CVS Corporation Reports Fourth Quarter and Year-End Results.Business Editors/Retail Writers WOONSOCKET Woonsocket (w  nsŏk`ĭt, w n–), city (1990 pop. 43,877), Providence co., N R.I. , R.I.--(BUSINESS WIRE)--Feb. 4, 2003
CVS (1) (Concurrent Versions System) A version control system for Unix that was initially developed as a series of shell scripts in the mid-1980s. CVS maintains the changes between one source code version and another and stores all the changes in one file. Corp. (NYSE NYSE See: New York Stock Exchange :CVS) -- Fourth Quarter Diluted EPS Increased to $0.49 -- 2002 Sales Increased 8.7% to a Record $24.2 Billion -- 2002 Diluted EPS, Excluding the 2001 Nonrecurring Items, Increased 12.2% to $1.75 CVS Corporation (NYSE:CVS), today announced sales and earnings for the fourth quarter and the year ended December December: see month. 28, 2002. Net sales Net Sales The amount a seller receives from the buyer after costs associated with the sale are deducted. Notes: This amount is calculated by subtracting the following items from gross sales: merchandise returned for credit, allowances for damaged or missing goods, freight for the fourth quarter ended December 28, 2002 increased 6.6% to a record $6.34 billion, up from $5.95 billion during the fourth quarter of 2001. Same store sales Same Store Sales A statistic used in retail industry analysis. It compares sales of stores that have been open for a year or more. Notes: This statistic allows investors to determine what portion of new sales has come from sales growth and what portion from the opening of (sales from stores open more than one year) for the quarter rose 6.7%, while pharmacy pharmacy, art of compounding and dispensing drugs and medication. The term is also applied to an establishment used for such purposes. Until modern times medication was prepared and dispensed by the physician himself. In the 18th cent. same store sales rose 10.9% and front-end front-end adj. 1. Of or relating to the initial phase of a project: a front-end investment. 2. Of or relating to the forward parts of a vehicle: a front-end alignment. same store sales decreased 0.6%. For the year, net sales increased 8.7% to a record $24.18 billion, compared to $22.24 billion in 2001. Same store sales for the year increased 8.4% over the prior year period, while pharmacy same store sales increased 11.7% and front-end same store sales increased 2.3%. Pharmacy same store sales were negatively impacted by approximately 230 basis points for the quarter and 180 basis points for the year by recent generic drug generic drug, a drug sold or prescribed under the nonproprietary name of its active ingredients or under a generally descriptive name rather than under a brand or trade name. introductions, which are being substituted for higher priced brand name drugs. Total pharmacy sales represented 66.8% of total company sales for the quarter and 67.6% for the year, while third party prescription sales were 92.5% of pharmacy sales for the quarter and 92.3% for the year. Net earnings for the fourth quarter increased 104% to $200.1 million or $0.49 per diluted di·lute tr.v. di·lut·ed, di·lut·ing, di·lutes 1. To make thinner or less concentrated by adding a liquid such as water. 2. To lessen the force, strength, purity, or brilliance of, especially by admixture. share, compared with net earnings of $98.2 million or $0.24 per diluted share in the fourth quarter of 2001, excluding the 2001 Nonrecurring Non`re`cur´ring a. 1. Nonrecurrent; as, the costs of a layoff are considered as a nonrecurring expense s>. Items discussed below. The Company's fourth quarter results were driven by healthy sales growth, a significant improvement in gross margin trends, and strong expense control. Net earnings for the year increased to $716.6 million, or $1.75 per diluted share, up 12.2% from the $1.56 per diluted share reported in 2001, excluding the 2001 Nonrecurring Items. (Nonrecurring litigation An action brought in court to enforce a particular right. The act or process of bringing a lawsuit in and of itself; a judicial contest; any dispute. When a person begins a civil lawsuit, the person enters into a process called litigation. settlements for the full year 2002 amounted to a net loss of $3.2 million pre-tax pre-tax adj → anterior al impuesto pre-tax adj → avant impôt(s) pre-tax adj → al lordo d'imposta ($2.0 million after-tax af·ter-tax also af·ter·tax adj. Relating to or being that which remains after payment, especially of income taxes: after-tax profits. ), or less than half a cent per diluted share, and are included in the reported results.) 