Table of Contents

 

 

 

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

 


 

FORM 11-K

 


 

x                  Annual Report Pursuant to Section 15(d) of the Securities and Exchange Act of 1934

 

¨                     Transition Report Pursuant to Section 15(d) of the Securities and Exchange Act of 1934

 

For the fiscal year ended December 31, 2010

 

Commission File Number:  001-01011

 

The 401(k) Plan and the Employee Stock Ownership Plan of CVS Caremark Corporation and Affiliated Companies

 


 

GRAPHIC

 

CVS Caremark Corporation

One CVS Drive

Woonsocket, RI 02895

(Name of issuer and address of principal executive offices of issuer)

 

 

 



Table of Contents

 

THE 401(k) PLAN AND THE EMPLOYEE STOCK OWNERSHIP PLAN

OF CVS CAREMARK CORPORATION AND AFFILIATED COMPANIES

YEARS ENDED DECEMBER 31, 2010 AND 2009

 

CONTENTS

 

 

 

Page

 

 

 

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

 

2

 

 

 

FINANCIAL STATEMENTS:

 

 

 

 

 

Statements of Net Assets Available for Benefits

 

3

 

 

 

Statements of Changes in Net Assets Available for Benefits

 

4

 

 

 

Notes to Financial Statements

 

5

 

 

 

SUPPLEMENTARY SCHEDULES:

 

 

 

 

 

Schedule H, Line 4a—Schedule of Delinquent Participant Contributions

 

21

 

 

 

Schedule H, Line 4i—Schedule of Assets (Held at End of Year)

 

22

 

 

 

SIGNATURE

 

35

 

 

 

EXHIBIT INDEX

 

36

 

 

 

Exhibit 23.1   Consent of Ernst & Young LLP

 

37

 

1



Table of Contents

 

Report of Independent Registered Public Accounting Firm

 

The Administrative Committee of

The 401(k) Plan and the Employee Stock Ownership

Plan of CVS Caremark Corporation and Affiliated Companies

 

We have audited the accompanying statements of net assets available for benefits of The 401(k) Plan and the Employee Stock Ownership Plan of CVS Caremark Corporation and Affiliated Companies (the “Plan”) as of December 31, 2010 and 2009, and the related statements of changes in net assets available for benefits for the years then ended. These financial statements are the responsibility of the Plan’s management. Our responsibility is to express an opinion on these financial statements based on our audits.

 

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. We were not engaged to perform an audit of the Plan’s internal control over financial reporting. Our audits included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Plan’s internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

 

In our opinion, the financial statements referred to above present fairly, in all material respects, the net assets available for benefits as of December 31, 2010 and 2009, and the changes in net assets available for benefits for the years then ended, in conformity with U.S. generally accepted accounting principles.

 

Our audits were performed for the purpose of forming an opinion on the financial statements taken as a whole. The accompanying supplemental schedules of delinquent participant contributions for the year ended December 31, 2010 and assets (held at end of year) as of December 31, 2010, are presented for purposes of additional analysis and are not a required part of the financial statements but are supplementary information required by the Department of Labor’s Rules and Regulations for Reporting and Disclosure under the Employee Retirement Income Security Act of 1974. These supplemental schedules are the responsibility of the Plan’s management. The supplemental schedules have been subjected to the auditing procedures applied in our audits of the financial statements and, in our opinion, are fairly stated in all material respects in relation to the financial statements taken as a whole.

 

 

/s/ Ernst & Young LLP

 

Boston, Massachusetts

June 24, 2011

 

2



Table of Contents

 

THE 401(k) PLAN AND THE EMPLOYEE STOCK OWNERSHIP PLAN

OF CVS CAREMARK CORPORATION AND AFFILIATED COMPANIES

 

Statements of Net Assets Available for Benefits

December 31, 2010 and 2009

 

 

 

2010

 

2009

 

Assets:

 

 

 

 

 

Investments, at fair value (Note 10):

 

 

 

 

 

Cash

 

$

9,742,342

 

$

 

Common collective trust funds (Note 2 (d))

 

788,193,027

 

1,105,228,605

 

Guaranteed investment contracts (Note 2 (d))

 

308,871,889

 

 

Mutual funds (Note 2 (d))

 

2,160,422,545

 

1,562,946,674

 

Common stock (Note 2 (d))

 

1,319,512,127

 

1,339,854,087

 

Total investments

 

4,586,741,930

 

4,008,029,366

 

Receivables:

 

 

 

 

 

Interest and dividends (Note 2 (i))

 

2,080,838

 

2,227,286

 

Employer contributions (Note 1 (d))

 

43,031,787

 

42,042,194

 

Employee contributions (Note 1 (d))

 

6,364,320

 

22,525,321

 

Notes receivable from participants (Note 4)

 

137,887,485

 

121,822,855

 

Total receivables

 

189,364,430

 

188,617,656

 

 

 

 

 

 

 

Total assets at fair value

 

4,776,106,360

 

4,196,647,022

 

 

 

 

 

 

 

Liabilities:

 

 

 

 

 

Accrued expenses and other liabilities

 

406,405

 

1,997,624

 

 

 

 

 

 

 

Total liabilities

 

406,405

 

1,997,624

 

 

 

 

 

 

 

Net assets available for benefits at fair value

 

4,775,699,955

 

4,194,649,398

 

 

 

 

 

 

 

Adjustments from fair value to contract value for fully benefit-responsive investment contracts

 

(20,933,427

)

75,476

 

 

 

 

 

 

 

Net assets available for benefits

 

$

4,754,766,528

 

$

4,194,724,874

 

 

See accompanying notes to financial statements.

 

3



Table of Contents

 

THE 401(k) PLAN AND THE EMPLOYEE STOCK OWNERSHIP PLAN

OF CVS CAREMARK CORPORATION AND AFFILIATED COMPANIES

 

Statements of Changes in Net Assets Available for Benefits

Years Ended December 31, 2010 and 2009

 

 

 

2010

 

2009

 

Investment activity:

 

 

 

 

 

Interest and dividend income (Note 2 (i))

 

$

101,303,645

 

$

89,110,408

 

Transfer in (out) of plan assets (Note 1 (a))

 

(2,721,793

)

730,042,061

 

Realized and unrealized gains (Notes 3 and 5)

 

353,061,073

 

566,101,097

 

Total investment activity

 

451,642,925

 

1,385,253,566

 

 

 

 

 

 

 

Contributions:

 

 

 

 

 

Employer contributions (Note 1 (d))

 

155,731,506

 

156,220,766

 

Employee contributions (Note 1 (d))

 

259,633,846

 

252,807,011

 

Rollovers

 

12,437,643

 

10,456,819

 

Total contributions

 

427,802,995

 

419,484,596

 

 

 

 

 

 

 

Deductions:

 

 

 

 

 

Benefits paid to participants (Notes 1 (g) and 2 (e))

 

307,443,630

 

212,424,650

 

Administrative expenses (Note 1 (h))

 

11,960,636

 

10,671,475

 

Total deductions

 

319,404,266

 

223,096,125

 

 

 

 

 

 

 

Net increase in net assets for the year

 

560,041,654

 

1,581,642,037

 

 

 

 

 

 

 

Net assets beginning of the year

 

4,194,724,874

 

2,613,082,837

 

 

 

 

 

 

 

Net assets end of the year

 

$

4,754,766,528

 

$

4,194,724,874

 

 

See accompanying notes to financial statements.

 

4



Table of Contents

 

THE 401(k) PLAN AND THE EMPLOYEE STOCK OWNERSHIP PLAN

OF CVS CAREMARK CORPORATION AND AFFILIATED COMPANIES

 

Notes to Financial Statements

Years Ended December 31, 2010 and 2009

 

Note 1 - Plan Description

 

The following description of the 401(k) Plan and the Employee Stock Ownership Plan (the “ESOP”) of CVS Caremark Corporation and Affiliated Companies (the “Plan”) provides only general information. Participants should refer to the Plan documents for a more complete description of the Plan’s provisions.

 

(a)                  Background

 

The Plan is a defined contribution plan subject to the provisions of the Employee Retirement Income Security Act of 1974 (“ERISA”), as amended. The general administration of the Plan and the responsibility for carrying out the provisions of the Plan are maintained by a committee (the “Benefit Plans Committee”) of not less than three persons appointed by the Board of Directors of CVS Caremark Corporation (“CVS Caremark” or the “Company”), the sponsor of the Plan. In accordance with the provisions of the Plan, the Benefit Plans Committee has appointed an administrator (the “Administrator”) and a trustee (the “Trustee”). The Administrator maintains participant account records and instructs the Trustee to execute transactions such as benefit payments to participants. The Trustee holds the assets of the Plan and executes transactions at the direction of the Benefit Plans Committee and the Administrator. Effective January 2010, the Benefits Plans Committee further named an Administrative Sub Committee and an Investment Sub Committee and delegated certain fiduciary duties to each of the Committees.

 

The Plan was established as of January 1, 1989.

