WALGREEN CO (Form: 10-Q, Received: 01/06/2006 15:12:53)

	UNITED STATES
	SECURITIES AND EXCHANGE COMMISSION
	WASHINGTON, D.C. 20549

	FORM 10-Q

(Mark One)

[X]	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
	OF THE SECURITIES EXCHANGE ACT OF 1934

	FOR THE QUARTER ENDED NOVEMBER 30, 2005

[ ]	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
	OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from _______to _______

	Commission File Number
	1-604

	WALGREEN CO.
	(Exact name of registrant as specified in its charter)

Illinois	36-1924025
(State of Incorporation)	(I.R.S. Employer Identification No.)

200 Wilmot Road, Deerfield, Illinois	60015
(Address of principal executive offices)	(Zip Code)

	(847) 914-2500
	(Registrant's telephone number, including area code)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

Yes [X] No [ ]

Indicate by check mark whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the Exchange Act).

Yes [X] No [ ]

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

Yes [ ] No [X]

The number of shares outstanding of the registrant's Common Stock, $.078125 par value, as of December 31, 2005 was 1,012,088,902.

WALGREEN CO. AND SUBSIDIARIES

CONSOLIDATED CONDENSED FINANCIAL STATEMENTS

The consolidated condensed financial statements included herein have been prepared by the company pursuant to the rules and regulations of the Securities and Exchange Commission. The Consolidated Condensed Balance Sheet as of November 30, 2005, the Consolidated Condensed Statements of Earnings for the three months ended November 30, 2005 and 2004, and the Consolidated Condensed Statements of Cash Flows for the three months ended November 30, 2005 and 2004, have been prepared without audit. Certain information and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States of America have been condensed or omitted pursuant to such rules and regulations, although the company believes that the disclosures are adequate to make the information presented not misleading. It is suggested that these consolidated condensed financial statements be read in conjunction with the financial statements and the notes thereto included in the company's latest annual report on Form 10-K.

In the opinion of the company, the consolidated condensed statements for the unaudited interim periods presented include all adjustments, consisting of normal recurring adjustments, necessary to present a fair statement of the results for such interim periods. Because of the influence of certain holidays, seasonal and other factors on the company's operations, net earnings for any interim period may not be comparable to the same interim period in previous years, nor necessarily indicative of earnings for the full year.

WALGREEN CO. AND SUBSIDIARIES

CONSOLIDATED CONDENSED BALANCE SHEETS

(UNAUDITED)

(Dollars in Millions)

November 30,

August 31,

2005

2005

Assets

Current Assets:

Cash and cash equivalents

$ 584.1

$ 576.8

Short-term investments - available for sale

311.4

494.8

Accounts receivable, net

1,472.8

1,396.3

Inventories

6,239.8

5,592.7

Other current assets

208.3

255.9

Total Current Assets

8,816.4

8,316.5

Property and Equipment, at cost, less

accumulated depreciation and amortization of

$2,105.2 at November 30 and $1,985.2 at August 31

6,371.3

6,165.0

Other Non-Current Assets

214.4

127.3

Total Assets

$ 15,402.1

$ 14,608.8

Liabilities and Shareholders' Equity

Current Liabilities:

Trade accounts payable

$ 3,303.4

$ 2,918.2

Accrued expenses and other liabilities

1,557.5

1,491.9

Income taxes

235.1

70.9

Total Current Liabilities

5,096.0

4,481.0

Non-Current Liabilities:

Deferred income taxes

186.3

240.4

Other non-current liabilities

1,014.0

997.7

Total Non-Current Liabilities

1,200.3

1,238.1

Shareholders' Equity:

Preferred stock $.0625 par value; authorized

32 million shares; none issued

-

-

Common stock $.078125 par value; authorized

3.2 billion shares; issued 1,025,400,000

at November 30 and August 31

80.1

80.1

Paid-in capital

583.9

565.0

Employee stock loan receivable

(84.5)

(76.8)

Retained earnings

9,116.1

8,836.3

Treasury Stock, at cost; 13,560,087 shares at November 30

and 11,887,953 shares at August 31

(589.8)

(514.9)

Total Shareholders' Equity

9,105.8

8,889.7

Total Liabilities & Shareholders' Equity

$ 15,402.1

$ 14,608.8

The accompanying Notes to Consolidated Condensed Financial

Statements are an integral part of these Statements.

WALGREEN CO. AND SUBSIDIARIES

CONSOLIDATED CONDENSED STATEMENTS OF EARNINGS

(UNAUDITED)

(In Millions Except Per Share Data)

Three Months Ended

November 30,

November 30,

2005

2004

Net Sales

$10,900.4

$ 9,889.1

Costs and Deductions:

Cost of sales

7,897.9

7,181.2

Selling, occupancy and

administration

2,460.7

2,201.8

10,358.6

9,383.0

Other Income:

Interest income

6.8

5.1

6.8

5.1

Earnings before income tax

provision

548.6

511.2

Income tax provision

203.0

182.6

Net earnings

$ 345.6

$ 328.6

Per share-

Basic

$ .34

$ .32

Diluted

$ .34

$ .32

Dividends declared

$ .065

$ .0525

Average shares outstanding

1,012.8

1,022.6

Dilutive effect of stock

options

9.5

6.8

Average shares outstanding

assuming dilution

1,022.3

1,029.4

The accompanying Notes to Consolidated Condensed Financial
Statements are an integral part of these Statements.

WALGREEN CO. AND SUBSIDIARIES

CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS

(UNAUDITED)

(Dollars in Millions)

Three Months Ended

November 30,

November 30,

2005

2004

Net cash provided by operating activities

$ 437.4

$ 58.6

Cash flows from investing activities:

Purchases of short-term investments-available for sale

(1,577.1)

(2,666.4)

Proceeds from sale of short-term investments-available for sale

1,763.6

3,247.9

Additions to property and equipment

(338.4)

(305.2)

Disposition of property and equipment

2.9

.2

Business acquisitions, net of cash received

(95.0)

-

Net cash provided by (used for) investing activities

(244.0)

276.5

Cash flows from financing activities:

Stock purchases

(158.5)

(119.3)

Proceeds related to employee stock plans

49.4

31.6

Cash dividends paid

(65.9)

(53.8)

Other

(11.1)

1.4

Net cash used for financing activities

(186.1)

(140.1)

Changes in cash and cash equivalents:

Net increase (decrease) in cash and cash equivalents

7.3

195.0

Cash and cash equivalents at beginning of year

576.8

444.0

Cash and cash equivalents at end of period

$ 584.1

$ 639.0

The accompanying Notes to Consolidated Condensed Financial
Statements are an integral part of these Statements.

WALGREEN CO. AND SUBSIDIARIES

NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS

(1) Inventories are valued on a lower of last-in, first-out (LIFO) cost or market basis. At November 30, 2005 and August 31, 2005, inventories would have been greater by $825.4 million and $804.2 million respectively, if they had been valued on a lower of first-in, first-out (FIFO) cost or market basis. LIFO inventory costs can only be determined annually when inflation rates and inventory levels are finalized; therefore, LIFO inventory costs for interim financial statements are estimated. Included in inventory are product cost and inbound freight. Cost of sales is primarily based upon point-of-sale scanning information with an estimate for shrinkage and adjusted based on periodic inventories.

(2) The principal retirement plan for employees is the Walgreen Profit-Sharing Retirement Trust to which both the company and the employees contribute. The company's contribution, which is determined annually at the discretion of the Board of Directors, has historically related to pre-tax income. The profit-sharing provision was $48.8 million for the quarter and $45.5 million for the same period last year. There were no company contributions for the quarter as compared to $189.0 million for the same period last year.

(3) Prior to fiscal 2006, as permitted under Statement of Financial Accounting Standards (SFAS) No. 123, "Accounting for Stock-Based Compensation," the company applied Accounting Principles Board (APB) Opinion No. 25 and related interpretations in accounting for its stock-based compensation plans. Under APB Opinion No. 25, compensation expense was recognized for stock option grants if the exercise price was below the fair value of the underlying stock at the measurement date.

As of September 1, 2005, the company adopted SFAS No. 123(R), "Share-Based Payment," using the modified prospective transition method. Under this method, compensation expense is recognized for new grants beginning this fiscal year and any unvested grants prior to the adoption of SFAS No. 123(R). The company recognizes compensation expense on a straight-line basis over the employee's vesting period or to the employee's retirement eligible date, if earlier. In accordance with the modified prospective transition method, the financial statements for prior periods have not been restated.

As a result of adopting SFAS No. 123(R), our earnings before income tax expense and net earnings for the quarter ended November 30, 2005 were $36.2 million and $22.8 million lower, respectively, than if the stock-based compensation was still accounted for under APB Opinion No. 25. The recognized tax benefit was $13.4 million. In addition, our basic and diluted earnings per share decreased by $0.02. The accelerated expense for retirement eligible employees was $13.1 million of the recognized compensation expense. The stock option expense recognized under APB No. 25 for the quarter ended November 30, 2004 was not material. The adoption of SFAS No. 123(R), which requires the excess tax benefits to be reflected as financing cash flows instead of operating cash flows, had no material impact on the company's consolidated statement of cash flows.