2002 selling, general and administrative expenses as a percentage of net sales were the lowest full-year level in the Company's history. This largely reflects the benefits realized from the 2001 strategic restructuring restructuring - The transformation from one representation form to another at the same relative abstraction level, while preserving the subject system's external behaviour (functionality and semantics). , the efficiencies gained from the EPIC pharmacy system, and the termination of goodwill amortization as a result of the adoption of SFAS SFAS Statement of Financial Accounting Standards SFAS Special Forces Assessment and Selection SFAS Student Financial Aid Services SFAS Sport Fishing Association of Singapore SFAS Safety Features Actuation System SFAS Statewide Fixed Assets System 142. "We're we're Contraction of we are. we're we are certainly happy to have achieved these results in what was a challenging year for the retail industry," stated Tom Ryan
Tom Ryan (born August 3 1986), who plays under the pseudonym Ogre 2, is a professional gamer from Pickerington, Ohio, USA. , Chairman, President, and Chief Executive Officer of CVS Corporation. "CVS has emerged from 2002 stronger, leaner, and better positioned to capitalize on Cap´i`tal`ize on` v. t. 1. To turn (an opportunity) to one's advantage; to take advantage of (a situation); to profit from; as, to capitalize on an opponent's mistakes s>. the rich opportunities in retail pharmacy," continued Ryan Ryan may refer to: Places
n the features of a dental benefits program or of the administration of the program designed to reduce or eliminate certain charges to the plan. and customer service, should continue to drive our strong performance." During 2001, the Company recorded a $352.5 million charge for restructuring and asset impairment Impairment 1. A reduction in a company's stated capital. 2. The total capital that is less than the par value of the company's capital stock. Notes: 1. This is usually reduced because of poorly estimated losses or gains. 2. costs. The Company also received $50.3 million of additional settlement proceeds from various lawsuits during 2001, of which the Company elected to contribute $46.8 million to the CVS Charitable Trust The arrangement by which real or Personal Property given by one person is held by another to be used for the benefit of a class of persons or the general public. , Inc. Combined, the restructuring charge restructuring charge The expense of reorganizing a company's operations. A restructuring charge is an infrequent expense that generally results from asset writedowns or facility closings. , the litigation proceeds, and the charitable donation, totaled $349.0 million pre-tax ($228.4 million after-tax), or $0.58 per diluted share for the fourth quarter 2001 due to antidilution and $0.56 per diluted share for the year, (the "2001 Nonrecurring Items"). Including the impact of the 2001 Nonrecurring Items, net earnings for the fourth quarter of 2002 increased to $200.1 million or $0.49 per diluted share, compared with a net loss of $130.2 million or $0.34 per diluted share in the fourth quarter of 2001. Net earnings for the year increased 73.4% to $716.6 million, or $1.75 per diluted share, compared to net earnings of $413.2 million or $1.00 per diluted share last year, including the 2001 Nonrecurring Items. For the year, CVS opened 174 new stores, closed 278 (224 of which related to the strategic restructuring) and relocated re·lo·cate v. re·lo·cat·ed, re·lo·cat·ing, re·lo·cates v.tr. To move to or establish in a new place: relocated the business. v.intr. 92 others. New store development included 78 stores in new markets, including: Chicago Chicago, city, United States Chicago (shĭkä`gō, shĭkô`gō), city (1990 pop. 2,783,726), seat of Cook co., NE Ill., on Lake Michigan; inc. 1837. , Illinois Illinois, river, United States Illinois, river, 273 mi (439 km) long, formed by the confluence of the Des Plaines and Kankakee rivers, NE Ill., and flowing SW to the Mississippi at Grafton, Ill. It is an important commercial and recreational waterway. ; Las Vegas Las Vegas (läs vā`gəs), city (1990 pop. 258,295), seat of Clark co., S Nev.; inc. 1911. It is the largest city in Nevada and the center of one of the fastest-growing urban areas in the United States. , Nevada Nevada (nəvăd`ə, –vä–), far western state of the United States. It is bordered by Utah (E), Arizona (SE), California (SW, W), and Oregon and Idaho (N). ; Phoenix, Arizona Phoenix /ˈfiːˌnɪks/ (English: Phoenix, Navajo: Hoozdo, lit. "the place is