SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
SCHEDULE TO
(RULE 14d-100)
TENDER OFFER STATEMENT UNDER SECTION 14(d)(1) OR 13(e)(1) OF
THE SECURITIES EXCHANGE ACT OF 1934
(Amendment No. )
LABORATORY CORPORATION OF AMERICA HOLDINGS
(Name of Subject Company (Issuer))
LABORATORY CORPORATION OF AMERICA HOLDINGS
(Name of Filing Person (Issuer))
Liquid Yield Option(TM) Notes due 2021 (Zero Coupon-Subordinated)
(Title of Class of Securities)
50540R AB 8
50540R AC 6
(CUSIP Number of Class of Securities)
Bradford T. Smith
Executive Vice President, Corporate Affairs and Secretary
Laboratory Corporation of America Holdings
358 South Main Street
Burlington, North Carolina 27215
(336) 229-1127
(Name, address and telephone number of person authorized to receive
notices and communications on behalf of filing person)
with copy to:
Michael J. Silver, Esq.
Hogan & Hartson L.L.P.
111 South Calvert Street, 16th Floor
Baltimore, Maryland 21202
(410) 659-2700
CALCULATION OF FILING FEE
Transaction Valuation*: $551,988,480 Amount of Filing Fee**:$59,062.77
* Calculated solely for purposes of determining the filing fee. The
purchase price of the Liquid Yield Option(TM) Notes due 2021 (Zero
Coupon-
Subordinated) (the "LYONs"), as described herein, is $741.92 per $1,000
principal amount at maturity of the LYONs. As of August 22, 2006,
there was $744,000,000 in aggregate principal amount at maturity of
LYONs outstanding.
** The amount of the filing fee was calculated in accordance with Rule
0-11 of the Securities Exchange Act of 1934, as amended, and equals
$107.00 for each $1,000,000 of the value of the transaction.
Check the box if any part of the fee is offset as provided by Rule
0-11(a)(2) and identify the filing with which the offsetting fee
was previously paid. Identify the previous filing by registration
statement number, or the Form or Schedule and the date of its filing.
Amount Previously Paid: Not applicable Filing Party: Not applicable
Form or Registration No.: Not applicable Date Filed: Not applicable
[ ]Check the box if the filing relates solely to preliminary
communications
made before the commencement of a tender offer.
Check the appropriate boxes below to designate any transactions to which this
statement relates:
[ ]third-party tender offer subject to Rule 14d-1.
[ ]going-private transaction subject to Rule 13e-3.
[X]issuer tender offer subject to Rule 13e-4.
[ ]amendment to Schedule 13D under Rule 13d-2.
Check the following box if the filing is a final amendment reporting the
results of the tender offer:[ ]
INTRODUCTORY STATEMENT
This Tender Offer Statement on Schedule TO-I ("Schedule TO-I") is filed
by Laboratory Corporation of America Holdings, a Delaware corporation (the
"Company"), and relates to the offer by the Company to purchase the Liquid
Yield Option(TM) Notes due 2021 (Zero Coupon-Subordinated) issued by the
Company
on September 11, 2001 (the "LYONs"), upon the terms and subject to the
conditions set forth in the Indenture (as defined below), the LYONs and the
Company Notice, dated August 23, 2006 (the "Company Notice", which Company
Notice and related offer materials, as amended or supplemented from time to
time, collectively constitute the "Put Option"). The LYONs were issued
pursuant to an Indenture, dated as of September 11, 2001 (the "Indenture"),
between the Company and The Bank of New York, as trustee (the "Trustee").
The Put Option will expire at 5:00 p.m., New York City time, on Thursday,
September 21, 2006.
This Schedule TO-I is intended to satisfy the disclosure requirements of Rule
13e-4(c)(2) under the Securities Exchange Act of 1934, as amended.
Items 1 through 9.
The Company is the issuer of the LYONs and the Company is offering to
purchase all of the LYONs if tendered by the holders under the terms and
subject to the conditions set forth in the Indenture, the LYONs and the
Company Notice. The LYONs are convertible into 13.4108 shares of common
stock, $0.10 par value per share, of the Company upon satisfaction of certain
conditions and terms set forth in the Indenture. The Company maintains its
registered and principal executive offices at 358 South Main Street,
Burlington, North Carolina 27215. The telephone number there is (336) 229-
1127. As permitted by General Instruction F to Schedule TO, all of the
information set forth in the Put Option is incorporated by reference into this
Schedule TO-I.
Item 10. Financial Statements
(a) The Company believes that its consolidated financial condition is
not material to a holder's decision whether to put the LYONs to the Company
because (i) the consideration being paid to holders surrendering LYONs
consists solely of cash, (ii) the Put Option is not subject to any financing
conditions, (iii) the Put Option applies to all outstanding LYONs and (iv) the
Company is a public reporting company that files reports electronically on
EDGAR. The financial condition and results of operations of the Company and
its subsidiaries are reported electronically on EDGAR on a consolidated basis.
(b) Not applicable.
Item 11. Additional Information.
(a) Not applicable.
(b) Not applicable.
Item 12. Exhibits.
(a)(1)(A) Company Notice to Holders of Liquid Yield Option(TM) Notes due
2021,
dated August 23, 2006.
(b) Not applicable.
(d)(1) Indenture, dated as of September 11, 2001, between the Company and
The Bank of New York, as Trustee (incorporated by reference to
Exhibit 4.1 to the Company's Registration Statement on Form S-3,
as filed with the Securities and Exchange Commission on October
19, 2001, File No. 333-71896).
(g) Not applicable.
(h) Not applicable.
Item 13. Information Required by Schedule 13E-3.
Not applicable.