Stock Compensation Plans

The Walgreen Co. Stock Purchase/Option Plan (Share Walgreens) provides for the granting of options to purchase common stock over a ten-year period to eligible non-executive employees upon the purchase of company shares, subject to certain restrictions. Employees may purchase the company shares through cash purchases or loans. For options granted on or after October 1, 2005, the option price is the closing price of a share of common stock on the grant date. Options may be granted under this Plan until September 30, 2012, for an aggregate of 42,000,000 shares of common stock. The options granted during fiscal 2005 and 2004 have a two-year vesting period.

The Walgreen Co. Executive Stock Option Plan provides for the granting of options to eligible key employees to purchase common stock over a ten-year period, at a price not less than the fair market value on the date of the grant. Under this Plan, options may be granted until October 9, 2006, for an aggregate of 38,400,000 shares of common stock. The options granted during fiscal 2005 and 2004 have a three-year vesting period.

The Walgreen Co. Broad Based Employee Stock Option Plan provides for the granting of options to eligible non-executive employees to purchase common stock over a ten-year period, at a price not less than the fair market value on the date of the grant, in connection with the achievement of store opening milestones. Under this Plan, on March 11, 2003, substantially all non-executive employees, in conjunction with the opening of the company's 4,000 ^th store, were granted a stock option to purchase 100 shares. Options may be granted for an aggregate of 15,000,000 shares of common stock until all options have either been exercised or have expired. The options have a three-year vesting period.

The Walgreen Co. 1982 Employees Stock Purchase Plan permits eligible employees to purchase common stock at 90% of the fair market value at the date of purchase. Employees may purchase shares through cash purchases, loans or payroll deductions up to certain limits. The aggregate number of shares, which all participants have the right to purchase under this Plan, is 74,000,000.

The Walgreen Co. Restricted Performance Share Plan provides for the granting of shares of common stock and cash to certain key employees, subject to restrictions as to continuous employment except in the case of death, normal retirement or total and permanent disability. Restrictions generally lapse over a four-year period from the date of grant. Compensation expense is recognized in the year of grant. Shares may be granted for an aggregate of 32,000,000 shares of common stock.

The Walgreen Co. Nonemployee Director Stock Plan provides that each Nonemployee Director receives an equity grant of shares each year on November 1. The number of shares granted shall be determined by dividing $80,000 by the price of a share of common stock on November 1. During the term of the Plan, each Nonemployee Director will also receive fifty percent of his or her quarterly retainer in the form of shares, which may be deferred into an equal number of stock units. In addition, a Nonemployee Director may elect to defer all or a portion of the cash component of his or her quarterly retainer and meeting fees and beginning with the November 1, 2006, equity grant in the form of deferred stock units or to have such amounts placed in a deferred cash compensation account.

A summary of information relative to the company's stock option plans follows:

		Weighted-	Weighted-
		Average	Average	Aggregate
		Exercise	Remaining	Intrinsic
Options	Shares	Price	Contractual Term	Value
Outstanding at August 31, 2005	42,905,655	$29.58
Granted	3,218,721	46.15
Exercised	(1,094,393)	21.13
Canceled/Forfeited	(481,017)	26.93
Outstanding at November 30, 2005	44,548,966	$30.98	6.38 yrs	$656,740,255

Exercisable at November 30, 2005	21,246,672	$27.66	4.30 yrs	$382,820,195

The intrinsic value for options exercised for the quarters ended November 30, 2005 and November 30, 2004 was $26.9 million and $10.4 million, respectively. Cash received from the exercise of options for the quarter ended November 30, 2005 was $23.1 million and the related tax benefit realized was $10.2 million. The total number of options vested during the quarter ended November 30, 2005, were 2,492,000 with a fair value of $32.8 million. The company has a practice of repurchasing shares to satisfy share-based payment arrangements and expects to repurchase approximately eight million shares during fiscal year 2006.

The fair value of each option grant was determined using the Black-Scholes option pricing model with weighted-average assumptions used for the quarters ended November 30, 2005 and 2004:

Three Months Ended

November 30, 2005

November 30, 2004

Risk-free interest rate (1)

4.06%

3.80%

Expected term (years) (2)

7.1

7.2

Volatility (3)

32.23%

28.14%

Dividend yield (4)

0.45%

0.58%

Weighted-average fair value at grant date

Granted at market price

$18.74

$13.46

Granted below market price

N/A

$12.78

Represents the Treasury bill rate for the expected term of the option.
Represents the period of time that options granted are expected to be outstanding. The company analyzed separate groups of employees with similar exercise behavior to determine the expected term.
Based on historical volatility of the company's common stock. As of fiscal 2006, the volatility is based on the daily percentage change in the price of the stock over the expected term of the option. In prior years, the volatility was based on the monthly percentage change in stock price.
Represents the company's cash dividend for the expected term.

Had compensation costs been determined consistent with the method of SFAS No. 123 for options granted in the quarter ended November 30, 2004, proforma net earnings and net earnings per common share would have been as follows:

Three Months Ended

(In Millions Except Per Share Data)

November 30, 2004

Net Earnings, as reported

$ 328.6

Add:

Stock-based employee compensation expense included in reported net earnings, net of related tax effects

.1

Deduct:

Total stock-based employee compensation expense determined under fair value based method for all awards, net of related tax effects

(13.2)

Pro forma net earnings

$ 315.5

Earnings per share -

Basic - as reported

$ .32

Basic - pro forma

$ .31

Diluted - as reported

$ .32

Diluted - pro forma

$ .31

(4) The company provides certain health insurance benefits for retired employees who meet eligibility requirements, including age, years of service and date of hire. The costs of these benefits are accrued over the period earned. The company's postretirement health benefit plans currently are not funded.

	Three Months Ended
Components of Net Periodic Benefit Costs		November 30,	November 30,
(In Millions):		2005	2004
Service cost		$ 4.6	$ 5.6
Interest cost		5.3	6.3
Amortization of actuarial loss		2.2	2.5
Amortization of prior service cost		(1.0)	(0.5)
Total postretirement benefit cost		$ 11.1	$ 13.9

(5) The company capitalized interest expense as part of significant construction projects. The amounts capitalized were $.8 million and $1.2 million for the three-months ended November 30, 2005 and 2004, respectively.

(6) The company remains secondarily liable on 26 assigned leases. The maximum potential of undiscounted future payments is $7.7 million as of November 30, 2005. Lease option dates vary, with some extending to 2013.

(7) Litigation settlement gains, which were classified as Other Income in the first quarter of fiscal 2005, have been reclassified as reductions to selling, occupancy and administrative expenses.

MANAGEMENT'S DISCUSSION AND ANALYSIS

OF RESULTS OF OPERATIONS AND FINANCIAL CONDITION

INTRODUCTION

Walgreens is a retail drugstore chain that sells prescription and non-prescription drugs and general merchandise. General merchandise includes, among other things, cosmetics, toiletries, food, beverages, household items and photofinishing. Customers can have prescriptions filled at the drugstore counter, as well as through the mail, by telephone and on the Internet. As of November 30, 2005, we operated 5,068 locations (including seven mail service facilities) located in 45 states and Puerto Rico. The store total now includes 33 home care locations but excludes 22 stores closed due to Hurricane Katrina.

The drugstore industry is highly competitive. In addition to other drugstore chains, independent drugstores and mail order prescription providers, we also compete with various other retailers including grocery stores, mass merchants and dollar stores.

The long-term outlook for prescription sales is strong due in part to the aging population, as well as the continued development of innovative drugs that improve quality of life and control healthcare costs. As of January 1, 2006, the new Medicare Part D prescription drug program will be in effect. While it is difficult to fully predict the business impact, we believe we are well positioned to capture additional Medicare prescription sales. During fiscal year 2005, the precursor to this program, Medicare senior discount cards, gave us additional prescription sales, although the gross margin rates on these sales were lower.

We continue to expand into new markets and increase penetration in existing markets. To support our growth, we are also investing significantly in prime locations, technology and customer service initiatives.

RECLASSIFICATION OF FINANCIAL STATEMENTS

Litigation settlement gains, which were classified as Other Income in the first quarter of fiscal 2005, have been reclassified as reductions to selling, occupancy and administration expenses.

