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UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
February 12,2004
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(Date of earliest event reported)
LABORATORY CORPORATION OF AMERICA HOLDINGS
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(Exact name of registrant as specified in its charter)
DELAWARE 1-11353 13-3757370
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(State or other (Commission (IRS Employer
jurisdiction of File Number) Identification
incorporation) Number)
358 SOUTH MAIN STREET, BURLINGTON, NORTH CAROLINA 27215
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(Address of principal executive offices)
336-229-1127
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(Registrant's telephone number, including area code)
ITEM 12. Results of Operations and Financial Conditions
On February 12, 2004, Laboratory Corporation of America -Registered
Trademark- Holdings (LabCorp -Registered Trademark-)(NYSE:LH) issued
a press release announcing its results for the quarter ended
December 31, 2003. A copy of the press release is attached hereto
as Exhibit 99.1 and is incorporated by reference herein.
SIGNATURES
Pursuant to the requirements of the Securities and
Exchange Act of 1934, the registrant has duly caused
this report to be signed on its behalf by the
undersigned hereunto duly authorized.
LABORATORY CORPORATION OF AMERICA HOLDINGS
------------------------------------------
(Registrant)
By:/s/ BRADFORD T. SMITH
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Bradford T. Smith
Executive Vice President
and Secretary
Date: February 12, 2004
EXHIBIT INDEX
Exhibit Description
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99.1 Press Release dated February 12, 2004
EXHIBIT 99.1
Laboratory Corporation of America-Registered Trademark- Holdings
358 South Main Street
Burlington, NC 27215
Telephone: 336-584-5171
FOR IMMEDIATE RELEASE
Contact: 336-436-4855
Pamela Sherry
Investor@labcorp.com
Shareholder Direct: 800-LAB-0401
www.labcorp.com
LABORATORY CORPORATION OF AMERICA-REGISTERED TRADEMARK-
ANNOUNCES 2003 FOURTH QUARTER AND FULL YEAR RESULTS
Strong Quarterly Performance Yields $144.2 Million in Operating
Cash Flow; Growth in Operating Income, EBITDA and EPS in Excess of
40 Percent
Burlington, NC, February 12, 2004 - Laboratory Corporation of
America-Registered Trademark- Holdings (LabCorp-Registered
Trademark-) (NYSE: LH) today announced results for the quarter
and year ended December 31, 2003.
Fourth Quarter Results:
Revenues for the quarter were $731.5 million, an increase of 12.5
percent compared to the same period in 2002. Testing volume, measured
by accessions, increased approximately 7.0 percent and price per
accession increased approximately 5.5 percent compared to fourth
quarter 2002.
Net earnings before restructuring and other special items for the
quarter increased 44.4 percent to $76.5 million, compared to 2002
fourth quarter net earnings of $53.0 million. Before these items,
earnings per diluted share increased 47.2 percent to $0.53 per
diluted share, versus $0.36 per diluted share in the fourth quarter
of 2002. Earnings before interest, taxes, depreciation, amortization
and nonrecurring restructuring items (EBITDA) were $174.4 million for
the quarter, or 23.8 percent of net sales, compared to $123.9 million,
or 19.1 percent of net sales, for the same period in 2002.
The Company recorded a net pre-tax restructuring credit of $1.8 million
during the fourth quarter of 2003, representing the net of
restructuring charges and adjustments. After recording the net credit,
diluted earnings per share were $0.54 for the fourth quarter of 2003.
During the quarter, the Company repaid $25 million in borrowings under
its revolving line of credit. Operating cash flow increased 21.7
percent to $144.2 million, and the cash balance at the end of the
quarter was $123.0 million.
Full Year Results :
Revenues for the year were $2,939.4 million, an increase of
17.2 percent compared to 2002. Testing volume, measured by accessions,
increased approximately 11.7 percent and price per accession increased
approximately 5.5 percent, compared to 2002.
Net earnings before restructuring and other special charges for the
year increased to $321.9 million, or $2.22 per diluted share, compared
to 2002 net earnings of $264.8 million, or $1.84 per diluted share.
EBITDA was $711.5 million, or 24.2 percent of net sales, compared to
$563.8 million, or 22.5 percent of net sales, for 2002. Operating cash
flow increased 26.8 percent to $564.3 million.