 

Effective April 10, 2002, the 401(k) Profit Sharing Plan of CVS Corporation (the “401(k) Plan”) was merged into the Plan, and the plan name was changed from CVS Corporation and Subsidiaries Employee Stock Ownership Plan to The 401(k) Plan and the Employee Stock Ownership Plan of CVS Corporation and Affiliated Companies. All assets and liabilities under the 401(k) Plan as of April 10, 2002 were transferred to the Plan and, as of that date, benefits for the participants and beneficiaries of the 401(k) Plan have been paid from the Plan. See Note 2(a) for further breakdown between ESOP and 401(k) assets.

 

Effective March 22, 2007, pursuant to the Agreement and Plan of Merger dated as of November 1, 2006, as amended, Caremark Rx, Inc. (“Caremark”) was merged into a newly formed subsidiary of CVS Caremark Corporation (“CVS”) with the CVS subsidiary continuing as the surviving entity (the “Caremark Merger”). Subsequently, the name of this plan was changed from The 401(k) Plan and the Employee Stock Ownership Plan of CVS Corporation and Affiliated Companies to The 401(k) Plan and the Employee Stock Ownership Plan of CVS Caremark Corporation and Affiliated Companies. The Plan has not been amended to allow for participation by Caremark employees and as such, the financial statements herein do not reflect any consolidation of benefits as provided to employees by Caremark at the time of the Caremark Merger.

 

Effective February 21, 2009, the Longs Drug Stores California LLC 401(k) Plan (the “Longs Plan”) was merged into the Plan and effective March 10, 2009, the assets of the Longs Plan, both cash and in-kind, were transferred into the Plan. This transfer included $194,944,787 and $535,097,274 of cash and in-kind assets, respectively. There are no remaining assets in the Longs Plan.

 

5



Table of Contents

 

THE 401(k) PLAN AND THE EMPLOYEE STOCK OWNERSHIP PLAN

OF CVS CAREMARK CORPORATION AND AFFILIATED COMPANIES

 

Notes to Financial Statements (Continued)

Years Ended December 31, 2010 and 2009

 

Effective January 1, 2010, CVS Caremark developed the Intercompany Voluntary Transfer Program, allowing employees who experienced a bona fide transfer within the Company’s control group the opportunity to voluntarily transfer their 401(k) assets from their prior business unit’s plan to the 401(k) plan sponsored by their current business unit.  This offering is made twice a year to eligible employees.  The first offering for this program was processed in October 2010 and resulted in a transfer of assets out of the Plan of $3,181,719 and transfer of assets into the Plan of $459,926, for a net effect of ($2,721,793).

 

(b)                      Eligibility

 

Employees are eligible to participate in the Plan upon attainment of age 21 and on the earliest of:

 

·                The first payroll period of the first month after completion of 90 continuous days of service as a full-time employee;

 

·                Completion of 12 months of service beginning on the employee’s hire date with at least 1,000 hours worked; or

 

·                Completion of at least 1,000 hours of service in the course of one calendar year.

 

Employees referred to above are defined as regular employees of the Company other than:

 

·                  A nonresident alien receiving no United States (“U.S.”) earned income from the Company;

 

·                 An individual covered under a collective bargaining agreement (unless the agreement provides for membership);

 

·                A leased employee (as defined in the Internal Revenue Code);

 

·                 A temporary employee (as determined by the Company); or

 

·                 An independent contractor or consultant (as defined by the Company).

 

(c)                       Leveraged ESOP Transaction

 

On June 23, 1989, the ESOP borrowed $357,500,000 from qualified lenders at an interest rate of 8.60% for a 20-year term (the “ESOP Notes”). The loan to the ESOP was guaranteed by CVS Caremark. The ESOP used the proceeds of the loan to purchase 6,688,494 shares of CVS Caremark Corporation Series One ESOP Convertible Preference Stock (“ESOP Preference Stock”). Each share of ESOP Preference Stock was convertible into shares of CVS Caremark Common Stock at the election of the Plan’s Trustee. The conversion rate was 4.628 shares of CVS Caremark Common Stock for each share of ESOP Preference Stock. The annual dividend on the ESOP Preference Stock is $3.90 per share. Cash dividend payments on unallocated ESOP Preference Stock were used to make debt service payments and are not allocated to participants’ accounts.

 

In accordance with the terms of the loan agreement, the interest rate on the loan was adjusted as of January 1, 1995 in connection with the increase in the Federal income tax rate to 35%. The adjusted interest rate was 8.52%.

 

As of December 31, 2008, the Plan repaid all outstanding amounts under the terms of the ESOP Notes described above.

 

6



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THE 401(k) PLAN AND THE EMPLOYEE STOCK OWNERSHIP PLAN

OF CVS CAREMARK CORPORATION AND AFFILIATED COMPANIES

 

Notes to Financial Statements (Continued)

Years Ended December 31, 2010 and 2009

 

On January 30, 2009, pursuant to the Company’s Amended and Restated Certificate of Incorporation (the “Charter”), the Company informed the trustee of the ESOP Trust of its intent to redeem for cash all of the outstanding shares of ESOP Preference Stock on February 24, 2009 (the “Redemption Date”).  Under the Charter, at any time prior to the Redemption Date, the trustee is afforded the right to convert the ESOP Preference Stock into shares of the Company’s Common Stock. The conversion rate at the time of the notice was 4.628 shares of Common Stock for each share of ESOP Preference Stock. The trustee exercised its right of conversion on February 23, 2009, and 3,553,212 shares of ESOP Preference Stock were converted into 16,444,265 shares of CVS Caremark Common Stock at a market value of $457,479,456.

 

(d)                      Contributions

 

Participants may elect to have the Company contribute to their accounts from 1% to 85% of the compensation that would otherwise be due to them, in multiples of 1%, pursuant to a salary reduction agreement. Each participant’s total elective deferrals for any calendar year may not exceed 85% of annual compensation or the maximum allowed by the Internal Revenue Code (the “Code”); whichever is less, as specified in the Plan document. The maximum elective deferral allowed by the Code was $16,500 for 2010 and 2009.

 

Effective January 1, 2009, on a quarterly basis, the Company matches in cash 100% up to 5% of eligible pre-tax compensation contributed, if the employee is actively employed at that time. Prior to January 1, 2009, the Company matched 100% up to 5% of eligible pre-tax compensation contributed, 50% to the employees’ Plan account quarterly and 50% to the employees’ ESOP Diversification Account at the end of the year. Shares of ESOP Preference Stock allocated to a participant account were calculated by dividing the greater of $53.45 (the cash liquidation value as specified in the Plan document) or the market price of CVS Caremark Common Stock at the time of allocation.

 

All employees at least age 50 that contribute the maximum amount to the Plan are permitted to make additional pre-tax catch-up contributions. Catch-up contributions may be made up to an additional $5,500 for 2010 and 2009.

 

(e)                       Participant’s Account

 

Each participant’s account is credited with an allocable share of their selected Plan’s investments and any unrealized appreciation or depreciation and interest and dividends of those investments. Allocations to individual participant’s accounts are based on the number of shares due to each participant as described in Note 1(d) above.

 

(f)                         Vesting

 

Participants are 100% vested in participant and Company matching contributions.

 

Participants whose account balances have been transferred into the Plan from other defined contribution plans maintain at least the degree of vesting in the account they had at the time of the transfer. Notwithstanding the foregoing, participants are fully vested in, and have a nonforfeitable right to (1) their accounts upon death or disability, and (2) any elective deferrals described in Note 1(d).

 

(g)                      Payment of Benefits

 

Upon termination of service by the participant, the Administrator will direct the Trustee to pay to the participant their benefit under one or more options, such as a single lump-sum, or in equal annual installments over a period not exceeding fifteen years.

 

7



Table of Contents

 

THE 401(k) PLAN AND THE EMPLOYEE STOCK OWNERSHIP PLAN

OF CVS CAREMARK CORPORATION AND AFFILIATED COMPANIES

 

Notes to Financial Statements (Continued)

Years Ended December 31, 2010 and 2009

 

(h)                      Administrative Expenses

 

Administrative expenses specifically attributable to the Plan and not covered by forfeitures were funded by the Plan for 2010 and 2009. Trustee’s fees were paid by the Plan for 2010 and 2009.

 

(i)                         Forfeitures

 

On a participant’s termination date, any unvested portion of their account is forfeited at the earlier of distribution or five years from the date of termination. If a former participant resumes employment and eligibility in the Plan within five years of termination, any amounts previously forfeited are restored to the participant’s account, but remain subject to the vesting provisions of the Plan. Forfeitures during any plan year are applied as follows: (i) to restore amounts previously forfeited by participants but required to be reinstated upon resumption of employment; (ii) to pay administrative expenses of the Plan; or (iii) to reduce future CVS Caremark contributions. If forfeitures for any plan year are insufficient to restore the required forfeitures, CVS Caremark shall contribute the balance required for that purpose.

 

Cash forfeitures for 2010 and 2009 were $288,931 and $260,084, respectively. Cash forfeitures restored to participants upon resumption of employment for 2010 and 2009 were $1,720 and $20,902, respectively. The remainder of the forfeitures for each year was applied to the administrative expenses of the plan and to reduce the CVS Caremark contribution.

