Express Scripts 2009 Annual Report Download - page 75

Express Scripts 2009 Annual Report
5. Non-operating charges, net
The non-operating charge of $2.0 million during the year ended December 31, 2008 represents an
unrealized loss on shares held in the Reserve Primary Fund (See Note 2).
On December 18, 2006, we announced a proposal to acquire all of the outstanding shares of Caremark Rx,
Inc. (“Caremark”) common stock. On March 16, 2007, Caremark shareholders approved a merger agreement with
CVS Corporation (“CVS”) and we subsequently withdrew our proposal to acquire Caremark. We incurred legal and
other professional fees (which do not include internal costs) of $27.2 million as a result of the proposed acquisition.
These expenses were partially offset by a $4.4 million special dividend paid by CVS Caremark Corporation (“CVS
Caremark”) on Caremark stock we owned prior to the CVS Caremark merger and by a non-operating gain of
$4.2 million resulting from the sale of our shares of CVS Caremark stock in the second quarter of 2007.
6. Joint venture
On July 1, 2008, the merger of RxHub and SureScripts was announced. We are one of the founders of
RxHub, an electronic exchange enabling physicians who use electronic prescribing technology to link to
pharmacies, PBM companies and health plans. The new organization enables physicians to securely access health
information through a fast and efficient health exchange when caring for their patients. We retain one-sixth
ownership in the merged company. Due to the decreased ownership percentage, the investment is recorded under
the cost method, under which dividends are the basis of recognition of earnings from an investment. RxHub has not
paid any dividends to date. Prior to the merger, the investment in RxHub was recorded using the equity method of
accounting, which required our percentage interest in RxHub’s results to be recorded in our consolidated statement
of operations. Our percentage of RxHub’s loss for 2008 and 2007 was $0.3 million and $1.3 million, respectively,
and has been recorded in other (expense) income, net, in the consolidated statement of operations. Our investment
in RxHub (approximately $0.8 million at both December 31, 2009 and 2008) is recorded in other assets in our
consolidated balance sheet.
7. Property and equipment
Property and equipment of our continuing operations, at cost, consists of the following:
December 31,
(in millions)
2009
2008
Land and buildings
$ 11.2
$ 6.3
Furniture
41.3
37.9
Equipment
305.1
198.8
Computer software
305.2
249.8
Leasehold improvements
65.2
51.9
Total Property and equipment
728.0
544.7
Less accumulated depreciation
373.9
322.5
Property and equipment, net
$ 354.1
$ 222.2
Depreciation expense for our continuing operations in 2009, 2008 and 2007 was $65.1 million,
$64.0 million and $63.8 million, respectively. Internally developed software, net of accumulated depreciation, for
our continuing operations was $62.9 million and $55.5 million at December 31, 2009 and 2008, respectively. We
capitalized $24.0 million of internally developed software during 2009.
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 (see Note 13).
Under certain of our operating leases for facilities in which we operate home delivery and specialty
pharmacies, we are required to remove improvements and equipment upon surrender of the property to the landlord
and convert the facilities back to office space. Our asset retirement obligation for our continuing operations was
$5.5 million and $6.3 million at December 31, 2009 and 2008, respectively.
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