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 JUNE 30, 1999
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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 127,136,226
shares as of July 31, 1999, of which 61,329,256 shares are held by indirect
wholly owned subsidiaries of Roche Holding Ltd.
The number of warrants outstanding to purchase shares of the issuer's common
stock is 22,151,308 as of July 31, 1999, of which 8,325,000 are held by an
indirect wholly owned subsidiary of Roche Holding Ltd.
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LABORATORY CORPORATION OF AMERICA HOLDINGS AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(DOLLARS IN MILLIONS, EXCEPT PER SHARE DATA)
<CAPTION>
JUNE 30, DECEMBER 31,
1999 1998
----------- -------------
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents $ 16.9 $ 22.7
Accounts receivable, net 376.5 375.4
Inventories 28.2 30.7
Prepaid expenses and other 15.6 12.3
Deferred income taxes 75.8 78.0
-------- --------
Total current assets 513.0 519.1
Property, plant and equipment, net 267.9 259.1
Intangible assets, net 819.8 836.2
Other assets, net 26.5 26.5
-------- --------
$1,627.2 $1,640.9
======== ========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 47.9 $ 50.2
Accrued expenses and other 134.7 128.7
Current portion of long-term debt 66.8 72.5
-------- --------
Total current liabilities 249.4 251.4
Revolving credit facility 20.0 --
Long-term debt, less current portion 528.9 571.3
Capital lease obligations 3.8 4.2
Other liabilities 118.5 132.8
Commitments and contingent liabilities -- --
Mandatorily redeemable preferred stock
(30,000,000 shares authorized):
Series A 8 1/2% Convertible
Exchangeable Preferred Stock, $0.10 par value,
4,363,178 shares issued and outstanding at
June 30, 1999 and December 31, 1998
(aggregate preference value of $218.2 at
June 30, 1999 and December 31, 1998) 213.2 213.0
Series B 8 1/2% Convertible Pay-in-Kind
Preferred Stock, $0.10 par value, 6,684,848
and 6,409,548 shares issued and outstanding
at June 30, 1999 and December 31, 1998
respectively (aggregate preference value of 328.3 313.8
$334.2 and $320.5, respectively)
Shareholders' equity:
Common stock, $0.01 par value; 520,000,000
shares authorized; 126,262,966 and
125,280,346 shares issued and outstanding
at June 30, 1999 and December 31, 1998,
respectively 1.2 1.2
Additional paid-in capital 417.0 415.7
Accumulated deficit (250.5) (260.5)
Accumulated other comprehensive income
(loss) (2.6) (2.0)
-------- --------
Total shareholders' equity 165.1 154.4
-------- --------
$1,627.2 $1,640.9
======== ========
The accompanying notes are an integral part of these unaudited condensed
consolidated financial statements.
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<TABLE>
LABORATORY CORPORATION OF AMERICA HOLDINGS AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(DOLLARS IN MILLIONS, EXCEPT PER SHARE DATA)
<CAPTION>
SIX MONTHS ENDED THREE MONTHS ENDED
JUNE 30, JUNE 30,
----------------- --------------------
1999 1998 1999 1998
------- ------- ------- -------
<S> <C> <C> <C> <C>
Net sales $ 847.4 $ 790.1 $ 429.5 $ 402.4
Cost of sales 531.7 513.5 265.2 257.8
------- ------- ------- -------
Gross profit 315.7 276.6 164.3 144.6
Selling, general and
administrative expenses 223.5 194.7 114.4 99.7
Amortization of intangibles
and other assets 15.7 15.2 7.8 7.5
------- ------- ------- -------
Operating income 76.5 66.7 42.1 37.4
Other income (expenses):
Gain/(loss)on sale of assets (1.2) 1.9 -- (0.1)
Investment income 0.4 0.6 0.2 0.2
Interest expense (20.9) (25.0) (10.3) (12.1)
------- ------- ------- -------
Earnings before income taxes 54.8 44.2 32.0 25.4
Provision for income taxes 20.8 22.1 12.2 12.6
------- ------- ------- -------
Net earnings 34.0 22.1 19.8 12.8
Less preferred stock dividends 23.5 22.3 12.5 11.3
Less accretion of mandatorily
redeemable preferred stock 0.5 0.4 0.2 0.2
------- ------- ------- -------
Net earnings (loss)
attributable to common
shareholders $ 10.0 $ (0.6) $ 7.1 $ 1.3
======= ======= ======= =======
Basic and diluted earnings
(loss)per common share $ 0.08 $ (0.00) $ 0.06 $ 0.01
======== ======== ======== ========
The accompanying notes are an integral part of these unaudited condensed
consolidated financial statements.