OPERATING STATISTICS

		Percentage Increases
		Three Months Ended November 30, 2005
Net Sales		10.2
Net Earnings		5.2
Comparable Drugstore Sales		7.2
Prescription Sales		10.3
Comparable Drugstore Prescription
	Sales	7.7
Front-End Sales		10.8
Comparable Front-End Sales		6.4

	Percent to Sales
	Three Months Ended
	November 30,	November 30,
	2005	2004
Gross Margin	27.5	27.4
Selling, Occupancy & Administration Expenses	22.6	22.3

	Other Statistics
	November 30, 2005	November 30, 2004
Year to Date Prescription Sales as a
% of Net Sales	64.5	64.5
Year to Date Third Party Sales as a
% of Drugstore Prescription Sales	92.5	92.6
Total Number of Stores	5,068*	4,711*

* The store total now includes 33 home care locations but excludes 22 stores closed due to Hurricane Katrina. Last year's numbers have been adjusted to include home care locations for consistency.

RESULTS OF OPERATIONS

Net earnings for the first quarter of fiscal 2006 were $345.6 million or $.34 per share (diluted). This was a 5.2% increase in net earnings over last year. Net earnings increases resulted from improved sales and higher gross margin rates, partially offset by higher expense ratios. Included in this year's first quarter results was a $36.2 million or $.02 per share (diluted) charge related to the adoption of SFAS No. 123(R), "Share-Based Payment," which requires expensing stock options based on the fair value of those options at the date of the grant. In addition, last year's earnings included pre-tax litigation settlement gains of $15.0 million or $.01 per share (diluted).

Net sales for the quarter ended November 30, 2005 increased by 10.2% to $10.9 billion. Drugstore sales increases resulted from sales gains in existing stores and added sales from new stores, each of which include an indeterminate amount of market-driven price changes. Sales in comparable drugstores were up 7.2% for the quarter. Comparable stores are defined as those that have been open for at least twelve consecutive months without closure for seven or more consecutive days and without a major remodel or a natural/economic disaster in the past twelve months. Relocated stores are not included as comparable stores for the first twelve months after the relocation. We operated 5,068 stores as of November 30, 2005, compared to 4,711 a year earlier.

Prescription sales increased 10.3% for the first quarter and were 64.5% of total sales for the first quarter this fiscal year and 64.5% for the comparable period a year ago. Comparable drugstore prescription sales were up 7.7%. The effect of generic drugs, which have a lower retail price, replacing brand name drugs reduced prescription sales by 2.0% in the first quarter versus 2.3% for the same period a year ago. Third party sales, where reimbursement is received from managed care organizations as well as government and private insurance, were 92.5% of prescription sales compared to 92.6% a year ago.

Non-prescription (front-end) sales increased 10.8% for the first quarter and were 35.4% of total sales compared to 35.3% a year ago. Comparable front-end sales were up 6.4%.

Gross margins as a percent of total sales were 27.5% in the quarter compared to 27.4% last year. Prescription margins increased primarily because of higher generic drug utilization. The higher generic drug utilization was principally due to a steady stream of new generics over the past year. Non-prescription margins decreased due to our sales mix moving to lower margin categories.

We use the last-in, first-out (LIFO) method of inventory valuation, which can be determined only annually when inflation rates and inventory levels are finalized; therefore, LIFO inventory costs for interim financial statements are estimated. Cost of sales for the November quarter includes a LIFO provision of $21.2 million ($.01 per share, diluted) versus $18.5 million ($.01 per share, diluted) for the same period a year ago.

Selling, occupancy and administration expenses were 22.6% of sales in the quarter compared to 22.3% a year ago. The increase, as a percent to sales, was principally caused by the adoption of SFAS No. 123(R) which requires expensing stock options, higher store salaries and litigation settlements received in the comparable period last year. These increases were partially offset by lower insurance costs as a percent to sales and lower costs associated with the ongoing conversion from analog to digital photo labs. New generic drugs, which tempered the rate of sales growth, also increased expense ratios in first quarter of 2006 and 2005.

Prior to fiscal 2006, as permitted under SFAS No. 123, the company applied Accounting Principles Board (APB) Opinion No. 25 and related interpretations in accounting for its stock-based compensation plans. Under APB Opinion No. 25, compensation expense was recognized for stock option grants if the exercise price was below the fair value of the underlying stock at the measurement date.

In September 2005, Walgreen adopted SFAS No. 123 (Revised), "Share-Based Payment," which requires the compensation expense to be recognized based on the fair value on the date of the grant. The company is using the modified prospective transition method, which does not require prior period financial statements to be restated. As of fiscal 2006, the volatility is based on the daily percentage change in the price of the stock over the expected term of the option. In prior years, the volatility was based on the monthly percentage change in stock price.

As of November 30, 2005, $96.0 million of total compensation cost related to nonvested awards has not yet been recognized. This cost is expected to be recognized over a weighted-average of 1.73 years.

The effective income tax rate was 37.00% for the first quarter this fiscal year compared to 35.72% for the same period last year. Last year's rate reflected the result of the settlement of prior year Internal Revenue Service matters.

CRITICAL ACCOUNTING POLICIES

The consolidated financial statements are prepared in accordance with accounting principles generally accepted in the United States of America and include amounts based on management's prudent judgments and estimates. Actual results may differ from these estimates. Management believes that any reasonable deviation from those judgments and estimates would not have a material impact on the consolidated financial position or results of operations. To the extent that the estimates used differ from actual results, however, adjustments to the statement of earnings and corresponding balance sheet accounts would be necessary. These adjustments would be made in future statements. Some of the more significant estimates include liability for closed locations, liability for insurance claims, vendor allowances, allowance for doubtful accounts and cost of sales. We use the following techniques to determine estimates:

Liability for closed locations -
	The liability is based on the present value of future rent obligations and other related costs (net of estimated sublease rent) to the first lease option date.

Liability for insurance claims -
	The liability for insurance claims is recorded based on nondiscounted estimates for claims incurred. The provisions are estimated in part by considering historical claims experience, demographic factors and other actuarial assumptions.

Vendor allowances -
	Vendor allowances are principally received as a result of purchases, sales or promotion of vendors' products. Allowances are generally recorded as a reduction of inventory and are recognized as a reduction of cost of sales when the related merchandise is sold. Those allowances received for promoting vendors' products are offset against advertising expense and result in a reduction of selling, occupancy and administration expense to the extent of advertising incurred, with the excess treated as a reduction of inventory costs.

Allowance for doubtful accounts -
	The provision for bad debt is based on both specific receivables and historic write-off percentages.

Cost of sales -
	Drugstore cost of sales is primarily derived based upon point-of-sale scanning information with an estimate for shrinkage and is adjusted based on periodic inventories.

LIQUIDITY AND CAPITAL RESOURCES

Cash and cash equivalents were $584.1 million at November 30, 2005, compared to $639.0 million at November 30, 2004. Short-term investment objectives are to minimize risk, maintain liquidity and maximize after-tax yields. To attain these objectives, investment limits are placed on the amount, type and issuer of securities. Investments are typically in top-tier money market funds and commercial paper.

Net cash provided by operating activities for the first quarter was $437.4 million compared to $58.6 million a year ago. The change between periods was principally caused by the timing of funding to the employee profit sharing trust and third party receivables which were affected by Medicaid drug payments from the State of Illinois. Our profitability is the principal source of funds for expansion and remodeling programs, dividends to shareholders and the stock repurchase program.

Net cash used for investing activities was $244.0 million versus $276.5 million provided last year. Proceeds from the sale of auction rate securities exceeded purchases of such securities by $186.5 million in the first quarter compared to $581.5 million for the same period last year. We actively invest in municipal bonds and student obligations and purchase these securities at par. While the underlying security is issued as a long term investment, they typically can be purchased and sold every 7, 28 and 35 days. The trading of auction rate securities takes place through a descending price auction with an interest rate reset at the beginning of each holding period. At the end of each holding period the interest is paid to the investor. Additions to property and equipment were $338.4 million compared to $305.2 million last year. In total, there were 127 new or relocated locations (net 83) added during the first quarter. This compares to 113 in the same period last year (net 98) which included two home medical centers. New stores are owned or leased. There were 41 owned locations added during the quarter and 66 under construction at November 30, 2005 versus 20 owned and 75 under construction as of November 30, 2004. Business acquisitions include Schraft's, a specialty pharmacy which provides fertility medications and services; SeniorMed, an institutional pharmacy, which provides prescription services to assisted living communities; and selected assets from the 23-store Medic drugstore chain in the Cleveland market. Other additions during the quarter were a home medical center and a clinical pharmacy.

Capital expenditures for fiscal 2006 are expected to be approximately $1.4 billion. We expect to open about 475 new stores in fiscal 2006, with a net increase of approximately 390 stores, and anticipate having a total of 7,000 drugstores in the year 2010. We are continuing to relocate stores to more convenient and profitable freestanding locations. In addition to new stores, expenditures are planned for technology and distribution centers. A new distribution center is planned for South Carolina with an anticipated opening date in 2007.

