Medco 2014 Annual Report Download - page 48

Express Scripts 2014 Annual Report
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In2014,netcashusedinfinancingactivitiesbycontinuingoperationsdecreased$1,205.1millionto$4,289.7
million.Cashinflowsfor2014include$2,490.1millionrelatedtotheissuanceofourJune2014SeniorNotes(definedbelow).
Thisinflowwasoffsetbyoutflowsof$4,493.0millionrelatedtotreasurysharerepurchases,$2,150.0millionrelatedtosenior
noteredemptionsand$684.3millionofquarterlytermfacilitypaymentsduringtheyearendedDecember31,2014.Thesenet
outflowsarecomparedto$4,055.2millionrelatedtotreasurysharerepurchases,$1,300.0millionrelatedtoseniornote
redemptionsand$631.6millionofquarterlytermfacilitypaymentsduringtheyearendedDecember31,2013.
AtDecember31,2014,ouravailablesourcesofcapitalincludea$1,500.0millionrevolvingcreditfacility(the
“revolvingfacility”)andthree$150.0millionuncommittedrevolvingcreditfacilities(the“2014creditfacilities”)(noneof
whichwereoutstandingatDecember31,2014).
Ourcurrentmaturitiesoflong-termdebtatDecember31,2014,excludingunamortizeddiscountsandpremiums,
includeapproximately$1,500.0millionofseniornotes,aswellas$1,052.6millionoftermloanpayments.
TheCompanyisaprovidertostateofIllinoisemployees.AsofDecember31,2014and2013,wehavean
outstandingreceivablebalanceofapproximately$212.5millionand$320.1million,respectively,fromthestateofIllinois.We
havenotrecordedareserveagainstthisreceivable,asitisassociatedwithastate,whichcontinuestomakepayments.We
believethefullreceivablebalancewillberealized.
Weanticipateourcurrentcashbalances,cashflowsfromoperations,ourrevolvingcreditfacilityandour2014
creditfacilitieswillbesufficienttomeetourcashneedsandmakescheduledpaymentsforourcontractualobligationsand
currentcapitalcommitments.However,ifneedsarise,wemaydecidetosecureexternalcapitaltoprovideadditionalliquidity.
Newsourcesofliquiditymayincludeadditionallinesofcredit,termloans,orissuancesofnotesorcommonstock,allofwhich
areallowable,withcertainlimitations,underourexistingcreditagreementandotherdebtinstruments.Whileourabilityto
securedebtfinancingintheshorttermatratesfavorabletousmaybemoderatedduetovariousfactors,includingexistingdebt
levels,marketconditionsorotherfactors,webelieveourliquidityoptionsdescribedabovearesufficienttomeetourcashflow
needs.
ACQUISITIONS AND RELATED TRANSACTIONS
AsaresultoftheMergeronApril2,2012,MedcoandESIeachbecame100%ownedsubsidiariesofExpress
ScriptsandformerMedcoandESIstockholdersbecameownersofExpressScriptsstock,whichislistedontheNasdaq.Upon
closingoftheMerger,formerESIstockholdersownedapproximately59%ofExpressScriptsandformerMedcostockholders
ownedapproximately41%ofExpressScripts.PerthetermsoftheMergerAgreement,uponconsummationoftheMergeron
April2,2012,eachshareofMedcocommonstockwasconvertedinto(i)therighttoreceive$28.80incash,withoutinterest
and(ii)0.81sharesofExpressScriptsstock.HoldersofMedcostockoptions,restrictedstockunits,anddeferredstockunits
receivedreplacementawardsatanexchangeratioof1.3474ExpressScriptsstockawardsforeachMedcoawardowned,which
isequaltothesumof(i)0.81and(ii)thequotientobtainedbydividing(1)$28.80(thecashcomponentoftheMerger
consideration)by(2)anamountequaltotheaverageoftheclosingpricesofESIcommonstockontheNasdaqforeachofthe
15consecutivetradingdaysendingwiththefourthcompletetradingdaypriortothecompletionoftheMerger(seeNote3-
Changesinbusiness).
Weregularlyreviewpotentialacquisitionsandaffiliationopportunities.Webelieveavailablecashresources,bank
financing,additionaldebtfinancingortheissuanceofdebtorequitycouldbeusedtofinancefutureacquisitionsoraffiliations.
Therecanbenoassurancewewillmakenewacquisitionsorestablishnewaffiliationsin2015orthereafter.
ACCELERATED SHARE REPURCHASE
OnDecember9,2013,aspartofourShareRepurchaseProgram(asdefinedbelow),weenteredintoanagreement
torepurchasesharesofourcommonstockforanaggregatepurchasepriceof$1,500.0million(the“2013ASRProgram”)
underanAcceleratedShareRepurchaseagreement(the“2013ASRAgreement”).Underthetermsofthe2013ASRAgreement,
uponpaymentofthepurchaseprice,wereceivedaninitialdeliveryof20.1millionsharesofourcommonstockatapriceof
$67.16pershare,whichrepresented,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.InApril2014,wesettledthe2013ASR
Agreementandreceived0.6millionadditionalshares,resultinginatotalof20.7millionsharesreceivedunderthe2013ASR
Agreement.
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