UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 10-Q
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended MARCH 31, 2001
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OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
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Commission file number 1-11353
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LABORATORY CORPORATION OF AMERICA HOLDINGS
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(Exact name of registrant as specified in its charter)
DELAWARE 13-3757370
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(State or other jurisdiction of (IRS Employer
incorporation or organization) Identification No.)
358 SOUTH MAIN STREET, BURLINGTON, NORTH CAROLINA 27215
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(Address of principal executive offices) (Zip code)
(336) 229-1127
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(Registrant's telephone number, including area code)
Indicate by check mark whether the registrant (1) has filed all
reports required to be filed by Section 13 or 15(d) of the
Securities Exchange Act of 1934 during the preceding 12 months
(or for such shorter period that the registrant was required to
file such reports) and (2) has been subject to such filing
requirements for the past 90 days. Yes X No ___
The number of shares outstanding of the issuer's common stock is
35,004,234 shares as of April 30, 2001, of which 11,352,537
shares are held by indirect wholly owned subsidiaries of Roche
Holding Ltd.
INDEX
PART I. Financial Information
Item 1 Financial Statements:
Condensed Consolidated Balance Sheets
March 31, 2001 (unaudited) and December 31, 2000
Condensed Consolidated Statements of Operations
(unaudited) Three months ended March 31, 2001 and 2000
Condensed Consolidated Statements of Changes in
Shareholders' Equity (unaudited)
Three months ended March 31, 2001 and 2000
Condensed Consolidated Statements of Cash Flows
(unaudited) Three months ended March 31, 2001 and 2000
Notes to Consolidated Financial Statements
Item 2 Management's Discussion and Analysis of Financial
Condition and Results of Operations
Item 3 Quantitative and Qualitative Disclosures about
Market Risk
PART II. OTHER INFORMATION
Item 1 Legal Proceedings
Item 6 Exhibits and Reports on Form 8-K
PART I - FINANCIAL INFORMATION
Item 1. Financial Information
LABORATORY CORPORATION OF AMERICA HOLDINGS AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(DOLLARS IN MILLIONS, EXCEPT PER SHARE DATA)
March 31, December 31,
2001 2000
---------- ------------
(Unaudited)
ASSETS
Current assets:
Cash and cash equivalents $ 66.8 $ 48.8
Accounts receivable, net 388.7 368.0
Inventories 32.2 31.6
Prepaid expenses and other 19.9 18.5
Deferred income taxes 49.3 44.8
--------- --------
Total current assets 556.9 511.7
Property, plant and equipment, net 271.4 272.8
Intangible assets, net 860.0 865.7
Other assets, net 15.1 16.7
--------- --------
$ 1,703.4 $ 1,666.9
========= ========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 55.5 $ 52.8
Accrued expenses and other 149.7 127.1
Current portion of long-term debt 132.0 132.0
--------- --------
Total current liabilities 337.2 311.9
Revolving credit facility -- --
Long-term debt, less current portion 313.5 346.5
Capital lease obligations 6.9 7.2
Other liabilities 122.1 123.9
Commitments and contingent liabilities -- --
Shareholders' equity:
Common stock, $0.10 par value; 52,000,000
shares authorized; 35,003,334 and
34,869,623 shares issued and outstanding
at March 31, 2001 and December 31,
2000, respectively 3.5 3.5
Additional paid-in capital 1,066.9 1,051.7
Accumulated deficit (124.5) (168.0)
Unearned restricted stock compensation (18.8) (9.4)
Accumulated other comprehensive loss (3.4) (0.4)
--------- --------
Total shareholders' equity 923.7 877.4
--------- --------
$ 1,703.4 $ 1,666.9
========= ========
The accompanying notes are an integral part of these unaudited condensed
consolidated financial statements.
