UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange
Act of 1934
FEBRUARY 15, 2000
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(Date of earliest event reported)
LABORATORY CORPORATION OF AMERICA HOLDINGS
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(Exact name of registrant as specified in its charter)
DELAWARE 1-11353 13-3757370
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(State or other (Commission (IRS Employer
jurisdiction of File Number) Identification
incorporation) Number)
358 SOUTH MAIN STREET, BURLINGTON, NORTH CAROLINA 27215
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(Address of principal executive offices)
336-229-1127
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(Registrant's telephone number, including area code)
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ITEM 5. OTHER EVENTS
On February 15, 2000 the Company issued a press release
announcing results for the quarter and twelve months ended
December 31, 1999. The Company also announced that its
Board of Directors declared dividends on the Company's 8 1/2
percent Series A Convertible Exchangeable Preferred Stock
and the Company's 8 1/2 percent Series B Convertible Pay-in-
Kind Preferred Stock. In addition, the Board of Directors
announced that it has approved, subject to shareholder
approval, a one-for-ten reverse stock split. If approved by
shareholders, common shareholders will receive one new share
for every ten that they own. The Company will seek approval
for the reverse stock split at its annual meeting which is
expected to be held in early May.
ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL
INFORMATION AND EXHIBITS
(c) Exhibit
20 Press release of the Company dated
February 15, 2000.
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SIGNATURES
Pursuant to the requirements of the Securities and Exchange
Act of 1934, the registrant has duly caused this report to
be signed on its behalf by the undersigned hereunto duly
authorized.
LABORATORY CORPORATION OF AMERICA HOLDINGS
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(Registrant)
By:/s/ BRADFORD T. SMITH
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Bradford T. Smith
Executive Vice President,
General Counsel, Secretary
and Compliance Officer
Date: February 29, 2000
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Laboratory Corporation of America-Registered Trademark-Holdings
358 South Main Street
Burlington, NC 27215
Telephone: 336-584-5171
FOR IMMEDIATE RELEASE
Contact: 336-436-4855 Shareholder Direct: 800-LAB-0401
Pamela Sherry www.labcorp.com
LABORATORY CORPORATION OF AMERICA-REGISTERED TRADEMARK- REPORTS
STRONG FOURTH QUARTER AND FULL YEAR RESULTS
BOARD APPROVES SHAREHOLDER VOTE ON ONE-FOR-TEN REVERSE STOCK SPLIT
BURLINGTON, NC, FEBRUARY 15, 2000 - Laboratory Corporation of America-
Registered Trademark- Holdings (LabCorp-Registered Trademark-) (NYSE:LH)
today announced results for the quarter and twelve months ended
December 31, 1999.
FOURTH QUARTER RESULTS
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Net sales for the fourth quarter were $422.7 million, compared to net
sales of $407.8 million in the fourth quarter of 1998. The revenue
increase of 3.7 percent is attributable to a 2.7 percent increase in
price and a 1.0 percent increase in volume. Operating income was
$33.1 million and net income was $14.2 million, compared to operating
income of $26.6 million and net income of $35.3 million in the fourth
quarter of 1998. After deducting preferred stock dividends, the
basic and diluted earnings per common share were $0.01 in the fourth
quarter of 1999. A $27.5 million increase in net income resulting
from a reduction in deferred tax asset valuation allowance during the
fourth quarter of 1998 had the effect of increasing basic earnings
per share by approximately $0.22 for the 1998 fourth quarter. After
this reduction in income tax expense, 1998 fourth quarter basic and
diluted earnings per common share were $0.20 and $0.11,
respectively.
Earnings before interest, taxes, depreciation, and amortization
(EBITDA), were $54.5 million for the fourth quarter of 1999, or 12.9
percent of net sales, versus $47.7 million, or 11.7 percent of net
sales, for the comparable period in 1998. Days sales outstanding
(DSO) for the quarter improved to 74 days from 76 days at the end of
the third quarter of 1999. Operating cash flow for the quarter was
$51.7 million, compared to $35.2 million in the fourth quarter of
1998. At the end of the quarter the balance owed on LabCorp's term
loan was $573.4 million and its $450 million revolving line of credit
remained at zero.
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FULL YEAR RESULTS
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Net sales for the year ended December 31, 1999, were $1,698.7
million, versus net sales of $1,612.6 million for 1998. The revenue
increase of 5.3 percent is attributable to a 3.1 percent increase in
price and a 2.2 percent increase in volume. Operating income for the
year was $149.7 million and net income was $65.4 million, compared to
operating income of $127.6 million and net income of $68.8 million
for 1998. After deducting preferred stock dividends, the basic and
diluted earnings per common share were $0.12 in 1999. A $27.5 million
increase in net income resulting from a reduction in deferred tax
asset valuation allowance during the fourth quarter of 1998 had the
effect of increasing basic earnings per share in 1998 by
approximately $0.22 for the year. After the reduction in income tax
expense in the fourth quarter of 1998, basic and diluted earnings per
common share were $0.20 in 1998.
EBITDA for 1999 was $233.4 million, or 13.7 percent of net sales,
versus $210.4 million, or 13.0 percent of net sales, in 1998.
Operating cash flow was $180.6 million in 1999, compared to $125.1
million in 1998. DSO for the year improved to 74 days from 83 days
at the end of 1998.
"I am very pleased with our 1999 performance," said Thomas P. Mac
Mahon, president and chief executive officer. "We maintained our
trend of profitable growth, with increases in both price and volume,
while expanding our leadership position in the use of cutting-edge
testing technologies. We continue to control costs, streamline
operations, improve cash collections, and maintain our focus on those
business segments offering the greatest long-term benefit to the
company and our shareholders."
