x
|
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|
o
|
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|
WALGREEN CO
.
|
||
(Exact name of registrant as specified in its charter)
|
||
Illinois
|
36-1924025
|
|
(State of incorporation)
|
(I.R.S. Employer Identification No.)
|
|
108 Wilmot Road, Deerfield, Illinois
|
60015
|
|
(Address of principal executive offices)
|
(Zip Code)
|
Title of each class
|
Name of each exchange on which registered
|
|
Common Stock ($.078125 Par Value)
|
New York Stock Exchange
|
|
The NASDAQ Stock Market LLC
|
||
Chicago Stock Exchange
|
Part I
|
|
Part II
|
|
Part III
|
|
Part IV
|
|
Item 1
. Business
|
Number of Locations
|
||||||||||||
Location Type
|
2011
|
2010
|
2009
|
|||||||||
Drugstores
|
7,761 | 7,562 | 6,997 | |||||||||
Worksite Facilities
|
355 | 367 | 377 | |||||||||
Infusion and Respiratory Services Facilities
|
83 | 101 | 105 | |||||||||
Specialty Pharmacies
|
9 | 14 | 15 | |||||||||
Mail Service Facilities
|
2 | 2 | 2 | |||||||||
Total
|
8,210 | 8,046 | 7,496 |
·
|
If we are unsuccessful in establishing effective advertising, marketing and promotional programs, our sales or sales margins could be negatively affected.
|
·
|
Our success depends on our continued ability to attract and retain store and management and professional personnel, and the loss of key personnel could have an adverse effect on the results of our operations, financial condition or cash flow.
|
·
|
Changes in accounting standards and the application of existing accounting standards particularly related to the measurement of fair value as compared to carrying value for the Company’s reporting units, including goodwill and intangible assets, may have an adverse effect on the Company’s financial condition and results of operations.
|
·
|
Severe weather conditions, terrorist activities, health epidemics or pandemics or the prospect of these events can impact our store operations or damage our facilities in affected areas or have an adverse impact on consumer confidence levels and spending in our stores.
|
·
|
The long-term effects of climate change on general economic conditions and the pharmacy industry in particular are unclear, and changes in the supply, demand or available sources of energy may affect the availability or cost of goods and services, including natural resources, necessary to run our business.
|
·
|
The products we sell are sourced from a wide variety of domestic and international vendors, and any future inability to find qualified vendors and access products in a timely and efficient manner could adversely impact our business.
|
State
|
2011
|
2010
|
State
|
2011
|
2010
|
State
|
2011
|
2010
|
||||||||||||||||||
Alabama
|
101 | 100 |
Louisiana
|
147 | 144 |
Oklahoma
|
105 | 110 | ||||||||||||||||||
Alaska
|
5 | 3 |
Maine
|
14 | 13 |
Oregon
|
73 | 70 | ||||||||||||||||||
Arizona
|
254 | 254 |
Maryland
|
66 | 58 |
Pennsylvania
|
138 | 132 | ||||||||||||||||||
Arkansas
|
60 | 60 |
Massachusetts
|
180 | 180 |
Rhode Island
|
29 | 29 | ||||||||||||||||||
California
|
627 | 604 |
Michigan
|
230 | 227 |
South Carolina
|
110 | 109 | ||||||||||||||||||
Colorado
|
167 | 168 |
Minnesota
|
156 | 146 |
South Dakota
|
14 | 14 | ||||||||||||||||||
Connecticut
|
117 | 121 |
Mississippi
|
71 | 70 |
Tennessee
|
261 | 255 | ||||||||||||||||||
Delaware
|
67 | 65 |
Missouri
|
201 | 202 |
Texas
|
700 | 694 | ||||||||||||||||||
District of Columbia
|
3 | 1 |
Montana
|
13 | 13 |
Utah
|
43 | 42 | ||||||||||||||||||
Florida
|
864 | 850 |
Nebraska
|
61 | 62 |
Vermont
|
4 | 3 | ||||||||||||||||||
Georgia
|
203 | 198 |
Nevada
|
87 | 88 |
Virginia
|
133 | 124 | ||||||||||||||||||
Hawaii
|
11 | 10 |
New Hampshire
|
35 | 35 |
Washington
|
130 | 129 | ||||||||||||||||||
Idaho
|
42 | 40 |
New Jersey
|
199 | 191 |
West Virginia
|
21 | 21 | ||||||||||||||||||
Illinois
|
598 | 581 |
New Mexico
|
66 | 66 |
Wisconsin
|
231 | 233 | ||||||||||||||||||
Indiana
|
211 | 212 |
New York
|
524 | 501 |
Wyoming
|
11 | 11 | ||||||||||||||||||
Iowa
|
72 | 72 |
North Carolina
|
201 | 188 |
Guam
|
1 | 1 | ||||||||||||||||||
Kansas
|
69 | 71 |
North Dakota
|
1 | 1 |
Puerto Rico
|
110 | 106 | ||||||||||||||||||
Kentucky
|
102 | 100 |
Ohio
|
271 | 268 |
TOTAL
|
8,210 | 8,046 |
Item 4.
[Reserved]
|
Name and Business Experience
|
Age
|
Office(s) Held
|
|||
Gregory D. Wasson
|
53
|
President and Chief Executive Officer
|
|||
President and Chief Executive Officer since February 2009
|
|||||
Director since February 2009
|
|||||
President and Chief Operating Officer – May 2007 to February 2009
|
|||||
Executive Vice President – October 2005 to May 2007
|
|||||
President, Walgreens Health Services – March 2002 to May 2007
|
|||||
Sona Chawla
|
44
|
President, E-Commerce
|
|||
President, E-Commerce since January 2011
|
|||||
Senior Vice President, E-Commerce – July 2008 to January 2011
|
|||||
Vice President, Global Online Business, Dell, Inc. – December 2006 to May 2008
|
|||||
Executive Vice President, Online Sales, Service and Marketing, Wells Fargo & Company – March 2005 to October 2006
|
|||||
Kermit R. Crawford
|
52
|
President, Pharmacy, Health and Wellness
|
|||
President, Pharmacy, Health and Wellness since September 2010
|
|||||
Executive Vice President – January 2010 to September 2010
|
|||||
Senior Vice President - October 2007 to January 2010
|
|||||
Vice President – October 2005 to October 2007
|
|||||
Senior Vice President, Walgreens Health Services – October 2005 to September 2007
|
|||||
Joseph C. Magnacca
|
49
|
President, Daily Living Products and Solutions
|
|||
President, Daily Living Products and Solutions since April 2011
|
|||||
President of Duane Reade Holdings, Inc. – July 2010 to April 2011
|
|||||
Senior Vice President and Chief Merchandising Officer of Duane Reade Holdings, Inc. – September 2008 to July 2010
|
|||||
Executive Vice President of Shoppers Drug Mart Corporation – 2001 to 2008
|
|||||
Mark A. Wagner
|
50
|
President, Community Management
|
|||
President, Community Management since September 2010
|
|||||
Executive Vice President – March 2006 to September 2010
|
|||||
Senior Vice President – February 2002 to March 2006
|
|||||
Wade D. Miquelon
|
46
|
Executive Vice President and Chief Financial Officer
|
|||
Executive Vice President and Chief Financial Officer since July 2009
|
|||||
Senior Vice President and Chief Financial Officer – June 2008 to July 2009
|
|||||
Executive Vice President and Chief Financial Officer, Tyson Foods, Inc. – June 2006 to June 2008
|
|||||
Vice President, Finance, Western Europe, The Procter & Gamble Company – September 2003 to June 2006
|
|||||
Thomas J. Sabatino, Jr.
|
52
|
Executive Vice President, General Counsel and Corporate Secretary
|
|||
Executive Vice President, General Counsel and Corporate Secretary since September 2011
|
|||||
Executive Vice President and General Counsel of UAL Corporation and United Air Lines, Inc. – March 2010 to December 2010
|
|||||
Executive Vice President and General Counsel of Schering- Plough Corporation – April 2004 to November 2009
|
|||||
Graham W. Atkinson
|
60
|
Senior Vice President and Chief Customer Experience Officer
|
|||
Senior Vice President and Chief Customer Experience Officer since January 2011
|
|||||
Executive Vice President of UAL Corporation and United Air Lines, Inc. and President of Mileage Plus frequent flyer program – October 2008 to December 2010
|
|||||
Executive Vice President – Chief Customer Officer of UAL Corporation and United Air Lines, Inc. – September 2006 to September 2008
|
|||||
Mia M. Scholz
|
45
|
Senior Vice President, Controller and Chief Accounting Officer
|
|||
Senior Vice President since January 2011
|
|||||
Vice President since October 2007
|
|||||
Controller and Chief Accounting Officer since January 2004
|
|||||
Divisional Vice President – January 2004 to October 2007
|
|||||
Timothy J. Theriault
|
51
|
Senior Vice President and Chief Information Officer
|
|||
Senior Vice President and Chief Information Officer since October 2009
|
|||||
President, Corporate and Institutional Services, Northern Trust Corporation – January 2006 to October 2009
|
|||||
President, Worldwide Operations and Technology, Northern Trust Corporation – February 2002 to January 2006
|
|||||
Kathleen Wilson-Thompson
|
54
|
Senior Vice President and Chief Human Resources Officer
|
|||
Senior Vice President and Chief Human Resources Officer since January 2010
|
|||||
Senior Vice President, Global Human Resources of Kellogg Company – July 2005 to December 2009
|
|||||
Robert G. Zimmerman
|
59
|
Senior Vice President and Chief Strategy Officer
|
|||
Senior Vice President and Chief Strategy Officer since September 2011
|
|||||
Senior Vice President since January 2011
|
|||||
Vice President – September 2007 to January 2011
|
|||||
Vice President and Chief Financial Officer, Walgreens Health Services – September 2001 to September 2007
|
|||||
W. Bryan Pugh
|
48
|
Vice President, Merchandising
|
|||
Vice President, Merchandising since February 2009
|
|||||
Chief Retail Operations Officer, Fresh & Easy Neighborhood Markets, USA, Tesco PLC – March 2005 to December 2008
|
Item 5
. Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities
|
Quarter Ended
|
2011
|
2010
|
||||||
November
|
$ | .1750 | $ | .1375 | ||||
February
|
.1750 | .1375 | ||||||
May
|
.1750 | .1375 | ||||||
August
|
.2250 | .1750 | ||||||
Fiscal Year
|
$ | .7500 | $ | .5875 |
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 Repurchase Programs (2)
|
Approximate Dollar Value of Shares that May Yet Be Purchased Under the Plans or Programs (2)
|
||||||||||||
06/01/2011 - 06/30/2011
|
2,864,700 | $ | 43.63 | 2,864,700 | $ | 50,418,560 | ||||||||||
07/01/2011- 07/31/2011
|
1,136,300 | 44.00 | 1,136,300 | - | ||||||||||||
08/01/2011-08/31/2011
|
12,808,100 | 35.92 | 11,808,100 | 1,575,032,563 | ||||||||||||
Total
|
16,809,100 | 37.78 | 15,809,100 | $ | 1,575,032,563 |
(1)
|
The Company purchased 1,000,000 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)
|
In July 2011, the Company completed its 2011 repurchase program, which authorized the repurchase of $1,000 million of the Company’s common stock. On July 13, 2011, the Board of Directors approved a new share repurchase program (2012 repurchase program) which allows for the repurchase of up to $2,000 million of the Company’s common stock prior to its expiration on December 31, 2015. The total remaining authorization under the 2012 repurchase program is $1,575 million as of August 31, 2011.
