CVS Corporation Reports Record Sales and Earnings in Fourth Quarter and Full Year 2005; Fourth Quarter Net Earnings Increased 59%, While Diluted EPS Increased to $0.48, Including Non-Recurring Adjustments.WOONSOCKET Woonsocket (w  nsŏk`ĭt, w n–), city (1990 pop. 43,877), Providence co., N R.I. , R.I. -- 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. Corporation (NYSE NYSESee: New York Stock Exchange : CVS) today announced record sales and earnings for the fourth quarter and fiscal year ended December December: see month. 31, 2005. Net earnings for the fourth quarter increased 59.3% to a record $406.4 million or $0.48 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 $255.1 million or $0.30 per diluted share in the fourth quarter of 2004. Net earnings for the full year 2005 increased to a record $1.2 billion, or $1.45 per diluted share, up 31.8% from $1.10 per diluted share reported in 2004. These figures include 7 cents of non-recurring adjustments, which are discussed below. The Company generated more than $650 million in free cash flow for the year. Fourth quarter results were driven by healthy sales growth and a significant improvement in gross margin, driven primarily by the increasing usage of generic drugs 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. . During the fourth quarter of 2005, the Company reversed $52.6 million of previously recorded tax reserves through the income tax provision, primarily resulting from finalizing certain state tax matters. The reversal generated a non-cash benefit to diluted earnings per share diluted earnings per share An earnings measure calculated by dividing net income less preferred stock dividends for a period by the average number of shares of common stock that would be outstanding if all convertible securities were converted into shares of for the fourth quarter and the full fiscal year of 6 cents. In addition, the fourth quarter and full fiscal year 2005 includes a one-cent benefit to diluted earnings per share, resulting from a 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. settlement. 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 thirteen-week period ended December 31, 2005 increased 9.1% to a record $9.7 billion, up from $8.9 billion during the thirteen-week period ended January January: see month. 1, 2005. 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%, and were benefited by approximately 149 basis points from the inclusion of approximately 1,100 stores acquired on July July: see month. 31, 2004. 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 increased 6.3% 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 increased 7.7%. For the full year, total sales for the fifty-two Adj. 1. fifty-two - being two more than fifty 52, lii cardinal - being or denoting a numerical quantity but not order; "cardinal numbers" week period ended December 31, 2005, increased 21.0% to a record $37.0 billion, compared to $30.6 billion in 2004. Same store sales for the year increased 6.5%, while pharmacy same store sales increased 7.0% and front-end same store sales increased 5.5%. Total pharmacy sales represented 68.8% and 70.2% of total company sales for the quarter and year respectively. Third party prescription sales were 94.0% of pharmacy sales for the quarter, and 94.1% for the year. Same store sales exclude stores that remain closed as a result of hurricanes Katrina KATRINA Keeping All the Resources in New Orleans Alive KATRINA Krewe Aiding Trash Removal In the New Orleans Area and Rita. "The year 2005 will be remembered as one of considerable accomplishment for our company," 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 of the Board, President, and Chief Executive Officer. "We completed the integration of approximately 1,100 stores acquired in 2004 and opened nearly 300 new or 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. 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, all while delivering exceptional results in our core business. Our progress on the turnaround Turnaround A situation where a company that has had poor performance for an extended period of time experiences a positive reversal. Notes: A speculator may profit from a turnaround if he or she accurately anticipates the improvement of a poorly performing company. of those acquired stores has exceeded our expectations and is adding incremental Additional or increased growth, bulk, quantity, number, or value; enlarged. Incremental cost is additional or increased cost of an item or service apart from its actual cost. tailwinds to the overall Company's sales and profit growth. We reported record sales and earnings results, and our solid free cash flow generation once again demonstrates the quality of our growth. I am very proud of our talented team of associates who worked so diligently dil·i·gent adj. Marked by persevering, painstaking effort. See Synonyms at busy. [Middle English, from Old French, from Latin d to make this a successful year on every front. "Our fourth quarter was no exception, as we delivered record sales and earnings yet again. Our financial performance was driven by strong sales growth in our retail and PBM PBM - play by mail. See play by electronic mail. businesses, solid gross margin improvement, and solid expense control," commented Mr. Ryan Ryan may refer to: Places
