CVS 2011 Annual Report Download - page 65

CVS CAREMARK 63 2011 ANNUAL REPORT
in 2062 and bear interest at 6.302% per year until June 1,
2012, at which time they will pay interest based on a float-
ing rate. The 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.
On May 13, 2010, the Company issued $550 million of
3.25% unsecured senior notes due May 18, 2015 and
issued $450 million of 4.75% unsecured senior notes due
May 18, 2020 (collectively, the “2010 Notes”) for total pro-
ceeds of $991 million, which was net of discounts and
underwriting fees. The 2010 Notes pay interest semi-annually
and may be redeemed, in whole at any time, or in part from
time to time, at the Company’s option at a defined redemp-
tion price plus accrued and unpaid interest to the redemp-
tion date. The net proceeds of the 2010 Notes were used to
repay a portion of the Company’s outstanding commercial
paper borrowings and certain other corporate debt, and were
used for general corporate purposes.
On March 10, 2009, the Company issued $1.0 billion of
6.6% unsecured senior notes due March 15, 2019 (the
“March 2009 Notes”). The March 2009 Notes pay interest
semi-annually and may be redeemed, in whole or in part, at a
defined redemption price plus accrued interest. The net pro-
ceeds were used to repay the existing bridge credit facility, a
portion of the Company’s outstanding commercial paper bor-
rowings and for general corporate purposes.
On July 1, 2009, the Company issued $300 million of unse-
cured floating rate senior notes due January 30, 2011 (the
“2009 Floating Rate Notes”). The 2009 Floating Rate Note
pays interest quarterly. The net proceeds from the 2009
Floating Rate Note were used for general corporate purposes.
On September 8, 2009, the Company issued $1.5 billion of
6.125% unsecured senior notes due September 15, 2039
(the “September 2009 Notes”). The September 2009 Notes
pay interest semi-annually and may be redeemed, in whole
or in part, at a defined redemption price plus accrued inter-
est. The net proceeds were used to repay a portion of the
Company’s outstanding commercial paper borrowings,
$650 million of unsecured senior notes and were used for
general corporate purposes.
The credit facilities, back-up credit facilities, unsecured senior
notes and ECAPS contain customary restrictive financial and
operating covenants. The covenants do not materially affect
the Company’s financial or operating flexibility.
The aggregate maturities of long-term debt for each of the
five years subsequent to December 31, 2011 are $56 million
in 2012, $5 million in 2013, $556 million in 2014, $556 million
in 2015, and $707 million in 2016.
7 LEASES
The Company leases most of its retail and mail order loca-
tions, ten of its distribution centers and certain corporate
offices under noncancelable operating leases, typically with
initial terms of 15 to 25 years and with options that permit
renewals for additional periods. The Company also leases
certain equipment and other assets under noncancelable
operating leases, typically with initial terms of 3 to 10 years.
Minimum rent is expensed on a straight-line basis over the
term of the lease. In addition to minimum rental payments,
certain leases require additional payments based on sales
volume, as well as reimbursement for real estate taxes, com-
mon area maintenance and insurance, which are expensed
when incurred.
The following table is a summary of the Company’s net rental expense for operating leases for the respective years:
in millions 2011 2010 2009
Minimum rentals $ 2,087 $ 2,001 $ 1,857
Contingent rentals 49 53 61
2,136 2,054 1,918
Less: sublease income (19) (19) (19)
$ 2,117 $ 2,035 $ 1,899
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