|
Item 7
. Management's Discussion and Analysis of Financial Condition and Results of Operations
|
Item 8
. Financial Statements and Supplementary Data
|
Item 9
. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure
|
Item 9A
. Controls and Procedures
|
Item 9B
. Other Information
|
Item 10
. Directors, Executive Officers and Corporate Governance
|
Item 11
. Executive Compensation
|
Item 12
. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters
|
Item 13
. Certain Relationships and Related Transactions and Director Independence
|
Item 14
. Principal Accounting Fees and Services
|
Item 15
. Exhibits and Financial Statement Schedules
|
(a)
|
Documents filed as part of this report:
|
|
(1)
|
Financial statements.
The following financial statements, supplementary data, and report of independent public accountants appearing in the 2011 Annual Report are incorporated herein by reference.
|
2011 Annual Report Page Number (printed)
|
||
Consolidated Statements of Earnings and Shareholders' Equity for the years ended August 31, 2011, 2010 and 2009
|
24 – 25
|
|
Consolidated Balance Sheets at August 31, 2011 and 2010
|
26
|
|
Consolidated Statements of Cash Flows for the years ended August 31, 2011, 2010 and 2009
|
27
|
|
Notes to Consolidated Financial Statements
|
28 – 39
|
|
Management's Report on Internal Control
|
40
|
|
Report of Independent Registered Public Accounting Firm
|
40
|
|
(2)
|
Financial statement schedules and supplementary information.
The following financial statement schedule and related report of the independent registered public accounting firm is included herein.
|
Schedule II Valuation and Qualifying Accounts
|
|
Report of Independent Registered Public Accounting Firm
|
|
(3)
|
Exhibits.
Exhibits 10.1 through 10.57 constitute management contracts or compensatory plans or arrangements required to be filed as exhibits pursuant to Item 15(b) of this Form 10-K.
|
Exhibit No.
|
Description
|
SEC Document Reference
|
||
3.1
|
Amended and Restated Articles of Incorporation of Walgreen Co.
|
Incorporated by reference to Exhibit 3.1 to Walgreen Co.’s Current Report on Form 8-K (File No. 1-00604) filed with the SEC on January 19, 2011.
|
||
3.2
|
Amended and Restated By-Laws of Walgreen Co., as amended effective as of September 1, 2008.
|
Incorporated by reference to Exhibit 3.1 to Walgreen Co.’s Current Report on Form 8-K (File No. 1-00604) filed with the SEC on September 5, 2008.
|
||
4.1*
|
Form of Indenture between Walgreen Co. and Wells Fargo Bank, National Association.
|
Incorporated by reference to Exhibit 4.1 to Walgreen Co.’s registration statement on Form S-3ASR (File No. 333-152315) filed with the SEC on July 14, 2008.
|
||
4.2
|
Form of 4.875% Note due 2013.
|
Incorporated by reference to Exhibit 4.1 to Walgreen Co.’s Current Report on Form 8-K (File No. 1-00604) filed with the SEC on July 17, 2008.
|
||
4.3
|
Form of 5.25% Note due 2019.
|
Incorporated by reference to Exhibit 4.1 to Walgreen Co.’s Current Report on Form 8-K (File No. 1-00604) filed with the SEC on January 13, 2009.
|
||
10.1
|
Walgreen Co. Management Incentive Plan (as amended and restated effective September 1, 2008).
|
Incorporated by reference to Exhibit 10.3 to Walgreen Co.’s Annual Report on Form 10-K for the fiscal year ended August 31, 2008 (File No. 1-00604).
|
||
10.2
|
Walgreen Co. Long-Term Performance Incentive Plan (amendment and restatement of the Walgreen Co. Restricted Performance Share Plan).
|
Incorporated by reference to Exhibit 10.1 to Walgreen Co.’s Current Report on Form 8-K (File No. 1-00604) filed with the SEC on January 11, 2007.
|
||
10.3
|
Walgreen Co. Long-Term Performance Incentive Plan Amendment No. 1 (effective January 10, 2007).
|
Incorporated by reference to Exhibit 10.2 to Walgreen Co.’s Quarterly Report on Form 10-Q for the quarter ended February 28, 2007 (File No. 1-00604).
|
||
10.4
|
Walgreen Co. Long-Term Performance Incentive Plan Amendment No. 2.
|
Incorporated by reference to Exhibit 10.1 to Walgreen Co.’s Current Report on Form 8-K (File No. 1-00604) filed with the SEC on April 14, 2011.
|
||
10.5
|
Form of Restricted Stock Unit Award Agreement (August 15, 2011 grants).
|
Filed herewith.
|
||
10.6
|
Form of Restricted Stock Unit Award Agreement (effective September 1, 2011).
|
Filed herewith.
|
||
10.7
|
Form of Performance Share Contingent Award Agreement (effective September 1, 2008).
|
Incorporated by reference to Exhibit 10.14 to Walgreen Co.’s Annual Report on Form 10-K for the fiscal year ended August 31, 2008 (File No. 1-00604).
|
||
10.8
|
Form of Performance Share Contingent Award Agreement (effective September 1, 2011).
|
Filed herewith.
|
||
10.9
|
Form of Restricted Stock Award Agreement (effective June 2008).
|
Incorporated by reference to Exhibit 10.15 to Walgreen Co.’s Annual Report on Form 10-K for the fiscal year ended August 31, 2008 (File No. 1-00604).
|
||
10.10
|
Walgreen Co. Executive Stock Option Plan (as amended and restated effective January 13, 2010).
|
Incorporated by reference to Exhibit 99.1 to Walgreen Co.’s Current Report on Form 8-K (File No. 1-00604) filed with the SEC on January 20, 2010.
|
||
10.11
|
Form of Stock Option Agreement (Benefit Indicator 512 - 515) (effective September 1, 2011).
|
Filed herewith.
|
||
10.12
|
Form of Stock Option Agreement (Benefit Indicator 516 and above) (effective September 1, 2011).
|
Filed herewith.
|
||
10.13
|
Walgreen Co. 1986 Executive Deferred Compensation/Capital Accumulation Plan.
|
Incorporated by reference to Exhibit 10 to Walgreen Co.’s Annual Report on Form 10-K for the fiscal year ended August 31, 1986 (File No. 1-00604).
|
||
10.14
|
Walgreen Co. 1988 Executive Deferred Compensation/Capital Accumulation Plan.
|
Incorporated by reference to Exhibit 10 to Walgreen Co.’s Quarterly Report on Form 10-Q for the quarter ended November 30, 1987 (File No. 1-00604).
|
||
10.15
|
Amendments to Walgreen Co. 1986 and 1988 Executive Deferred Compensation/ Capital Accumulation Plans.
|
Incorporated by reference to Exhibit 10 to Walgreen Co.’s Quarterly Report on Form 10-Q for the quarter ended November 30, 1988 (File No. 1-00604).
|
||
10.16
|
Walgreen Co. 1992 Executive Deferred Compensation/Capital Accumulation Plan Series 1.
|
Incorporated by reference to Exhibit 10 to Walgreen Co.’s Annual Report on Form 10-K for the fiscal year ended August 31, 1992 (File No. 1-00604).
|
||
10.17
|
Walgreen Co. 1992 Executive Deferred Compensation/Capital Accumulation Plan Series 2.
|
Incorporated by reference to Exhibit 10 to Walgreen Co.’s Annual Report on Form 10-K for the fiscal year ended August 31, 1992 (File No. 1-00604).
|
||
10.18
|
Walgreen Co. 1997 Executive Deferred Compensation/Capital Accumulation Plan Series 1.
|
Incorporated by reference to Exhibit 10(c) to Walgreen Co.’s Quarterly Report on Form 10-Q for the quarter ended February 28, 1997 (File No. 1-00604).
|
||
10.19
|
Walgreen Co. 1997 Executive Deferred Compensation/Capital Accumulation Plan Series 2.
|
Incorporated by reference to Exhibit 10(d) to Walgreen Co.’s Quarterly Report on Form 10-Q for the quarter ended February 28, 1997 (File No. 1-00604).
|
||
10.20
|
Walgreen Co. 2001 Executive Deferred Compensation/Capital Accumulation Plan.
|
Incorporated by reference to Exhibit 10(g) to Walgreen Co.’s Annual Report on Form 10-K for the fiscal year ended August 31, 2001 (File No. 1-00604).
|
||
10.21
|
Walgreen Co. 2002 Executive Deferred Compensation/Capital Accumulation Plan.
|
Incorporated by reference to Exhibit 10(g) to Walgreen Co.’s Annual Report on Form 10-K for the fiscal year ended August 31, 2002 (File No. 1-00604).
|
||
10.22
|
Amendment to the Walgreen Co. 1986, 1988, 1992 (Series 1), 1992 (Series 2), 1997 (Series 1), 1997 (Series 2), 2001 and 2002 Executive Deferred Compensation/ Capital Accumulation Plans.
|
Incorporated by reference to Exhibit 10.3 to Walgreen Co.’s Quarterly Report on Form 10-Q for the fiscal quarter ended February 28, 2009 (File No. 1-00604).