Net cash used for financing activities was $186.1 million compared to $140.1 million last year. On July 14, 2004 the Board of Directors announced a stock repurchase program of up to $1 billion, which we plan to execute over four years. During first quarter fiscal 2006 we purchased $59.2 million of company shares related to the stock repurchase program for a total of $426.2 million purchases since the start of the program. An additional $99.3 million of shares were purchased to support the long-term needs of the employee stock plans. Comparable amounts were $66.4 million and $52.9 million in fiscal 2005. There were no new short-term borrowings during either period. At November 30, 2005, we had an unused syndicated bank line of credit facility of $200 million to support our short-term commercial paper program.

CONTRACTUAL OBLIGATIONS AND COMMITMENTS

The following table lists our contractual obligations and commitments as of November 30, 2005.

	Payments Due by Period (In Millions)
	Total	Less than 1 Year	1-3 Years	3-5 Years	Over 5 Years
Operating leases*	$23,996.9	$1,373.0	$2,792.0	$2,705.5	$17,126.4
Purchase obligations (1):
Open inventory purchase orders*	1,392.9	1,392.9	-	-	-
Real estate development*	504.4	498.4	6.0	-	-
Other corporate obligations*	487.0	227.0	142.2	106.8	11.0
Insurance	421.9	151.6	107.3	57.4	105.6
Retiree health & life	264.4	6.7	15.9	21.0	220.8
Closed location obligations	86.3	20.8	31.7	18.2	15.6
Capital lease obligations	38.5	.7	1.9	2.0	33.9
Other long-term liabilities reflected on the balance sheet	405.5	23.4	46.7	40.8	294.6
Total	$27,597.8	$3,694.5	$3,143.7	$2,951.7	$17,807.9

* Not on balance sheet.

The purchase obligations include agreements to purchase goods or services that are enforceable and legally binding and that specify all significant terms, including open purchase orders.

OFF-BALANCE SHEET ARRANGEMENTS

Letters of credit are issued to support purchase obligations and commitments (as reflected on the Contractual Obligations and Commitments table) as follows (In Millions):

Inventory obligations

$ 40.7

Real estate development

1.7

Insurance

292.2

Total

$ 334.6

We have no off-balance sheet arrangements other than those disclosed on the previous Contractual Obligations and Commitments table. Both on- and off-balance sheet financing are considered when targeting debt to equity ratios to balance the interest of equity and debt (real estate) investors. This balance allows us to lower our cost of capital while maintaining a prudent level of financial risk.

RECENT ACCOUNTING PRONOUNCEMENTS

In October 2005, the Financial Accounting Standards Board (FASB) issued Staff Position 13-1, "Accounting for Rental Costs Incurred During a Construction Period." This pronouncement states that rental costs associated with ground or building operating leases that are incurred during a construction period should be recognized as rental expense. We are already in conformity with this new pronouncement; therefore, the implementation will not impact the financial statements.

In November 2005, the FASB issues FSP No. 123(R)-3, "Transition Election Related to Accounting for the Tax Effects of Share-Based Payment Awards." This pronouncement provides an alternative method of calculating the excess tax benefits available to absorb any tax deficiencies recognized subsequent to the adoption of SFAS No. 123(R). The company has until November 2006 to make a one-time election to adopt the transition method. The company is currently evaluating FSP 123(R)-3; this one-time election will not affect operating income or net earnings.

CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS

Certain information in this Form 10-Q, as well as in other public filings, the company website, press releases and oral statements made by our representatives, is forward-looking information based on current expectations and plans that involve risks and uncertainties. Forward-looking information includes statements concerning pharmacy sales trends, prescription margins, number and location of new store openings, the level of capital expenditures, demographic trends, as well as those that include or are preceded by the words "expects," "estimates," "believes," "plans," "anticipates" or similar language. For such statements, we claim the protection of the safe harbor provisions of the Private Securities Litigation Reform Act of 1995.

The following factors, in addition to those discussed elsewhere in this Form 10-Q and in our Annual Report on Form 10-K for the fiscal year ended August 31, 2005, could cause results to differ materially from management expectations as projected in such forward-looking statements: the impact of events related to any terrorist actions, changes in economic conditions generally or in the markets served by the company; consumer preferences and spending patterns; competition from other drugstore chains, independent drugstores, mail order prescription providers, and various other retailers including grocery stores, convenience stores, mass merchants and dollar stores; the introduction of new brand and generic prescription drugs; changes in or the introduction of new state or federal legislation or regulations, including but not limited to those affecting the practice of pharmacy and pharmacy reimbursement rates; the efforts of third party payers to reduce pharmacy reimbursement rates; the success of planned advertising and merchandising strategies; the availability and cost of real estate and construction; changes in accounting policies and practices; the company's ability to hire and retain pharmacists and other store and management personnel; the company's relationships with its suppliers; the company's ability to successfully implement new computer systems and technology; and adverse determinations with respect to litigation or other claims. Unless otherwise required by applicable securities laws, the company assumes no obligation to update its forward-looking statements to reflect subsequent events or circumstances.

Item 3. Qualitative and Quantitative Disclosure about Market Risk

Management does not believe that there is any material market risk exposure with respect to derivative or other financial instruments that would require disclosure under this item.

Item 4. Controls and Procedures

Based on their evaluation as of November 30, 2005, pursuant to Exchange Act Rule 13a-15(b), the company's management, including its Chief Executive Officer and Chief Financial Officer, believe the company's disclosure controls and procedures (as defined in Exchange Act Rule 13a-15(e)) are effective.

In connection with the evaluation pursuant to Exchange Act Rule 13a-15(d) of the company's internal control over financial reporting (as defined in Exchange Act Rule 13a-15(f)) by the company's management, including its Chief Executive Officer and Chief Financial Officer, no changes during the quarter ended November 30, 2005 were identified that have materially affected, or are reasonably likely to materially affect, the company's internal control over financial reporting.

PART II. OTHER INFORMATION

Item 2. Change in Securities, Use of Proceeds and Issuer Purchases of Equity Securities

(c)

The following table provides information about purchases by the company during the quarter ended November 30, 2005 of equity securities that are registered by the company pursuant to Section 12 of the Exchange Act:

ISSUER PURCHASES OF EQUITY SECURITIES

Period

Total Number of Shares Purchased (1)

Average Price Paid per Share

Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs

Approximate Dollar Value of Shares that May Yet Be Purchased Under the Plans or Programs (2)

09/01/2005 - 09/30/2005

-

$ -

-

$632,957,238

10/01/2005 - 10/31/2005

2,095,000

44.0125

884,000

594,055,489

11/01/2005 - 11/30/2005

1,426,000

46.5151

437,000

573,752,400

Total

3,521,000

$45.0261

1,321,000

$573,752,400

(1)

The company repurchased an aggregate of 2,200,000 shares of its common stock in open-market transactions to satisfy the requirements of the company's employee stock purchase and option plans, as well as the company's Nonemployee Director Stock Plan.

(2)

On July 14, 2004, the Board of Directors approved a stock repurchase program, pursuant to which up to $1 billion of the company's common stock may be repurchased. This program was announced in the company's report on Form 8-K, which was filed on July 15, 2004. The total remaining authorization under the repurchase programs was $573,752,400 as of November 30, 2005. The expiration date of the repurchase program is July 13, 2008.

Item 6. Exhibits

(a) Exhibits

	3.	(a)	Articles of Incorporation of the company, as amended, filed with the Securities and Exchange Commission as Exhibit 3(a) to the company's Quarterly Report on Form 10-Q for the quarter ended February 28, 1999, and incorporated by reference herein.
		(b)	By-Laws of the company, as amended and restated effective as of July 9, 2003, filed with the Securities and Exchange Commission as Exhibit 3(b) to the company's Quarterly Report on Form 10-Q for the quarter ended November 30, 2003, and incorporated by reference herein.

	4.	(a)	Rights Agreement dated as of July 10, 1996, between the company and Harris Trust and Savings Bank, filed with the Securities and Exchange Commission as Exhibit 1 to Registration Statement on Form 8-A on July 11, 1996 (File No. 1-604), and incorporated by reference herein.

	10.	(a)	Walgreen Co. Nonemployee Director Stock Plan Amendment No. 1 (effective October 12, 2005), filed with the Securities and Exchange Commission as Exhibit 10(a) to the company's Quarterly Report on Form 10-Q for the fiscal quarter ended November 30, 2005.
		(b)	Walgreen Co. 2006 Executive Deferred Compensation/Capital Accumulation Plan (effective January 1, 2006), filed with the Securities and Exchange Commission as Exhibit 10(b) to the company's Quarterly Report on Form 10-Q for the fiscal quarter ended November 30, 2005.

	31.1	Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

	31.2	Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

	32.1	Certification of Chief Executive Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, 18 U.S.C. Section 1350.

	32.2	Certification of Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, 18 U.S.C. Section 1350.

SIGNATURES

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 thereunto duly authorized.

