Walgreen Co. Reports Fiscal 2013 Fourth Quarter and Full-Year Results

  Walgreen Co. Reports Fiscal 2013 Fourth Quarter and Full-Year Results

  *Adjusted fourth quarter earnings per diluted share increase 15.9 percent
    to 73 cents, compared with adjusted earnings per diluted share of 63 cents
    in year-ago quarter; GAAP earnings per diluted share increase 75.9 percent
    to 69 cents compared with 39 cents in last year’s fourth quarter
  *Adjusted fourth quarter earnings increase 26.9 percent to $702 million,
    compared with adjusted earnings of $553 million in year-ago quarter; GAAP
    earnings increase 86.4 percent to $657 million compared with $353 million
    in last year’s fourth quarter
  *Fiscal 2013 sales reach a record $72.2 billion compared with $71.6 billion
    in prior year, with adjusted earnings per diluted share of $3.12 compared
    with $2.93 in previous year; GAAP fiscal year earnings per diluted share
    total $2.56 compared with $2.42 in previous year
  *Company generates operating cash flow of $4.3 billion and record free cash
    flow of $3.1 billion, in fiscal year 2013, returning more than $1 billion
    to shareholders through dividends
  *Joint synergy program with Alliance Boots delivers combined first-year net
    synergies of $154 million, exceeding the previously stated range of
    $125-$150 million

Business Wire

DEERFIELD, Ill. -- October 1, 2013

Walgreen Co. (NYSE: WAG) (Nasdaq: WAG) today announced earnings and sales
results for the fourth quarter and fiscal year 2013 ended Aug. 31.

Net earnings determined in accordance with generally accepted accounting
principles (GAAP) for the fiscal 2013 fourth quarter were $657 million, an
86.4 percent increase from $353 million in the same quarter a year ago. Net
earnings per diluted share for the quarter increased 75.9 percent to 69 cents,
compared with 39 cents per diluted share in the year-ago quarter.

Adjusted fiscal 2013 fourth quarter net earnings were $702 million, a 26.9
percent increase from $553 million in the same quarter a year ago. Adjusted
net earnings per diluted share for the quarter increased 15.9 percent to 73
cents, compared with 63 cents per diluted share in the year-ago quarter. This
year’s adjusted fourth quarter results exclude the negative impact of 5 cents
per diluted share in acquisition related amortization, 4 cents per diluted
share in Alliance Boots related tax, 1 cent per diluted share in other
acquisition related costs and 1 cent per diluted share in costs associated
with the company’s change in prescription drug wholesalers. Also excluded is
the positive impact of 6 cents per diluted share in fair value adjustments and
amortization related to the company’s warrants to purchase AmerisourceBergen’s
common stock, and 1 cent per diluted share from the quarter’s LIFO income.

GAAP and adjusted net earnings in this year’s quarter include 3 cents per
diluted share in net gains from certain litigation matters.

Last year’s adjusted fourth quarter results exclude the negative impact of 9
cents per diluted share related to the company’s transaction with Alliance
Boots GmbH, 10 cents per diluted share from the quarter’s LIFO provision and 5
cents per diluted share in acquisition-related amortization costs.

“We had a solid quarter across our entire business. We saw improvement in our
daily living business resulting from the investments we made and enhanced
execution. We also saw continued strength in our pharmacy business as we
increased our retail pharmacy market share for the fiscal year to 19.1
percent, and we continued to make great progress on controlling selling,
general and administrative costs,” said Walgreens President and CEO Greg
Wasson. “We closed the year with record sales and record free cash flow, and
we were pleased to be able to return more than $1 billion to shareholders
during fiscal 2013 as we increased our dividend for the 38th consecutive
year.”

Fiscal Year Results

Net earnings for fiscal 2013 ended Aug. 31 determined in accordance with GAAP
were $2.5 billion, an increase of 15.2 percent compared with $2.1 billion in
fiscal 2012. Net earnings per diluted share for fiscal 2013 increased 5.7
percent to $2.56, compared with $2.42 per diluted share in fiscal 2012.