|
||
10.23
|
Walgreen Co. 2006 Executive Deferred Compensation/Capital Accumulation Plan (effective January 1, 2006).
|
Incorporated by reference to Exhibit 10(b) to Walgreen Co.’s Quarterly Report on Form 10-Q for the fiscal quarter ended November 30, 2005 (File No. 1-00604).
|
||
10.24
|
Walgreen Co. 2011 Executive Deferred Compensation Plan.
|
Incorporated by reference to Exhibit 10.1 to Walgreen Co.’s Current Report on Form 8-K (File No. 1-00604) filed with the SEC on November 12, 2010.
|
||
10.25
|
Amendment No. 1 to the Walgreen Co. 2011 Executive Deferred Compensation Plan.
|
Incorporated by reference to Exhibit 10.1 to Walgreen Co.’s Current Report on Form 8-K (File No. 1-00604) filed with the SEC on January 19, 2011.
|
||
10.26
|
Walgreen Co. Executive Deferred Profit-Sharing Plan, as amended and restated
effective January 1, 2012.
|
Incorporated by reference to Exhibit 10.2 to Walgreen Co.’s Current Report on Form 8-K (File No. 1-00604) filed with the SEC on July 15, 2011.
|
||
10.27
|
Share Walgreens Stock Purchase/Option Plan (effective October 1, 1992), as amended.
|
Incorporated by reference to Exhibit 10(d) to Walgreen Co.’s Quarterly Report on Form 10-Q for the quarter ended February 28, 2003 (File No. 1-00604).
|
||
10.28
|
Share Walgreens Stock Purchase/Option Plan Amendment No. 4 (effective July 15, 2005), as amended.
|
Incorporated by reference to Exhibit 10(h)(ii) to Walgreen Co.’s Annual Report on Form 10-K for the fiscal year ended August 31, 2005 (File No. 1-00604).
|
||
10.29
|
Share Walgreens Stock Purchase/Option Plan Amendment No. 5 (effective October 11, 2006).
|
Incorporated by reference to Exhibit 10(b) to Walgreen Co.’s Quarterly Report on Form 10-Q for the quarter ended November 30, 2006 (File No. 1-00604).
|
||
10.30
|
Walgreen Select Senior Executive Retiree Medical Expense Plan.
|
Incorporated by reference to Exhibit 10(j) to Walgreen Co.’s Annual Report on Form 10-K for the fiscal year ended August 31, 1996 (File No. 1-00604).
|
||
10.31
|
Walgreen Select Senior Executive Retiree Medical Expense Plan Amendment No. 1 (effective August 1, 2002).
|
Incorporated by reference to Exhibit 10(a) to Walgreen Co.’s Quarterly Report on Form 10-Q for the quarter ended February 28, 2003 (File No. 1-00604).
|
||
10.32
|
Walgreen Co. Profit-Sharing Restoration Plan (as restated effective January 1, 2003).
|
Incorporated by reference to Exhibit 10(b) to Walgreen Co.’s Quarterly Report on Form 10-Q for the quarter ended May 31, 2003 (File No. 1-00604).
|
||
10.33
|
Walgreen Co. Profit-Sharing Restoration Plan Amendment No. 1 (effective January 1, 2008).
|
Incorporated by reference to Exhibit 10.36 to Walgreen Co.’s Annual Report on Form 10-K for the fiscal year ended August 31, 2008 (File No. 1-00604).
|
||
10.34
|
Walgreen Co. Profit-Sharing Restoration Plan Amendment No. 2 (effective January 1, 2010).
|
Incorporated by reference to Exhibit 10.1 to Walgreen Co.’s Quarterly Report on Form 10-Q for the quarter ended February 28, 2010 (File No. 1-00604).
|
||
10.35
|
Amendment to the Walgreen Co. Profit-Sharing Restoration Plan.
|
Incorporated by reference to Exhibit 10.3 to Walgreen Co.’s Quarterly Report on Form 10-Q for the quarter ended November 30, 2010 (File No. 1-00604).
|
||
10.36
|
Amendment to the Walgreen Co. Profit-Sharing Restoration Plan.
|
Incorporated by reference to Exhibit 10.2 to Walgreen Co.’s Current Report on Form 8-K (File No. 1-00604) filed with the SEC on January 19, 2011.
|
||
10.37
|
Walgreen Co. 162(m) Deferred Compensation Plan, as amended and restated.
|
Incorporated by reference to Exhibit 10.1 to Walgreen Co.’s Current Report on Form 8-K (File No. 1-00604) filed with the SEC on October 17, 2011.
|
||
10.38
|
Walgreen Co. Nonemployee Director Stock Plan, as amended and restated (effective January 14, 2004).
|
Incorporated by reference to Exhibit 10(a) to Walgreen Co.’s Quarterly Report on Form 10-Q for the quarter ended February 29, 2004 (File No. 1-00604).
|
||
10.39
|
Walgreen Co. Nonemployee Director Stock Plan Amendment No. 1 (effective October 12, 2005).
|
Incorporated by reference to Exhibit 10(a) to Walgreen Co.’s Quarterly Report on Form 10-Q for the quarter ended November 30, 2005 (File No. 1-00604).
|
||
10.40
|
Walgreen Co. Nonemployee Director Stock Plan Amendment No. 2 (effective October 11, 2006).
|
Incorporated by reference to Exhibit 10(f) to Walgreen Co.’s Quarterly Report on Form 10-Q for the quarter ended November 30, 2006 (File No. 1-00604).
|
||
10.41
|
Walgreen Co. Nonemployee Director Stock Plan Amendment No. 3 (effective September 1, 2009).
|
Incorporated by reference to Exhibit 10.43 to Walgreen Co.’s Annual Report on Form 10-K for the fiscal year ended August 31, 2010 (File No. 1-00604).
|
||
10.42
|
Walgreen Co. Broad-Based Stock Option Plan (effective July 10, 2002).
|
Incorporated by reference to Exhibit 10(p) to Walgreen Co.’s Annual Report on Form 10-K for the fiscal year ended August 31, 2002 (File No. 1-00604).
|
||
10.43
|
Walgreen Co. Broad-Based Employee Stock Option Plan Amendment No. 1 (effective April 1, 2003).
|
Incorporated by reference to Exhibit 10(c) to Walgreen Co.’s Quarterly Report on Form 10-Q for the quarter ended May 31, 2003 (File No. 1-00604).
|
||
10.44
|
Walgreen Co. Broad-Based Employee Stock Option Plan Amendment No. 2 (effective October 11, 2006).
|
Incorporated by reference to Exhibit 10(e) to Walgreen Co.’s Quarterly Report on Form 10-Q for the quarter ended November 30, 2006 (File No. 1-00604).
|
||
10.45
|
Form of Change of Control Employment Agreements.
|
Incorporated by reference to Exhibit 10 to Walgreen Co.’s Current Report on Form 8-K dated October 18, 1988 (File No. 1-00604).
|
||
10.46
|
Form of Amendment to Change of Control Employment Agreements (effective January 1, 2009).
|
Incorporated by reference to Exhibit 10.2 to Walgreen Co.’s Quarterly Report on Form 10-Q for the fiscal quarter ended February 28, 2009 (File No. 1-00604).
|
||
10.47
|
Amendment to Employment Agreements adopted July 12, 1989.
|
Incorporated by reference to Exhibit 10 to Walgreen Co.’s Annual Report on Form 10-K for the fiscal year ended August 31, 1989 (File No. 1-00604).
|
||
10.48
|
Executive Stock Option Plan – Stock Option Agreement made as of October 10, 2008 between Alan G. McNally and Walgreen Co.
|
Incorporated by reference to Exhibit 10.8 to Walgreen Co.’s Quarterly Report on Form 10-Q for the fiscal quarter ended November 30, 2008 (File No. 1-00604).
|
||
10.49
|
Long-Term Performance Incentive Plan – Restricted Stock Unit Award Agreement made as of October 10, 2008 between Alan G. McNally and Walgreen Co.
|
Incorporated by reference to Exhibit 10.9 to Walgreen Co.’s Quarterly Report on Form 10-Q for the fiscal quarter ended November 30, 2008 (File No. 1-00604).
|
||
10.50
|
Amended and Restated Senior Executive Severance Agreement effective as of July 31, 2006 between Medmark, Inc. and Stanley B. Blaylock.
|
Incorporated by reference to Exhibit 10.1 to Walgreen Co.’s Quarterly Report on Form 10-Q for the fiscal quarter ended November 30, 2009 (File No. 1-00604).
|
||
10.51
|
Separation and Release Agreement, effective April, 2, 2010, between Stanley B. Blaylock and Walgreen Co.
|
Incorporated by reference to Exhibit 10.1 to Walgreen Co.’s Quarterly Report on Form 10-Q for the fiscal quarter ended May 31, 2010 (File No. 1-00604).
|
||
10.52
|
Voluntary Separation and Release Agreement, dated January 8, 2010, between George Riedl and Walgreen Co.
|
Incorporated by reference to Exhibit 10.60 to Walgreen Co.’s Annual Report on Form 10-K for the fiscal year ended August 31, 2010 (File No. 1-00604).
|
||
10.53
|
Agreement and Release between Hal F. Rosenbluth and Walgreen Co.
|
Incorporated by reference to Exhibit 10.2 to Walgreen Co.’s Quarterly Report on Form 10-Q for the fiscal quarter ended May 31, 2011 (File No. 1-00604).
|
||
10.54
|
Offer letter agreement dated March 10, 2011 between Joseph C. Magnacca and Walgreen Co.
|
Incorporated by reference to Exhibit 10.3 to Walgreen Co.’s Quarterly Report on Form 10-Q for the fiscal quarter ended May 31, 2011 (File No. 1-00604).
|
||
10.55
|
Offer letter agreement dated August 9, 2011 between Thomas J. Sabatino and Walgreen Co.
|
Filed herewith.
|
||
10.56
|
drugstore.com, inc., 1998 Stock Plan, as amended.
|
Incorporated by reference to Exhibit 99.1 to Walgreen Co.’s Registration Statement on Form S-8 (File No. 333-174811) filed with the SEC on June 9, 2011.
|
||
10.57
|
drugstore.com, inc., 2008 Equity Incentive Plan, as amended.
