CVS 2013 Annual Report Download - page 40

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Management’s Discussion and Analysis
of Financial Condition and Results of Operations
38
CVS Caremark
Pursuant to the authorizations under the 2011 and 2012 Repurchase Programs, on September 19, 2012, we entered
into a $1.2 billion fixed dollar ASR agreement with Barclays. Upon payment of the $1.2 billion purchase price on
September 20, 2012, we received a number of shares of our common stock equal to 50% of the $1.2 billion notional
amount of the ASR agreement or approximately 12.6 million shares at a price of $47.71 per share. We received
approximately 13.0 million shares of common stock on November 16, 2012 at an average price of $46.96 per share,
representing the remaining 50% of the $1.2 billion notional amount of the ASR agreement and thereby concluding
the agreement, and completing the 2011 Repurchase Program. The total of 25.6 million shares of common stock
delivered to us by Barclays over the term of the September 2012 ASR agreement were placed into treasury stock.
Pursuant to the authorization under the 2011 Repurchase Program, on August 24, 2011, we entered into a $1.0 billion
fixed dollar ASR agreement with Barclays. The ASR agreement contained provisions that establish the minimum and
maximum number of shares to be repurchased during its term. Pursuant to this 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, 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 under the August 2011 ASR agreement, were placed into treasury stock.
This represented all the repurchases that occurred during the year ended December 31, 2011 under the 2011
Repurchase Program.
During the years ended December 31, 2013 and 2012, we repurchased an aggregate of 66.2 million and 95.0 million
shares of common stock for approximately $4.0 and $4.3 billion, respectively, under the 2012 and 2011 Repurchase
Programs. As of December 31, 2013, there remained an aggregate of approximately $6.7 billion available for future
repurchases under the 2013 and 2012 Repurchase Programs.
On June 14, 2010, our Board of Directors authorized a share repurchase program for up to $2.0 billion of our
outstanding common stock (the “2010 Repurchase Program”). During the year ended December 31, 2011, we
repurchased an aggregate of 56.4 million shares of common stock for approximately $2.0 billion, completing the
2010 Repurchase Program.
Short-term borrowings –
There was no commercial paper outstanding as of December 31, 2013. In connection
with our commercial paper program, we maintain a $1.25 billion, four-year unsecured back-up credit facility, which
expires on May 23, 2016, a $1.25 billion, five-year unsecured back-up credit facility, which expires on February 17,
2017, and a $1.0 billion, five-year unsecured back-up credit facility, which expires on May 23, 2018. The credit
facilities allow for borrowings at various rates that are dependent, in part, on the Company’s public debt ratings and
require the Company to pay a weighted average quarterly facility fee of approximately 0.03%, regardless of usage.
As of December 31, 2013, there were no borrowings outstanding under the back-up credit facilities.
Long-term borrowings –
On December 2, 2013, the Company issued $750 million of 1.2% unsecured senior notes
due December 5, 2016; $1.25 billion of 2.25% unsecured senior notes due December 5, 2018; $1.25 billion of 4%
unsecured senior notes due December 5, 2023; and $750 million of 5.3% unsecured senior notes due December 5,
2043 (the “2013 Notes”) for total proceeds of approximately $4.0 billion, net of discounts and underwriting fees. The
2013 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 redemption price plus accrued and unpaid interest to the redemption date. The net
proceeds of the 2013 Notes were used to repay commercial paper outstanding at the time of issuance and to fund
the acquisition of Coram LLC in January 2014. The remainder will be used for general corporate purposes.