As I look to 2006, I am optimistic op·ti·mist n. 1. One who usually expects a favorable outcome. 2. A believer in philosophical optimism. op that we will have another terrific year. We expect to continue to benefit from the turnaround of the stores we acquired in 2004, while delivering consistent, strong growth from our core retail business as well as our PBM business. At mid-year, we expect to complete the recently-announced acquisition of 700 Sav-on and Osco OSCO Oklahoma Scholastic Chess Organization drugstores from Albertsons Albertsons is a brand name currently used by two separate companies due to the 2006 split of Albertsons, Inc.:
Adj. 1. fast-growing - tending to spread quickly; "an aggressive tumor" strong-growing, aggressive region where we currently have only 20 stores. It will also strengthen our market shares in other key states, such as Indiana Indiana, state, United States Indiana, midwestern state in the N central United States. It is bordered by Lake Michigan and the state of Michigan (N), Ohio (E), Kentucky, across the Ohio R. (S), and Illinois (W). , Missouri Missouri, state, United States Missouri (mĭz r`ē, –ə), one of the midwestern states of the United States. , Arizona Arizona (âr'əzō`nə), state in the southwestern United States. It is bordered by Utah (N), New Mexico (E), Mexico (S), and, across the Colorado R., Nevada and California (W). , and Illinois Illinois, river, United StatesIllinois, 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. . The deal will enhance our long-term Long-term Three or more years. In the context of accounting, more than 1 year. long-term 1. Of or relating to a gain or loss in the value of a security that has been held over a specific length of time. Compare short-term. growth, and is expected to be accretive to earnings and cash flow in its first full year. At the same time, we will continue our organic store growth program, with plans to open 250-275 new or relocated stores throughout 2006. I look forward to reporting on our continued good progress," concluded Mr. Ryan. For the year, CVS opened 166 new stores, closed 70 stores and relocated 131 others. As of December 31, 2005, CVS operated 5,471 retail and specialty pharmacy stores in 37 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). . The Company will be holding a conference call today for the investment community at 8:30am (ET) to discuss the quarterly results. An audio webcast of the conference call will be broadcast simultaneously through the Investor Relations Investor relations The process by which the corporation communicates with its investors. portion of the CVS website for all interested parties. To access the webcast, visit http://investor.CVS.com. This webcast will be archived and available on the web site for a one-month period following the conference call. As reported in a separate press release today, January revenues increased 7.9% to $3.0 billion, compared to $2.7 billion in the prior year period. January same store sales rose 5.4%, while pharmacy same store sales increased 4.8% and front-end same store sales increased 6.7%. CVS is America's largest retail pharmacy, operating over 5,400 retail and specialty pharmacy stores in 37 states and the District of Columbia. With more than 40 years of dynamic growth in the retail pharmacy industry, CVS is committed to being the easiest pharmacy retailer for customers to use. CVS has created innovative approaches to serve the healthcare needs of all customers through its CVS/pharmacy(R) stores; its online pharmacy  This article or section may deal primarily with the U.S. and may not present a worldwide view. , CVS.com(R); and 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. , mail order and specialty pharmacy subsidiary, PharmaCare(R).
General information about CVS is available through the Investor
Relations portion of the Company's website, at
http://investor.CVS.com, as well as through the press room portion of
the Company's website, at www.cvs.com/pressroom.
This press release contains a non-GAAP measure, free cash flow. In accordance Accordance is Bible Study Software for Macintosh developed by OakTree Software, Inc.[] As well as a standalone program, it is the base software packaged by Zondervan in their Bible Study suites for Macintosh. with SEC regulations, the Company has provided a reconciliation of free cash flow to its comparable GAAP GAAP See: Generally Accepted Accounting Principles GAAP See generally accepted accounting principles (GAAP). measure on the investor relations portion of its website, at http://investor.CVS.com. 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 "Management's Discussion and Analysis Management's discussion and analysis (MD&A) A report from management to shareholders that accompanies the firm's financial statements in the annual report. It explains the period's financial results and enables management to discuss topics that may not be apparent in the financial of Financial Condition and Results of Operations - Cautionary Statement Concerning Forward-Looking Statements" in its Quarterly Report on Form 10-Q Form 10-Q See 10-Q. for the period ended October October: see month. 1, 2005.