hot", Western Apache: Fiinigis) is the capital and the most populous city of the U.S. ; and several markets in Florida Florida, state, United States Florida (flôr`ĭdə, flŏr`–), state in the extreme SE United States. A long, low peninsula between the Atlantic Ocean (E) and the Gulf of Mexico (W), Florida is bordered by Georgia and and Texas. As of December 28, 2002, CVS operated 4,087 retail and specialty pharmacy stores in 32 states and the District of Columbia District of Columbia, federal district (2000 pop. 572,059, a 5.7% decrease in population since the 1990 census), 69 sq mi (179 sq km), on the east bank of the Potomac River, coextensive with the city of Washington, D.C. (the capital of the United States). . As reported in a separate press release today, January January: see month. sales increased 7.2 % to $1.91 billion, compared to $1.78 billion in the prior year period. January same store sales rose 5.8% while pharmacy same store sales increased 8.8% and front-end same store sales decreased 0.4%. The Company will be holding a conference call today for the investment community at 8:30 a.m. (EST EST electroshock therapy. EST abbr. electroshock therapy ) to discuss the quarterly results. The call will be simulcast on the Company's web site for all interested parties. To access the webcast, visit the Company's Web site at http://www.CVS.com on the Investor Relations Investor relations The process by which the corporation communicates with its investors. page to hear the call live, or to listen to an archive of the call which will be available for a one-week period following the call. CVS is America's #1 pharmacy dispensing dispensing provision of drugs or medicines as set out properly on a lawful prescription. A prescription can only be filled, the drugs supplied, by a registered pharmacist, veterinarian, dentist or member of the medical profession. prescriptions in more stores than any other retailer. With annual revenues exceeding $24 billion, CVS has created innovative approaches to serve the healthcare needs of all of our customers through its over 4,000 CVS/pharmacy CVS/pharmacy (also CVS) is a pharmacy and convenience store chain in the United States. CVS is also the largest pharmacy chain in the United States, based on the number of stores. stores; CVS ProCare ProCare is a service offered by the Apple Store that provides additional services from the Genius Bar. ProCare is an annual membership costing US$99 that provides the customer with various services to expedite the Genius Bar experience in addition to features such as backup consultation , its specialty pharmacy business; CVS.com, its online pharmacy  This article or section may deal primarily with the U.S. and may not present a worldwide view. ; and PharmaCare, its pharmacy benefit management A Pharmacy Benefit Manager (PBM) is a third party administrator of prescription drug programs. They are primarily responsible for processing and paying prescription drug claims. company.
This press release contains certain forward-looking statements forward-looking statement A projected financial statement based on management expectations. A forward-looking statement involves risks with regard to the accuracy of assumptions underlying the projections. that are subject to risks and uncertainties that could cause actual results to differ materially. For these statements, the Company claims the protection of the safe harbor Safe Harbor 1. A legal provision to reduce or eliminate liability as long as good faith is demonstrated. 2. A form of shark repellent implemented by a target company acquiring a business that is so poorly regulated that the target itself is less attractive. for forward-looking statements contained in the Private Securities Litigation Reform Act The Private Securities Litigation Reform Act of 1995 (PSLRA) implemented several significant substantive changes affecting certain cases brought under the federal securities laws, including changes related to pleading, discovery, liability, class representation and awards fees and of 1995. The Company strongly recommends that you become familiar with the specific risks and uncertainties outlined under the caption "Cautionary Statement Concerning Forward-Looking Statements" in its Annual Report on Form 10-K Form 10-K A report required by the SEC from exchange-listed companies that provides for annual disclosure of certain financial information. Form 10-K See 10-K. for the fiscal year ended December 29, 2001 and its Quarterly Report on Form 10-Q Form 10-Q See 10-Q. for the third quarter ended September 28, 2002.