Adjusted net earnings for fiscal 2013 ended Aug. 31 were $3.0 billion, an
increase of 16.3 percent compared with adjusted net earnings of $2.6 billion
in fiscal 2012. Adjusted net earnings per diluted share for fiscal 2013
increased 6.5 percent to $3.12, compared with $2.93 per diluted share in
fiscal 2012. This year’s adjusted fiscal-year results exclude the negative
impact of 25 cents per diluted share in acquisition related amortization, 16
cents per diluted share from the LIFO provision, 13 cents per diluted share in
Alliance Boots related tax, 6 cents per diluted share in other acquisition
related costs, 5 cents per diluted share related to a legal settlement with
the DEA, 3 cents per diluted share in costs related to Hurricane Sandy and 1
cent per diluted share in costs associated with the company’s change in
prescription drug wholesalers. Also excluded is the positive impact of 12
cents per diluted share in fair value adjustments and amortization related to
the company’s warrants to purchase AmerisourceBergen’s common stock and 1 cent
per diluted share in additional proceeds from the 2011 sale of the company’s
pharmacy benefit manager business.

Walgreens joint synergy program with its strategic partner, Alliance Boots,
delivered combined first-year net synergies of $154 million, exceeding the
previously stated range of $125-$150 million. Alliance Boots contributed 8
cents per diluted share to Walgreens fourth quarter adjusted results.

During fiscal 2013, the company delivered fiscal year operating cash flow of
$4.3 billion and record free cash flow of $3.1 billion, while increasing its
quarterly dividend rate in July 2013 by 14.5 percent to 31.5 cents per share,
consistent with the company’s goal of returning cash to shareholders.

“Our solid results, especially in the latter part of the quarter, round out a
year of steady progress on our long-term growth strategies to create a well
experience, transform community pharmacy and establish an efficient global
platform with our strategic partner Alliance Boots and with our long-term
relationship with AmerisourceBergen,” Wasson said.“We are very pleased to
have exceeded our joint synergy target with Alliance Boots. We also are
pleased with the successful distribution transition of branded drugs to
AmerisourceBergen.Extraordinary customer response to our Balance® Rewards
loyalty program, now with more than 85 million enrollees, gives us a wealth
ofnew insights to increase customer delight.In addition this year, we
expanded our Healthcare Clinic and pharmacy services, and we forged long-term
contracts with fair and predictable reimbursement rates with the major
commercial pharmacy payers, bringing greater stability and certainty to our
pharmacy book of business. We also began participating as part of the
preferred pharmacy networks of three of the top national Medicare Part D
plans, giving us a leading role in serving the growing number of
Medicare-eligible Americans.”

FINANCIAL HIGHLIGHTS

Sales

Fourth quarter sales increased 5.1 percent compared with the prior-year
quarter to $17.9 billion, while sales for fiscal 2013 increased 0.8 percent to
a record $72.2 billion. Front-end comparable store sales (those open at least
a year) increased 1.6 percent in the fourth quarter, customer traffic in
comparable stores decreased 1.9 percent and basket size increased 3.6 percent,
while total sales in comparable stores increased 4.6 percent.

Prescription sales, which accounted for 63.9 percent of sales in the quarter,
increased 6.1 percent, while prescription sales in comparable stores increased
6.4 percent. The company filled 203 million prescriptions in the quarter, an
increase of 8.2 percent over last year’s fourth quarter. Prescriptions filled
in comparable stores increased 7.1 percent in the quarter.

In fiscal 2013 Walgreens filled a record 821 million prescriptions,
representing a retail prescription market share of 19.1 percent, an increase
of 0.4 percentage point over the previous year.

Gross Profit and SG&A

GAAP total gross profit dollars increased $356 million, or 7.4 percent,
compared with the year-ago fourth quarter, with gross profit margins
increasing 60 basis points versus the year-ago quarter to 28.9 as a percentage
of sales. Adjusted gross profit dollars increased $216 million, or 4.3
percent, compared with the year-ago fourth quarter.