 

(j)                         Investment Options

 

Upon enrollment in the Plan, a participant elects to direct contributions or investment balances to the investment options offered by the plan. Participants may modify investment elections daily thereafter.  The Plan’s investments are comprised of guaranteed insurance contracts, securities of CVS Caremark and securities of unaffiliated issuers. The securities in unaffiliated issuers include marketable mutual funds and separately managed funds, comprised of marketable securities. The following is a brief explanation of each fund’s investment objectives:

 

Core Equity Fund

 

The Institutional Vanguard Index Fund seeks to replicate the total return of the Standard & Poors (“S&P”) 500 Composite Stock Index (“S&P 500”) by investing in stocks that make up the index. The S&P 500 Index consists mainly of large companies and represents approximately 75% of the U.S. stock market value.

 

Diversified Bond Fund

 

The PIMCO Total Return Institutional Class Fund is a core bond fund that seeks to outperform the Barclays Capital Aggregate Bond Index. Investments may include government and corporate debt securities, mortgage and other asset-backed securities, money market instruments, and derivatives.

 

International Equity Fund

 

The Templeton Foreign Equity Series-Primary Shares Fund seeks long-term growth of capital through participation in stock markets outside the United States. The fund invests mainly in the common stock of companies based in more developed countries, but may also include investments in developing countries. It is benchmarked by the Morgan Stanley Capital International (“MSCI”) Europe, Australasia, and Far East (“EAFE”) Index.

 

8



Table of Contents

 

THE 401(k) PLAN AND THE EMPLOYEE STOCK OWNERSHIP PLAN

OF CVS CAREMARK CORPORATION AND AFFILIATED COMPANIES

 

Notes to Financial Statements (Continued)

Years Ended December 31, 2010 and 2009

 

Small Cap Growth Fund

 

The Vanguard® Explorer™ Fund Admiral™ Shares seeks long-term growth of capital and dividend income through participation in the stock market. The fund invests primarily in stocks of relatively small companies, making it a high-risk investment with potential for large rewards. This fund is benchmarked by the Russell 2500 Growth Index.

 

Global Equity Fund

 

The American Funds-New Perspective Fund seeks long-term growth of capital by investing in a variety of foreign and domestic companies. The fund tries to outperform the MSCI World Index, which measures the performance of U.S. and international stock markets.

 

Small Cap Value Fund

 

This fund is managed by Dimensional Fund Advisors and Lord, Abbett & Co. This blended fund seeks long-term growth by investing primarily in stocks of small to medium-sized companies.

 

Small Cap Index Fund

 

The Vanguard Small Cap Index Fund seeks to replicate the total return of the MSCI US Small Cap 1750 Index by investing in the stocks that make up the index. The MSCI US Small Cap 1750 Index consists of smaller U.S. companies.

 

Mid Cap Index Fund

 

The Vanguard Mid Cap Index Fund seeks to replicate the total return of the MSCI US Mid Cap 450 Index by investing in the stocks that make up the index. The MSCI US Mid Cap 450 Index consists of medium-size U.S. companies.

 

International Equity Index Fund

 

The Vanguard Developed Markets Index Fund seeks to replicate the total return of the MSCI EAFE Index by investing in the institutional shares of two other Vanguard funds — the Vanguard European Stock Index Fund and Vanguard Pacific Stock Index Fund. These indexes include common stock of approximately 1,140 companies located in Europe, Australia, Asia and the Far East.

 

Conservative Lifestyle Fund

 

The fund invests in the following Future Fund investment options: Small Cap Growth, Small Cap Value, International Equity, Large Cap Growth, Core Equity, Growth & Income, Diversified Bond, U.S. Bond Index Fund, and Stable Value Fund. This fund has the following composite benchmarks: Russell 1000 Index, Barclays Capital Aggregate Bond Index, S&P 500 Index, 3-Year U.S. Treasury Index, Russell 2000 Index, and the MSCI EAFE Index.

 

Moderate Lifestyle Fund

 

The fund invests in other Future Fund investment options as follows: Small Cap Growth, Small Cap Value, International Equity, Large Cap Growth, Core Equity, Growth & Income, Diversified Bond, U.S. Bond Index Fund, and Stable Value Fund. The composite benchmark has been determined as follows: Russell 1000 Index, Barclays Capital Aggregate Bond Index, S&P 500 Index, MSCI EAFE Index, Russell 2000 Index, and the 3-Year U.S. Treasury Index.

 

Aggressive Lifestyle Fund

 

The fund invests in other Future Fund investment options as follows: Small Cap Growth, Small Cap Value, International Equity, Large Cap Growth, Core Equity, Growth & Income, Diversified Bond, and U.S. Bond Index Fund. This fund has the following composite benchmarks: Russell 1000 Index, Barclays Capital Aggregate Bond Index, S&P 500 Index, MSCI EAFE Index, and the Russell 2000 Index.

 

9



Table of Contents

 

THE 401(k) PLAN AND THE EMPLOYEE STOCK OWNERSHIP PLAN

OF CVS CAREMARK CORPORATION AND AFFILIATED COMPANIES

 

Notes to Financial Statements (Continued)

Years Ended December 31, 2010 and 2009

 

CVS Caremark Common Stock Fund

 

CVS Caremark Common Stock Fund seeks long-term growth and dividend income by purchasing shares of CVS Caremark common stock.

 

Stable Value Fund

 

This fund is managed by Galliard Capital Management and seeks to preserve capital while generating a steady rate of return higher than money market funds provide. The fund’s investments consist of cash, highly rated insurance company contracts (guaranteed investment contracts (“GICs”)), other bond investments, and a commingled fund managed by Galliard Capital Management that is further diversified by manager and security type.

 

Growth and Income Fund

 

This fund is managed by J&W Seligman, Mellon Capital Management and Barrow, Hanley, Mewhinney & Strauss. This blended fund seeks long-term growth of capital and dividend income through participation in the stock market. This fund invests primarily in the common stock of U.S.-based, well-established, medium- to large-sized companies. This blended fund is benchmarked by the Russell 1000 Value Index (“RVI”).

 

Large Cap Growth Fund

 

This fund seeks long-term growth of capital through participation in the stock market. Investment advisory services are provided by Columbus Circle. The fund invests primarily in the common stock of established large companies that are based in the United States and that represent industries expected to out-perform the stock market as a whole. This fund is benchmarked by the Russell 1000 Growth Index and the S&P 500.

 

Inflation-Protected Fund

 

The Vanguard Inflation-Protected Securities Fund Admiral Shares seeks to provide modest income and protection from inflation. This fund invests primarily in high-quality inflation-indexed bonds issued by the U.S. government and corporations.

 

U.S. Bond Index Fund

 

The Vanguard Total Bond Market Index Fund Institutional Shares seeks to replicate the total return of Barclays Capital U.S. Aggregate Float Adjusted Index by investing in bonds that make up that index.

 

Note 2 - Summary of Significant Accounting Policies

 

(a)                     Basis of Presentation

 

The net assets available for 401(K) Plan and ESOP benefits, on an accrual basis, according to the accounts of employees with rights to allocated stock are reflected in the Statements of Net Assets Available for Benefits as of December 31, 2010 and 2009.

 

10



Table of Contents

 

THE 401(k) PLAN AND THE EMPLOYEE STOCK OWNERSHIP PLAN

OF CVS CAREMARK CORPORATION AND AFFILIATED COMPANIES

 

Notes to Financial Statements (Continued)

Years Ended December 31, 2010 and 2009

 

The following table presents the changes in net assets available for the 401(k) Plan and ESOP benefits separately, on an accrual basis, according to:

 

·                  The accounts of employees with rights to allocated stock (Allocated); and

 

·                  Stock not yet allocated to employees (Unallocated). As of December 31, 2010, all stock was allocated.

 

 

 

December 31, 2010

 

December 31, 2009

 

 

 

Total

 

Allocated

 

Unallocated

 

Total

 

Investment activity:

 

 

 

 

 

 

 

 

 

Interest and dividend income

 

$

101,303,645

 

$

89,110,408

 

$

 

$

89,110,408

 

Transfer in (out) of plan assets

 

(2,721,793

)

730,042,061

 

 

730,042,061

 

Realized and unrealized gains

 

353,061,073

 

566,101,097

 

 

566,101,097

 

Total investment activity

 

451,642,925

 

1,385,253,566

 

 

1,385,253,566

 

 

 

 

 

 

 

 

 

 

 

Contributions:

 

 

 

 

 

 

 

 

 

Employer contributions

 

155,731,506

 

156,222,097

 

(1,331

)

156,220,766

 

Employee contributions

 

259,633,846

 

252,807,011

 

 

252,807,011

 

Rollovers

 

12,437,643

 

10,456,819

 

 

10,456,819

 

Total contributions

 

427,802,995

 

419,485,927

 

(1,331

)

419,484,596

 

 

 

 

 

 

 

 

 

 

 

Deductions:

 

 

 

 

 

 

 

 

 

Benefits paid to participants

 

307,443,630

 

212,424,650

 

 

212,424,650

 

Administrative expenses

 

11,960,636

 

10,671,475

 

 

10,671,475

 

Total deductions

 

319,404,266

 

223,096,125

 

 

223,096,125

 

 

 

 

 

 

 

 

 

 

 

Net increase (decrease) in net assets for the year

 

560,041,654

 

1,581,643,368

 

(1,331

)