SIGNATURE
After due inquiry and to the best of my knowledge and belief, I certify that
the information set forth in this statement is true, complete and correct.
LABORATORY CORPORATION OF AMERICA HOLDINGS
By: /s/ BRADFORD T. SMITH
---------------------
Bradford T. Smith
Executive Vice President,
Corporate Affairs and Secretary
Dated: August 23, 2006
EXHIBIT INDEX
(a)(1)(A) Company Notice to Holders of Liquid Yield Option(TM) Notes due
2021, dated August 23, 2006.
(b) Not applicable.
(d)(1) Indenture, dated as of September 11, 2001, between the Company
and The Bank of New York, as Trustee (incorporated by reference
to Exhibit 4.1 to the Company's Registration Statement on Form
S-3, as filed with the Securities and Exchange Commission on
October 19, 2001, File No. 333-71896).
(g) Not applicable.
(h) Not applicable.
EXHIBIT 99.(a)(1)(A)
COMPANY NOTICE
TO HOLDERS OF
LIQUID YIELD OPTION(tm) NOTES DUE 2021
(ZERO COUPON - SUBORDINATED)
ISSUED BY
LABORATORY CORPORATION OF AMERICA HOLDINGS
CUSIP Numbers: 50540R AB 8 and 50540R AC 6
NOTICE IS HEREBY GIVEN pursuant to the terms and conditions of the
Indenture, dated as of September 11, 2001 (the "Indenture"), between
Laboratory Corporation of America Holdings, a Delaware corporation (the
Company"), and The Bank of New York, as trustee and paying agent (the "Paying
Agent"), and the Liquid Yield Option(TM) Notes due 2021 (Zero Coupon-
Subordinated) (the "LYONs") of the Company, that at the option of each holder
(the "Holder") of the LYONs, the LYONs will be purchased by the Company for
$741.92 in cash per $1,000 principal amount at maturity of the LYONs (the
"Purchase Price"), subject to the terms and conditions of the Indenture, the
LYONs and this Company Notice and related notice materials, as amended and
supplemented from time to time (the "Put Option"). Holders may surrender
their LYONs at any time from August 23, 2006 through 5:00 p.m., New York City
time, on Thursday, September 21, 2006. This Company Notice is being sent
pursuant to the provisions of Section 3.08 of the Indenture and Section 7 of
the LYONs. All capitalized terms used but not specifically defined herein
shall have the meanings given to such terms in the Indenture and the LYONs.
To exercise your option to have the Company purchase the LYONs and
receive payment of $741.92 in cash per $1,000 principal amount at maturity of
the LYONs, you must validly surrender the LYONs prior to 5:00 p.m., New York
City time, on Thursday, September 21, 2006 (the "Expiration Date") and not
have withdrawn such surrendered LYONs prior to 5:00 p.m., New York City time,
on the Expiration Date. LYONs surrendered for purchase may be withdrawn at
any time prior to 5:00 p.m., New York City time, on the Expiration Date.
The Trustee has informed the Company that, as of the date of this
Company Notice, all custodians and beneficial holders of the LYONs hold the
LYONs through Depository Trust Company ("DTC") accounts and that there are no
certificated LYONs in non-global form. Accordingly, all LYONs surrendered for
purchase hereunder must be delivered through the transmittal procedures of
DTC.
The Paying Agent is: The Bank of New York
By Regular, Registered or Certified
Mail or Overnight Courier: By Facsimile:
The Bank of New York (212) 298-1915
Corporate Trust Operations Attention: Corporate Trust
Reorganization Unit Administration
101 Barclay Street, 7 East Confirm Receipt of Facsimile Only:
New York, NY 10286 (212) 815-3738
Attention: Corporate Trust Administration
Copies of this Company Notice may be obtained from the Paying Agent at its
addresses set forth above.
The date of this Company Notice is August 23, 2006.
TABLE OF CONTENTS
Page
----
SUMMARY TERM SHEET ..................................................... 1
IMPORTANT INFORMATION CONCERNING THE OPTION ............................ 4
1. Information Concerning the Company ................................. 4
2. Information Concerning the LYONs ................................... 4
2.1 The Company's Obligation to Purchase the LYONs ................ 4
2.2 Purchase Price ................................................ 4
2.3 Conversion Rights of the LYONs ................................ 5
2.4 Market for the LYONs and the Company's Common Stock ........... 5
2.5 Redemption .................................................... 6
2.6 Change in Control ............................................. 6
3. Procedures to Be Followed by Holders Electing to Surrender LYONs
for Purchase ....................................................... 6
3.1 Method of Delivery ............................................ 6
3.2 Delivery of LYONs ............................................. 6
4. Right of Withdrawal ................................................ 6
5. Payment for Surrendered LYONs ...................................... 7
6. LYONs Acquired ..................................................... 7
7. Plans or Proposals of the Company .................................. 7
8. Interests of Directors, Executive Officers and Affiliates of the
Company in the LYONs ............................................... 8
9. Purchase, Exchange or Redemption of LYONs by the Company and Its
Affiliates ......................................................... 8
10. Material United States Tax Considerations .......................... 9
11. Additional Information ............................................. 11
12. No Solicitations ................................................... 12
13. Definitions ........................................................ 12
14. Conflicts .......................................................... 12
Annex A. BOARD OF DIRECTORS AND EXECUTIVE OFFICERS
No person has been authorized to give any information or to make any
representations other than those contained in this Put Option and, if given
or made, such information or representations must not be relied upon as
having been authorized. This Company Notice does not constitute an offer to
buy or the solicitation of an offer to sell securities in any circumstances
or jurisdiction in which such offer or solicitation is unlawful. The
delivery of this Company Notice shall not under any circumstances create any
implication that the information contained herein or in the related notice
materials is current as of any time subsequent to the date of such
information. None of the Company or its board of directors or employees are
making any representation or recommendation to any Holder as to whether or
not to surrender such Holder's LYONs. You should consult your own financial
and tax advisors and must make your own decision as to whether to surrender
your LYONs for purchase and, if so, the amount of LYONs to surrender.
