As filed with the Securities and Exchange Commission on May 18, 2001January 31, 2003
Registration No. 333-333-______
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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
---------------------------------
Form S-4
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
---------------------------------
CVS CORPORATION
---------------
(Exact name of registrant as specified in its charter)
Delaware 05-0494040
- ---------------------------------- ------------------------------
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization) Identification No.)
One CVS Drive
Woonsocket, RI 02895
(401) 765-1500
(Address, including zip code, and telephone number, including area code, of
registrant's principal executive offices)
David B. Rickard
Executive Vice President, Chief Financial Officer and
Chief FinancialAdministrative Officer
CVS Corporation
One CVS Drive
Woonsocket, RI 02895
(401) 765-1500
(Name, address, including zip code, and telephone number, including area code,
of agent for service)
---------------------------------
Copies to:
Douglas A. Sgarro
Deanna L. Kirkpatrick Senior Vice PresidentDouglas A. Sgarro
Davis Polk & Wardwell Senior Vice President and
450 Lexington Avenue Chief Legal Officer
450 Lexington Avenue CVS Corporation
New York, NY 10017 CVS Corporation
(212) 450-4000 One CVS Drive
(212) 450-4000
Woonsocket, RI 02895
(401) 765-1500
Approximate date of commencement of proposed sale to the public: From time
to time after the effective date of this Registration Statement.
If the securities being registered on this Form are being offered in
connection with the formation of a holding company and there is compliance with
General Instruction G, check the following box: [ ]
/ /
CALCULATION OF REGISTRATION FEE
===================================================================================================================================
Proposed Maximum
Title of Each Class Amount to be Proposed Maximum Aggregate Offering Amount of
of Securities to be Registered Registered Offering Price(1) Price(1) Registration Fee(2)
- -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
5 5/3 7/8% Exchange Notes due
March
15, 2006............................. $300,000,000November 1, 2007 $ 300,000,000 100% $300,000,000 $75,000
===================================================================================================================================$ 300,000,000 $ 27,600
====================================================================================================================
(1) Estimated solely for the purpose of calculating the amount of the registration fee.
(2) Calculated pursuant to Rule 457(f).
-----------------------
The registrant hereby amends this Registration Statement on such date or
dates as may be necessary to delay its effective date until the registrant shall
file a further amendment which specifically states that this Registration
Statement shall thereafter become effective in accordance with Section 8(a) of the
Securities Act of 1933, as amended or until the Registration Statement shall
become effective on such date as the Commission, actingregistration fee.
(2) Calculated pursuant to said SectionRule 457(f).
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THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(a) OF
THE SECURITIES ACT OF 1933, AS AMENDED OR UNTIL THE REGISTRATION STATEMENT SHALL
BECOME EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID
SECTION 8(a), may determine.
===============================================================================MAY DETERMINE.
================================================================================
The information in this prospectus is not complete and may be changed. We may
not sell these securities until the registration statement filed with the
Securities and Exchange Commission is effective. This prospectus is not an offer
to sell these securities and it is not soliciting an offer to buy these
securities in any state where the offer or sale is not permitted.
SUBJECT TO COMPLETION, DATED May 18, 2001January 31, 2003
PROSPECTUS
CVS CorporationCORPORATION
Offer to Exchange
5 5/3 7/8% Notes Due March 15, 2006November 1, 2007
for
5 5/3 7/8% Exchange Notes Due March 15, 2006November 1, 2007
We are offering to exchange up to $300,000,000 of our new 5 5/3 7/8% Exchange
Notes due March 15, 2006November 1, 2007 for up to $300,000,000 of our existing 5 5/3 7/8% Notes
due March 15, 2006.November 1, 2007. The terms of the new notes are identical in all material
respects to the terms of the old notes, except that the new notes have been
registered under the Securities Act, and the transfer restrictions and
registration rights relating to the old notes do not apply to the new notes.
To exchange your old notes for new notes:
o- you are required to make the representations described on page 3229 to
us
o- you must complete and send the letter of transmittal that accompanies
this prospectus to the exchange agent, The Bank of New York, by 5:00
p.m., New York time, on , 2001
o_______________, 2003
- you should read the section called "The Exchange Offer" for further
information on how to exchange your old notes for new notes
Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved of the notes to be issued in the exchange
offer or passed upon the adequacy or accuracy of this prospectus. Any
representation to the contrary is a criminal offense.NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
COMMISSION HAS APPROVED OR DISAPPROVED OF THE NOTES TO BE ISSUED IN THE EXCHANGE
OFFER OR PASSED UPON THE ADEQUACY OR ACCURACY OF THIS PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
The date of this prospectus is , 20012003
1
WHERE YOU CAN FIND MORE INFORMATION
We file annual, quarterly and special reports, proxy statements and other
information with the U.S. Securities and Exchange Commission. Our SEC filings
are available to the public over the Internet at the SEC's web site at
http://www.sec.gov. You may also read and copy any document we file at the SEC's
public reference rooms in Washington, D.C., New York, New York and Chicago,
Illinois. Please call the SEC at 1-800-SEC-0330 for further information on the
public reference rooms. In addition, because our common stock is listed on the
New York Stock Exchange, reports and other information concerning CVS can also
be inspected at the office of the New York Stock Exchange, Inc., 20 Broad
Street, New York, New York 10005. In addition, our SEC filings, as well as other
Company information, are available via the internet on our corporate web site at
http://www.cvs.com.
This prospectus is a part of a registration statement filed by us with the
SEC under the Securities Act. As allowed by SEC rules, this prospectus does not
contain all of the information that you can find in the registration statement
or the exhibits to the registration statement.
The SEC allows us to "incorporate by reference" the information we file
with them, which means that we can disclose important information to you by
referring you to those documents. The information incorporated by reference
includes important business and financial information that is not included in
this document and is an important part of this prospectus, and information that
we file later with the SEC will automatically update and supersede the
information in this prospectus. We incorporate by reference the documents listed
below and any future filings made with the SEC under Sections 13(a), 13(c), 14,
or 15(d) of the Exchange Act until the termination of the offering under this
prospectus.
(1)(i) CVS' Annual Report on Form 10-K...................... Year10-K.....................Year ended December 30, 2000;
(2)29, 2001
(ii) CVS' Quarterly Report on Form 10-Q................... Quarterly period10-Q.......Quarterly periods ended March 31, 2001;
(3) CVS' Current Reports on Form 8-K..................... Filed on March 30, 20012002,
June 29, 2002 and March 20, 2001.September 28, 2002
You may request a copy of these filings at no cost, by writing or
telephoning us at the following address:
Nancy R. Christal
Vice President, Investor Relations
CVS Corporation
670 White Plains Road, Suite 210
Scarsdale, New York, 10583
(800) 201-0938
To obtain timely delivery of copies of these filings, you must make your
request no later than .TO OBTAIN TIMELY DELIVERY OF COPIES OF THESE FILINGS, YOU MUST MAKE YOUR
REQUEST NO LATER THAN , 2003.
2
CVS CORPORATION
CVS Corporation is a leader in the retail drugstore industry in the United
States with net sales of $20.1$22.2 billion in fiscal 2000. We are2001, making us the second
largest retail drugstore chain based on sales. As of September 28, 2002, we
operated 4,027 retail and specialty pharmacy stores in 32 states and the
District of Columbia, making us the largest retail drugstore chain in the nation
based on store countcount. At the end of fiscal 2001, we operated in 60 of the top
100 U.S. drugstore markets and holdheld the number one market share in 3435 of the top 100 U.S. drugstorethese
markets, more than any other retail drugstore chain. We alsoAt the end of fiscal 2001,
we held the number one or number two market share in 73% of the markets in which
we operated. During fiscal 2001, we filled moreover 309 million prescriptions, than any otheror
approximately 11% of the U.S. retail drugstore chain in America during fiscal 2000.market.
CVS Corporation is a Delaware corporation. Our principal executive offices areStore Support Center
(corporate office) is located at One CVS Drive, Woonsocket, Rhode Island 02895,
telephone (401) 765-1500.
CAUTIONARY STATEMENT CONCERNING FORWARD-LOOKING STATEMENTS
In the documents we have incorporated by reference into this prospectus
(as well as in our web site, press releases and oral statements made by our
management and/or representatives), we make forward-looking statements. These
statements are subject to risks and uncertainties. Forward-looking statements
include the information concerning:
o our future results of operations, including sales and earnings per
common share growth;
o our ability to continue to reduce selling, general and administrative
expenses as a percentage of net sales;
o our belief concerning the growth and profitability of CVS ProCare;
o our belief concerning the growth and profitability of CVS.com;
o our belief concerning our ability to increase our free cash flow;
o our belief that we will have sufficient cash flows to support our
future working capital needs, capital expenditures and debt service
requirements;
o our belief that we can continue to reduce inventory levels and improve
inventory turnover;
o our planned store development program, including store openings,
number of freestanding locations, new markets and capital
expenditures; and
o our belief that we can continue to improve operating performance by
relocating existing in-line stores to freestanding locations.
In addition, statements that include the words "believes," "expects,"
"anticipates," "intends," "estimates" or other similar expressions are
forward-looking statements. For those statements, we claim the protection of the
safe harbor for forward-looking statements contained in theThe Private Securities Litigation Reform Act of 1995.
What Factors Could Affect the Outcome of Our Forward-Looking Statements?
You should understand that the following important factors, in addition to
those discussed elsewhere in the documents which are incorporated by reference
(as well as in our web site, press releases and oral1995 (the "Reform Act")
provides a safe harbor for forward-looking statements made by or on behalf of
CVS Corporation. We and our management and/representatives may, from time to time, make written
or representatives) could affectverbal forward-looking statements, including statements contained in our
filings with the Securities and Exchange Commission and in our reports to
stockholders. Generally, the inclusion of the words "believe," "expect,"
"intend," "estimate," "anticipate," "will," and similar expressions identify
statements that constitute "forward-looking statements". All statements
addressing operating performance of CVS Corporation or any subsidiary, events,
or developments that we expect or anticipate will occur in the future, results of CVSincluding
statements relating to sales growth, earnings or earnings per common share
growth, free cash flow, inventory levels and 3
could cause thoseturn rates, store development,
relocations and new market entries, as well as statements expressing optimism or
pessimism about future operating results or other outcomesevents, are forward-looking
statements within the meaning of the Reform Act. The forward-looking statements
are and will be based upon management's then-current views and assumptions
regarding future events and operating performance, and are applicable only as of
the dates of such statements. We undertake no obligation to update or revise any
forward-looking statements, whether as a result of new information, future
events, or otherwise. By their nature, all forward-looking statements involve
risks and uncertainties. Actual results may differ materially from those
expressedcontemplated by the forward-looking statements for a number of reasons,
including but not limited to:
- The strength of the economy in our forward-looking statements.
Industry and Market Factors
o changes in economic conditions generallygeneral or in the markets served by
CVS;
o future federalCVS, including changes in consumer purchasing power and/or state regulatory and legislative actions
affecting CVS and/or the chain drugstore industry;
o consumer preferences and spending
patterns;
o- Increased competition from other drugstore chains, from alternative
distribution channels such as supermarkets, membership clubs, mail
order companies, discount retailers and internet companies
(e-commerce) and from other third party plans;
o- Changes in consumer preference or loyalties;
- Price reductions taken by us in response to competitive pressures, as
well as price reductions taken to drive demand that may not result in
anticipated sales levels;
- Our ability to achieve projected levels of efficiencies, cost
reduction measures and other benefits from the restructuring plan
announced during the fourth quarter of fiscal 2001 and other
initiatives;
- The effects of litigation and the creditworthiness of the purchasers
of former businesses whose store leases are guaranteed by CVS;
- Our ability to generate sufficient cash flows to support capital
expansion, and general operating activities, and our ability to obtain
necessary financing at favorable interest rates;
- Changes in laws and regulations, including changes in accounting
standards, taxation requirements, including tax rate changes, new tax
laws and revised tax law interpretations;
- Interest rate fluctuations and other capital market conditions;
3
- The continued introduction of successful new prescription drugs;
- The continued efforts of health maintenance organizations, managed
care organizations, pharmacy benefit management companies governmental agencies and other
third party payers to reduce prescription drug costs;
and
o changes in accounting policies and practices, including taxation
requirements.
Operating Factors
o our- Our ability to continue to successfully implement new informationcomputer systems
and technologies;
o our- Our ability to continue to secure suitable new store locations at
favorableacceptable lease terms;
o our- Our ability to continue to purchase inventory on favorable terms;
o adverse determinations with respect to litigation or other claims;
o our- Our ability to attract, hire and retain suitable pharmacists and
management personnel;
o our- Our ability to establish effective advertising, marketing and
promotional programs (including pricing strategies) in the different
geographic markets in which we operate; and
o- Other risks and uncertainties detailed from time to time in our
filings with the creditworthinessSecurities and Exchange Commission.
The foregoing list is not exhaustive. There can be no assurance that we
have correctly identified and appropriately assessed all factors affecting its
business. Additional risks and uncertainties not presently known to us or that
we currently believe to be immaterial also may adversely impact us. Should any
risks and uncertainties develop into actual events, these developments could
have material adverse effects on our business, financial condition, and results
of the purchasers of former businesses whose
store leasesoperations. For these reasons, you are guaranteed by CVS.cautioned not to place undue reliance
on our forward-looking statements.
USE OF PROCEEDS
We will not receive any cash proceeds from the issuance of the new notes.
The new notes will be exchanged for old notes as described in this prospectus
upon our receipt of old notes. We will cancel all of the old notes surrendered
in exchange for the new notes.
Our net proceeds from the sale of the old notes were approximately $297$296
million, after deduction of the initial purchasers' discounts and commissions
and other expenses of the offering. We used those net proceeds to repay
outstanding commercial paper.paper issued as of and subsequent to September 28, 2002.