LABORATORY CORPORATION OF AMERICA HOLDINGS AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(DOLLARS IN MILLIONS, EXCEPT PER SHARE DATA)
(Unaudited)
Three Months Ended
March 31,
-----------------------
2001 2000
-----------------------
Net sales $ 525.4 $ 462.7
Cost of sales 303.8 279.2
------- -------
Gross profit 221.6 183.5
Selling, general and
administrative expenses 125.0 118.4
Amortization of intangibles
and other assets 9.3 7.7
------- -------
Operating income 87.3 57.4
Other income (expenses):
Loss on sale of assets (0.4) (0.4)
Net investment income 1.0 0.5
Interest expense (8.8) (9.9)
------- -------
Earnings before income taxes 79.1 47.6
Provision for income taxes 35.6 21.9
------- -------
Net earnings 43.5 25.7
Less preferred stock dividends -- (14.7)
Less accretion of mandatorily
redeemable preferred stock -- (0.2)
------- -------
Net income attributable to
common shareholders $ 43.5 $ 10.8
======= =======
Basic earnings per common share $ 1.26 $ 0.85
======== ========
Diluted earnings per common share $ 1.24 $ 0.75
======== ========
The accompanying notes are an integral part of these unaudited
condensed consolidated financial statements.
LABORATORY CORPORATION OF AMERICA HOLDINGS AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY
(DOLLARS IN MILLIONS, EXCEPT PER SHARE DATA)
(Unaudited)
Additional
Common Paid-in Accumulated
Stock Capital Deficit
------- ---------- ----------
PERIOD ENDED MARCH 31, 2000
Balance at beginning of year $ 1.3 $ 423.9 $ (245.5)
Comprehensive income:
Net earnings -- -- 25.7
Other comprehensive income:
Foreign currency translation
adjustments -- -- --
------ ------- -------
Comprehensive income -- -- 25.7
Issuance of common stock -- 1.3 --
Issuance of restricted stock
awards -- 2.1 --
Amortization of unearned
restricted stock compensation -- -- --
Preferred stock dividends -- -- (14.7)
Accretion of mandatorily
redeemable preferred stock -- -- (0.2)
------ ------- -------
BALANCE AT MARCH 31, 2000 $ 1.3 $ 427.3 $ (234.7)
====== ======= =======
PERIOD ENDED MARCH 31, 2001
Balance at beginning of year $ 3.5 $1,051.7 $ (168.0)
Comprehensive income:
Net earnings -- -- 43.5
Other comprehensive income:
Cumulative effect of change
in accounting principle
(net-of-tax) -- -- --
Unrealized derivative loss
on cash flow hedge
(net-of-tax) -- -- --
Foreign currency translation
adjustments -- -- --
------ ------- -------
Comprehensive income -- -- 43.5
Issuance of common stock -- 3.1 --
Issuance of restricted stock awards -- 11.3 --
Amortization of unearned
restricted stock compensation -- -- --
Income tax benefit from stock
options exercised -- 0.8 --
------ ------- -------
BALANCE AT MARCH 31, 2001 $ 3.5 $1,066.9 $ (124.5)
====== ======= =======
The accompanying notes are an integral part of these unaudited condensed
consolidated financial statements.
LABORATORY CORPORATION OF AMERICA HOLDINGS AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY
(DOLLARS IN MILLIONS, EXCEPT PER SHARE DATA)
(Unaudited)
Unearned Accumulated
Restricted Other Total
Stock Comprehensive Shareholders'
Compensation Loss Equity
------------ ------------- ------------
PERIOD ENDED MARCH 31, 2000
Balance at beginning of year $ (4.1) $ (0.1) $ 175.5
Comprehensive income:
Net earnings -- -- 25.7
Other comprehensive income:
Foreign currency translation
adjustments -- (0.2) (0.2)
------ ------ ------
Comprehensive income -- (0.2) 25.5
Issuance of common stock -- -- 1.3
Issuance of restricted stock
awards (2.1) -- --
Amortization of unearned
restricted stock compensation 0.2 -- 0.2
Preferred stock dividends -- -- (14.7)
Accretion of mandatorily
redeemable preferred stock -- -- (0.2)
------ ------ ------
BALANCE AT MARCH 31, 2000 $ (6.0) $ (0.3) $ 187.6
====== ====== ======
PERIOD ENDED MARCH 31, 2001
Balance at beginning of year $ (9.4) $ (0.4) $ 877.4
Comprehensive income:
Net earnings -- -- 43.5
Other comprehensive income:
Cumulative effect of change
in accounting principle
(net-of-tax) -- 0.6 0.6
Unrealized derivative loss
on cash flow hedge
(net-of-tax) -- (2.8) (2.8)
Foreign currency translation
adjustments -- (0.8) (0.8)
------ ------ ------
Comprehensive income -- (3.0) 40.5
Issuance of common stock -- -- 3.1
Issuance of restricted stock awards (11.3) -- --
Amortization of unearned
restricted stock compensation 1.9 -- 1.9
Income tax benefit from stock
options exercised -- -- 0.8
------ ------ ------
BALANCE AT MARCH 31, 2001 $ (18.8) $ (3.4) $ 923.7
====== ====== ======
The accompanying notes are an integral part of these unaudited condensed
consolidated financial statements.
