EX-99 2 q2-04financials.htm FINANCIALS

Exhibit 99.1

EXPRESS SCRIPTS, INC.
Unaudited Consolidated Statement of Operations

   Three Months Ended
      June 30,		    Six Months Ended
      June 30,
(in thousands, except per share data)       2004
       2003
       2004
       2003
Revenues 1     $ 3,779,505   $ 3,334,197   $ 7,407,320   $ 6,558,178  
Cost of revenues 1    3,555,983    3,116,962    6,962,011    6,131,330  
   Gross profit    223,522    217,235    445,309    426,848  
Selling, general and administrative    96,723    106,955    191,967    208,741  
Operating income    126,799    110,280    253,342    218,107  
Other (expense) income:  
   Undistributed loss from joint venture    (1,460 )  (1,545 )  (2,800 )  (3,084 )
   Interest income    801    721    1,625    1,589  
   Interest expense    (20,160 )  (14,040 )  (32,870 )  (24,742 )
    (20,819 )  (14,864 )  (34,045 )  (26,237 )
Income before income taxes    105,980    95,416    219,297    191,870  
Provision for income taxes    40,560    36,410    83,914    73,215  
Income before cumulative effect of accounting change    65,420    59,006    135,383    118,655  
Cumulative effect of accounting change, net of tax    --    --    --    (1,028 )
Net income   $ 65,420   $ 59,006   $ 135,383   $ 117,627  
Basic earnings per share:  
   Before cumulative effect of accounting change   $ 0.85   $ 0.75   $ 1.75   $ 1.52  
   Cumulative effect of accounting change    --    --    --    (0.01 )
   Net income   $ 0.85   $ 0.75   $ 1.75   $ 1.51  
Weighted average number of common shares  
   Outstanding during the period - Basic EPS    77,254    78,366    77,293    77,959  
Diluted earnings per share:  
   Before cumulative effect of accounting change   $ 0.83   $ 0.74   $ 1.72   $ 1.49  
   Cumulative effect of accounting change    --    --    --    (0.01 )
   Net income   $ 0.83   $ 0.74   $ 1.72   $ 1.48  
Weighted average number of common shares  
   Outstanding during the period - Diluted EPS    78,552    80,021    78,529    79,366  

1 Excludes estimated retail pharmacy co-payments of $1,387,488 and $1,338,804 for the three months ended June 30, 2004 and 2003, respectively, and $2,784,599 and $2,669,558 for the six months ended June 30, 2004 and 2003, respectively. These are amounts we instructed retail pharmacies to collect from members. We have no information regarding actual co-payments collected.

EXPRESS SCRIPTS, INC.
Unaudited Consolidated Balance Sheet

(in thousands, except share data)
 June 30,
2004
 December 31,
2003
Assets            
Current assets:  
   Cash and cash equivalents   $ 117,713   $ 396,040  
   Receivables, net    1,082,532    1,011,154  
   Inventories    137,208    116,375  
   Deferred taxes    16,024    15,346  
   Prepaid expenses and other current assets    27,948    21,220  
        Total current assets    1,381,425    1,560,135  
Property and equipment, net    174,666    177,312  
Goodwill, net    1,705,649    1,421,493  
Other intangible assets, net    251,073    232,059  
Other assets    31,842    18,175  
        Total assets   $ 3,544,655   $ 3,409,174  
Liabilities and Stockholders' Equity  
Current liabilities:  
   Claims and rebates payable   $ 1,169,021   $ 1,178,321  
   Accounts payable    285,697    232,290  
   Accrued expenses    195,250    215,797  
   Current maturities of long-term debt    22,000    --  
        Total current liabilities    1,671,968    1,626,408  
Long-term debt    397,650    455,018  
Other liabilities    156,677    133,755  
        Total liabilities    2,226,295    2,215,181  
Stockholders' equity:  
   Preferred stock, $0.01 par value per share, 5,000,000 shares authorized,  
      and no shares issued and outstanding    --    --  
   Common Stock, $0.01 par value per share, 275,000,000 and 181,000,000  
      shares authorized, respectively, and 79,782,000 and 79,795,000 shares  
      issued and outstanding, respectively    797    798  
   Additional paid-in capital    479,874    484,663  
   Unearned compensation under employee compensation plans    (22,427 )  (23,302 )
   Accumulated other comprehensive income    3,585    3,638  
   Retained earnings    999,933    864,550  
     1,461,762    1,330,347  
   Common Stock in treasury at cost, 2,194,000 and 2,223,000  
      shares, respectively    (143,402 )  (136,354 )
        Total stockholders' equity    1,318,360    1,193,993  
        Total liabilities and stockholders' equity   $ 3,544,655   $ 3,409,174  

EXPRESS SCRIPTS, INC.
Unaudited Consolidated Statement of Cash Flows

Six Months Ended
June 30,
(in thousands) 2004
 2003
Cash flows from operating activities:            
   Net income   $ 135,383   $ 117,627  
   Adjustments to reconcile net income to net cash  
      provided by operating activities, excluding  
      the effect of the acquisition:  
        Depreciation and amortization    32,825    26,394  
        Non-cash adjustments to net income    4,512    48,546  
        Net changes in operating assets and liabilities    (58,409 )  (71,969 )
Net cash provided by operating activities    153,311    120,598  
Cash flows from investing activities:  
   Purchases of property and equipment    (17,354 )  (21,562 )
   Acquisition, net of cash acquired, and investment in joint venture    (331,058 )  2,924  
   Loan to Pharmacy Care Alliance    (11,300 )  --  
   Other    96  10  
Net cash used in investing activities    (359,616 )  (18,628 )
Cash flows from financing activities:  
   Proceeds from long-term debt, net    675,000  --
   Repayment of long-term debt, net    (734,955 )  (110,430 )
   Proceeds from revolving credit line, net    25,000  25,000
   Treasury stock acquired    (52,146 )  (45,228 )
   Deferred financing fees    (6,032 )  --  
   Net proceeds from employee stock plans    21,515    30,422  
Net cash used in financing activities    (71,618 )  (100,236 )
Effect of foreign currency translation adjustment    (404 )  2,174  
Net (decrease) increase in cash and cash equivalents    (278,327 )  3,908  
Cash and cash equivalents at beginning of period    396,040    190,654  
Cash and cash equivalents at end of period   $ 117,713   $ 194,562