1,581,642,037

 

 

 

 

 

 

 

 

 

 

 

Net assets beginning of the year

 

4,194,724,874

 

2,613,081,506

 

1,331

 

2,613,082,837

 

Net assets end of the year

 

$

4,754,766,528

 

$

4,194,724,874

 

$

 

$

4,194,724,874

 

 

11



Table of Contents

 

THE 401(k) PLAN AND THE EMPLOYEE STOCK OWNERSHIP PLAN

OF CVS CAREMARK CORPORATION AND AFFILIATED COMPANIES

 

Notes to Financial Statements (Continued)

Years Ended December 31, 2010 and 2009

 

(b)                      Recently Adopted Accounting Pronouncements

 

In September 2010, the FASB issued Accounting Standards Update (“ASU”) 2010-25, Reporting Loans to Participants by Defined Contribution Pension Plans, (“ASU 2010-25”). ASU 2010-25 requires participant loans to be measured at their unpaid principal balance plus any accrued but unpaid interest and classified as notes receivable from participants. Previously, loans were measured at fair value and were classified as investments. ASU 2010-25 is effective for fiscal years ending after December 15, 2010 and is required to be applied retrospectively. The adoption of ASU 2010-25 did not change the value of loans to participants from the amount previously reported as of December 31, 2009. In connection with the adoption of ASU 2010-25 in 2010, loans to participants as of December 31, 2009 have been reclassified from investments to receivables and are presented as “notes receivable from participants” as of December 31, 2009.

 

In January 2010, the FASB issued guidance which expanded the required disclosures about fair value measurements. In particular, this guidance requires (i) separate disclosure of the amounts of significant transfers in and out of Level 1 and Level 2 fair value measurements along with the reasons for such transfers, (ii) information about purchases, sales, issuances and settlements to be presented separately in the reconciliation for Level 3 fair value measurements, (iii) expanded fair value measurement disclosures for each class of assets and liabilities and (iv) disclosures about the valuation techniques and inputs used to measure fair value for both recurring and nonrecurring fair value measurements that fall in either Level 2 or Level 3. This guidance is effective for annual reporting periods beginning after December 15, 2009 except for (ii) above which is effective for fiscal years beginning after December 15, 2010. The adoption of this guidance did not have a material impact on the Statement of Net Assets Available for Benefits or the Statement of Changes in Net Assets Available for Benefits.

 

(c)                       Recent Accounting Pronouncement Not Yet Effective

 

In May 2011, the FASB issued Accounting Standards Update 2011-04, Amendments to Achieve Common Fair Value Measurements and Disclosure Requirements in U.S. GAAP and IFRSs, (“ASU 2011-04”). ASU 2011-04 amended Accounting Standards Codification (“ASC”) 820, Fair Value Measurements and Disclosures, (“ASC 820”) to converge the fair value measurement guidance in US GAAP and International Financial Reporting Standards (IFRSs). Some of the amendments clarify the application of existing fair value measurement requirements, while other amendments change a particular principle in ASC 820. In addition, ASU 2011-04 requires additional fair value disclosures. The amendments are to be applied prospectively and are effective for annual periods beginning after December 15, 2011. Plan management is currently evaluating the effect the provisions of ASU 2011-04 will have on the Plan’s financial statements.

 

(d)                      Investment Valuation

 

The value of the investments held at December 31, 2010 and 2009 is based on their fair value. Shares of mutual funds are valued at quoted market prices, which represent the net asset values of shares held by the Plan at year end. CVS Caremark common stock and common stock owned directly in the Small Cap Value Fund, Growth and Income Fund, and the Large Cap Growth Fund, separately managed funds, are valued based upon quoted market prices.

 

The fair value of the Plan’s common collective trust funds represents the net asset value of the underlying investments.

 

12



Table of Contents

 

THE 401(k) PLAN AND THE EMPLOYEE STOCK OWNERSHIP PLAN

OF CVS CAREMARK CORPORATION AND AFFILIATED COMPANIES

 

Notes to Financial Statements (Continued)

Years Ended December 31, 2010 and 2009

 

The Plan invests in fully benefit-responsive GICs. These investment contracts are recorded at fair value; however, since these contracts are fully benefit-responsive, an adjustment is reflected in the Statements of Net Assets Available for Benefits to present these investments at contract value. Contract value is the relevant measurement attributable to fully benefit-responsive investment contracts because contract value is the amount participants would receive if they were to initiate permitted transactions under the terms of the Plan. The contract value of the fully benefit-responsive investment contracts represents contributions plus earnings, less participant withdrawals and administrative expenses.

 

The Plan invests in various investment securities. Investment securities are exposed to various risks such as interest rate, market and credit risks. Due to the level of risk associated with certain investment securities, it is at least reasonably possible that changes in the values of investment securities will occur in the near term and that such changes could materially affect participants’ account balances and the amounts reported in the Statements of Net Assets Available for Benefits.

 

(e)                       Benefits Paid

 

Distribution of benefits are recorded when paid.

 

(f)                         Use of Estimates

 

The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of changes in net assets available for benefits during the reporting period. Actual results could differ from those estimates.

 

(g)                      Accrual Basis of Accounting

 

The Plan utilizes the accrual basis of accounting.

 

(h)                      Purchase and Sale of Securities

 

Purchases and sales of securities are made on a trade-date basis.

 

(i)                         Investment Income

 

Dividend and interest income is recorded when earned.

 

13



Table of Contents

 

THE 401(k) PLAN AND THE EMPLOYEE STOCK OWNERSHIP PLAN

OF CVS CAREMARK CORPORATION AND AFFILIATED COMPANIES

 

Notes to Financial Statements (Continued)

Years Ended December 31, 2010 and 2009

 

Note 3 - Fair Value Measurements

 

The Plan uses the three-level hierarchy for the recognition and disclosure of fair value measurements.  The categorization of assets and liabilities within this hierarchy is based upon the lowest level of the input that is significant to the measurement of fair value. Valuation techniques used need to maximize the use of observable inputs and minimize the use of unobservable inputs. The three levels of the fair value hierarchy consist of the following:

 

·                  Level 1 — Inputs to the valuation methodology are unadjusted quoted prices in active markets for identical assets or liabilities that the Plan has the ability to access at the measurement date.

 

·                  Level 2 — Inputs to the valuation methodology are quoted prices for similar assets and liabilities in active markets, quoted prices in markets that are not active or inputs that are observable for the asset or liability, either directly or indirectly, for substantially the full term of the instrument.

 

·                  Level 3 — Inputs to the valuation methodology are unobservable inputs based upon management’s best estimate of inputs market participants could use in pricing the asset or liability at the measurement date, including assumptions about risk.

 

Following is a description of the valuation methodologies used for assets measured at fair value. There have been no changes in the methodologies used at December 31, 2010 and 2009.

 

Common collective trust funds: Valued at the net asset value (“NAV”) as permitted by practical expedient and reported by the respective funds at each valuation date.  The use of NAV is deemed appropriate as these types of investments do not have finite lives or significant restrictions on redemptions.

 

GICs: Valued at fair value by discounting the related cash flows based on current yields of similar instruments with comparable durations, and adjusting for the credit-worthiness of the issuer, if necessary.

 

Mutual funds:  Valued at the NAV of shares held by the plan at year end which are reported on an active market.

 

Common stock:  Valued at the closing price reported on the active market on which the individual securities are traded.

 

Notes receivable from participants: Valued at amortized cost, which approximates fair value.

 

The methods described above may produce a fair value calculation that may not be indicative of net realizable value or reflective of future fair values. Furthermore, while the Plan believes its valuation methods are appropriate and consistent with other market participants, the use of different methodologies or assumptions to determine the fair value of certain financial instruments could result in a different fair value measurement at the reporting date.

 

The market value of CVS Caremark Common Stock was $34.77 and $32.21 per share at December 31, 2010 and 2009, respectively.

