CVS 2012 Annual Report Download - page 41

CVS CAREMARK 2012 ANNUAL REPORT
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Between 1991 and 1997, the Company sold or spun off a number of subsidiaries, including Bob’s Stores, Linens ‘n Things,
Marshalls, Kay-Bee Toys, This End Up and Footstar. In many cases, when a former subsidiary leased a store, the Company
provided a guarantee of the store’s lease obligations. When the subsidiaries were disposed of, the Company’s guarantees
remained in place, although each initial purchaser has indemnified the Company for any lease obligations the Company
was required to satisfy. If any of the purchasers or any of the former subsidiaries were to become insolvent and failed to
make the required payments under a store lease, the Company could be required to satisfy these obligations.
As of December 31, 2012, the Company guaranteed approximately 74 such store leases (excluding the lease guarantees
related to Linens ‘n Things), with the maximum remaining lease term extending through 2022. Management believes the
ultimate disposition of any of the remaining lease guarantees will not have a material adverse effect on the Company’s
consolidated financial condition or future cash flows. Please see “Income (loss) from discontinued operations” previously
in this document for further information regarding our guarantee of certain Linens ‘n Things’ store lease obligations.
Following is a summary of our significant contractual obligations as of December 31, 2012:
Payments Due by Period
2014 to 2016 to
In millions Total 2013 2015 2017 Thereafter
Operating leases $ 27,596 $ 2,261 $ 4,097 $ 3,802 $ 17,436
Leases from discontinued operations 93 21 36 24 12
Long-term debt 8,967 1 1,100 1,731 6,135
Interest payments on long-term debt (1) 6,545 472 897 813 4,363
Other long-term liabilities reflected in our
consolidated balance sheet 512 39 152 104 217
Capital lease obligations 336 20 42 42 232
$ 44,049 $ 2,814 $ 6,324 $ 6,516 $ 28,395
(1) Interest payments on long-term debt are calculated on outstanding balances and interest rates in effect on December 31, 2012.
Critical Accounting Policies
We prepare our consolidated financial statements in conformity with generally accepted accounting principles, which
require management to make certain estimates and apply judgment. We base our estimates and judgments on historical
experience, current trends and other factors that management believes to be important at the time the consolidated
financial statements are prepared. On a regular basis, we review our accounting policies and how they are applied and
disclosed in our consolidated financial statements. While we believe the historical experience, current trends and other
factors considered, support the preparation of our consolidated financial statements in conformity with generally accepted
accounting principles, actual results could differ from our estimates, and such differences could be material.
Our significant accounting policies are discussed in Note 1 to our consolidated financial statements. We believe the
following accounting policies include a higher degree of judgment and/or complexity and, thus, are considered to be
critical accounting policies. We have discussed the development and selection of our critical accounting policies with the
Audit Committee of our Board of Directors and the Audit Committee has reviewed our disclosures relating to them.