The growth in GAAP margins was driven by an increase in generic prescription
drugs dispensed, while front-end margins slightly declined. Fiscal 2013 fourth
quarter LIFO was a benefit of $8 million, compared with a $132 million charge
in the year-ago quarter, primarily driven by lower than anticipated
prescription drug inventory levels in advance of the transition to
AmerisourceBergen.

GAAP selling, general and administrative expense dollars increased $37
million, or 0.9 percent, compared with the year-ago quarter, including a 1.0
percentage point benefit of lower SG&A expenses for acquisition-related costs,
offset by 0.3 percentage point related to the company’s change in prescription
drug wholesalers and 0.1 percentage point of acquisition related amortization
costs. Adjusted selling, general and administrative expense dollars increased
$60 million, or 1.5 percent, compared with the year-ago quarter. Both GAAP and
adjusted selling, general and administrative expense dollars include a net
benefit of 1.1 percentage points from certain litigation matters.

The company opened or acquired 33 new drugstores in the fourth quarter
compared with 54 in the year-ago quarter. In fiscal 2013, Walgreens added a
net gain of 186 new drugstores including 76 net new drugstores through
acquisitions.

Interest expense increased to $55 million in this year’s fourth quarter
compared with $37 million in the year-ago quarter. The increase in interest
expense was primarily attributable to the $4.0 billion issuance of notes
associated with the Alliance Boots transaction and also includes a $16 million
negative impact from a non-cash fair market value adjustment to the company’s
previously outstanding interest rate swaps on its $1.3 billion notes. These
notes were repaid in August and the swaps were settled.

Milestones and Looking Ahead

Walgreens achieved several key milestones since the beginning of fiscal 2013
in executing its vision to be the first choice in health and daily living,
including:

  *Following the announcement in March that Walgreens and Alliance Boots
    reached a strategic, long-term relationship with AmerisourceBergen,
    Walgreens and AmerisourceBergen successfully began implementation in early
    September of their 10-year agreement for pharmaceutical distribution.
    AmerisourceBergen also will collaborate with Walgreens and Alliance Boots
    on global supply chain opportunities, and Walgreens and Alliance Boots
    together have rights to acquire a minority equity position in
    AmerisourceBergen.
  *Alex Gourlay, Chief Executive of the Health & Beauty Division, Alliance
    Boots, was appointed as Walgreens Executive Vice President, President of
    Customer Experience and Daily Living, effective Oct. 1. Gourlay’s
    appointment represented another important step forward in advancing the
    company’s strategic partnership with Alliance Boots.
  *In September, Walgreens announced a partnership with Theranos, Inc. to
    bring access to Theranos’ new lab testing service through Walgreens
    pharmacies nationwide. Consumers will be able to access less invasive and
    more affordable clinician-directed lab testing from a blood sample as
    small as a few drops, or 1/1,000^th the size of a typical blood draw.
  *Last month, Walgreens also announced its acquisition of Kerr Drug’s 76
    retail drugstores and its specialty pharmacy business, with the
    transaction expected to close later this year. During fiscal 2013,
    Walgreens also completed its acquisition of the USA Drug chain.
  *Walgreens and Express Scripts launched Smart90® Walgreens, a new option
    for Express Scripts clients interested in 90-day prescription drug
    programs that drive lower costs and improve health outcomes for people
    with chronic diseases. Plan sponsors that choose to include Walgreens as
    part of the Smart90 program for their pharmacy benefit will provide their
    members who have chronic conditions the choice to receive 90-day supplies
    of maintenance medications through home delivery from Express Scripts or
    directly at a Walgreens retail pharmacy for the same copayment.
  *Walgreens Balance® Rewards loyalty program has grown to more than 85
    million enrollees. The company announced that members can participate in
    additional health-related activities and goal tracking to earn more points
    through walking, running and weight management goals that can be logged
    and tracked through Steps with Balance Rewards.
  *Walgreens provided more than 8.5 million immunizations in fiscal year
    2013, compared with 6.7 million the prior year. Walgreens is the largest
    retail provider of flu immunizations in the country. This flu season,
    Walgreens is partnering with the United Nations Foundation to help provide
    up to 3 million life-saving vaccines to children in developing countries
    through a donation to the Foundation’s Shot@Life campaign.
  *Earlier in the fiscal year, Walgreens opened its 8,000^th store nationwide
    with its flagship store in Hollywood, Calif. The company also continued
    expansion of its Well Experience stores and now operates more than 500
    locations with the new format, in addition to 12 flagship stores.