4
SELECTED CONSOLIDATED FINANCIAL AND OPERATING DATA
The following tables set forth the selected consolidated financial and
operating data for CVS. The selected consolidated financial and operating data
as of and for the 53-weeksfifty-two week periods ended December 29, 2001 and December
30, 2000, the fifty-three week period ended January 1, 2000 and the 52-weeksfifty-two
week periods ended December
30, 2000, December 26, 1998, and December 27, 1997 and December 28, 1996 has been derived
from CVS Corporation'sCVS' consolidated financial statements, which have been audited by KPMG
LLP, independent accountants. You should not take historical results as
necessarily indicative of the results that may be expected for any future
period. The selected consolidated financial and operating data as of and for the
thirteen weeksnine months ended March 31,September 28, 2002 and September 29, 2001 and April 1, 2000 havehas been derived
from CVS' unaudited consolidated condensed financial statements. The results for
the thirteen weeksnine months ended March 31, 2001September 28, 2002 are not necessarily indicative of
results that may be expected for the entire fiscal year.
You should read this selected consolidated financial and operating data in
conjunction with CVS' Annual Report on Form 10-K for the fiscal year ended
December 30, 200029, 2001 and theCVS' Quarterly Report on Form 10-Q for the quarterly
period ended March 31, 2001.September 28, 2002.
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Fiscal Years 13 Weeks Ended
------------------------------------------------------ ---------------------
NINE MONTHS ENDED FISCAL YEAR
------------------------ --------------------------------------------------------------
2001 2000 1999 1998 1997
IN MILLIONS, EXCEPT PER SHARE AMOUNTS 9/28/02 9/29/01 (52 weeks)WEEKS) (52 weeks)WEEKS) (53 WEEKS) (52 weeks) (53 weeks)WEEKS) (52 weeks) April 1, March 31,
In millions, except per share 1996 1997 1998 1999 2000 2000 2001
amounts
- ----------------------------------------------------------------------------------------------------------------WEEKS)
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Statement of Operations:STATEMENT OF OPERATIONS DATA:
Net sales $11,831.6 $13,749.6 $15,273.6 $18,098.3 $20,087.5sales............................. $ 4,739.517,836.7 $ 5,385.916,290.9 $ 22,241.4 $ 20,087.5 $ 18,098.3 $ 15,273.6 $ 13,749.6
Gross margin(1) 3,300.9....................... 4,456.1 4,283.7 5,691.0 5,361.7 4,861.4 4,129.2 3,718.3 4,129.2 4,861.4 5,361.7 1,300.0 1,453.4
Selling, general and
administrative 2,490.8& administrative..... 3,353.9 3,100.6 4,256.3 3,761.6 3,448.0 2,949.0 2,776.0 2,949.0 3,448.0 3,742.4 893.3 993.4
Depreciation and amortization 205.4amortization(2)...... 230.9 239.5 320.8 296.6 277.9 249.7 238.2 249.7 277.9 296.6 71.8 78.6
Merger, restructuring and other
nonrecurring charges 12.8 422.4 178.6and gains...... -- -- 343.3 (19.2) -- --178.6 422.4
Operating profit(2) 591.9profit(3)................... 871.3 943.6 770.6 1,322.7 1,135.5 751.9 281.7 751.9 1,135.5 1,322.7 334.9 381.4
Other expense (income), net (51.5)net........... 38.3 46.9 61.0 79.3 59.1 60.9 44.1 60.9 59.1 79.3 16.1 15.7
Income tax provision 271.0provision.................. 316.5 353.2 296.4 497.4 441.3 306.5 149.2 306.5 441.3 497.4 127.5 144.0
Earnings from continuing operations
before extraordinary item(3)item(4)........ $ 372.4516.5 $ 88.4543.5 $ 413.2 $ 746.0 $ 635.1 $ 384.5 $ 635.1 $ 746.0 $ 191.3 $ 221.7
- ----------------------------------------------------------------------------------------------------------------
Per Common Share Data:88.4
PER COMMON SHARE DATA:
Earnings from continuing operations
before extraordinary item:(3)
Basic(4).......
Basic............................... $ 0.981.29 $ 0.201.36 $ 1.02 $ 1.87 $ 1.59 $ 0.96 $ 1.59 $ 1.87 $ 0.48 $ 0.56
Diluted0.20
Diluted............................. 1.26 1.32 1.00 1.83 1.55 0.95 0.19 0.95 1.55 1.83 0.47 0.54
Cash dividends per common share 0.2200 0.2200 0.2250 0.2300 0.2300 0.0575 0.0575
- ----------------------------------------------------------------------------------------------------------------
Other Operating Data:share....... 0.1725 0.1725 0.230 0.230 0.230 0.225 0.220
OTHER OPERATING DATA:
EBITDA(5)............................. $ 1,102.2 $ 1,183.1 $ 1,091.4 $ 1,619.3 $ 1,413.4 $ 1,001.6 $ 519.9
Ratio of earnings to fixed charges(4) 3.96xcharges(6). 4.20x 4.39x 3.01x 4.56x 4.88x 3.87x 2.12x 3.87x 4.88x 4.56x 5.04x 5.21x
Pharmacy sales as a percentage of
total sales 51.6%sales......................... 67.9% 66.5% 66.1% 62.7% 58.7% 57.6% 54.7% 57.6% 58.7% 62.7% 61.6% 67.0%
Total same store sales 8.9%sales................ 9.0% 9.0% 8.6% 10.9% 12.5% 10.8% 9.7% 10.8% 12.5% 10.9% 8.8% 11.3%
Pharmacy same store sales 13.5%sales............. 12.0% 14.1% 13.0% 17.7% 19.4% 16.5% 16.5% 19.4% 17.7% 15.2% 17.6%
Third party sales as a percentage of
pharmacy sales 79.8%sales...................... 92.1% 90.6% 90.9% 89.2% 86.5% 83.7% 80.8% 83.7% 86.5% 89.2% 87.7% 90.0%
Number of stores (at end of period) 4,204... 4,027 4,135 4,191 4,133 4,098 4,122 4,094
4,122 4,098 4,133 4,078 4,127
- ----------------------------------------------------------------------------------------------------------------
Balance Sheet Data:
(End of Period)
Working capitalBALANCE SHEET:
Total working capital................. $ 1,540.32,416.3 $ 1,043.4 $1,215.92,400.8 $ 2,344.0 $ 1,972.5 $ 1,718.1 $ 1,972.51,215.9 $ 1,619.5 $ 2,390.01,043.4
Total assets 6,014.9assets.......................... 9,053.8 8,945.5 8,628.2 7,949.5 7,275.4 6,686.2 5,920.5
6,686.2 7,275.4 7,949.5 7,691.0 8,374.8Long-term debt........................ 807.7 836.2 810.4 536.8 558.5 275.7 290.4
Total long-term debt 1,204.8 290.4 275.7 558.5 536.8 558.2 836.6
Total shareholders equity 2,413.8shareholders' equity............ 5,050.9 4,713.0 4,566.9 4,304.6 3,679.7 3,110.6 2,626.5 3,110.6 3,679.7 4,304.6 3,750.9 4,538.2
- ----------------------------------------------------------------------------------------------------------------
(1) Gross margin includes the pre-tax effect of the following nonrecurring
charges: (i) in 2001, $5.7 million ($3.6 million after-tax) related to the
markdown of certain inventory contained in the stores closing as part of
the 2001 strategic restructuring to its net realizable value, (ii) in 1998,
$10.0 million ($5.9 million after-tax) related to the markdown of
noncompatible Arbor Drugs, Inc. merchandise and (ii)(iii) in 1997, $75.0
million ($49.9 million after-tax) related to the markdown of noncompatible
Revco D.S., Inc. merchandise.
5
(2) As a result of adopting SFAS No. 142 "Goodwill and Other Intangible Assets"
at the beginning of fiscal 2002, the Company no longer amortizes goodwill
and other indefinite-lived intangible assets. Goodwill amortization totaled
$24.4 million pre-tax ($22.0 million after-tax) for the nine months ended
September 29, 2001.
(3) Operating profit includes the pre-tax effect of the charges discussed in
Note (1) above and the following merger, restructuring, and other
nonrecurring charges and gain:gains: (i) in the fourth quarter of 2001,
$346.8 million ($226.9 million after-tax) related to restructuring and
asset impairment costs associated with the strategic restructuring and $3.5
million ($2.1 million after-tax) nonrecurring gain resulting from the net
effect of the $50.3 million of settlement proceeds received from various
lawsuits against certain manufacturers of brand name prescription drugs
which was offset by the Company's contribution of $46.8 million of these
settlement proceeds to the CVS Charitable Trust, Inc. to fund future
charitable giving, (ii) in 2000, $19.2 million ($11.5 million after-tax)
nonrecurring gain in total operating expenses, which
represented arepresenting partial payment of our share of the
settlement proceeds from a class action lawsuit against certain
manufacturers of brand name prescription drugs, (ii)(iii) in 1998, $147.3
million ($101.3 million after-tax) charge related to the merger of CVS and
Arbor and $31.3 million ($18.4 million after-tax) of nonrecurring costs
incurred in connection with eliminating Arbor's information technology
systems and removing Revco's noncompatible store merchandise fixtures (iii)and (iv) in
1997, $337.1 million ($229.8 million after-tax) charge related to the
merger of CVS and Revco on May 29, 1997, $54.3 million ($32.0 million
after-tax) of nonrecurring costs incurred in connection with eliminating
Revco's information technology systems and noncompatible store merchandise
fixtures and $31.0 million ($19.1 million after-tax) charge related to the
restructuring of Big B, Inc.
and (iv) in 1996, $12.8 million ($6.5
million after-tax) charge related to the write-off of costs incurred in
connection with the failed merger of Rite Aid Corporation and Revco.
5
(3)(4) Earnings from continuing operations before extraordinary item and earnings
per common share from continuing operations before extraordinary item
include the after-tax effect of the charges and gaingains discussed in Notes
(1) and (2) above(3) above.
(5) EBITDA is defined as operating profit plus depreciation and amortization.
EBITDA includes the effect of the pre-tax charges discussed in Notes (1)
and (3) above. EBITDA is not a $121.4 million ($72.1 million after-tax) gain
realized during 1996 upon the salemeasurement of certain equity securities receivedfinancial performance under
generally accepted accounting principles and does not represent cash flow
from operations. Accordingly, you should not regard this figure as partial proceeds from the salean
alternative to net income or as an indicator of Marshalls.
(4)our operating performance
or as an alternative to cash flows as a measure of liquidity. We believe
that EBITDA is widely used by analysts, investors and other interested
parties in our industry but is not necessarily comparable with similarly
titled measures for other companies.
(6) For purposes of computing the ratio of earnings to fixed charges, earnings
consist of earnings from continuing operations before income taxes and
extraordinary item and fixed charges (excluding capitalized interest).
Fixed charges consist of interest, capitalized interest and one-third of
rental expense, which is deemed representative of the interest factor.
6
DESCRIPTION OF NOTES
The old notes were issued under an indenture dated as of March 22, 2001November 4, 2002
between CVS and The Bank of New York as trustee. The following summary
highlights material terms of the indenture. Because this is a summary, it does
not contain all of the information that is included in the indenture. You should
read the entire indenture, including the definitions of the terms used below. We
define some of the terms used below in the section called "Defined termsterms"
beginning on page 22."20. We indicate those terms by placing them in bold the first
time that they are used. The indenture is subject to and governed by the Trust
Indenture Act of 1939, as amended. We have filed a copy of the indenture as an
exhibit to the registration statement to which this prospectus relates. See
"Where You Can Find More Information."
The terms of the new notes are identical in all material respects to the
terms of the old notes, except that the transfer restrictions and registration
rights relating to the old notes do not apply to the new notes. If we do not
complete the exchange offer by October 29, 2001,June 12, 2003, holders of old notes that have
complied with their obligations under the registration rights agreement will be
entitled to liquidated damages in an amount equal to a rate of 0.5% per year on
the notes until the consummation of the exchange offer. For purposes of this
section, "notes" refers to both the old notes and the new notes.
GeneralGENERAL
The notes:
o- are unsecured senior obligations;
o- mature on March 15, 2006;
oNovember 1, 2007;
- bear interest at the rate of 5 5/3 7/8% per year from March 22, 2001,November 4, 2002, or
from the most recent interest payment date to which interest has been
paid or provided for; and
o- will not be listed on a national securities exchange.
Because the notes are not secured, your claim against the assets of our
company will be junior to the extent we have granted liens on our assets to the
holders of other indebtedness. In addition, the notes are not guaranteed by any
of our subsidiaries, so you will not have any claim as a creditor against our
subsidiaries, and the claims of creditors, including trade creditors, of our
subsidiaries against our subsidiaries will be senior to your claims against
them. At March 31, 2001:
oSeptember 28, 2002:
- we had $17.7$16.3 million of secured debt,SECURED DEBT, including capitalized leases;
and
o- we had $3.8$4.0 billion of liabilities, including trade payables.
We may, without the consent of the holders of the notes, issue an unlimited
amount of additional notes under the indenture having the same terms in all
respects as the notes, except for possible differences as to payment of interest
on the notes:
(1) scheduled and paid prior to the date of issuance of those additional
notes; or
(2) payable on the first interest payment date following the date of
issuance of those additional notes.
The notes and any additional notes would be treated as a single class for all
purposes under the indenture and will vote together as one class on all matters
with respect to the notes.
