CVS 2013 Annual Report Download - page 63

61
2013 Annual Report
The following are the components of property and equipment at December 31:
In millions 2013 2012
Land $ 1,460 $ 1,429
Building and improvements
2,694 2,614
Fixtures and equipment
8,419 7,928
Leasehold improvements
3,320 3,105
Software
1,515 1,230
17,408 16,306
Accumulated depreciation and amortization
(8,793) (7,674)
Property and equipment, net
$ 8,615 $ 8,632
The gross amount of property and equipment under capital leases was $260 million and $219 million as of
December 31, 2013 and 2012, respectively. Accumulated amortization of property and equipment under capital
lease was $74 million and $64 million as of December 31, 2013 and 2012, respectively. Amortization of property and
equipment under capital lease is included within depreciation expense. Depreciation expense totaled $1.4 billion,
$1.3 billion and $1.1 billion in 2013, 2012 and 2011, respectively.
Goodwill and other indefinitely-lived assets – Goodwill and other indefinitely-lived assets are not amortized, but
are subject to impairment reviews annually, or more frequently if necessary. See Note 4 for additional information on
goodwill and other indefinitely-lived assets.
Intangible assets – Purchased customer contracts and relationships are amortized on a straight-line basis over
their estimated useful lives between 10 and 20 years. Purchased customer lists are amortized on a straight-line basis
over their estimated useful lives of up to 10 years. Purchased leases are amortized on a straight-line basis over the
remaining life of the lease. See Note 4 for additional information about intangible assets.
Impairment of long-lived assets – The Company groups and evaluates fixed and finite-lived intangible assets
for impairment at the lowest level at which individual cash flows can be identified, whenever events or changes in
circumstances indicate that the carrying value of an asset may not be recoverable. If indicators of impairment are
present, the Company first compares the carrying amount of the asset group to the estimated future cash flows
associated with the asset group (undiscounted and without interest charges). If the estimated future cash flows used
in this analysis are less than the carrying amount of the asset group, an impairment loss calculation is prepared. The
impairment loss calculation compares the carrying amount of the asset group to the asset group’s estimated future
cash flows (discounted and with interest charges). If required, an impairment loss is recorded for the portion of the
asset group’s carrying value that exceeds the asset group’s estimated future cash flows (discounted and with interest
charges).
Redeemable noncontrolling interest – Through June 29, 2012, the Company had an approximately 60% owner-
ship interest in Generation Health, Inc. (“Generation Health”) and consolidated Generation Health in its consolidated
financial statements. The nonemployee noncontrolling shareholders of Generation Health held put rights for the
remaining interest in Generation Health that if exercised would require the Company to purchase the remaining
interest in Generation Health in 2015 for a minimum of $26 million and a maximum of $159 million, depending on
certain financial metrics of Generation Health in 2014. Since the noncontrolling shareholders of Generation Health
had a redemption feature as a result of the put rights, the Company had classified the redeemable noncontrolling
interest in Generation Health in the mezzanine section of the consolidated balance sheet outside of shareholders’
equity. On June 29, 2012, the Company acquired the remaining 40% interest in Generation Health from minority
shareholders and employee option holders for $26 million and $5 million, respectively, for a total of $31 million.