Express Scripts 2015 Annual Report Download - page 45

43 Express Scripts 2015 Annual Report
CONTRACTUAL OBLIGATIONS AND COMMERCIAL COMMITMENTS
Following is a schedule of the current maturities of our long-term debt, future minimum lease payments and purchase
commitments (in millions) as of December 31, 2015:
Payments Due by Period as of December 31, 2015
Total 2016 2017-2018 2019-2020 Thereafter
Long-term debt(1) $ 18,385.1 $ 2,118.1 $ 6,546.2 $ 4,630.0 $ 5,090.8
Future minimum operating lease payments 299.8 60.8 98.8 62.5 77.7
Future minimum capital lease payments 39.5 12.9 23.7 2.9 —
Purchase commitments(2) 242.3 166.8 65.9 9.6 —
Total contractual cash obligations $ 18,966.7 $ 2,358.6 $ 6,734.6 $ 4,705.0 $ 5,168.5
(1) Excludes the interest expense on our 2015 revolving facility, which requires us to pay interest at LIBOR plus a margin
and for which our interest payments fluctuate with changes in LIBOR and in the margin over LIBOR we are required to
pay (see Note 6 - Financing), as well as the balance outstanding on our 2015 revolving facility. Interest payments on our
senior notes are fixed, and are included in these amounts.
(2) Consists 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 experience and
current business plans.
The gross liability for uncertain tax positions which could result in future payments is $506.8 million and $585.7
million as of December 31, 2015 and 2014, respectively. We are not able to provide a reasonably reliable estimate of the timing
of future payments relating to the noncurrent obligations. Our net long-term deferred tax liability is $4,069.8 million and
$4,923.2 million as of December 31, 2015 and 2014, 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
Most of our contracts provide we bill clients based on a generally recognized price index for pharmaceuticals and
accordingly, the rate of inflation, and our efforts to manage the impact of inflation for our clients, with respect to prescription
drugs can affect our revenues and cost of revenues.
OTHER MATTERS
In November 2015, the Financial Accounting Standards Board (“FASB”) issued authoritative guidance containing
changes to the balance sheet presentation of deferred taxes, allowing for classification of all deferred tax assets and liabilities as
long-term. This statement is effective for financial statements issued for annual periods beginning after December 15, 2016,
with early adoption permitted. We have elected to prospectively adopt ASU 2015-17 as of December 31, 2015, as part of a
simplification initiative. Prior periods have not been retrospectively adjusted for adoption of this statement.
In April and August 2015, the FASB issued authoritative guidance containing changes to the balance sheet
presentation of debt issuance costs. This statement is effective for financial statements issued for annual periods beginning after
December 15, 2015, with early adoption permitted. We have elected to adopt ASU 2015-03 and ASU 2015-15 as of December
31, 2015, with retrospective application to all statements of financial position presented. Net financing costs of $50.6 million
related to our senior notes and term loans have been reclassified from “Other intangible assets, net” to a reduction in the
carrying value of our long-term debt, and net financing costs of $3.7 million related to our 2011 revolving facility have been
reclassified from “Other intangible assets, net” to “Other assets” on our consolidated balance sheet as of December 31, 2014.
Comparatively, net financing costs of $48.1 million related to our senior notes and term loans are reflected as a reduction in the
carrying value of our long-term debt, and net financings costs of $6.6 million related to our 2015 revolving facility are reflected
in “Other assets” on our consolidated balance sheet as of December 31, 2015.
In May 2014, the FASB issued Accounting Standards Codification (“ASC”) Topic 606, Revenue from Contracts with
Customers, which supersedes ASC 605, Revenue Recognition. The new standard requires companies to recognize revenues
upon transfer of goods or services to customers in amounts that reflect the consideration which the company expects to receive
in exchange for those goods or services. In July 2015, the FASB delayed the effective date of the standard by one year. The new
guidance is effective for financial statements issued for annual reporting periods beginning after December 15, 2017 and early