CVS 2012 Annual Report Download - page 72

Download and view the complete annual report

Please find page 72 of the 2012 CVS annual report below. You can navigate through the pages in the report by either clicking on the pages listed below, or by using the keyword search tool below to find specific information within the annual report.

Page out of 92

  • 1
  • 2
  • 3
  • 4
  • 5
  • 6
  • 7
  • 8
  • 9
  • 10
  • 11
  • 12
  • 13
  • 14
  • 15
  • 16
  • 17
  • 18
  • 19
  • 20
  • 21
  • 22
  • 23
  • 24
  • 25
  • 26
  • 27
  • 28
  • 29
  • 30
  • 31
  • 32
  • 33
  • 34
  • 35
  • 36
  • 37
  • 38
  • 39
  • 40
  • 41
  • 42
  • 43
  • 44
  • 45
  • 46
  • 47
  • 48
  • 49
  • 50
  • 51
  • 52
  • 53
  • 54
  • 55
  • 56
  • 57
  • 58
  • 59
  • 60
  • 61
  • 62
  • 63
  • 64
  • 65
  • 66
  • 67
  • 68
  • 69
  • 70
  • 71
  • 72
  • 73
  • 74
  • 75
  • 76
  • 77
  • 78
  • 79
  • 80
  • 81
  • 82
  • 83
  • 84
  • 85
  • 86
  • 87
  • 88
  • 89
  • 90
  • 91
  • 92

CVS CAREMARK 2012 ANNUAL REPORT
70
Notes to Consolidated Financial Statements
8 Leases
The Company leases most of its retail and mail order locations, 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, common 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 2012 2011 2010
Minimum rentals $ 2,165 $ 2,087 $ 2,001
Contingent rentals 48 49 53
2,213 2,136 2,054
Less: sublease income (20) (19) (19)
$ 2,193 $ 2,117 $ 2,035
The following table is a summary of the future minimum lease payments under capital and operating leases as of
December 31, 2012:
Capital Operating
In millions Leases Leases (1)
2013 $ 20 $ 2,261
2014 21 2,078
2015 21 2,019
2016 21 1,944
2017 21 1,858
Thereafter 232 17,436
Total future lease payments 336 $ 27,596
Less: imputed interest (165)
Present value of capital lease obligations $ 171
(1) Future operating lease payments have not been reduced by minimum sublease rentals of $263 million due in the future under noncancelable subleases.
The Company finances a portion of its store development program through sale-leaseback transactions. The properties
are generally sold at net book value, which generally approximates fair value, and the resulting leases qualify and are
accounted for as operating leases. The operating leases that resulted from these transactions are included in the above
table. The Company does not have any retained or contingent interests in the stores and does not provide any guarantees,
other than a guarantee of lease payments, in connection with the sale-leaseback transactions. Proceeds from sale-lease-
back transactions totaled $529 million in 2012, $592 million in 2011 and $507 million in 2010.
8