 

14



Table of Contents

 

THE 401(k) PLAN AND THE EMPLOYEE STOCK OWNERSHIP PLAN

OF CVS CAREMARK CORPORATION AND AFFILIATED COMPANIES

 

Notes to Financial Statements (Continued)

Years Ended December 31, 2010 and 2009

 

The following tables set forth by level, within the fair value hierarchy, the Plan’s assets at fair value as of December 31, 2010 and 2009:

 

 

 

 

 

Investments at estimated fair value at
December 31, 2010

 

 

 

 

 

Investments at
fair value as
determined by
quoted prices in
active markets
(Level I)

 

Valuation
techniques
based on
observable
market data
(Level II)

 

Valuation
techniques
incorporating
information
other than
observable
market data
(Level III)

 

Total

 

Cash

 

$

9,742,342

 

$

 

$

 

$

9,742,342

 

Common collective trust funds

 

 

788,193,027

 

 

788,193,027

 

Guaranteed investment contracts

 

 

 

308,871,889

 

308,871,889

 

Mutual funds:

 

 

 

 

 

 

 

 

 

Small cap equity

 

267,217,460

 

 

 

267,217,460

 

Mid cap equity

 

114,578,874

 

 

 

114,578,874

 

Large cap equity

 

548,432,281

 

 

 

548,432,281

 

International

 

702,660,573

 

 

 

702,660,573

 

Bond

 

527,533,357

 

 

 

527,533,357

 

Total mutual funds

 

2,160,422,545

 

 

 

2,160,422,545

 

Common stock:

 

 

 

 

 

 

 

 

 

Small Cap Equity

 

621,263,446

 

 

 

621,263,446

 

Large Cap Equity

 

92,528,091

 

 

 

92,528,091

 

CVS Caremark Common Stock Fund

 

605,720,590

 

 

 

605,720,590

 

Total common stock

 

1,319,512,127

 

 

 

1,319,512,127

 

Total investments

 

$

3,489,677,014

 

$

788,193,027

 

$

308,871,889

 

$

4,586,741,930

 

 

15



Table of Contents

 

THE 401(k) PLAN AND THE EMPLOYEE STOCK OWNERSHIP PLAN

OF CVS CAREMARK CORPORATION AND AFFILIATED COMPANIES

 

Notes to Financial Statements (Continued)

Years Ended December 31, 2010 and 2009

 

 

 

 

 

Investments at estimated fair value at
December 31, 2009

 

 

 

 

 

Investments at
fair value as
determined by
quoted prices in
active markets
(Level I)

 

Valuation
techniques
based on
observable
market data
(Level II)

 

Valuation
techniques
incorporating
information
other than
observable
market data
(Level III)

 

Total

 

Common collective trust funds

 

$

 

$

700,498,315

 

$

404,730,290

 

$

1,105,228,605

 

Mutual funds:

 

 

 

 

 

 

 

 

 

Small cap equity

 

120,552,933

 

 

 

120,552,933

 

Mid cap equity

 

49,176,344

 

 

 

49,176,344

 

Large cap equity

 

438,618,714

 

 

 

438,618,714

 

International

 

557,876,580

 

 

 

557,876,580

 

Bond

 

396,722,103

 

 

 

396,722,103

 

Total mutual funds

 

1,562,946,674

 

 

 

1,562,946,674

 

Common stock:

 

 

 

 

 

 

 

 

 

Small Cap Equity

 

547,515,428

 

 

 

547,515,428

 

Large Cap Equity

 

153,192,086

 

 

 

153,192,086

 

CVS Caremark Common Stock Fund

 

639,146,573

 

 

 

639,146,573

 

Total common stock

 

1,339,854,087

 

 

 

1,339,854,087

 

Total investments

 

$

2,902,800,761

 

$

700,498,315

 

$

404,730,290

 

$

4,008,029,366

 

 

Level 3 Gains and Losses

 

The table below sets forth a summary of changes in the fair value of the Plan’s level 3 assets for the year ended December 31, 2010 and 2009.

 

 

 

Level 3 Assets – GICs
Year Ended December 31,

 

 

 

2010

 

2009

 

Balance, beginning of year

 

$

404,730,290

 

$

488,833,048

 

Unrealized losses relating to instruments still held at the reporting date

 

(40,143,584

)

(11,603,899

)

Purchases, sales, issuances and settlements, net

 

(55,714,817

)

(72,498,859

)

Balance, end of year

 

$

308,871,889

 

$

404,730,290

 

 

16



Table of Contents

 

THE 401(k) PLAN AND THE EMPLOYEE STOCK OWNERSHIP PLAN

OF CVS CAREMARK CORPORATION AND AFFILIATED COMPANIES

 

Notes to Financial Statements (Continued)

Years Ended December 31, 2010 and 2009

 

Note 4 — Notes Receivable from Participants

 

Participants may obtain bona fide loans from the Plan, utilizing funds accumulated in their accounts. The minimum amount which may be borrowed is $1,000. Participants can borrow up to 50% of their vested account balance but not more than $50,000, less their highest outstanding loan balance during the previous twelve months. The loans are repaid to the Plan through after-tax payroll deductions. The term of the loan is selected at the discretion of the participant, but may not exceed five years for a general loan and twenty-five years for a home purchase loan. Interest on loans is equal to the Prime Rate as of the prior month end plus 1%.

 

Note 5 - Investment Policy

 

At December 31, 2010 and 2009, most of the Plan’s 401(k) related assets were allocated among the investment options discussed in Note 1(j) based on employees’ elections. The investment options are recommended by independent investment managers and approved by the Benefit Plans Investment Sub-Committee. Employee contributions that are waiting to be processed are temporarily invested in common collective trust funds. These common collective trust funds are also used to account for and administer notes receivable from participants. The note repayments and interest earned are allocated to each of the investment funds based upon the participants’ contribution election percentages.

 

During 2010 and 2009, the Plan’s investments, including investments purchased, sold, as well as held during the year appreciated (depreciated) in fair value as follows:

 

Asset Category

 

2010

 

2009

 

 

 

 

 

 

 

Common collective trust funds

 

$

4,747,826

 

$

116,793

 

Mutual funds

 

214,753,616

 

339,988,884

 

Common stock

 

133,559,631

 

186,602,089

 

Preference shares

 

 

39,393,331

 

 

 

$

353,061,073

 

$

566,101,097

 

 

Note 6 - Plan Termination and Related Commitments

 

Although it has not expressed any intention to do so, the Company has the right under the Plan to discontinue its contributions at any time and to terminate the Plan subject to the provisions of ERISA. If the Company terminates the Plan, all participants in the Plan become fully vested.

 

Note 7 - Federal Income Taxes

 

The Plan has received a determination letter from the Internal Revenue Service dated June 17, 2004, stating that the Plan is qualified under Section 401(a) of the Code and, therefore, the related trust is exempt from taxation. Subsequent to this determination by the Internal Revenue Service, the Plan was amended and restated. The plan sponsor has submitted a request for a new determination letter. Once qualified, the Plan is required to operate in conformity with the Code to maintain its qualification.  The plan administrator has indicated that it will take the necessary steps, if any, to bring the Plan’s operations into compliance with the Code.

 

17



Table of Contents

 

THE 401(k) PLAN AND THE EMPLOYEE STOCK OWNERSHIP PLAN

OF CVS CAREMARK CORPORATION AND AFFILIATED COMPANIES

 

Notes to Financial Statements (Continued)

Years Ended December 31, 2010 and 2009

 

Accounting principles generally accepted in the United States require plan management to evaluate uncertain tax positions taken by the Plan. The financial statement effects of a tax position are recognized when the position is more likely than not, based on the technical merits, to be sustained upon examination by the IRS. The plan administrator has analyzed the tax positions taken by the Plan, and has concluded that as of December 31, 2010, there are no uncertain positions taken or expected to be taken. The Plan has recognized no interest or penalties related to uncertain tax positions. The Plan is subject to routine audits by taxing jurisdictions; however, there are currently no audits for any tax periods in progress. The plan administrator believes it is no longer subject to income tax examinations for years prior to 2007.

 

Note 8 - Transactions with Parties-In-Interest

 

Certain Plan investments are investment funds managed by The Bank of New York Mellon. The Bank of New York Mellon is the Trustee as defined by the Plan, and therefore, these transactions qualify as party-in-interest transactions.

 

Note 9 - Reconciliation of Financial Statements to Form 5500

 

The following is a reconciliation of the net assets available for benefits per the financial statements to the Form 5500 as of December 31, 2010 and 2009:

 

 

 

2010

 

2009

 

 

 

 

 

 

 

Net assets available for benefits per the financial statements

 

$

4,754,766,528

 

$

4,194,724,874

 

Employer contributions receivable

 

 

(149,811

)

Adjustment from fair value to contract value for fully benefit responsive investment contracts

 

20,933,427

 

(75,476

)

Net assets available for benefits per the Form 5500

 

$

4,775,699,955

 

$

4,194,499,587

 

 

Note 10 - Investments

 

The following table presents investments of the Plan at fair value that represent 5% or more of the total fair value of the Plan’s assets.

 

 

 

2010

 

2009

 

CVS Caremark Corporation Common Stock

 

$

606,920,155

 

$

646,867,418

 

EB Temporary Investment Fund II

 

541,932,540

 

 

Vanguard Institutional Index Fund

 

548,432,281

 

438,618,714

 

PIMCO Total Return Institutional Class Fund

 

336,902,577

 

396,722,103

 

Templeton Foreign Equity Series-Primary Shares Fund

 

278,649,571

 

263,934,817

 

Vanguard Developed Markets Index Fund Institutional Shares

 

242,364,541

 

 

State Street Stable Fixed Income Fund for Employee Benefit Trusts

 

 

678,381,033

 

Merrill Lynch Retirement Preservation Trust

 

 

328,873,368

 

 

18



Table of Contents

 

THE 401(k) PLAN AND THE EMPLOYEE STOCK OWNERSHIP PLAN

OF CVS CAREMARK CORPORATION AND AFFILIATED COMPANIES

 

Notes to Financial Statements (Continued)

Years Ended December 31, 2010 and 2009

 

Note 11 — Guaranteed Investment Contracts

 

The Plan invests in fully benefit-responsive GICs.  The issuer maintains the contributions in a general account. The account is credited with participant contributions plus earnings and charged for participant withdrawals and administrative expenses. The issuer is contractually obligated to repay the principal and a specified interest rate that is guaranteed to the Plan. The crediting interest rate is fixed at the time the contract is entered into with the issuer and does not reset.  For the year ended December 31, 2010, the average yield of the GIC based upon underlying earnings and credited to participant accounts was 2.2%.

