 568.5 549.6 2,274.7
Net earnings attributable to Laboratory Corporation of America Holdings 127.1 122.9 134.3 135.4 519.7
Basic earnings per common share 1.27 1.22 1.34 1.36 5.20
Diluted earnings per common share 1.23 1.20 1.31 1.34 5.11