	WALGREEN CO.
	(Registrant)

Dated: 01/04/2006	/s/ William M. Rudolphsen
	William M. Rudolphsen
	Senior Vice President and
	Chief Financial Officer

Dated: 01/06/2006	/s/ Mia M. Scholz
	Mia M. Scholz
	Controller
	(Chief Accounting Officer)

WALGREEN CO. NONEMPLOYEE DIRECTOR STOCK PLAN
AMENDMENT NO. 1

Effective October 12, 2005, Sections 7.1, 7.2 and 7.3 of the Plan are amended in their entirety to read as follows:

" 7.1 Deferral of Annual Equity Grants, Retainers, Committee Fees, and Meeting Fees. During the term of this Plan, any Nonemployee Director may elect to receive all or a portion of the cash component of his or her Annual Retainer, Committee Fees, Meeting Fees and/or any similar fees for service as a Nonemployee Director in the form of Deferred Stock Units or to have such amounts placed in a Deferred Cash Compensation Account. During the term of this Plan, any Nonemployee Director may also elect to receive all or a portion of his or her Annual Equity Grant described in Section 5.1 and/or the Share component of his or her Annual Retainer in the form of Deferred Stock Units. An election to receive Deferred Stock Units or to defer amounts into the Deferred Cash Compensation Account pursuant to this Section 7.1 shall be subject to the provisions of this Article 7.

7.2 Election. An election to receive all or a portion of a Nonemployee Director's Annual Retainer, Committee Fees, Meeting Fees or any similar fees for service as a Nonemployee Director in the form of Deferred Stock Units or to defer amounts into the Deferred Cash Compensation Account, as provided in Section 7.1, shall be made by December 1 for all payments to be made in the succeeding calendar year. An election to receive all or a portion of a Nonemployee Director's Annual Equity Grant in the form of Deferred Stock Units, as provided in Section 7.1, shall be made by October 31 for the Annual Equity Grant to be earned over the 12-month period beginning on the immediately following November 1 and made as of the next November 1. New Nonemployee Directors shall make their election with respect to any of the above deferrals upon their original election to the Board. Each such election may pertain to more than one (1) calendar year of scheduled payments. Deferral elections may be made only in ten percent (10%) increments.

7.3 Number of Deferred Stock Units. The number of Deferred Stock Units to be granted in connection with an election pursuant to Section 7.2 shall equal the portion of the Annual Equity Grant, Annual Retainer, Committee Fees, and Meeting Fees being deferred into Deferred Stock Units, divided by the Fair Market Value of a Share on the date of the scheduled payment of the amount deferred."

WALGREEN CO.
2006 EXECUTIVE DEFERRED COMPENSATION/
CAPITAL ACCUMULATION PLAN

Walgreen Co. (the "Company") hereby establishes a nonqualified deferred compensation program for certain of its employees as described herein. The following shall constitute the terms and conditions of the Walgreen Co. 2006 Executive Deferred Compensation/Capital Accumulation Plan (the "Plan"), effective January 1, 2006:

1. Purpose; Effective Date. The purpose of the Plan is to permit a select group of management or highly compensated employees of the Company and its participating subsidiaries (collectively referred to herein as the "Employer") to defer the receipt of income which would otherwise become payable to them and to provide additional benefits through crediting of interest. It is intended that this Plan, by providing this deferral opportunity, will assist the Company in retaining and attracting key individuals by providing them with these benefits.

2. Administration. Full power and authority to construe, interpret, and administer the Plan shall be vested in the Compensation Committee of the Board of Directors of the Company (the "Committee"), as follows:

Powers of the Committee . The Committee shall have all powers necessary to administer the Plan, including, without limitation, the power to interpret the provisions of the Plan, to decide all questions of eligibility, to establish rules and forms for the administration of the Plan, and to appoint individuals to assist in the administration of the Plan and any other agents it deems advisable.
Actions of the Committee . All determinations, interpretations, rules, and decisions of the Committee with respect to any question arising out of or in connection with the administration, interpretation and application of the Plan and the rules and regulations promulgated hereunder shall be final, conclusive and binding upon all persons having or claiming to have any interest or right under the Plan.
Delegation . The Committee shall have the power to delegate specific duties and responsibilities to officers or other employees of the Company or to other individuals or entities. The Committee may rescind any delegation at any time. Except as otherwise required by law, each person or entity to whom a duty or responsibility has been delegated shall be responsible for the exercise of such duty or responsibility and shall not be responsible for any act or failure to act of any other person or entity. The Committee hereby delegates responsibility for the day-to-day administration of the Plan to the Company's Vice President of Human Resources, who shall have the authority to assign administrative duties to other Company employees.
Indemnification . The Company shall indemnify the members of the Committee, the members of the Board and all Company officers and other employees responsible for administering the Plan against any and all liabilities arising by reason of any act or failure to act made in good faith in accordance with the provisions of the Plan. For this purpose, liabilities include expenses reasonably incurred in the defense of any claim relating to the Plan.
Reports and Records . The Committee and those to whom the Committee has delegated duties under the Plan shall keep records of all their proceedings and actions and shall maintain books of account, records, and other data as shall be necessary for the proper administration of the Plan and for compliance with applicable law.

3. Eligibility and Participation. Only those persons who are employed in Salary Grades 12 through 33 or their equivalent as of January 1, 2006, shall be eligible to become a participant in the Plan. An eligible employee shall become a participant upon the execution of an irrevocable election under the Plan and the acceptance of the election by the Company.

Notwithstanding the foregoing, a person who is not employed in an eligible grade level as of January 1, 2006, but who is subsequently hired in or promoted to an eligible position during 2006 or thereafter, may be offered the opportunity to defer the receipt of 12 months worth of compensation under the Plan. The terms and conditions of such deferral opportunities will be designed to mirror the terms and conditions set forth in the remainder of this Plan, with appropriate adjustments to account for the different deferral periods. The timing of the deferral election and the designated deferral period with respect to any such deferral opportunity will be structured to comply with the applicable requirements of Section 409A of the Internal Revenue Code of 1986, as amended, and the regulations issued thereunder (the "Code").

4. Deferred Compensation Account.

Each participant shall make an irrevocable election in writing (or via electronic means to be established by the Company) of the amount of compensation to be deferred under the Plan (the "deferral amount"). Such amount shall not be in excess of 10% of the participant's base salary as of January 1, 2006, and shall be in increments of no less than $1,000. The election shall be made prior to January 1, 2006 and shall be for the period January 1, 2006 through December 31, 2006. The deferral shall be reduced in substantially equal amounts from the base salary otherwise periodically payable to the participant over the 2006 calendar year (or over a portion of such calendar year as deemed administratively practicable), and attributable to service by the participant for the Employer after the date of participant's election.
The Employer shall establish and maintain a bookkeeping account in the name of each participant, which shall be known as his or her "Deferred Account," and which shall be credited with the amount of compensation deferred, and which shall reflect the accumulated value of the deferral amount. The accumulated value of the deferral amount shall equal the amount arrived at by increasing the deferral account balance by assumed simple interest compounded annually but credited as of the last day of each calendar month, calculated from January 1, 2006. Amounts paid to or on behalf of the participant or his or her beneficiary pursuant to this Plan, shall be deducted from the Deferred Account as of the first day of the month in which such payment is made. The rate to be used in determining the accumulated value of the deferral amount shall be that rate specified in the Plan paragraph under which payment is to be made.
The participant's Deferred Account shall at all times be reflected on the Employer's books in accordance with generally accepted accounting practices as a general unsecured and unfunded obligation of the Employer. The Plan shall not give any person any right or security interest in any asset of the Employer nor shall it imply any trust or segregation of assets by the Employer. The participant's Deferred Account shall be distributed from the general assets of the Employer.

5. Time and Manner of Payment. The participant's Deferred Account shall be distributed as follows:

Installment Payments Following Retirement or Termination Upon Disability

A participant who has not attained age 50 as of January 1, 2006 shall receive 15 equal annual installment payments commencing at the January 1 of the year following his or her attainment of age 65, or as soon as practicable thereafter, if the participant's continuous employment with the employer ends by reason of Retirement or Disability. For purposes of this Plan:
1. Retirement is defined as leaving the active employ of the Employer after attaining at least age 65, or after at least 10 years of service and after attaining at least age 55; and
2. Disability shall mean that the participant is unable to engage in any substantial gainful activity by reason of any medically determinable physical or mental impairment which can be expected to result in death or can be expected to last for a continuous period of not less than 12 months, as determined in the sole discretion of the Committee.
A participant who has attained age 50 but not age 65 as of January 1, 2006, shall elect, at the time of making the deferral election pursuant to Paragraph 4A, to receive installment payments in one of the following manners following termination of employment by reason of Retirement or Disability:
1. Fifteen (15) equal annual installments as described in subparagraph (1) above; or
2. Ten (10) equal annual installments commencing at the January 1 of the year following his or her attainment of age 70, or as soon as practicable thereafter.
A participant who attained age 65 but not age 70 as of January 1, 2006, shall receive 10 equal annual installments commencing at the January 1 following his or her attainment of age 70, or as soon as practicable thereafter.
A participant who has attained age 70 as of January 1, 2006, shall receive equal annual installments commencing at the January 1 following the end of the deferral period and ending on January 1 following his or her 79 ^th birthday.

