LabCorp 2015 Annual Report Download - page 55

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Index
from 0.125% to 0.40%. The interest margin applicable to the credit facilities, and the facility fee and letter of credit fees payable under the new revolving
credit facility, are based on the Company’s senior credit ratings as determined by Standard & Poor’s and Moody’s, which are currently BBB and Baa2,
respectively.
As of December 31, 2015, the effective interest rate on the revolving credit facility was 1.5% and the effective interest rate on the term loan was 1.7%.
Net cash used for financing activities for the year ended December 31, 2014 was $200.6 compared to $518.3 for the year ended December 31, 2013. The
$317.7 decrease in the cash used for financing activities for the year ended December 31, 2014, as compared to the prior year, was primarily a result of a
$746.6 decrease in repurchases of common stock partially offset by a net increase of $328.5 in debt financing in 2013.
As of December 31, 2015, the Company provided letters of credit aggregating $45.4, primarily in connection with certain insurance programs. Letters of
credit provided by the Company are issued under the Company's revolving credit facility and are renewed annually, around mid-year.
As of December 31, 2015, the Company had outstanding authorization from the Board of Directors to purchase up to $789.5 of Company common stock
based on settled trades as of that date. Following the announcement of the Acquisition in the fourth quarter of 2014, the Company suspended its share
repurchases. The Company does not anticipate resuming its share repurchase activity until it approaches its targeted leverage ratio of total debt to
consolidated EBITDA of 2.5 to 1.0. However, the Company will continue to evaluate all opportunities for strategic deployment of capital in light of market
conditions.
The Company had a $36.9 and $24.9 reserve for unrecognized income tax benefits, including interest and penalties as of December 31, 2015 and
December 31, 2014, respectively. The Acquisition accounted for substantially all of the increase. Substantially all of these tax reserves are classified in other
long-term liabilities in the Company's Consolidated Balance Sheets at December 31, 2015 and December 31, 2014.
On September 11, 2015, the Company announced that for the period of September 12, 2015 to March 11, 2016, 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 9, 2015, in addition to the continued accrual of the original issue discount.
On January 4, 2016, 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 convert 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, 2016, 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 Thursday, March 31, 2016. 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 new revolving credit facility.

The Company’s debt ratings of Baa2 from Moody’s and BBB from S&P’s contribute to its ability to access capital markets.

Payments Due by Period
2017-
2019-
2021 and
Total
2016
2018
2020
thereafter
Operating lease obligations $ 346.0
$ 73.4
$ 108.0
$ 59.6
$ 105.0
Contingent future licensing payments (a) 18.2
3.4
7.2
4.4
3.2
Minimum royalty payments 5.9
1.0
1.9
2.0
1.0
Purchase obligations 60.0
29.5
28.4
2.1
—
Scheduled interest payments on Senior Notes 2,148.2
197.7
364.0
326.4
1,260.1
Scheduled interest payments on Term Loan 62.0
14.5
31.6
15.9
—
Long-term debt, other than revolving credit facility 5,525.0
325.0
900.0
1,100.0
3,200.0
Total contractual cash obligations (b) and (c) $ 8,165.3
$ 644.5
$ 1,441.1
$ 1,510.4
$ 4,569.3
55