01—Abstract
Summary
Summary of the 10-K/A filed August 2, 2012. Cited figures are marked; the original filing is the authoritative source.
Laboratory Corporation of America Holdings reported net sales of $5.54 billiona for 2011, up from $5.00 billion in 2010, with operating income of $948.4 million versus $978.8 million a year earlier.
Net earnings attributable to Laboratory Corporation of America Holdings were $519.7 millionb, or $5.11 diluted earnings per share, compared with $558.2 million, or $5.29 per diluted share, in 2010. Results were affected by net restructuring and special charges, including $44.6 of net restructuring charges and $18.9 of fixed asset impairments, along with a $2.8 loss on the divestiture of Orchid's U.S. government paternity business required by the FTC. The company's acquisition activity was significant.
It bought Orchid Cellmark for a total purchase price of approximately $85.4c and acquired various laboratories for $137.3 in cash during 2011, following the $925.2 Genzyme Genetics acquisition completed on December 1, 2010. Long-term debt rose to $2,085.5 million at year-end 2011 from $1,826.7 million, driven mainly by a $560.0 million drawn balance on a new $1.0 billion revolving credit facility entered into in December 2011. Cash and cash equivalents declined to $159.3 million, and net cash provided by operating activities was $855.6 million.
Capital return was a major use of cash. The company purchased 7.4 million shares of common stock for $643.9 milliond in 2011, and in February 2012 its board authorized an additional $500.0 million repurchase program.
Management concluded that internal control over financial reporting was effective as of December 31, 2011, and PricewaterhouseCoopers LLP issued an unqualified opinion. The company operates as one reportable segment and describes itself as the second largest independent clinical laboratory company in the United States based on 2011 net revenues.
02—Key points
Key Highlights
- Net sales rose to $5,542.3 million in 2011 from $5,003.9 million in 2010 and $4,694.7 million in 2009.
- Operating income declined to $948.4 million in 2011 from $978.8 million in 2010, reflecting $80.9 million of restructuring and other special charges in 2011 versus $12.0 million in 2010.
- Diluted earnings per share were $5.11 in 2011, down from $5.29 in 2010; net earnings attributable to the company were $519.7 million versus $558.2 million.
- Long-term debt increased to $2,085.5 million at December 31, 2011, including a $560.0 million balance on a new $1.0 billion revolving credit facility.
- The company repurchased $643.9 million of common stock in 2011 and received board authorization for an additional $500.0 million of repurchases in February 2012.
- Operating cash flow was $855.6 million in 2011, compared with $883.6 million in 2010, while capital expenditures were $145.7 million.
- Total assets were $6,171.0 million at year-end 2011 (balance sheet data in the selected financial data table) with shareholders' equity of $2,503.5 million.
03—One dollar
Follow one dollar
Of each $1.00 of revenue in FY2011, Labcorp Holdings kept $0.09.
- Revenue$5.54B100.0%
- Cost of revenue−$3.27B59.0%
- Gross profit$2.27B41.0%
- Operating costs−$1.33B23.9%
- Operating income$948.4M17.1%
- Interest, other & tax−$428.7M7.7%
- Net income$519.7M9.4%
Where FY2011 revenue went
$5.54B- Cost of revenue: $3.27B, 59% of revenue
- SG&A: $1.16B, 21% of revenue
- Net income: $519.7M, 9.4% of revenue
- Other operating costs: $166.7M, 3.0% of revenue
- Interest, other & tax: $428.7M, 7.7% of revenue
Kept 9.4% as net income
Full revenue history →04—Financials
Financial Highlights
Figures from 10-K/AFY2011filed August 2, 2012Financial Statements
FY2011 against FY2010
| Line item | FY2011FY2010 | Change |
|---|---|---|
| Revenue | $5.54B$5.00B | +10.8% |
| Cost of Revenue | $3.27B$2.91B | +12.4% |
| Gross Profit | $2.27B$2.10B | +8.4% |
| SG&A Expenses | $1.16B$1.03B | +12.1% |
| Operating Income | $948.40M$978.80M | −3.1% |
| Interest Expense | $87.50M$70.00M | +25.0% |
| Net Income | $519.70M$558.20M | −6.9% |
| EPS (Basic) | $5.20$5.42 | −4.1% |
| EPS (Diluted) | $5.11$5.29 | −3.4% |
| Shares Outstanding (Basic) | 100.00M103.00M | −2.9% |
| Shares Outstanding (Diluted) | 101.80M105.40M | −3.4% |
05—Questions
Frequently Asked Questions
What drove the decline in operating income in 2011?
Operating income fell to $948.4 million from $978.8 million even as net sales grew. The filing attributes part of the pressure to $80.9 million of restructuring and other special charges in 2011, including $44.6 of net restructuring charges and $18.9 of fixed asset impairments, compared with $12.0 million in 2010. Selling, general and administrative expenses also increased to $1,159.6 million from $1,034.3 million.
How did the Orchid Cellmark and Genzyme Genetics acquisitions affect the company?
The company completed the Orchid Cellmark acquisition on December 15, 2011, and recorded a $2.8 million non-deductible loss on divesting Orchid's U.S. government paternity business as required by the FTC. The Genzyme Genetics acquisition, for approximately $925.2 million in cash, closed on December 1, 2010 and was funded partly by $925.0 million of senior notes issued in November 2010. The filing notes that integration of these acquisitions drove ongoing restructuring costs.
How is the company funding its share repurchases and debt obligations?
At December 31, 2011, the company had $560.0 million outstanding on a five-year $1.0 billion senior unsecured revolving credit facility entered into December 21, 2011. The company repaid its prior $318.8 million term loan and $235.0 million revolver balance with proceeds of this facility. Its 5 1/2% senior notes due 2013, 5 5/8% senior notes due 2015, 3.125% senior notes due 2016 and 4.625% senior notes due 2020 remain outstanding, and the company was in compliance with its covenants at year-end.
What is the outlook for the zero-coupon convertible subordinated notes?
The zero-coupon notes had $164.1 million aggregate principal at maturity outstanding at December 31, 2011, with an accreted balance of $135.5 million. Holders could convert during the first quarter of 2012 and the company planned to settle the cash portion of any conversion with cash on hand and/or revolver borrowings. The company also reported that none of the notes were tendered for purchase at the September 2011 put date.
06—Continue