7
The additional notes might be offered with original issue discount ("OID")
for U.S. federal income tax purposes. Purchasers of notes after the date of any
such increase will not be able to differentiate between notes sold as part of
the increase and previously issued notes. If notes issued as part of an increase
of the principal amount of the notes are issued with OID, persons that are
subject to U.S. federal income taxation who purchase notes after such an
increase may be required to accrue OID (or greater amounts of OID than they
would otherwise have accrued) with respect to their notes. This may affect the
price of outstanding notes.
Payment of principal and interest7
PAYMENT OF PRINCIPAL AND INTEREST
We will pay interest on March 15May 1 and September 15November 1 every year, beginning September 15, 2001,May 1,
2003, to the person in whose name each note, or any predecessor note, is
registered at the close of business on the March 1April 15 or September 1October 15 preceding the
relevant interest payment date.
Interest on the notes will be computed on the basis of a 360-day year
consisting of twelve 30-day months.
We will pay principal, any premium, and interest on the notes at the office
we maintain in New York City for those purposes, which is currently the
corporate trust office of the trustee, located at 101 Barclay Street in The City
of New York. You may exchange your notes or register any transfer of notes at
that office as well.
Optional RedemptionOPTIONAL REDEMPTION
We may at any time, at our option, redeem all or any portion of the notes,
at a redemption price plus accrued interest to the date of redemption, equal to
the greater of:
(1) 100% of their principal amount; or
(2) the sum of the present values of the remaining scheduled payments of
principal and interest thereon discounted to the date of redemption on
a semiannual basis, assuming a 360-day year consisting of twelve
30-day months, at the applicable treasury yieldTREASURY YIELD plus 0.15%0.20%.
How the optional redemption calculation will apply to the notesHOW THE OPTIONAL REDEMPTION CALCULATION WILL APPLY TO THE NOTES
The present value of the remaining payments, as determined by clause (2),
will increase as interest rates on U.S. Treasury securities decline, since the
interest that we pay to you will be comparatively valuable compared to the lower
interest rates then being paid on comparable securities. The present value will
decline as interest rates increase. We will always pay you at least 100% of the
principal amount of your notes, even if interest rates have dramatically
increased and the present value of the remaining payments is less than that.
However, clause (2) seeks to ensure that you will capture the benefit of the
increased value of your note as interest rates decline by requiring us to pay
you an amount equal to the present value of remaining payments, as determined in
clause (2).
How the optional redemption payment in clauseHOW THE OPTIONAL REDEMPTION PAYMENT IN CLAUSE (2) is calculatedIS CALCULATED
In connection with any redemption date, the "treasury yield" will be an
annual rate equal to the semiannual equivalent yield to maturity of the
comparable U.S. Treasury security. In calculating the yield to maturity of the
comparable U.S. Treasury security, we will assume a price for the comparable
U.S. Treasury security, expressed as a percentage of its principal amount, equal
to the applicable comparable Treasury priceCOMPARABLE TREASURY PRICE for that redemption date.
8
An independent investment banker will select as the comparable U.S.
Treasury security a United States Treasury security that has a maturity
comparable to the remaining term of the notes that would be utilized, at the
time of selection and in accordance with customary financial practice, in
pricing new issues of corporate debt securities of comparable maturity to the
remaining term of the notes. Credit Suisse First Boston Corporation will act as
the independent investment banker. If that firm is unwilling or unable to select
a comparable U.S. Treasury security, the trustee will appoint another
independent investment banking institution of national standing to act as the
independent investment banker.
Notices of RedemptionNOTICES OF REDEMPTION
Holders of the notes to be redeemed will receive notice of the redemption
by first-class mail at least 30 and not more than 60 days prior to the date
fixed for redemption.
No Redemption at Holder's OptionNO REDEMPTION AT HOLDER'S OPTION
The notes are not redeemable at the holder's option.
Restrictive Covenants
Summary of the principal restrictive covenants8
RESTRICTIVE COVENANTS
SUMMARY OF THE PRINCIPAL RESTRICTIVE COVENANTS
The indenture governing the notes limits the ability of CVS and its
restricted subsidiariesRESTRICTED SUBSIDIARIES to:
o- secure debt with security interests on our principal propertyPRINCIPAL PROPERTY or
securities of our restricted subsidiaries unless the notes are equally
and ratably secured; or
o- engage in sale and leaseback transactions with respect to our
principal property, as we describe below.
You should read the sections called "--Detailed explanation of the
restrictions on secured debt" and "--Detailed explanation of limitation on
sale/leaseback transactions" below, for a more detailed explanation of these
covenants and the exceptions to them.
Our "principal property" includes:
o- any real and tangible property owned and operated, currently or in the
future, by CVS or any of our restricted subsidiaries that constitute a
part of any store, warehouse or distribution center located within the
United States of America or its territories or possessions;
o- but excluding, current assets, motor vehicles, mobile
materials-handling equipment and other rolling stock, cash registers
and other point-of-sale recording devices, and related equipment and
data processing and other office equipment;
o- the net book value of which (including leasehold improvements and
store fixtures constituting a part of that store, warehouse or
distribution center) as of the date on which the determination is
being made is more than 1.0% of our consolidated net tangible assets.CONSOLIDATED NET TANGIBLE ASSETS.
As of the date of this prospectus, none of our stores falls within this
definition of principal property.
All of our subsidiariesSUBSIDIARIES are currently restricted subsidiaries. However, our
board of directors may designate any of our subsidiaries as an "unrestricted
subsidiary""UNRESTRICTED
SUBSIDIARY" and therefore not subject to the covenants. However, our board may
not:
9
o- designate as an unrestricted subsidiary any subsidiary that owns any
principal property or any stock of a restricted subsidiary;
o- continue the designation of any subsidiary as an unrestricted
subsidiary at any time that it owns any principal property; or
o- cause or permit any restricted subsidiary to transfer or otherwise
dispose of any principal property to any unrestricted subsidiary,
unless
(1) that unrestricted subsidiary will be redesignated as a restricted
subsidiary, and
(2) any pledge, mortgage, security interest or other lien arising in
connection with any indebtednessINDEBTEDNESS of that unrestricted subsidiary
does not extend to any principal property, except if the
existence of that pledge, mortgage, security interest or other
lien would otherwise be permitted under the indenture.
There are many transactions not restricted by the Indenture9
THERE ARE MANY TRANSACTIONS NOT RESTRICTED BY THE INDENTURE
The indenture does not contain any provisions that would:
o- limit our ability to incur indebtedness;
o- require the maintenance of financial ratios or specified levels of net
worth or liquidity;
o- afford holders of the notes protection in the event of a highly
leveraged transaction, change in credit rating or other similar
occurrence;
o- require us to repurchase or redeem or otherwise modify the terms of
any of the notes upon a change in control or other event involving us
which may adversely affect the creditworthiness of the notes; or
o- limit our ability to pay dividends to our shareholders.
Detailed explanation of the restrictions on secured debtDETAILED EXPLANATION OF THE RESTRICTIONS ON SECURED DEBT
We will not, and we will not permit any of our restricted subsidiaries to,
incur, issue, assume, guarantee or create any secured debt, unless we provide
that the notes, together with, if we so choose, any other indebtedness of CVS or
the applicable restricted subsidiary which is not subordinated to the notes,
whether then existing or thereafter created, will be secured equally and ratably
with, or prior to, that secured debt, unless after taking into account the
proposed secured debt, the sum of:
o- the aggregate amount of all outstanding secured debt of CVS and our
restricted subsidiaries; plus
o- all attributable debtATTRIBUTABLE DEBT in respect of sale and leaseback transactions
relating to a principal property, with the exception of attributable
debt which is excluded as provided by clauses (1) to (8) described
under "Detailed explanation of limitations on sale/leaseback
transactions" below,
would not exceed 15% of consolidated net tangible assets.
This restriction will not apply to, and there will be excluded from secured
debt in any computation under this restriction and under "Detailed explanation
of limitation on sale/leaseback transactions" below, indebtedness, secured by:
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(1) liensLIENS on property, shares of capital stock or indebtedness of any
corporation existing at the time that corporation becomes a
subsidiary;
(2) liens on property, shares of capital stock or indebtedness if those
liens
o- existed at the time of acquisition, including, without
limitation, by way of merger or consolidation, of that property,
shares of capital stock or indebtedness or
o- were incurred within 360 days of the time of that acquisition by
CVS or any restricted subsidiary;
(3) liens on property, shares of capital stock or indebtedness acquired or
constructed by CVS or any restricted subsidiary and created
(a) prior to, at the time of, or within 360 days after,
o- that acquisition, including, without limitation, acquisition
through merger or consolidation, or
o- the completion of construction or commencement of commercial
operation of that property,
whichever is later or
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(b) thereafter, if the lien is provided for by a binding commitment
entered into prior to, at the time of or within 360 days after
the acquisition, completion of construction or commencement of
commercial operation referred to in clause (a),
to secure or provide for the payment of all or any part of the
purchase price or the construction price of that property, capital
stock or indebtedness;
(4) liens in favor of CVS or any restricted subsidiary;
(5) liens in favor of the United States of America, any State or the
District of Columbia or any foreign government, or any agency,
department or other instrumentality of the United States of America,
any State or the District of Columbia, to secure partial, progress,
advance or other payments as provided by any contract or provisions of
any statute;
(6) liens incurred or assumed in connection with the issuance of revenue
bonds the interest on which is exempt from Federal income taxation as
provided by Section 103(b) of the Internal Revenue Code;
(7) liens securing the performance of any contract or undertaking not
directly or indirectly in connection with the borrowing of money, the
obtaining of advances or credit or the securing of indebtedness, if
made and continuing in the ordinary course of business;
(8) liens incurred, no matter when created, in connection with CVS's or a
restricted subsidiary's engaging in leveraged or single-investor lease
transactions; provided, however,PROVIDED, HOWEVER, that the instrument creating or
evidencing any borrowings secured by that lien will provide that those
borrowings are payable solely out of the income and proceeds of the
property subject to that lien and are not a general obligation of CVS
or that restricted subsidiary;
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(9) liens in favor of a governmental agency to qualify CVS or any
restricted subsidiary to do business, maintain self insurance or
obtain other benefits, or liens under workers' compensation laws,
unemployment insurance laws or similar legislation;
(10) good faith deposits in connection with bids, tenders, contracts or
deposits to secure public or statutory obligations of CVS or any
restricted subsidiary, or deposits of cash or obligations of the
United States of America to secure surety and appeal bonds to which
CVS or any restricted subsidiary is a party or in lieu of those bonds,
or pledges or deposits for similar purposes in the ordinary course of
business;
(11) liens imposed by law, including laborers' or other employees',
carriers', warehousemen's, mechanics', materialmen's and vendors'
liens;
(12) liens arising out of judgments or awards against CVS or any restricted
subsidiary with respect to which CVS or that restricted subsidiary at
the time shall be prosecuting an appeal or proceedings for review or
liens arising out of individual final judgments or awards in amounts
of less than $100,000; provided that$1,000,000; PROVIDED THAT the aggregate amount of all
those individual final judgments or awards shall not at any one time
exceed $1,000,000;
(13) liens for taxes, assessments, governmental charges or levies not yet
subject to penalties for nonpayment or the amount or validity of which
is being in good faith contested by appropriate proceedings by CVS or
any restricted subsidiary, as the case may be;
(14) minor survey exceptions, minor encumbrances, easements or reservations
of, or rights of others for, rights of way, sewers, electric lines,
telegraph and telephone lines and other similar purposes, or zoning or
other restrictions or liens as to the use of real properties, which
liens, exceptions, encumbrances, easements, reservations, rights and
restrictions do not, in the opinion of CVS, in the aggregate
materially detract from the value of said properties or materially
impair their use in the operation of the business of CVS and its
restricted subsidiaries;
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(15) liens incurred to finance all or any portion of the cost of
construction, alteration or repair of any principal property or
improvements thereto created
(a) prior to or within 360 days after completion of that
construction, alteration or repair; or
(b) thereafter, if that lien is created as provided by a binding
commitment to lend entered into prior to, at the time of, or
within 360 days after completion of that construction, alteration
or repair;
(16) liens existing on the date of the indenture;
(17) liens created in connection with a project financed with, and created
to secure, a nonrecourse obligation;NONRECOURSE OBLIGATION; or
(18) any extension, renewal, refunding or replacement of the foregoing,
providedPROVIDED that
(a) the extension, renewal, refunding or replacement lien shall be
limited to all or a part of the same property that secured the
lien extended, renewed, refunded or replaced, plus improvements
on that property, and
(b) the funded debtFUNDED DEBT secured by that lien is not increased.
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Detailed explanation of limitation on sale/leaseback transactionsDETAILED EXPLANATION OF LIMITATION ON SALE/LEASEBACK TRANSACTIONS
We will not, and we will not permit any restricted subsidiary to, enter
into any arrangement with any person providing for the leasing by CVS or any
restricted subsidiary of any principal property of CVS or any restricted
subsidiary:
o- if the lease is required by GAAP to be capitalized on the balance
sheet of the lessee; and
o- if the principal property has been or is to be sold or transferred by
CVS or that restricted subsidiary to that person
unless, after taking into account the proposed sale and leaseback, the aggregate
amount of all attributable debt with respect to all sale and leaseback
transactions as described above plusPLUS all secured debt, other than funded debt
which is excluded as provided by clauses (1) to (18) described under "Detailed
explanation of the restrictions on secured debt" above, would not exceed 15% of
consolidated net tangible assets.
