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Express Scripts 2009 Annual Report
In connection with the discontinued operations of IP (see Note 4) and pursuant to our policies for assessing
impairment of goodwill and long-lived assets (see Note 1), approximately $7.0 million of goodwill was written off
in the fourth quarter of 2007 along with intangible assets with a net book value of $0.4 million (gross carrying value
of $0.7 million net of accumulated amortization of $0.3 million), consisting of contractual relationships.
9. Financing
Long-term debt consists of:
December 31,
(in millions)
2009
2008
Term A loans due October 14, 2010 with an average
interest rate of 0.9% at December 31, 2009
$ 540.0
$ 960.0
Term-1 loans due October 14, 2010 with an average
interest rate of 1.1% at December 31, 2009
800.0
800.0
5.25% senior notes due 2012, net of unamortized discount
999.4
-
6.25% senior notes due 2014, net of unamortized discount
996.1
-
7.25% senior notes due 2019, net of unamortized discount
496.8
-
Revolving credit facility due October 14, 2010
-
-
Other
0.3
0.3
Total debt
3,832.6
1,760.3
Less current maturities
1,340.1
420.0
Long-term debt
$ 2,492.5
$ 1,340.3
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 the Term A loan. The maturity date of the credit facility is October 14, 2010. 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.
The 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 will range from 0.50% to 1.125%,
depending on our consolidated leverage ratio or our credit rating. Under the 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%. The 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.
On June 9, 2009, we issued $2.5 billion of Senior Notes, including $1.0 billion aggregate principal amount
of 5.250% Senior Notes due 2012; $1.0 billion aggregate principal amount of 6.250% Senior Notes due 2014 and
$500 million aggregate principal amount of 7.250% Senior Notes due 2019. The Senior Notes require interest to be
paid semi-annually on June 15 and December 15. We may redeem some or all of each series of Senior Notes prior
to maturity at a price equal to the greater of (1) 100% of the aggregate principal amount of any notes being
redeemed, plus accrued and unpaid interest; or (2) the sum of the present values of the remaining scheduled
payments of principal and interest on the notes being redeemed, not including unpaid interest accrued to the
redemption date, discounted to the redemption date on a semiannual basis at the treasury rate plus 50 basis points
with respect to any notes being redeemed, plus in each case, unpaid interest on the notes being redeemed accrued to
75