|
Incorporated by reference to Exhibit 99.2 to Walgreen Co.’s Registration Statement on Form S-8 (File No. 333-174811) filed with the SEC on June 9, 2011.
|
||
12.
|
Computation of Ratio of Earnings to Fixed Charges.
|
Filed herewith.
|
||
13.
|
Portions of the Walgreen Co. Annual Report to Shareholders for the fiscal year ended August 31, 2011.
|
This report, except for those portions thereof which are expressly incorporated by reference in this Form 10-K, is being furnished for the information of the SEC and is not deemed to be "filed" as a part of the filing of this Form 10-K.
|
||
21.
|
Subsidiaries of the Registrant.
|
Filed herewith.
|
||
23.
|
Consent of Independent Registered Public Accounting Firm.
|
Filed herewith.
|
||
31.1
|
Certification of the Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
|
Filed herewith.
|
||
31.2
|
Certification of the Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
|
Filed herewith.
|
||
32.1
|
Certification of the Chief Executive Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, 18 U.S.C. Section 1350.
|
Furnished herewith.
|
||
32.2
|
Certification of the Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, 18 U.S.C. Section 1350.
|
Furnished herewith.
|
||
101**
|
The following financial statements and footnotes from the Walgreen Co. Annual Report on Form 10-K for the year ended August 31, 2011, formatted in XBRL (eXtensible Business Reporting Language): (i) Consolidated Statement of Earnings; (ii) Consolidated Statement of Cash Flows; (iii) Consolidated Balance Sheet; (iv) Consolidated Statement of Shareholders' Equity, and (v) the Notes to Consolidated Financial Statements.
|
Furnished herewith.
|
*
|
Other instruments defining the rights of holders of long-term debt of the registrant and its consolidated subsidiaries may be omitted from Exhibit 4 in accordance with Item 601(b)(4)(iii)(A) of Regulation S-K. Copies of such agreements will be furnished to the SEC upon request.
|
**
|
In accordance with Rule 406T under Regulation S-T, the XBRL-related information in Exhibit 101 to this Annual Report on Form 10-K shall be deemed to be “furnished” and not “filed”.
|
Classification
|
Balance at Beginning of
Period
|
Additions Charged to Costs and
Expenses
|
Deductions
|
Balance at End
of Period
|
||||||||||||
Allowances deducted from receivables for doubtful accounts -
|
||||||||||||||||
Year Ended August 31, 2011
|
$ | 104 | $ | 88 | $ | (91 | ) | $ | 101 | |||||||
Year Ended August 31, 2010
|
$ | 110 | $ | 111 | $ | (117 | ) | $ | 104 | |||||||
Year Ended August 31, 2009
|
$ | 96 | $ | 116 | $ | (102 | ) | $ | 110 |
Name
|
Title
|
Date
|
||||
/s/ Gregory D. Wasson
|
President and Chief Executive Officer
|
October 25, 2011
|
||||
Gregory D. Wasson
|
(Principal Executive Officer)
|
|||||
/s/ Wade D. Miquelon
|
Executive Vice President and Chief
|
October 25, 2011
|
||||
Wade D. Miquelon
|
Financial Officer (Principal Financial Officer)
|
|||||
/s/ Mia M. Scholz
|
Senior Vice President, Controller and
|
October 25, 2011
|
||||
Mia M. Scholz
|
Chief Accounting Officer (Principal Accounting Officer)
|
|||||
/s/ David J. Brailer
|
Director
|
October 25, 2011
|
||||
David J. Brailer
|
||||||
/s/ Steven A. Davis
|
Director
|
October 25, 2011
|
||||
Steven A. Davis
|
||||||
/s/ William C. Foote
|
Director
|
October 25, 2011
|
||||
William C. Foote
|
||||||
/s/ Mark P. Frissora
|
Director
|
October 25, 2011
|
||||
Mark P. Frissora
|
||||||
/s/ Ginger L. Graham
|
Director
|
October 25, 2011
|
||||
Ginger L. Graham
|
||||||
/s/ Alan G. McNally
|
Chairman of the Board
|
October 25, 2011
|
||||
Alan G. McNally
|
||||||
/s/ Nancy M. Schlichting
|
Director
|
October 25, 2011
|
||||
Nancy M. Schlichting
|
||||||
/s/ David Y. Schwartz
|
Director
|
October 25, 2011
|
||||
David Y. Schwartz
|
||||||
/s/ Alejandro Silva
|
Director
|
October 25, 2011
|
||||
Alejandro Silva
|
||||||
/s/ James A. Skinner
|
Director
|
October 25, 2011
|
||||
James A. Skinner
|
Exhibit No.
|
Description
|
|
10.5
|
Form of Restricted Stock Unit Award Agreement (August 15, 2011 grants).
|
|
10.6
|
Form of Restricted Stock Unit Award Agreement (effective September 1, 2011).
|
|
10.8
|
Form of Performance Share Contingent Award Agreement (effective September 1, 2011).
|
|
10.11
|
Form of Stock Option Agreement (Benefit Indicator 512 - 515) (effective September 1, 2011).
|
|
10.12
|
Form of Stock Option Agreement (Benefit Indicator 516 and above) (effective September 1, 2011).
|
|
10.55
|
Offer letter agreement dated August 9, 2011 between Thomas J. Sabatino and Walgreen Co.
|
|
12
|
Computation of Ratio of Earnings to Fixed Charges.
|
|
13
|
Annual Report to shareholders for the fiscal year ended August 31, 2011. This report, except for those portions thereof which are expressly incorporated by reference in this Form 10-K, is being furnished for the information of the Securities and Exchange Commission and is not deemed to be "filed" as a part of the filing of this Form 10-K.
|
|
21
|
Subsidiaries of the Registrant.
|
|
23
|
Consent of Independent Registered Public Accounting Firm.
|
|
31.1
|
Certification of the Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
|
|
31.2
|
Certification of the Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
|
|
32.1
|
Certification of the Chief Executive Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, 18 U.S.C. Section 1350.
|
|
32.2
|
Certification of the Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, 18 U.S.C. Section 1350.
|
|
101*
|
The following financial statements and footnotes from the Walgreen Co. Annual Report on Form 10-K for the year ended August 31, 2011, formatted in XBRL (eXtensible Business Reporting Language): (i) Consolidated Statement of Earnings; (ii) Consolidated Statement of Cash Flows; (iii) Consolidated Balance Sheet; (iv) Consolidated Statement of Shareholders' Equity, and (v) the Notes to Consolidated Financial Statements.
|
*
|
In accordance with Rule 406T under Regulation S-T, the XBRL-related information in Exhibit 101 to this Annual Report on Form 10-K shall be deemed to be “furnished” and not “filed”.
|
|
(a)
|
business or marketing plans, trade secrets, selling and pricing procedures and techniques, customer records,
|
|
(b)
|
customer lists, requirements, and information,
|
|
(c)
|
databases and software developed or used by the Company, financial information and projections, and other information for which the Company has assumed an obligation of confidentiality.
|
|
(a)
|
I agree that the restrictions contained in this Agreement are reasonable and necessary to protect the Company’s legitimate business interests and that full compliance with the terms of this Agreement will not prevent me from earning a livelihood following the termination of my employment, and that these covenants do not place undue restraint on me.
|
|
(b)
|
Because the Company’s
current base of operations is in Illinois, I consent to the jurisdiction of the state and federal courts of Illinois with respect to any claim arising out of this Agreement.
|
|
(c)
|
Because the Company’s
current base of operations is in Illinois, I agree that this Agreement shall be governed by the laws of Illinois without regard to its choice of law rules.
|
|
(d)
|
In the event of a breach or a threatened breach of this Agreement, I acknowledge that the Company will face irreparable injury which may be difficult to calculate in dollar terms and that the Company shall be entitled, in addition to all remedies otherwise available in law or in equity, to temporary restraining orders and preliminary and final injunctions enjoining such breach or threatened breach in any court of competent jurisdiction without the necessity of posting a surety bond, as well as to obtain an equitable accounting of all profits or benefits arising out of any violation of this Agreement.
|
|
(e)
|
I agree that if a court determines that any of the provisions in this Agreement is unenforceable or unreasonable in duration, territory, or scope, then that court shall modify those provisions so they are reasonable and enforceable, and enforce those provisions as modified.
|
|
(f)
|
If any phrase or provision of this Agreement is declared invalid or unenforceable by a court of competent jurisdiction, that phrase, clause or provision shall be deemed severed from this Agreement, and will not affect the enforceability of any other provisions of this Agreement, which shall otherwise remain in full force and effect.
|
|
(g)
|
Waiver of any of the provisions of this Agreement by the Company in any particular instance shall not be deemed to be a waiver of any provision in any other instance and/or of the Company’s other rights at law or under this Agreement.
|
|
(h)
|
I agree that the Company may assign this Agreement to its successors and that any such successor may stand in the Company’s shoes for purposes of enforcing this Agreement.
|
|
(i)
|
I agree to reimburse Company for all attorneys’ fees, costs, and expenses that it reasonably incurs in connection with enforcing its rights and remedies under this Agreement, but only to the extent the Company is ultimately the prevailing party in the applicable legal proceedings.
|
|
(j)
|
If I violate this Agreement, then the restrictions set out in Paragraphs 2 - 5 shall be extended by the same period of time as the period of time during which the violation(s) occurred.
|
|
(k)
|
I fully understand my obligations in this Agreement, have had full and complete opportunity to discuss and resolve any ambiguities or uncertainties regarding these covenants before signing this Agreement, and have voluntarily agreed to comply with these covenants for their stated terms.
|
1.
|
The amount of performance shares earned at the end of the three-year Performance Period will vary depending on the degree to which return on invested capital (ROIC) performance goals are met. Return on invested capital performance goals are based on the three-year average annual ROIC, with inventory based on the FIFO method of accounting.
|
Percent of
|
|||||
Performance
|
=
|
Contingent
|
X
|
Contingent
|
|
Shares Awarded
|
Performance Shares
|
Performance Shares Earned
|
2.
|
At the end of fiscal year 2014, actual performance for the entire Performance Period shall be reviewed, and the amount of the earned award shall be determined based on this performance and communicated to you.
|
3.
|
If you terminate employment with the Company and all subsidiaries during the Performance Period due to Retirement, Disability or death (in each case as defined in the Plan), then the award earned by you at the end of the Performance Period will be prorated to reflect the portion of the Performance Period during which you remained employed by the Company. Such prorated portion shall equal the number of performance shares that would otherwise be earned, multiplied by a fraction equal to the number of full months of the Performance Period completed as of your retirement date, divided by 36. Any other termination of employment during the Performance Period shall result in no earned award.