Installment payments shall be calculated to amortize fully the accumulated value of the deferral amount over the payment period. For purposes of this Subparagraph A, the interest rate to be credited in the calculation of the accumulated value of the deferral amount shall be 10.5%.

Interim Payments

Participants who have not yet attained age 45 as of January 1, 2006 shall receive, in addition to the applicable payments described in the remainder of this Paragraph 5, an interim lump-sum payment on January 1, 2013, or as soon as practicable thereafter, provided that one of the following conditions is met:

The participant remains in the continuous employ of the Employer during the period beginning January 1, 2006 and ending December 31, 2012; or

The participant terminates employment due to Disability after a period of continuous employment from January 1, 2006.

This interim lump-sum payment, if any, shall be an amount equal to the deferral amount under Paragraph 4A of this Plan. Payments under Subparagraphs B(1) and B(2) shall be debited from the participant's Deferral Account as of the first day of the month in which payment is made.

Payment Upon Termination
1. Subject to Subparagraph C(4) below, a participant who voluntarily terminates his or her employment with the Employer prior to Retirement or whose employment with the Employer is involuntarily terminated prior to Retirement for any reason other than Cause (as defined below), shall receive, as soon as practicable after such termination, a lump-sum payment in the amount of the accumulated value of the deferral amount. For purposes of this Subparagraph C(1), the rate to be credited in the calculation of the accumulated value of the deferral amount shall be 7.5%.
2. Subject to Subparagraph C(3) below, and notwithstanding any other provision of this Plan, if participant's employment with the Employer is terminated at any time for "Cause," the sole amount payable to or on behalf of participant hereunder shall be a lump-sum payment of the accumulated value of the participant's deferral amount, payable as soon as practicable after such termination of employment. For purposes of this Subparagraph C(2), the rate to be credited in the calculation of the accumulated value of the deferral amount shall be 0%. For purposes of this Subparagraph C(2), termination of employment for Cause shall be determined by the Committee or its delegates and shall mean a termination of employment for: (a) an act or acts of dishonesty committed by a Participant; (b) a violation of any of the anti-harassment or anti-discrimination policies or procedures of the Company; or (c) a violation of any of the other policies or procedures of the Company applicable to the Participant's employment or job category which is either: (i) grossly negligent; or (ii) willful and deliberate.
3. Notwithstanding the remainder of this Subparagraph 5C, a lump-sum payment to any participant who is a "Key Employee," as such term is defined in Section 409A of the Code, shall, to the extent necessary to comply with Section 409A of the Code, be paid no earlier than six months following such participant's termination of employment with the Employer.

Payment Upon Death of the Participant
1. If a participant dies after leaving the active employ of the Employer for Retirement as provided in Subparagraph 5A above, or while actively employed but after becoming eligible for Retirement (based on age and service), and prior to receiving any or all annual installment payments due the participant pursuant to Subparagraph 5A above, the Employer shall pay any such unpaid annual payments to the participant's beneficiary, commencing with the next annual payment due following the date of participant's death.
2. If a participant dies while actively employed by the Employer and prior to becoming eligible for Retirement (based on age and service), no interim payments or annual installments pursuant to Subparagraphs 5A and B shall be paid by the Employer after the date of the participant's death, but the Employer shall as soon as practicable after the participant's death, pay to the participant's beneficiary, in a lump sum, the accumulated value of the deferral amount. For purposes of this Subparagraph 5D, the rate to be credited in the calculation of the accumulated value of the deferral amount shall be 10.5%.
3. If participant dies while actively employed by the Employer after commencement of annual installment payments at either age 65 or 70, the Employer shall pay any such unpaid annual installment payments to the participant's beneficiary commencing with the next annual payment due following the date of the participant's death.

6. Noncompetition . Notwithstanding any other provision of this Plan, if the Committee at any time determines that a participant, without having obtained the prior written consent of the Committee or its designee, has engaged in Competition with the Employer, the sole amount payable to the participant hereunder shall be a lump-sum payment of the accumulated value of the deferral amount, payable as soon as practicable after such determination. For purposes of this Paragraph 6, the simple rate of interest applied to determine the accumulated value of the deferral amount shall be 2%. "Competition with the Employer" shall mean engaging, within any geographical area or market served by the Employer and without the Employer's written consent, in the provision of goods or services, or in any other business activity of a type offered or engaged in by the employer, on the participant's own behalf or on behalf of another business enterprise, while employed by the Employer or during the 24-month period following the participant's termination of employment with the Employer. Notwithstanding the foregoing, if this Paragraph 6 applies to a participant who is receiving or has otherwise become eligible to receive installment payments pursuant to Paragraph 5A, then, to the extent required to comply with Section 409A of the Code, such participant will receive installment payments as scheduled, but such payments will be reduced such that rate of interest applied to determine the accumulated value of the entire deferral amount shall be 2%.

7. Beneficiary Designation . A Participant may, from time to time, designate any legal or natural person, persons or entity (who may be designated contingently or successively) to whom or to which payments are to be made if the participant dies before receiving payment of all amounts due hereunder, by signing a form approved by the Committee. A beneficiary designation form shall be effective only after the signed form is filed with the Employer while the participant is alive. Such forms may be submitted electronically pursuant to reasonable procedures established by the Company for such purpose. A properly filed designation shall cancel all beneficiary designation forms signed and filed earlier. If the participant fails to designate a beneficiary as provided above, or if all designated beneficiaries of the participant die before the participant or before complete payment of all amounts due hereunder, the Employer, in its discretion, may pay the unpaid amounts to one or more of such participant's relatives by blood, adoption, or marriage in any manner permitted by law which the Committee considers to be appropriate, including, but not limited to, payment to the legal representative or representatives of the estate of the last to die of the participant and the participant's designated beneficiaries. The Committee may also permit beneficiaries to designate their own beneficiaries following the participant's death.

8. Facility of Payment . If the Employer has, for any reason, doubt as to the proper person to whom to make payment, the Employer may withhold payment until instructed by a final order of a court of competent jurisdiction. Any payment hereunder made by the Employer in good faith shall fully discharge the Employer from its obligation with respect to such payment.

9. Insurance . The Employer may, in its sole discretion, purchase a policy or policies of insurance on the life of any participant or disability insurance with respect to a participant, the cash value, if any, and proceeds of which may, but need not, be used by the Employer to satisfy part or all of its obligations hereunder. The Employer will be the owner of any such policies and neither a participant nor any other person or entity claiming through the participant shall have any ownership rights in such policies or any proceeds thereof. Each participant, as a condition of receiving any benefits hereunder, on behalf of himself/herself or any person or entity claiming through him or her, shall cooperate with the Employer in obtaining any such insurance that the Employer desires to purchase by submitting to such physical examinations, completing such forms, and making such records available as may be required by the Employer from time to time.

10. Effect on Other Benefits . The deferral amount shall be included in the participant's compensation for the year of deferral for the purpose of calculating the participant's bonuses and awards under any incentive or similar compensation plan or program of the Employer, insurance, and other employee benefits, except that in accordance with the terms of any plan qualified under Section 401(a) of the Code maintained by the Employer, the amount deferred under Paragraph 4 shall not be included as compensation in the year of deferral for purposes of calculating the benefits or contributions by or on behalf of the participant under such plan or plans. Payments shall be excluded from compensation in years paid for purposes of calculating the participant's bonuses and awards under any incentive or similar compensation plan or program of the Employer, insurance, and other employee benefits, except that in accordance with the terms of any plan qualified under Section 401(a) of the Code maintained by the Employer, payments to active employees shall be included as compensation in the year paid.

11. Nonalienation. Neither a participant nor anyone claiming through him or her shall have any right to commute, sell, assign, transfer, or otherwise convey the right to receive any payments hereunder, which payments and the rights thereto hereby are expressly declared to be nonassignable and nontransferable, nor shall any such right to receive payments hereunder be subject to the claims of creditors of a participant or anyone claiming through him or her to any legal, equitable, or other proceeding or process for the enforcement of such claims.

12. Tax Withholding . Notwithstanding the provisions of Paragraph 11, the Employer may withhold from any Plan benefit or payment such amount or amounts as may be required for purposes of complying with the tax withholding or other provisions of the Code or the Social Security Act or any state income tax act or for purposes of paying any estate, inheritance or other tax attributable to any benefit or payment hereunder.

13. Nonsecured Promise . The rights under this Plan of each participant and any person or entity claiming through him or her shall be solely those of an unsecured, general creditor of the Employer. Any insurance policy or other asset acquired or held by the Employer shall not be deemed to be held by the Employer for or on behalf of any participant, or any other person, or to be security for the performance of any obligations hereunder of the Employer, but shall, with respect to this Plan, be and remain a general, unpledged, unrestricted asset of the Employer.