 

Certain events limit the ability of the Plan to transact at contract value with the GIC issuers. Such events may include (i) amendments to the plan documents (including complete or partial plan termination or merger with another plan), (ii) changes to the plan’s prohibition on competing investment options or deletion of equity wash provisions, (iii) bankruptcy of the plan sponsor or other plan sponsor events (for example, divestitures or spin-offs of a subsidiary) that cause a significant withdrawal from the Plan, or (iv) the failure of the trust to qualify for exemption from federal income taxes or any required prohibited transaction exemption under ERISA. The plan administrator does not believe that the occurrence of any such events that would limit the Plan’s ability to transact at contract value with participants is probable.

 

GICs generally do not permit issuers to terminate the agreement prior to the scheduled maturity date.  The issuer may be in default if it breaches a material obligation under the investment contract, makes a material misrepresentation, has a decline in its long term credit rating below a threshold set forth in the contract, or is acquired or reorganized and the successor issuer does not satisfy the investment or credit guidelines applicable to issuers. If, in the event of default of an issuer, the Plan was unable to obtain a replacement investment contract, withdrawing participants may experience losses if the value of the Plan’s assets no longer covered by the contract is below contract value. The Plan may seek to add additional issuers over time to diversify the Plan’s exposure to such risk, but there is no assurance the Plan may be able to do so. The combination of the default of an issuer and an inability to obtain a replacement agreement could render the Plan unable to achieve its objective of maintaining a stable contract value. The terms of an investment contract generally provide for settlement of payments only upon termination of the contract or total liquidation of the covered investments. If the contract terminates due to issuer default (other than a default occurring because of a decline in its rating), the issuer will generally be required to pay to the Plan the excess, if any, of contract value over market value on the date of termination. Contract termination also may occur by either party upon election and notice. As GICs are fully benefit-responsive, contract value is the relevant measurement attribute for that portion of the net assets available for benefits attributable to the GIC. Participants may ordinarily direct the withdrawal or transfer of all or a portion of their investment at contract value.

 

19



Table of Contents

 

Supplemental Schedules

 

20



Table of Contents

 

THE 401(k) PLAN AND THE EMPLOYEE STOCK OWNERSHIP PLAN

OF CVS CAREMARK CORPORATION AND AFFILIATED COMPANIES

Plan Number: 017

EIN: 05-0494040

 

Schedule H, Line 4a—Schedule of Delinquent Participant Contributions

December 31, 2010

 

Participant Contributions
Transferred Late to Plan

 

Total that Constitute Nonexempt Prohibited Transactions

 

 

 

Check here
If Late Participant

Loan Repayments
are included: o

 

Contributions
Not Corrected

 

Contributions
Corrected
Outside VFCP

 

Contributions
Pending
Correction in VFCP

 

Total Fully
Corrected
Under VFCP
and PTE 2002-51

 

 

 

 

 

$

10,272

(1)

 

 

 

 

 


(1)

Represents delinquent participant contributions from various 2010 pay periods.

 

21



Table of Contents

 

THE 401(k) PLAN AND THE EMPLOYEE STOCK OWNERSHIP PLAN

OF CVS CAREMARK CORPORATION AND AFFILIATED COMPANIES

Plan Number: 017

EIN 05-0494040

 

Schedule H, Line 4i — Schedule of Assets (Held at End of Year)

December 31, 2010

 

 

 

Par value/

 

 

 

 

 

 

 

 

 

number of

 

 

 

 

 

Current

 

Fund

 

shares

 

Identity of issue

 

Description

 

value**

 

 

 

 

 

 

 

 

 

 

 

International Equity Fund

 

13,897,734

 

Templeton Foreign Equity Series-Primary Shares Fund

 

Mutual Fund

 

$

278,649,571

 

 

 

 

 

 

 

 

 

 

 

Core Equity Fund

 

4,768,562

 

Vanguard Institutional Index Fund

 

Mutual Fund

 

548,432,281

 

 

 

 

 

 

 

 

 

 

 

Small Cap Growth Fund

 

1,755,707

 

Vanguard Explorer Fund

 

Mutual Fund

 

119,107,194

 

 

 

 

 

 

 

 

 

 

 

Small Cap Index Fund

 

1,632,149

 

Vanguard Small Cap Index Fund

 

Mutual Fund

 

56,749,822

 

 

 

 

 

 

 

 

 

 

 

Mid Cap Index Fund

 

5,627,646

 

Vanguard Mid Cap Index Fund

 

Mutual Fund

 

114,578,874

 

 

 

 

 

 

 

 

 

 

 

International Equity Index Fund

 

24,285,024

 

Vanguard Developed Markets Index Fund Institutional Shares

 

Mutual Fund

 

242,364,541

 

 

 

 

 

 

 

 

 

 

 

U.S. Bond Index Fund

 

17,336,289

 

Vanguard Total Bond Market Index Fund

 

Mutual Fund

 

183,764,664

 

 

 

 

 

 

 

 

 

 

 

Inflation-Protected Bond Fund

 

268,838

 

Vanguard Inflation-Protected Securities Admiral Fund

 

Mutual Fund

 

6,866,115

 

 

 

 

 

 

 

 

 

 

 

Diversified Bond Fund

 

31,050,929

 

PIMCO Total Return Institutional Class Fund

 

Mutual Fund

 

336,902,577

 

 

 

 

 

 

 

 

 

 

 

Global Equity Fund

 

6,353,496

 

American Funds-New Perspective Fund

 

Mutual Fund

 

181,646,462

 

 

 

 

 

 

 

 

 

 

 

CVS Caremark Common Stock Fund

 

17,420,782

 

* CVS Caremark Common Stock

 

CVS Caremark Corporation Common Stock

 

605,720,590

 

 

 

 

 

 

 

 

 

 

 

 

 

5,770,054

 

* EB Temporary Investment Fund II

 

Common Collective Trust Fund

 

5,770,054

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

CVS Caremark Common Stock Fund Subtotal

 

 

 

611,490,644

 

 

 

 

 

 

 

 

 

 

 

 

 

2,123,339

 

* EB Temporary Investment Fund II

 

Common Collective Trust Fund

 

2,123,339

 

 

22



Table of Contents

 

THE 401(k) PLAN AND THE EMPLOYEE STOCK OWNERSHIP PLAN

OF CVS CAREMARK CORPORATION AND AFFILIATED COMPANIES

Plan Number: 017

EIN 05-0494040

 

Schedule H, Line 4i — Schedule of Assets (Held at End of Year) (Continued)

December 31, 2010

 

 

 

Par value/

 

 

 

 

 

 

 

 

 

number of

 

 

 

 

 

Current

 

Fund

 

shares

 

Identity of issue

 

Description

 

value**

 

 

 

 

 

 

 

 

 

 

 

Stable Value Fund

 

 

 

Stable Value Fund

 

Separately Managed Fund

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Genworth Life and Insurance Co.

 

 

 

 

 

 

 

8,143,004

 

5.05%, due 5/31/2012

 

Guaranteed Investment Contract (“GIC”)

 

$

8,143,004

 

 

 

10,929,932

 

5.66%, due 5/31/2012

 

GIC

 

10,929,932

 

 

 

11,401,919

 

5.56%, due 6/28/2013

 

GIC

 

11,401,919

 

 

 

2,707,636

 

5.58%, due 1/31/2011

 

GIC

 

2,707,636

 

 

 

8,480,584

 

5.40%, due 7/29/2011

 

GIC

 

8,480,584

 

 

 

5,381,415

 

5.12%, due 8/31/2011

 

GIC

 

5,381,415

 

 

 

5,425,739

 

5.14%, due 4/30/2012

 

GIC

 

5,425,739

 

 

 

11,727,142

 

5.15%, due 9/28/2012

 

GIC

 

11,727,142

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Hartford Life Insurance Co.

 

 

 

 

 

 

 

5,478,698

 

5.23%, due 1/31/2012

 

GIC

 

5,478,698

 

 

 

11,586,175

 

5.03%, due 11/30/2012

 

GIC

 

11,586,175

 

 

 

10,833,574

 

5.55%, due 6/29/2012

 

GIC

 

10,833,574

 

 

 

5,156,387

 

5.41%, due 10/31/2013

 

GIC

 

5,156,387

 

 

 

10,031,942

 

5.11%, due 11/30/2011

 

GIC

 

10,031,942

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

ING Life Insurance Co.

 

 

 

 

 

 

 

10,820,523

 

5.23%, due 4/29/2011

 

GIC

 

10,820,523

 

 

 

1,709,162

 

4.89%, due 8/30/2013

 

GIC

 

1,709,162

 

 

 

3,433,896

 

5.11%, due 9/30/2013

 

GIC

 

3,433,896

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Jackson National Life Insurance Co.

 

 

 

 

 

 

 

5,417,501

 

5.57%, due 3/31/2011

 

GIC

 

5,417,501

 

 

 

8,236,620

 

5.66%, due 6/30/2011

 

GIC

 

8,236,620

 

 

 

11,502,886

 

5.37%, due 12/28/2012

 

GIC

 

11,502,886

 

 

 

11,387,304

 

5.41%, due 6/28/2013

 

GIC

 

11,387,304

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

New York Life Ins. Co.

