LabCorp 2012 Annual Report Download - page 9

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(c) Following the closing of its acquisition of Orchid Cellmark Inc. (“Orchid”) in mid-December 2011, the Company recorded a net $2.8 loss on its
divestiture of certain assets of Orchid’s U.S. government paternity business, under the terms of the agreement reached with the U.S. Federal
Trade Commission. This non-deductible loss on disposal was recorded in Other Income and Expense in the Company’s Consolidated
Statements of Operations and decreased net earnings for the twelve months ended December 31, 2011 by $2.8.
(d) During 2010, the Company recorded net restructuring charges of $5.8 primarily related to work force reductions and the closing of redundant
and underutilized facilities. In addition, the Company recorded a special charge of $6.2 related to the write-off of development costs incurred
on systems abandoned during the year.
The Company incurred approximately $25.7 in professional fees and expenses in connection with the acquisition of Genzyme Genetics
and other acquisition activity, including significant costs associated with the Federal Trade Commission’s review of the Company’s purchase
of specified net assets of Westcliff. These fees and expenses are included in selling, general and administrative expenses for the year ended
December 31, 2010.
The Company also incurred $7.0 of financing commitment fees (included in interest expense for the year ended December 31, 2010) in
connection with the acquisition of Genzyme Genetics.
(e) During 2009, the Company recorded net restructuring charges of $13.5 primarily related to the closing of redundant and underutilized facilities.
In October 2009, the Company received approval from its Board of Directors to freeze any additional service-based credits for any years of
service after December 31, 2009 on the defined benefit retirement plan (the “Company Plan”) and the nonqualified supplemental retirement
plan (the “PEP”). As a result of the changes to the Company Plan and PEP which were adopted in the fourth quarter of 2009, the Company
recognized a net curtailment charge of $2.8 due to remeasurement of the PEP obligation at December 31, 2009 and the acceleration of
unrecognized prior service for that plan. In addition, the Company recorded favorable adjustments of $21.5 to its tax provision relating to the
resolution of certain state income tax issues under audit, as well as the realization of foreign tax credits.
In connection with the Monogram Biosciences, Inc. acquisition, the Company incurred $2.7 in transaction fees and expenses in the
third quarter of 2009.
(f) 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. 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.
In the fourth quarter of 2008, the Company recorded a $7.5 cumulative revenue adjustment relating to certain historic overpayments made
by Medicare for claims submitted by a subsidiary of the Company. In addition, the Company recorded a $7.1 favorable adjustment to its fourth
quarter tax provision relating to tax treaty changes adopted by the United States and Canada.
During the fourth quarter of 2008, the Company recorded charges of approximately $3.7, which related to the acceleration of the
recognition of stock compensation and certain defined benefit plan obligations due to the announced retirement of the Company’s Executive
Vice President of Corporate Affairs, effective December 31, 2008.
In the second quarter of 2008, the Company recorded a $45.0 increase in its provision for doubtful accounts. The Company’s estimate
of the allowance for doubtful accounts was increased due to the impact of the economy, higher patient deductibles and copayments, and
recent acquisitions on the collectibility of accounts receivable balances.
(g) Long-term obligations primarily include the Company’s zero-coupon convertible subordinated notes, 51/2% senior notes due 2013, 55/8%
senior notes due 2015, 31/8% senior notes due 2016, 21/5% senior notes due 2017, 45/8% senior notes due 2020, 33/4% senior notes due 2022,
term loan, revolving credit facility and other long-term obligations. The accreted balance of the zero-coupon convertible subordinated notes
was $130.0, $135.5, $286.7, $292.2 and $573.5 at December 31, 2012, 2011, 2010, 2009 and 2008, respectively. The balance of the 51/2%
senior notes, including principal and unamortized portion of a deferred gain on an interest rate swap agreement, was $350.0, $350.5, $350.9,
$351.3 and $351.7 at December 31, 2012, 2011, 2010, 2009 and 2008, respectively. The principal balance of the 55/8% senior notes was
$250.0 at December 31, 2012, 2011, 2010, 2009 and 2008. The principal balance of the 31/8% senior notes was $325.0 at December 31, 2012,
2011 and 2010, and $0 for 2009 and 2008. The principal balance of the 45/8% senior notes was $600.0 at December 31, 2012, 2011 and 2010
and $0 for 2009 and 2008. The principal balances of the 21/5% and 33/4% senior notes were $500.0 each at December 31, 2012 and $0 for
all other years presented. The term loan was $0.0, $0.0, $375.0, $425.0 and $475.0 at December 31, 2012, 2011, 2010, 2009 and 2008,
respectively. The revolving credit facility was $0.0, $560.0, $0.0, $75.0, $70.8 at December 31, 2012, 2011, 2010, 2009 and 2008, respectively.
The remainder of other long-term obligations consisted primarily of mortgages payable with balances of $0.0, $0.0, $0.8, $0.9 and $0.3 at
December 31, 2012, 2011, 2010, 2009 and 2008, respectively. Long-term obligations exclude amounts due to affiliates.
LABORATORY CORPORATION OF AMERICA
Selected Financial Data (continued)