14. Independence of Plan. Except as otherwise expressly provided herein, this Plan shall be independent of, and in addition to, any other employment agreement or employment benefit agreement or plan or rights that may exist from time to time between the parties hereto. This Plan shall not be deemed to constitute a contract of employment between the parties hereto, nor shall any provision hereof restrict the right of the Employer to discharge any participant, or restrict the right of any participant to terminate his or her employment with the Employer.

15. Amendment . The Company may in its sole discretion amend the Plan from time to time by action of the Board of Directors of the Company (the "Board") or the Committee. No such amendment shall alter a participant's right to receive a payment due under the terms of the Plan at the date of amendment. Notwithstanding any other provision of the Plan, from and after a Change of Control, the Company may not amend the Plan to reduce the rate to be credited in calculating the accumulated value of participant's deferral amount below the rate that would have been utilized had his or her employment been terminated or the Plan terminated as of the date of the adoption of the amendment or, if more favorable, below the highest rate provided at any time during the 90-day period prior to the Change of Control. Neither the terms of this Paragraph 15 nor those of Paragraph 16 may be amended so as to diminish the rights of a participant under such provision from or after a Change of Control or in anticipation of a Change of Control, and any such purported amendment shall be null and void. For this purpose, a "Change of Control" shall mean:

The acquisition, other than from the Company, by any individual, entity, or group (within the meaning of Section 13(d)(3) or 14(d)(2) of the Securities Exchange Act of 1934, as amended (the "Exchange Act")) of beneficial ownership (within the meaning of Rule 13d-3 promulgated under the Exchange Act) of 20% or more of either the then outstanding shares of common stock of the Company or the combined voting power of the then outstanding voting securities of the Company entitled to vote generally in the election of directors, but excluding, for this purpose, any such acquisition by the Company or any of its subsidiaries, or any employee benefit plan (or related trust) of the Company or its subsidiaries, or any corporation with respect to which, following such acquisition, more than 50% of, respectively, the then outstanding shares of common stock of such corporation and the combined voting power of the then outstanding voting securities of such corporation entitled to vote generally in the election of directors is then beneficially owned, directly or indirectly, by the individuals and entities who were the beneficial owners, respectively, of the common stock and voting securities of the Company immediately prior to such acquisition in substantially the same proportion as their ownership, immediately prior to such acquisition, of the then outstanding shares of common stock of the Company or the combined voting power of the then outstanding voting securities of the Company entitled to vote generally in the election of directors, as the case may be; or

Individuals who, as of the date hereof, constitute the Board (as of the date hereof the "Incumbent Board") cease for any reason to constitute at least a majority of the Board, provided that any individual becoming a director subsequent to the date hereof whose election, or nomination for election by the Company's shareholders, was approved by a vote of at least a majority of the directors then comprising the Incumbent Board shall be considered as though such individual were a member of the Incumbent Board, but excluding, for this purpose, any such individual whose initial assumption of office is in connection with an actual or threatened election contest relating to the election of the Directors of the Company (as such terms are used in Rule 14a-11 of Regulation 14A promulgated under the Exchange Act); or

Approval by the shareholders of the Company of a reorganization, merger, or consolidation, in each case, with respect to which all or substantially all the individuals and entities who were the respective beneficial owners of the common stock and voting securities of the Company immediately prior to such reorganization, merger, or consolidation do not, following such reorganization, merger, or consolidation, beneficially own, directly or indirectly, more than 50% of, respectively, the then outstanding shares of common stock and the combined voting power of the then outstanding voting securities entitled to vote generally in the election of directors, as the case may be, of the corporation resulting from such reorganization, merger, or consolidation, or a complete liquidation or dissolution of the Company or of the sale or other disposition of all or substantially all of the assets of the Company.

16. Successors; Change of Control . The terms and conditions of this Plan and deferral election shall inure to the benefit of and bind the Company, the Employer, and the participant, including his or her successors, assigns, and personal representatives. If substantially all of the assets of the Company are acquired by another corporation or entity or if the Company is merged into, or consolidated with, another corporation or entity, then the obligations created hereunder shall be obligations of the successor corporations or entity. Further, if the employment of a participant were to be involuntarily terminated during a period of five years following a Change of Control (as defined in Paragraph 15 above) for reasons other than Cause (as defined in Subparagraph 5C(3)), such termination shall be treated as Retirement by the participant for all purposes of this Plan, except to the extent that such treatment would result in any payment made under this Plan being nondeductible by the Employer for federal income tax purposes by reason of Section 280G of the Code. A payment shall only be deemed to be nondeductible for purposes of this Paragraph 16 if the Employer provides the participant with an opinion of counsel reasonably acceptable to the participant to that effect.

17. Termination of the Plan; Termination of Plan Participation. Notwithstanding any other provision of this Plan, if the Committee determines that participation by one or more participants shall cause the Plan to be subject to Part 2, 3 or 4 of Title I of the Employee Retirement Income Security Act of 1974, as amended ("ERISA"), the entire interest of such participant or participants under the Plan may be paid immediately to such participant or participants, to the extent the Committee determines such immediate payment is consistent with Code Section 409A, or shall otherwise be segregated from the Plan in the discretion of the Committee, and such participant or participants shall cease to have any interest under the Plan. The Company may terminate this Plan by action of the Board or the Committee if the Committee, in its sole and absolute discretion, determines that any change in federal or state law, or judicial or administrative interpretation thereof, has materially affected the cost of providing the benefits otherwise payable under this Plan, or for any other reason whatsoever. Upon such termination, to the extent the Committee determines that immediate payment is consistent with Code Section 409A, the entire interest of each participant under the Plan may be paid in one lump sum, as soon as practicable after such termination of the Plan. For purposes of this Paragraph 17, all lump-sum payments shall equal the accumulated value of the deferral amount, and the rate to be credited in the calculation of the accumulated value of the deferral amount shall be 10.5%

18. Claims and Appeals Procedures. The following claims and appeals procedures shall apply under the Plan pursuant to the requirements of ERISA and the Department of Labor regulations issued thereunder:

Presentation of Claim . Any participant or beneficiary of a deceased participant (such participant or beneficiary being referred to below as a "Claimant") may deliver to the Company's Director of Compensation and Benefits (or such other employee or group of employees designated by the Committee to consider written claims under the Plan) (the "Administrator") a written claim for a determination with respect to the amounts distributable to such Claimant from the Plan. If such a claim relates to the contents of a notice received by the Claimant, the claim must be made within 60 days after such notice was received by the Claimant. The claim must state with particularity the determination desired by the Claimant. All other claims must be made within 180 days of the date on which the event that caused the claim to arise occurred. The claim must state with particularity the determination desired by the Claimant.
Notification of Decision . The Administrator shall consider a Claimant's claim within 90 days after its receipt (180 days if the Administrator determines additional time is required for administrative reasons), and shall notify the Claimant in writing or electronically:

that the Claimant's requested determination has been made, and that theclaim has been allowed in full; or
that the Administrator has reached a conclusion contrary, in whole or in part, to the Claimant's requested determination, and such notice must set forth in a manner calculated to be understood by the Claimant:

the specific reason(s) for the denial of the claim, or any part of it;
specific reference(s) to pertinent provisions of the Plan upon which such denial was based;
a description of any additional material or information necessary for the Claimant to perfect the claim, and an explanation of why such material or information is necessary; and
an explanation of the claim review procedure set forth in Subparagraph C below, and of the Claimant's right to bring suit under ERISA if the claim is denied on review.

Review of a Denied Claim . Within 60 days after receiving a notice from the Administrator that a claim has been denied, in whole or in part, a Claimant (or the Claimant's duly authorized representative) may file with the Committee a written request for a review of the denial of the claim. Thereafter, but not later than 30 days after the review procedure began, the Claimant (or the Claimant's duly authorized representative):

may review pertinent documents;
may submit written comments or other documents; and/or
may request a hearing, which the Committee, in its sole discretion, may grant.

Decision on Review . The Claimant's request for review shall be considered by the Committee (or by such other individual or individuals designated by the Committee to consider written appeals under the Plan). The Committee shall render its decision on review promptly, and not later than 60 days after the filing of a written request for review of the denial, unless a hearing is held or other special circumstances require additional time, in which case the Committee's decision must be rendered within 120 days after such date. Such decision must be written in a manner calculated to be understood by the Claimant, and it must contain specific reasons for the decision , specific reference(s) to the pertinent Plan provisions upon which the decision was based, and such other matters as the Committee deems relevant.
Legal Action . A Claimant's compliance with the foregoing provisions of this Paragraph 18 is a mandatory prerequisite to a Claimant's right to commence any legal action with respect to any claim for benefits under this Plan. Any such legal action must commence within six months of receipt of the Committee's decision on review.

