CVS 2007 Annual Report Download - page 58

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54 I CVS Caremark
ASR agreement. Pursuant to the terms of the November ASR
agreement, on November 7, 2007, the Company paid $2.3 billion
to Lehman in exchange for Lehman delivering 37.2 million shares
of common stock to the Company, which were placed into its
treasury account upon delivery. On November 26, 2007, upon
establishment of the minimum number of shares to be repur-
chased, Lehman delivered an additional 14.4 million shares
of common stock to the Company. As of December 29, 2007,
the aggregate 51.6 million shares of common stock, received
pursuant to the November ASR agreement, had been placed into
the Company’s treasury account. The Company may receive up to
5.7 million of additional shares of common stock, depending on
the market price of the common stock, as determined under the
November ASR agreement, over the term of the November ASR
agreement, which is currently expected to conclude during the
first quarter of 2008.
Borrowing and Credit Agreements
Following is a summary of the Company’s borrowings as of the
respective balance sheet dates:
Dec. 29, Dec. 30,
In millions 2007 2006
Commercial paper $ 2,085.0 $ 1,842.7
3.875% senior notes due 2007 – 300.0
4.0% senior notes due 2009 650.0 650.0
Floating rate notes due 2010 1,750.0 –
5.75% senior notes due 2011 800.0 800.0
4.875% senior notes due 2014 550.0 550.0
6.125% senior notes due 2016 700.0 700.0
5.75% senior notes due 2017 1,750.0 –
6.25% senior notes due 2027 1,000.0 –
8.52% ESOP notes due 2008(1) 44.5 82.1
6.302% Enhanced Capital Advantage
Preferred Securities 1,000.0 –
Mortgage notes payable 7.3 11.7
Capital lease obligations 145.1 120.9
10,481.9 5,057.4
Less:
Short-term debt (2,085.0) (1,842.7)
Current portion of long-term debt (47.2) (344.3)
$ 8,349.7 $ 2,870.4
(1) See Note 8 for further information about the Company’s ESOP Plan.
In connection with its commercial paper program, the Company
maintains a $675 million, five-year unsecured back-up credit
facility, which expires on June 11, 2009, a $675 million, five-year
unsecured back-up credit facility, which expires on June 2, 2010,
a $1.4 billion, five-year unsecured back-up credit facility, which
expires on May 12, 2011 and a $1.3 billion, five-year unsecured
back-up credit facility, which expires on March 12, 2012. The
credit facilities allow for borrowings at various rates depending
on the Company’s public debt ratings and requires the Company
to pay a quarterly facility fee of 0.1%, regardless of usage. As of
December 29, 2007, the Company had no outstanding borrow-
ings against the credit facilities. The weighted average interest
rate for short-term debt was 5.3% as of December 29, 2007 and
December 30, 2006.
On May 22, 2007, the Company issued $1.75 billion of floating
rate senior notes due June 1, 2010, $1.75 billion of 5.75%
unsecured senior notes due June 1, 2017, and $1.0 billion of
6.25% unsecured senior notes due June 1, 2027 (collectively
the “2007 Notes”). Also on May 22, 2007, the Company entered
into an underwriting agreement with Lehman Brothers, Inc.,
Morgan Stanley & Co. Incorporated, Banc of America Securities
LLC, BNY Capital Markets, Inc., and Wachovia Capital Markets,
LLC, as representatives of the underwriters pursuant to which
the Company agreed to issue and sell $1.0 billion of Enhanced
Capital Advantaged Preferred Securities (“ECAPS”) due June 1,
2062 to the underwriters. The ECAPS bear interest at 6.302%
per year until June 1, 2012 at which time they will pay interest
based on a floating rate. The 2007 Notes and ECAPS pay interest
semi-annually and may be redeemed at any time, in whole or in
part at a defined redemption price plus accrued interest. The net
proceeds from the 2007 Notes and ECAPS were used to repay the
bridge credit facility and commercial paper borrowings.
On August 15, 2006, the Company issued $800 million
of 5.75% unsecured senior notes due August 15, 2011 and
$700 million of 6.125% unsecured senior notes due August 15,
2016 (collectively the “2006 Notes”). The 2006 Notes pay interest
semi-annually and may be redeemed at any time, in whole or
in part at a defined redemption price plus accrued interest. Net
proceeds from the 2006 Notes were used to repay a portion of
the outstanding commercial paper issued to finance the acquisi-
tion of the Standalone Drug Business.
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