This covenant will not apply to, and there will be excluded from
attributable debt in any computation under this restriction or under "Detailed
explanation of the restrictions on secured debt" above, attributable debt with
respect to any sale and leaseback transaction if:
(1) CVS or a restricted subsidiary is permitted to create funded debt
secured by a lien as provided by clauses (1) to (18) inclusive
described under "Detailed explanation of the restrictions on secured
debt" above on the principal property to be leased, in an amount equal
to the attributable debt with respect to that sale and leaseback
transaction, without equally and ratably securing the notes;
(2) the property leased as provided by that arrangement
(a) is sold for a price at least equal to that property's fair market
value, as determined by the chief executive officer, the
president, the chief financial officer, the treasurer or the
controller of CVS, and
(b) within 360 days after the sale, CVS or a restricted subsidiary,
shall apply the proceeds to the retirement of indebtedness or
funded debt of CVS or any restricted subsidiary, other than
indebtedness or funded debt owned by CVS or any restricted
subsidiary.
However, no retirement referred to in this clause (2) may be effected
by payment at maturity or by any mandatory sinking fund payment
provision of indebtedness;
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(3) CVS or a restricted subsidiary applies the net proceeds of the sale or
transfer of the leased principal property to the purchase of assets
and the cost of construction of assets within 360 days prior or
subsequent to that sale or transfer;
(4) the effective date of the arrangement or the purchaser's commitment
therefor is within 36 months prior or subsequent to
o- the acquisition of the principal property, including,
without limitation, acquisition by merger or consolidation,
or
o- the completion of construction and commencement of operation
of the principal property, which, in the case of a retail
store, is the date of opening to the public,
whichever is later;
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(5) the lease in the sale and leaseback transaction is for a term,
including renewals, of not more than three years;
(6) the sale and leaseback transaction is entered into between CVS and a
restricted subsidiary or between restricted subsidiaries;
(7) the lease secures or relates to industrial revenue or pollution
control bonds; or
(8) the lease payment is created in connection with a project financed
with, and the obligation constitutes, a nonrecourse obligation.
Merger, Consolidation and Disposition of AssetsMERGER, CONSOLIDATION AND DISPOSITION OF ASSETS
CVS will not consolidate with, merge with or into, or sell, convey,
transfer, lease or otherwise dispose of all or substantially all of its property
and assets as an entirety or substantially as an entirety in one transaction or
a series of related transactions to, any person other than to a restricted
subsidiary, or permit any person to merge with or into CVS, unless:
(1) either (a) CVS shall be the continuing person or
(b) the person, if other than CVS, formed by that
consolidation or into which CVS is merged or that
acquired or leased the property and assets of CVS shall
o- be a corporation organized and validly existing
under the laws of the United States of America or
any jurisdiction inside the United States of
America and
o- expressly assume, by a supplemental indenture,
executed and delivered to the trustee, all of the
obligations of CVS under the notes and the
indenture, and
CVS shall have delivered to the trustee an opinion of
counsel stating that:
o- the consolidation, merger or transfer and the
supplemental indenture complies with this
provision;
o- all conditions precedent provided for in the
indenture relating to that transaction have been
complied with;
o- the supplemental indenture constitutes the legal
valid and binding obligation of CVS or the
successor, enforceable against that entity in
accordance with its terms, subject to customary
exceptions; and
(2) CVS shall have delivered to the trustee an officers' certificate to
the effect that immediately after, and taking into account, that
transaction, no default shall have occurred and be continuing.
13
The indenture does not restrict, or require us to redeem or permit holders
to cause a redemption of notes in the event of:
(1) a consolidation, merger, sale of assets or other similar transaction
that may adversely affect the creditworthiness of CVS or its successor
or combined entity;
(2) a change in control of CVS; or
(3) a highly leveraged transaction involving CVS, whether or not involving
a change in control.
14
Accordingly, you will not have protection in the event of a highly leveraged
transaction, reorganization, restructuring, merger or similar transaction
involving CVS that may adversely affect the holders of notes. The existing
protective covenants applicable to the notes would continue to apply to CVS, or
its successor, in the event of such a transaction but may not prevent that
transaction from taking place.
Events of Default, Waiver and NoticeEVENTS OF DEFAULT, WAIVER AND NOTICE
The following events are considered events of default:
(1) CVS defaults in the payment of all or any part of the principal of the
notes when the same becomes due and payable;
(2) CVS defaults in the payment of any interest on the notes when the same
becomes due and payable, and that default continues for a period of 30
days;
(3) CVS defaults in the performance of or breaches any other covenant or
agreement of CVS in the indenture and that default or breach continues
for a period of 60 consecutive days after written notice of that
default or breach has been given to CVS by the trustee or to CVS and
the trustee by the holders of 25% or more in aggregate principal
amount of the notes;
(4) events of bankruptcy or insolvency with respect to CVS;
(5) (a) an event of default as defined in any one or more indentures or
instruments evidencing or under which CVS has outstanding an
aggregate of at least $25,000,000 aggregate principal amount of
indebtedness for borrowed money, shall happen and be continuing;
(b) that indebtedness shall have been accelerated so that it shall be
or become due and payable prior to the date on which the same
would otherwise have become due and payable; and
(c) that acceleration shall not be rescinded or annulled within ten
days after notice of that acceleration shall have been given to
CVS by the trustee, or to CVS and the trustee by the holders of
at least 25% in aggregate principal amount of the notes at the
time outstanding; or
(6) (a) failure by CVS to make any payment at maturity, including any
applicable grace period, in respect of at least $25,000,000
aggregate principal amount of indebtedness for borrowed money;
and
(b) that failure shall have continued for a period of ten days after
notice of that failure shall have been given to CVS by the
trustee, or to CVS and the trustee by the holders of at least 25%
in aggregate principal amount of the notes at the time
outstanding.
If an event of default occurs and is continuing, then, either the trustee
or the holders of not less than 25% in aggregate principal amount of the notes
then outstanding by notice in writing to CVS, and to the trustee if given by
holders, may declare the entire principal amount of all notes, and accrued and
unpaid interest, to be due and payable immediately. Upon this declaration, the
principal of and interest on the notes shall become immediately due and payable.
14
If an event of default described in clause (4) occurs and is continuing,
then the principal amount of all the notes then outstanding and accrued and
unpaid interest shall be and become immediately due and payable, without any
notice or other action by any holder or the trustee to the full extent permitted
by applicable law.
15
If an event of default described in clause (5) or (6) occurs and is
continuing, if the acceleration of other indebtedness or failure to pay other
indebtedness shall be remedied or cured by CVS or waived by the holders of that
indebtedness, then the event of default under that clause shall automatically be
remedied, cured or waived without further action upon the part of either the
trustee or any of the holders.
Holders of a majority in principal amount of the notes may control remedies upon
an event of default and waivers of an event of defaultHOLDERS OF A MAJORITY IN PRINCIPAL AMOUNT OF THE NOTES MAY CONTROL REMEDIES UPON
AN EVENT OF DEFAULT AND WAIVERS OF AN EVENT OF DEFAULT
Subject to provisions in the indenture for the indemnification of the
trustee and other limitations described in the indenture, the holders of at
least a majority in aggregate principal amount of the outstanding notes may
direct the time, method and place of conducting any proceeding for any remedy
available to the trustee or exercising any trust or power conferred on the
trustee by the indenture. However, the trustee may refuse to follow any
direction that conflicts with law or the indenture; may involve the trustee in
personal liability; or the trustee determines in good faith may be unduly
prejudicial to the rights of holders not joining in the giving of that
direction.
In addition, the trustee may take any other action it believes is proper
that is not inconsistent with any directions received from holders of notes as
provided by this paragraph.
Subject to various provisions in the indenture, the holders of at least a
majority in principal amount of the outstanding notes, by notice to the trustee,
may waive an existing default or event of default and its consequences, except:
o- a default in the payment of principal of or interest on any note as
specified in clauses (a) or (b) of "--Events of Default"; or
o- in respect of a covenant or provision of the indenture which cannot be
modified or amended without the consent of the holder of each
outstanding note affected.
Upon any waiver, the default shall cease to exist, and any event of default
arising therefrom shall automatically be cured, for every purpose of the
indenture; but no waiver shall extend to any subsequent or other default or
event of default or impair any right consequent thereto.
No holder of any notes may institute any proceeding, judicial or otherwise,
with respect to the indenture or the notes, or for the appointment of a receiver
or trustee, or for any other remedy under the indenture, unless:
(1) that holder has previously given to the trustee written notice of a
continuing event of default;
(2) the holders of at least 25% in aggregate principal amount of
outstanding notes shall have made written request to the trustee to
institute proceedings in respect of that event of default in its own
name as trustee under the indenture;
(3) that holder or holders have offered to the trustee indemnity
reasonably satisfactory to the trustee against any costs, liabilities
or expenses to be incurred in compliance with that request;
(4) the trustee for 60 days after its receipt of the notice, request and
offer of indemnity has failed to institute that proceeding; and
(5) during that 60-day period, the holders of a majority in aggregate
principal amount of the outstanding notes have not given the trustee a
direction that is inconsistent with that written request.
16
A holder may not use the indenture to prejudice the rights of another holder or
to obtain a preference or priority over any other holder.
15
However, notwithstanding any of the provisions described above, the right
of any holder of a note to receive payment of principal, premium, if any, and
interest on or after their respective due dates or to bring suit for the
enforcement of any of those payments on or after those dates, may not be
impaired or affected without the consent of that holder.
InformationINFORMATION
Whether or not required by the rules and regulations of the SEC, we have
agreed that, so long as any notes are outstanding, we will furnish to the
trustee, within 15 days after we are or would have been required to file with
the SEC, and to furnish to the holders of the notes thereafter:
(1) all quarterly and annual financial information that would be required
to be contained in a filing with the SEC on Forms 10-Q and 10-K if we
were required to file those Forms, including a "Management's
Discussion and Analysis of Financial Condition and Results of
Operations" and, with respect to the annual information only, a report
thereon by our certified independent accountants, and
(2) all current reports that would be required to be filed with the SEC on
Form 8-K if we were required to file those reports.
In addition, whether or not required by the rules and regulations of the
SEC, at any time after we file a registration statement with respect to an
exchange offer or a registration statement permitting resales of the notes, we
will file a copy of all that information and reports with the SEC for public
availability and make that information available to securities analysts and
prospective investors upon request.
In addition, we have agreed that, for so long as any notes remain
outstanding, we will furnish to the holders and to securities analysts and
prospective investors, upon their request, the information required to be
delivered by Rule 144A(d)(4) under the Securities Act. Requests should be
directed to the address referred to under "Where You Can Find More Information."
Under Rule 144A(d)(4), we are not required to deliver any information so long as
we continue to be a reporting company under the Exchange Act.
We will be required to file with the trustee annually, within four months
of the end of each fiscal year, a certificate as to the compliance with all
conditions and covenants of the indenture.
Discharge of the NotesDISCHARGE OF THE NOTES
We may terminate our obligations under the notes and the indenture if:
(1) all notes previously authenticated and delivered, other than notes
that were mutilated or lost, have been delivered to the trustee for
cancellation and we have paid all sums payable by us under the
indenture; or
(2) (a) the notes mature within one year or all of them are to be called
for redemption within one year under arrangements satisfactory to
the trustee for giving the notice of redemption;
(b) we irrevocably deposit in trust with the trustee, as trust funds
solely for the benefit of the holders of the notes for that
purpose, money or U.S. government obligations or a combination
sufficient, without consideration of any reinvestment, to pay the
principal of and interest on the notes to maturity or redemption,
as relevant, and to pay all other sums payable by us under the
indenture; and
17
(c) we deliver to the trustee an officers' certificate and an opinion
of counsel, stating that we have complied with all conditions
necessary to terminate our obligations under the notes and the
indenture.
If all notes previously authenticated and delivered have been cancelled as
provideprovided in clause (1), the only obligations we will continue to have under the
indenture will be to compensate and indemnify the trustee.
16
If we have complied with the requirements of clause (2), the only
obligations we will continue to have under the indenture until the notes are no
longer outstanding, will be to:
o- maintain an office or agency in respect of the notes;
o- have moneys held for payment in trust, although the indenture permits
us to recover from the trustee moneys held in trust if those moneys
have been unclaimed for two years;
o- register the transfer or exchange of the notes;
o- deliver notes for replacement or to be canceled;
o- compensate and indemnify the trustee; and
o- appoint a successor trustee.
DefeasanceDEFEASANCE
We:
(1) will be considered to have paid and will be discharged from all
obligations in respect of the notes, and the provisions of the
indenture will, except as noted below, no longer be in effect with
respect to the notes; or
(2) need not comply with any specific covenant which may be defeased under
the indenture, and our non-compliance will not be an event of default
under clause (c) of "--Events of Default"
if we satisfy the following conditions:
(a) we irrevocably deposit in trust with the trustee as trust funds
solely for the benefit of the holders of the notes, for payment
of the principal of and interest on the notes, money or U.S.
government obligations or a combination sufficient, without
consideration of any reinvestment, to pay and discharge the
principal of and accrued interest on the outstanding notes to
maturity or to a specific redemption date, if we make irrevocable
arrangements satisfactory to the trustee to ensure that the
redemption will occur on that date;
(b) the deposit will not result in a breach or violation of, or
constitute a default under, the indenture or any other material
agreement or instrument to which we are a party or by which we
are bound;
(c) no default with respect to the notes has occurred and is
continuing on the date of that deposit;
18
(d) we deliver to the trustee an opinion of counsel (or direct ruling
of the Internal Revenue Service to the same effect) that
(1) the holders of the notes will not recognize income, gain or
loss for Federal income tax purposes as a result of our
election to defease the notes and will be subject to Federal
income tax on the same amount, in the same manner and at the
same times as would have been the case if that deposit and
defeasance had not occurred; and
(2) the holders of the notes have a valid security interest in
the trust funds; and
(e) we deliver to the trustee an officers' certificate and an opinion
of counsel, stating that we have complied with all conditions.