19. Trust Fund . The Employer shall be responsible for the payment of all benefits provided under the Plan. At its discretion, the Company may establish one or more trusts, with such trustees as the Committee may approve, for the purpose of assisting in the payment of such benefits. Although such a trust may be irrevocable, its assets shall be held for payment of all of the Employer's general creditors in the event of insolvency. To the extent any benefits provided under the Plan are paid from any such trust, the Employer shall have no further obligation to pay them. If not paid from the trust, such benefits shall remain the obligation of the Employer.

20. Responsibility for Legal Effect . Neither party hereto makes any representations or warranties, express or implied, or assumes any responsibility concerning the legal, tax, or other implications or effects of this Plan.

21. Severability. If any provision of the Plan shall be found to be invalid or unenforceable by a court of competent jurisdiction, the validity or enforceability of the remaining provisions of the Plan shall remain in full force and effect.

22. Paragraph Headings . The Paragraph headings used in this Plan are for convenience of reference only and shall not be considered in construing this Plan.

23. Controlling Law . The Plan shall be construed in accordance with the laws of the state of Illinois.

EXHIBIT 31.1

CERTIFICATION

I, David W. Bernauer, Chief Executive Officer, certify that:

1.	I have reviewed this quarterly report on Form 10-Q of Walgreen Co.;
2.	Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3.	Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4.	The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rule 13a-15(f) and 15d-15(f)) for the registrant and have:
a)	designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
b)	designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
c)	evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
d)	disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and
5.	The registrant's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):
a)	all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and
b)	any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

				Date
/s/		David W. Bernauer	Chief Executive Officer	01/04/2006
		David W. Bernauer

EXHIBIT 31.2

CERTIFICATION

I, William M. Rudolphsen, Chief Financial Officer, certify that:

1.	I have reviewed this quarterly report on Form 10-Q of Walgreen Co.;
2.	Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3.	Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4.	The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
a)	designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
b)	designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
c)	evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
d)	disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and
5.	The registrant's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):
a)	all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and
b)	any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

				Date
/s/		William M. Rudolphsen	Chief Financial Officer	01/04/2006
		William M. Rudolphsen

Exhibit 32.1

CERTIFICATION PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

(18 U.S.C. SECTION 1350)

In connection with the Annual Report of Walgreen Co., an Illinois corporation (the "Company"), on Form 10-Q for the quarter ending November 30, 2005 as filed with the Securities and Exchange Commission (the "Report"), I, David W. Bernauer, Chief Executive Officer of the Company, certify, pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, to the best of my knowledge:

(1) The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

/s/ David W. Bernauer

David W. Bernauer

Chief Executive Officer

Dated: 01/04/2006

A signed original of this written statement required by Section 906 has been provided to Walgreen Co. and will be retained by Walgreen Co. and furnished to the Securities and Exchange Commission or its staff upon request.

Exhibit 32.2

CERTIFICATION PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

(18 U.S.C. SECTION 1350)

In connection with the Annual Report of Walgreen Co., an Illinois corporation (the "Company"), on Form 10-Q for the quarter ending November 30, 2005 as filed with the Securities and Exchange Commission (the "Report"), I, William M. Rudolphsen, Chief Financial Officer of the Company, certify, pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, to the best of my knowledge:

(1) The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

/s/ William M. Rudolphsen

William M. Rudolphsen

Chief Financial Officer

Dated: 01/04/2006

	WALGREEN CO. AND SUBSIDIARIES
	CONSOLIDATED CONDENSED BALANCE SHEETS
	(UNAUDITED)
	(Dollars in Millions)



				November 30,	August 31,
				2005	2005
Assets
	Current Assets:
		Cash and cash equivalents		$ 584.1	$ 576.8
		Short-term investments - available for sale		311.4	494.8
		Accounts receivable, net		1,472.8	1,396.3
		Inventories		6,239.8	5,592.7
		Other current assets		208.3	255.9
			Total Current Assets	8,816.4	8,316.5
	Property and Equipment, at cost, less
		accumulated depreciation and amortization of
		$2,105.2 at November 30 and $1,985.2 at August 31		6,371.3	6,165.0
	Other Non-Current Assets			214.4	127.3
			Total Assets	$ 15,402.1	$ 14,608.8

Liabilities and Shareholders' Equity
	Current Liabilities:
		Trade accounts payable		$ 3,303.4	$ 2,918.2
		Accrued expenses and other liabilities		1,557.5	1,491.9
		Income taxes		235.1	70.9
			Total Current Liabilities	5,096.0	4,481.0
	Non-Current Liabilities:
		Deferred income taxes		186.3	240.4
		Other non-current liabilities		1,014.0	997.7
			Total Non-Current Liabilities	1,200.3	1,238.1
	Shareholders' Equity:
		Preferred stock $.0625 par value; authorized
			32 million shares; none issued	-	-
		Common stock $.078125 par value; authorized
			3.2 billion shares; issued 1,025,400,000
			at November 30 and August 31	80.1	80.1
		Paid-in capital		583.9	565.0
		Employee stock loan receivable		(84.5)	(76.8)
		Retained earnings		9,116.1	8,836.3
		Treasury Stock, at cost; 13,560,087 shares at November 30
			and 11,887,953 shares at August 31	(589.8)	(514.9)
			Total Shareholders' Equity	9,105.8	8,889.7
			Total Liabilities & Shareholders' Equity	$ 15,402.1	$ 14,608.8

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

				Three Months Ended
				November 30,	November 30,
				2005	2004

Net Sales				$10,900.4	$ 9,889.1

Costs and Deductions:
	Cost of sales			7,897.9	7,181.2
	Selling, occupancy and
			administration	2,460.7	2,201.8
				10,358.6	9,383.0
Other Income:
	Interest income			6.8	5.1
				6.8	5.1
Earnings before income tax
	provision			548.6	511.2
Income tax provision				203.0	182.6
Net earnings				$ 345.6	$ 328.6
Per share-
	Basic			$ .34	$ .32
	Diluted			$ .34	$ .32

	Dividends declared			$ .065	$ .0525

Average shares outstanding				1,012.8	1,022.6
Dilutive effect of stock
		options		9.5	6.8
Average shares outstanding
	assuming dilution			1,022.3	1,029.4

	WALGREEN CO. AND SUBSIDIARIES
	CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
	(UNAUDITED)
	(Dollars in Millions)

		Three Months Ended
		November 30,	November 30,
		2005	2004

Net cash provided by operating activities		$ 437.4	$ 58.6

Cash flows from investing activities:
	Purchases of short-term investments-available for sale	(1,577.1)	(2,666.4)
	Proceeds from sale of short-term investments-available for sale	1,763.6	3,247.9
	Additions to property and equipment	(338.4)	(305.2)
	Disposition of property and equipment	2.9	.2
	Business acquisitions, net of cash received	(95.0)	-
Net cash provided by (used for) investing activities		(244.0)	276.5

Cash flows from financing activities:
	Stock purchases	(158.5)	(119.3)
	Proceeds related to employee stock plans	49.4	31.6
	Cash dividends paid	(65.9)	(53.8)
	Other	(11.1)	1.4
Net cash used for financing activities		(186.1)	(140.1)

Changes in cash and cash equivalents:
	Net increase (decrease) in cash and cash equivalents	7.3	195.0
	Cash and cash equivalents at beginning of year	576.8	444.0
Cash and cash equivalents at end of period		$ 584.1	$ 639.0

		Three Months Ended
(In Millions Except Per Share Data)		November 30, 2004
Net Earnings, as reported		$ 328.6

Add:	Stock-based employee compensation expense included in reported net earnings, net of related tax effects	.1
Deduct:	Total stock-based employee compensation expense determined under fair value based method for all awards, net of related tax effects	(13.2)
Pro forma net earnings		$ 315.5

Earnings per share -
	Basic - as reported	$ .32
	Basic - pro forma	$ .31

	Diluted - as reported	$ .32
	Diluted - pro forma	$ .31

Inventory obligations	$ 40.7
Real estate development	1.7
Insurance	292.2
Total	$ 334.6

ISSUER PURCHASES OF EQUITY SECURITIES
Period	Total Number of Shares Purchased (1)	Average Price Paid per Share	Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs	Approximate Dollar Value of Shares that May Yet Be Purchased Under the Plans or Programs (2)
09/01/2005 - 09/30/2005	-	$ -	-	$632,957,238
10/01/2005 - 10/31/2005	2,095,000	44.0125	884,000	594,055,489
11/01/2005 - 11/30/2005	1,426,000	46.5151	437,000	573,752,400
Total	3,521,000	$45.0261	1,321,000	$573,752,400

WALGREEN CO. 2006 EXECUTIVE DEFERRED COMPENSATION/ CAPITAL ACCUMULATION PLAN

WALGREEN CO.
2006 EXECUTIVE DEFERRED COMPENSATION/
CAPITAL ACCUMULATION PLAN