CVS 2015 Annual Report Download - page 38

Management’s Discussion and Analysis
of Financial Condition and Results of Operations
36 CVS Health
Program may be modified or terminated by the Board of Directors at any time. The 2013 and 2012 Repurchase
Programs have been completed, as described below.
Pursuant to the authorization under the 2014 Repurchase Program, effective December 11, 2015, the Company
entered into a $725 million fixed dollar ASR with Barclays Bank PLC (“Barclays”). Upon payment of the $725 million
purchase price on December 14, 2015, the Company received a number of shares of its common stock equal to
80% of the $725 million notional amount of the ASR or approximately 6.2 million shares. At the conclusion of the
ASR program, the Company may receive additional shares equal to the remaining 20% of the $725 million notional
amount. The initial 6.2 million shares of common stock delivered to the Company by Barclays were placed into treasury
stock in December 2015. The ASR was accounted for as an initial treasury stock transaction for $580 million and a
forward contract for $145 million. The forward contract was classified as an equity instrument and was recorded within
capital surplus on the consolidated balance sheet. On January 28, 2016, the Company received 1.4 million shares of
common stock, representing the remaining 20% of the $725 million notional amount of the ASR, thereby concluding
the ASR. The remaining 1.4 million shares of common stock delivered to the Company by Barclays were placed into
treasury stock in January 2016 and the forward contract was reclassified from capital surplus to treasury stock.
Pursuant to the authorization under the 2013 Repurchase Programs, effective January 2, 2015, the Company
entered into a $2.0 billion fixed dollar ASR agreement with J.P. Morgan Chase Bank (“JP Morgan”). Upon payment of
the $2.0 billion purchase price on January 5, 2015, the Company received a number of shares of its common stock
equal to 80% of the $2.0 billion notional amount of the ASR agreement or approximately 16.8 million shares, which
were placed into treasury stock in January 2015. On May 1, 2015, the Company received approximately 3.1 million
shares of common stock, representing the remaining 20% of the $2.0 billion notional amount of the ASR, thereby
concluding the ASR. The remaining 3.1 million shares of common stock delivered to the Company by JP Morgan
were placed into treasury stock in May 2015. The ASR was accounted for as an initial treasury stock transaction for
$1.6 billion and a forward contract for $0.4 billion. The forward contract was classified as an equity instrument and
was initially recorded within capital surplus on the consolidated balance sheet and was reclassified to treasury stock
upon the settlement of the ASR in May 2015.
Pursuant to the authorization under the 2012 Repurchase Program, effective October 1, 2013, the Company entered
into a $1.7 billion fixed dollar ASR agreement with Barclays. Upon payment of the $1.7 billion purchase price on
October 1, 2013, the Company received a number of shares of its common stock equal to 50% of the $1.7 billion
notional amount of the ASR agreement or approximately 14.9 million shares at a price of $56.88 per share. The
Company received approximately 11.7 million shares of common stock on December 30, 2013 at an average
price of $63.83 per share, representing the remaining 50% of the $1.7 billion notional amount of the ASR agreement
and thereby concluding the agreement. The total of 26.6 million shares of common stock delivered to the Company
by Barclays over the term of the October 2013 ASR agreement were placed into treasury stock. The ASR was
accounted for as an initial treasury stock transaction and a forward contract. The forward contract was classified
as an equity instrument.
Each of the ASR transactions described above, the initial repurchase of the shares and delivery of the remainder of
the shares to conclude each ASR, resulted in an immediate reduction of the outstanding shares used to calculate
the weighted average common shares outstanding for basic and diluted earnings per share.
During the year ended December 31, 2015, the Company repurchased an aggregate of 48.0 million shares of
common stock for approximately $5.0 billion under the 2013 and 2014 Repurchase Programs. As of December 31,
2015, there remained an aggregate of approximately $7.7 billion available for future repurchases under the 2014
Repurchase Program and the 2013 Repurchase Program was complete.
Short-term borrowings We did not have any commercial paper outstanding as of December 31, 2015. In connec-
tion with our commercial paper program, we maintain a $1.00 billion, five-year unsecured back-up credit facility,
which expires on May 23, 2018, a $1.25 billion, five-year unsecured back-up credit facility, which expires on July 24,
2019, and a $1.25 billion, five-year unsecured back-up credit facility, which expires on July 1, 2020. The credit