Express Scripts 2009 Annual Report Download - page 58

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Express Scripts 2009 Annual Report 56
The gross liability for uncertain tax positions is $56.1 million and $40.4 million as of December 31, 2009 and
2008, respectively. We do not expect a significant payment related to these obligations to be made within the next twelve
months. We are not able to provide a reasonable reliable estimate of the timing of future payments relating to the non-
current obligations. Our net long-term deferred tax liability is $361.6 million and $313.7 million as of December 31, 2009
and 2008, respectively. Scheduling payments for deferred tax liabilities could be misleading since future settlements of
these amounts are not the sole determining factor of cash taxes to be paid in future periods.
OTHER MATTERS
In May 2009, the FASB issued authoritative guidance which establishes standards of accounting for events that
occur after the balance sheet date and disclosures of events that occur after the balance sheet date but before financial
statements are issued. The guidance requires disclosure of the date through which an entity has evaluated subsequent
events and the basis for the date. This guidance is effective for interim or annual financial periods ending after June 15,
2009. We have evaluated subsequent events through February 24, 2010, the date of the financial statements issuance.
Adoption of the guidance does not have an impact on financial position, results of operations, or cash flows.
IMPACT OF INFLATION
Changes in prices charged by manufacturers and wholesalers for pharmaceuticals affect our revenues and cost of
revenues. Most of our contracts provide that we bill clients based on a generally recognized price index for pharmaceuticals.
Item 7A. Quantitative and Qualitative Disclosures About Market Risk.
We are exposed to market risk from changes in interest rates related to debt outstanding under our credit facility.
Our earnings are subject to change as a result of movements in market interest rates. At December 31, 2009, we had $269.7
million of obligations, net of cash, which were subject to variable rates of interest under our credit facility. A hypothetical
increase in interest rates of 1% would result in an increase in annual interest expense of approximately $2.7 million (pre-
tax), presuming obligations subject to variable interest rates remained constant.