CVS 2014 Annual Report Download - page 40

Management’s Discussion and Analysis
of Financial Condition and Results of Operations
38
CVS Health
Long-term borrowings — On August 7, 2014, the Company issued $850 million of 2.25% unsecured senior notes
due August 12, 2019 and $650 million of 3.375% unsecured senior notes due August 12, 2024 (collectively, the
“2014 Notes”) for total proceeds of approximately $1.5 billion, net of discounts and underwriting fees. The 2014
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 2014 Notes were used for general corporate purposes and to repay certain corporate debt.
On August 7, 2014, the Company announced tender offers for any and all of the 6.25% Senior Notes due 2027, and
up to a maximum amount of the 6.125% Senior Notes due 2039, the 5.75% Senior Notes due 2041 and the 5.75%
Senior Notes due 2017, for up to an aggregate principal amount of $1.5 billion. On August 21, 2014, the Company
increased the aggregate principal amount of the tender offers to $2.0 billion and completed the repurchase for the
maximum amount on September 4, 2014. The Company paid a premium of $490 million in excess of the debt
principal in connection with the tender offers, wrote off $26 million of unamortized deferred financing costs and
incurred $5 million in fees, for a total loss on the early extinguishment of debt of $521 million. The loss was recorded
in income from continuing operations in the condensed consolidated statement of income for the year ended
December 31, 2014.
During the year ended December 31, 2014, the Company repurchased the remaining $41 million of outstanding
Enhanced Capital Advantage Preferred Securities (“ECAPS”) at par. The fees and write-off of deferred issuance
costs associated with the early extinguishment of the ECAPS were immaterial.
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 in January 2014. The remainder was used for general corporate purposes.
On November 26, 2012, we issued $1.25 billion of 2.75% unsecured senior notes due December 1, 2022 (the “2012
Notes”) for total proceeds of approximately $1.24 billion, net of discounts and underwriting fees. The 2012 Notes
pay interest semi-annually and may be redeemed, in whole at any time, or in part from time to time, at our option at
a defined redemption price plus accrued and unpaid interest to the redemption date. The net proceeds of the 2012
Notes were used for general corporate purposes and to repay certain corporate debt.
Also on November 26, 2012, we announced tender offers for any and all of the 6.6% Senior Notes due 2019, and
up to a maximum amount of the 6.125% Senior Notes due 2016 and 5.75% Senior Notes due 2017, for up to an
aggregate principal amount of $1.0 billion. In December 2012, we increased the aggregate principal amount of the
tender offers to $1.325 billion and completed the repurchase for the maximum amount. We paid a premium of
$332 million in excess of the debt principal in connection with the tender offers, wrote off $13 million of unamortized
deferred financing costs and incurred $3 million in fees, for a total loss on the early extinguishment of debt of
$348 million. The loss was recorded in income from continuing operations on the consolidated statement of income.
Our backup credit facilities and unsecured senior notes (see Note 5 to the Consolidated Financial Statements)
contain customary restrictive financial and operating covenants.