LABORATORY CORPORATION OF AMERICA HOLDINGS AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(DOLLARS IN MILLIONS, EXCEPT PER SHARE DATA)
(Unaudited)
Three Months Ended
March 31,
------------------------
2001 2000
------------------------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net earnings $ 43.5 $ 25.7
Adjustments to reconcile net earnings
to net cash provided by operating
activities:
Depreciation and amortization 23.6 21.3
Deferred compensation 1.9 0.2
Net losses on sale of assets 0.4 0.4
Deferred income taxes (0.8) 3.1
Change in assets and liabilities:
Net decrease in restructuring reserves (1.8) (1.3)
Increase in accounts receivable, net (20.7) (19.4)
(Increase) decrease in inventories (0.9) 3.0
(Increase) decrease in prepaid
expenses and other (1.5) 0.4
Increase in accounts payable 2.7 1.4
Increase in accrued expenses and other 17.5 14.2
Other, net 0.6 (0.5)
------ ------
Net cash provided by operating activities 64.5 48.5
------ ------
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures (12.7) (10.8)
Proceeds from sale of assets 0.4 --
Acquisition of businesses (3.3) (4.4)
------ ------
Net cash used for investing activities (15.6) (15.2)
------ ------
(continued)
LABORATORY CORPORATION OF AMERICA HOLDINGS AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(DOLLARS IN MILLIONS, EXCEPT PER SHARE DATA)
(Unaudited)
Three Months Ended
March 31,
-------------------
2001 2000
-------------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Payments on long-term debt (33.0) (29.0)
Payments on long-term lease obligations (0.2) (0.2)
Payment of preferred stock dividends -- (4.6)
Net proceeds from issuance of stock to
employees 3.1 1.3
------ ------
Net cash used for financing activities (30.1) (32.5)
------ ------
Effect of exchange rate changes on cash
and cash equivalents (0.8) (0.2)
Net increase in cash and cash
equivalents 18.0 0.6
Cash and cash equivalents at
beginning of period 48.8 40.3
------ ------
Cash and cash equivalents at
end of period $ 66.8 $ 40.9
------ ------
Supplemental schedule of cash
flow information:
Cash paid during the period for:
Interest $ 10.1 $ 12.7
Income taxes, net of refunds 4.8 1.9
Disclosure of non-cash financing
and investing activities:
Preferred stock dividends -- 10.1
Accretion of mandatorily redeemable
preferred stock -- 0.2
The accompanying notes are an integral part of these unaudited
condensed consolidated financial statements.
LABORATORY CORPORATION OF AMERICA HOLDINGS AND SUBSIDIARIES
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(DOLLARS IN MILLIONS, EXCEPT PER SHARE DATA)
1. BASIS OF FINANCIAL STATEMENT PRESENTATION
The condensed consolidated financial statements include the
accounts of Laboratory Corporation of America Holdings and its
wholly owned subsidiaries (the "Company") after elimination of
all material intercompany accounts and transactions.
