Express Scripts 2013 Annual Report Download - page 53

53 Express Scripts 2013 Annual Report
per share, which represents, based on the closing share price of our common stock on Nasdaq on December 9, 2013,
approximately 90% of the $1,500.0 million amount of the 2013 ASR Program. The final purchase price per share (the “forward
price”) and the final number of shares received will be determined using the arithmetic mean of the daily volume-weighted
average price of the Company’s common stock (the “VWAP”) over the term of the 2013 ASR Program less a discount granted
under the ASR Agreement. The 2013 ASR Program will be completed in the second quarter of 2014, subject to the right of the
investment bank to accelerate the settlement of the program.
Upon settlement of the 2013 ASR Program, we may receive additional shares, including for the remaining 10% of
the $1,500.0 million amount of the 2013 ASR Program, or we may be required to pay additional cash for the initial shares
received or re-deliver shares (at our option), based on the forward price beginning after the effective date of the 2013 ASR
Agreement and ending on or about May 5, 2014, subject to the right of the investment bank to accelerate settlement of the 2013
ASR Agreement. Under the terms of the contract, the maximum number of shares that could be delivered by us is 44.7 million.
If the 2013 ASR Program had been settled as of December 31, 2013, based on the VWAP since the effective date of the
agreement, the investment bank would have been required to deliver an additional 2.3 million shares to us. These shares are not
included in the calculation of diluted weighted-average common shares outstanding during the period because their effect was
anti-dilutive.
The 2013 ASR Agreement is accounted for as an initial treasury stock transaction and a forward stock purchase
contract. We recorded this transaction as an increase to treasury stock of $1,350.1 million, and recorded the remaining $149.9
million as a decrease to additional paid-in capital in the consolidated balance sheet at December 31, 2013. The $149.9 million
recorded in additional paid-in capital will be reclassified to treasury stock upon completion of the 2013 ASR Program. The
forward stock purchase contract is classified as an equity instrument under applicable accounting guidance and was deemed to
have a fair value of zero at the effective date of the 2013 ASR Agreement. The initial delivery of shares resulted in an
immediate reduction of the outstanding shares used to calculate the weighted-average common shares outstanding for basic and
diluted net income per share on the effective date of the 2013 ASR Agreement.
On May 27, 2011, ESI entered into agreements to repurchase shares of its common stock for an aggregate purchase
price of $1,750.0 million under an Accelerated Share Repurchase agreement (the “2011 ASR Agreement”). The 2011 ASR
Agreement consisted of two agreements providing for the repurchase of shares of ESI’s common stock worth $1,000.0 million
and $750.0 million, respectively. Upon payment of the purchase price on May 27, 2011, ESI received 29.4 million shares of
ESI’s common stock at a price of $59.53 per share. During the third quarter of 2011, we settled the $1,000.0 million portion of
the 2011 ASR Agreement and received 1.9 million shares at a final forward price of $53.51 per share. During the fourth quarter
of 2011, we settled $725.0 million of the $750.0 million portion of the 2011 ASR Agreement and received 2.1 million shares at
a weighted-average final forward price of $50.69.
On April 27, 2012, we settled the remaining portion of the 2011 ASR Agreement and received 0.1 million
additional shares, resulting in a total of 33.5 million shares received under the 2011 ASR Agreement. See Note 9 - Common
stock for more information on the terms of the 2011 ASR Agreement.
SENIOR NOTES
Following the consummation of the Merger on April 2, 2012, several series of senior notes issued by Medco are
reported as debt obligations of Express Scripts on a consolidated basis.
In February 2012, we issued $3,500.0 million of senior notes, including:
• $1,000.0 million aggregate principal amount of 2.100% senior notes due 2015
• $1,500.0 million aggregate principal amount of 2.650% senior notes due 2017
• $1,000.0 million aggregate principal amount of 3.900% senior notes due 2022
The net proceeds were used to pay a portion of the cash consideration paid in the Merger and to pay related fees
and expenses (see Note 3 - Changes in business).
On November 14, 2011, we issued $4,100.0 million of senior notes, including:
• $900.0 million aggregate principal amount of 2.750% senior notes due 2014
• $1,250.0 million aggregate principal amount of 3.500% senior notes due 2016
• $1,250.0 million aggregate principal amount of 4.750% senior notes due 2021
• $700.0 million aggregate principal amount of 6.125% senior notes due 2041
The net proceeds were used to pay a portion of the cash consideration paid in the Merger and to pay related fees
and expenses (see Note 3 - Changes in business).