CVS 2011 Annual Report Download - page 36

Management’s Discussion and Analysis of Financial Condition
and Results of Operations
CVS CAREMARK 34 2011 ANNUAL REPORT
Net cash used in financing activities was approximately
$3.5 billion in 2011, compared to net cash used in financing
activities of $2.8 billion in 2010 and net cash used in financ-
ing activities of $3.2 billion in 2009. Net cash used in financ-
ing activities during 2011, was primarily due to $3.0 billion
of share repurchases associated with the share repurchase
program outlined below, as well as a net reduction in our
outstanding debt of $209 million. Net cash used in financing
activities during 2010, was primarily due to the repayment
of long-term-debt of approximately $2.1 billion, $1.5 billion
of share repurchases associated with the share repurchase
programs described below, partially offset by the proceeds
received of $991 million related to the issuance of long-
term debt. Net cash used in financing activities during 2009
was primarily due to approximately $2.5 billion of share
repurchases associated with the share repurchase pro-
grams described below, the net reduction of approximately
$2.2 billion of our outstanding commercial paper borrow-
ings, the repayment of $500 million of borrowings outstand-
ing under our bridge credit facility used to finance the Longs
Acquisition, and the payment of $439 million of dividends
on our common stock. This was partially offset by the net
increase in long-term debt of approximately $2.1 billion and
proceeds from the exercise of stock options of $250 million.
Share repurchase programs – On August 23, 2011, our
Board of Directors authorized a share repurchase program for
up to $4.0 billion of outstanding common stock (the “2011
Repurchase Program”). The share repurchase authorization,
which was effective immediately, permits us to effect repur-
chases from time to time through a combination of open mar-
ket repurchases, privately negotiated transactions, accelerated
share repurchase transactions, and/or other derivative trans-
actions. The 2011 Repurchase Program may be modified or
terminated by the Board of Directors at any time.
Pursuant to the authorization under the 2011 Repurchase
Program, on August 24, 2011, we entered into a $1.0 billion
fixed dollar accelerated share repurchase (“ASR”) agreement
with Barclays Bank PLC (“Barclays”). The ASR agreement
contained provisions that establish the minimum and maxi-
mum number of shares to be repurchased during its term.
Pursuant to the ASR agreement, on August 25, 2011,
we paid $1.0 billion to Barclays in exchange for Barclays
delivering 20.3 million shares of common stock to us. On
September 16, 2011, upon establishment of the minimum
number of shares to be repurchased, Barclays delivered
an additional 5.4 million shares of common stock to us. At
the conclusion of the transaction on December 28, 2011,
Barclays delivered a final installment of 1.6 million shares
of common stock on December 29, 2011. The aggregate
27.3 million shares of common stock delivered to us by
Barclays, were placed into treasury stock. As of December
31, 2011, we had approximately $3.0 billion remaining under
the 2011 Repurchase Program.
On June 14, 2010, our Board of Directors authorized a
share repurchase program for up to $2.0 billion of our out-
standing common stock (the “2010 Repurchase Program”).
During the year ended December 31, 2011, we repur-
chased an aggregate of 56.4 million shares of common
stock for approximately $2.0 billion, completing the 2010
Repurchase Program.
On November 4, 2009, our Board of Directors authorized a
share repurchase program for up to $2.0 billion of our out-
standing common stock (the “2009 Repurchase Program”).
In 2009, we repurchased 16.1 million shares of common
stock for approximately $500 million pursuant to the 2009
Repurchase Program. During 2010, we repurchased 42.4 mil-
lion shares of common stock for approximately $1.5 billion,
completing the 2009 Repurchase Program.
On May 7, 2008, our Board of Directors authorized, effec-
tive May 21, 2008, a share repurchase program for up to
$2.0 billion of our outstanding common stock (the “2008
Repurchase Program”). From May 21, 2008 through
December 31, 2008, we repurchased approximately 0.6 mil-
lion shares of common stock for $23 million under the 2008
Repurchase Program. During the year ended December 31,
2009, we repurchased approximately 57.0 million shares of
common stock for approximately $2.0 billion completing the
2008 Repurchase Program.
Short-term borrowings – We had $750 million of commercial
paper outstanding at a weighted average interest rate of 0.37%
as of December 31, 2011. In connection with our commercial
paper program, we maintain a $1.3 billion, five-year unsecured
back-up credit facility, which expires on March 12, 2012, and a
$1.0 billion three-year unsecured back-up credit facility, which
expires on May 27, 2013, and a $1.3 billion, four-year unse-
cured back-up credit facility which expires on May 12, 2015.
The credit facilities allow for borrowings at various rates that are
dependent, in part, on our public debt ratings and require us to
pay a weighted average quarterly facility fee of approximately
0.04%, regardless of usage. As of December 31, 2011, there
were no borrowings outstanding under the back-up credit
facilities. We intend to renew our back-up credit facility which
expires in March 2012.
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