The financial statements of the Company's foreign
subsidiary are measured using the local currency as the
functional currency. Assets and liabilities are translated at
exchange rates as of the balance sheet date. Revenues and
expenses are translated at average monthly exchange rates
prevailing during the period. Resulting translation adjustments
are included in "Accumulated other comprehensive loss."
The accompanying condensed consolidated financial
statements of the Company are unaudited. In the opinion of
management, all adjustments (which include only normal recurring
accruals) necessary for a fair presentation of such financial
statements have been included. Interim results are not
necessarily indicative of results for a full year.
The financial statements and notes are presented in
accordance with the rules and regulations of the Securities and
Exchange Commission and do not contain certain information
included in the Company's annual report. Therefore, the interim
statements should be read in conjunction with the consolidated
financial statements and notes thereto contained in the
Company's annual report.
2. EARNINGS PER SHARE
Basic earnings per share is computed by dividing net
income, less preferred stock dividends and accretion, by the
weighted average number of common shares outstanding. Dilutive
earnings per share is computed by dividing net income, by the
weighted average number of common shares outstanding plus
potentially dilutive shares, as if they had been issued at the
beginning of the period presented. Potentially dilutive common
shares result primarily from the Company's mandatorily
redeemable preferred stock, restricted stock awards and
outstanding stock options.
LABORATORY CORPORATION OF AMERICA HOLDINGS AND SUBSIDIARIES
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(DOLLARS IN MILLIONS, EXCEPT PER SHARE DATA)
The following represents a reconciliation of the weighted
average shares used in the calculation of basic and diluted
earnings per share:
Three months
Ended March 31,
-----------------------
2001 2000
-----------------------
Basic 34,615,307 12,755,152
Assumed conversion/exercise
of:
Stock options 276,123 375,958
Restricted stock awards 262,370 191,929
Series A preferred stock -- 7,932,747
Series B preferred Stock -- 13,158,363
---------- ----------
Diluted 35,153,800 34,414,149
---------- ----------
At March 31, 2001 and 2000, options to acquire 8,040
and 739,212 shares of common stock, respectively, were
excluded in the computations of diluted earnings per share,
because the effect of including the options would have been
antidilutive.
3. ACCOUNTING CHANGE - DERIVATIVE FINANCIAL INSTRUMENTS
Effective January 1, 2001, the Company adopted Statement of
Financial Accounting Standards ("SFAS") No. 133, "Accounting for
Derivative Instruments and Hedging Activities", as amended by
SFAS No. 138, "Accounting for Certain Derivative Instruments and
Certain Hedging Activities", which provides a comprehensive and
consistent standard for the recognition and measurement of
derivatives and hedging activities.
At January 1 and March 31, 2001, the Company was a party to
an interest rate swap agreement with a major financial
institution, solely to manage its interest rate exposure with
respect to $350.0 and $200.0, respectively, of its floating rate
debt. This effectively fixed the interest rate exposure on the
floating rate debt to a weighted-average fixed interest rate of
5.8%. This swap requires that the Company pay a fixed rate
amount in exchange for the financial institution paying a
floating rate amount. The swap agreement matures March 31,
2003. The amount paid or received by the Company as of March
31, 2001 was $0.0. The notional amount of the agreement is used
to measure the interest to be paid or received and does not
represent the amount of exposure to credit loss. The estimated
cost at which the Company could have terminated this agreement
as of March 31, 2001 was approximately $3.8. This fair value
was estimated by discounting the expected
LABORATORY CORPORATION OF AMERICA HOLDINGS AND SUBSIDIARIES
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(DOLLARS IN MILLIONS, EXCEPT PER SHARE DATA)
cash flows using rates currently available for interest rate
swaps with similar terms and maturities. Interest rates in
effect for both the long-term and revolving credit agreement as
of March 31, 2001 were 5.5%.
In accordance with the provisions of SFAS No. 133, as
amended, this interest rate swap agreement has been designated
as a cash flow hedge and is carried on the balance sheet at fair
value. At March 31, 2001, the fair value of the hedge is
recorded as a long-term liability of $3.8. In addition, the
cumulative effect of the change in accounting principle related
to the adoption of SFAS 133, resulted in a $0.6 credit (net-of-
tax) to accumulated other comprehensive income on the date of
transition (January 1, 2001). For the three months ended March
31, 2001, the change in the fair value of the derivative
instrument was recorded as a $2.8 debit (net-of-tax) to
accumulated other comprehensive income.