In the case of legal defeasance under clause (1) above, the opinion of
counsel referred to in clause (d)(1) above may be replaced by a ruling directed
to the trustee received from the Internal Revenue Service to the same effect.
If we select the covenant defeasance option under clause (2) above, we will
continue to be bound by all of the other terms of the indenture other than the
specified covenant(s) that is defeased.
17
After the notes are no longer outstanding, the only obligations we will
have under the indenture will be to compensate and indemnify the trustee, and we
will have the right to recover excess money held by the trustee.
Modification and Waiver
Amendments without the consent of any holderMODIFICATION AND WAIVER
AMENDMENTS WITHOUT THE CONSENT OF ANY HOLDER
CVS and the trustee may amend or supplement the indenture or the notes
without notice to or the consent of any holder:
(1) to cure any ambiguity, defect or inconsistency in the indenture;
providedPROVIDED that those amendments or supplements do not materially and
adversely affect the interests of the holders;
(2) to comply with the provisions of the indenture in connection with a
consolidation or merger of CVS or the sale, conveyance, transfer,
lease or other disposal of all or substantially all of the property
and assets of CVS;
(3) to comply with any requirements of the SEC in connection with the
qualification of the indenture under the Trust Indenture Act;
(4) to evidence and provide for the acceptance of appointment under the
indenture by a successor trustee; or
(5) to make any change that does not materially and adversely affect the
rights of any holder.
Amendments with the consent of the holders
Majority consent is usually sufficientAMENDMENTS WITH THE CONSENT OF THE HOLDERS
MAJORITY CONSENT IS USUALLY SUFFICIENT
CVS and the trustee may amend the indenture and the outstanding notes with
the written consent of the holders of a majority in principal amount of the
notes then outstanding, and the holders of a majority in 19
principal amount of the
outstanding notes by written notice to the trustee may waive future compliance
by CVS with any provision of the indenture or the notes.
The following provisions require the consent of all holders affected
therebyTHE FOLLOWING PROVISIONS REQUIRE THE CONSENT OF ALL HOLDERS AFFECTED
THEREBY
Notwithstanding the preceding paragraphs, without the consent of each
holder affected thereby, an amendment or waiver may not:
(1) extend the stated maturitySTATED MATURITY of the principal of, or any installment of
interest on, that holder's notes, or reduce the principal of or the
rate of interest on the notes, or any premium payable with respect to
the notes;
(2) change any place or currency of payment where any note or any premium
or interest is payable;
(3) impair the right to institute suit for the enforcement of any payment
on or after the due date therefor;
(4) reduce the percentage in principal amount of outstanding notes the
consent of whose holders is required for any supplemental indenture,
for any waiver of compliance with the provisions of the indenture or
defaults and the consequences of those defaults established in the
indenture;
(5) waive a default in the payment of principal of or interest on any note
of a holder; or
(6) modify this provision of the indenture, except to increase any
percentage or to provide that other provisions of the indenture cannot
be modified or waived without the consent of the holder of each
outstanding note thereunder affected thereby.
18
The consent of any holder need not approve the particular form of any
proposed amendment, supplement or waiver, so long as the consent approves the
substance of the amendment. After an amendment, supplement or waiver becomes
effective, we will give to the holders affected thereby a notice briefly
describing the amendment, supplement or waiver. We will mail supplemental
indentures to holders upon request. Any failure of CVS to mail that notice, or
any defect therein, shall not, however, in any way impair or affect the validity
of any supplemental indenture or waiver.
Governing LawGOVERNING LAW
The indenture and the notes will be governed by the laws of the State of
New York.
The TrusteeTHE TRUSTEE
We and our subsidiaries maintain ordinary banking and trust relationships
with The Bank of New York, which is the trustee for the notes, and its
affiliates. The Bank of New York also acts as the registrar and transfer agent
for our common stock.
Book-Entry; Delivery and FormBOOK-ENTRY; DELIVERY AND FORM
The certificates representing the new notes will be issued in fully
registered form, without interest coupons. Except as described below, the new
notes will be deposited with, or on behalf of, The Depository Trust Company, New
York, New York, and registered in the name of Cede & Co. as DTC's nominee, in
the form of a global note.
20
The Global Note.THE GLOBAL NOTE. CVS expects that in accordance with procedures established
by DTC:
(1) upon deposit of the global note, DTC or its custodian will credit on
its internal system interests in the global notes to the accounts of
persons, or "participants", who have accounts with DTC;
(2) holders of the notes that are not participants in DTC will have their
ownership interests reflected on the records of their participant.
Any transfer of ownership interests held by a participant will be made
through records maintained by DTC or its nominee, and transfers of interests
held indirectly through participants will be made through the records of
participants. You will not be able to own an interest in the global note unless
you are a participant or hold an interest through a participant.
So long as DTC or its nominee is the registered owner or holder of the new
notes, DTC or its nominee will be considered the sole owner or holder of the new
notes represented by the global note for all purposes under the indenture. You
will not be able to transfer your interest in the global note except in
accordance with DTC's procedures, in addition to those provided for under the
indenture with respect to the new notes.
We will make payments on the global note to DTC or its nominee, as the
registered owner of the note. Neither CVS, the trustee nor any paying agent
under the indenture will have any responsibility or liability for any aspect of
the records relating to or payments made on account of beneficial ownership
interests in the global note or for maintaining, supervising or reviewing any
records relating to beneficial ownership interests.
We expect that DTC or its nominee, upon receipt of any payment of the
principal of or premium and interest on the global note, will credit
participants' accounts with payments in amounts proportionate to their
respective beneficial interests in the principal amount of the global note as
shown on the records of DTC or its nominee. We also expect that payments by
participants to owners of beneficial interests in the global note held through
them will be governed by standing instructions and customary practice as is now
the case with securities held for the account of customers registered in the
names of nominees for those customers. Such payments will be the responsibility
of the participants.
19
Transfers between participants in DTC will be effected in accordance with
DTC rules and will be settled in immediately available funds. If a holder
requires physical delivery of a certificated note for any reason, including to
sell new notes to persons in states which require physical delivery of the new
notes or to pledge them, the holder must transfer its interest in the global
note in accordance with the normal procedures of DTC and with the procedures set
forth in the indenture.
DTC has advised us that DTC will take any action permitted to be taken by a
holder of new notes only at the direction of one or more participants to whose
account at DTC interests in the global note are credited and only in respect of
that portion of the aggregate principal amount of new notes as to which the
participant or participants has or have given such direction. However, if there
is an event of default under the indenture, DTC will exchange the global note
for certificated notes, which it will distribute to its participants.
DTC has advised us that it is a limited purpose trust company organized
under the laws of the State of New York, a member of the Federal Reserve System,
a "clearing corporation" within the meaning of the Uniform Commercial Code, and
a "clearing agency" registered in accordance with the provisions of Section 17A
of the Exchange Act. DTC was created to hold securities for its participants and
facilitate the clearance and settlement of securities transactions between
participants through electronic book-entry changes in accounts of its
participants, thereby eliminating the need for physical movement of
certificates. Participants include securities brokers and dealers, banks, trust
companies and clearing corporations and other organizations. Indirect access to
the DTC system is available to others, including banks, brokers, dealers 21
and
trust companies that clear through or maintain a custodial relationship with a
participant, either directly or indirectly.
Although DTC has agreed to the foregoing procedures in order to facilitate
transfers of interests in the global notes among participants, it is under no
obligation to perform these procedures, and these procedures may be discontinued
at any time. Neither CVS nor the trustee will have any responsibility for the
performance by DTC or its participants or indirect participants of their
respective obligations under the rules and procedures governing their
operations.
Certificated Notes.CERTIFICATED NOTES. Interests in the global notes will be exchangeable or
transferable, as the case may be, for certificated notes if:
(1) DTC notifies us that it is unwilling or unable to continue as
depositary for the global notes, or DTC ceases to be a "clearing
agency" registered under the Exchange Act, and a successor depositary
is not appointed by CVS within 90 days; or
(2) CVS in its discretion at any time determines not to have all the notes
represented by the global notes; or
(3) an event of default has occurred and is continuing with respect to the
new notes.
Upon the occurrence of any of the events described in the preceding
sentence, CVS will cause the appropriate certificated notes to be delivered.
Defined termsDEFINED TERMS
The following terms referred to in this "Description of Notes" are defined
in the indenture as follows:
"attributable debt""ATTRIBUTABLE DEBT" means, in connection with any sale and leaseback
transaction under which either CVS or any restricted subsidiary is at the time
liable as lessee for a term of more than 12 months and at any date as of which
the amount thereof is to be determined, the lesser of:
(1) total net obligations of the lessee for rental payments during the
remaining term of the lease discounted from the respective due dates
of the payments to the determination date at a yearly rate equivalent
to the greater of
(a) the weighted average yield to maturity of the notes, the average
being weighted by the principal amount of the notes and
(b) the interest rate inherent in the lease, as determined in good
faith by CVS, both to be compounded semi-annually; or
20
(2) the sale price for the assets so sold and leased multiplied by a
fraction the numerator of which is the remaining portion of the base
term of the lease included in the transaction and the denominator of
which is the base term of the lease.
"capital lease obligations""CAPITAL LEASE OBLIGATIONS" means with respect to any person any obligation
which is required to be classified and accounted for as a capital lease on the
face of a balance sheet of such person prepared in accordance with GAAP.
"comparable treasury price""COMPARABLE TREASURY PRICE" means, in connection with any redemption date
applicable to the notes;
22
(1) the average of the applicable reference dealer quotationsREFERENCE DEALER QUOTATIONS for that
redemption date, after excluding the highest and lowest applicable
reference dealer quotations; or
(2) if the trustee obtains fewer than four reference dealer quotations,
the average of all quotations.
"consolidated net tangible assets""CONSOLIDATED NET TANGIBLE ASSETS" means, at any date:
(1) the total assets appearing on the most recent consolidated balance
sheet of CVS and its restricted subsidiaries as at the end of the
fiscal quarter of CVS ending not more than 135 days prior to the date,
prepared in accordance with U.S. generally accepted accounting
principles, less
(2) all current liabilities due within one year as shown on that balance
sheet,
(3) investments in and advances to unrestricted subsidiaries, and
(4) intangible assetsINTANGIBLE ASSETS and liabilities relating thereto.
"funded debt""FUNDED DEBT" means:
(1) any indebtedness of CVS or a restricted subsidiary maturing more than
12 months after the time of computation;
(2) guarantees of funded debt or of dividends of others, except guarantees
in connection with the sale or discount of accounts receivable, trade
acceptances and other paper arising in the ordinary course of
business;
(3) in the case of any restricted subsidiary, all of its preferred stock
having mandatory redemption provisions as reflected on its balance
sheet prepared in accordance with U.S. generally accepted accounting
principles; and
(4) all capital lease obligations.
"indebtedness"CAPITAL LEASE OBLIGATIONS.
"INDEBTEDNESS" means, at any date, without duplication, all obligations for
borrowed money of CVS or a restricted subsidiary.
"intangible assets""INTANGIBLE ASSETS" means, at any date, the value, as shown on or reflected
in the most recent consolidated balance sheet of CVS and its restricted
subsidiaries as at the end of the fiscal quarter of CVS ending not more than 135
days prior to the date, prepared in accordance with generally accepted
accounting principles, of:
(1) all trade names, trademarks, licenses, patents, copyrights, service
marks, goodwill and other like intangibles;
(2) organizational and development costs;
(3) deferred charges, other than prepaid items, including insurance,
taxes, interest, commissions, rents, pensions, compensation and
similar items and tangible assets being amortized; and
(4) unamortized debt discount and expense, less unamortized premium.
"liens"21
"LIENS" means pledges, mortgages, security interests and other liens on any
principal property of CVS or a restricted subsidiary which secure secured debt.
23
"nonrecourse obligation""NONRECOURSE OBLIGATION" means indebtedness or lease payment obligations
substantially related to:
(1) the acquisition of assets not previously owned by CVS or any
restricted subsidiary; or
(2) the financing of a project involving the development or expansion of
properties of CVS or any restricted subsidiary,
as to which the obligee with respect to the indebtedness or obligation has no
recourse to CVS or any restricted subsidiary or any assets of CVS or any
subsidiary other than the assets which were acquired with the proceeds of the
transaction or the project financed with the proceeds of the transaction and the
proceeds of that asset or project.
"principal property""PRINCIPAL PROPERTY" is defined in the section called "Restrictive
Covenants--Summary of the principal restrictive covenants."
"reference dealer quotations""REFERENCE DEALER QUOTATIONS" means, with respect to each reference dealer
and any redemption date for the notes, the average, as determined by the
trustee, of the bid and asked prices for the comparable U.S. Treasury security
for the notes, expressed in each case as a percentage of its principal amount,
quoted in writing to the trustee by that reference dealer at 5:00 p.m., New York
City time, on the third business day preceding the redemption date. Credit
Suisse First Boston Corporation will be a reference dealer but, if it ceases to
be a primary U.S. Government securities dealer in New York City, CVS will
substitute another primary U.S. Government securities dealer to act as a
reference dealer.
"restricted subsidiary""RESTRICTED SUBSIDIARY" is any subsidiary other than an unrestricted
subsidiary.
"secured debt""SECURED DEBT" means funded debt which is secured by any pledge of, or
mortgage, security interest or other lien on any:
(1) principal property, whether owned on the date of the indenture or
thereafter acquired or created;
(2) shares of stock owned by CVS or a subsidiary in a restricted
subsidiary; or
(3) indebtedness of a restricted subsidiary.
"stated maturity""STATED MATURITY" of a security means the date specified in that security
as the fixed date on which the principal of that security is due and payable,
including pursuant to any mandatory redemption provision but excluding any
provision providing for the repurchase of such security at the option of the
holder upon the happening of any contingency, unless that contingency has
occurred.
