Express Scripts 2011 Annual Report Download - page 55

Express Scripts 2011 Annual Report 53
CONTRACTUAL OBLIGATIONS AND COMMERCIAL COMMITMENTS
The following table sets forth our schedule of current maturities of our long-term debt as of December 31, 2011,
future minimum lease payments due under noncancellable operating leases of our continuing operations, and purchase
commitments (in millions):
Payments Due by Period as of December 31, 2011
Contractual obligations
Total
2012
2013-2014
2015-2016
After 2017
Long-term debt (1)(2)
$ 10,938.5
$ 1,342.7
$ 2,501.6
$ 3,184.8
$ 3,909.4
Future minimum lease payments (3)
185.0
33.3
58.7
49.2
43.8
Purchase commitments (4)
186.9
120.9
63.8
2.2
-
Total contractual cash obligations
$ 11,310.4
$ 1,496.9
$ 2,624.1
$ 3,236.2
$ 3,953.2
(1) These payments exclude the interest expense on our revolving 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 ―Part II – Item 7 – Management’s Discussion and Analysis of
Financial Condition and Results of Operations – Liquidity and Capital Resources – Bank Credit Facility‖), as
well as the balance outstanding on our revolving credit facility. Interest payments on our Senior Notes are
fixed, and have been included in these amounts.
(2) In the event the merger with Medco is not consummated, we would be required to redeem the $4.1 billion of
senior notes issued in November 2011 at a redemption price equal to 101% of the aggregate principal amount
of such notes, plus accrued and unpaid interest prior to their original maturities shown in the table above.
(3) 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,
2011, our lease obligation is $4.2 million. In accordance with applicable accounting guidance, our lease
obligation has been offset against $4.2 million of industrial revenue bonds issued to us by the Camden
County Joint Development Authority.
(4) 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.
If the merger with Medco is not completed, we could be liable to Medco for termination fees in connection with
the termination of the Merger Agreement, depending on the reasons leading to such termination, and/or the reimbursement
of certain of Medco’s expenses, in amounts up to $950 million. We expect cash expenditures of approximately $160.0
million in connection with the closing of the merger.
The gross liability for uncertain tax positions is $32.3 million and $56.4 million as of December 31, 2011 and
2010, 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
noncurrent obligations. Our net long-term deferred tax liability is $546.5 million and $448.9 million as of December 31,
2011 and 2010, 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.
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, 2011, we had no
obligations, net of cash, which were subject to variable rates of interest under our credit facility.