Express Scripts 2011 Annual Report Download - page 83

Express Scripts 2011 Annual Report 81
11. Commitments and contingencies
We have entered into noncancellable agreements to lease certain office and distribution facilities with
remaining terms from one to ten years. The majority of our lease agreements include renewal options which would
extend the agreements from one to five years. Rental expense under the office and distribution facilities leases,
excluding the discontinued operations of PMG (see Note 4 – Discontinued operations), in 2011, 2010, and 2009 was
$30.2 million, $40.3 million and $27.8 million, respectively. The future minimum lease payments due under
noncancellable operating leases are shown below (in millions):
Year Ended December 31,
Minimum Lease
Payments
2012
$ 33.3
2013
31.5
2014
27.2
2015
25.4
2016
23.8
Thereafter
43.8
$ 185.0
In the fourth quarter of 2011, we opened a new office facility in St. Louis, Missouri to consolidate our St.
Louis presence onto our Headquarters campus. The annual lease commitments for this facility are approximately
$3.3 million and the term of the lease is ten years.
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 was $4.2 million. Our lease obligation has been offset against $4.2 million of industrial bonds
issued by the Camden County Joint Development Authority.
For the year ended December 31, 2011, approximately 58.7% of our pharmaceutical purchases were
through one wholesaler. We believe other alternative sources are readily available. Except for customer
concentration described in Note 12 – Segment information below, we believe no other concentration risks exist at
December 31, 2011.
As of December 31, 2011, we have certain required future purchase commitments for materials, supplies,
services and fixed assets related to the normal course of business. We do not expect potential payments under these
provisions to materially affect results of operations or financial condition based upon reasonably likely outcomes
derived by reference to historical experience and current business plans. These future purchase commitments (in
millions) are summarized below:
Year Ended December 31,
Future
Purchase Commitment
2012
$ 120.9
2013
36.6
2014
27.2
2015
1.7
2016
0.5
Thereafter
-
$ 186.9
In the ordinary course of business there have arisen various legal proceedings, investigations or claims now
pending against us or our subsidiaries. In accordance with applicable accounting guidance, we record accruals for
certain of our outstanding legal proceedings, investigations or claims when it is probable that a liability will be
incurred and the amount of loss can be reasonably estimated. We evaluate, on a quarterly basis, developments in
legal proceedings, investigations or claims that could affect the amount of any accrual, as well as any developments
that would make a loss contingency both probable and reasonably estimable. We disclose the amount of the accrual
if the financial statements would be otherwise misleading, which was not the case for the years ended December 31,
2011, 2010 and 2009.