We operate our United States and Canadian PBM and non-PBM businesses out of leased and owned facilities throughout the United States and Canada.
The following selected financial data should be read in conjunction with the Consolidated Financial Statements, including the related notes, and “
Our Phoenix Marketing Group subsidiary records an administrative fee for verifying practitioner licensure and then distributing consigned drug samples to doctors based on orders received from pharmaceutical sales representatives.
The $10,420,000 or 38.5% increase in net interest expense for the year ended December 31, 2002 over 2001 is primarily due to the addition of $325 million of Term B loans and the $100 million draw down on our revolving credit facility during 2002 primarily to finance the NPA acquisition. Interest expense was positively impacted by 2002 prepayments of $105 million of Term A loans and repayment of all amounts outstanding under our revolving credit facility. Net interest expense decreased $12,374,000 or 31.3% in 2001 over 2000 as a result of debt prepayments in 2001 and 2000. Associated with the prepayment of our loans during 2000, we recorded an ordinary gain in interest expense of $1.5 million ($926,000 net of tax) due to the restructuring of our interest rate swap agreements (see “-Market Risk”). Additionally, we repurchased $10,115,000 of our Senior Notes during 2000 (see “-Liquidity and Capital Resources”).
During 2000, we recorded a $165,207,000 ($103,089,000 net of tax) non-cash impairment charge on our investment in PlanetRx common stock as the loss in value was deemed to be other than temporary. This partially offsets a one-time non-cash gain of $182,930,000 recorded in 1999. Any unrealized loss associated with recording our investment in PlanetRx at current market value previously recorded in stockholders’ equity was written off to the current period earnings, in addition to any additional charges necessary to write-off our investment in accordance with FAS 115, “Accounting for Certain Investments in Debt and Equity Securities”. Additionally, during 2000, we made charitable donations of 200,000 shares of our PlanetRx common stock (after giving effect to the December 4, 2000 8-for-1 reverse stock split) and realized selling, general and administrative expense related to the donation of approximately $713,000.
Preferred stock, $0.01 par value, 5,000,000 shares authorized, and no shares
The change in accumulated amortization from December 31, 2001 to December 31, 2002 is a result of changes in foreign currency exchange rates.
Depreciation expense for 2002, 2001 and 2000 was $69,498,000, $33,345,000 and $24,977,000, respectively. We regularly explore the use of emerging technologies to improve the operational and administrative support functions of providing the pharmacy benefit. Several projects designed to promote member, client and physician connectivity, enhance the adjudication process and improve the overall delivery of the pharmacy benefit were initiated during 2002. As a result of our review of the useful lives of assets supporting our business processes, we reduced the estimated useful lives of existing systems due to the progress in implementing new technologies. Accordingly, depreciation expense increased by approximately $29,903,000 (of which $6,440,000 was recorded in cost of revenues).
Purchase of property and equipment (44,867 ) (14,825 ) (1,611 ) -