-i-
SUMMARY TERM SHEET
The following are answers to some of the questions that you may have
about the Put Option. To understand the Put Option fully and for a more
complete description of the terms of the Put Option, we urge you to read
carefully the remainder of this Company Notice and other offering materials
because the information in this summary is not complete and those documents
contain additional important information. We have included page references
to direct you to a more complete description of the topics in this summary.
Who is offering to purchase my LYONs?
Laboratory Corporation of America Holdings, a Delaware corporation (the
"Company"), is offering to purchase your validly surrendered Liquid Yield
Option(TM) Notes due 2021 (Zero Coupon-Subordinated) (the "LYONs"). (Page 4)
What LYONs are you seeking to purchase?
We are offering to purchase all of the LYONs validly surrendered, at the
option of the holder thereof (the "Holder"). As of August 23, 2006, there
was $744,000,000 aggregate principal amount at maturity of LYONs outstanding.
The LYONs were issued under an Indenture, dated as of September 11, 2001 (as
supplemented, the "Indenture"), between the Company and The Bank of New York,
as trustee and paying agent (the "Paying Agent"). (Page 4)
How much are you offering to pay and what is the form of payment?
Pursuant to the terms of the Indenture and the LYONs, we will pay, in
cash, a purchase price of $741.92 in cash per $1,000 principal amount at
maturity of LYONs validly surrendered for purchase on the date of purchase
and not previously withdrawn (the "Purchase Price"). (Pages 2-3)
How can I determine the market value of the LYONs?
There is no established reporting system or market for trading in the
LYONs. To the extent that the LYONs are traded, prices of the LYONs may
fluctuate widely depending on trading volume, the balance between buy and
sell orders, prevailing interest rates, the Company's operating results, the
trading price of the Company's common stock, $0.10 par value per share (the
"Common Stock"), and the market for similar securities. To the extent
available, Holders are urged to obtain the best information available as to
potential current market prices of the LYONs prior to making any decision
with respect to the Put Option. The Common Stock of the Company into which
the LYONs are convertible is listed on the New York Stock Exchange ("NYSE")
under the symbol "LH." On August 22, 2006, the last reported sales price of
the Common Stock on the NYSE was $68.84 per share. (Pages 5-6)
Why are you making the offer?
We are required to make the offer pursuant to the terms of the LYONs and
the Indenture. (Page 4)
What does the board of directors of the Company think of the Put Option?
The board of directors of the Company has not made any recommendation as
to whether you should surrender your LYONs for purchase in the Put Option.
You must make your own decision whether to surrender your LYONs for purchase
in the Put Option and, if so, the amount of LYONs to surrender. (Page 15)
When does the Put Option expire?
The Put Option expires at 5:00 p.m., New York City time, on Thursday,
September 21, 2006 (the "Expiration Date"). To exercise your option to have
the Company purchase the LYONs and receive payment of the Purchase Price, you
must validly surrender the LYONs prior to 5:00 p.m., New York City time, on
the
-1-
Expiration Date. We will not extend the period Holders have to accept
the Put Option unless required to do so by the Federal securities laws.
(Page 4)
What are the conditions to the purchase by the Company of the LYONs?
The purchase by us of validly surrendered LYONs is not subject to any
conditions other than such purchase being lawful. (Page 4)
How do I surrender my LYONs?
To surrender your LYONs for purchase pursuant to the Put Option, you must
surrender the LYONs through the transmittal procedures of the Depository
Trust Company ("DTC") no later than 5:00 p.m., New York City time, on the
Expiration Date. (Page 6)
- - Holders whose LYONs are held by a broker, dealer, commercial bank,
trust company or other nominee must contact such nominee if such Holder
desires to surrender such Holder's LYONs and instruct such nominee to
surrender the LYONs on the Holder's behalf through the transmittal
procedures of DTC.
- - Holders who are DTC participants should surrender their LYONs
electronically through DTC's book-entry system, subject to the terms
and procedures of that system on or before 5:00 p.m., New York City
time, on the Expiration Date.
If I surrender my LYONs, when will I receive payment for them?
We will accept for payment all validly surrendered LYONs promptly upon
expiration of the Put Option. We will promptly forward to the Paying Agent,
prior to 10:00 a.m., New York City time, on September 22, 2006, the
appropriate amount of cash required to pay the Purchase Price for the
surrendered LYONs, and the Paying Agent will promptly distribute the cash to
the Holders. (Page 7)
Until what time can I withdraw previously surrendered LYONs?
You can withdraw LYONs previously surrendered for purchase at any time
prior to 5:00 p.m., New York City time, on the Expiration Date. (Pages 6-7)
How do I withdraw previously surrendered LYONs?
To withdraw previously surrendered LYONs, you must comply with the
withdrawal procedures of the DTC prior to 5:00 p.m., New York City time, on
the Expiration Date. (Pages 6-7)
Do I need to do anything if I do not wish to surrender my LYONs for purchase?
No. If you do not surrender your LYONs prior to the expiration of the
Put Option, we will not purchase your LYONs and such LYONs will remain
outstanding subject to their existing terms. (Page 6)
If I choose to surrender my LYONs for purchase, do I have to surrender all of
my LYONs?