CVS CORPORATION
Consolidated Condensed Statements of Operations
(Unaudited)
----------------------------------------------------------------------
Quarter Ended Fiscal Year Ended
December 31, January 1, December 31, January 1,
In millions, except 2005 2005 2005 2005
per share amounts (13 weeks) (13 weeks) (52 weeks) (52 weeks)
----------------------------------------------------------------------
Net sales $ 9,732.0 $ 8,923.2 $ 37,006.2 $ 30,594.3
Cost of goods sold,
buying and
warehousing costs 7,030.0 6,561.0 27,105.0 22,563.1
----------------------------------------------------------------------
Gross margin 2,702.0 2,362.2 9,901.2 8,031.2
Selling, general and
administrative
expenses (1) 1,943.0 1,827.6 7,292.6 6,079.7
Depreciation and
amortization (1) 155.9 188.7 589.1 496.8
----------------------------------------------------------------------
Total operating
expenses 2,098.9 2,016.3 7,881.7 6,576.5
----------------------------------------------------------------------
Operating profit 603.1 345.9 2,019.5 1,454.7
Interest expense, net 26.9 28.7 110.5 58.3
----------------------------------------------------------------------
Earnings before
income tax provision 576.2 317.2 1,909.0 1,396.4
Income tax
provision (2) 169.8 62.1 684.3 477.6
----------------------------------------------------------------------
Net earnings 406.4 255.1 1,224.7 918.8
Preference dividends,
net of income tax
benefit 3.6 3.3 14.1 14.2
----------------------------------------------------------------------
Net earnings
available to common
shareholders $ 402.8 $ 251.8 $ 1,210.6 $ 904.6
----------------------------------------------------------------------
Basic earnings per
common share: (3)
Net earnings $ 0.49 $ 0.31 $ 1.49 $ 1.13
----------------------------------------------------------------------
Weighted average
basic common shares
outstanding 814.3 801.2 811.4 797.2
----------------------------------------------------------------------
Diluted earnings per
common share: (3)(4)
Net earnings $ 0.48 $ 0.30 $ 1.45 $ 1.10
----------------------------------------------------------------------
Weighted average
diluted common
shares outstanding 843.3 836.2 841.6 830.8
----------------------------------------------------------------------
Dividends declared
per common share $ 0.03625 $ 0.03313 $ 0.14500 $ 0.13250
----------------------------------------------------------------------
(1) During the fourth quarter of 2004, the Company conformed its
accounting for operating leases and leasehold improvements to the
views expressed by the Office of the Chief Accountant of the
Securities and Exchange Commission to the American Institute of
Certified Public Accountants on February 7, 2005. As a result, the
Company recorded a non-cash pre-tax adjustment of $9.0 million ($5.4
million after-tax) to selling, general and administrative expenses and
$56.9 million ($35.1 after-tax) to depreciation and amortization,
which represents the cumulative effect of the adjustment for a period
of approximately 20 years. Since the effect of this non-cash
adjustment was not material to any previously reported fiscal year,
the cumulative effect was recorded in the fourth quarter of 2004.
(2) During the fourth quarter of 2005, an assessment of tax reserves
resulted in a reduction that was principally based on finalizing
certain tax return years. As a result, the Company reversed $52.6
million of previously recorded tax reserves through the income tax
provision. During the fourth quarter of 2004, an assessment of tax
reserves resulted in a reduction that was principally based on
finalizing certain tax return years and on a 2004 court decision that
was relevant to the industry. As a result, the Company reversed $60.0
million of previously recorded tax reserves through the income tax
provision.
(3) On May 12, 2005, CVS Corporation's Board of Directors authorized a
two-for-one common stock split, which was effected in the form of a
dividend by the issuance of one additional share of common stock for
each share of common stock outstanding. These shares were distributed
on June 6, 2005 to shareholders of record as of May 23, 2005. All
share and per share amounts presented have been restated to reflect
the effect of the stock split.
(4) Diluted earnings per common share is computed by dividing (i) net
earnings, after accounting for the difference between the dividends on
the ESOP preference stock and common stock and after making
adjustments for the incentive compensation plans by (ii) Basic shares
plus the additional shares that would be issued assuming that all
dilutive stock options and restricted stock units are exercised or
released and the ESOP preference stock is converted into common stock.
The dilutive earnings adjustment was $1.2 million for the thirteen
weeks ended December 31, 2005 and January 1, 2005. The dilutive
earnings adjustment was $4.4 million and $5.2 million for the
fifty-two weeks ended December 31, 2005 and January 1, 2005
respectively.