“Looking ahead, we begin the new fiscal year well positioned to build on the
momentum we have coming out of a solid fourth quarter. We are advancing our
key strategies with a continued focus on disciplined execution, and are
addressing the challenges ahead in a difficult consumer environment and
changing health care system,” Wasson said.“While we are pleased with our
progress and momentum, we recognize there is more to do to achieve our vision
of being the first choice for health and daily living for everyone in America,
and beyond.”

At Aug. 31, Walgreens operated 8,582 locations in all 50 states, the District
of Columbia, Puerto Rico and Guam. The company has 8,116 drugstores
nationwide, 186 more than a year ago. Walgreens also operates worksite health
and wellness centers, infusion and respiratory services facilities, specialty
pharmacies and mail service facilities. Its Take Care Health Systems
subsidiary manages more than 700 in-store convenient care clinics and worksite
health and wellness centers. Walgreens e-commerce business includes
Walgreens.com, drugstore.com, Beauty.com, SkinStore.com and VisionDirect.com.

Walgreens will hold a one-hour conference call to discuss the fourth quarter
results beginning at 8:30 a.m. Eastern time today, Oct. 1. The conference call
will be simulcast through Walgreens investor relations website at:
http://investor.walgreens.com. A replay of the conference call will be
archived on the website for 12 months after the call. A podcast also will be
available on the investor relations website.

The replay also will be available from 11:30 a.m. Eastern time, Oct. 1,
through Oct. 8 by calling 855-859-2056 within the U.S. and Canada, or
404-537-3406 outside the U.S. and Canada, using replay code 69675446.

Cautionary Note Regarding Forward-Looking Statements. Statements in this
release that are not historical, including, without limitation, estimates of
future financial and operating performance, including the amounts and timing
of future accretion and synergies, are forward-looking statements made
pursuant to the safe harbor provisions of the Private Securities Litigation
Reform Act of 1995. Words such as "expect," "likely," "outlook," "forecast,
"would," "could," "should," "can," "will," "project," "intend," "plan,"
"goal," “target,” "continue," "sustain," "synergy," "on track," "believe,"
"seek," "estimate," "anticipate," "may," "possible," "assume," variations of
such words and similar expressions are intended to identify such
forward-looking statements. These forward-looking statements are not
guarantees of future performance and involve risks, assumptions and
uncertainties, including, but not limited to, those relating to our commercial
agreement with AmerisourceBergen, the arrangements and transactions
contemplated by our framework agreement with AmerisourceBergen and Alliance
Boots and their possible effects, the Purchase and Option Agreement and other
agreements relating to our strategic partnership with Alliance Boots, the
arrangements and transactions contemplated thereby and their possible effects,
the parties' ability to realize anticipated synergies and achieve anticipated
financial results, the risks associated with transitions in supply
arrangements, the risks associated with international business operations, the
risks associated with governance and control matters, whether the option to
acquire the remainder of the Alliance Boots equity interest will be exercised
and the financial ramifications thereof, the risks associated with potential
equity investments in AmerisourceBergen including whether the warrants to
invest in AmerisourceBergen will be exercised and the financial ramifications
thereof, changes in vendor, payer and customer relationships and terms,
changes in network participation, levels of business with Express Scripts
customers, the implementation, operation and growth of our customer loyalty
program, changes in economic and market conditions, competition, risks
associated with new business areas and activities, risks associated with
acquisitions, joint ventures and strategic investments, the ability to realize
anticipated results from capital expenditures and cost reduction initiatives,
outcomes of legal and regulatory matters, and changes in legislation or
regulations. These and other risks, assumptions and uncertainties are
described in Item 1A (Risk Factors) of our most recent Annual Report on Form
10-K and Quarterly Report on Form 10-Q, each of which is incorporated herein
by reference, and in other documents that we file or furnish with the
Securities and Exchange Commission. Should one or more of these risks or
uncertainties materialize, or should underlying assumptions prove incorrect,
actual results may vary materially from those indicated or anticipated by such
forward-looking statements. Accordingly, you are cautioned not to place undue
reliance on these forward-looking statements, which speak only as of the date
they are made. Except to the extent required by law, Walgreens does not
undertake, and expressly disclaims, any duty or obligation to update publicly
any forward-looking statement after the initial distribution of this release,
whether as a result of new information, future events, changes in assumptions
or otherwise.