</TABLE>
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LABORATORY CORPORATION OF AMERICA HOLDINGS AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(DOLLARS IN MILLIONS, EXCEPT PER SHARE DATA)
<CAPTION>
SIX MONTHS ENDED
JUNE 30,
---------------------
1999 1998
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<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net earnings $ 34.0 $ 22.1
Adjustments to reconcile net earnings
to net cash provided by operating
activities:
Depreciation and amortization 42.6 42.7
Net (gains) losses on sale of assets 1.2 (1.9)
Deferred income taxes (2.9) 15.0
Change in assets and liabilities:
Increase in accounts receivable, net (1.1) (27.4)
Decrease in inventories 2.5 6.0
Increase in prepaid
expenses and other (2.8) (0.5)
Change in income taxes receivable -- 8.8
Decrease in accounts payable (2.3) (4.7)
Increase in accrued expenses and other 6.6 7.2
Other, net (1.9) (1.9)
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Net cash provided by operating activities 75.9 65.4
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CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures (36.9) (28.7)
Proceeds from sale of assets 0.7 12.3
Refund of lease guaranty -- 8.0
Acquisition of businesses -- (10.4)
------- -------
Net cash used for investing activities (36.2) (18.8)
------- -------
(continued)
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</TABLE>
<TABLE>
LABORATORY CORPORATION OF AMERICA HOLDINGS AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(DOLLARS IN MILLIONS, EXCEPT PER SHARE DATA)
<CAPTION>
SIX MONTHS ENDED
JUNE 30,
--------------------
1999 1998
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<S> <C> <C>
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from revolving credit facilities 30.0 10.0
Payments on revolving credit facilities (10.0) (50.0)
Payments on long-term debt (48.0) --
Payments on long-term lease obligations (0.6) (0.8)
Deferred payments on acquisitions (8.7) (6.0)
Payment of preferred stock dividends (9.3) (9.2)
Net proceeds from issuance of stock to
employees 1.3 1.6
------- -------
Net cash used for financing activities (45.3) (54.4)
------- -------
Effect of exchange rate changes on cash
and cash equivalents (0.2) --
Net decrease in cash and cash equivalents (5.8) (7.8)
Cash and cash equivalents at
beginning of period 22.7 23.3
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Cash and cash equivalents at
end of period $ 16.9 $ 15.5
======= =======
Supplemental schedule of cash
flow information:
Cash (paid) received during the
period for:
Interest $ (23.4) $ (25.7)
Income taxes, net of refunds (18.9) 13.7
Disclosure of non-cash financing
and investing activities:
Preferred stock dividends 14.2 13.0
Accretion of mandatorily redeemable
preferred stock 0.5 0.4
Unrealized loss on securities available-
for-sale (net of tax) (0.4) --
The accompanying notes are an integral part of these unaudited condensed
consolidated financial statements.
</TABLE>
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<TABLE>
LABORATORY CORPORATION OF AMERICA HOLDINGS AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY
(DOLLARS IN MILLIONS, EXCEPT PER SHARE DATA)
<CAPTION>
Additional
Common Paid-in Accumulated
Stock Capital Deficit
--------- ----------- -----------
<S> <C> <C> <C>
PERIOD ENDED JUNE 30, 1998
Balance at beginning of year $ 1.2 $ 412.8 $ (284.9)
Comprehensive income:
Net income -- -- 22.1
-------- -------- --------
Comprehensive income -- -- 22.1
Issuance of common stock -- 1.6 --
Preferred stock dividends -- -- (22.3)
Accretion of mandatorily
redeemable preferred stock -- -- (0.4)
-------- -------- --------
BALANCE AT JUNE 30, 1998 $ 1.2 $ 414.4 $ (285.5)
======== ======== ========
PERIOD ENDED JUNE 30, 1999
Balance at beginning of year $ 1.2 $ 415.7 $ (260.5)
Comprehensive income:
Net income -- -- 34.0
Other comprehensive income:
Foreign currency translation
adjustments -- -- --
Unrealized loss on securities,
net of tax -- -- --
-------- -------- --------
Comprehensive income -- -- 34.0
Issuance of common stock -- 1.3 --
Preferred stock dividends -- -- (23.5)
Accretion of mandatorily
redeemable preferred stock -- -- (0.5)
-------- -------- --------
BALANCE AT JUNE 30, 1999 $ 1.2 $ 417.0 $ (250.5)
======== ======== ========
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</TABLE>
<TABLE>
<CAPTION>
Accumulated
Other Total
Comprehensive Shareholders'
Income (loss) Equity
------------- ------------
<S> <C> <C>
PERIOD ENDED JUNE 30, 1998
Balance at beginning of year $ -- $ 129.1
Comprehensive income:
Net income -- 22.1
-------- --------
Comprehensive income -- 22.1
Issuance of common stock -- 1.6
Preferred stock dividends -- (22.3)
Accretion of mandatorily
redeemable preferred stock -- (0.4)
-------- --------
BALANCE AT JUNE 30, 1998 $ -- $ 130.1
PERIOD ENDED JUNE 30, 1999
Balance at beginning of year $ (2.0) $ 154.4
Comprehensive income:
Net income -- 34.0
Other comprehensive income:
Foreign currency translation
adjustments (0.2) (0.2)
Unrealized loss on securities,
net of tax (0.4) (0.4)
-------- --------
Comprehensive income (0.6) 33.4
Issuance of common stock -- 1.3
Preferred stock dividends -- (23.5)
Accretion of mandatorily
redeemable preferred stock -- (0.5)
-------- --------
BALANCE AT JUNE 30, 1999 $ (2.6) $ 165.1
======== ========
The accompanying notes are an integral part of these unaudited condensed
consolidated financial statements.
</TABLE>
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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 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. RECLASSIFICATIONS
In 1999, the Company reclassified $31.0 for the six-months ended June 30,
1998 and $16.3 for the three-months ended June 30, 1998 to selling, general
and administrative expenses from net sales adjustments to be consistent with
the 1999 classification. The reclassification had no effect on operating
income.
3. EARNINGS PER SHARE
Basic and diluted earnings (loss) per share are based upon the weighted-
average number of shares outstanding during the three- and six-months ended
June 30, 1999 of 126,258,380 shares and 126,199,250 shares, respectively, and
the weighted-average number of shares outstanding during the three- and six-
months ended June 30, 1998 of 124,506,673 shares and 124,452,465 shares,
respectively.
The effect of conversion of the Company's redeemable preferred stock, or
exercise of the Company's stock options or warrants was not included in the
computation of diluted earnings per common share as it would have been
antidilutive for all applicable periods presented.