CVS CORPORATION
Consolidated Statements of Operations
(Unaudited)
13 Weeks Ended 52 Weeks Ended
December December December December
In millions, except per share 28, 29, 28, 29,
amounts 2002 2001 2002 2001
----------------------------------------------------------------------
Net sales $6,344.9 $5,950.5 $24,181.5 $22,241.4
Cost of goods sold, buying and
warehousing costs 4,732.2 4,543.1 18,112.7 16,550.4
----------------------------------------------------------------------
Gross margin 1,612.7 1,407.4 6,068.8 5,691.0
Selling, general and
administrative expenses(1)(4) 1,198.4 1,499.1 4,552.3 4,599.6
Depreciation and amortization(2) 79.4 81.3 310.3 320.8
----------------------------------------------------------------------
Total operating expenses 1,277.8 1,580.4 4,862.6 4,920.4
----------------------------------------------------------------------
Operating profit (loss) 334.9 (173.0) 1,206.2 770.6
Interest expense, net 12.1 14.1 50.4 61.0
----------------------------------------------------------------------
Earnings (loss) before income
tax provision (benefit) 322.8 (187.1) 1,155.8 709.6
Income tax provision (benefit) 122.7 (56.9) 439.2 296.4
----------------------------------------------------------------------
Net earnings (loss) 200.1 (130.2) 716.6 413.2
Preference dividends, net of
income tax benefit 3.7 3.6 14.8 14.7
----------------------------------------------------------------------
Net earnings (loss) available
to common shareholders $ 196.4 $ (133.8) $ 701.8 $ 398.5
----------------------------------------------------------------------
Basic earnings per common share:
Net earnings (loss) $ 0.50 $ (0.34) $ 1.79 $ 1.02
----------------------------------------------------------------------
Weighted average basic common
shares outstanding 392.9 390.8 392.3 392.2
----------------------------------------------------------------------
Diluted earnings per common
share: (1)(2)(3)(4)
Net earnings (loss) $ 0.49 $ (0.34) $ 1.75 $ 1.00
----------------------------------------------------------------------
Weighted average diluted
common shares outstanding 405.4 390.8 405.3 408.3
----------------------------------------------------------------------
Dividends declared per common
share $ 0.0575 $ 0.0575 $ 0.2300 $ 0.2300
----------------------------------------------------------------------
(1) Included in the 2002 results are settlement proceeds received
during the third quarter from certain anti-trust lawsuits in which
the Company was either a co-plaintiff or class action member.
Offsetting the proceeds during the third quarter, were costs
incurred as a result of entering into settlement agreements for
certain nonrecurring litigation matters, including a collective
action lawsuit filed against CVS. For the third quarter of 2002,
the net effect of these nonrecurring litigation items was a
nonrecurring gain of $7.0 million pre-tax ($4.4 million after
tax), or $0.01 per diluted share. For the year, the net effect of
these nonrecurring litigation items, including litigation costs
recorded during the first quarter of 2002 related to the above
collective action lawsuit, was a nonrecurring net loss of $3.2
million pre-tax ($2.0 million after tax), or less than half a cent
per diluted share.
(2) Effective in 2002, CVS adopted Statement of Financial Accounting
Standard No. 142, "Goodwill and Other Intangible Assets." As a
result of the adoption, goodwill and other indefinite-lived
intangible assets are no longer being amortized. Amortization of
these assets for the thirteen and fifty-two weeks ended December
29, 2001 amounted to $7.0 million pre-tax ($6.2 million after-tax)
and $31.4 million pre-tax ($28.2 million after-tax), respectively.
Removing this amortization expense and its related tax effect
would have resulted in a net loss of $124.1 million, or $0.32 per
diluted share, for the thirteen weeks ended December 29, 2001 and
net earnings of $441.4 million or $1.07 per share for the
fifty-two weeks ended December 29, 2001.
(3) In accordance with Statement of Financial Accounting Standards No.
128, "Earnings per Share", the assumed conversion of ESOP
preference stock and outstanding stock options were excluded from
the diluted earnings per common share calculation in the fourth
quarter of 2001 since their effect would be antidilutive. This
results in diluted earnings per common share equal to basic
earnings per common share for the fourth quarter of 2001.
(4) During 2001, the Company recorded a $352.5 million charge for
restructuring and asset impairment costs. The Company also
received $50.3 million of settlement proceeds from various
lawsuits during 2001, of which the Company elected to contribute
$46.8 million to the CVS Charitable Trust, Inc. The net effect of
these items was a $349.0 million pre-tax ($228.4 million
after-tax) decrease in net earnings in 2001. Due to antidilution
in the fourth quarter of 2001 (discussed in note 3 above),
combined, the restructuring charge, the litigation proceeds, and
the charitable donation, had a $0.58 per diluted share impact on
the fourth quarter and a $0.56 impact per diluted share on the
year.
