LabCorp 2014 Annual Report Download - page 57

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55
In addition, during 2014, the Company recorded $18.6 in consulting expenses (recorded in selling, general and administrative
expenses) relating to fees incurred as part of its business process improvement initiative as well as one-time CFO transition costs.
The Company also recorded $10.8 of costs related to the Covance acquisition, of which $4.8 is included in selling, general and
administrative expenses and $6.0 is included in interest expense.
During 2013, the Company recorded net restructuring charges of $21.8. The charges were comprised of $15.4 in severance
and other personnel costs and $9.5 in facility-related costs primarily associated with general integration activities. These charges
were offset by the reversal of previously established reserves of $0.7 in unused severance and $2.4 in unused facility related costs.
During 2012, the Company recorded net restructuring charges of $25.3. The charges were comprised of $16.2 in severance
and other personnel costs and $19.6 in facility-related costs primarily associated with the ongoing integration of Orchid and
Integrated Genetics Division (formerly Genzyme Genetics) and costs associated with the previously announced termination of an
executive vice president. These charges were offset by the reversal of previously established reserves of $6.3 in unused severance
and $4.2 in unused facility-related costs.
As part of the Clearstone integration, the Company also recorded a $6.9 loss on the disposal of one of its European subsidiaries
in Other, net under Other income (expenses) during 2012.
During 2014, the Company announced Project Launchpad, which re-engineers the Company's systems and processes, leverages
technological advancements and creates a sustainable, more efficient business model. The Company expects this initiative to
drive savings in excess of $150.0 over the next three years, with associated one-time costs of approximately $30.0. The Company
believes that any restructuring costs which may be incurred in future periods will be more than offset by subsequent savings
realized from these potential actions and that any related restructuring charges will not have a material impact on the Company's
operations or liquidity.
Interest Expense Years Ended December 31, Change
2014 2013 2012 2014 2013
Interest expense $ 109.5 $ 96.5 $ 94.5 13.5% 2.1%
The increase in interest expense for 2014 as compared with 2013 is primarily due to the issuance of $700.0 of senior notes in
November 2013, reductions in borrowings under the Company's former Revolving Credit Facility, and Covance-related financing
activities. This increase was also partially offset by a decrease in interest expense on the Company's senior notes due 2020 as a
result of entering into a fixed to floating interest rate swap in the third quarter of 2013. The new and former Revolving Credit
Facilities and the Company's financing activities in connection with the Covance acquisition are described below under the heading
"Liquidity, Capital Resources, and Financial Position."
The increase in interest expense for 2013 as compared with 2012 is primarily due to the issuance of $700.0 of senior notes in
November 2013 and $1,000.0 of senior notes in August 2012, net of the payoff of the Company's 5.5% senior notes due 2013 and
the reductions in borrowings under the former Revolving Credit Facility due to paydowns with proceeds from the 2012 and 2013
issuances. This increase was also partially offset by a decrease in interest expense on the senior notes due 2020 as a result of
entering into a fixed to floating interest rate swap in the third quarter of 2013.
Equity Method Income
Years Ended December 31, Change
2014 2013 2012 2014 2013
Equity method income $ 14.3 $ 16.9 $ 21.4 (15.4)% (21.0)%
Equity method income represents the Company's ownership share in joint venture partnerships along with equity investments
in other companies in the health care industry. The decrease in income in 2014 compared to 2013 is primarily the result of a
decline in profitability of one of the Company's joint venture partnerships due to a challenging business climate in its market.
The decrease in income in 2013 compared to 2012 is primarily the result of a $2.9 increase recorded in 2012 due to the
liquidation of one of its joint ventures and a decline in profitability of one of the Company's joint venture partnerships due to a
challenging business climate in its market.