Current Report
SECURITIES
AND EXCHANGE COMMISSION
WASHINGTON,
D.C. 20549
FORM
8-K
CURRENT
REPORT
Pursuant
to Section 13 or 15(d) of
the
Securities Exchange Act of 1934
Date of
Report (Date of earliest event reported): December 22, 2008
WALGREEN
CO.
(Exact
name of registrant as specified in its charter)
|
Illinois
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1-604
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36-1924025
|
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(State
or other Jurisdiction of Incorporation)
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(Commission
File Number)
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(I.
R. S. Employer Identification Number)
|
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200
Wilmot Road
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60015
|
|
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Deerfield,
Illinois
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(Zip
Code)
|
|
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(Address
of Principal Executive
Offices)
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Registrant’s
telephone number, including area code: (847) 914-2500
Check the
appropriate box below if the Form 8-K filing is intended to simultaneously
satisfy the filing obligations of the registrant under any of the following
provisions:
|
o
|
Written
communications pursuant to Rule 425 under the Securities Act (17 CFR
230.425)
|
|
o
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Soliciting
material pursuant to Rule 14a-12 under the Exchange Act (17 CFR
240.14a-12)
|
|
o
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Pre-commencement
communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR
240.14d-2(b))
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o
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Pre-commencement
communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR
240.13e-4(c))
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On
December 22, 2008, Walgreen Co. issued a press release announcing financial
results for the quarter ended November 30, 2008. A copy of this press
release is attached hereto as Exhibit 99.1.
This
information, including exhibits attached hereto and the information under Item
7.01 below, shall not be deemed “filed” for purposes of Section 18 of the
Securities Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise
subject to the liabilities of that section. This information shall
not be deemed to be incorporated by reference in any filing under the Securities
Act of 1933, as amended, or the Exchange Act, except as shall be expressly set
forth by specific reference to this Form 8-K in such a filing.
Item
7.01 Regulation
FD Disclosure.
In
addition to issuing a press release, Walgreen Co. is also conducting a
conference call and webcast regarding results for the quarter ended November 30,
2008. Slides prepared for the purposes of the conference call are
available on the Walgreens investor relations Web site at
http://investor.walgreens.com.
Item
9.01 Financial
Statements and Exhibits.
(d) The
following exhibit is being furnished as part of this Form 8-K:
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Exhibit
Number
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Exhibit
Title
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99.1
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Press
Release issued by Walgreen Co., dated December 22, 2008, announcing
results for the quarter ended November 30,
2008.
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SIGNATURE
Pursuant
to the requirements of the Securities Exchange Act of 1934, the registrant has
duly caused this report to be signed on its behalf by the undersigned hereunto
duly authorized.
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WALGREEN
CO.
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|||
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Date:
December 22, 2008
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By:
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/s/ Wade D. Miquelon | |
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Name:
Wade D. Miquelon
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|||
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Title:
Senior Vice President and Chief
Financial
Officer (Principal Financial Officer)
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|||
EXHIBIT
INDEX
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Exhibit
Number
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Exhibit
Title
|
|
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99.1
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Press
Release issued by Walgreen Co., dated December 22, 2008, announcing
results for the quarter ended November 30,
2008.
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3
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News
From
|
|
Walgreen
Co. Corporate Communications
l
200 Wilmot Road
l
Deerfield, Ill.
60015
l
(847)
914-2500
Media
Contact: Tiffani Bruce, 847-914-2962
Investor
Contact: Rick Hans, CFA,
847-914-2385
| FOR IMMEDIATE RELEASE |
INTERNET: http://www.walgreens.com
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WALGREEN
CO. REPORTS EARNINGS PER SHARE OF 41 CENTS,
RECORD
SALES FOR FIRST QUARTER 2009
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●
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Sales
increase 6.6 percent
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●
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Company
announces further reduction in new store openings
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●
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Aggressive
expense management continues
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DEERFIELD, Ill., Dec. 22, 2008 –
Walgreens (NYSE, NASDAQ: WAG) today announced earnings and sales results for the
first quarter of fiscal year 2009.
Net earnings for the quarter ended Nov.
30 decreased 10.4 percent to $408 million or 41 cents per share (diluted), from
$456 million or 46 cents per share (diluted) in the same quarter a year
ago.
Sales for the first quarter increased
6.6 percent to a record $14.9 billion, while sales in comparable stores (those
open more than a year) rose 1.7 percent in the quarter.
Prescription
sales, which accounted for 66 percent of sales in the quarter, climbed 6.2
percent, while prescription sales in comparable stores rose 2.6 percent in the
quarter. The company’s number of U.S. retail prescriptions filled increased 3.7
percent over last year’s first quarter. That compares to an industry-wide
decline of 0.5 percent (excluding Walgreens) during the same period, according
to IMS Health and Walgreens figures. The number of prescriptions filled in
comparable stores was virtually flat, although prescriptions were up 1.5 percent
when adjusted for more patients filling 90-day prescriptions versus 30-day.
Front-end comparable sales were flat in the quarter.
