SECURITIES AND EXCHANGE COMMISSION FORM 10-K Annual report pursuant to section 13 and 15(d) Filing Date: 2010-02-26 | Period of Report: 2009-12-31 SEC Accession No. 0001193125-10-043086 (HTML Version on secdatabase.com) FILER CVS CAREMARK CORP Mailing Address Business Address ONE CVS DR. ONE CVS DR. CIK:64803| IRS No.: 050494040 | State of Incorp.:DE | Fiscal Year End: 1231 WOONSOCKET RI 02895 WOONSOCKET RI 02895 Type: 10-K | Act: 34 | File No.: 001-01011 | Film No.: 10640360 4017651500 SIC: 5912 Drug stores and proprietary stores Copyright © 2012 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document Table of Contents UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-K x Annual Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 For the fiscal year ended December 31, 2009 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 incorporation or organization) Identification No.) One CVS Drive Woonsocket, Rhode Island 02895 (Address of principal executive offices) (Zip Code) (401) 765-1500 (Registrants 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 whether the registrant has submitted electronically and posted on its corporate Website, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). 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 registrants 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. ¨ Copyright © 2012 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document 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 registrants common stock held by non-affiliates was approximately $46,267,935,658 as of June 30, 2009, 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 22, 2010, the registrant had 1,390,515,000 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 22 through 71, and page 73 of our Annual Report to Stockholders for the fiscal year ended December 31, 2009 is incorporated by reference in our response to Items 7, 8 and 9 of Part II. Information contained in our Proxy Statement for the 2010 Annual Meeting of Stockholders is incorporated by reference in our response to Items 10 through 14 of Part III. Copyright © 2012 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document Table of Contents TABLE OF CONTENTS Page Part I Item 1: Business 3 Item 1A: Risk Factors 22 Item 1B: Unresolved Staff Comments 27 Item 2: Properties 27 Item 3: Legal Proceedings 29 Item 4: Submission of Matters to a Vote of Security Holders 31 Executive Officers of the Registrant 32 Part II Item 5: Market for Registrants Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities 34 Item 6: Selected Financial Data 35 Item 7: Managements Discussion and Analysis of Financial Condition and Results of Operations 36 Item 7A: Quantitative and Qualitative Disclosures About Market Risk 36 Item 8: Financial Statements and Supplementary Data 36 Item 9: Changes in and Disagreements with Accountants on Accounting and Financial Disclosure 36 Copyright © 2012 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document Item 9A: Controls and Procedures 36 Item 9B: Other Information 37 Part III Item 10: Directors and Executive Officers of the Registrant 38 Item 11: Executive Compensation 38 Item 12: Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters 38 Item 13: Certain Relationships and Related Transactions and Director Independence 38 Item 14: Principal Accountant Fees and Services 38 Part IV Item 15: Exhibits, Financial Statement Schedules 39 Report of Independent Registered Public Accounting Firm Schedule II Valuation and Qualifying Accounts 45 Signatures 46 2 Copyright © 2012 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document Table of Contents PART I Item 1. Business Overview CVS Caremark Corporation (CVS Caremark, the Company, we or us) is the largest pharmacy health care provider in the United States. As a fully integrated pharmacy services company, we believe we can drive value for our customers by effectively managing pharmaceutical costs and improving health care outcomes through our pharmacy benefit management, mail order and specialty pharmacy division, Caremark Pharmacy Services®; approximately 7,000 CVS/pharmacy® retail stores; our retail-based health clinic subsidiary, MinuteClinic®; and our online pharmacy, CVS.com®. In March 2007, we completed our merger with Caremark Rx, Inc. (the Caremark Merger). Following the Caremark Merger, we changed our name to CVS Caremark Corporation and Caremark Rx, Inc. became a wholly-owned subsidiary, Caremark Rx, L.L.C. (Caremark). The Caremark Merger brought together the nations largest retail pharmacy chain and a leading pharmacy benefit manager. We believe the Caremark Merger has uniquely positioned our Company to deliver significant benefits to health plan sponsors through effective cost management solutions and innovative programs that engage plan members and promote healthier and more cost-effective behaviors. In addition, the Caremark Merger has enhanced our ability to offer plan members and consumers expanded choice, greater access and more personalized services. Business Segments During the third quarter of 2009, we made changes to our reportable segments to reflect changes that were made to the way our management evaluates the performance of operations, develops strategy and allocates resources. This change involves recording certain administrative expenses previously recorded within the Pharmacy Services and Retail Pharmacy segments in a new Corporate segment. The Corporate segment consists of costs primarily associated with executive management, corporate relations, legal, compliance, human resources, corporate information technology and finance. This change had no impact on our consolidated results of operations. As a result of this change, the Company has three segments: Pharmacy Services, Retail Pharmacy and Corporate. Our historical segment disclosures have been revised to conform to the current presentation. During the third quarter of 2009, we also made a change to our Pharmacy Services segment as it relates to our intersegment activities (such as the Maintenance Choice® program). This change impacts the gross profit and operating profit lines within the Pharmacy Services segment. Under the Maintenance Choice program, eligible members in plans sponsored by Pharmacy Services clients can elect to pick up their maintenance prescriptions at Retail Pharmacy segment stores instead of receiving them through the mail. When this occurs, both the Pharmacy Services and Retail Pharmacy segments now record the revenue, gross profit and operating profit on a standalone basis and corresponding