 

 

 

 

 

 

 

3,275,134

 

4.70%, due 9/28/2012

 

GIC

 

3,275,134

 

 

 

3,406,976

 

2.73%, due 2/29/2012

 

GIC

 

3,406,976

 

 

 

5,144,141

 

3.35%, due 7/31/2013

 

GIC

 

5,144,141

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Pacific Life Ins. Co.

 

 

 

 

 

 

 

11,326,568

 

5.44%, due 6/28/2013

 

GIC

 

11,326,568

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Protective Life Insurance Co.

 

 

 

 

 

 

 

11,371,311

 

4.44%, due 7/31/2012

 

GIC

 

11,371,311

 

 

 

11,373,121

 

4.85%, due 3/28/2013

 

GIC

 

11,373,121

 

 

 

3,258,018

 

4.76%, due 8/31/2012

 

GIC

 

3,258,018

 

 

 

1,688,757

 

4.55%, due 7/31/2013

 

GIC

 

1,688,757

 

 

23



Table of Contents

 

THE 401(k) PLAN AND THE EMPLOYEE STOCK OWNERSHIP PLAN

OF CVS CAREMARK CORPORATION AND AFFILIATED COMPANIES

Plan Number: 017

EIN 05-0494040

 

Schedule H, Line 4i — Schedule of Assets (Held at End of Year) (Continued)

December 31, 2010

 

 

 

Par value/

 

 

 

 

 

 

 

 

 

number of

 

 

 

 

 

Current

 

Fund

 

shares

 

Identity of issue

 

Description

 

value**

 

 

 

 

 

 

 

 

 

 

 

Stable Value Fund

 

 

 

Stable Value Fund

 

Separately Managed Fund

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Prudential Life Ins. Co.

 

 

 

 

 

 

 

5,458,181

 

5.20%, due 3/30/2012

 

GIC

 

$

5,458,181

 

 

 

11,343,059

 

4.50%, due 12/28/2012

 

GIC

 

11,343,059

 

 

 

11,443,449

 

5.34%, due 4/30/2013

 

GIC

 

11,443,449

 

 

 

1,741,206

 

3.86%, due 11/30/2011

 

GIC

 

1,741,206

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Transamerica Life Insurance and Annuity

 

 

 

 

 

 

 

8,333,707

 

5.85%, due 5/31/2011

 

GIC

 

8,333,707

 

 

 

7,994,208

 

5.09%, due 10/28/2011

 

GIC

 

7,994,208

 

 

 

8,280,414

 

5.32%, due 12/30/2011

 

GIC

 

8,280,414

 

 

 

11,323,105

 

5.37%, due 7/31/2012

 

GIC

 

11,323,105

 

 

 

11,335,288

 

4.60%, due 2/28/2013

 

GIC

 

11,335,288

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

United of Omaha Life Insurance Co.

 

 

 

 

 

 

 

5,494,742

 

5.31%, due 1/31/2012

 

GIC

 

5,494,742

 

 

 

 

 

 

 

 

 

 

 

 

 

151,151,168

 

Wells Fargo Stable Value Fund D

 

Common Collective Trust Fund

 

156,592,610

 

 

 

 

 

 

 

 

 

 

 

 

 

9,742,342

 

BNY Mellon Cash Reserve

 

Cash

 

9,742,342

 

 

 

 

 

 

 

 

 

 

 

 

 

525,152,060

 

* EB Temporary Investment Fund II

 

Common Collective Trust Fund

 

525,152,060

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Stable Value Fund Subtotal

 

 

 

$

984,870,436

 

 

24



Table of Contents

 

THE 401(k) PLAN AND THE EMPLOYEE STOCK OWNERSHIP PLAN

OF CVS CAREMARK CORPORATION AND AFFILIATED COMPANIES

Plan Number: 017

EIN 05-0494040

 

Schedule H, Line 4i — Schedule of Assets (Held at End of Year) (Continued)

December 31, 2010

 

 

 

Par value/

 

 

 

 

 

 

 

 

 

number of

 

 

 

 

 

Current

 

Fund

 

shares

 

Identity of issue

 

Description

 

value**

 

 

 

 

 

 

 

 

 

 

 

Small Cap Value Fund

 

 

 

Lord Abbett and Dimension Fund Advisor Small Cap Value Fund

 

Separately Managed Fund

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

29,000

 

AAR CORP

 

Common Stock

 

$

796,630

 

 

 

25,050

 

AEROPOSTALE INC

 

Common Stock

 

617,232

 

 

 

8,500

 

ALEXANDRIA REAL ESTATE EQUITIE

 

Common Stock

 

622,710

 

 

 

41,500

 

ALTERRA CAPITAL HOLDINGS LTD

 

Common Stock

 

898,060

 

 

 

43,300

 

AMERICAN MEDICAL SYSTEMS HOLDI

 

Common Stock

 

816,638

 

 

 

21,200

 

ANIXTER INTERNATIONAL INC

 

Common Stock

 

1,266,276

 

 

 

9,100

 

APTARGROUP INC

 

Common Stock

 

432,887

 

 

 

20,100

 

ATHEROS COMMUNICATIONS INC

 

Common Stock

 

721,992

 

 

 

18,600

 

ATLAS AIR WORLDWIDE HOLDINGS I

 

Common Stock

 

1,038,438

 

 

 

1,800

 

BALDOR ELECTRIC CO

 

Common Stock

 

113,472

 

 

 

22,100

 

BIG LOTS INC

 

Common Stock

 

673,166

 

 

 

21,000

 

BRISTOW GROUP INC

 

Common Stock

 

994,350

 

 

 

55,700

 

CABOT CORP

 

Common Stock

 

2,097,105

 

 

 

24,000

 

CABOT MICROELECTRONICS CORP

 

Common Stock

 

994,800

 

 

 

29,200

 

CENTENE CORP

 

Common Stock

 

739,928

 

 

 

50,500

 

CHICAGO BRIDGE & IRON CO NV

 

Common Stock

 

1,661,450

 

 

 

16,900

 

CHILDRENS PLACE RETAIL STORES

 

Common Stock

 

838,916

 

 

 

16,200

 

CITY NATIONAL CORP/CA

 

Common Stock

 

994,032

 

 

 

21,000

 

COHERENT INC

 

Common Stock

 

947,940

 

 

 

40,900

 

COLUMBIA BANKING SYSTEM INC

 

Common Stock

 

861,354

 

 

 

34,700

 

COMMERCIAL METALS CO

 

Common Stock

 

575,673

 

 

 

10,200

 

COMPASS MINERALS INTERNATIONAL

 

Common Stock

 

910,554

 

 

 

11,700

 

COOPER COS INC/THE

 

Common Stock

 

659,178

 

 

 

12,600

 

CRACKER BARREL OLD COUNTRY STO

 

Common Stock

 

690,102

 

 

 

6,300

 

CULLEN/FROST BANKERS INC

 

Common Stock

 

385,056

 

 

 

22,700

 

CURTISS-WRIGHT CORP

 

Common Stock

 

753,640

 

 

 

100,600

 

CVB FINANCIAL CORP

 

Common Stock

 

872,202

 

 

 

33,200

 

DANVERS BANCORP INC

 

Common Stock

 

586,644

 

 

 

5,493,713

 

DFA US TARGETED VALUE I FUND

 

Mutual Fund

 

91,360,444

 

 

 

22,800

 

DIODES INC

 

Common Stock

 

615,372

 

 

 

59,500

 

DOLE FOOD CO INC

 

Common Stock

 

803,845

 

 

 

7,700

 

DONALDSON CO INC

 

Common Stock

 

448,756

 

 

 

29,300

 

DRESS BARN INC/THE

 

Common Stock

 

774,106

 

 

 

24,800

 

ELSTER GROUP SE

 

Common Stock

 

419,120

 

 

 

12,800

 

EMCOR GROUP INC

 

Common Stock

 

370,944

 

 

 

14,500

 

ENPRO INDUSTRIES INC

 

Common Stock

 

602,620

 

 

25



Table of Contents

 

THE 401(k) PLAN AND THE EMPLOYEE STOCK OWNERSHIP PLAN

OF CVS CAREMARK CORPORATION AND AFFILIATED COMPANIES

Plan Number: 017

EIN 05-0494040

 

Schedule H, Line 4i — Schedule of Assets (Held at End of Year) (Continued)

December 31, 2010

 

 

 

Par 
value/
number 

 

 

 

 

 

 

 

 

 

of

 

 

 

 

 

Current

 

Fund

 

shares

 

Identity of issue

 

Description

 

value**

 

 

 

 

 

 

 

 

 

 

 

Small Cap Value Fund

 

 

 

Lord Abbett and Dimension Fund Advisor Small Cap Value Fund

 

Separately Managed Fund

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

25,500

 

ENTERTAINMENT PROPERTIES TRUST

 

Common Stock

 

$

1,179,375

 

 

 

83,400

 

FERRO CORP

 

Common Stock

 

1,220,976

 

 

 

43,200

 