“We continue to post solid sales
results and achieve strong cost control in this difficult retail environment,”
said Walgreens President and COO Gregory D. Wasson. “Customer traffic
strengthened through the quarter and we’re making substantial progress on our
growth strategies to get more from our core operations and enhance the customer
experience.”
(more)
- 2 -
Today, the company is also announcing
plans to further reduce its organic store openings to a rate between 4.0 and 4.5
percent in 2010 and between 2.5 and 3.0 percent in 2011. This is a further
reduction from plans announced last July to slow organic store openings to 5
percent by 2011. The company will continue to open new stores in strategic
markets, on the best corners, and which offer the greatest rates of return. The
new target growth rate will reduce capital expenditures through 2011 by
approximately an additional $500 million beyond the $500 million capital
expenditure savings announced last July.
Wasson said, “We believe that further
slowing of organic store growth is a prudent step in the context of current
economic conditions. Furthermore, by freeing up human and financial capital,
substantial upside exists to drive greater value creation by enhancing the best
community-based store network in America. This includes refreshing and
remodeling existing stores, more efficient assortment within stores,
prescription file buys and continued expansion of retail and worksite
clinics.”
Selling, general and administrative
expense dollars increased 9.1 percent in the quarter compared to the same
quarter last year, which includes costs associated with opening a record 212 new
or acquired drugstores in the quarter.
Gross profit margins decreased 0.2
percentage points versus the year-ago quarter to 27.8 as a percent of sales.
Retail pharmacy margins increased due to generic drug sales, which have higher
margins. Front-end margins remained essentially flat from the prior year. The
gross profit was negatively impacted by non-retail businesses and an increase in
the LIFO provision to $43 million in this year’s quarter versus a provision of
$27 million in last year’s first quarter.
Walgreens continues to progress on key
initiatives reviewed at its Analyst Day in October:
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●
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The
company continues to implement initiatives to enhance the customer
experience and ensure the most relevant and efficient assortment and
promotions. More than 40 percent of categories have been reviewed and
enhancements will begin in mid- to late- spring. Through its “Affordable
Essentials” program, Walgreens will continue to provide greater value on
the basic staples customers are seeking in these challenging economic
times.
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(more)
- 3
-
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●
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Walgreens
increased membership in its Prescription Savings Club by more than 40
percent versus the previous quarter. Thirty percent of all enrollees are
new Walgreens patients. The company continues to broaden patient offerings
and services in other ways such as flu shots, which have also increased
dramatically to more than 1.1 million versus 440,000 for the entire season
last year.
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●
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The
POWER project, designed to enhance patient-pharmacist interaction and
reduce costs, is now fully implemented in 280 Florida locations, while key
components of the new process have been introduced in nearly 400
additional stores in the state. Some of the POWER components are now
operational in 30 Arizona
locations.
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●
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During
the quarter, the company’s Health and Wellness division opened 76 in-store
Take Care Clinics and four worksite health centers, for a total of 661
clinic locations at Nov. 30. Take Care’s retail and worksite health
centers both continue to show increasing customer
demand.
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●
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Walgreens
acquired a specialty pharmacy business from McKesson Corporation. The
acquisition will further strengthen Walgreens position as the
fourth-largest specialty pharmacy in the
country.
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●
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Walgreens
is working toward greater efficiencies through Rewiring for Growth, which
targets approximately $1 billion in annual cost savings by fiscal 2011 in
the areas of indirect procurement, general overhead and labor, and via the
POWER project. The first quarter results were negatively impacted by 1
cent per diluted share related to Rewiring for Growth one-time
costs.
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●
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Walgreens continues to build locations on America’s best corners.
“The store we opened in New York’s Times Square in November is a great
example,” said Wasson. “Early results are excellent and already place the
store among our top performers.”
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Wasson
concluded, “Our growth strategies and financial flexibility position us well to
create shareholder value in the years ahead.”
Walgreens will hold a one-hour
conference call to discuss the quarter’s results beginning at 8:30 a.m. Eastern
time today, Dec. 22. The conference call will be webcast through Walgreens
investor relations Web site at: http://investor.walgreens.com. This webcast will
be archived on the site for 12 months after the call.
(more)
- 4
-
A replay of the conference call also
will be available from 11:30 a.m. Eastern time, Dec. 22, through Dec. 29. The
replay can be accessed at http://investor.walgreens.com or by calling
888-203-1112 within the U.S. and Canada, or 719-457-0820 outside the U.S. and
Canada, using replay code 9244629.
This news release may contain
forward-looking statements that involve risks and uncertainties. The
following factors could cause results to differ materially from management
expectations as projected in such forward-looking statements: seasonal
variations, competition, risks of new business areas, the availability and cost
of real estate and construction, and changes in federal or state legislation or
regulations. Investors are referred to the “Cautionary Note Regarding
Forward-Looking Statements” in the Company’s most recent Form 10-K, which Note
is incorporated into this news release by reference.