No. You may surrender all of your LYONs, a portion of your LYONs or
none of your LYONs for purchase. If you wish to surrender a portion of your
LYONs, however, you must surrender your LYONs in a principal amount at
maturity of $1,000 or an integral multiple thereof. (Pages 4-5)
If I do not surrender my LYONs for purchase, will I continue to be able to
exercise my conversion rights?
Yes. If you do not surrender your LYONs prior to the expiration of the
Put Option, we will not purchase your LYONs and your conversion rights will
not be affected. (Page 5)
-2-
If I am a U.S. resident for U.S. federal income tax purposes, will I have to
pay taxes if I surrender my LYONs for purchase in the Put Option?
The receipt of cash in exchange for LYONs pursuant to the Put Option
will be a taxable transaction for U.S. federal income tax purposes and you
may recognize gain, income, loss or deduction. You should consult with your
own tax advisor regarding the actual tax consequences to you. (Pages 8-11)
Who is the Paying Agent?
The Bank of New York, the trustee for the LYONs, is serving as Paying
Agent in connection with the Put Option. Its address and telephone number
are set forth on the front cover page of this Company Notice.
Whom can I talk to if I have questions about the Put Option?
Questions and requests for assistance in connection with the surrender
of LYONs for purchase in the Put Option may be directed to the Paying Agent
at the address and telephone and facsimile numbers set forth on the front
cover page of this Company Notice.
-3-
IMPORTANT INFORMATION CONCERNING THE PUT OPTION
1. Information Concerning the Company. Laboratory Corporation of America
Holdings, a Delaware corporation (the "Company"), is offering to purchase the
Liquid Yield Option(TM) Notes due 2021 (Zero Coupon-Subordinated) (the
"LYONs"). The LYONs are convertible into the Common Stock, $0.10 par value
per share (the "Common Stock"), of the Company, subject to the terms,
conditions and adjustments specified in the Indenture and the LYONs.
The Company and its subsidiaries, headquartered in Burlington, North
Carolina, is the second largest independent clinical laboratory company in the
United States based on 2004 net revenues. Since its founding in 1971, the
Company has grown into a national network of 32 primary laboratories and over
1,300 service sites, consisting of branches, patient service centers and STAT
laboratories, which are laboratories that have the ability to perform certain
routine tests quickly and report the results to the physician immediately.
Through its national network of laboratories, the Company offers a broad
range of clinical laboratory tests that are used by the medical profession in
routine testing, patient diagnosis, and in the monitoring and treatment of
disease. In addition, the Company has developed specialty and niche
businesses based on certain types of specialized testing capabilities and
client requirements, such as oncology testing, HIV genotyping and phenotyping,
diagnostic genetics and clinical research trials.
The Company maintains its registered and principal executive offices at
358 South Main Street, Burlington, North Carolina 27215. The telephone number
there is (336) 229-1127.
2. Information Concerning the LYONs. The LYONs were issued under an
Indenture, dated as of September 11, 2001 (the "Indenture"), between the
Company and The Bank of New York, as trustee and paying agent (the "Paying
Agent"). The LYONs mature on September 11, 2021.
2.1. The Company's Obligation to Purchase the LYONs. Pursuant to the
terms of the LYONs and the Indenture, the Company is obligated to purchase on
September 11, 2006 all LYONs validly surrendered for purchase and not
previously withdrawn, at the Holder's option.
This Put Option will expire at 5:00 p.m., New York City time, on
Thursday, September 21, 2006 (the "Expiration Date"), which is 20 business
days after the date of this Company Notice. The Company will purchase all
LYONs validly surrendered for purchase and not withdrawn, at the Holder's
option. To exercise your option to have the Company purchase the LYONs and
receive payment of the Purchase Price, you must validly surrender the LYONs
prior to 5:00 p.m., New York City time, on the Expiration Date. We will not
extend the period Holders have to accept the Put Option unless required to do
so by the Federal securities laws. The purchase by the Company of validly
surrendered LYONs is not subject to any conditions other than such purchase
being lawful.
2.2. Purchase Price. Pursuant to the LYONs, the purchase price to be
paid by the Company for the LYONs on the Expiration Date is $741.92 per $1,000
principal amount at maturity of LYONs (the "Purchase Price"). The Purchase
Price will be paid in cash with respect to any and all LYONs validly
surrendered for purchase and not withdrawn prior to 5:00 p.m., New York City
time, on the Expiration Date. LYONs surrendered for purchase will be
accepted only in principal amounts at maturity equal to $1,000 or integral
multiples thereof. The Original Issue Discount (as defined in the LYONs)
will cease to accrue on September 11, 2006 on LYONs validly surrendered for
purchase and not withdrawn unless the Company defaults in making payment on
these LYONs.
The Purchase Price is based solely on the requirements of the
Indenture and the LYONs and bears no relationship to the market price of the
LYONs or the Common Stock. Thus, the Purchase Price may be significantly
higher or lower than the market price of the LYONs on the Expiration Date.
Holders of LYONs are urged to obtain the best information available as to
potential current market prices of the LYONs, to the extent available, and
the Common Stock before making a decision whether to surrender their LYONs
for purchase.
-4-
None of the Company or its board of directors or employees are
making any recommendation to Holders as to whether to surrender or refrain
from surrendering LYONs for purchase pursuant to this Company Notice. Each
Holder must make his or her own decision whether to surrender his or her
LYONs for purchase and, if so, the principal amount of LYONs to surrender
based on such Holder's assessment of current market value of the LYONs and
the Common Stock and other relevant factors.
2.3. Conversion Rights of the LYONs. Each LYON is currently convertible
into 13.4108 shares of Common Stock, subject to adjustment under certain
circumstances specified in the Indenture. The Paying Agent is currently
acting as conversion agent for the LYONs.