FIRST FINANCIAL BANCORP

 

Common Stock

 

798,336

 

 

 

6,800

 

FLEETCOR TECHNOLOGIES INC

 

Common Stock

 

210,256

 

 

 

15,400

 

FOREST OIL CORP

 

Common Stock

 

584,738

 

 

 

20,900

 

FTI CONSULTING INC

 

Common Stock

 

779,152

 

 

 

27,900

 

GATX CORP

 

Common Stock

 

984,312

 

 

 

17,800

 

GAYLORD ENTERTAINMENT CO

 

Common Stock

 

639,732

 

 

 

13,700

 

GENESEE & WYOMING INC

 

Common Stock

 

725,415

 

 

 

31,600

 

GENTIVA HEALTH SERVICES INC

 

Common Stock

 

840,560

 

 

 

27,000

 

GRANITE CONSTRUCTION INC

 

Common Stock

 

740,610

 

 

 

16,200

 

GREATBATCH INC

 

Common Stock

 

391,230

 

 

 

13,600

 

GREIF INC

 

Common Stock

 

841,840

 

 

 

13,000

 

HAEMONETICS CORP

 

Common Stock

 

821,340

 

 

 

28,200

 

HARSCO CORP

 

Common Stock

 

798,624

 

 

 

45,100

 

HEALTHSPRING INC

 

Common Stock

 

1,196,503

 

 

 

78,100

 

HEARTLAND EXPRESS INC

 

Common Stock

 

1,251,162

 

 

 

5,300

 

HERBALIFE LTD USD COM SHS

 

Common Stock

 

362,361

 

 

 

104,000

 

HEXCEL CORP

 

Common Stock

 

1,881,360

 

 

 

26,100

 

HUB GROUP INC

 

Common Stock

 

917,154

 

 

 

11,800

 

II-VI INC

 

Common Stock

 

547,048

 

 

 

8,500

 

INTEGRA LIFESCIENCES HOLDINGS

 

Common Stock

 

402,050

 

 

 

34,500

 

INVACARE CORP

 

Common Stock

 

1,040,520

 

 

 

5,500

 

J CREW GROUP INC

 

Common Stock

 

237,270

 

 

 

17,400

 

JACK HENRY & ASSOCIATES INC

 

Common Stock

 

507,210

 

 

 

15,700

 

JOS A BANK CLOTHIERS INC

 

Common Stock

 

633,024

 

 

 

15,200

 

KAYDON CORP

 

Common Stock

 

618,944

 

 

 

29,400

 

KBW INC

 

Common Stock

 

820,848

 

 

 

25,800

 

KENNAMETAL INC

 

Common Stock

 

1,018,068

 

 

 

80,700

 

KEY ENERGY SERVICES INC

 

Common Stock

 

1,047,486

 

 

 

29,000

 

KIRBY CORP

 

Common Stock

 

1,277,450

 

 

 

30,500

 

KNIGHT TRANSPORTATION INC

 

Common Stock

 

579,500

 

 

 

32,300

 

KOPPERS HOLDINGS INC

 

Common Stock

 

1,155,694

 

 

 

38,400

 

KORN/FERRY INTERNATIONAL

 

Common Stock

 

887,424

 

 

 

24,900

 

LITTELFUSE INC

 

Common Stock

 

1,171,794

 

 

 

14,300

 

MAXIMUS INC

 

Common Stock

 

937,794

 

 

26



Table of Contents

 

THE 401(k) PLAN AND THE EMPLOYEE STOCK OWNERSHIP PLAN

OF CVS CAREMARK CORPORATION AND AFFILIATED COMPANIES

Plan Number: 017

EIN 05-0494040

 

Schedule H, Line 4i — Schedule of Assets (Held at End of Year) (Continued)

December 31, 2010

 

 

 

Par value/

 

 

 

 

 

 

 

 

 

number of

 

 

 

 

 

Current

 

Fund

 

shares

 

Identity of issue

 

Description

 

value**

 

 

 

 

 

 

 

 

 

 

 

Small Cap Value Fund

 

 

 

Lord Abbett and Dimension Fund Advisor Small Cap Value Fund

 

Separately Managed Fund

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

100,600

 

MGIC INVESTMENT CORP

 

Common Stock

 

$

1,025,114

 

 

 

18,900

 

MOOG INC

 

Common Stock

 

752,220

 

 

 

9,000

 

MSC INDUSTRIAL DIRECT CO

 

Common Stock

 

582,210

 

 

 

18,600

 

NAVIGATORS GROUP INC/THE

 

Common Stock

 

936,510

 

 

 

5,400

 

NEW JERSEY RESOURCES CORP

 

Common Stock

 

232,794

 

 

 

32,400

 

NUTRISYSTEM INC

 

Common Stock

 

681,372

 

 

 

102,200

 

OLIN CORP

 

Common Stock

 

2,097,144

 

 

 

76,900

 

ORIENT EXPRESS HOTELS LTD CL A

 

Common Stock

 

998,931

 

 

 

15,600

 

OWENS & MINOR INC

 

Common Stock

 

459,108

 

 

 

144,800

 

PACIFIC SUNWEAR OF CALIFORNIA

 

Common Stock

 

784,816

 

 

 

35,000

 

PACWEST BANCORP

 

Common Stock

 

748,300

 

 

 

29,900

 

PAR PHARMACEUTICAL COS INC

 

Common Stock

 

1,151,449

 

 

 

21,900

 

PAREXEL INTERNATIONAL CORP

 

Common Stock

 

464,937

 

 

 

42,900

 

PENSKE AUTOMOTIVE GROUP INC

 

Common Stock

 

747,318

 

 

 

53,700

 

PEOPLE’S UNITED FINANCIAL INC

 

Common Stock

 

752,337

 

 

 

40,300

 

PLEXUS CORP

 

Common Stock

 

1,246,882

 

 

 

57,100

 

PMC - SIERRA INC

 

Common Stock

 

490,489

 

 

 

57,200

 

QLOGIC CORP

 

Common Stock

 

973,544

 

 

 

11,300

 

REGAL-BELOIT CORP

 

Common Stock

 

754,388

 

 

 

25,900

 

RELIANCE STEEL & ALUMINUM CO

 

Common Stock

 

1,323,490

 

 

 

38,200

 

RENT-A-CENTER INC/TX

 

Common Stock

 

1,233,096

 

 

 

5,400

 

ROBBINS & MYERS INC

 

Common Stock

 

193,212

 

 

 

23,500

 

ROGERS CORP

 

Common Stock

 

898,875

 

 

 

5,400

 

RSC HOLDINGS INC

 

Common Stock

 

52,596

 

 

 

15,400

 

RTI INTERNATIONAL METALS INC

 

Common Stock

 

415,492

 

 

 

121,904

 

SANDRIDGE ENERGY INC

 

Common Stock

 

892,337

 

 

 

35,700

 

SCANSOURCE INC

 

Common Stock

 

1,138,830

 

 

 

19,300

 

SIGNATURE BANK/NEW YORK NY

 

Common Stock

 

965,000

 

 

 

13,000

 

SILGAN HOLDINGS INC

 

Common Stock

 

465,530

 

 

 

32,400

 

SUPERIOR ENERGY SERVICES INC

 

Common Stock

 

1,133,676

 

 

 

87,600

 

SUSQUEHANNA BANCSHARES INC

 

Common Stock

 

847,968

 

 

 

14,800

 

SVB FINANCIAL GROUP

 

Common Stock

 

785,140

 

 

 

21,500

 

TAL INTERNATIONAL GROUP INC

 

Common Stock

 

663,705

 

 

 

60,000

 

TERADYNE INC

 

Common Stock

 

842,400

 

 

 

46,500

 

TEXAS CAPITAL BANCSHARES INC

 

Common Stock

 

989,055

 

 

 

26,100

 

THOR INDUSTRIES INC

 

Common Stock

 

886,356

 

 

27



Table of Contents

 

THE 401(k) PLAN AND THE EMPLOYEE STOCK OWNERSHIP PLAN

OF CVS CAREMARK CORPORATION AND AFFILIATED COMPANIES

Plan Number: 017

EIN 05-0494040

 

Schedule H, Line 4i — Schedule of Assets (Held at End of Year) (Continued)

December 31, 2010

 

 

 

Par 
value/
number

 

 

 

 

 

 

 

 

 

of

 

 

 

 

 

Current

 

Fund

 

shares

 

Identity of issue

 

Description

 

value**

 

 

 

 

 

 

 

 

 

 

 

Small Cap Value Fund

 

 

 

Lord Abbett and Dimension Fund Advisor Small Cap Value Fund

 

Separately Managed Fund

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

63,600

 

TRUEBLUE INC

 

Common Stock

 

$

1,144,164

 

 

 

6,300

 

UGI CORP

 

Common Stock

 

198,954

 

 

 

44,800

 

UTI WORLDWIDE INC SHS

 

Common Stock

 

949,760

 

 

 

15,500

 

WABCO HOLDINGS INC

 

Common Stock

 

944,415

 

 

 

43,600

 

WASHINGTON FEDERAL INC

 

Common Stock

 

737,712

 

 

 

22,300

 

WATTS WATER TECHNOLOGIES INC

 

Common Stock