(more)
- 5
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(more)
- 6
-
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WALGREEN
CO. AND SUBSIDIARIES
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||||||||
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CONSOLIDATED
CONDENSED BALANCE SHEETS
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||||||||
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(UNAUDITED
AND SUBJECT TO RECLASSIFICATION)
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||||||||
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(In
Millions)
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||||||||
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November
30,
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November
30,
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|||||||
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2008
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2007
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|||||||
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Assets
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||||||||
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Current
Assets:
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||||||||
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Cash
and cash equivalents
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$ | 886 | $ | 295 | ||||
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Accounts
receivable, net
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2,776 | 2,247 | ||||||
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Inventories
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8,298 | 7,553 | ||||||
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Other
current assets
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199 | 240 | ||||||
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Total
Current Assets
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12,159 | 10,335 | ||||||
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Non-Current
Assets:
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||||||||
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Property
and Equipment, at cost, less
accumulated
depreciation and amortization
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10,150 | 8,502 | ||||||
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Goodwill
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1,433 | 1,066 | ||||||
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Other
non-current assets
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771 | 573 | ||||||
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Total
Non-Current Assets
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12,354 | 10,141 | ||||||
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Total
Assets
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$ | 24,513 | $ | 20,476 | ||||
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Liabilities
and Shareholders' Equity
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||||||||
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Current
Liabilities:
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||||||||
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Short-term
borrowings
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$ | 1,080 | $ | 1,176 | ||||
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Trade
accounts payable
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5,026 | 4,107 | ||||||
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Accrued
expenses and other liabilities
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2,246 | 2,085 | ||||||
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Income
taxes
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144 | 178 | ||||||
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Total
Current Liabilities
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8,496 | 7,546 | ||||||
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Non-Current
Liabilities:
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||||||||
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Long-term
debt
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1,337 | 20 | ||||||
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Deferred
income taxes
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154 | 107 | ||||||
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Other
non-current liabilities
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1,395 | 1,313 | ||||||
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Total
Non-Current Liabilities
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2,886 | 1,440 | ||||||
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Shareholders'
Equity
|
13,131 | 11,490 | ||||||
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Total
Liabilities and Shareholders' Equity
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$ | 24,513 | $ | 20,476 | ||||
(more)
- 7
-
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WALGREEN
CO. AND SUBSIDIARIES
|
||||||||
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CONSOLIDATED
CONDENSED STATEMENTS OF CASH FLOWS
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||||||||
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(UNAUDITED
AND SUBJECT TO RECLASSIFICATION)
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||||||||
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(In
Millions)
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||||||||
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Three
Months Ended November 30,
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||||||||
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2008
|
2007
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|||||||
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Cash
flows from operating activities:
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||||||||
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Net
earnings
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$ | 408 | $ | 456 | ||||
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Adjustments
to reconcile net earnings to net cash provided by
operating
activities -
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||||||||
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Depreciation
and amortization
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236 | 195 | ||||||
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Deferred
income taxes
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16 | (72 | ) | |||||
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Stock
compensation expense
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32 | 31 | ||||||
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Income
tax savings from employee stock plans
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- | 1 | ||||||
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Other
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4 | 3 | ||||||
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Changes
in operating assets and liabilities -
|
||||||||
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Accounts
receivable, net
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(313 | ) | (158 | ) | ||||
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Inventories
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(1,036 | ) | (753 | ) | ||||
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Other
assets
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15 | (9 | ) | |||||
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Trade
accounts payable
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736 | 373 | ||||||
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Accrued
expenses and other liabilities
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21 | 2 | ||||||
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Income
taxes
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210 | 322 | ||||||
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Other
non-current liabilities
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(17 | ) | (1 | ) | ||||
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Net
cash provided by operating activities
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312 | 390 | ||||||
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Cash
flows from investing activities:
|
||||||||
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Additions
to property and equipment
|
(638 | ) | (490 | ) | ||||
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Proceeds
from sale of assets
|
15 | 5 | ||||||
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Business
and intangible asset acquisitions, net of cash received
|
(61 | ) | (48 | ) | ||||
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Net
proceeds from corporate-owned life insurance policies
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- | 2 | ||||||
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Net
cash used for investing activities
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(684 | ) | (531 | ) | ||||
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Cash
flows from financing activities:
|
||||||||
|
Net
proceeds from short-term borrowings
|
998 | 317 | ||||||
|
Payments
of debt
|
- | (29 | ) | |||||
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Stock
purchases
|
(99 | ) | (78 | ) | ||||
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Proceeds
related to employee stock plans
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32 | 68 | ||||||
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Cash
dividends paid
|
(111 | ) | (94 | ) | ||||
|
Other
|
(5 | ) | (3 | ) | ||||
|
Net
cash provided by financing activities
|
815 | 181 | ||||||
|
Changes
in cash and cash equivalents:
|
||||||||
|
Net
increase in cash and cash equivalents
|
443 | 40 | ||||||
|
Cash
and cash equivalents at September 1
|
443 | 255 | ||||||
|
Cash
and cash equivalents at November 30
|
$ | 886 | $ | 295 | ||||
# # # #