LabCorp 2015 Annual Report Download - page 54

Index
Acquisition of $3,607.4, ($4,388.2 cash paid, net of cash acquired of $780.8). Capital expenditures were $255.8 and $203.5 for the year ended December 31,
2015 and 2014, respectively. The Company expects capital expenditures of approximately 3.0% of revenue in 2016. The Company intends to continue to
pursue acquisitions to fund growth and make important investments in its business, including in information technology, to improve efficiency and enable
the execution of the Company's strategic vision. Such expenditures are expected to be funded by cash flow from operations, as well as borrowings under the
Company's revolving credit facility or any successor facility as needed.
Net cash used in investing activities for the year ended December 31, 2014 was $350.1 as compared to $359.6 for the year ended December 31, 2013. The
$9.5 decrease in cash used in investing activities for the year ended December 31, 2014, as compared to the prior year, was primarily the result of the $31.6
proceeds received from the sale of one of the company’s equity investments offset by cash outflows of $20.2 for additional equity investments.
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Net cash provided by financing activities for the year ended December 31, 2015 was $3,184.6 compared to $200.6 net cash used in financing activities for
the year ended December 31, 2014. The $3,385.2 increase in the cash provided by financing activities for 2015, as compared to the prior year, was primarily a
result of $4,360.0 of financing proceeds for the Acquisition offset by repayments and debt issue costs of $781.7. The Company also repaid $500.0 of senior
notes (including $250.0 of Covance Inc. senior notes) in 2015. The remainder of the period-over-period increase is primarily due to the suspension of share
repurchases following the announcement of the Acquisition in the fourth quarter of 2014, compared to $269.0 of share repurchases for 2014.
As part of its financing of the Acquisition, the Company entered into a $1,000.0 term loan and $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 term loan credit facility will mature
five years after the closing date of the Acquisition and may be prepaid without penalty. The term loan balance at December 31, 2015 was $715.0.
On December 19, 2014, the Company also entered into an amendment and restatement of its existing senior revolving credit facility, which was originally
entered into on December 21, 2011. The senior revolving credit facility consists of a five-year revolving facility in the principal amount of up to $1,000.0,
with the option of increasing the facility by up to an additional $250.0, subject to the agreement of one or more new or existing lenders to provide such
additional amounts and certain other customary conditions. The new revolving credit facility also provides for a subfacility of up to $100.0 for swing line
borrowings and a subfacility of up to $125.0 for issuances of letters of credit. The new revolving credit facility is permitted to be used for general corporate
purposes, including working capital, capital expenditures, funding of share repurchases and certain other payments, and acquisitions and other investments.
There was $0.0 outstanding on the Company's revolving credit facility at December 31, 2015 and 2014.
On February 13, 2015, the Company entered into a 60-day cash bridge term loan credit facility in the principal amount of $400.0 for the purpose of
financing a portion of the cash consideration and the fees and expenses in connection with the Acquisition. The 60-day cash bridge term loan credit facility
was entered into under the terms set forth in the bridge facility commitment letter for the $400.0 60-day cash bridge tranche. The 60-day cash bridge term
loan credit facility was advanced in full on February 19, 2015, the date of the Company’s completion of the Acquisition. The 60-day cash bridge term loan
credit facility was repaid in March 2015.
Under the term loan credit facility and the new revolving credit facility, the Company is subject to negative covenants limiting subsidiary indebtedness
and certain other covenants typical for investment grade-rated borrowers and the Company is required to maintain a leverage ratio that varies. Prior to the
Acquisition Date, the leverage ratio was required to have been no greater than 3.75 to 1.00, calculated by excluding the $2,900.0 Acquisition Notes. From
and after the Acquisition Date, the leverage ratio must be no greater than 4.75 to 1.00 with respect to the last day of each of the first four fiscal quarters ending
on or after the closing date, 4.25 to 1.00 with respect to the last day of each of the fifth through eighth fiscal quarters ending after the closing date, and 3.75 to
1.00 with respect to the last day of each fiscal quarter ending thereafter. The Company was in compliance with all covenants under the credit facilities at
December 31, 2015. As of December 31, 2015, the ratio of total debt to consolidated EBITDA was 3.6 to 1.0.
The term loan credit facility accrues interest at a per annum rate equal to, at the Company’s election, either a LIBOR rate plus a margin ranging from
1.125% to 2.00%, or a base rate determined according to a prime rate or federal funds rate plus a margin ranging from 0.125% to 1.00%. Advances under the
new revolving credit facility will accrue interest at a per annum rate equal to, at the Company’s election, either a LIBOR rate plus a margin ranging from
1.00% to 1.60%, or a base rate determined according to a prime rate or federal funds rate plus a margin ranging from 0.00% to 0.60%. Fees are payable on
outstanding letters of credit under the new revolving credit facility at a per annum rate equal to the applicable margin for LIBOR loans, and the Company is
required to pay a facility fee on the aggregate commitments under the new revolving credit facility, at a per annum rate ranging
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