If the Company discontinues hedge accounting because it
is no longer probable that the forecasted transaction will
occur in the originally expected period, the gain or loss on
the derivative remains in accumulated other comprehensive
income and is reclassified into earnings when the forecasted
transaction affects earnings.
4. STOCK SPLIT
On April 23, 2001, the Company announced that its Board of
Directors approved a two-for-one stock split, subject to
shareholder approval of an increase in the number of authorized
shares of common stock. The stock split will be effected by the
issuance on June 11, 2001 of a stock dividend of one new share
of common stock for each share of common stock held by
shareholders of record on June 4, 2001. If shareholder approval
is obtained, proforma earnings per share would be as follows:
Three months
Ended March 31,
-----------------------
2001 2000
-----------------------
Basic $0.63 $0.42
Diluted $0.62 $0.37
5. BUSINESS ACQUISITIONS
On April 30, 2001, the Company completed the acquisition of
all of the outstanding stock of Path Lab Holdings, Inc. (Path
Lab), which is based in Portsmouth, New Hampshire for
approximately $83 in cash and future payments of $25 based upon
attainment of specific earnings targets. Path Lab's revenues
for the year ended December 31, 2000 were approximately $51.6.
LABORATORY CORPORATION OF AMERICA HOLDINGS AND SUBSIDIARIES
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(DOLLARS IN MILLIONS, EXCEPT PER SHARE DATA)
6. RESTRUCTURING CHARGES
The following represents the Company's restructuring
activities for the period indicated:
Lease and
Severance Other Facility
Costs Costs Total
---------- ---------------- ------
Balance at December 31, 2000 $ 1.9 $20.1 $22.0
Cash payments (1.1) (0.7) (1.8)
Reclassifications and
non-cash items 0.7 (0.7) --
---- ---- ----
Balance at March 31, 2001 $ 1.5 18.7 20.2
==== ==== ====
Current $10.8
Non-current $ 9.4
----
$20.2
====
7. LONG-TERM DEBT
The Company made a payment of $33.0 to its term loan on
March 31, 2001. The effective rate on the Company's term loan
at March 31, 2001 was a weighted-average fixed interest rate of
5.8%.
8. STOCK COMPENSATION PLANS
During February 2001, the Company granted 520,900 options
and 85,100 shares of restricted stock at a price of $132.25
under its 2000 Stock Incentive Plan.
The tax benefits associated with the exercise of non-
qualified stock options reduces taxes currently payable by $0.8
for the three months ended March 31, 2001. Such benefits are
credited to additional paid-in-capital.
9. COMMITMENTS AND CONTINGENCIES
The Company is involved in litigation one of which
purports to be a class action brought on behalf of certain
patients, private insurers and benefit plans that paid for
laboratory testing services during the time frame covered by
the 1996 government settlement. The Company has also
received certain similar claims brought on behalf of certain
other insurance companies and individuals, some of which
have been resolved for immaterial amounts. These claims for
private reimbursement are similar to the government claims
settled in 1996. The Company is carefully evaluating these
LABORATORY CORPORATION OF AMERICA HOLDINGS AND SUBSIDIARIES
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(DOLLARS IN MILLIONS, EXCEPT PER SHARE DATA)
claims and has entered into settlement negotiations with the
representatives of all of these parties, resulting in
settlement agreements to resolve the matters. During the
quarter ended March 31, 2001, $7.9 was paid out with one of
these settlement agreements. Based upon these discussions,
management does not believe that the ultimate outcome of
these claims will exceed existing reserves or have a
material adverse affect on the Company. On January 9, 2001,
the Company was served with a complaint in North Carolina
which purports to be a class action and makes claims similar
to the cases referred to above. The Company is carefully
evaluating this claim. Due to the early stage of the claim,
its outcome cannot be presently predicted.