CVS CORPORATION
Consolidated Balance Sheets
(Unaudited)
December 28, December 29,
In millions, except share and per share 2002 2001(1)
amounts
----------------------------------------------------------------------
Assets:
Cash and cash equivalents $ 700.4 $ 236.3
Accounts receivable, net 1,019.3 966.2
Inventories 4,013.9 3,918.6
Deferred income taxes 216.4 242.6
Other current assets 32.1 46.2
----------------------------------------------------------------------
Total current assets 5,982.1 5,409.9
Property and equipment, net 2,215.8 1,847.3
Goodwill, net 878.9 874.9
Intangible assets, net 351.4 318.3
Deferred income taxes 6.6 8.1
Other assets 210.5 177.8
----------------------------------------------------------------------
Total assets $ 9,645.3 $ 8,636.3
----------------------------------------------------------------------
Liabilities:
Accounts payable $ 1,707.9 $ 1,535.8
Accrued expenses 1,361.2 1,267.1
Short-term borrowings 4.8 235.8
Current portion of long-term debt 32.0 26.4
----------------------------------------------------------------------
Total current liabilities 3,105.9 3,065.1
Long-term debt 1,076.3 810.4
Other long-term liabilities 266.1 193.9
Shareholders' equity:
Preference stock, series one ESOP
convertible, par value $1.00:
authorized 50,000,000 shares; issued and
outstanding 4,685,000 shares at December 28,
2002 and 4,887,000 shares at December 29,
2001 250.4 261.2
Common stock, par value $0.01: authorized
1,000,000,000 shares; issued 409,286,000
shares at December 28, 2002 and 408,532,000
shares at December 29, 2001 4.1 4.1
Treasury stock, at cost: 16,215,000 shares at
December 28, 2002 and 17,645,000 shares at
December 29, 2001 (469.5) (510.8)
Guaranteed ESOP obligation (194.4) (219.9)
Capital surplus 1,546.6 1,539.6
Accumulated other comprehensive loss (44.6) --
Retained earnings 4,104.4 3,492.7
----------------------------------------------------------------------
Total shareholders' equity 5,197.0 4,566.9
----------------------------------------------------------------------
Total liabilities and shareholders' equity $ 9,645.3 $ 8,636.3
----------------------------------------------------------------------
(1) Certain reclassifications have been made to the December 29, 2001
consolidated balance sheet to conform to the current year
presentation.
CVS CORPORATION
Consolidated Statements of Cash Flows
(Unaudited)
52 Weeks Ended
December 28, December 29,
In millions 2002 2001
----------------------------------------------------------------------
Cash flows from operating activities:
Net earnings $ 716.6 $ 413.2
Adjustments required to reconcile net
earnings to net cash
provided by operating activities:
Restructuring Charge -- 352.5
Depreciation and amortization 310.3 320.8
Deferred income taxes and other noncash
items 71.8 (83.5)
Change in operating assets and liabilities,
providing/(requiring)
cash, net of effects from acquisitions:
Accounts receivable, net (53.1) (141.7)
Inventories (95.3) (366.8)
Other current assets 12.5 4.1
Other assets (35.3) (13.9)
Accounts payable 172.0 184.4
Accrued expenses 105.0 11.6
Other long-term liabilities 0.3 (0.1)
----------------------------------------------------------------------
Net cash provided by operating activities 1,204.8 680.6
----------------------------------------------------------------------
Cash flows from investing activities:
Additions to property and equipment (1,108.8) (713.6)
Proceeds from sale-leaseback transactions 448.8 323.3
Acquisitions (net of cash acquired) and
investments (93.5) (159.1)
Proceeds from sale or disposal of assets 17.7 12.6
----------------------------------------------------------------------
Net cash used in investing activities (735.8) (536.8)
----------------------------------------------------------------------
Cash flow from financing activities:
Reductions in short-term borrowings (230.9) (353.8)
Dividends paid (104.9) (105.2)
Additions to long-term debt 296.9 295.9
Purchase of treasury shares -- (129.0)
Proceeds from exercise of stock options 34.0 47.3
----------------------------------------------------------------------
Net cash used in financing activities (4.9) (244.8)
----------------------------------------------------------------------
Net increase (decrease) in cash and cash
equivalents 464.1 (101.0)
Cash and cash equivalents at beginning of
period 236.3 337.3
----------------------------------------------------------------------
Cash and cash equivalents at end of period $ 700.4 $ 236.3
----------------------------------------------------------------------
CVS CORPORATION
Supplemental Cash Flow Information
Following are the components of free cash flow:
(Unaudited)
52 Weeks Ended
December 28, December 29,
2002 2001
----------------------------------------------------------------------
Net earnings $ 716.6 $ 413.2
Noncash charges (including depreciation and
amortization) 382.1 589.8
Working capital change 106.1 (322.4)
----------------------------------------------------------------------
Net cash provided by operating activities $ 1,204.8 $ 680.6
Subtract: Additions to property and
equipment (1,108.8) (713.6)
Add: Proceeds from sale-leaseback
transactions 448.8 323.3
----------------------------------------------------------------------
Free cash flow $ 544.8 $ 290.3
----------------------------------------------------------------------
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