Holders that do not surrender their LYONs for purchase pursuant to
the Put Option will maintain the right to convert their LYONs into Common
Stock, subject to the terms, conditions and adjustments specified in the
Indenture and the LYONs. Any LYONs surrendered may be converted in
accordance with the terms of the Indenture and the LYONs only if the
surrender of LYONs has been validly withdrawn prior to 5:00 p.m., New York
City time, on the Expiration Date, as described in Section 4 below.
2.4. Market for the LYONs and the Company's Common Stock. There is no
established reporting system or trading market for trading in the LYONs.
However, we believe the LYONs currently are traded over the counter. We have
been advised that there is no practical way to determine the trading history
of the LYONs. We believe that trading in the LYONs has been limited and
sporadic. To the extent that the LYONs are traded, prices of the LYONs may
fluctuate widely depending on trading volume, the balance between buy and
sell orders, prevailing interest rates, the Company's operating results, the
market price of the Common Stock and the market for similar LYONs. Following
the consummation of the Put Option, we expect that LYONs not purchased in the
Put Option will continue to be traded over the counter. A debt security with
a smaller outstanding principal amount available for trading (a smaller
"float") may command a lower price and trade with greater volatility than
would a comparable debt security with a larger float. Consequently, our
purchase of LYONs pursuant to the Put Option will reduce the float and, if a
substantial amount of LYONs is purchased, would likely negatively affect the
liquidity and could also affect the market value and price volatility of the
LYONs that remain outstanding following the Put Option. We cannot assure you
that a market will exist for the LYONs following the Put Option. The extent
of the public market for the LYONs following consummation of the Put Option
will depend upon, among other things, the remaining outstanding principal
amount of the LYONs at such time, the number of holders of LYONs remaining at
that time and the interest on the part of securities firms in maintaining a
market in the LYONs. The LYONs are held through The Depository Trust Company
("DTC"). As of August 23, 2006, there was $744,000,000 aggregate principal
amount at maturity of LYONs outstanding and DTC was the sole record holder of
the LYONs.
The Common Stock into which the LYONs are convertible is listed on the
New York Stock Exchange ("NYSE") under the symbol "LH." The following table
sets forth, for the fiscal quarters indicated, the high and low sales prices
of the Common Stock as reported on the NYSE.
High Low
---- ---
Year Ending on December 31, 2006
3rd Quarter (through August 22, 2006) ............. $69.17 $61.59
2nd Quarter ....................................... 62.98 56.22
1st Quarter ....................................... 61.055 52.58
Year Ending on December 31, 2005
4th Quarter ....................................... $55.00 $47.22
3rd Quarter ....................................... 51.97 46.58
2nd Quarter ....................................... 51.25 46.83
1st Quarter ....................................... 50.67 44.632
Year Ending on December 31, 2004
4th Quarter ....................................... $50.03 $40.80
3rd Quarter ....................................... 44.10 36.70
2nd Quarter ....................................... 42.75 38.02
1st Quarter ....................................... 44.20 36.90
-5-
On August 22, 2006, the last reported sales price of the Common Stock on
the NYSE was $68.84 per share. As of July 26, 2006, there were
125,234,485 shares of Common Stock outstanding. We urge you to obtain
current market information for the LYONs, to the extent available, and the
Common Stock before making any decision to surrender your LYONs pursuant to
the Put Option.
2.5. Redemption. Beginning September 11, 2006, the LYONs are redeemable
for cash at any time at the option of the Company, in whole or in part, at a
redemption price equal to the Issue Price (as defined in the Indenture) plus
accrued Original Issue Discount (as defined in the Indenture) and Contingent
Additional Interest (as defined in the Indenture), if applicable.
2.6. Change in Control. A Holder may require the Company to redeem for
cash his or her LYONs if there is a Change in Control (as defined in the
Indenture) prior to September 11, 2006 at a redemption price equal to the
Issue Price (as defined in the Indenture) plus accrued Original Issue
Discount (as defined in the Indenture) and Contingent Additional Interest
(as defined in the Indenture), if applicable.
3. Procedures to Be Followed by Holders Electing to Surrender LYONs for
Purchase. Holders will not be entitled to receive the Purchase Price for
their LYONs unless they validly surrender and do not withdraw the LYONs prior
to 5:00 p.m., New York City time, on the Expiration Date. Only registered
Holders are authorized to surrender their LYONs for purchase. Holders may
surrender some or all of their LYONs.
If Holders do not validly surrender their LYONs on or before 5:00 p.m.,
New York City time, on the Expiration Date, their LYONs will remain
outstanding subject to their existing terms.
3.1. Method of Delivery. The Trustee has informed the Company that,
as of the date of this Company Notice, all custodians and beneficial holders
of the LYONs hold the LYONs through DTC accounts and that there are no
certificated LYONs in non-global form. Accordingly, all LYONs surrendered for
purchase hereunder must be delivered through DTC's Automatic Tenders over the
Participant Terminal System ("PTS"). This Company Notice constitutes the
Company Notice (as defined in the Indenture) and delivery of LYONs via PTS
will satisfy the notice requirements of the Indenture. Delivery of LYONs and
all other required documents, including delivery and acceptance through PTS,
is at the election and risk of the person surrendering such LYONs.
3.2. Delivery of LYONs.
LYONs Held Through a Custodian. A Holder whose LYONs are held by
a broker, dealer, commercial bank, trust company or other nominee must contact
such nominee if such Holder desires to surrender his or her LYONs and instruct
such nominee to surrender the LYONs for purchase on the Holder's behalf.