|
4.
|
Each earned performance share shall be converted to one share of Walgreen Co. common stock (“Common Stock”). Subject to the requirements of Paragraph 5 below, the Company shall transfer to you one share of Common Stock for each earned performance share. At that time, the Company may withhold shares otherwise transferable to you to the extent necessary to satisfy withholding taxes in accordance with Paragraph 5 below and Section 13.1 of the Plan. You shall have no rights as a stockholder with respect to the Common Stock awarded hereunder prior to the date of issuance to you of a certificate or certificates for such shares. Certificates for the shares of Common Stock shall be issued and delivered to you, your legal representative, or a brokerage account for your benefit, as the case may be, or the shares may be held in book entry form. Performance shares payable under this Agreement are intended to be exempt from Internal Revenue Code Section 409A under the exemption for short-term deferrals. Accordingly, performance shares will be settled in Common Stock no later than the 15
th
day of the third month following the end of the fiscal year of the Company in which the performance shares are realized.
|
5.
|
Whenever an earned performance share award is realized, the Company or its agent shall notify you of the related amount of tax that must be withheld under applicable tax laws. Regardless of any action the Company takes with respect to any or all income tax, social security, payroll tax, payment on account or other tax-related withholding (“Tax”) that you are required to bear pursuant to all applicable laws, such Tax is your responsibility. Prior to receipt of any shares of Common Stock that correspond to earned performance shares, you shall make adequate arrangements satisfactory to the Company to satisfy all tax withholding obligations of the Company. In this regard, the Company shall sell or arrange for the sale of Common Stock that the Employee is due to acquire to satisfy the withholding obligation for Tax and/or withhold a sufficient number of shares of Common Stock. Finally, you agree to pay the Company any amount of any Tax that the Company may be required to withhold as a result of your participation in the Plan that cannot be satisfied by the means previously described. The Company may refuse to deliver Common Stock if you fail to comply with your obligations described in this Paragraph.
|
6.
|
Notwithstanding the remainder of this Award Agreement, if there is a Change in Control of Walgreen Co. (as defined in the Plan) during the Performance Period, then your earned award shall be equal your target number of performance shares, and this award will be settled in cash (subject to required tax withholdings) in accordance with Section 11.1 of the Plan and distributed to you within 45 days of the effective date of the Change in Control.
|
7.
|
This Award Agreement and your rights hereunder are subject to all of the terms and conditions of the Plan, as it may be amended from time to time, as well as to such rules and regulations as the Compensation Committee of the Board of Directors may adopt for administration of the Plan. It is expressly understood that this Committee is authorized to administer, construe and make all determinations necessary or appropriate for the administration of the Plan and this Award Agreement, all of which shall be binding upon you. Any inconsistency between this Award Agreement and the Plan shall be resolved in favor of the Plan.
|
8.
|
This award may be accepted only by an individual who is an employee of the Company and who satisfies the eligibility requirements outlined in the Plan and the Committee’s administrative procedures. If a Registration Statement under the Securities Act of 1933, as amended, is not in effect with respect to the shares of Common Stock to be issued pursuant to this Award Agreement, you hereby represent that you are acquiring the shares of Common Stock for investment and with no present intention of selling or transferring them and that you will not sell or otherwise transfer the shares except in compliance with all applicable securities laws and requirements of any stock exchange on which the shares of Common Stock may then be listed.
|
9.
|
In the event of any change in the Common Stock of the Company, the provisions of Section 10.2 of the Plan shall govern such that the number of performance shares subject to this Award Agreement shall be equitably adjusted by the Compensation Committee of the Board of Directors.
|
Fiscal Year Ended | ||||||||||||||||||||
8/31/2011
|
8/31/2010
|
8/31/2009
|
8/31/2008
|
8/31/2007
|
||||||||||||||||
Income before income taxes
|
$ | 4,294 | $ | 3,373 | $ | 3,164 | $ | 3,430 | $ | 3,189 | ||||||||||
Add:
|
||||||||||||||||||||
Fixed charges
|
1,212 | 1,100 | 996 | 842 | 735 | |||||||||||||||
Amortization of capitalized interest | 5 | 4 | 3 | 2 | 2 | |||||||||||||||
Less: Capitalized interest
|
(10 | ) | (12 | ) | (16 | ) | (19 | ) | (6 | ) | ||||||||||
Earnings as defined
|
$ | 5,501 | $ | 4,465 | $ | 4,147 | $ | 4,254 | $ | 3,920 | ||||||||||
Interest expense, net of capitalized interest
|
$ | 77 | $ | 90 | $ | 91 | $ | 18 | $ | 1 | ||||||||||
Capitalized interest
|
10 | 12 | 16 | 19 | 6 | |||||||||||||||
Portions of rentals representative of the interest factor
|
1,125 | 998 | 889 | 805 | 728 | |||||||||||||||
Fixed charges as defined
|
$ | 1,212 | $ | 1,100 | $ | 996 | $ | 843 | $ | 735 | ||||||||||
Ratio of earnings to fixed charges
|
4.54 | 4.06 | 4.16 | 5.05 | 5.33 |
Fiscal Year
|
2011
|
2010(1)
|
2009
|
2008
|
2007
|
|||||||||||||||
Net sales
|
$ | 72,184 | $ | 67,420 | $ | 63,335 | $ | 59,034 | $ | 53,762 | ||||||||||
Cost of sales (2)
|
51,692 | 48,444 | 45,722 | 42,391 | 38,518 | |||||||||||||||
Gross Profit
|
20,492 | 18,976 | 17,613 | 16,643 | 15,244 | |||||||||||||||
Selling, general and administrative expenses (2) (3)
|
16,561 | 15,518 | 14,366 | 13,202 | 12,093 | |||||||||||||||
Gain on sale of business (4)
|
434 | - | - | - | - | |||||||||||||||
Operating Income
|
4,365 | 3,458 | 3,247 | 3,441 | 3,151 | |||||||||||||||
Other (expense) income
|
(71 | ) | (85 | ) | (83 | ) | (11 | ) | 38 | |||||||||||
Earnings Before Income Tax Provision
|
4,294 | 3,373 | 3,164 | 3,430 | 3,189 | |||||||||||||||
Income tax provision (5)
|
1,580 | 1,282 | 1,158 | 1,273 | 1,148 | |||||||||||||||
Net Earnings
|
$ | 2,714 | $ | 2,091 | $ | 2,006 | $ | 2,157 | $ | 2,041 | ||||||||||
Per Common Share
|
||||||||||||||||||||
Net earnings
|
||||||||||||||||||||
Basic
|
$ | 2.97 | $ | 2.13 | $ | 2.03 | $ | 2.18 | $ | 2.04 | ||||||||||
Diluted
|
2.94 | 2.12 | 2.02 | 2.17 | 2.03 | |||||||||||||||
Dividends declared
|
.75 | .59 | .48 | .40 | .33 | |||||||||||||||
Book value
|
16.69 | 15.34 | 14.54 | 13.01 | 11.20 | |||||||||||||||
Non-Current Liabilities
|
||||||||||||||||||||
Long-term debt
|
$ | 2,396 | $ | 2,389 | $ | 2,336 | $ | 1,337 | $ | 22 | ||||||||||
Deferred income taxes
|
343 | 318 | 265 | 150 | 158 | |||||||||||||||
Other non-current liabilities
|
1,785 | 1,735 | 1,396 | 1,410 | 1,285 | |||||||||||||||
Assets and Equity
|
||||||||||||||||||||
Total Assets
|
$ | 27,454 | $ | 26,275 | $ | 25,142 | $ | 22,410 | $ | 19,314 | ||||||||||
Shareholders' Equity
|
14,847 | 14,400 | 14,376 | 12,869 | 11,104 | |||||||||||||||
Return on average shareholders' equity
|
18.6 | % | 14.5 | % | 14.7 | % | 18.0 | % | 19.2 | % | ||||||||||
Locations
|
||||||||||||||||||||
Year-end (6)
|
8,210 | 8,046 | 7,496 | 6,934 | 5,997 |
(1)
|
Includes results of Duane Reade operations since the April 9, 2010 acquisition date.
|
(2)
|
Fiscal 2011, 2010 and 2009 included Rewiring for Growth restructuring and restructuring-related charges of $45 million pre-tax, $28 million after tax, or $.03 per diluted share, $106 million pre-tax, $67 million after tax, or $.07 per diluted share, and $252 million pre-tax, $160 million after tax, or $.16 per diluted share, respectively. Charges included in cost of sales for fiscal 2011, 2010 and 2009 were $3 million, $40 million and $95 million, respectively. Selling, general and administrative expenses related to the initiative for fiscal 2011, 2010 and 2009 were $42 million, $66 million and $157 million, respectively. Fiscal 2011, 2010 and 2009 included expenses related to Customer Centric Retailing store conversions of $84 million, $45 million and $5 million, respectively, all of which were included in selling, general and administrative expenses.
|
(3)
|
Fiscal 2008 included a positive adjustment of $79 million pre-tax, $50 million after tax, or $.05 per diluted share, relating to an adjustment of the Company’s vacation liability.
|
(4)
|
In fiscal 2011, the Company sold its pharmacy benefit management business, Walgreens Health Initiatives, Inc., to Catalyst Health Solutions, Inc. and recorded a pre-tax gain of $434 million, $273 million after tax, or $.30 per diluted share.
|
(5)
|
Fiscal 2010 included a deferred tax charge of $43 million related to the repeal of a tax benefit for the Medicare Part D subsidy for retiree benefits.
|
(6)
|
Locations include drugstores, worksite health and wellness centers, infusion and respiratory services facilities, specialty pharmacies and mail service facilities.