BOARD APPROVES ONE-FOR-TEN REVERSE STOCK SPLIT
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The Board of Directors announced that it has approved, subject to
shareholder approval, a one-for-ten reverse stock split. If approved
by shareholders, common shareholders will receive one new share for
every ten that they own. The Company will seek approval for the
reverse stock split at its annual meeting, which is expected to be
held in early May.
If approved by shareholders, the plan would reduce the total number
of outstanding common shares to approximately 12.9 million from
approximately 129 million. The reverse stock split is intended to
provide greater liquidity in the market for the Company's stock.
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BOARD DECLARES PREFERRED STOCK DIVIDEND
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LabCorp also announced today that its Board of Directors has declared
a dividend of $1.0625 per share on the Company's 8 1/2 percent Series A
Convertible Exchangeable Preferred Stock (Series A Preferred Stock),
payable in cash. The Board has also declared a dividend of $1.0625
per share on the Company's 8 1/2 percent Series B Convertible Pay-in-
Kind Preferred Stock (Series B Preferred Stock), payable in shares of
Series B Preferred Stock at the rate of 0.02125 shares per share of
Series B Preferred Stock held. No fractional shares of Series B
Preferred Stock will be issued, so that the number of shares to be
paid as a dividend on the Series B Preferred Stock will be rounded to
the nearest whole number of shares. The dividends will be payable on
March 31, 2000, for each issued and outstanding share of Series A and
B Preferred Stock to stockholders of record on March 17, 2000, and
will cover the dividend period from January 1, 2000, to March 31,
2000, at an equivalent annualized rate of $4.25 per share.
A live broadcast of LabCorp's quarterly conference call will be
available online at www.labcorp.com or at www.streetfusion.com, on
February 15, 2000, beginning at 10:00 a.m. Eastern Standard Time,
with an online rebroadcast continuing through April 15, 2000.
The Company noted that each of the above forward-looking statements
is subject to change based on various important factors, including
without limitation, competitive actions in the marketplace and
adverse actions of governmental and other third-party payors.
Further information on potential factors that could affect the
Company's financial results is included in the Company's Form 10-K
for the year ended December 31, 1998, and will be included in the
Company's Form 10-K for the year ended December 31, 1999.
Laboratory Corporation of America-Registered Trademark- Holdings
(LabCorp-Registered Trademark-) is a national clinical laboratory
with annual revenues of $1.7 billion in 1999. With 18,000 employees
and over 100,000 clients nationwide, the company offers more than
2,000 clinical tests ranging from simple blood analyses to
sophisticated molecular diagnostics. LabCorp leverages its expertise
in innovative clinical testing technology with three Centers of
Excellence. The Center for Molecular Biology and Pathology, in
Research Triangle Park (RTP), North Carolina, develops applications
for polymerase chain reaction (PCR) technology. Its Center for
Occupational Testing in RTP is the world's largest substance abuse
testing facility, and the Center for Esoteric Testing in Burlington,
North Carolina, performs the largest volume of specialty testing in
the network. LabCorp's clients include physicians, state and federal
government, managed care organizations, hospitals, clinics,
pharmaceutical and Fortune 1000 companies, and other clinical
laboratories.
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LABORATORY CORPORATION OF AMERICA HOLDINGS
SUMMARIZED FINANCIAL INFORMATION
(Dollars in millions, except per share data)
(Unaudited)
Three Months Ended Year Ended
December 31, December 31,
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1999 1998 1999 1998
<S> <C> <C> <C> <C>
STATEMENT OF OPERATIONS DATA:
Net sales $ 422.7 $ 407.8 $1,698.7 $1,612.6
Cost of sales 272.7 265.4 1,069.6 1,049.2
Selling, general and administrative 109.1 107.8 448.3 405.0
Amortization of intangibles
and other assets 7.8 8.0 31.1 30.8
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Operating income 33.1 26.6 149.7 127.6
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Earnings before income taxes 22.9 14.9 105.5 81.5
Provision for income taxes (1) 8.7 (20.4) 40.1 12.7
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Net earnings 14.2 35.3 65.4 68.8
Less preferred stock dividends
and accretion of mandatorily
redeemable preferred stock 13.4 10.4 50.4 44.4
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Net income attributable to common
shareholders $ 0.8 $ 24.9 $ 15.0 $ 24.4
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Basic earnings per share $ 0.01 $ 0.20 $ 0.12 $ 0.20
Diluted earnings per share $ 0.01 $ 0.11 $ 0.12 $ 0.20
Weighted average shares for basic 127.2 125.3 126.7 124.8
Weighted average shares for diluted 131.3 318.7 128.8 124.8
(1) Based on improved current and projected operating results, the
Company reduced its deferred tax asset valuation allowance by
approximately $27.5 million during the fourth quarter of 1998. This
was reflected as a reduction in the provision for income taxes and
had the effect of increasing earnings per share by approximately
$0.22 for both the fourth quarter and the year ended December 31,
1998.
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Year Ended Year Ended
December 31, December 31,
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1999 1998
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BALANCE SHEET DATA:
Cash and cash equivalents $ 40.3 $ 22.7
Accounts receivable, net 348.0 375.4
Property, plant & equipment 273.2 259.1
Intangible assets, net 804.0 836.2
Other assets 124.7 147.5
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$ 1,590.2 $ 1,640.9
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Total bank debt $ 573.4 $ 643.8
Other liabilities 282.6 315.9
Redeemable preferred stock 558.7 526.8
Shareholders' equity 175.5 154.4
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$ 1,590.2 $ 1,640.9
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