LYONs in Global Form. A Holder who is a DTC participant may elect
to surrender to the Company his or her beneficial interest in the LYONs by:
- delivering to the Paying Agent's account at DTC through
DTC's book-entry system his or her beneficial interest in
the LYONs on or prior to 5:00 p.m., New York City time, on
the Expiration Date; and
- electronically transmitting his or her acceptance through
DTC's PTS, subject to the terms and procedures of that
system on or prior to 5:00 p.m., New York City time, on the
Expiration Date.
4. Right Of Withdrawal. LYONs surrendered for purchase may be withdrawn
at any time prior to 5:00 p.m., New York City time, on the Expiration Date.
Any attempted withdrawals after such time will be ineffective. In order to
withdraw LYONs, Holders must comply with the withdrawal procedures of the DTC
prior to such time. LYONs withdrawn from the Put Option may be resurrendered
by following the surrender procedures described in Section 3 above.
-6-
This means a Holder must deliver, or cause to be delivered, a valid
withdrawal request through DTC's book-entry system from the tendering DTC
participant before 5:00 p.m., New York City time, on the Expiration Date. The
withdrawal notice must:
- specify the DTC Voluntary Offer Instruction Number, the name of
the participant for whose account such LYONs were tendered and
such participant's account number at DTC to be credited with the
withdrawn LYONs;
- contain a description of the LYONs to be withdrawn (including the
principal amount to be withdrawn); and
- be submitted through the DTC PTS system by such participant under
the same name as the participant's name is listed in the original
tender, or be accompanied by evidence satisfactory to the Company
that the person withdrawing the tender has succeeded to the
beneficial ownership of the LYONs.
We will determine all questions as to the validity, form and eligibility,
including time of receipt, of notices of withdrawal.
5. Payment for Surrendered LYONs. We will promptly forward to the Paying
Agent, prior to 10:00 a.m., New York City time, on Friday, September 22, 2006
the appropriate amount of cash required to pay the Purchase Price for the
surrendered LYONs, and the Paying Agent will promptly thereafter distribute
the cash to each Holder that has validly delivered its LYONs and not validly
withdrawn such delivery prior to 5:00 p.m., New York City time, on the
Expiration Date.
In the event any LYONs are surrendered and accepted for payment, we
intend to use available cash to purchase the LYONs.
6. LYONs Acquired. Any LYONs purchased by us pursuant to the Put Option
will be cancelled by the Trustee, pursuant to the terms of the Indenture.
7. Plans or Proposals of the Company. Except as publicly disclosed prior
to the date hereof, the Company does not currently have any plans that would
be material to a Holder's decision to surrender LYONs for purchase in the Put
Option, which relate to or which would result in:
- any extraordinary transaction, such as a merger, reorganization
or liquidation involving the Company or any of its subsidiaries;
- any purchase, sale or transfer of a material amount of assets of
the Company or any of its subsidiaries;
- any material change in the present dividend rate or policy or
indebtedness or capitalization of the Company;
- any change in the present board of directors or management of the
Company, including, but not limited to, any plans or proposals to
change the number or the term of directors or to fill any
existing vacancies on the board or to change any material term of
the employment contract of any executive officer;
- any other material change in the corporate structure or business
of the Company;
- any class of equity securities of the Company to be delisted from
a national securities exchange or cease to be authorized to be
quoted in an automated quotation system operated by a national
securities association;
-7-
- any class of equity securities of the Company becoming eligible
for termination of registration under Section 12(g)(4) of the
Exchange Act;
- the suspension of the obligation of the Company to file reports
under Section 15(d) of the Exchange Act;
- the acquisition by any person of additional securities of the
Company or the disposition of securities of the Company; or
- any changes in the charter, bylaws or other governing instruments
of the Company or other actions that could impede the acquisition
of control of the Company.
8. Interests of Directors, Executive Officers and Affiliates of the
Company in the LYONs. Except as otherwise disclosed below, to the knowledge
of the Company:
- none of the Company or its executive officers, directors,
subsidiaries or other affiliates has any beneficial interest in
the LYONs;
- the Company will not purchase any LYONs from such persons; and
- during the 60 days preceding the date of this Company Notice,
none of such officers, directors or affiliates has engaged in any
transactions in the LYONs.
A list of the directors and executive officers of the Company is attached
to this Company Notice as Annex A.
Certain directors and executive officers of the Company and its affiliates
are parties to ordinary course equity incentive plans and arrangements
involving the Common Stock of the Company, as disclosed by the Company prior
to the date hereof. Except as described in the previous sentence, none of
the Company, or to its knowledge, any of its affiliates, directors or
executive officers, is a party to any contract, arrangement, understanding or
agreement with any other person relating, directly or indirectly, to the Put
Option or with respect to any of the securities of the Company, including,
but not limited to, any contract, arrangement, understanding or agreement
concerning the transfer or the voting of the securities, joint ventures, loan
or option arrangements, puts or calls, guarantees of loans, guarantees
against loss or the giving or withholding of proxies, consents or
authorizations.
9. Purchase, Exchange or Redemption of LYONs by the Company and Its
Affiliates. The Company and its affiliates may, subject to restrictions
under applicable United States federal securities laws, purchase LYONs in the
open market, in private transactions, through a subsequent tender or exchange
offer, or otherwise, any of which may be consummated at purchase prices
higher or lower than the Purchase Price. In particular, the Company may,
subject to restrictions under applicable United States federal securities
laws, determine to offer to exchange LYONs for a new class of debt securities
with terms that differ from the LYONs and/or call the LYONs for redemption.