"I am delighted to report that we successfully accomplished all of
our goals for 2003 and delivered another year of excellent financial
performance," said Thomas P. Mac Mahon, chairman and chief executive
officer. "Our solid financial results are only matched by the
continued progress we have made in enhancing our scientific
capabilities and expanding our geographic reach. While completing
the successful integration of two large acquisitions and bringing new
tests to market, LabCorp once again generated significant amounts of
cash and strong growth in revenues, profitability and EPS."
Mr. Mac Mahon added, "The year ahead promises exciting opportunities
to again deliver strong results, and to continue our efforts to lead
the industry in introducing medically important new tests. Our existing
genomic and esoteric testing businesses are poised for continued
growth, and we remain focused on further strengthening our core
business and building upon our excellence in customer service."
The Company today is filing an 8-K that will include additional information
on its business and operations, including financial guidance for 2004.
This information is also available on the Company's Web site. Analysts
and investors are directed to this 8-K and the Web site to review this
supplemental information.
A live broadcast of LabCorp's quarterly conference call on February
12, 2004 will be available online at www.labcorp.com or at
www.streetevents.com beginning at 9:30 a.m. Eastern Time, with
an online rebroadcast continuing through March 12, 2004. The live
call at 9:30 a.m. is also available in a listen-only mode by dialing
415-908-6200. A telephone replay of the call will be available
through February 19, 2004 and can be heard by dialing 800-633-8284
(402-977-9140 for international callers). The access code for the
replay is 211-80-749.
Laboratory Corporation of America-REGISTERED TRADEMARK- Holdings
is a pioneer in commercializing new diagnostic technologies and the
first in its industry to embrace genomic testing. With annual revenues
of $2.9 billion in 2003, approximately 23,000 employees nationwide,
and more than 220,000 clients, LabCorp offers over 4,400 clinical
assays ranging from blood analyses to HIV and genomic testing.
LabCorp combines its expertise in innovative clinical testing
technology with its Centers of Excellence: The Center for Molecular
Biology and Pathology, in Research Triangle Park, NC; National Genetics
Institute, Inc. in Los Angeles, CA; ViroMed Laboratories, Inc. based in
Minneapolis, MN; The Center for Esoteric Testing in Burlington, NC;
and DIANON Systems, Inc. based in Stratford, CT. LabCorp clients
include physicians, government agencies, managed care organizations,
hospitals, clinical labs, and pharmaceutical companies. To learn more
about our growing organization, visit our web site at: www.LabCorp.com.
Each of the above forward-looking statements is subject to change based
on various important factors, including without limitation, competitive
actions in the marketplace and adverse actions of governmental and other
third-party payors. Actual results could differ materially from those
suggested by these forward-looking statements. Further information on
potential factors that could affect LabCorp's financial results is
included in the Company's Form 10-K for the year ended December 31,
2002 and subsequent SEC filings, and will be available in the Company's
Form 10-K for the year ended December 31, 2003, when filed.