"subsidiary""SUBSIDIARY" means any corporation of which at least a majority of the
outstanding stock, which, under ordinary circumstances not dependent upon the
happening of a contingency, has voting power to elect a majority of the board of
directors of that corporation or similar management body, is owned directly or
indirectly by CVS and/or by one or more subsidiaries of CVS.
"treasury yield""TREASURY YIELD" is defined in the section called "Optional Redemption--How
the optional redemption payment in clause (2) is calculated."
"unrestricted subsidiary""UNRESTRICTED SUBSIDIARY" is defined in the section called "Restrictive
Covenants--Summary of the principal restrictive covenants."
2422
THE EXCHANGE OFFER
In a registration rights agreement between CVS and the initial purchasers
of the old notes, we agreed:
(1) to file a registration statement on or prior to 90 days after the
closing of the offering of the old notes with respect to an offer to
exchange the old notes for a new issue of notes, with terms
substantially the same as of the old notes but registered under the
Securities Act;
(2) to use our best efforts to cause the registration statement to be
declared effective by the SEC on or prior to 180 days after the
closing of the old notes offering; and
(3) to use our best efforts to consummate the exchange offer and issue the
new notes within 30 business days after the registration statement is
declared effective.
The registration rights agreement provides that, in the event we fail to
file the registration statement within 90 days after the closing date or
consummate the exchange offer within 220 days, we will be required to pay
additional interest on the old notes over and above the regular interest on the
notes. Once we complete this exchange offer, we will no longer be required to
pay additional interest on the old notes.
The exchange offer is not being made to, nor will we accept tenders for
exchange from, holders of old notes in any jurisdiction in which the exchange
offer or acceptance of the exchange offer would violate the securities or blue
sky laws of that jurisdiction.
Termsof the Exchange Offer; Period for Tendering Old NotesTERMS OF THE EXCHANGE OFFER; PERIOD FOR TENDERING OLD NOTES
This prospectus and the accompanying letter of transmittal contain the
terms and conditions of the exchange offer. Upon the terms and subject to the
conditions included in this prospectus and in the accompanying letter of
transmittal, which together are the exchange offer, we will accept for exchange
old notes which are properly tendered on or prior to the expiration date, unless
you have previously withdrawn them.
o- When you tender to us old notes as provided below, our acceptance of
the old notes will constitute a binding agreement between you and us
upon the terms and subject to the conditions in this prospectus and in
the accompanying letter of transmittal.
o- For each $1,000 principal amount of old notes surrendered to us in the
exchange offer, we will give you $1,000 principal amount of new notes.
o- We will keep the exchange offer open for not less than 30 days, or
longer if required by applicable law, after the date that we first
mail notice of the exchange offer to the holders of the old notes. We
are sending this prospectus, together with the letter of transmittal,
on or about the date of this prospectus to all of the registered
holders of old notes at their addresses listed in the trustee's
security register with respect to old notes.
o- The exchange offer expires at 5:00 p.m., New York City time, on ,
2001; provided, however,2003; PROVIDED, HOWEVER, that we, in our sole discretion, may extend
the period of time for which the exchange offer is open. The term
"expiration date""EXPIRATION DATE" means , 20012003 or, if extended by us, the latest
time and date to which the exchange offer is extended.
o- As of the date of this prospectus, $300,000,000 in aggregate principal
amount of the old notes were outstanding. The exchange offer is not
conditioned upon any minimum principal amount of old notes being
tendered.
25
o- Our obligation to accept old notes for exchange in the exchange offer
is subject to the conditions that we describe in the section called
"Conditions to the Exchange Offer" below.
o23
- We expressly reserve the right, at any time, to extend the period of
time during which the exchange offer is open, and thereby delay
acceptance of any old notes, by giving oral or written notice of an
extension to the exchange agent and notice of that extension to the
holders as described below. During any extension, all old notes
previously tendered will remain subject to the exchange offer unless
withdrawal rights are exercised. Any old notes not accepted for
exchange for any reason will be returned without expense to the
tendering holder as promptly as practicable after the expiration or
termination of the exchange offer.
o- We expressly reserve the right to amend or terminate the exchange
offer, and not to accept for exchange any old notes that we have not
yet accepted for exchange, if any of the conditions of the exchange
offer specified below under "Conditions to the Exchange Offer" are not
satisfied.
o- We will give oral or written notice of any extension, amendment,
termination or non-acceptance described above to holders of the old
notes as promptly as practicable. If we extend the expiration date, we
will give notice by means of a press release or other public
announcement no later than 9:00 a.m., New York City time, on the
business day after the previously scheduled expiration date. Without
limiting the manner in which we may choose to make any public
announcement and subject to applicable law, we will have no obligation
to publish, advertise or otherwise communicate any public announcement
other than by issuing a release to the Dow Jones News Service.
o- Holders of old notes do not have any appraisal or dissenters' rights
in connection with the exchange offer.
o- Old notes which are not tendered for exchange or are tendered but not
accepted in connection with the exchange offer will remain outstanding
and be entitled to the benefits of the indenture, but will not be
entitled to any further registration rights under the registration
rights agreement.
o- We intend to conduct the exchange offer in accordance with the
applicable requirements of the Exchange Act and the rules and
regulations of the SEC thereunder.
o- By executing, or otherwise becoming bound by, the letter of
transmittal, you will be making the representations described below to
us. See "--Resales of the New Notes."
Important rules concerning the exchange offerIMPORTANT RULES CONCERNING THE EXCHANGE OFFER
You should note that:
o- All questions as to the validity, form, eligibility, time of receipt
and acceptance of old notes tendered for exchange will be determined
by CVS in its sole discretion, which determination shall be final and
binding.
o- We reserve the absolute right to reject any and all tenders of any
particular old notes not properly tendered or to not accept any
particular old notes which acceptance might, in our judgment or the
judgment of our counsel, be unlawful.
o- We also reserve the absolute right to waive any defects or
irregularities or conditions of the exchange offer as to any
particular old notes either before or after the expiration date,
including the right to waive the ineligibility of any holder who seeks
to tender old notes in the exchange offer. Unless we agree to waive
any defect or irregularity in connection with the tender of old 26
notes
for exchange, you must cure any defect or irregularity within any
reasonable period of time as we shall determine.
o- Our interpretation of the terms and conditions of the exchange offer
as to any particular old notes either before or after the expiration
date shall be final and binding on all parties.
o- Neither CVS, the exchange agent nor any other person shall be under
any duty to give notification of any defect or irregularity with
respect to any tender of old notes for exchange, nor shall any of them
incur any liability for failure to give any notification.
Procedures for Tendering Old Notes
What to submit and how24
PROCEDURES FOR TENDERING OLD NOTES
WHAT TO SUBMIT AND HOW
If you, as the registered holder of an old note, wish to tender your old
notes for exchange in the exchange offer, you must transmit a properly completed
and duly executed letter of transmittal to The Bank of New York at the address
set forth below under "Exchange Agent" on or prior to the expiration date.
In addition,
(1) certificates for old notes must be received by the exchange agent
along with the letter of transmittal, orOR
(2) a timely confirmation of a book-entry transfer of old notes, if such
procedure is available, into the exchange agent's account at DTC using
the procedure for book-entry transfer described below, must be
received by the exchange agent prior to the expiration date, orOR
(3) you must comply with the guaranteed delivery procedures described
below.
The method of delivery of old notes, letters of transmittal and notices of
guaranteed delivery is at your election and risk. If delivery is by mail, we
recommend that registered mail, properly insured, with return receipt requested,
be used. In all cases, sufficient time should be allowed to assure timely
delivery. No letters of transmittal or old notes should be sent toTHE METHOD OF DELIVERY OF OLD NOTES, LETTERS OF TRANSMITTAL AND NOTICES OF
GUARANTEED DELIVERY IS AT YOUR ELECTION AND RISK. IF DELIVERY IS BY MAIL, WE
RECOMMEND THAT REGISTERED MAIL, PROPERLY INSURED, WITH RETURN RECEIPT REQUESTED,
BE USED. IN ALL CASES, SUFFICIENT TIME SHOULD BE ALLOWED TO ASSURE TIMELY
DELIVERY. NO LETTERS OF TRANSMITTAL OR OLD NOTES SHOULD BE SENT TO CVS.
How to sign your letter of transmittal and other documentsHOW TO SIGN YOUR LETTER OF TRANSMITTAL AND OTHER DOCUMENTS
Signatures on a letter of transmittal or a notice of withdrawal, as the
case may be, must be guaranteed unless the old notes being surrendered for
exchange are tendered:
(1) by a registered holder of the old notes who has not completed the box
entitled "Special Issuance Instructions" or "Special Delivery
Instructions" on the letter of transmittal; or
(2) for the account of an eligible institution.
If signatures on a letter of transmittal or a notice of withdrawal, as the
case may be, are required to be guaranteed, the guarantees must be by any of the
following eligible institutions:
o- a firm which is a member of a registered national securities exchange
or a member of the National Association of Securities Dealers, Inc.;
or
o- a commercial bank or trust company having an office or correspondent
in the United States
27
If the letter of transmittal is signed by a person or persons other than
the registered holder or holders of old notes, the old notes must be endorsed or
accompanied by appropriate powers of attorney, in either case signed exactly as
the name or names of the registered holder or holders that appear on the old
notes and with the signature guaranteed.
If the letter of transmittal or any old notes or powers of attorney are
signed by trustees, executors, administrators, guardians, attorneys-in-fact,
officers or corporations or others acting in a fiduciary or representative
capacity, the person should so indicate when signing and, unless waived by CVS,
proper evidence satisfactory to CVS of its authority to so act must be
submitted.
Acceptance of Old Notes for Exchange; Delivery of New NotesACCEPTANCE OF OLD NOTES FOR EXCHANGE; DELIVERY OF NEW NOTES
Once all of the conditions to the exchange offer are satisfied or waived,
we will accept, promptly after the expiration date, all old notes properly
tendered and will issue the new notes promptly after acceptance of the old
notes. See "Conditions to the Exchange Offer" below. For purposes of the
exchange offer, our giving of oral or written notice of our acceptance to the
exchange agent will be considered our acceptance of the exchange offer.
25
In all cases, we will issue new notes in exchange for old notes that are
accepted for exchange only after timely receipt by the exchange agent of:
o- certificates for old notes, or
oOR
- a timely book-entry confirmation of transfer of old notes into the
exchange agent's account at DTC using the book-entry transfer
procedures described below, and
oAND
- a properly completed and duly executed letter of transmittal.
If we do not accept any tendered old notes for any reason included in the
terms and conditions of the exchange offer or if you submit certificates
representing old notes in a greater principal amount than you wish to exchange,
we will return any unaccepted or non-exchanged old notes without expense to the
tendering holder or, in the case of old notes tendered by book-entry transfer
into the exchange agent's account at DTC using the book-entry transfer
procedures described below, non-exchanged old notes will be credited to an
account maintained with DTC as promptly as practicable after the expiration or
termination of the exchange offer.
Book-Entry TransferBOOK-ENTRY TRANSFER
The exchange agent will make a request to establish an account with respect
to the old notes at DTC for purposes of the exchange offer promptly after the
date of this prospectus. Any financial institution that is a participant in
DTC's systems may make book-entry delivery of old notes by causing DTC to
transfer old notes into the exchange agent's account in accordance with DTC's
Automated Tender Offer Program procedures for transfer. However, the exchange
for the old notes so tendered will only be made after timely confirmation of
book-entry transfer of old notes into the exchange agent's account, and timely
receipt by the exchange agent of an agent's message, transmitted by DTC and
received by the exchange agent and forming a part of a book-entry confirmation.
The agent's message must state that DTC has received an express acknowledgment
from the participant tendering old notes that are the subject of that book-entry
confirmation that the participant has received and agrees to be bound by the
terms of the letter of transmittal, and that we may enforce the agreement
against that participant.
Although delivery of old notes may be effected through book-entry transfer
into the exchange agent's account at DTC, the letter of transmittal, or a
facsimile copy, properly completed and duly executed, with 28
any required
signature guarantees, must in any case be delivered to and received by the
exchange agent at its address listed under "--Exchange Agent" on or prior to the
expiration date.
If your old notes are held through DTC, you must complete a form called
"instructions to registered holder and/or book-entry participant," which will
instruct the DTC participant through whom you hold your notes of your intention
to tender your old notes or not tender your old notes. Please note that delivery
of documents to DTC in accordance with its procedures does not constitute
delivery to the exchange agent and we will not be able to accept your tender of
notes until the exchange agent receives a letter of transmittal and a book-entry
confirmation from DTC with respect to your notes. A copy of that form is
available from the exchange agent.
Guaranteed Delivery ProceduresGUARANTEED DELIVERY PROCEDURES
If you are a registered holder of old notes and you want to tender your old
notes but your old notes are not immediately available, or time will not permit
your old notes to reach the exchange agent before the expiration date, or the
procedure for book-entry transfer cannot be completed on a timely basis, a
tender may be effected if
(1) the tender is made through an eligible institution,
(2) prior to the expiration date, the exchange agent receives, by
facsimile transmission, mail or hand delivery, from that eligible
institution a properly completed and duly executed letter of
transmittal, or a facsimile copy, and notice of guaranteed delivery,
substantially in the form provided by us, stating:
o- the name and address of the holder of old notes,
o- the amount of old notes tendered,
o26
- the tender is being made by delivering that notice and
guaranteeing that within three New York Stock Exchange trading
days after the date of execution of the notice of guaranteed
delivery, the certificates of all physically tendered old notes,
in proper form for transfer, or a book-entry confirmation, as the
case may be, will be deposited by that eligible institution with
the exchange agent; and
(3) the certificates for all physically tendered old notes, in proper form
for transfer, or a book-entry confirmation, as the case may be, are
received by the exchange agent within three New York Stock Exchange
trading days after the date of execution of the Notice of Guaranteed
Delivery.
