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87
Express Scripts 2014 Annual Report
Purchase commitments. AsofDecember31,2014,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experienceandcurrentbusinessplans.Thesefuturepurchasecommitmentsaresummarizedbelow(in
millions):
Year Ended December 31,
Future
Purchase
Commitments
2015 $120.8
2016 64.0
2017 30.3
2018 1.5
2019 1.6
Thereafter 1.5
Total $219.7
Other contingencies. FortheyearendedDecember31,2014,approximately70.4%ofourpharmaceutical
purchaseswerethroughonewholesaler.Webelieveotheralternativesourcesarereadilyavailable.Exceptforcustomer
concentrationdescribedinNote13-Segmentinformation,webelievenootherconcentrationrisksexistatDecember31,2014.
Legal contingencies.Intheordinarycourseofbusinesstherehavearisenvariouslegalproceedings,investigations,
governmentinquiriesandclaimspendingagainstusoroursubsidiaries,including,butnotlimitedto,thoserelatingto
regulatory,commercial,employmentandemployeebenefits.Werecordaccrualsforcertainofouroutstandinglegal
proceedings,investigationsandclaimswhenwebelieveitisprobablealiabilitywillbeincurredandtheamountoflosscanbe
reasonablyestimated.Onaquarterlybasis,weevaluatedevelopmentsinlegalproceedings,investigationsandclaimsthatcould
affecttheamountofanyaccrual,aswellasanydevelopmentsthatwouldmakealossbothprobableandreasonablyestimable.
Wedisclosetheamountoftheaccrualiftheconsolidatedfinancialstatementswouldbeotherwisemisleading,whichwasnot
thecasefortheyearsendedDecember31,2014and2013.
Werecordself-insuranceaccrualsbaseduponestimatesoftheaggregateliabilityofclaimcosts(includingdefense
costs)inexcessofourinsurancecoverage(seeNote1-Summaryofsignificantaccountingpolicies,“Self-insuranceaccruals”).
Themajorityoftheseclaimsarelegalclaimsandourliabilityestimateisprimarilyrelatedtothecosttodefendtheseclaims.
Wedonotaccrueforsettlements,judgments,monetaryfinesorpenaltiesuntilsuchamountsareprobableandestimable.Ifthe
rangeofpossiblelossisbroad,theliabilityaccrualisbasedonthelowendoftherange.
Whenalosscontingencyisnotbelievedtobebothprobableandestimable,wedonotestablishanaccruedliability.
However,iftheloss(oranadditionallossinexcessoftheaccrual)isbelievedtobeatleastareasonablepossibilityand
material,thenwediscloseanestimateofthepossiblelossorrangeofloss,ifsuchestimatecanbemade,ordiscloseanestimate
cannotbemade.
Thelegalproceedings,investigations,governmentinquiresandclaimspendingagainstusoroursubsidiaries
includemulti-districtlitigation,classactionlawsuits,antitrustallegations,quitamlawsuits(“whistleblower”actions)and
variousgovernmentalinquiriesandinformationalsubpoenas.
Theassessmentofwhetheralossisprobableandreasonablyestimableinvolvesaseriesofcomplexjudgments
aboutfutureevents.Weareoftenunabletoestimatearangeoflossduetosignificantuncertainties,particularlywhere(i)the
damagessoughtareunspecifiedorindeterminate;(ii)theproceedingsareintheearlystages;(iii)themattersinvolvenovelor
unsettledlegaltheoriesoralargenumberofparties;(iv)classactionstatusmaybesoughtandcertified;(v)itisquestionable
whetherassertedclaimsorallegationswillsurvivedispositivemotionpractice;(vi)theimpactofdiscoveryonthelegalprocess
isunknown;(vii)thesettlementpostureofthepartiesisnotdeterminedand/or(viii)inthecaseofcertaingovernmentagency
investigations,whetherasealedquitamlawsuithasbeenfiledandwhetherthegovernmentagencymakesadecisionto
interveneinthelawsuitfollowinginvestigation.Accordingly,formanyproceedings,wearecurrentlyunabletoestimatethe
lossorarangeofpossibleloss.
Foralimitednumberofproceedings,wemaybeabletoreasonablyestimatethepossiblerangeoflossinexcessof
anyaccruals.However,webelievesuchmatters,individuallyandintheaggregate,whenfinallyresolved,arenotreasonably
likelytohaveamaterialadverseeffectonourcashfloworfinancialcondition.Wealsobelievethatanyamountthatcouldbe
reasonablyestimatedinexcessofaccruals,ifany,forsuchproceedingsisnotmaterial.However,anunexpectedadverse
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