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LABORATORY CORPORATION OF AMERICA HOLDINGS AND SUBSIDIARIES
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(DOLLARS IN MILLIONS, EXCEPT PER SHARE DATA)
The following table summarizes the potential common shares not included
in the computation of dilutive earnings per share because their impact would
have an antidilutive effect on earnings per share:
JUNE 30,
--------------------------
1999 1998
----------- -----------
Stock Options 10,587,591 9,699,707
Warrants 22,151,308 22,151,308
Series A convertible exchangeable
preferred stock 79,330,430 79,330,430
Series B convertible pay-in-kind
preferred stock 121,542,570 111,737,834
4. RESTRUCTURING CHARGES
The following represents the Company's restructuring activities for the
period indicated:
Asset Lease and
Severance revaluations other facility
costs and write-offs obligations Total
Balance at
December 31, 1998 $ 2.5 $ 3.5 $ 27.0 $ 33.0
Cash payments (0.8) (0.1) (1.8) (2.7)
------ ------ ------ ------
Balance at
June 30, 1999 $ 1.7 $ 3.4 $ 25.2 $ 30.3
====== ====== ====== ======
Current $ 15.5
Non-current 14.8
------
$ 30.3
======
5. ACCUMULATED OTHER COMPREHENSIVE INCOME
At June 30, 1999, the Company recorded an unrealized loss on its shares
of Universal Standard Healthcare, Inc. of $0.4, net of related deferred tax
benefit of $0.3.
<PAGE>
LABORATORY CORPORATION OF AMERICA HOLDINGS AND SUBSIDIARIES
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(DOLLARS IN MILLIONS, EXCEPT PER SHARE DATA)
6. INTEREST RATE SWAP
The existing rate collar transaction and swap have effectively changed
the interest exposure on $500.0 of floating rate debt to a weighted-average
fixed interest rate of 6.04%. The notional amounts of the agreements are used
to measure interest to be paid or received and do not represent the amount of
exposure to credit loss.
7. LONG-TERM DEBT
The Third Amendment to the Amended and Restated Credit Agreement became
effective on May 7, 1999. This amendment primarily addresses leverage ratio
requirements, Year 2000 issues, increases the amount of the acquisition
covenant, and provides the Company with the ability to purchase a limited
amount of Preferred Stock.
The Company made scheduled loan payments of $11.6 on March 31, 1999 and
$11.1 on June 30, 1999 on its Amended Term Loan Facility. In addition, the
Company made a special payment on its Amended Term Loan Facility on April 15,
1999 of $25.3, based on a contractual formula contained in the Amended Credit
Agreement. During the second quarter of 1999, the Company borrowed $30.0 on
its revolving credit facility and repaid $10.0 of that outstanding balance.
8. COMMITMENTS AND CONTINGENCIES
The Company is involved in litigation 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, some of which have
been resolved for immaterial amounts. These claims for private reimbursement
are similar to the government claims settled in 1996. However, no amount of
damages has been specified at this time and, with the exception of the above,
no settlement discussions have taken place. The Company is carefully
evaluating these claims, however, due to the early stage of the claims, the
ultimate outcome of these claims cannot presently be predicted.
The Company is also involved in certain claims and legal actions arising
in the ordinary course of business. These matters include, but are not
limited to, 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.
<PAGE>
LABORATORY CORPORATION OF AMERICA HOLDINGS AND SUBSIDIARIES
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(DOLLARS IN MILLIONS, EXCEPT PER SHARE DATA)
9. NEW ACCOUNTING PRONOUNCEMENTS
In June 1998, Statement of Financial Accounting Standards No. 133,
"Accounting for Derivative Instruments and Hedging Activities," was issued.
This Statement standardizes the accounting for derivative instruments by
requiring that an entity recognize those items as assets or liabilities and
measure them at fair value. In June 1999, Statement of Financial Accounting
Standards No. 137 "Accounting for Derivative Instruments and Hedging
Activities - Deferral of the Effective Date of FASB No. 133" was issued. This
Statement delayed the effective date of Statement No. 133 for one year, to
fiscal years beginning after June 15, 2000. Adoption is not expected to have
a material impact on the Company's financial position or results of
operations.
OVERVIEW
- --------
This quarterly report on Form 10-Q contains forward-looking statements
within the meaning of Section 27A of the Securities Act of 1933, as amended,
and Section 21E of the Securities Exchange Act of 1934, as amended. In
addition, from time to time, the Company or its representatives have made
or may make forward-looking statements, orally or in writing. Such forward-
looking statements may be included in, but are not limited to, various filings
made by the Company with the Securities and Exchange Commission, press
releases or oral statements made by or with the approval of an authorized
executive officer of the Company. Actual results could differ materially from
those projected or suggested in any forward-looking statements as a result of
a wide variety of factors and conditions, which have been described in the
section of the Company's Annual Report on Form 10-K for the year ended
December 31, 1998, entitled, "Cautionary Statement for Purposes of the `Safe
Harbor' Provisions of the Private Securities Litigation Reform Act of 1995"
and other documents the Company files from time to time with the Securities
and Exchange Commission including the Company's quarterly reports on Form 10-Q
and current reports on Form 8-K, and shareholders are specifically referred to
these documents with regard to factors and conditions that may affect future
results.
RESULTS OF OPERATIONS
- ---------------------
Three Months ended June 30, 1999 compared with Three Months ended June 30,
1998.
Net sales for the three months ended June 30, 1999 were $429.5, an
increase of approximately 6.7% from $402.4 for the comparable 1998 period.
The sales increase is a result of a 2.3% increase in price and a 4.4%
increase in testing volume. The increase in sales for the second quarter
of 1999 would have been approximately 5.0% after excluding the effect of the
three acquisitions made in 1998 (Universal Standard Healthcare, Inc., Medlab
and Coastal Medical).
<PAGE>
LABORATORY CORPORATION OF AMERICA HOLDINGS AND SUBSIDIARIES
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(DOLLARS IN MILLIONS, EXCEPT PER SHARE DATA)
Cost of sales, which includes primarily laboratory and distribution
costs, was $265.2 for the three months ended June 30, 1999 compared to $257.8
in the corresponding 1998 period, an increase of $7.4. Cost of sales
increased $11.1 due to the increase in volume and $5.3 primarily due to
testing supplies and consulting fees. These increases were partially offset
by decreases totaling $7.0 in salaries and benefits, telephone, report and
request forms and depreciation expenses. Cost of sales as a percentage of net
sales was 61.7% for the three months ended June 30, 1999 and 64.1% in the
corresponding 1998 period. The decrease in the cost of sales percentage of
net sales primarily resulted from the Company's continued cost reduction
efforts.