|
|
Number of Locations
|
||||||||||||
Location Type
|
2011
|
2010
|
2009
|
|||||||||
Drugstores
|
7,761 | 7,562 | 6,997 | |||||||||
Worksite Health and Wellness Centers
|
355 | 367 | 377 | |||||||||
Infusion and Respiratory Services Facilities
|
83 | 101 | 105 | |||||||||
Specialty Pharmacies
|
9 | 14 | 15 | |||||||||
Mail Service Facilities
|
2 | 2 | 2 | |||||||||
Total
|
8,210 | 8,046 | 7,496 |
Twelve Months Ended August 31,
|
||||||||||||
2011
|
2010
|
2009
|
||||||||||
Severance and other benefits
|
$ | 5 | $ | 16 | $ | 74 | ||||||
Project cancellation settlements
|
- | - | 7 | |||||||||
Inventory charges
|
- | 19 | 63 | |||||||||
Restructuring expense
|
5 | 35 | 144 | |||||||||
Consulting
|
37 | 50 | 76 | |||||||||
Restructuring and restructuring-related costs
|
$ | 42 | $ | 85 | $ | 220 | ||||||
Cost of sales
|
$ | - | $ | 19 | $ | 63 | ||||||
Selling, general and administrative expenses
|
42 | 66 | 157 | |||||||||
$ | 42 | $ | 85 | $ | 220 |
Severance and Other Benefits
|
||||
August 31, 2009 Reserve Balance
|
$ | 4 | ||
Charges
|
19 | |||
Cash Payments
|
(23 | ) | ||
August 31, 2010 Reserve Balance
|
$ | - | ||
Charges
|
5 | |||
Cash Payments
|
(5 | ) | ||
August 31, 2011 Reserve Balance
|
$ | - |
Percentage Increases/ (Decreases)
|
||||||||||||
Fiscal Year
|
2011
|
2010
|
2009
|
|||||||||
Net Sales
|
7.1 | 6.4 | 7.3 | |||||||||
Net Earnings
|
29.8 | 4.2 | (7.0 | ) | ||||||||
Comparable Drugstore Sales
|
3.3 | 1.6 | 2.0 | |||||||||
Prescription Sales
|
6.3 | 6.3 | 7.8 | |||||||||
Comparable Drugstore Prescription Sales
|
3.3 | 2.3 | 3.5 | |||||||||
Front-End Sales
|
8.5 | 6.8 | 6.3 | |||||||||
Comparable Drugstore Front-End Sales
|
3.3 | 0.5 | (0.5 | ) | ||||||||
Gross Profit
|
8.0 | 7.7 | 5.8 | |||||||||
Selling, General and Administrative Expenses
|
6.7 | 8.0 | 8.8 |
Percent to Net Sales
|
||||||||||||
Fiscal Year
|
2011
|
2010
|
2009
|
|||||||||
Gross Margin
|
28.4 | 28.1 | 27.8 | |||||||||
Selling, General and Administrative Expenses
|
23.0 | 23.0 | 22.7 |
Other Statistics
|
||||||||||||
Fiscal Year
|
2011
|
2010
|
2009
|
|||||||||
Prescription Sales as a % of Net Sales
|
64.7 | 65.2 | 65.3 | |||||||||
Third Party Sales as a % of Total Prescription Sales
|
95.6 | 95.3 | 95.4 | |||||||||
Total Number of Prescriptions (in millions)
|
718 | 695 | 651 | |||||||||
30-Day Equivalent Prescriptions (in millions) *
|
819 | 778 | 723 | |||||||||
Total Number of Locations
|
8,210 | 8,046 | 7,496 |
* Includes the adjustment to convert prescriptions greater than 84 days to the equivalent of three 30-day prescriptions. This adjustment reflects the fact that these prescriptions include approximately three times the amount of product days supplied compared to a normal prescription.
|
Infusion and
|
Specialty
|
Mail
|
||||||||||||||||||||||
Drugstores
|
Worksites
|
Respiratory Services
|
Pharmacy
|
Service
|
Total
|
|||||||||||||||||||
August 31, 2009
|
6,997 | 377 | 105 | 15 | 2 | 7,496 | ||||||||||||||||||
New/Relocated
|
359 | 24 | 4 | 1 | - | 388 | ||||||||||||||||||
Acquired
|
281 | - | 1 | - | - | 282 | ||||||||||||||||||
Closed/Replaced
|
(75 | ) | (34 | ) | (9 | ) | (2 | ) | - | (120 | ) | |||||||||||||
August 31, 2010
|
7,562 | 367 | 101 | 14 | 2 | 8,046 | ||||||||||||||||||
New/Relocated
|
237 | 21 | 1 | 2 | - | 261 | ||||||||||||||||||
Acquired
|
32 | - | 4 | - | - | 36 | ||||||||||||||||||
Closed/Replaced
|
(70 | ) | (33 | ) | (23 | ) | (7 | ) | - | (133 | ) | |||||||||||||
August 31, 2011
|
7,761 | 355 | 83 | 9 | 2 | 8,210 |
Rating Agency
|
Long-Term Debt Rating
|
Commercial Paper Rating
|
Outlook
|
Moody's
|
A2
|
P-1
|
Negative
|
Standard & Poor's
|
A
|
A-1
|
Negative
|
Payments Due by Period
|
||||||||||||||||||||
Total
|
Less Than 1 Year
|
1-3 Years
|
3-5 Years
|
Over 5 Years
|
||||||||||||||||
Operating leases (1)
|
$ | 36,205 | $ | 2,381 | $ | 4,715 | $ | 4,492 | $ | 24,617 | ||||||||||
Purchase obligations (2):
|
||||||||||||||||||||
Open inventory purchase orders
|
1,736 | 1,736 | - | - | - | |||||||||||||||
Real estate development
|
240 | 155 | 77 | 8 | - | |||||||||||||||
Other corporate obligations
|
494 | 244 | 142 | 88 | 20 | |||||||||||||||
Long-term debt*(3)
|
2,353 | 8 | 1,305 | 9 | 1,031 | |||||||||||||||
Interest payment on long-term debt
|
523 | 116 | 168 | 105 | 134 | |||||||||||||||
Insurance*
|
570 | 226 | 166 | 76 | 102 | |||||||||||||||
Retiree health*
|
407 | 11 | 26 | 32 | 338 | |||||||||||||||
Closed location obligations*
|
145 | 33 | 38 | 23 | 51 | |||||||||||||||
Capital lease obligations*(1)
|
113 | 5 | 10 | 7 | 91 | |||||||||||||||
Other long-term liabilities reflected on the balance sheet* (4)
|
889 | 64 | 172 | 151 | 502 | |||||||||||||||
Total
|
$ | 43,675 | $ | 4,979 | $ | 6,819 | $ | 4,991 | $ | 26,886 |
(1)
|
Amounts for operating leases and capital leases do not include certain operating expenses under these leases such as common area maintenance, insurance and real estate taxes. These expenses were $404 million for the fiscal year ended August 31, 2011.
|
(2)
|
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.
|
(3)
|
Total long-term debt on the Consolidated Balance Sheet includes a $57 million fair market value adjustment and $6 million of unamortized discount.
|
(4)
|
Includes $101 million ($40 million in 1-3 years, $45 million in 3-5 years and $16 million over 5 years) of unrecognized tax benefits recorded under Accounting Standards Codification (ASC) Topic 740, Income Taxes.
|
August 31, 2011
|
||||
Inventory obligations
|
$ | 143 | ||
Insurance
|
40 | |||
Real estate development
|
13 | |||
Total | $ | 196 |
2011
|
2010
|
2009
|
||||||||||
Net sales
|
$ | 72,184 | $ | 67,420 | $ | 63,335 | ||||||
Cost of sales
|
51,692 | 48,444 | 45,722 | |||||||||
Gross Profit
|
20,492 | 18,976 | 17,613 | |||||||||
Selling, general and administrative expenses
|
16,561 | 15,518 | 14,366 | |||||||||
Gain on sale of business
|
434 | - | - | |||||||||
Operating Income
|
4,365 | 3,458 | 3,247 | |||||||||
Interest expense, net
|
(71 | ) | (85 | ) | (83 | ) | ||||||
Earnings Before Income Tax Provision
|
4,294 | 3,373 | 3,164 | |||||||||
Income tax provision
|
1,580 | 1,282 | 1,158 | |||||||||
Net Earnings
|
$ | 2,714 | $ | 2,091 | $ | 2,006 | ||||||
Net earnings per common share - basic
|
$ | 2.97 | $ | 2.13 | $ | 2.03 | ||||||
Net earnings per common share - diluted
|
2.94 | 2.12 | 2.02 | |||||||||
Average shares outstanding
|
915.1 | 981.7 | 990.0 | |||||||||
Dilutive effect of stock options
|
9.4 | 6.2 | 1.3 | |||||||||
Average diluted shares
|
924.5 | 987.9 | 991.3 |
Shareholders' Equity
|
Common Stock Shares
|
Common Stock Amount
|
Paid-In Capital
|
Employee Stock Loan Receivable
|
Retained Earnings
|
Accumulated Other Comprehensive Income(Loss)
|
Treasury Stock Amount
|
|||||||||||||||||||||
Balance, August 31, 2008
|
989,176,218 | $ | 80 | $ | 575 | $ | (36 | ) | $ | 13,792 | $ | 9 | $ | (1,551 | ) | |||||||||||||
Net earnings
|
- | - | - | - | 2,006 | - | - | |||||||||||||||||||||
Dividends declared ($.4750 per share)
|
- | - | - | - | (471 | ) | - | - | ||||||||||||||||||||
Treasury stock purchases
|
(10,270,000 | ) | - | - | - | - | - | (279 | ) | |||||||||||||||||||
Employee stock purchase and option plans
|
9,655,172 | - | (48 | ) | - | - | - | 297 | ||||||||||||||||||||
Stock-based compensation
|
- | - | 78 | - | - | - | - | |||||||||||||||||||||
Employee stock loan receivable
|
- | - | - | (104 | ) | - | - | - | ||||||||||||||||||||
Additional minimum postretirement liability, net of $29 tax expense
|
- | - | - | - | - | 28 | - | |||||||||||||||||||||
Balance, August 31, 2009
|
988,561,390 | 80 | 605 | (140 | ) | 15,327 | 37 | (1,533 | ) | |||||||||||||||||||
Net earnings
|
- | - | - | - | 2,091 | - | - | |||||||||||||||||||||
Dividends declared ($.5875 per share)
|
- | - | - | - | (570 | ) | - | - | ||||||||||||||||||||