Please refer to the supplemental information presented below for
reconciliations of the non-GAAP financial measures used in this release to the
most comparable GAAP financial measure and related disclosures.


WALGREEN CO. AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENTS OF EARNINGS
(UNAUDITED)
(In Millions, Except Per Share Amounts)


                        Three Months Ended          Twelve Months Ended
                         August 31,    August 31,    August 31,   August 31,
                         2013           2012          2013          2012
                                                                    
Net sales                $   17,941     $  17,073     $  72,217     $  71,633
Cost of sales (1)           12,750       12,238       51,098       51,291
Gross Profit                 5,191         4,835         21,119        20,342
Selling, general and
administrative               4,286         4,249         17,543        16,878
expenses
Equity earnings in           124           -             344           -
Alliance Boots
Gain on sale of             -            -            20           -
business
Operating Income             1,029         586           3,940         3,464
                                                                    
Interest expense,            55            37            165           88
net
Other income                43           -            120          -
Earnings Before              1,017         549           3,895         3,376
Income Tax Provision
Income tax provision        360          196          1,445        1,249
Net Earnings                657          353          2,450        2,127
Net earnings per
common share:
Basic                    $   .69        $  .40        $  2.59       $  2.43
Diluted                  $   .69        $  .39        $  2.56       $  2.42
                                                                    
Dividends declared       $   .3150      $  .2750      $  1.1400     $  .9500
                                                                    
Average shares               945.7         889.8         946.0         874.7
outstanding
Dilutive effect of          11.6         5.5          9.2          5.4
stock options
Average Diluted             957.3        895.3        955.2        880.1
Shares
                                                                    
                                                                    
                         Percent of Sales             Percent of Sales
                                                                    
Net sales                    100.0%        100.0%        100.0%        100.0%
Cost of sales               71.1         71.7         70.7         71.6
Gross Margin                 28.9          28.3          29.3          28.4
Selling, general and
administrative               23.9          24.9          24.3          23.6
expenses
Equity earnings in           0.7           -             0.5           -
Alliance Boots
Gain on sale of             -            -            -            -
business
Operating Income             5.7           3.4           5.5           4.8
                                                                    
Interest expense,            0.3           0.2           0.2           0.1
net
Other income                0.3          -            0.2          -
Earnings Before              5.7           3.2           5.5           4.7
Income Tax Provision
Income tax provision        2.0          1.1          2.0          1.7
Net Earnings                3.7%         2.1%         3.5%         3.0%
                                                                    
(1) Fiscal 2013 fourth quarter LIFO includes a benefit of $8 million versus a
provision of $132 million in the previous year.
Fiscal 2013 twelve months ended includes a LIFO provision of $239 million
versus $309 million in the previous year.