Selling, general and administrative expenses increased to $114.4 for the
three months ended June 30, 1999 from $99.7 in the same period in 1998. The
primary reason for the increase is due to an increase to bad debt expense.
Bad debt expense increased $10.9 as a result of increased sales and delays in
payments from several large managed care and hospital payors in specific
regions of the country. See "Liquidity and Capital Resources." In addition,
Year 2000 project expenses recorded during the three months ended June 30,
1999, totaled approximately $1.2. As a percentage of net sales, selling,
general and administrative expenses were 26.6% and 24.8% for the three months
ended June 30, 1999 and 1998, respectively. The increase in the selling,
general and administrative percentage primarily resulted from the bad debt
increase as noted above.
The amortization of intangibles and other assets was $7.8 and $7.5 for
the three months ended June 30, 1999 and 1998, respectively.
Net interest expense was $10.1 for the three months ended June 30, 1999
compared with $11.9 for the same period in 1998. As previously
discussed, the interest rate that the Company pays on its debt is linked to
the Company's financial performance. As of September 30, 1998, the interest
rate that the Company pays on its long term debt was reduced from LIBOR plus
1.0% to LIBOR plus 0.5% and from 0.75% to 0.3125% on its revolving debt. This
decrease, along with the reduction of outstanding indebtedness and the general
decline in interest rates over the past year, has reduced the Company's
interest by $1.7.
The provision for income taxes as a percentage of earnings before taxes
was 38.0% for the three months ended June 30, 1999 compared to 49.6% for the
three months ended June 30, 1998. During the three months ended June 30,
1999, the Company reduced its valuation allowance applied against its
deferred tax assets by $2.5, thereby reducing its provision for income taxes
as a percentage of earnings before taxes.
<PAGE>
LABORATORY CORPORATION OF AMERICA HOLDINGS AND SUBSIDIARIES
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(DOLLARS IN MILLIONS, EXCEPT PER SHARE DATA)
SIX MONTHS ENDED JUNE 30, 1999 COMPARED WITH SIX MONTHS ENDED
JUNE 30, 1998.
Net sales for the six months ended June 30, 1999 were $847.4, an increase
of approximately 7.2% from $790.0 reported in the comparable 1998 period. The
sales increase is a result of a 3.9% increase in volume and a 3.3% increase in
price.
Cost of sales, which includes primarily laboratory and distribution
costs, was $531.7 for the six months ended June 30, 1999 compared to $513.5 in
the corresponding 1998 period, an increase of $18.2. Cost of sales increased
approximately $19.6 due to the increase in volume and approximately $10.1 due
to increases in personnel expense, testing supplies and consulting fees.
These increases were partially offset by decreases totaling $9.0 in
telephone, depreciation, report and request forms and insurance expenses.
Cost of sales as a percentage of net sales was 62.7% for the six months ended
June 30, 1999 and 65.0% in the corresponding 1998 period. The decrease in the
cost of sales percentage of net sales primarily resulted from the Company's
continued cost reduction efforts.
Selling, general and administrative expenses increased to $223.5 for the
six months ended June 30, 1999 from $194.7 in the same period in 1998. The
primary reason for the increase is due to an increase to bad debt expense.
Bad debt expense increased $23.0 as a result of increased sales and delays in
payments from several large managed care and hospital payors in specific
regions of the country. See "Liquidity and Capital Resources." In addition,
Year 2000 project expenses recorded during the six months ended June 30, 1999,
totaled approximately $2.7. As a percentage of net sales, selling, general and
administrative expenses were 26.4% and 24.6% for the six months ended June 30,
1999 and 1998, respectively. The increase in the selling, general and
administrative percentage primarily resulted from the bad debt increase as
noted above.
The amortization of intangibles and other assets was $15.7 and $15.2 for
the six months ended June 30, 1999 and 1998, respectively.
Net interest expense was $20.5 for the six months ended June 30, 1999
compared with $24.4 for the same period in 1998. As of September 30, 1998,
the interest rate that the Company pays on its long term debt was reduced from
LIBOR plus 1.0% to LIBOR plus 0.5% and from 0.75% to 0.3125% on its revolving
debt. This decrease, along with the reduction of outstanding indebtedness and
the general decline in interest rates over the past year, has reduced the
Company's interest by $3.9.
<PAGE>
LABORATORY CORPORATION OF AMERICA HOLDINGS AND SUBSIDIARIES
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(DOLLARS IN MILLIONS, EXCEPT PER SHARE DATA)
The provision for income taxes as a percentage of earnings before taxes
was 38.0% for the six months ended June 30, 1999 compared to 50.0% for the six
months ended June 30, 1998. During the six months ended June 30, 1999, the
Company reduced its valuation allowance applied against its deferred tax
assets by $5.0, thereby reducing its provision for income taxes as a
percentage of earnings before taxes.
LIQUIDITY AND CAPITAL RESOURCES
- -------------------------------
Net cash provided by operating activities was $75.9 and $65.4 for the six
months ended June 30, 1999 and June 30, 1998, respectively. The increase in
cash flow from operations primarily resulted from improved earnings. Capital
expenditures were $36.9 and $28.7 for the first six months of 1999 and 1998,
respectively.
The Company's days sales outstanding (DSO) at June 30, 1999 was 79 days,
compared to 83 days at the end of the first quarter. The Company is focusing
on reducing its DSO through the conversion of the entire Company to a single,
centralized billing system. The Company expects to be substantially converted
to the new billing system by the end of the year 2000.
For a discussion of legal proceedings which may impact the Company's
liquidity and capital resources see "Note 8 to the Company's Unaudited
Condensed Consolidated Financial Statements".
Cash and cash equivalents on hand, cash flows from operations and
additional borrowing capabilities under the Amended Revolving Credit Facility
are expected to be sufficient to meet anticipated operating requirements and
provide funds for capital expenditures, potential acquisitions and working
capital for the foreseeable future.