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- - Table to Follow -
LABORATORY CORPORATION OF AMERICA HOLDINGS
Consolidated Statements of Operations
(Dollars in millions, except per share data)
Three Months Ended
December 31,
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2003 2002
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Net sales $ 731.5 $ 650.1
Cost of sales 430.8 396.2
Selling, general and administrative 161.7 158.2
Amortization of intangibles and
other assets 10.1 7.4
Restructuring and other special items (1.8) --
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Operating income 130.7 88.3
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Other income (expense) (0.6) (0.2)
Investment income 0.3 0.8
Interest expense (10.0) (5.5)
Income from equity investments 11.1 7.2
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Earnings before income taxes 131.5 90.6
Provision for income taxes 53.9 37.6
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Net earnings $ 77.6 $ 53.0
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Net earnings before restructuring and
other special items $ 76.5 $ 53.0
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Diluted earnings per common share:
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Net earnings $ 0.54 $ 0.36
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Net earnings before restructuring and
Other special items $ 0.53 $ 0.36
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Weighted average shares outstanding 143.0 146.4
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EBITDA $ 174.4 $ 123.9
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Year Ended
December 31,
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2003 2002
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Net sales $2,939.4 $2,507.7
Cost of sales 1,714.8 1,445.9
Selling, general and administrative 651.8 585.5
Amortization of intangibles and
other assets 37.6 23.8
Restructuring and other special items 1.5 17.5
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Operating income 533.7 435.0
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Other income (expense) (1.2) (0.6)
Investment income 5.1 3.7
Interest expense (40.9) (19.2)
Income from equity investments 43.7 13.4
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Earnings before income taxes 540.4 432.3
Provision for income taxes 219.4 177.7
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Net earnings $ 321.0 $ 254.6
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Net earnings before restructuring and
other special items $ 321.9 $ 264.8
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Diluted earnings per common share:
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Net earnings $ 2.22 $ 1.77
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Net earnings before restructuring and
Other special items $ 2.22 $ 1.84
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Weighted average shares outstanding 144.8 144.2
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EBITDA $ 711.5 $ 563.8
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LABORATORY CORPORATION OF AMERICA HOLDINGS
Consolidated Balance Sheets
(Dollars in millions, except per share data)
December 31, December 31,
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2003 2002
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Cash and cash equivalents $ 123.0 $ 56.4
Accounts receivable, net 432.5 393.0
Property, plant & equipment 361.3 351.2
Intangible assets, net 1,860.4 1,217.5
Investments in equity affiliates 507.1 400.6
Other assets 130.6 173.3
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$ 3,414.9 $ 2.592.0
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Total bank debt $ 2.8 $ 3.5
Zero coupon-subordinated notes 523.2 512.9
5 1/2% senior note 353.8 --
Other liabilities 639.2 463.9
Shareholders' equity 1,895.9 1,611.7
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$ 3,414.9 $ 2,592.0
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Notes to Financial Tables
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1) During the third quarters of 2003 and 2002, the Company recorded
restructuring and other special items of $3.3 million and $17.5
million, respectively, principally relating to costs to be incurred
as part of its integration efforts on its DIANON and Dynacare
acquisitions. During the fourth quarter of 2003, the Company
recorded a net pre-tax restructuring credit of $1.8 million,
representing the net of restructuring charges and adjustments.
2) EBITDA represents earnings before interest, income taxes,
depreciation, amortization, and nonrecurring charges, and includes
the Company's proportional share of the underlying EBITDA of the
income from equity investments. The Company uses EBITDA extensively
as an internal management performance measure and believes it is a
useful, and commonly used measure of financial performance in
addition to earnings before taxes and other profitability
measurements under generally accepted accounting principles
("GAAP"). EBITDA is not a measure of financial performance under
GAAP. It should not be considered as an alternative to earnings
before income taxes (or any other performance measure under GAAP)
as a measure of performance or to cash flows from operating,
investing or financing activities as an indicator of cash flows
or as a measure of liquidity. The following table reconciles
earnings before income taxes, representing the most comparable
measure under GAAP, to EBITDA for the three- and twelve-month
periods ended December 31, 2003 and 2002
Three Months Ended Year Ended
December 31, December 31,
2003 2002 2003 2002
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Earnings before income taxes $ 131.5 $ 90.6 $ 540.4 $ 432.3
Add (subtract):
Interest expense 10.0 5.5 40.9 19.2
Investment income (0.3) (0.8) (5.1) (3.7)
Other (income) expense, net 0.6 0.2 1.2 0.6
Depreciation 23.4 20.6 91.6 73.0
Amortization 10.1 7.4 37.6 23.8
Restructuring and other
special items (1.8) -- 1.5 17.5
Equity investments'
depreciation and
amortization 0.9 0.4 3.4 1.1
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EBITDA $ 174.4 $ 123.9 $ 711.5 $ 563.8
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3) The following table reconciles net earnings to net earnings before
restructuring and other special items
Three Months Ended Year Ended
December 31, December 31,
2003 2002 2003 2002
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Net earnings $ 77.6 $ 53.0 $ 321.0 $ 254.6
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Restructuring and other
special items (1.8) -- 1.5 17.5
Provision for income taxes 0.7 -- (0.6) (7.3)
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(1.1) -- 0.9 10.2
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Net earnings before
restructuring and other
special items $ 76.5 $ 53.0 $ 321.9 $ 264.8
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