This excerpt taken from the MHS 10-K filed Feb 24, 2009.
We believe that our current liquidity and prospects for increasing our cash flows from operations by improved working capital management assist in limiting the effects on our business from the weak capital and credit markets. At the end of fiscal year 2008, we had additional committed borrowing capacity under our revolving credit facility of approximately $1 billion and have no required long-term debt payments until 2012. Additionally, we have a 364-day accounts receivable financing facility, which is renewable annually in July at the option of both Medco and the banks. We currently do not expect to increase our total outstanding debt. If our accounts receivable financing facility is not renewed, we have adequate capacity under our revolving credit facility. In 2009, we anticipate improved cash flow from operations resulting from the optimization of invested capital including enhanced inventory and receivables management.
As a result of the current economic weakness and lack of liquidity in the marketplace, we intend to build our cash balances by year-end 2009. In October 2008, our Board of Directors approved a new share repurchase program, authorizing the purchase of up to $3 billion of our common stock in the open market over a two-year period commencing November 10, 2008. We intend to fund our share repurchases with our free cash flow (cash flow from operations less capital expenditures). Any investments we make are within approved investing guidelines and we continue to monitor ongoing events and make investment decisions accordingly.
The rate of increase for our profitability is affected by the representation of lower-cost generic drugs in our product mix. This is primarily impacted by brand-name drugs that lose patent protection. It is anticipated that in 2009 there will be lower drug spend associated with brand-name drugs that lose patent protection, after factoring in the timing within the year of the drugs losing patent protection, as well as the penetration of these drugs within Medcos book of business. This will result in a lower rate of increase for our profitability in 2009.
We anticipate that our 2009 capital expenditures, for items such as capitalized software development for strategic initiatives, infrastructure enhancements, and the completion of our third automated dispensing pharmacy in Whitestown, Indiana, will be approximately $225 million. We expect that capital expenditures will be funded by our cash flows from operations.
We have clients in various industries, including the automobile manufacturer industry and the financial industry. We actively monitor the status of our accounts receivable and have mechanisms in place to minimize the potential for incurring material accounts receivable credit risk. To date, we have not experienced any deterioration in our client or manufacturer accounts receivables.
We believe the oversight of the investments held under our pension plans is rigorous and the investment strategies are prudent. Reductions in pension plan assets from investment losses in 2008, and increased benefit obligations related to increased plan participants, contributed to the increase in the pension plans unfunded status from $9.0 million to $73.7 million and a decrease of $39.3 million, net of tax, reflected in comprehensive income in stockholders equity. This increase in unfunded status did not have an impact on the consolidated statement of income for 2008. Net actuarial gains and losses, in excess of certain thresholds, are amortized into the consolidated statement of income over the 12-year average remaining service life of participants. We estimate the 2009 net periodic benefit cost for our pension plans to be included in our consolidated statement of income will be approximately $31 million.
We have no plans to pay cash dividends in the foreseeable future.
This excerpt taken from the MHS 10-K filed Feb 22, 2007.
We believe our ability to generate cash from operating activities is one of our fundamental financial strengths. We believe that our 2007 cash flows will continue to be positive and adequate to fund our ongoing operations, debt service requirements, and capital and strategic investments. We expect to meet all of our financial commitments and operating needs in 2007 and the foreseeable future. It is anticipated that our 2007 capital expenditures, for items such as capitalized software development for strategic initiatives and infrastructure enhancements, will not exceed $150 million. We have no immediate plans for dividend payments.
This excerpt taken from the MHS 10-K filed Mar 3, 2006.
We believe that our 2006 cash flows will continue to be positive and adequate to fund our ongoing operations, debt service requirements, share repurchase program, and capital and strategic investments. It is anticipated that our 2006 capital expenditures will not exceed $150 million. We have no immediate plans for dividend payments.
This excerpt taken from the MHS 10-K filed Mar 1, 2005.
On February 23, 2005, we announced that we entered into an agreement to acquire Accredo Health, Incorporated (Accredo), a leading provider of specialty pharmacy products and services for the treatment of patients with complex, chronic diseases. Total consideration is approximately $2.2 billion in cash and Medco common stock. Accredo has approximately $0.3 billion of debt on its balance sheet. Under terms of the agreement, each Accredo share outstanding will be exchanged for $22.00 in cash and 0.49107 shares of our common stock, subject to adjustment based on the value of the common stock in certain situations as provided in the agreement and plan of merger. We expect to fund the cash portion of the consideration through a combination of cash on hand, bank borrowings and our accounts receivable financing facility. The transaction is expected to close in mid-2005.
Subsequent to the closing of the Accredo acquisition, we expect to be capitalized by an anticipated debt to EBITDA ratio of 1.5x and a debt to total capitalization ratio of less than 25 percent. We believe that our 2005 cash flows will continue to be positive and adequate to fund our ongoing operations, debt service, and capital and strategic investments. It is anticipated that our 2005 capital expenditures, excluding the impact of the Accredo transaction, will not exceed $130 million. We have no immediate plans for stock repurchases or dividend payments.
Fiscal year 2005 will consist of 53 weeks.