Beginning on September 11, 2006, the LYONs are redeemable for cash at any
time at the option of the Company, in whole or in part, at redemption prices
equal to the sum of the Issue Price (as defined in the Indenture) plus
Accrued Original Issue Discount (as defined in the Indenture) and Contingent
Additional Principal (as defined in the Indenture), if any, on such LYONs as
of the applicable redemption date. Holders who tender their LYONs in the Put
Option and do not withdraw such LYONs prior to the Expiration Date would not
be able to participate in any such purchase, exchange or redemption with
respect to such LYONs. Any decision to purchase, exchange or redeem the
LYONs will depend upon many factors, including the market price of the LYONs,
the amount of LYONs surrendered for purchase pursuant to the Put Option, the
market price of the Common Stock, the business and financial position of the
Company and general economic and market conditions.
10. Material United States Tax Considerations.
The following discussion summarizes certain United States federal income
tax considerations that may be relevant to you if you exercise the Put Option.
This summary is based on the Internal Revenue Code of 1986, as
-8-
amended, and the regulations, rulings and decisions thereunder, all of which
are subject to change, possibly with retroactive effect.
This summary does not describe all of the tax considerations that may be
relevant to you. All Holders are strongly encouraged to consult with their
own tax advisor about the United States federal, state, local and other tax
consequences of exercising the Put Option.
U.S. Holders
This discussion deals only with U.S. holders who hold the LYONs as capital
assets, and does not apply if you are a member of a class of holders subject
to special rules, such as:
- a dealer in securities or currencies;
- a trader in securities that elects to use a mark-to-market method
of accounting for your securities holdings;
- a bank;
- a life insurance company;
- a tax-exempt organization;
- a person that owns LYONs that are a hedge or that are hedged
against interest rate risks;
- a person that owns LYONs as part of a straddle or conversion
transaction for tax purposes; or
- a United States person whose functional currency for tax purposes
is not the U.S. dollar.
You will be a U.S. Holder if you are a beneficial owner of the LYONs for
U.S. federal income tax purposes and you are:
- a citizen or resident of the United States;
- a domestic corporation;
- an estate whose income is subject to United States federal income
taxation regardless of its source; or
- a trust if a United States court is able to exercise primary
supervision over the trust's administration and one or more
United States persons are authorized to control all substantial
decisions of the trust.
If you are not a U.S. Holder, this discussion does not apply to you.
Generally, your exercise of the Put Option will result in taxable gain or
loss to you equal to the difference between (i) the amount of cash received,
and (ii) your adjusted tax basis in the LYONs surrendered. Because you
agreed when you purchased your LYONs to treat the LYONs as subject to the
special rules regarding contingent payment debt instruments, your adjusted
tax basis in the LYONs will generally be equal to your original purchase
price for the LYONs, increased by any interest income previously accrued by
you, decreased by the amount of any projected payments previously made on the
LYONs to you, and increased or decreased by the amount of any positive or
negative adjustment, respectively, that you are required to make if you
purchased your LYONs at a price other than the adjusted issue price
determined for tax purposes. This gain will generally be treated as ordinary
interest income; any loss will be ordinary loss to the extent of interest
previously included in income, and thereafter,
-9-
capital loss (which will be long-term if you held your LYONs for more than
one year). The deductibility of net capital losses by individuals and
corporations is subject to limitations.
The contingent payment debt instrument regulations are complex. You
should consult your tax advisor regarding the accrual of interest, any
positive and negative adjustments, and the calculation of adjusted tax basis
with respect to your LYONs.
Non-U.S. Holders
This discussion describes the tax consequences to a non-U.S. holder.
You are a non-U.S. holder if you are the beneficial owner of LYONs and are,
for United States federal income tax purposes:
- a nonresident alien individual;
- a foreign corporation;
- a foreign partnership; or
- an estate or trust that in either case is not subject to United
States federal income tax on a net income basis on income or gain
from the LYONs.
If you are a U.S. holder, this section does not apply to you.
If you are a non-U.S. holder, we and other U.S. payors generally will not
be required to deduct United States withholding tax from cash received upon
exercising the Put Option if:
(1) you do not actually or constructively own 10% or more of the total
combined voting power of all classes of our stock entitled to vote;
(2) you are not a controlled foreign corporation that is related to us
through stock ownership; and
(3) the U.S. payor does not have actual knowledge or reason to know that
you are a United States person; and:
(a) you have furnished to the U.S. payor an IRS Form W-8BEN or an
acceptable substitute form upon which you certify, under penalties of perjury,
that you are a non-United States person;
(b) in the case of payments made outside the United States to you
at an offshore account (generally, an account maintained by you at a bank or
other financial institution at any location outside the United States), you
have furnished to the U.S. payor documentation that establishes your identity
and your status as a non-United States person;
(c) the U.S. payor has received a withholding certificate
(furnished on an appropriate IRS Form W-8 or an acceptable substitute form)
from a person claiming to be:
(i) a withholding foreign partnership (generally a foreign
partnership that has entered into an agreement with the IRS to assume primary
withholding responsibility with respect to distributions and guaranteed
payments it makes to its partners);
(ii) a qualified intermediary (generally a non-United States
financial institution or clearing organization or a non-United States branch or
office of a United States financial institution or clearing organization that
is a party to a withholding agreement with the IRS); or
(iii)a U.S. branch of a non-United States bank or of a non-
United States insurance company, and the withholding foreign partnership,
qualified intermediary or U.S. branch has received
-10-
documentation upon which it may rely to treat the payment as made to a non-
United States person in accordance with U.S. Treasury regulations (or, in the
case of a qualified intermediary, in accordance with its agreement with the
IRS);
(d) the U.S. payor receives a statement from a securities clearing
organization, bank or other financial institution that holds customers'
securities in the ordinary course of its trade or business:
(i) certifying to the U.S. payor under penalties of perjury
that an IRS Form W-8BEN or an acceptable substitute form has been received from
you by it or by a similar financial institution between it and you; and
(ii) to which is attached a copy of the IRS Form W-8BEN or an
acceptable substitute form; or
(e) the U.S. payor otherwise possesses documentation upon which
it may rely to treat the payment as made to a non-United States person in
accordance with U.S. Treasury regulations.