Treasury stock purchases
|
(55,716,733 | ) | - | - | - | - | - | (1,756 | ) | |||||||||||||||||||
Employee stock purchase and option plans
|
5,760,396 | - | (5 | ) | - | - | - | 188 | ||||||||||||||||||||
Stock-based compensation
|
- | - | 84 | - | - | - | - | |||||||||||||||||||||
Employee stock loan receivable
|
- | - | - | 53 | - | - | - | |||||||||||||||||||||
Additional minimum postretirement liability, net of $34 tax benefit
|
- | - | - | - | - | (61 | ) | - | ||||||||||||||||||||
Balance, August 31, 2010
|
938,605,053 | 80 | 684 | (87 | ) | 16,848 | (24 | ) | (3,101 | ) | ||||||||||||||||||
Net earnings
|
- | - | - | - | 2,714 | - | - | |||||||||||||||||||||
Dividends declared ($.7500 per share)
|
- | - | - | - | (685 | ) | - | - | ||||||||||||||||||||
Treasury stock purchases
|
(54,739,474 | ) | - | - | - | - | - | (2,028 | ) | |||||||||||||||||||
Employee stock purchase and option plans
|
5,428,551 | - | (12 | ) | - | - | - | 203 | ||||||||||||||||||||
Other
|
- | - | 27 | - | - | - | - | |||||||||||||||||||||
Stock-based compensation
|
135 | - | - | - | - | |||||||||||||||||||||||
Employee stock loan receivable
|
- | - | - | 53 | - | - | - | |||||||||||||||||||||
Additional minimum postretirement liability, net of $22 tax expense
|
- | - | - | - | - | 40 | - | |||||||||||||||||||||
Balance, August 31, 2011
|
889,294,130 | $ | 80 | $ | 834 | $ | (34 | ) | $ | 18,877 | $ | 16 | $ | (4,926 | ) |
Assets
|
2011
|
2010
|
||||||
Current Assets
|
||||||||
Cash and cash equivalents
|
$ | 1,556 | $ | 1,880 | ||||
Accounts receivable, net
|
2,497 | 2,450 | ||||||
Inventories
|
8,044 | 7,378 | ||||||
Other current assets
|
225 | 214 | ||||||
Total Current Assets
|
12,322 | 11,922 | ||||||
Non-Current Assets
|
||||||||
Property and equipment, at cost, less accumulated depreciation and amortization
|
11,526 | 11,184 | ||||||
Goodwill
|
2,017 | 1,887 | ||||||
Other non-current assets
|
1,589 | 1,282 | ||||||
Total Non-Current Assets
|
15,132 | 14,353 | ||||||
Total Assets
|
$ | 27,454 | $ | 26,275 | ||||
Liabilities and Shareholders' Equity
|
||||||||
Current Liabilities
|
||||||||
Short-term borrowings
|
$ | 13 | $ | 12 | ||||
Trade accounts payable
|
4,810 | 4,585 | ||||||
Accrued expenses and other liabilities
|
3,075 | 2,763 | ||||||
Income taxes
|
185 | 73 | ||||||
Total Current Liabilities
|
8,083 | 7,433 | ||||||
Non-Current Liabilities
|
||||||||
Long-term debt
|
2,396 | 2,389 | ||||||
Deferred income taxes
|
343 | 318 | ||||||
Other non-current liabilities
|
1,785 | 1,735 | ||||||
Total Non-Current Liabilities
|
4,524 | 4,442 | ||||||
Commitments and Contingencies (see Note 10)
|
||||||||
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 shares in 2011 and 2010
|
80 | 80 | ||||||
Paid-in capital
|
834 | 684 | ||||||
Employee stock loan receivable
|
(34 | ) | (87 | ) | ||||
Retained earnings
|
18,877 | 16,848 | ||||||
Accumulated other comprehensive income (loss)
|
16 | (24 | ) | |||||
Treasury stock at cost, 136,105,870 shares in 2011 and 86,794,947 shares in 2010
|
(4,926 | ) | (3,101 | ) | ||||
Total Shareholders' Equity
|
14,847 | 14,400 | ||||||
Total Liabilities and Shareholders' Equity
|
$ | 27,454 | $ | 26,275 |
2011
|
2010
|
2009
|
||||||||||
Cash Flows from Operating Activities
|
||||||||||||
Net earnings
|
$ | 2,714 | $ | 2,091 | $ | 2,006 | ||||||
Adjustments to reconcile net earnings to net cash provided by operating activities –
|
||||||||||||
Depreciation and amortization
|
1,086 | 1,030 | 975 | |||||||||
Gain on sale of business
|
(434 | ) | - | - | ||||||||
Deferred income taxes
|
132 | 63 | 260 | |||||||||
Stock compensation expense
|
135 | 84 | 84 | |||||||||
Other
|
53 | 60 | 13 | |||||||||
Changes in operating assets and liabilities -
|
||||||||||||
Accounts receivable, net
|
(243 | ) | 124 | 6 | ||||||||
Inventories
|
(592 | ) | (307 | ) | 533 | |||||||
Other assets
|
(24 | ) | 50 | 7 | ||||||||
Trade accounts payable
|
384 | 167 | 11 | |||||||||
Accrued expenses and other liabilities
|
218 | 262 | 66 | |||||||||
Income taxes
|
102 | 10 | 105 | |||||||||
Other non-current liabilities
|
112 | 110 | 45 | |||||||||
Net cash provided by operating activities
|
3,643 | 3,744 | 4,111 | |||||||||
Cash Flows from Investing Activities
|
||||||||||||
Purchases of short-term investments – held to maturity
|
- | (3,000 | ) | (2,600 | ) | |||||||
Proceeds from short-term investments – held to maturity
|
- | 3,500 | 2,100 | |||||||||
Investment in restricted cash
|
(191 | ) | - | - | ||||||||
Additions to property and equipment
|
(1,213 | ) | (1,014 | ) | (1,927 | ) | ||||||
Proceeds from sale of assets
|
79 | 51 | 51 | |||||||||
Business and intangible asset acquisitions, net of cash received
|
(630 | ) | (779 | ) | (405 | ) | ||||||
Proceeds from sale of business
|
442 | - | - | |||||||||
Other
|
(12 | ) | (32 | ) | 5 | |||||||
Net cash used for investing activities
|
(1,525 | ) | (1,274 | ) | (2,776 | ) | ||||||
Cash Flows from Financing Activities
|
||||||||||||
Net payment from short-term borrowings
|
- | - | (70 | ) | ||||||||
Net proceeds from issuance of long-term debt
|
- | - | 987 | |||||||||
Payments of long-term debt
|
(17 | ) | (576 | ) | - | |||||||
Stock purchases
|
(2,028 | ) | (1,756 | ) | (279 | ) | ||||||
Proceeds related to employee stock plans
|
235 | 233 | 138 | |||||||||
Cash dividends paid
|
(647 | ) | (541 | ) | (446 | ) | ||||||
Other
|
15 | (37 | ) | (21 | ) | |||||||
Net cash (used for) provided by financing activities
|
(2,442 | ) | (2,677 | ) | 309 | |||||||
Changes in Cash and Cash Equivalents
|
||||||||||||
Net (decrease) increase in cash and cash equivalents
|
(324 | ) | (207 | ) | 1,644 | |||||||
Cash and cash equivalents at beginning of year
|
1,880 | 2,087 | 443 | |||||||||
Cash and cash equivalents at end of year
|
$ | 1,556 | $ | 1,880 | $ | 2,087 |
2011
|
2010
|
|||||||
Land and land improvements
|
||||||||
Owned locations
|
$ | 3,209 | $ | 3,135 | ||||
Distribution centers
|
96 | 103 | ||||||
Other locations
|
240 | 233 | ||||||
Buildings and building improvements
|
||||||||
Owned locations
|
3,651 | 3,442 | ||||||
Leased locations (leasehold improvements only)
|
1,235 | 1,099 | ||||||
Distribution centers
|
596 | 592 | ||||||
Other locations
|
372 | 343 | ||||||
Equipment
|
||||||||
Locations
|
4,468 | 4,126 | ||||||
Distribution centers
|
1,098 | 1,106 | ||||||
Other locations
|
423 | 410 | ||||||
Capitalized system development costs
|
328 | 333 | ||||||
Capital lease properties
|
118 | 97 | ||||||
15,834 | 15,019 | |||||||
Less: accumulated depreciation and amortization
|
4,308 | 3,835 | ||||||
$ | 11,526 | $ | 11,184 |
Twelve Months Ended August 31,
|
||||||||||||
2011
|
2010
|
2009
|
||||||||||
Severance and other benefits
|
$ | 5 | $ | 16 | $ | 74 | ||||||
Project cancellation settlements
|
- | - | 7 | |||||||||
Inventory charges
|
- | 19 | 63 | |||||||||
Restructuring expense
|
5 | 35 | 144 | |||||||||
Consulting
|
37 | 50 | 76 | |||||||||
Restructuring and restructuring-related costs
|
$ | 42 | $ | 85 | $ | 220 | ||||||
Cost of sales
|
$ | - | $ | 19 | $ | 63 | ||||||
Selling, general and administrative expenses
|
42 | 66 | 157 | |||||||||
$ | 42 | $ | 85 | $ | 220 |
Severance and Other Benefits
|
||||
August 31, 2009 Reserve Balance
|
$ | 4 | ||
Charges
|
19 | |||
Cash Payments
|
(23 | ) | ||
August 31, 2010 Reserve Balance
|
$ | - | ||
Charges
|
5 | |||
Cash Payments
|
(5 | ) | ||
August 31, 2011 Reserve Balance
|
$ | - |
Capital Lease
|
Operating Lease
|
|||||||
2012
|
$ | 9 | $ | 2,381 | ||||
2013
|
11 | 2,379 | ||||||
2014
|
11 | 2,336 | ||||||
2015
|
10 | 2,277 | ||||||
2016
|
10 | 2,215 | ||||||
Later
|
168 | 24,617 | ||||||
Total minimum lease payments
|
$ | 219 | $ | 36,205 |
Twelve Months Ended
August 31
|
||||||||
2011
|
2010
|
|||||||
Balance – beginning of period
|
$ | 151 | $ | 99 | ||||
Provision for present value of non-cancellable lease