The Company is also involved in various claims and
legal actions arising in the ordinary course of business.
These matters include, but are not limited to, professional
liability, employee related matters, inquiries from
governmental agencies and Medicare or Medicaid carriers
requesting comment on allegations of billing irregularities
that are brought to their attention through billing audits
or third parties. In the opinion of management, based upon
the advice of counsel and consideration of all facts
available at this time, the ultimate disposition of these
matters will not have a material adverse effect on the
financial position, results of operations or liquidity of
the Company.
The Company believes that it is in compliance in all
material respects with all statutes, regulations and other
requirements applicable to its clinical laboratory operations.
The clinical laboratory testing industry is, however, subject to
extensive regulation, and many of these statutes and regulations
have not been interpreted by the courts. There can be no
assurance therefore that applicable statutes and regulations
might not be interpreted or applied by a prosecutorial,
regulatory or judicial authority in a manner that would
adversely affect the Company. Potential sanctions for violation
of these statutes and regulations include significant fines and
the loss of various licenses, certificates and authorizations.
7. our failure to obtain and retain new customers and
alliance partners, or a reduction in tests ordered or
specimens submitted by existing customers.
8. our failure to integrate newly acquired businesses and
the cost related to such integration.
9. adverse results in litigation matters.
10.our ability to attract and retain experienced and
qualified personnel.
11. failure to maintain our days sales outstanding levels.
RESULTS OF OPERATIONS
Three Months ended March 31, 2001 compared with Three Months
ended March 31, 2000.
Net sales for the three months ended March 31, 2001 were
$525.4, an increase of $62.7, or 13.6%, from $462.7 for the
comparable 2000 period. The sales increase is a result of a
6.2% increase in volume and a 7.4% increase in average price.
The increase in sales for the first quarter of 2001 would have
been approximately 11.6% after excluding the effect of the
acquisitions made in 2000.
Cost of sales, which includes primarily laboratory and
distribution costs, was $303.8 for the three months ended
March 31, 2001 compared to $279.2 in the corresponding 2000
period, an increase of $24.6. The increase in cost of sales
is primarily the result of increases in volume and supplies
due to increases in the mix of genomic and esoteric tests run
as well as higher cost tests run in the core laboratories.
Cost of sales as a percentage of net sales was 57.8% for the
three months ended March 31, 2001 and 60.3% in the
corresponding 2000 period. The decrease in the cost of sales
percentage of net sales primarily resulted from price
increases and the Company's continued cost reduction efforts
and cost efficiencies related to increased volume.
Selling, general and administrative expenses increased to
$125.0 for the three months ended March 31, 2001 from $118.4
in the same period in 2000. This increase resulted primarily
from bad debt expense on higher net sales amounts, as well as
from personnel and other costs related to billing system
conversions. The Company lowered its provision for bad debt
expense, as a percentage of sales, to 9.7% for the three
months ended March 31, 2001 compared to 10.2% for the year
ended December 31, 2000. As a percentage of net sales,
selling, general and administrative expenses were 23.8% and
25.6% for the three months ended March 31, 2001 and 2000,
respectively.
The amortization of intangibles and other assets was $9.3
and $7.7 for the three months ended March 31, 2001 and 2000.
Interest expense was $8.8 for the three months ended
March 31, 2001 compared with $9.9 for the same period in 2000.
The decline in interest expense is a result of the Company's
reduction in long-term debt and lower interest rates.
The provision for income taxes as a percentage of earnings
before taxes was 45.0% for the three months ended March 31, 2001
compared to 46.0% for the three months ended March 31, 2000.
LIQUIDITY AND CAPITAL RESOURCES
Net cash provided by operating activities was $64.5 and
$48.5 for the three months ended March 31, 2001 and March 31,
2000, respectively. The increase in cash flow from operations
primarily resulted from improved earnings. Capital expenditures
were $12.7 and $10.8 for the first three months of 2001 and
2000, respectively.