Withdrawal RightsWITHDRAWAL RIGHTS
You can withdraw your tender of old notes at any time on or prior to the
expiration date.
For a withdrawal to be effective, a written notice of withdrawal must be
received by the exchange agent at one of the addresses listed below under
"Exchange Agent." Any notice of withdrawal must specify:
o- the name of the person having tendered the old notes to be withdrawn;
o- the old notes to be withdrawn;
o- the principal amount of the old notes to be withdrawn;
29
o- if certificates for old notes have been delivered to the exchange
agent, the name in which the old notes are registered, if different
from that of the withdrawing holder ;
oholder;
- if certificates for old notes have been delivered or otherwise
identified to the exchange agent, then, prior to the release of those
certificates, you must also submit the serial numbers of the
particular certificates to be withdrawn and a signed notice of
withdrawal with signatures guaranteed by an eligible institution
unless you are an eligible institution; and
o- if old notes have been tendered using the procedure for book-entry
transfer described above, any notice of withdrawal must specify the
name and number of the account at DTC to be credited with the
withdrawn old notes and otherwise comply with the procedures of that
facility.
Please note that all questions as to the validity, form, eligibility and
time of receipt of notices of withdrawal will be determined by us, and our
determination shall be final and binding on all parties. Any old notes so
withdrawn will be considered not to have been validly tendered for exchange for
purposes of the exchange offer.
If you have properly withdrawn old notes and wish to re-tender them, you
may do so by following one of the procedures described under "Procedures for
Tendering Old Notes" above at any time on or prior to the expiration date.
Conditions to the Exchange OfferCONDITIONS TO THE EXCHANGE OFFER
Notwithstanding any other provisions of the exchange offer, we will not be
required to accept for exchange, or to issue new notes in exchange for, any old
notes and may terminate or amend the exchange offer, if at any time before the
acceptance of old notes for exchange or the exchange of the new notes for old
notes, that acceptance or issuance would violate applicable law or any
interpretation of the staff of the SEC.
That condition is for our sole benefit and may be asserted by us regardless
of the circumstances giving rise to that condition. Our failure at any time to
exercise the foregoing rights shall not be considered a waiver by us of that
right. Our rights described in the prior paragraph are ongoing rights which we
may assert at any time and from time to time.
In addition, we will not accept for exchange any old notes tendered, and no
new notes will be issued in exchange for any old notes, if at that time any stop
order shall be threatened or in effect with respect to the exchange offer to
which this prospectus relates or the qualification of the indenture under the
Trust Indenture Act.
3027
Exchange AgentEXCHANGE AGENT
The Bank of New York has been appointed as the exchange agent for the
exchange offer. All executed letters of transmittal should be directed to the
exchange agent at one of the addresses set forth below. Questions and requests
for assistance, requests for additional copies of this prospectus or of the
letter of transmittal and requests for notices of guaranteed delivery should be
directed to the exchange agent, addressed as follows:
Deliver To:
By Registered or Certified Mail:BY REGISTERED OR CERTIFIED MAIL:
The Bank of New York, Exchange Agent
Re-organization Unit
101 Barclay Street
Floor 7 East
New York New York 10286
Attention: William Buckley
By Hand or Overnight Delivery:Kin Lau
BY HAND OR OVERNIGHT DELIVERY:
The Bank of New York, Exchange Agent
101 Barclay Street
Corporate Trust Services Window
Ground LevelFloor 7 East
New York New York 10286
Attention: William Buckley
Facsimile Transmissions:Kin Lau
FACSIMILE TRANSMISSIONS:
(212) 815-6339
To Confirm by Telephone
or for Information:298-1915
TO CONFIRM BY TELEPHONE
OR FOR INFORMATION:
(212) 815-5788
Delivery to an address other than as listed above or transmission of
instructions via facsimile other than as listed above does not constitute a
valid delivery.
Fees and Expenses815-3750
DELIVERY TO AN ADDRESS OTHER THAN AS LISTED ABOVE OR TRANSMISSION OF
INSTRUCTIONS VIA FACSIMILE OTHER THAN AS LISTED ABOVE DOES NOT CONSTITUTE A
VALID DELIVERY.
FEES AND EXPENSES
The principal solicitation is being made by mail; however, additional
solicitation may be made by telegraph, telephone or in person by our officers,
regular employees and affiliates. We will not pay any additional compensation to
any of our officers and employees who engage in soliciting tenders. We will not
make any payment to brokers, dealers, or others soliciting acceptances of the
exchange offer. However, we will pay the exchange agent reasonable and customary
fees for its services and will reimburse it for its reasonable out-of-pocket
expenses in connection with the exchange offer.
The estimated cash expenses to be incurred in connection with the exchange
offer, including legal, accounting, SEC filing, printing and exchange agent
expenses, will be paid by us and are estimated in the aggregate to be $200,000.
31
Transfer TaxesTRANSFER TAXES
Holders who tender their old notes for exchange will not be obligated to
pay any transfer taxes in connection therewith, except that holders who instruct
us to register new notes in the name of, or request that old notes not tendered
or not accepted in the exchange offer be returned to, a person other than the
registered tendering holder will be responsible for the payment of any
applicable transfer tax thereon.
Resale of the New Notes28
RESALE OF THE NEW NOTES
Under existing interpretations of the staff of the SEC contained in several
no-action letters to third parties, the new notes would in general be freely
transferable after the exchange offer without further registration under the
Securities Act. The relevant no-action letters include the Exxon Capital
Holdings CorporationEXXON CAPITAL
HOLDINGS CORPORATION letter, which was made available by the SEC on May 13,
1988, and the Morgan StanleyMORGAN STANLEY & Co. IncorporatedCO. INCORPORATED letter, made available on June
5, 1991.
However, any purchaser of old notes who is an "affiliate" of CVS or who
intends to participate in the exchange offer for the purpose of distributing the
new notes:
(1) will not be able to rely on the interpretation of the staff of the
SEC;
(2) will not be able to tender its old notes in the exchange offer; and
(3) must comply with the registration and prospectus delivery requirements
of the Securities Act in connection with any sale or transfer of the
notes unless that sale or transfer is made using an exemption from
those requirements.
By executing, or otherwise becoming bound by, the Letter of Transmittal
each holder of the old notes will represent that:
(1) it is not our "affiliate";
(2) any new notes to be received by it were acquired in the ordinary
course of its business; and
(3) it has no arrangement with any person to participate in the
"distribution," within the meaning of the Securities Act, of the new
notes.
In addition, in connection with any resales of new notes, any broker-dealer
participating in the exchange offer who acquired notes for its own account as a
result of market-making or other trading activities must deliver a prospectus
meeting the requirements of the Securities Act. The SEC has taken the position
in the ShearmanSHEARMAN & SterlingSTERLING no-action letter, which it made available on July 2,
1993, that participating broker- dealersbroker-dealers may fulfill their prospectus delivery
requirements with respect to the new notes, other than a resale of an unsold
allotment from the original sale of the old notes, with the prospectus contained
in the exchange offer registration statement. Under the registration rights
agreement, we are required to allow participating broker-dealers and other
persons, if any, subject to similar prospectus delivery requirements to use this
prospectus as it may be amended or supplemented from time to time, in connection
with the resale of new notes.
MATERIAL UNITED STATES TAX CONSEQUENCES OF THE EXCHANGE OFFER
In the opinion of Davis Polk & Wardwell, the exchange of old notes for new
notes in the exchange offer will not result in any United States federal income
tax consequences to holders. When a holder exchanges an old note for a new note
in the exchange offer, the holder will have the same adjusted basis and holding
period in the new note as in the old note immediately before the exchange.
32
PLAN OF DISTRIBUTION
Each broker-dealer that receives new notes for its own account in the
exchange offer must acknowledge that it will deliver a prospectus in connection
with any resale of new notes. This prospectus, as it may be amended or
supplemented from time to time, may be used by a broker-dealer in connection
with resales of new notes received in exchange for old notes where old notes
were acquired as a result of market-making activities or other trading
activities. We have agreed that, for a period of 135 days after the expiration
date, we will make this prospectus, as amended or supplemented, available to any
broker-dealer for use in connection with any resale of new notes received by it
in exchange for old notes.
We will not receive any proceeds from any sale of new notes by
broker-dealers.
29
New notes received by broker-dealers for their own account in the exchange
offer may be sold from time to time in one or more transactions, including:
o- in the over-the-counter market;
o- in negotiated transactions;
o- through the writing of options on the new notes; or
o- a combination of those methods of resale,
at market prices prevailing at the time of resale, at prices related to
prevailing market prices or negotiated prices.
Any resale may be made directly to purchasers or to or through brokers or
dealers who may receive compensation in the form of commissions or concessions
from any broker-dealer or the purchasers of any new notes.
Any broker-dealer that resells new notes that were received by it for its
own account in the exchange offer and any broker or dealer that participates in
a distribution of those new notes may be considered to be an "underwriter"
within the meaning of the Securities Act. Any profit on any resale of those new
notes and any commission or concessions received by any of those persons may be
considered to be underwriting compensation under the Securities Act. The letter
of transmittal states that, by acknowledging that it will deliver and by
delivering a prospectus, a broker-dealer will not be considered to admit that it
is an "underwriter" within the meaning of the Securities Act.
For a period of 135 days after the expiration date, we will promptly send
additional copies of this prospectus and any amendment or supplement to this
prospectus to any broker-dealer that requests those documents in the letter of
transmittal. We have agreed to pay all expenses incident to the exchange offer,
including the expenses of one counsel for the holders of the notes, other than
commissions or concessions of any brokers or dealers and will indemnify the
holders of the notes, including any broker-dealers, against some liabilities,
including liabilities under the Securities Act.
LEGAL MATTERS
Davis Polk & Wardwell will opine for us on whether the new notes are valid
and binding obligations of CVS.
33
EXPERTSINDEPENDENT PUBLIC ACCOUNTANTS
The historical consolidated financial statements of CVS Corporation and its
subsidiaries as of December 30, 200029, 2001 and January 1,December 30, 2000 and for the fifty-two
week periodperiods ended December 29, 2001 and December 30, 2000, and the fifty-three
week period ended January 1, 2000 and the fifty-two week period ended December 26, 1998 and the related consolidated financial
statement schedule have been incorporated by reference in this prospectus in
reliance upon the reports of KPMG LLP, independent certified public accountants,
incorporated by reference herein, and given upon the authority of said firm as
experts in accounting and auditing.
34With respect to the unaudited interim financial information for the
periods ended March 30, 2002 and March 31, 2001, June 29, 2002 and June 30,
2001, and September 28, 2002 and September 29, 2001 incorporated by reference
herein, the independent accountants have reported that they applied limited
procedures in accordance with professional standards for a review of such
information. However, their separate reports included in the Company's
quarterly report on Form 10-Q for the thirteen week periods ended March 30,
2002 and March 31, 2001, the thirteen and twenty-six week periods ended June
29, 2002 and June 30, 2001, and the thirteen and thirty-nine weeks periods
ended September 28, 2002 and September 29, 2001, and incorporated by
reference herein, states that they did not audit and they do not express an
opinion on that interim financial information. Accordingly, the degree of
reliance on their reports on such information should be restricted in light
of the limited nature of the review procedures applied. The accountants are
not subject to the liability provisions of Section 11 of the Securities Act
of 1933 for their report on the unaudited interim financial information
because that report is not a "report" or a "part" of a registration statement
prepared or certified by the accountants within the meaning of Sections 7 and
11 of the Securities Act of 1933.
30
============================================= =============================================
You should rely only on the information
contained in this document or that we have
referred you to. We have not authorized
anyone to provide you with information that
is different. We are not making an offer of
these securities in any state where the offer $300,000,000
is not permitted. You should not assume that
the information in this prospectus is
accurate as of any date other than the date CVS Corporation
on the front of those documents.
[GRAPHIC OMITTED]
----------------------================================================================================
$300,000,000
CVS
CORPORATION
[CVS LOGO]
3 7/8% EXCHANGE NOTES DUE NOVEMBER 1, 2007
PROSPECTUS
, 2003
================================================================================
================================================================================
YOU SHOULD RELY ONLY ON THE INFORMATION CONTAINED IN THIS DOCUMENT OR THAT
WE HAVE REFERRED YOU TO. WE HAVE NOT AUTHORIZED ANYONE TO PROVIDE YOU WITH
INFORMATION THAT IS DIFFERENT. WE ARE NOT MAKING AN OFFER OF THESE SECURITIES IN
ANY STATE WHERE THE OFFER IS NOT PERMITTED. YOU SHOULD NOT ASSUME THAT THE
INFORMATION IN THIS PROSPECTUS IS ACCURATE AS OF ANY DATE OTHER THAN THE DATE ON
THE FRONT OF THOSE DOCUMENTS.
TABLE OF CONTENTS
Page 5 5/8% Exchange Notes due
---- March 15, 2006
PAGE
Where You Can Find More Information.........2Information............................................2
CVS Corporation.............................3 -------------------Corporation................................................................3
Cautionary Statement Concerning Forward-
Looking Statements.......................3 ProspectusStatements..........................................................3
Use of Proceeds.............................4Proceeds................................................................4
Selected Consolidated Financial Data........5 -------------------Data...........................................5
Description of Notes........................7Notes...........................................................7
The Exchange Offer.........................25Offer............................................................23
Material United States Tax Consequences of the
Exchange Offer......................32Offer.............................................................29
Plan of Distribution.......................33Distribution..........................................................29
Legal Matters..............................33
Experts....................................34
, 2001
============================================= =============================================Matters.................................................................30
Independent Public Accountants................................................30
================================================================================
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ItemITEM 20. Indemnification of Directors and Officers.INDEMNIFICATION OF DIRECTORS AND OFFICERS.
