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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
July 22,2004
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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 July 22, 2004, Laboratory Corporation of America -Registered
Trademark- Holdings (LabCorp -Registered Trademark-)(NYSE:LH) issued
a press release announcing its results for the quarter ended
June 30, 2004. 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
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(Registrant)
By:/s/ BRADFORD T. SMITH
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Bradford T. Smith
Executive Vice President
and Secretary
Date: July 22, 2004
EXHIBIT INDEX
Exhibit Description
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99.1 Press Release dated July 22, 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 2004 SECOND QUARTER RESULTS
EPS Increases 16.7 Percent to $0.70; EBITDA Margin Hits 26.9 Percent of Net
Sales; Operating Cash Flow Increases 19 Percent;
Company Increases Annual EPS Guidance for 2004
Burlington, NC, July 22, 2004 - Laboratory Corporation of America-REGISTERED
TRADEMARK- Holdings (LabCorp-REGISTERED TRADEMARK-) (NYSE: LH) today announced
results for the quarter and six-months ended June 30, 2004.
Second Quarter Results
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Net earnings increased 13.8 percent to $98.3 million, compared to second
quarter 2003 net earnings of $86.4 million. Earnings per diluted share (EPS)
increased 16.7 percent to $0.70 per diluted share, versus $0.60 per diluted
share in the second quarter of 2003. Earnings before interest, taxes,
depreciation and amortization (EBITDA) were $210.8 million for the quarter, or
26.9 percent of net sales, compared to $187.4 million, or 25.2 percent of net
sales, for the same period in 2003.
Revenues for the quarter were $784.3 million, an increase of 5.5 percent
compared to the same period in 2003. Compared to the second quarter of 2003,
testing volume, measured by accessions, increased approximately 5.0 percent,
and price increased 0.5 percent.
During the quarter, the Company repurchased approximately $115 million of stock
under its $250 million stock repurchase program, representing approximately 2.9
million shares. Operating cash flow increased 19 percent to $146.7 million, and
the cash balance at the end of the quarter was $182 million.
Six-Month Results
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Net earnings for the period increased to $185.6 million, or $1.30 per diluted
share, compared to 2003 six-month net earnings of $160.3 million, or $1.10 per
diluted share. EBITDA were $401.9 million, or 26.2 percent of net sales,
compared to $353.1 million, or 24.3 percent of net sales, for the same period
in 2003.
Revenues for the period were approximately $1,536.8 million, an increase of 5.6
percent compared to the same period in 2003. This increase was driven by an
increase in testing volume.
During the first half of the year, the Company repurchased approximately $182
million of stock under its $250 million stock repurchase program, representing
approximately 4.6 million shares. Operating cash flow for the period increased
14 percent to $294.3 million.
Based on its strong performance during the first half of the year, the Company
is increasing its annual EPS guidance for 2004. LabCorp now expects 2004 EPS to
be in the range of $2.55 to $2.60, as compared to the Thomson First Call mean
estimate of $2.51.
"We are extremely pleased with our financial performance this quarter," said
Thomas P. Mac Mahon, chairman and chief executive officer. "Our commitment to
executing a proven strategy that expands our national network and enhances our
genomic and esoteric testing capabilities has again delivered outstanding
results for LabCorp's shareholders. By following this successful strategy and
consistently managing both revenues and expenses for optimal performance,
LabCorp continues its efforts to lead the industry in terms of scientific
expertise, profitability, cash generation and shareholder return."
The Company today is filing an 8-K that will include additional information on
its business and operations, including updated financial guidance for 2004.
This information will also be 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 conference call discussing LabCorp's quarterly results will be held at 9:30
a.m. Eastern Time and is available in a listen-only mode by dialing 415-247-
8505. A telephone replay of the call will be available through July 29, 2004
and can be heard by dialing 800-633-8284 (402-977-9140 for international
callers). The access code for the replay is 211-96-716. A live online
broadcast of LabCorp's quarterly conference call on July 22, 2004 will be
available at www.labcorp.com or at www.streetevents.com beginning at 9:30 a.m.
Eastern Time. This webcast will be archived and accessible continuing through
August 22, 2004.
Laboratory Corporation of America 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, over 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, 2003, and subsequent SEC filings.
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LABORATORY CORPORATION OF AMERICA HOLDINGS
Consolidated Statements of Operations
(in millions, except per share data)
Three Months Ended
June 30,
(unaudited)
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2004 2003
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Net sales $ 784.3 $ 743.7
Cost of sales 444.6 427.2
Selling, general and administrative 165.0 164.1
Amortization of intangibles and
other assets 10.5 9.5
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Operating income 164.2 142.9
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Other income (expense) (0.8) (0.2)
Investment income 0.4 2.4
Interest expense (9.3) (10.0)
Income from equity investments 12.1 11.3
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Earnings before income taxes 166.6 146.4
Provision for income taxes 68.3 60.0
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Net earnings $ 98.3 $ 86.4
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Diluted earnings per common share:
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Net earnings $ 0.70 $ 0.60
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Weighted average shares outstanding 141.3 145.0
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EBITDA $ 210.8 $ 187.4
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LABORATORY CORPORATION OF AMERICA HOLDINGS
Consolidated Statements of Operations
(in millions, except per share data)
Six Months Ended
June 30,
(unaudited)
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2004 2003
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Net sales $1,536.8 $1,455.9
Cost of sales 879.5 842.9
Selling, general and administrative 328.0 327.4
Amortization of intangibles and
other assets 20.8 18.0
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Operating income 308.5 267.6
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Other income (expense) (0.9) (0.3)
Investment income 0.9 4.7
Interest expense (18.6) (21.4)
Income from equity investments 24.7 21.1
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Earnings before income taxes 314.6 271.7
Provision for income taxes 129.0 111.4
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Net earnings $ 185.6 $ 160.3
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Diluted earnings per common share:
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Net earnings $ 1.30 $ 1.10
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Weighted average shares outstanding 142.3 145.7
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EBITDA $ 401.9 $ 353.1
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LABORATORY CORPORATION OF AMERICA HOLDINGS
Consolidated Balance Sheets
(in millions, except per share data)
(Unaudited)
June 30, December 31,
2004 2003
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Cash and cash equivalents $ 182.2 $ 123.0
Accounts receivable, net 452.5 432.5
Property, plant & equipment 356.0 361.3
Intangible assets, net 1,870.5 1,857.3
Investments in equity affiliates 493.6 505.3
Other assets 116.2 135.5
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$ 3,471.0 $ 3,414.9
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Total bank debt $ 2.4 $ 2.8
Zero coupon-subordinated notes 528.4 523.2
5 1/2% senior note 353.6 353.8
Other liabilities 664.7 639.2
Shareholders' equity 1,921.9 1,895.9
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$ 3,471.0 $ 3,414.9
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Notes to Financial Tables
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1) 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 six month periods ended
June 30, 2004 and 2003.
Three Months Six Months
Ended June 30, Ended June 30,
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2004 2003 2004 2003
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Earnings before income taxes $ 166.6 $ 146.4 $ 314.6 $ 271.7
Add:
Interest expense 9.3 10.0 18.6 21.4
Investment income (0.4) (2.4) (0.9) (4.7)
Other (income) expense, net 0.8 (0.2) 0.9 0.3
Depreciation 23.3 22.8 46.3 44.7
Amortization 10.5 9.5 20.8 18.0
Equity investments' depreciation
And amortization 0.7 0.9 1.6 1.7
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EBITDA $ 210.8 $ 187.4 $ 401.9 $ 353.1
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