CVS 2013 Annual Report Download - page 50

48
CVS Caremark
Management’s Discussion and Analysis
of Financial Condition and Results of Operations
Recently Proposed Accounting Standard Update
In May 2013, the FASB issued a revised proposed accounting standard update on lease accounting that will require
entities to recognize assets and liabilities arising from lease contracts on the balance sheet. The proposed accounting
standard update states that lessees and lessors should apply a “right-of-use model” in accounting for all leases.
Under the proposed model, lessees would recognize an asset for the right to use the leased asset, and a liability for
the obligation to make rental payments over the lease term. The lease term is defined as the noncancelable term that
takes into account renewal options and termination options if there is a significant economic incentive for an entity
to exercise or not exercise the option. The accounting by a lessor would reflect its retained exposure to the risks
or benefits of the underlying leased asset. A lessor would recognize an asset representing its right to receive lease
payments based on the expected term of the lease. The Company cannot presently determine the potential impact
the proposed standard would have on its results of operations. While the Company believes that the proposed
standard, as currently drafted, will likely have a material impact on its financial position, it will not have a material
impact on its liquidity; however, until the proposed standard is finalized, such evaluation cannot be completed.
Cautionary Statement Concerning Forward-Looking Statements
The Private Securities Litigation Reform Act of 1995 (the “Reform Act”) provides a safe harbor for forward-looking
statements made by or on behalf of CVS Caremark Corporation. The Company and its representatives may, from time
to time, make written or verbal forward-looking statements, including statements contained in the Company’s filings
with the SEC and in its reports to stockholders. Generally, the inclusion of the words “believe,” “expect,” “intend,”
“estimate,” “project,” “anticipate,” “will,” “should” and similar expressions identify statements that constitute forward-
looking statements. All statements addressing operating performance of CVS Caremark Corporation or any subsidiary,
events or developments that the Company expects or anticipates will occur in the future, including statements
relating to corporate strategy; revenue growth; earnings or earnings per common share growth; adjusted earnings
or adjusted earnings per common share growth; free cash flow; debt ratings; inventory levels; inventory turn and
loss rates; store development; relocations and new market entries; retail pharmacy business, sales trends and
operations; PBM business, sales trends and operations; the Company’s ability to attract or retain customers and
clients; Medicare Part D competitive bidding, enrollment and operations; new product development; and the impact
of industry developments, as well as statements expressing optimism or pessimism about future operating results
or events, are forward-looking statements within the meaning of the Reform Act.
The forward-looking statements are and will be based upon management’s then-current views and assumptions
regarding future events and operating performance, and are applicable only as of the dates of such statements.
The Company undertakes no obligation to update or revise any forward-looking statements, whether as a result of
new information, future events, or otherwise.
By their nature, all forward-looking statements involve risks and uncertainties. Actual results may differ materially from
those contemplated by the forward-looking statements for a number of reasons, including, but not limited to:
• Risks relating to the health of the economy in general and in the markets we serve, which could impact consumer
purchasing power, preferences and/or spending patterns, drug utilization trends, the financial health of our PBM
clients or other payors doing business with the Company and our ability to secure necessary financing, suitable
store locations and sale-leaseback transactions on acceptable terms.
• Efforts to reduce reimbursement levels and alter health care financing practices, including pressure to reduce
reimbursement levels for generic drugs.