AmerisourceBergen 2005 Annual Report Download - page 40

AmerisourceBergen Corporation 2005
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During the fiscal year September 30, 2005, the Company recorded an impairment charge of $5.3 million relating to certain intangible assets
within its technology operations.
Amortization expense for other intangible assets was $10.3 million, $10.0 million and $7.0 million in the fiscal years ended September 30,
2005, 2004 and 2003, respectively. Amortization expense for other intangible assets is estimated to be $10.1 million in fiscal 2006, $8.8 million
in fiscal 2007, $5.0 million in fiscal 2008, $3.3 million in fiscal 2009, $3.2 million in fiscal 2010, and $15.9 million thereafter.
Note 6. Debt
Debt consisted of the following:
September 30,
(dollars in thousands) 2005 2004
Blanco revolving credit facility at 4.53% and 3.34%, respectively, due 2006 $ 55,000 $55,000
AmerisourceBergen securitization financing due 2007 ——
Revolving credit facility due 2009 ——
$400,000, 55⁄8%senior notes due 2012 398,010 —
$500,000, 57⁄8%senior notes due 2015 497,508 —
Term loan facility at 3.02% —180,000
Bergen 71⁄4%senior notes due 2005 —99,939
81⁄8%senior notes due 2008 —500,000
71⁄4%senior notes due 2012 —300,000
AmeriSource 5% convertible subordinated notes due 2007 —300,000
Other 2,193 3,532
Total debt 952,711 1,438,471
Less currentportion 1,232 281,360
Total, net of current portion $951,479 $1,157,111
Long-Term Debt
In September 2005, theCompanyissued $400 million of 5.625%
senior notes due September 15, 2012 (the “2012 Notes”) and $500
million of5.875% senior notes due September 15, 2015 (the “2015
Notes”). The 2012 Notes and 2015 Notes each were sold at 99.5% of
principal amount and have an effective interest yield of 5.71% and
5.94%, respectively.Interest on the 2012 Notes andthe 2015 Notes is
payable semiannually in arrears, commencing on March 15, 2006. Both
the 2012 Notes andthe 2015 Notes are redeemable at the Company’s
option at a price equal to the greater of 100% of the principal amount
thereof, or the sum of the discounted value of the remaining scheduled
payments, as defined. In addition, at any time before September 15,
2008, the Company may redeem up to an aggregate of 35% of the
principal amount ofthe 2012 Notes or the 2015 Notes at redemption
prices equal to 105.625% and 105.875%, respectively, of the principal
amounts thereof, plus accrued and unpaid interest and liquidated
damages, if any, to the date of redemption, with the cash proceeds of
one or more equity issuances. In connection with the issuance of the
2012 Notes and the 2015 Notes, the Company incurred approximately
$6.3 million and $7.9 million of costs, respectively, which were
deferred and are being amortized over the terms of the notes.
The gross proceeds from the sale of the 2012 Notes and the 2015
Notes wereused to finance the early retirement of the $500 million of
81⁄8%senior notes due 2008 and $300 million of 71⁄4%senior notes due
2012 in September 2005, including the payment of $102.3 million of
premiums and other costs. Additionally, the Company expensed $8.5
million of deferred financing costs related to the retirement of the
71⁄4%Notes and the 81⁄8%Notes.
In December 2004, theCompanyentered into a $700 million
five-year senior unsecured revolving credit facility (the “Senior
Revolving Credit Facility”) with a syndicate of lenders. The Senior
RevolvingCredit Facility replaced the Senior Credit Agreement, as
defined below. There were no borrowings outstanding under the Senior
RevolvingCredit Facility at September 30, 2005. Interest on borrowings
under the Senior Revolving Credit Facility accrues at specific rates
based on the Company’s debt rating. In April 2005, the Company’s debt
ratingwas raised by oneof the rating agencies and in accordance with
the terms of the Senior Revolving Credit Facility, interest on borrow-
ings accrue at either 80 basis points over LIBOR or the prime rate at
September 30, 2005. Availability under theSenior RevolvingCredit
Facility is reduced by the amount of outstanding letters of credit
($12.0 million at September 30, 2005). TheCompanypays quarterly
facility fees to maintain the availability under the Senior Revolving
Credit Facility at specific rates based on the Company’s debt rating.
In April 2005, the rate payable to maintain the availability of the
$700 million commitment was reduced to 20 basis points per annum
resultingfrom theCompany’s improved debt rating. In connection
with entering into the Senior Revolving Credit Facility, the Company
incurred approximately $2.5 million of costs, which were deferred and
are being amortized over the life of the facility. The Company may
choose to repay or reduce its commitments under the Senior Revolving
Credit Facility at any time. The Senior Revolving Credit Facility contains
covenants that impose limitations on, among other things, additional
indebtedness, distributions and dividends to stockholders, and invest-
ments. Additional covenants require compliance with financial tests,
includingleverage and minimum earnings to fixed charges ratios.
In August 2001, the Company had entered into a senior secured
credit agreement (the “Senior Credit Agreement”) with a syndicate of
lenders. The Senior Credit Agreement consisted of a $1.0 billion
revolving credit facility (the “Revolving Facility”) and a $300 million
term loan facility (the “Term Facility”), both of which had been
scheduled to maturein August 2006. The Term Facility had scheduled
quarterly maturities, which began in December 2002, totaling $60
million in each of fiscal 2003 and 2004, $80 million in fiscal 2005
and$100 million in fiscal 2006. Thecompany previously paid the
scheduled quarterly maturities of $60 million in fiscal 2004 and 2003.