Exculpation. Section 102(b)(7) of the Delaware General Corporations Law
("Delaware Law") permits a corporation to include in its certificate of
incorporation a provision eliminating or limiting the personal liability of a
director to the corporation or its stockholders for monetary damages for breach
of fiduciary duty as a director, provided that such provision may not eliminate
or limit the liability of a director for any breach of the director's duty of
loyalty to the corporation or its stockholders, for acts or omissions not in
good faith or which involve intentional misconduct or a knowing violation of
law, for the payment of unlawful dividends, or for any transaction from which
the director derived an improper personal benefit.
The CVS certificate of incorporation (the "CVS Charter") limits the
personal liability of a director to CVS and its stockholders for monetary
damages for a breach of fiduciary duty as a director to the fullest extent
permitted by law.
Indemnification. Section 145 of the Delaware Law permits a corporation to
indemnify any of its directors or officers who was or is a party, or is
threatened to be made a party to any third party proceeding by reason of the
fact that such person is or was a director or officer of the corporation,
against expenses (including attorney's fees), judgments, fines and amounts paid
in settlement actually and reasonably incurred by such person in connection with
such action, suit or proceeding, if such person acted in good faith and in a
manner such person reasonably believed to be in or not opposed to the best
interests of the corporation, and, with respect to any criminal action or
proceeding, had no reason to believe that such person's conduct was unlawful. In
a derivative action, i.e., one by or in the right of a corporation, the
corporation is permitted to indemnify directors and officers against expenses
(including attorneys' fees) actually and reasonably incurred by them in
connection with the defense or settlement of an action or suit if they acted in
good faith and in a manner that they reasonably believed to be in or not opposed
to the best interests of the corporation, except that no indemnification shall
be made if such person shall have been adjudged liable to the corporation,
unless and only to the extent that the court in which the action or suit was
brought shall determine upon application that the defendant directors or
officers are fairly and reasonably entitled to indemnity for such expenses
despite such adjudication of liability.
Expenses, including attorneys' fees, incurred by any such person in
defending any such action, suit or proceeding shall be paid or reimbursed by CVS
in advance of the final disposition of such action, suit or proceeding upon
receipt by it of an undertaking of such person to repay such expenses if it
shall ultimately be determined that such person is not entitled to be
indemnified by CVS.
The CVS Charter provides for indemnification of directors and officers of
CVS against liability they may incur in their capacities as such to the fullest
extent permitted under the Delaware Law.
Insurance. CVS has in effect Directors and Officers Liability, Employment
Practices Liability and Pension Trust Liability insurance with a combined limit
of $200,000,000. The Pension Trust Liability and Employment Practices Liability
insurance covers actions of directors and officers as well as other employees of
CVS.
Revco Directors and Officers. The Revco merger agreement provides that CVS
will cause Revco and its Subsidiaries to indemnify (including the payment of
reasonable fees and expenses of legal counsel) the current or former directors
or officers of Revco to the fullest extent permitted by law for damages and
liabilities arising out of facts and circumstances occurring at or prior to the
merger. The Revco merger agreement also provides that for a period of six years
after the merger CVS will cause to be maintained in effect Revco's existing
policies of directors' and officers' liability insurance as in effect on
February 6, 1997 (provided that CVS may substitute policies with reputable and
financially sound carriers having at II-1
least the same coverage and amounts and
containing terms and conditions that are no less advantageous) with respect to
facts or circumstances occurring at or prior to the merger; provided that if the
annual premium for such insurance during such six-year period exceeds 200% of
the annual premiums paid by Revco as of February 6, 1997 for such insurance
(such 200% amount, the "Maximum Premium") then CVS will cause Revco to provide
the most advantageous directors' and officers' insurance coverage then available
for an annual premium equal to the Maximum Premium.
II-1
Arbor Directors and Officers. The Arbor merger agreement provides that
after the Effective Time (as defined in the Arbor merger agreement), CVS will
cause Arbor to indemnify (including the payment of reasonable fees and expenses
of legal counsel) each person who was a director or officer of Arbor or its
subsidiaries at or prior to the date of the Arbor merger agreement to the
fullest extent permitted by law for damages and liabilities arising out of facts
and circumstances occurring at or prior to the Effective Time. The Arbor merger
agreement also provides that, for a period of six years after the Effective
Time, CVS will maintain in effect Arbor's existing policies of directors' and
officers' liability insurance as in effect on February 8, 1998 (provided that
CVS may substitute policies with reputable and financially sound carriers having
at least the same coverage and amounts and containing terms and conditions that
are no less advantageous to the covered persons) with respect to facts or
circumstances occurring at or prior to the Effective Time; provided that if the
aggregate annual premium for such insurance during such six-year period exceeds
200% of the aggregate annual premium paid by Arbor as of February 8, 1998 for
such insurance, then CVS will cause Arbor to provide the most advantageous
directors' and officers' insurance coverage then available for an annual premium
equal to such 200% of the February 8, 1998 premiums.
ItemITEM 21. Exhibits and
Financial Statement SchedulesEXHIBITS AND FINANCIAL STATEMENT SCHEDULES
(a) Exhibits (see index to exhibits at E-1).
ItemITEM 22. UndertakingsUNDERTAKINGS
(a) The undersigned Registrant hereby undertakes:
(1) To file during any period in which offers or sales are being
made, a post-effective amendment to this registration statement: (i) to include
any prospectus required by Section 10(a)(3) of the Securities Act of 1933; (ii)
to reflect in the prospectus any facts or events arising after the effective
date of the registration statement (or the most recent post-effective amendment
thereof) which, individually or in the aggregate, represent a fundamental change
in the information set forth in the registration statement. Notwithstanding the
foregoing, any increase or decrease in the volume of securities offered (if the
total dollar value of securities offered would not exceed that which was
registered) and any deviation from the low or high end of the estimated maximum
offering range may be reflected in the form of prospectus filed with the
Commission pursuant to Rule 424(b) if, in the aggregate, the changes in volume
and price represent no more than a 20 percent change in the maximum aggregate
offering price set forth in the "Calculation of Registration Fee" table in the
effective registration statement; and (iii) to include any material information
with respect to the plan of distribution not previously disclosed in the
registration statement or any material change to such information in the
registration statement;
(2) That, for the purpose of determining any liability under the
Securities Act of 1933, each such post-effective amendment shall be deemed to be
a new registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial bona
fide offering thereof.
(3) To remove from registration by means of a post-effective
amendment any of the securities being registered which remain unsold at the
termination of the offering.
II-2
provided, however, that paragraphs (a)(1)(i) and (a)(1)(ii) do not apply if the
registration statement is on Form S-3, Form S-8 or Form F-3, and the information
required to be included in a post-effective amendment by those paragraphs is
contained in periodic reports filed with or furnished to the Commission by the
registrant pursuant to Section 13 or 15(d) of the Securities Exchange Act of
1934 that are incorporated by reference in the registration statement.
(b) The undersigned Registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act of 1933, each filing of the
Registrant's annual report pursuant to Section 13(a) or 15(d) of the Securities
Exchange Act of 1934 (and, where applicable, each filing of an employee benefit
plan's annual report pursuant to Section 15(d) of the Securities Exchange Act of
1934) that is incorporated by reference in the registration statement shall be
deemed to be a new registration statement relating to the securities offered
therein, and the offering of such securities at that time shall be deemed to be
the initial bona fide offering thereof.
II-2
(c) Insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to directors, officers and controlling
persons of the Registrant pursuant to the foregoing provisions, or otherwise,
the Registrant has been advised that in the opinion of the Securities and
Exchange Commission such indemnification is against public policy as expressed
in the Act and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by the
registrant of expenses incurred or paid by a director, officer or controlling
person of the Registrant in the successful defense of any action, suit or
proceeding) is asserted by such director, officer or controlling person in
connection with the securities being registered, the Registrant will, unless in
the opinion of its counsel the matter has been settled by controlling precedent,
submit to a court of appropriate jurisdiction the question whether such
indemnification by it is against public policy as expressed in the Act and will
be governed by the final adjudication of such issue.
(d) The undersigned Registrant hereby undertakes to respond to requests
for information that is incorporated by reference into the prospectus pursuant
to Item 4, 10(b) or 11 of this form, within one business day of receipt of such
request, and to send the incorporated documents by first class mail or other
equally prompt means. This includes information contained in documents filed
subsequent to the effective date of the registration statement through the date
of responding to the request.
(e) The undersigned Registrant hereby undertakes to supply by means of a
post-effective amendment all information concerning a transaction, and CVS being
acquired involved therein, that was not the subject of and included in the
registration statement when it became effective.
II-3
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, CVS Corporation
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form S-4 and has duly caused this registration
statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the city of Woonsocket, state of Rhode Island, on May 18, 2001.January 31,
2003.
CVS CORPORATION
By: /s/ David B. Rickard
--------------------------------------------------------
David B. Rickard
Executive Vice President,
Chief Financial Officer and
Chief FinancialAdministrative Officer
The registrant and each person whose signature appears below constitutes
and appoints David B. Rickard, his true and lawful attorney-in-fact and agent,
with full power of substitution and resubstitution, for him and in his name,
place and stead, in any and all capacities, to sign and file (i) any and all
amendments (including post-effective amendments) to this registration statement,
with all exhibits thereto, and other documents in connection therewith, and (ii)
a registration statement, and any and all amendments, thereto, relating to the
offering covered hereby filed pursuant to Rule 462(b) under the Securities Act
of 1933, with the Securities and Exchange Commission, granting unto said
attorney-in-fact and agent, full power and authority to do and perform each and
every act and thing requisite or necessary to be done in and about the premises,
as fully to all intents and purposes as he might or could do in person, hereby
ratifying and confirming all that said attorney-in-fact and agent or his
substitute or substitutes, may lawfully do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, this
registration statement has been signed by the following persons in the
capacities and on the dates indicated.
Signature Title(s) Date
--------- -------- ----
Signature Title Date
--------- ----- ----
/s/ Thomas M. Ryan
- ------------------------------- Chairman of the Board, President May 18, 2001January 31, 2003
------------------ And Chief Executive Officer
Thomas M. Ryan and Chief Executive Officer (Principal Executive Officer)
/s/ David B. Rickard - ------------------------------- Executive Vice President, Chief January 31, 2003
-------------------- Financial Officer and May 18, 2001Chief
David B. Rickard Chief FinancialAdministrative Officer
(Principal Financial Officer)
/s/ Larry D. Solberg - ------------------------------- Senior Vice President - May 18, 2001January 31, 2003
-------------------- Finance and Controller
Larry D. Solberg Finance and Controller
(Principal Accounting Officer)
II-4
Signature Title Date
--------- ----- ----
/s/ Eugene Applebaum - ------------------------------ Director May 18, 2001January 31, 2003
--------------------
Eugene Applebaum
/s/ W. Don Cornwell - ------------------------------- Director May 18, 2001January 31, 2003
-------------------
W. Don Cornwell
/s/ Thomas P. Gerrity - ------------------------------- Director May 18, 2001January 31, 2003
---------------------
Thomas P. Gerrity
II-4
/s/ Stanley P. Goldstein - ------------------------------ Director May 18, 2001January 31, 2003
------------------------
Stanley P. Goldstein
/s/ Marian L. Heard - ------------------------------ Director May 18, 2001January 31, 2003
-------------------
Marian L. Heard
/s/ William H. Joyce - ------------------------------ Director May 18, 2001January 31, 2003
--------------------
William H. Joyce
/s/ Terry R. Lautenbach - ------------------------------ Director May 18, 2001January 31, 2003
-----------------------
Terry R. Lautenbach
/s/ Terrence Murray - ------------------------------ Director May 18, 2001January 31, 2003
-------------------
Terrence Murray
/s/ Sheli Z. Rosenberg - ------------------------------ Director May 18, 2001January 31, 2003
----------------------
Sheli Z. Rosenberg
/s/ Ivan G. Seidenberg - ------------------------------ Director May 18, 2001January 31, 2003
----------------------
Ivan G. Seidenberg
II-5
EXHIBIT INDEX
Exhibit No. Document
- ----------- --------
1.1 Registration Rights Agreement dated as of March 19, 2001October 30, 2002 between
CVS and Credit Suisse First Boston Corporation, Bear Stearns & Co.
Inc., J.P. Morgan Securities Inc. and Morgan Stanley & Co.
Incorporated, as Initial PurchaserPurchasers
4.1 Indenture, dated as of March 22, 2001November 4, 2002 between CVS and the Trustee
5.1*5.1 Opinion of Davis Polk & Wardwell with respect to the new notes
8.1*8.1 Tax opinion of Davis Polk & Wardwell
12.1 Computation of Ratio of Earnings to Fixed Charges
23.1*23.1 Consent of Davis Polk & Wardwell (contained in their opinion filed
as Exhibit 5.1).
23.2 Consent of KPMG LLP.LLP
23.3 Letter re: Unaudited Interim Financial Information
24.1 Power of Attorney (included on the signature page of this
registration statement)
25.1 Form T-1, Statement of Eligibility of The Bank of New York to act as
Trustee under the Indenture
99.1*99.1 Form of Letter of Transmittal
99.2*99.2 Form of Notice of Guaranteed Delivery
99.3*99.3 Form of Letter to Clients
99.4*99.4 Form of Letter to Nominees
99.5*99.5 Form of Instructions to Registered Holder and/or Book-Entry Transfer
Participant from Owner
- -------------------
* To be filed by amendment.
E-1II-6