LabCorp 2014 Annual Report Download - page 123

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F-44
Year ended December 31, 2013
1st
Quarter 2nd
Quarter 3rd
Quarter 4th
Quarter Full
Year
Net sales $ 1,440.9 $ 1,468.2 $ 1,462.2 $ 1,437.0 $ 5,808.3
Gross profit 572.2 577.3 547.6 526.1 2,223.2
Net earnings attributable to Laboratory Corporation
of America Holdings 147.2 151.9 148.3 126.4 573.8
Basic earnings per common share 1.58 1.65 1.66 1.46 6.36
Diluted earnings per common share 1.56 1.62 1.63 1.43 6.25
22. SUBSEQUENT EVENTS
As described in Note 2, on February 19, 2015, the Company completed its acquisition of Covance, a leading drug development
services company and a leader in nutritional analysis, for approximately $6,200.0. Covance stockholders received $75.76 in cash
and 0.2686 shares of the Company's common stock for each share of Covance common stock they own. In connection with the
transaction, the Company secured $4,250.0 in bridge financing. On January 30, 2015, the Company issued $2,900.0 in debt
securities, consisting of $500.0 aggregate principal amount of 2.625% Senior Notes due 2020, $500.0 aggregate principal amount
of 3.20% Senior Notes due 2022, $1,000.0 aggregate principal amount of 3.60% Senior Notes due 2025 and $900.0 aggregate
principal amount of 4.70% Senior Notes due 2045. The net proceeds from the offering of the Notes were approximately $2,870.2
million after deducting underwriting discounts and other expenses of the offering. Net proceeds will be used to pay a portion of
the cash consideration and the fees and expenses in connection with the Company’s acquisition of Covance. The Company incurred
$33.8 of transaction costs related to the Acquisition.
The Company will account for the Acquisition using the acquisition method, which requires the assets acquired and the liabilities
assumed to be measured at fair value at the date of the Acquisition. The Company expects to recognize identifiable intangible
assets, including customer lists, land use right and trade names and trademarks using the income approach through a discounted
cash flow analysis with the discounted cash flow projections. The excess of the purchase price over the estimated fair value of the
tangible net assets and identifiable intangible assets acquired will be recorded as goodwill. The factors contributing to the recognition
of the amount of goodwill are based on several strategic and synergistic benefits that are expected to be realized from the Acquisition.
These benefits include a complementary product offerings, enhanced global footprint, and attractive synergy opportunities and
value creation.
For the year ended December 31, 2014, the unaudited pro forma consolidated revenues, net income, and basic and diluted
earnings per share is $8,532.6, $523.7, $5.23 and $5.15, respectively, as though the Acquisition had occurred as of January 1, 2014.
The unaudited pro forma results reflect certain adjustments related to past operating performance, acquisition costs and acquisition
accounting adjustments, such as increased amortization expense based on the estimated fair value of assets acquired, the impact
of the Company’s new financing arrangements, and the related tax effects. The pro forma results include costs directly attributable
to the Acquisition which are not expected to have a continuing impact on the combined company, such as transactions costs of
$68.8, post combination expense for acceleration of stock based compensation of $47.2 and change in control payments and
severance arrangements of $23.7. The pro forma results do not include any anticipated synergies which may be achievable
subsequent to the Acquisition nor do they include costs that the Company may incur to call Covance debt post-Acquisition. To
produce the unaudited pro forma financial information, LabCorp adjusted Covance’s assets and liabilities to their estimated fair
value; however, LabCorp has not completed the detailed valuation work necessary to arrive at the required estimates of the fair
value of the Covance assets to be acquired and the liabilities to be assumed and the related allocation of purchase price.
LABORATORY CORPORATION OF AMERICA HOLDINGS AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Dollars and shares in millions, except per share data)