WALGREEN CO. AND SUBSIDIARIES
CONSOLIDATED CONDENSED BALANCE SHEETS
(UNAUDITED AND SUBJECT TO RECLASSIFICATION)
(In Millions)
                                                                 
                                                                    
                                                       August 31,   August 31,
                                                       2013         2012
Assets
Current Assets:
Cash and cash equivalents                              $  2,106     $  1,297
Accounts receivable, net                                  2,632        2,167
Inventories                                               6,852        7,036
Other current assets                                     284         260
Total Current Assets                                      11,874       10,760
Non-Current Assets:
Property and Equipment, at cost, less accumulated         12,138       12,038
depreciation and amortization
Equity investment in Alliance Boots                       6,261        6,140
Alliance Boots call option                                839          866
Goodwill                                                  2,410        2,161
Other non-current assets                                 1,959       1,497
Total Non-Current Assets                                 23,607      22,702
Total Assets                                           $  35,481    $  33,462
Liabilities and Shareholders' Equity
Current Liabilities:
Short-term borrowings                                  $  570       $  1,319
Trade accounts payable                                    4,635        4,384
Accrued expenses and other liabilities                    3,577        3,019
Income taxes                                             101         -
Total Current Liabilities                                 8,883        8,722
Non-Current Liabilities:
Long-term debt                                            4,477        4,073
Deferred income taxes                                     600          545
Other non-current liabilities                            2,067       1,886
Total Non-Current Liabilities                            7,144       6,504
Shareholders' Equity                                     19,454      18,236
Total Liabilities and Shareholders' Equity             $  35,481    $  33,462


WALGREEN CO. AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
(UNAUDITED AND SUBJECT TO RECLASSIFICATION)
(In Millions)


                                                      Twelve Months Ended
                                                       August 31,  August 31,
                                                       2013         2012
                                                                    
Cash flows from operating activities:
Net earnings                                           $  2,450     $  2,127
Adjustments to reconcile net earnings to net cash
provided by operating activities -
Depreciation and amortization                             1,283        1,166
Change in fair value of warrants and related              (120)        -
amortization
Deferred income taxes                                     148          265
Stock compensation expense                                104          99
Equity earnings in Alliance Boots                         (344)        -
Other                                                     113          43
Changes in operating assets and liabilities -
Accounts receivable, net                                  (449)        394
Inventories                                               321          1,083
Other current assets                                      18           (4)
Trade accounts payable                                    182          (439)
Accrued expenses and other liabilities                    424          (184)
Income taxes                                              103          (228)
Other non-current assets and liabilities                 68          109
Net cash provided by operating activities                4,301       4,431
                                                                    
Cash flows from investing activities:
Additions to property and equipment                       (1,212)      (1,550)
Business and intangible asset acquisitions, net of        (630)        (491)
cash received
Purchases of short term investments held to maturity      (66)         -
Proceeds from short term investments held to              16           -
maturity
Proceeds from sale of assets                              145          123
Proceeds (payments) related to sale of business           20           (45)
Return of restricted cash                                 -            191
Investment in AmerisourceBergen                           (224)        -
Investment in Alliance Boots                              -            (4,025)
Other                                                    (45)        (63)
Net cash used for investing activities                   (1,996)     (5,860)
                                                                    
Cash flows from financing activities:
Net proceeds from issuance of debt                        4,000        3,000
Payments of long-term debt                                (4,300)      -
Stock purchases                                           (615)        (1,191)
Proceeds related to employee stock plans                  486          165
Cash dividends paid                                       (1,040)      (787)
Other                                                    (27)        (17)
Net cash (used for) provided by financing activities     (1,496)     1,170
                                                                    
Changes in cash and cash equivalents:
Net increase (decrease) in cash and cash equivalents      809          (259)
Cash and cash equivalents at beginning of period         1,297       1,556
Cash and cash equivalents at end of period             $  2,106     $  1,297


WALGREEN CO. AND SUBSIDIARIES
SUPPLEMENTAL INFORMATION (UNAUDITED)
RECONCILIATION OF NON-GAAP FINANCIAL MEASURES
(In millions, except per share amounts)


