LabCorp 2014 Annual Report Download - page 58

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Other, net
Years Ended December 31, Change
2014 2013 2012 2014 2013
Other, net $ 10.4 $ 2.1 $ (7.2) 395.2% 129.2%
Other, net represents the Company's gain on the sale of its investment in an equity security, partially offset by the impairment
of other investments.
Income Tax Expense Years Ended December 31,
2014 2013 2012
Income tax expense $ 314.1 $ 340.2 $ 359.4
Income tax expense as a % of income before tax 38.0% 37.2% 38.1%
The effective rate for 2014 was unfavorably impacted by the recording of a full valuation allowance for the write-down of two
of the Company's investments.
The effective rate for 2013 was favorably impacted by the release of a capital loss valuation allowance and recording two years
of a research and development tax credit. The American Taxpayer Relief Act of 2012 was enacted in early 2013 and reinstated
the R&D tax credit for 2012 and extended the credit for calendar year 2013.
The effective tax rate for 2012 was favorably impacted by a decrease in the reserve for unrecognized income tax benefits,
partially offset by an increase in tax on the additional investment in the Company's Canadian subsidiary.
Liquidity, Capital Resources and Financial Position
The Company's strong cash-generating capability and financial condition typically have provided ready access to capital
markets. The Company's principal source of liquidity is operating cash flow, supplemented by proceeds from debt offerings. This
cash-generating capability is one of the Company's fundamental strengths and provides substantial financial flexibility in meeting
operating, investing and financing needs.
On February 19, 2015, the Company completed its acquisition of Covance for approximately $6,200.0, pursuant to a definitive
merger agreement entered into on November 2, 2014 (the “Merger Agreement”). 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 owned immediately prior to
consummation of the acquisition.
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 4.700% Senior Notes due 2045 (together, the
"Acquisition Notes"). Net proceeds from the offering of the Acquisition Notes were $2,870.2 after deducting underwriting discounts
and other estimated expenses of the offering. Net proceeds were used to pay a portion of the cash consideration and the fees and
expenses in connection with the Covance acquisition.
With the acquisition of Covance, the Company anticipates a significant increase in the total debt to consolidated EBITDA ratio
for the combined company. The Company expects to maintain an investment grade credit profile and intends to utilize its free
cash flow to pay down debt and make small "fold-in" acquisitions.
On November 1, 2013, the Company issued $700.0 in new senior notes pursuant to an effective shelf registration on Form S-3.
The 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 first used to repay all of the outstanding borrowings under the
Company’s former Revolving Credit Facility and the remainder was used for general corporate purposes.
During the third quarter of 2013, the Company entered into 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