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68
CVS Caremark
Notes to Consolidated Financial Statements
The Company recorded the cumulative effect of these changes in accounting principle as of January 1, 2012. The
Company determined that retrospective application for periods prior to 2012 is impracticable, as the period-specific
information necessary to value prescription drug inventories in the Retail Pharmacy Segment under the weighted
average cost method is unavailable. The Company implemented a new pharmacy cost accounting system to value
prescription drug inventory as of January 1, 2012 and calculated the cumulative impact. The effect of these changes
in accounting principle as of January 1, 2012 was a decrease in inventories of $146 million, an increase in current
deferred income tax assets of $57 million and a decrease in retained earnings of $89 million.
Had the Company not made these changes in accounting principle, for the year ended December 31, 2012, income
from continuing operations and net income attributable to CVS Caremark would have been approximately $19 million
lower. For the year ended December 31, 2012, basic and diluted earnings per common share for income from continu-
ing operations attributable to CVS Caremark and net income attributable to CVS Caremark would have been reduced
by $0.01.
3 Discontinued Operations
On November 1, 2011, the Company sold its TheraCom, L.L.C. (“TheraCom”) subsidiary to AmerisourceBergen
Corporation for $250 million, plus a working capital adjustment of $7 million which the Company received in March
2012. TheraCom is a provider of commercialization support services to the biotech and pharmaceutical industries.
The TheraCom business had historically been part of the Company’s PSS. The results of the TheraCom business are
presented as discontinued operations and have been excluded from both continuing operations and segment results
for all periods presented.
In connection with certain business dispositions completed between 1991 and 1997, the Company retained guarantees
on store lease obligations for a number of former subsidiaries, including Linens ‘n Things which filed for bankruptcy in
2008. The Company’s income (loss) from discontinued operations includes lease-related costs which the Company
believes it will likely be required to satisfy pursuant to its Linens ‘n Things lease guarantees.
Below is a summary of the results of discontinued operations for the years ended December 31:
In millions
2013 2012 2011
Net revenues of TheraCom
$ —
$ — $ 650
Income from operations of TheraCom
$ —
$ — $ 18
Gain on disposal of TheraCom
—
— 53
Loss on disposal of Linens ‘n Things
(12)
(12) (7)
Income tax benefit (provision)
4
5 (95)
Loss from discontinued operations, net of tax
$ (8)
$ (7) $ (31)