The Company's days sales outstanding (DSO) decreased to 67
days at March 31, 2001 from 68 days at the end of December 31,
2000. The Company expects to continue to reduce DSO to the mid
60s by the end of 2001.
Based on current and projected levels of operations,
coupled with availability under its revolving credit facility,
the Company believes it has sufficient liquidity to meet both
its short-term and long-term cash needs. For a discussion of
legal proceedings which may impact the Company's liquidity and
capital resources see "Note 9 to the Company's Unaudited
Condensed Consolidated Financial Statements".
LABORATORY CORPORATION OF AMERICA HOLDINGS AND SUBSIDIARIES
PART II - OTHER INFORMATION
Item 1. Legal Proceedings
See "Note 9 to the Company's Unaudited Condensed
Consolidated Financial Statements" for the three
months ended March 31, 2001
Item 6. Exhibits and Reports on Form 8-K
(b) Reports on Form 8-K
(1) A current report on Form 8-K dated February
14, 2001 was filed on February 14, 2001,
by the registrant, in connection with the
press release dated February 14, 2001
announcing the results for the quarter and
twelve months ended December 31, 2000.
(2) A current report on Form 8-K dated February
14, 2001 was filed on February 14, 2001,
by the registrant, in connection with the
press release dated February 14, 2001
announcing summary information for the
Company.
(3) A current report on Form 8-K dated March
26, 2001 was filed on March 26, 2001,
by the registrant, in connection with the
press release dated March 26, 2001
announcing that it has entered into a
definitive agreement with privately-held
Path Lab Holdings, Inc. (Path Lab) to
acquire all of its outstanding stock.
(4) A current report on Form 8-K dated March
27, 2001 was filed on March 28, 2001,
by the registrant, in connection with the
press release dated March 27, 2001
announcing that Thomas P. Mac Mahon,
chairman and chief executive officer, was
scheduled to speak at the Banc of America
Securities Health Care Conference in Las
Vegas on March 27, 2001.
(b) Reports on Form 8-K (continued)
(5) A current report on Form 8-K dated April
3, 2001 was filed on April 3, 2001,
by the registrant, in connection with the
press release dated April 3, 2001
announcing that Bradford T. Smith,
executive vice president of public affairs,
was scheduled to speak at the Thomas Weisel
Health Care Conference in San Francisco
on April 3, 2001.
(6) A current report on Form 8-K dated April
11, 2001 was filed on April 11, 2001,
by the registrant, in connection with the
press release dated April 11, 2001
announcing that Thomas P. Mac Mahon,
chairman and chief executive officer, was
scheduled to speak at the Merrill Lynch
Health Services Conference in Washington,
DC on Wednesday April 11, 2001.
(7) A current report on Form 8-K dated April
23, 2001 was filed on April 23, 2001,
by the registrant, in connection with the
press release dated April 23, 2001
announcing results for the quarter ended
March 31, 2001.
(8) A current report on Form 8-K dated April
23, 2001 was filed on April 23, 2001,
by the registrant, in connection with the
press release dated April 23, 2001
announcing summary information for the
Company.
(9) A current report on Form 8-K dated May 1,
2001 was filed on May 1, 2001, by the
registrant, in connection with the press
release dated May 1, 2001 announcing the
completion of the acquisition of New
England-based Path Lab Holdings, Inc.
(Path Lab). Path Lab had revenues in 2000
of approximately $51.6 million and earnings
before interest, taxes, depreciation and
amortization of $12.9 million. Terms of
the transaction were not disclosed.
S I G N A T U R E S
Pursuant to the requirements of the Securities Exchange
Act of 1934, the registrant has duly caused this report to be
signed on its behalf by the undersigned thereunto duly
authorized.
LABORATORY CORPORATION OF AMERICA HOLDINGS
Registrant
By:/s/ THOMAS P. MAC MAHON
---------------------------
Thomas P. Mac Mahon
Chairman, President and
Chief Executive Officer
By:/s/ WESLEY R. ELINGBURG
-------------------------------
Wesley R. Elingburg
Executive Vice President,
Chief Financial Officer and
Treasurer
May 4, 2001
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