YEAR 2000 UPDATE
- ----------------
The Company has an ongoing effort to identify and remediate data
recognition problems that will be caused in computer systems, software, and
lab equipment by the change in date from the year 1999 to the year 2000. The
Company is also working to address potential problems in systems and equipment
that contain imbedded hardware or software that may have a time element
(referred to as "non-IT" systems). The Company's Year 2000 project has five
phases: i) inventory of the business critical functional equipment and
systems affected by the Year 2000 issue; ii) assessment of the key elements
identified by the inventory including development of strategies to address
affected critical equipment and systems; iii) contingency planning; iv)
remediation of affected equipment and systems; and v) testing and validation
of its systems for Year 2000 date recognition.
Inventories of business critical functional equipment and systems have
been completed. Follow-up assessments of the key elements identified by the
inventories and the development of strategies to
<PAGE>
LABORATORY CORPORATION OF AMERICA HOLDINGS AND SUBSIDIARIES
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(DOLLARS IN MILLIONS, EXCEPT PER SHARE DATA)
address key equipment and systems have also been completed. Contingency
planning is scheduled to be completed by the end of the third quarter of 1999.
Completion of all material phases of remediation for business critical
equipment and systems is scheduled for September 30, 1999. All material
phases of testing and validation for business critical equipment and systems
is scheduled to be completed by mid-October.
The Company is also working to assess Year 2000 readiness on the part of
its significant service providers, vendors, suppliers, customers and
governmental entities. There can be no guarantee that the failure by these
other companies to successfully and timely achieve Year 2000 compliance would
not have an adverse effect on the Company's operations.
The total cost associated with required Year 2000 modifications and
related activities is not expected to be material to the Company's financial
position and is expected to be funded through capital and operating cash
flows. The Company estimates total Year 2000 expenditures to be $20.0 - $25.0
with approximately $3.0 charged to earnings during the year ended 1998 and
$2.7 charged to earnings and an additional $3.2 in related purchases
capitalized during the six-months ended June 30, 1999. The amounts required
to address Year 2000 readiness do not include significant investments in new
systems which have been and are being incurred in the normal course of
business and are Year 2000 compliant.
The estimates and conclusions herein contain forward-looking statements
and are based on management's best estimates of future events. The failure to
correct a material Year 2000 problem could result in an interruption in, or a
failure of, certain normal business activities or operations. Such failures
could materially and adversely affect the Company's results of operation,
liquidity and financial condition. Due to the general uncertainty inherent in
the Year 2000 problem, resulting in part from uncertainty of the Year 2000
readiness of third-party suppliers and customers, the Company is unable to
determine at this time whether consequences of Year 2000 failures will have a
material impact on the Company's results of operations, liquidity or financial
condition.
<PAGE>
LABORATORY CORPORATION OF AMERICA HOLDINGS AND SUBSIDIARIES
PART II - OTHER INFORMATION
Item 1. Legal Proceedings
See "Note 8 to the Company's Unaudited Condensed Consolidated
Financial Statements" for the six months ended June 30, 1999.
Item 4. REPORT OF THE INSPECTOR OF ELECTION
On June 16, 1999 the Company held its 1999 annual meeting. The final
tabulation of the votes cast at the meeting was as follows:
FOR WITHHELD
--- --------
ELECTION OF THE MEMBERS
OF THE BOARD OF DIRECTORS:
Thomas P. Mac Mahon 114,804,229 1,962,251
James B. Powell, MD 114,791,800 1,974,680
Jean-Luc Belingard 114,804,229 1,962,251
Wendy E. Lane 114,804,229 1,962,251
Robert E. Mittelstaedt, Jr. 114,803,429 1,963,051
David B. Skinner, MD 114,803,129 1,963,351
Andrew G. Wallace, MD 114,804,029 1,962,451
VOTES VOTES VOTES
FOR AGAINST ABSTAINED
----- ------- ---------
APPROVAL OF THE LABORATORY CORPORATION
OF AMERICA HOLDINGS AMENDED AND RESTATED
1999 STOCK INCENTIVE PLAN 78,721,708 6,005,510 136,217
APPROVAL OF AMENDMENTS TO THE LABORATORY
CORPORATION OF AMERICA HOLDINGS 1997
EMPLOYEE STOCK PURCHASE PLAN TO INCREASE
BY 4,000,000 THE NUMBER OF SHARES OF
COMMON STOCK OF THE COMPANY AUTHORIZED
UNDER SUCH PLAN 82,780,626 1,945,443 137,366
RATIFICATION OF THE APPOINTMENT OF
PRICEWATERHOUSECOOPERS LLP AS THE
COMPANY'S INDEPENDENT AUDITORS FOR THE
FISCAL YEAR ENDING DECEMBER 31, 1999 116,498,076 215,690 52,714
In addition, certain shares of National Health Laboratories Holdings, Inc.
which have not been converted to Company shares were eligible to vote at the
annual meeting and were voted as follows:
<PAGE>
Item 4. REPORT OF THE INSPECTOR OF ELECTION - Continued
FOR WITHHELD
--- --------
ELECTION OF THE MEMBERS
OF THE BOARD OF DIRECTORS:
Thomas P. Mac Mahon 226 155
James B. Powell, MD 226 155
Jean-Luc Belingard 226 155
Wendy E. Lane 226 155
Robert E. Mittelstaedt, Jr. 226 155
David B. Skinner, MD 226 155
Andrew G. Wallace, MD 226 155
VOTES VOTES VOTES
FOR AGAINST ABSTAINED
----- ------- ---------
APPROVAL OF THE LABORATORY CORPORATION
OF AMERICA HOLDINGS AMENDED AND RESTATED
1999 STOCK INCENTIVE PLAN 226 155 0
APPROVAL OF AMENDMENTS TO THE LABORATORY
CORPORATION OF AMERICA HOLDINGS 1997
EMPLOYEE STOCK PURCHASE PLAN TO INCREASE
BY 4,000,000 THE NUMBER OF SHARES OF
COMMON STOCK OF THE COMPANY AUTHORIZED
UNDER SUCH PLAN 226 155 0
RATIFICATION OF THE APPOINTMENT OF
PRICEWATERHOUSECOOPERS LLP AS THE
COMPANY'S INDEPENDENT AUDITORS FOR THE
FISCAL YEAR ENDING DECEMBER 31, 1999 376 5 0
<PAGE>
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
10.1 Third Amendment to the Amended and Restated
Credit Agreement dated as of May 7, 1999 among the
Company, the banks named therein and Credit Suisse First
Boston as Administrative Agent.