CVS CORPORATION
Consolidated Condensed Balance Sheets
(Unaudited)
----------------------------------------------------------------------
In millions, except share and per
share amounts December 31, 2005 January 1, 2005
----------------------------------------------------------------------
Assets:
Cash and cash equivalents $ 513.4 $ 392.3
Accounts receivable, net 1,839.6 1,764.2
Inventories 5,719.8 5,453.9
Deferred income taxes 240.9 243.1
Other current assets 79.0 66.0
----------------------------------------------------------------------
Total current assets 8,392.7 7,919.5
Property and equipment, net 3,952.6 3,505.9
Goodwill 1,789.9 1,898.5
Intangible assets, net 802.2 867.9
Deferred income taxes 122.5 137.6
Other assets 223.5 217.4
----------------------------------------------------------------------
Total assets $ 15,283.4 $ 14,546.8
----------------------------------------------------------------------
Liabilities:
Accounts payable $ 2,467.5 $ 2,275.9
Accrued expenses 1,521.4 1,666.7
Short-term debt 253.4 885.6
Current portion of long-term debt 341.6 30.6
----------------------------------------------------------------------
Total current liabilities 4,583.9 4,858.8
Long-term debt 1,594.1 1,925.9
Deferred income taxes -- --
Other long-term liabilities 774.2 774.9
Shareholders' equity: (1)
Preference stock, series one ESOP
convertible, par value $1.00:
authorized 50,000,000 shares;
issued and outstanding 4,165,000
shares at December 31, 2005 and
4,273,000 shares at January 1,
2005 222.6 228.4
Common stock, par value $0.01:
authorized 1,000,000,000 shares;
issued 838,841,000 shares at
December 31, 2005 and
828,552,000 shares at January 1,
2005 8.4 8.3
Treasury stock, at cost:
24,533,000 shares at December
31, 2005 and 26,634,000 shares
at January 1, 2005 (356.5) (385.9)
Guaranteed ESOP obligation (114.0) (140.9)
Capital surplus 1,922.4 1,687.3
Retained earnings 6,738.6 5,645.5
Accumulated other comprehensive
loss (90.3) (55.5)
----------------------------------------------------------------------
Total shareholders' equity 8,331.2 6,987.2
----------------------------------------------------------------------
Total liabilities and shareholders'
equity $ 15,283.4 $ 14,546.8
----------------------------------------------------------------------
(1) On May 12, 2005, CVS Corporation's Board of Directors authorized a
two-for-one common stock split, which was effected in the form of a
dividend by the issuance of one additional share of common stock for
each share of common stock outstanding. These shares were distributed
on June 6, 2005 to shareholders of record as of May 23, 2005. All
share and per share amounts presented have been restated to reflect
the effect of the stock split.
CVS CORPORATION
Consolidated Condensed Statements of Cash Flows
(Unaudited)
----------------------------------------------------------------------
Fiscal Year Ended
December 31, 2005 January 1, 2005
----------------------------------------------------------------------
In millions (52 weeks) (52 weeks)
----------------------------------------------------------------------
Cash flows from operating
activities:
Cash receipts from sales $ 36,923.1 $ 30,545.8
Cash paid for inventory (26,403.9) (22,469.2)
Cash paid to other suppliers and
employees (8,186.7) (6,528.5)
Interest and dividends received 6.5 5.7
Interest paid (135.9) (70.4)
Income taxes paid (591.0) (569.2)
----------------------------------------------------------------------
Net cash provided by operating
activities 1,612.1 914.2
----------------------------------------------------------------------
Cash flows from investing
activities:
Additions to property and
equipment (1,495.4) (1,347.7)
Proceeds from sale-leaseback
transactions 539.9 496.6
Acquisitions (net of cash
acquired) and investments 12.1 (2,293.7)
Cash outflow from hedging
activities -- (32.8)
Proceeds from sale or disposal of
assets 31.8 14.3
----------------------------------------------------------------------
Net cash used in investing
activities (911.6) (3,163.3)
----------------------------------------------------------------------
Cash flows from financing
activities:
Additions to / (reductions in)
short-term debt (632.2) 885.6
Dividends paid (131.6) (119.8)
Additions to long-term debt 16.5 1,204.1
Reductions in long-term debt (10.5) (301.5)
Proceeds from exercise of stock
options 178.4 129.8
----------------------------------------------------------------------
Net cash provided by (used in)
financing activities (579.4) 1,798.2
----------------------------------------------------------------------
Net (decrease) increase in cash and
cash equivalents 121.1 (450.9)
Cash and cash equivalents at
beginning of period 392.3 843.2
----------------------------------------------------------------------
Cash and cash equivalents at end of
period $ 513.4 $ 392.3
----------------------------------------------------------------------
Reconciliation of net earnings to
net cash provided by operating
activities:
Net earnings $ 1,224.7 $ 918.8
Adjustments required to reconcile
net earnings to net cash provided
by operating activities:
Depreciation and amortization 589.1 496.8
Deferred income taxes and other
noncash items 13.8 (23.6)
Change in operating assets and
liabilities,
providing/(requiring) cash, net
of effects from acquisitions:
Accounts receivable, net (83.1) (48.4)
Inventories (265.2) (509.8)
Other current assets (13.5) 35.7
Other assets (0.1) 8.5
Accounts payable 192.2 109.4
Accrued expenses (43.8) (144.2)
Other long-term liabilities (2.0) 71.0
----------------------------------------------------------------------
Net cash provided by operating
activities 1,612.1 914.2
----------------------------------------------------------------------
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