LabCorp 2013 Annual Report Download - page 42

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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 2013
was $72.55.
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 2013 and 2012, the Company settled notices to convert
$25.5 and $9.8 aggregate principal amount at maturity of its zero-
coupon subordinated notes with a conversion value of $31.8 and
$12.0, respectively. The total cash used for these settlements was
$21.5 and $8.2 and the Company also issued 0.1 and 0.0 additional
shares of common stock, respectively. As a result of these conver-
sions, in 2013 and 2012 the Company also reversed approximately
$3.4 and $0.6, respectively, of deferred tax liability to reflect the tax
benefit realized upon issuance of the shares.
On September 12, 2013, the Company announced that for the
period of September 12, 2013 to March 11, 2014, 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 6, 2013,
in addition to the continued accrual of the original issue discount.
On January 2, 2014, 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 con-
vert 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,
2014, 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 Monday,
March 31, 2014. 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 November 1, 2013, the Company issued $700.0 in new senior
notes pursuant to the Company’s effective shelf registration on
Form S-3. The new senior notes consisted of $400.0 aggregate
principal amount of 2.50% Senior Notes due 2018 and $300.0
aggregate principal amount of 4.00% Senior Notes due 2023. The
net proceeds were used to repay all of the outstanding borrowings
under the Company’s Revolving Credit Facility and for general
corporate purposes.
The Senior Notes due 2018 and Senior Notes due 2023 bear
interest at the rate of 2.50% per annum and 4.00% per annum,
respectively, payable semi-annually on November 1 and May 1 of
each year, commencing on May 1, 2014.
During the third quarter of 2013, the Company entered into
two fixed-to-variable interest rate swap agreements for the
4.625% senior notes due 2020 with an aggregate notional amount
of $600.0 and variable interest rates based on one-month LIBOR
plus 2.298% to hedge against changes in the fair value of a portion of
the Company’s long term debt. These derivative financial instruments
are accounted for as fair value hedges of the senior notes due 2020.
These interest rate swaps are included in other long term assets or
liabilities, as applicable, and added to the value of the senior notes,
with an aggregate fair value of $0.0 at December 31, 2013.
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 borrow-
ings under the Company’s Revolving Credit Facility. The remaining
proceeds were 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