10.2 Laboratory Corporation of America Holdings
Amended and Restated 1999 Stock Incentive Plan
(incorporated by reference herein to Annex I of the
Company's 1999 Annual Proxy Statement filed with the
Commission on June 16, 1999).
10.3 Amendments to the Laboratory Corporation of
America Holdings 1997 Employee Stock Purchase Plan
(incorporated by reference herein to Annex II of the
Company's 21999 Annual Proxy Statement filed with the
Commission on June 16, 1999).
27 Financial Data Schedule (electronically filed
version only).
(b) Reports on Form 8-K
(1) A current report on Form 8-K dated May 10, 1999 was
filed on June 7,1999, by the registrant along with Roche
Diagnostics Corporation, in connection with the press
release dated May 10, 1999 announcing an initiative that
provides a new on-site testing program called Rapid
Assessment of Drug and Alcohol Results to employees.
(2) A current report on Form 8-K dated June 7, 1999 was
filed on June 10, 1999, by the registrant, in connection
with the press release dated June 7, 1999 announcing
that its Board of Directors declared dividends on the
Company's 8 1/2% Series A Convertible Exchangeable
Preferred Stock and the Company's 8 1/2% Series B
Convertible Pay-in-Kind Preferred Stock.
(3) A current report on Form 8-K dated June 9, 1999 was
filed on July 1, 1999, by the registrant, in connection
with the press release dated June 9, 1999 announcing that
its clinical trials testing business opened a clinical
trials testing facility in Mechelen, Belgium, near
Brussels, to serve the global pharmaceutical industry.
<PAGE>
Item 6. Exhibits and Reports on Form 8-K (Continued)
(4) A current report on Form 8-K dated July 21, 1999
was filed on August 5, 1999, by the registrant, in
connection with the press release dated July 21, 1999
announcing operating results of the Company for the
quarter ended June 30, 1999.
<PAGE>
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
<PAGE>
THIRD AMENDMENT TO AMENDED AND RESTATED CREDIT AGREEMENT
THIRD AMENDMENT TO AMENDED AND RESTATED CREDIT AGREEMENT,
dated as of May 7, 1999 (this "Amendment") among LABORATORY
CORPORATION OF AMERICA HOLDINGS, a Delaware corporation (the
"Borrower"), the banks, financial institutions and other
institutional lenders (the "Banks") listed on the signature
pages thereof, and CREDIT SUISSE FIRST BOSTON, as administrative
agent (the "Administrative Agent") for the Lenders hereunder.
PRELIMINARY STATEMENTS
The parties hereto (i) have entered into an Amended and
Restated Credit Agreement dated as of March 31, 1997, as amended
as of September 30, 1997 and February 25, 1998 (the "Credit
Agreement") providing for, among other things, the Lenders to
lend to the Borrower up to $1,143,750,000 on the terms and
subject to the conditions set forth therein and (ii) desire to
amend the Credit Agreement in the manner set forth herein. Each
capitalized term used but not defined herein shall have the
meaning ascribed thereto in the Credit Agreement.
NOW, THEREFORE,in consideration of the premises and the mutual
covenants and agreements contained herein, the parties hereto
hereby agree as follows:
ARTICLE I
AMENDMENTS; AMENDMENT FEE
SECTION 1.01. Amendment to Representations and Warranties.
Section 4.01 of the Credit Agreement if hereby amended by adding
the following new Section 4.01 (r):
(r) The Borrower has (i) initiated a review and assessment
of all areas within its and each of its Subsidiaries' business
and operations that could reasonably by expected to be adversely
affected by the "Year 2000 Problem" (that is, the risk that
computer applications used by the Borrower or any of its
Subsidiaries may be unable to recognize and perform properly date-
sensitive functions involving certain dates prior to and any date
after December 31, 1999), (ii) developed a plan and timeline for
addressing the Year 2000 Problem on a timely basis (which plan
includes contingencies and testing of such computer
applications), and (iii) to date, implemented that plan in
accordance with that timetable. Based on the foregoing, the
Borrower believes that all computer applications within its and
its Subsidiaries' control that are material to its or any of its
Subsidiaries' business and operations are expected to be able
to perform date-sensitive functions for all dates before and
after January 1, 2000, except to the extent that a failure to do
so could not reasonably be expected to have a Material Adverse
Effect. The total cost associated with implementation of the
Borrower's plan for addressing the Year 2000 Problem is not
expected to be material to the Borrower's financial position.
SECTION 1.02. Amendment to Leverage Ratio. Section 5.01
(i) of the Credit Agreement is hereby amended by deleting the
figures shown with strike-over lines and replacing such figures
with the figures indicated in boldface type and underscored, to
read in its entirety as follows:
(i) Leverage Ratio. Maintain at the end of each four
fiscal quarter period specified below a Leverage Ratio of not
more than the ratio set forth below:
Four Fiscal
Quarters Ending in Ratio
------------------- ----------
March 1997 6.50:1.0
June 1997 5.00:1.0
September 1997 4.75:1.0
December 1997 4.75:1.0
March 1998 4.75:1.0
June 1998 4.50:1.0
September 1998 4.25:1.0
December 1998 4.00:1.0
March 1999 4.00:1.0
June 1999 3.75:1.0
September 1999 3.50:1.0
December 1999 3.50:1.0
March 2000 3.50:1.0
June 2000 3.25:1.0
September 2000 3.00:1.0
December 2000 3.00:1.0
March 2001 2.50:1.0
June 2001 2.25:1.0
September 2001 2.25:1.0
December 2001 2.00:1.0
March 2002 2.00:1.0
June 2002 1.75:1.0
September 2002 1.75:1.0
and 1.50:1.0 for each four fiscal quarter period
thereafter.
