UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-K ⌧ Annual Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 For the fiscal year ended December 29, 2007 OR Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 For the transition period from to Commission file number 001-01011 CVS CAREMARK CORPORATION (Exact name of Registrant as specified in its charter) Delaware 050494040 (State or other jurisdiction of (I.R.S. Employer Identification No.) incorporation or organization) One CVS Drive 02895 Woonsocket, Rhode Island (Zip Code) (Address of principal executive offices) (401) 765-1500 (Registrant’s telephone number, including area code) Securities registered pursuant to Section 12(b) of the Exchange Act: Common Stock, par value $0.01 per share New York Stock Exchange Title of each class Name of each exchange on which registered Securities registered pursuant to Section 12(g) of the Exchange Act: None Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes[X] No[ ] Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes[ ] No[X] Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports) and (2) has been subject to such filing requirements for the past 90 days. Yes[X] No[ ] Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. [X] Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, or a non-accelerated filer, or a smaller reporting company. See definition of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. Large accelerated filer [X] Accelerated filer [ ] Non-accelerated filer [ ] (Do not check if a smaller reporting company Smaller reporting company [ ] Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes[ ] No [X] The aggregate market value of the registrant’s common stock held by non-affiliates was approximately $53,375,286,000 as of June 29, 2007, based on the closing price of the common stock on the New York Stock Exchange. For purposes of this calculation, only executive officers and directors are deemed to be the affiliates of the registrant. As of February 21, 2008, the registrant had 1,431,879,000 shares of common stock issued and outstanding. DOCUMENTS INCORPORATED BY REFERENCE Filings made by companies with the Securities and Exchange Commission sometimes “incorporate information by reference.” This means that the company is referring you to information that was previously filed or is to be filed with the SEC, and this information is considered to be part of the filing you are reading. The following materials are incorporated by reference into this Form 10-K: • Information contained on pages 18 through 68, and pages 70 through 71 of our Annual Report to Stockholders for the fiscal year ended December 29, 2007 is incorporated by reference in our response to Items 7, 8 and 9 of Part II. • Information contained in our Proxy Statement for the 2008 Annual Meeting of Stockholders is incorporated by reference in our response to Items 10 through 14 of Part III. 1 TABLE OF CONTENTS Part I Page Item 1: Business........................................................................................................................................... 3 Item 1A: Risk Factors..................................................................................................................................... 19 Item 1B: Unresolved Staff Comments............................................................................................................ 22 Item 2: Properties......................................................................................................................................... 23 Item 3: Legal Proceedings ........................................................................................................................... 25 Item 4: Submission of Matters to a Vote of Security Holders...................................................................... 28 Executive Officers of the Registrant ................................................................................................................. 29 Part II Item 5: Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities......................................................................................................... 30 Item 6: Selected Financial Data ................................................................................................................... 32 Item 7: Management’s Discussion and Analysis of Financial Condition and Results of Operations........... 32 Item 7A: Quantitative and Qualitative Disclosures About Market Risk......................................................... 33 Item 8: Financial Statements and Supplementary Data................................................................................ 33 Item 9: Changes in and Disagreements with Accountants on Accounting and Financial Disclosure .......... 33 Item 9A: Controls and Procedures.................................................................................................................. 34 Item 9B: Other Information............................................................................................................................ 34 Part III Item 10: Directors and Executive Officers of the Registrant ......................................................................... 35 Item 11: Executive Compensation ................................................................................................................. 35 Item 12: Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters............................................................................................................ 37 Item 13: Certain Relationships and Related Transactions and Director Independence.................................. 37 Item 14: Principal Accountant Fees and Services.......................................................................................... 37 Part IV Item 15: Exhibits, Financial Statement Schedules ......................................................................................... 38 Report of Independent Registered Public Accounting Firm.............................................................................. 42 Schedule II – Valuation and Qualifying Accounts ............................................................................................ 44 Signatures ......................................................................................................................................................... 45 2 PART I Item 1. Business Overview CVS Caremark Corporation (“CVS Caremark”, the “Company”, “we” or “us”) is the largest provider of prescriptions and related healthcare services in the United States. We fill or manage more than one billion prescriptions annually. As a fully integrated pharmacy services company, we drive value for our customers by effectively managing pharmaceutical costs and improving healthcare outcomes through our approximately 6,200 CVS/pharmacy® retail stores; our pharmacy benefit management, mail order and specialty pharmacy division, Caremark Pharmacy Services; our retail-based health clinic subsidiary, MinuteClinic®; and our online pharmacy, CVS.com®. We currently operate two business segments: Retail Pharmacy and Pharmacy Services. Our business segments are operating units that offer different products and services and require distinct technology and marketing strategies. The Caremark Merger Effective March 22, 2007, we closed our merger with Caremark Rx, Inc. (“Caremark”). Following the Caremark Merger, we changed our name to “CVS Caremark Corporation.” We believe CVS and Caremark are complementary companies and the merger is expected to yield benefits for health plan sponsors through more effective cost-management solutions and innovative programs and for consumers through expanded choice, improved access and more personalized services. We also believe we can operate the combined companies more efficiently than either company could have operated on its own. In that regard, the merger has enabled us to achieve significant synergies from purchasing scale and operating efficiencies. Purchasing synergies are largely comprised of purchase discounts and/or rebates obtained from generic and brand name drug manufacturers and cost efficiencies obtained from our retail pharmacy networks. Operating synergies include decreases in overhead expense, increases in productivity and efficiencies obtained by eliminating excess capacity, decreases in prescription dispensing costs and other benefits made possible by combining complementary operations. Over the longer term, we expect the Caremark Merger will also create significant