Express Scripts 2009 Annual Report Download - page 57

Express Scripts 2009 Annual Report
55
BANK CREDIT FACILITY
At December 31, 2009, our credit facility includes $540.0 million of Term A loans, $800.0 million of Term-1
loans and a $600.0 million revolving credit facility. The revolving credit facility (none of which was outstanding as of
December 31, 2009) is available for general corporate purposes. During 2009, we made scheduled payments of $420.0
million on our Term A loan. While we cannot provide any assurances that free cash flow from operations will be sufficient
to make our scheduled payments, we anticipate that we will continue making scheduled payments under the terms of the
credit agreement until the loan is repaid in full on or before the maturity date of October 14, 2010. We do not believe we
will need to secure external sources of capital in order to meet these obligations; however, we may decide to secure external
capital for operating activities or for other business needs. In the event future cash flows are insufficient to meet our
scheduled payments, we believe it will be possible to amend, extend, and/or refinance the Term loans prior to their
maturity.
Our credit facility requires us to pay interest periodically on the London Interbank Offered Rates (“LIBOR”) or
base rate options, plus a margin. The margin over LIBOR ranges from 0.50% to 1.125%, depending on our consolidated
leverage ratio or our credit rating. Under our credit facility we are required to pay commitment fees on the unused portion
of the $600.0 million revolving credit facility. The commitment fee will range from 0.10% to 0.25% depending on our
consolidated leverage ratio or our credit rating.
At December 31, 2009, the weighted average interest rate on the facility was 1.0%. Our credit facility contains
covenants which limit the indebtedness we may incur, the common shares we may repurchase, and dividends we may pay.
The repurchase and dividend covenant applies if certain leverage thresholds are exceeded. The covenants also include a
minimum interest coverage ratio and a maximum leverage ratio. At December 31, 2009, we believe we are in compliance
with all covenants associated with our credit facility.
CONTRACTUAL OBLIGATIONS AND COMMERCIAL COMMITMENTS
The following table sets forth our schedule of current maturities of our long-term debt as of
December 31, 2009, and future minimum lease payments due under noncancellable operating leases of our continuing
operations (in millions):
Payments Due by Period as of December 31, 2009
Contractual obligations
Total
2010
2011 – 2012
2013 – 2014
After 2015
Long-term debt (1)
$ 4,607.9
$ 1,493.4
$ 1,280.5
$ 1,168.6
$ 665.4
Future minimum lease
payments
(2)
166.0
31.2
49.8
38.6
46.4
Purchase commitments (3)
111.6
58.8
37.5
15.3
-
Total contractual cash
obligations
$ 4,885.5
$ 1,583.4
$ 1,367.8
$ 1,222.5
$ 711.8
(1) These payments exclude the interest expense on our credit facility, which requires us to pay interest on
LIBOR plus a margin. Our interest payments fluctuate with changes in LIBOR and in the margin over
LIBOR we are required to pay (see “Bank Credit Facility”). Interest payments on our Senior Notes are fixed,
and have been included in these amounts.
(2) In July 2004, we entered into a capital lease with the Camden County Joint Development Authority in
association with the development of our Patient Care Contact Center in St. Marys, Georgia. At December
31, 2009, our lease obligation is $7.5 million. In accordance with applicable accounting guidance, our lease
obligation has been offset against $7.5 million of industrial revenue bonds issued to us by the Camden
County Joint Development Authority.
(3) These amounts consist of required future purchase commitments for materials, supplies, services and fixed
assets in the normal course of business. We do not expect potential payments under these provisions to
materially affect results of operations or financial condition. This conclusion is based upon reasonably likely
outcomes derived by reference to historical experience and current business plans.