Section 1.03. Amendment to Covenant Prohibiting Stock
Repurchases. Section 5.02 (e) of the Credit Agreement is hereby
amended by deleting the text shown with strike-over lines and
replacing such text with the text indicated in boldface type and
underscored, to read in its entirety as follows:
<PAGE>
(e) Dividends, Repurchases, Etc. Declare or pay any
dividends, purchase, redeem, retire, defease or otherwise
acquire for value any of its capital stock or any warrants,
rights or options to acquire such capital stock, now or
hereafter outstanding, return any capital to its stockholders as
such, make any distribution of assets, capital stock,
warrants, rights, options, obligations or securities to its
stockholders as such or issue or sell any capital stock or
warrants, rights or options to acquire such capital stock, or
permit any of its Subsidiaries to purchase, redeem, retire,
defease or otherwise acquire for value any capital stock of
the Borrower or any warrants, rights or options to acquire such
capital stock or to issue or sell any capital stock or any
warrants, rights or options to acquire such capital stock (other
than to the Borrower), except that:
(i) the Borrower may declare and deliver
dividends and distributions payable only in Borrower
Common Stock or warrants, rights or options to acquire
Borrower Common Stock;
(ii) after the second anniversary of the
Amendment Effective Date if (A) the Borrower's Capital
Ratio is equal to or less than 50% on the last day of the most
recently ended fiscal quarter and (B) the Leverage
Ratio for the most recently ended four fiscal quarter period is
less than or equal to 2.5:1.0, the Borrower may, during
any single fiscal year, declare and pay cash dividends to
holders of Borrower Common Stock in an amount not to exceed
ten percent of the Borrower's Net Income for the fiscal year
immediately preceding the fiscal year in which such
dividend is declared or paid;
(iii) the Borrower may purchase options or
warrants to purchase shares of Borrower Common Stock granted
by the Borrower to employees of the Borrower or any of its
Subsidiaries, for an aggregate purchase price, for all such
purchases during any single fiscal year, of not more than $1,000,000;
(iv) the Borrower may, during any single fiscal
year, declare and pay cash dividends to holders of Borrower
Series A Preferred Stock at a rate not to exceed 10% per
annum and at any time after the third anniversary of the
Amendment Effective Date, the Borrower may, during any
such fiscal year, pay cash dividends to holders of Borrower
Series B Preferred Stock at a rate not to exceed 10% per
annum;
(v) the Borrower may declare and pay dividends
to holders of Borrower Series B Preferred Stock payable
in shares of Borrower Series B Preferred Stock; and
(vi) The Borrower may purchase shares of the
Borrower Preferred Stock (other than shares owned by Roche
Holdings or any Affiliate of Roche Holdings) for an
aggregate purchase price of not more than $75,000,000;
<PAGE>
provided, however, that, at the time of any payment or
purchase referred to above and after giving effect to such
payment or purchase, no Default shall have occurred and be
continuing.
SECTION 1.04. Amendment to Acquisition Covenant.
Section 5.02 (h) of the Credit Agreement is hereby
amended by deleting "$25,000,000" in subsection 5.02 (h) (iii)
(A) and inserting "$75,000,000" in lieu thereof.
SECTION 1.05. Amendment Fee. The effectiveness of
this Agreement is subject to the receipt by the Agent of an
amendment fee, payable to the Agent for the ratable distribution
to each Lender which has executed this Amendment (each, a
"Consenting Lender"), in an amount equal to 0.15% times (A) the
aggregate outstanding principal amount of the Committed Advances
held by the Consenting Lenders as of the date hereof plus (B)
the aggregate unused Revolving Credit Commitment of the
Consenting Lenders as of the date hereof.
ARTICLE II
REPRESENTATIONS AND WARRANTIES
SECTION 2.01. Representations and Warranties of the
Borrower. The Borrower represents and warrants as follows:
(a) The Borrower is a corporation duly organized,
validly existing and in good standing under the laws of the
State of Delaware.
(b) The execution, delivery and performance by the
Borrower of this Amendment are within its corporate powers,
have been duly authorized by all necessary corporate action, and
do not contravene the Borrower's charter or by-laws.
(c) No authorization or approval or other action by,
and no notice to or filing with, any governmental authority or
regulatory body is required for the due execution, delivery and
performance by the Borrower of this Amendment.
(d) This Amendment has been duly executed and
delivered by the Borrower. This Amendment is the legal,
valid and binding obligation of the Borrower, enforceable against
the Borrower, in accordance with its terms, subject to
applicable bankruptcy, insolvency, reorganization, moratorium or
similar laws affecting the enforceability of creditors' rights
generally and by general principles of equity.
(e) The representations and warranties contained in
Section 4.01 of the Credit Agreement are correct in all
material aspects on and as of the date hereof, as though made on
and as of the date thereof.
(f) No event has occurred and is continuing which
constitutes a Default.
<PAGE>
ARTICLE III
MISCELLANEOUS
SECTION 3.01. Governing Law. This Amendment shall be
governed by, and construed in accordance with, the laws of
the State of New York, without regard to the conflicts of law
principles thereof.
SECTION 3.02. Execution in Counterparts. This
Amendment may be executed in any number of counterparts and
by any combination of the parties hereto in separate counterparts,
each of which counterparts shall be an original and all of which
taken together shall constitute one and the same instrument.
Delivery of an executed counterpart of a signature page to this
Amendment by facsimile shall be effective as delivery of a
manually executed counterpart of this Amendment.