Information Reporting and Backup Withholding
In general, information reporting requirements will apply to payments
made within the United States to non-corporate U.S. holders if you exercise
the Put Option. Backup withholding will apply to those payments if such a
U.S. holder fails to provide an accurate taxpayer identification number (TIN)
or fails to certify that it is not subject to backup withholding or has been
notified by the Internal Revenue Service that it has failed to report all
interest and dividend payments shown on its federal income tax return. In
general, if you are a non-U.S. holder, payments made by us and other payors
to you upon an exercise of the Put Option will not be subject to backup
withholding and information reporting, provided that the certification
requirements described above under "-Non-U.S. Holders" are satisfied or you
otherwise establish an exemption.
11. Additional Information. The Company is subject to the reporting and
other informational requirements of the Exchange Act and, in accordance
therewith, files reports, proxy statements and other information with the SEC.
Such reports, proxy statements and other information can be inspected and
copied at the Public Reference Section of the SEC located at 100 F Street,
N.E., Washington D.C. 20549. Copies of such material can be obtained from
the Public Reference Section of the SEC at prescribed rates. Such material
may also be accessed electronically by means of the SEC's home page on the
Internet at www.sec.gov.
The Company has filed with the SEC a Tender Offer Statement on Schedule
TO-I, pursuant to Section 13(e) of the Exchange Act and Rule 13e-4 promulgated
thereunder, furnishing certain information with respect to the Put Option.
The Tender Offer Statement on Schedule TO-I, together with any exhibits and
any amendments thereto, may be examined and copies may be obtained at the
same places and in the same manner as set forth above.
The documents listed below (as such documents may be amended from time
to time) contain important information about the Company and its financial
condition.
- The Company's Annual Report on Form 10-K for the year ended
December 31, 2005;
- The Company's Quarterly Reports on Form 10-Q for the period ended
March 31, 2006 and for the period ended June 30, 2006,
respectively;
- The Company's Current Reports on Form 8-K dated March 1 and July
21, 2006;
- All documents filed with the SEC by the Company pursuant to
Sections 13, 14 and 15(d) of the Exchange Act subsequent to the
date of this Company Notice and prior to 5:00 p.m., New York City
time, on the Expiration Date; and
-11-
- The description of the Common Stock, filed in the Company's
Registration Statement on Form S-3 filed on July 1, 1994, as
amended by Amendment No. 1 thereof dated April 27, 1995, under
the Securities Exchange Act of 1934, and the description of the
related stock purchase rights in the Registration Statement filed
on Form 8-A filed on December 21, 2001, including amendments
thereto, and any report filed for the purpose of updating such
descriptions.
In the event of conflicting information in these documents, the
information in the latest filed documents should be considered correct.
12. No Solicitations. The Company has not employed any persons to make
solicitations or recommendations in connection with the Put Option.
13. Definitions. All capitalized terms used but not specifically defined
herein shall have the meanings given to such terms in the Indenture and the
LYONs.
14. Conflicts. In the event of any conflict between this Company Notice on
the one hand and the terms of the Indenture or the LYONs or any applicable
laws on the other hand, the terms of the Indenture or the LYONs or applicable
laws, as the case may be, will control.
None of the Company or its board of directors or employees are making
any recommendation to any Holder as to whether to surrender or refrain from
surrendering LYONs for purchase pursuant to this Company Notice. Each Holder
must make his or her own decision whether to surrender his or her LYONs for
purchase and, if so, the principal amount of LYONs to surrender based on
their own assessment of current market value and other relevant factors.
LABORATORY CORPORATION OF AMERICA HOLDINGS
August 23, 2006
-12-
ANNEX A
BOARD OF DIRECTORS AND EXECUTIVE OFFICERS
The following table sets forth the names of each of the members of the
Company's board of directors and each of the Company's executive officers.
Directors
Name Title
---- -----
Thomas P. MacMahon ......................... Chairman
Kerri B. Anderson ......................... Director
Jean-Luc Belingard ........................ Director
Wendy E. Lane .............................. Director
Robert E. Mittelstaedt, Jr. ................ Director
Arthur H. Rubenstein, MBBCh ................ Director
Andrew G. Wallace, M.D. .................... Director
M. Keith Weikel, Ph.D. ..................... Director
Executive Officers
Name Title
---- -----
Thomas P. MacMahon ......................... Chairman of the Board,
President and Chief
Executive Officer
William B. Haas ............................ Executive Vice President,
Esoteric Business
William B. Hayes ........................... Executive Vice President, Chief
Financial Officer and
Treasurer
David P. King .............................. Executive Vice President and
Chief Operating Officer
Myla P. Lai-Goldman, M.D. .................. Executive Vice President, Chief
Scientific Officer and
Medical Director
Benjamin R. Miller .......................... Executive Vice President, Sales,
Marketing and Managed Care
Richard L. Novak ............................ Executive Vice President of
Strategic Planning and
Corporate Development
Bradford T. Smith ........................... Executive Vice President of
Corporate Affairs, Chief
Legal Officer and Secretary
The business address of each person set forth above is c/o Laboratory
Corporation of America Holdings, 358 south Main Street, Burlington, North
Carolina 27515. The telephone number there is (336) 229-1127.
A-1