The following information provides reconciliations of the supplemental
non-GAAP financial measures, as defined under SEC rules, presented in this
press release to the most directly comparable financial measures calculated
and presented in accordance with generally accepted accounting principles in
the United States (GAAP). The company has provided these non-GAAP financial
measures in the press release, which are not calculated or presented in
accordance with GAAP, as supplemental information and in addition to the
financial measures that are calculated and presented in accordance with
GAAP.These supplemental non-GAAP financial measures are presented because
management has evaluated the company’s financial results both including and
excluding the adjusted items and believes that the supplemental non-GAAP
financial measures presented provide additional perspective and insights when
analyzing the core operating performance of the Company’s business from period
to period and trends in the company’s historical operating results.These
supplemental non-GAAP financial measures should not be considered superior to,
as a substitute for or as an alternative to, and should be considered in
conjunction with, the GAAP financial measures presented in the press release.
                                                   
                           Three months ended          Twelve months ended
                           August 31,     August      August 31,   August
                                           31,                       31,
                           2013            2012        2013          2012
Net earnings (GAAP)        $    657        $  353      $  2,450      $  2,127
Acquisition-related             59            45          241           161
amortization
Alliance Boots related          38            -           124           -
tax add-back
LIFO provision                  (5)           85          151           195
Hurricane Sandy costs           -             -           24            -
Acquisition-related             7             70          60            82
costs
DEA settlement costs            -             -           47            -
Distributor transition          8             -           8             -
costs
Increase in fair
market value of                 (62)          -           (110)         -
warrants
Gain on sale of
Walgreen Health                -            -          (13)         -
Initiatives, Inc.
Adjusted net earnings      $    702        $  553      $  2,982      $  2,565
                                                                     
Net earnings per
common share – diluted     $    0.69       $  0.39     $  2.56       $  2.42
(GAAP)
Acquisition-related             0.05          0.05        0.25          0.18
amortization
Alliance Boots related          0.04          -           0.13          -
tax add-back
LIFO provision                  (0.01)        0.10        0.16          0.22
Hurricane Sandy costs           -             -           0.03          -
Acquisition-related             0.01          0.08        0.06          0.09
costs
DEA settlement costs            -             -           0.05          -
Distributor transition          0.01          -           0.01          -
costs
Alliance Boots share            -             0.01        -             0.02
issuance effect
Increase in fair
market value of                 (0.06)        -           (0.12)        -
warrants
Gain on sale of
Walgreen Health                -            -          (0.01)       -
Initiatives, Inc.
Adjusted net earnings
per common share –         $    0.73       $  0.63     $  3.12       $  2.93
diluted

                                    
                                           Three months ended
                                           August 31,         August 31,
                                           2013                2012
Gross profit (GAAP)                        $     5,191         $     4,835
LIFO (benefit) provision                        (8)                132
Adjusted gross profit                      $     5,183         $     4,967
Adjusted gross profit                            4.3%
growth
                                                               
Selling, general and
administrative expenses                    $     4,286         $     4,249
(GAAP)
Acquisition-related                              73                  70
amortization
Acquisition-related costs                        11                  50
Distributor transition                          13                 -
costs
Adjusted selling, general                  $     4,189         $     4,129
and administrative expenses
Adjusted selling, general
and administrative expenses                      1.5%
growth
                                                               
                                                               Twelve
                                                               months ended
                                                               August 31,
                                                               2013
Net cash provided by                                           $     4,301
operating activities (GAAP)
Less: Additions to property                                         1,212
and equipment
Free cash flow(1)                                              $     3,089
                                                               
(1) Free cash flow is defined as net cash provided by operating activities in
a period minus additions to property and equipment (capital expenditures) made
in that period.This measure does not represent residual cash flows available
for discretionary expenditures as the measure does not deduct the payments
required for debt service and other contractual obligations or payments for
future business acquisitions. Therefore, we believe it is important to view
free cash flow as a measure that provides supplemental information to our
entire statements of cash flows.

Contact:

Walgreens
Michael Polzin, 847-315-2920
http://news.walgreens.com
@WalgreensNews
facebook.com/Walgreens
 
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