SECTION 3.03. Effect on the Credit Agreement. Upon
execution and delivery of this Amendment, each reference in the
Credit Agreement to "this Agreement", "hereunder", "hereof",
"herein", or words of like import shall mean and be a reference
to the Credit Agreement, as amended hereby and each reference to
the Credit Agreement in any Loan Document (as defined in the
Credit Agreement) shall mean and be a reference to the Credit
Agreement, as amended hereby. Except as expressly modified
hereby, all of the terms and conditions of the Credit Agreement
shall remain unaltered and in full force and effect. This
Amendment is subject to the provisions of Section 8.01 of the
Credit Agreement.
Each of the undersigned has caused this Amendment to be
executed by its repective officer or officers thereunto duly
authorized, as of the date first written above.
<PAGE>
BORROWER: LABORATORY CORPORATION OF AMERICA HOLDINGS
By:/s/ WESLEY R. ELINGBURG
------------------------
Name: Wesley R. Elingburg
Title: CFO/EVP/Treasurer
ADMINISTRATIVE CREDIT SUISSE FIRST BOSTON,
AGENT: as Administrative Agent
By:/s/ JULIA P. KINGSBURY
-----------------------
Name: Julia P. Kingbury
Title: Vice President
By:/s/ WM. MATTHEW CARTER
----------------------
Name: Wm. Matthew Carter
Title: Assistant Vice President
By:/s/ JOEL GLODOWSKI
---------------------
Name: Joel Glodowski
Title: Managing Director
By:/s/ KARL M. STUDER
---------------------
Name: Karl M. Studer
Title: Director
BANK OF AMERICA NATIONAL TRUST AND
SAVINGS ASSOCIATION (As successor by
merger to Bank of America Illinois)
By:/s/ MARTY MITCHELL
--------------------
Name: Marty Mitchell
Title: Vice President
BANQUE NATIONALE DE PARIS
By:/s/ BONNIE G. EISENSTAT
-----------------------
Name: Bonnie G. Eisenstat
Title: Vice President
By:/s/ RICHARD L. STED
-----------------------
Name: Richard L. Sted
Title: Senior Vice President
<PAGE>
BAYERISCHE LANDESBANK GIROZENTRALE
By:/s/ PETER OBERMANN
---------------------
Name: Peter Obermann
Title: Senior Vice President
By:/s/ MARTHA E. ASMA
--------------------
Name: Martha E. Asma
Title: First Vice President
THE CHASE MANHATTAN BANK
By:/s/ ROBERT T. SACKS
--------------------
Name: Robert T. Sacks
Title: Managing Director
CREDIT LYONNAIS (NEW YORK BRANCH)
By:/s/ JOHN C. OBERLE
-------------------
Name: John C. Oberle
Title: Vice President
DEUTSCHE BANK AG NEW YORK BRANCH
and/or CAYMAN ISLANDS BRANCH
By:/s/ OLIVER SCHWARZ
--------------------
Name: Oliver Schwarz
Title: Assistant Vice President
By:/s/ BARBARA ANNE HOELTZ
-----------------------
Name: Barbara Anne Hoeltz
Title: Vice President
FIRST UNION NATIONAL BANK
By:/s/ J. PAUL SOLITARIO
---------------------
Name: J. Paul Solitario
Title: Vice President
<PAGE>
THE FUJI BANK, LTD. (NEW YORK BRANCH)
By:/s/ RAYMOND VENTURA
----------------------
Name: Raymond Ventura
Title: Vice President & Manager
UBS AG, Stamford Branch
By:/s/ GUIDO W. SCHULER
-----------------------
Name: Guido W. Schuler
Title: Executive Director,
Swiss Corporate Clients
By:/s/ ROBERT P. WAGNER
----------------------
Name: Robert P. Wagner
Title: Director
SOCIETE GENERALE
By:/s/ GEORG L. PETERS
---------------------
Name: Georg L. Peters
Title: Vice President
THE SUMITOMO BANK, LIMITED
(NEW YORK BRANCH)
By:/s/ SURESH TATA
--------------------
Name: Suresh Tata
Title: Senior Vice President
WACHOVIA BANK, N.A., formerly known
as Wachovia Bank of Georgia, N.A.
By:/s/ J. CALVIN RATCLIFF, JR.
----------------------------
Name: J. Calvin Ratcliff, Jr.
Title: Vice President
<PAGE>
WESTDEUTSCHE LANDESBANK GIROZENTRALE
By:/s/ ELISABETH R. WILDS
--------------------------
Name: Elisabeth R. Wilds
Title: Associate
By:/s/ LISA M. WALKER
-------------------------
Name: Lisa M. Walker
Title: Vice President
COMMERZBANK AKTIENGESELLSCHAFT,
Atlanta Agency
By:/s/ HARRY P. YERGEY
----------------------
Name: Harry P. Yergey
Title: Senior Vice President & Manager
By:/s/ SUBASH R. VISWANATHAN
--------------------------
Name: Subash R. Viswanathan
Title: Vice President
BBL INTERNATIONAL (U.K.) LIMITED
By:/s/ M.C. SWINNEN
----------------------
Name: M.C. Swinnen
Title: Authorised Signatory
By:/s/ C.F. WRIGHT
----------------------
Name: C.F. Wright
Title: Authorised Signatory
THE MITSUI TRUST AND BANKING CO., LIMITED
By:/s/ MARGARET HOLLOWAY
-------------------------
Name: Margaret Holloway
Title: Vice President & Manager
<PAGE>
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<NAME> LABORATORY CORPORATION OF AMERICA HOLDINGS
<MULTIPLIER> 1000
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<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-START> JAN-01-1999
<PERIOD-END> JUN-30-1999
<CASH> 16,900
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<RECEIVABLES> 536,500
<ALLOWANCES> 160,000
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<CURRENT-ASSETS> 513,000
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<TOTAL-ASSETS> 1,627,200
<CURRENT-LIABILITIES> 249,400
<BONDS> 548,900
541,500
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<COMMON> 1,200
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<SALES> 847,400
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<PAGE>
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