payments of closed facilities
|
49 | 77 | ||||||
Assumptions about future sublease income, terminations and changes in interest rates
|
(19 | ) | (9 | ) | ||||
Interest accretion
|
24 | 22 | ||||||
Cash payments, net of sublease income
|
(60 | ) | (45 | ) | ||||
Reserve acquired through acquisition
|
- | 7 | ||||||
Balance – end of period
|
$ | 145 | $ | 151 |
2011
|
2010
|
2009
|
||||||||||
Minimum rentals
|
$ | 2,506 | $ | 2,218 | $ | 1,973 | ||||||
Contingent rentals
|
9 | 9 | 11 | |||||||||
Less: Sublease rental income
|
(15 | ) | (9 | ) | (9 | ) | ||||||
$ | 2,500 | $ | 2,218 | $ | 1,975 |
Accounts receivable
|
$ | 52 | ||
Inventory
|
228 | |||
Other current assets
|
99 | |||
Property and equipment
|
219 | |||
Other non-current assets
|
3 | |||
Intangible assets
|
445 | |||
Goodwill
|
401 | |||
Total assets acquired
|
1,447 | |||
Liabilities assumed
|
313 | |||
Debt assumed
|
574 | |||
Net cash paid
|
$ | 560 |
Twelve Months Ended August,
|
||||||||
2011 | 2010 | |||||||
Net sales
|
$ | 1,868 | $ | 732 | ||||
Net loss
|
(7 | ) | (56 | ) | ||||
Net earnings per common share:
|
||||||||
Basic
|
(0.01 | ) | (0.06 | ) | ||||
Diluted
|
(0.01 | ) | (0.06 | ) |
2011
|
2010
|
|||||||
Net book value – September 1
|
||||||||
Goodwill
|
$ | 1,915 | $ | 1,473 | ||||
Accumulated impairment losses
|
(28 | ) | (12 | ) | ||||
Total
|
1,887 | 1,461 | ||||||
Acquisitions
|
158 | 442 | ||||||
Impairment charges
|
- | (16 | ) | |||||
Other
|
(28 | ) | - | |||||
Net book value – August 31
|
$ | 2,017 | $ | 1,887 |
2011
|
2010
|
|||||||
Gross Intangible Assets
|
||||||||
Purchased prescription files
|
$ | 913 | $ | 749 | ||||
Favorable lease interests
|
385 | 377 | ||||||
Purchasing and payer contracts
|
308 | 280 | ||||||
Non-compete agreements
|
95 | 69 | ||||||
Trade name
|
71 | 44 | ||||||
Other amortizable intangible assets
|
4 | 34 | ||||||
Total gross intangible assets
|
1,776 | 1,553 | ||||||
Accumulated amortization
|
||||||||
Purchased prescription files
|
(338 | ) | (293 | ) | ||||
Favorable lease interests
|
(76 | ) | (38 | ) | ||||
Purchasing and payer contracts
|
(94 | ) | (68 | ) | ||||
Non-compete agreements
|
(43 | ) | (33 | ) | ||||
Trade name
|
(11 | ) | (3 | ) | ||||
Other amortizable intangibles
|
(2 | ) | (4 | ) | ||||
Total accumulated amortization
|
(564 | ) | (439 | ) | ||||
Total intangible assets, net
|
$ | 1,212 | $ | 1,114 |
2012
|
2013
|
2014
|
2015
|
2016
|
||||||||||||||
$ | 218 | $ | 192 | $ | 160 | $ | 128 | $ | 90 |
2011
|
2010
|
2009
|
||||||||||
Current provision -
|
||||||||||||
Federal
|
$ | 1,301 | $ | 1,129 | $ | 807 | ||||||
State
|
147 | 90 | 91 | |||||||||
1,448 | 1,219 | 898 | ||||||||||
Deferred provision -
|
||||||||||||
Federal
|
113 | 62 | 243 | |||||||||
State
|
19 | 1 | 17 | |||||||||
132 | 63 | 260 | ||||||||||
Income tax provision
|
$ | 1,580 | $ | 1,282 | $ | 1,158 |
2011
|
2010
|
2009
|
||||||||||
Federal statutory rate
|
35.0 | % | 35.0 | % | 35.0 | % | ||||||
State income taxes, net of federal benefit
|
2.6 | 2.2 | 2.2 | |||||||||
Medicare Part D Subsidy
|
- | 1.3 | - | |||||||||
Other
|
(0.8 | ) | (0.5 | ) | (0.6 | ) | ||||||
Effective income tax rate
|
36.8 | % | 38.0 | % | 36.6 | % |
2011
|
2010
|
|||||||
Deferred tax assets -
|
||||||||
Postretirement benefits
|
$ | 214 | $ | 179 | ||||
Compensation and benefits
|
165 | 228 | ||||||
Insurance
|
226 | 190 | ||||||
Accrued rent
|
112 | 176 | ||||||
Tax benefits
|
327 | 138 | ||||||
Stock compensation
|
179 | 133 | ||||||
Inventory
|
143 | 59 | ||||||
Other
|
78 | 123 | ||||||
Subtotal
|
1,444 | 1,226 | ||||||
Less: Valuation allowance
|
91 | - | ||||||
Total deferred tax assets
|
1,353 | 1,226 | ||||||
Deferred tax liabilities -
|
||||||||
Accelerated depreciation
|
1,176 | 1,050 | ||||||
Inventory
|
476 | 356 | ||||||
Intangible assets
|
49 | 117 | ||||||
Other
|
31 | 45 | ||||||
Subtotal
|
1,732 | 1,568 | ||||||
Net deferred tax liabilities
|
$ | 379 | $ | 342 |
2011
|
2010
|
2009
|
||||||||||
Balance at beginning of year
|
$ | 93 | $ | 128 | $ | 64 | ||||||
Gross increases related to tax positions in a prior period
|
25 | 12 | 38 | |||||||||
Gross decreases related to tax positions in a prior period
|
(68 | ) | (57 | ) | (5 | ) | ||||||
Gross increases related to tax positions in the current period
|
54 | 37 | 38 | |||||||||
Settlements with taxing authorities
|
(8 | ) | (21 | ) | (1 | ) | ||||||
Lapse of statute of limitations
|
(2 | ) | (6 | ) | (6 | ) | ||||||
Balance at end of year
|
$ | 94 | $ | 93 | $ | 128 |
2011
|
2010
|
|||||||
Short-Term Borrowings -
|
||||||||
Current maturities of loans assumed through the purchase of land and buildings; various interest rates from 5.00% to 8.75%; various maturities from 2012 to 2035
|
$ | 8 | $ | 7 | ||||
Other
|
5 | 5 | ||||||
Total short-term borrowings
|
$ | 13 | $ | 12 | ||||
Long-Term Debt -
|
||||||||
4.875% unsecured notes due 2013 net of unamortized discount and interest rate swap fair market value adjustment (see Note 8)
|
$ | 1,339 | $ | 1,348 | ||||
5.250% unsecured notes due 2019 net of unamortized discount and interest rate swap fair market value adjustment (see Note 8)
|
1,011 | 995 | ||||||
Loans assumed through the purchase of land and buildings; various interest rates from 5.00% to 8.75%; various maturities from 2012 to 2035
|
54 | 53 | ||||||
2,404 | 2,396 | |||||||
Less current maturities
|
(8 | ) | (7 | ) | ||||
Total long-term debt
|
$ | 2,396 | $ | 2,389 |
2011
|
2010
|
|||||||
Derivatives designated as hedges:
|
||||||||
Interest rate swaps
|
$ | 1,550 | $ | 1,300 |
Location in Consolidated Balance Sheet
|
2011
|
2010
|
|||||||
Asset derivatives designated as hedges:
|
|||||||||
Interest rate swaps
|
Other non-current assets
|
$ | 63 | $ | 44 |
Level 1 -
|
Quoted prices in active markets that are accessible at the measurement date for identical assets and liabilities. The fair value hierarchy gives the highest priority to Level 1 inputs.
|
Level 2 -
|
Observable inputs other than quoted prices in active markets.
|
Level 3 -
|
Unobservable inputs for which there is little or no market data available. The fair value hierarchy gives the lowest priority to Level 3 inputs.
|
August 31, 2011
|
Level 1
|
Level 2
|
Level 3
|
|||||||||||||
Assets:
|
||||||||||||||||
Money market funds
|
$ | 1,239 | $ | 1,239 | $ | - | $ | - | ||||||||
Interest rate swaps
|
63 | - | 63 | - |
August 31, 2010
|
Level 1
|
Level 2
|
Level 3
|
|||||||||||||
Assets:
|
||||||||||||||||
Money market funds
|
$ | 1,030 | $ | 1,030 | $ | - | $ | - | ||||||||
Interest rate swaps
|
44 | - | 44 | - |
August 31, 2010
|
Level 1
|
Level 2
|
Level 3
|
|||||||||||||
Assets:
|
||||||||||||||||
Goodwill
|
$ | 3 | $ | - | $ | - | $ | 3 |
Options
|
Shares
|
Weighted-Average Exercise Price
|
Weighted-Average Remaining Contractual Term (Years)
|
Aggregate Intrinsic Value (in millions)
|
||||||||||||
Outstanding at August 31, 2010
|
49,107,203 | $ | 34.75 | 6.03 | $ | 16 | ||||||||||
Granted
|
9,015,933 | 28.93 | ||||||||||||||
Exercised
|
(4,349,340 | ) | 33.74 | |||||||||||||
Expired/Forfeited
|
(4,739,950 | ) | 35.44 | |||||||||||||
Outstanding at August 31, 2011
|
49,033,846 | 33.70 | 6.04 | 193 | ||||||||||||
Vested or expected to vest at August 31, 2011
|
28,919,936 | 29.89 | 7.75 | 164 | ||||||||||||
Exercisable at August 31, 2011
|
19,154,555 | 39.63 | 3.32 | 24 |
Nonvested Shares
|
Shares
|
Weighted-Average Grant-Date Fair Value
|
||||||
Nonvested at August 31, 2010
|
96,710 | $ | 37.53 | |||||
Granted
|
- | - | ||||||
Forfeited
|
(111 | ) | 36.43 | |||||
Vested
|
(48,553 | ) | 38.92 | |||||
Nonvested at August 31, 2011
|
48,046 | 36.13 |
Outstanding Shares
|
Shares
|
Weighted-Average Grant-Date Fair Value
|
||||||
Outstanding at August 31, 2010
|
1,148,164 | $ | 34.40 | |||||
Granted
|
1,005,255 | 33.13 | ||||||
Dividends
|
37,510 | 38.16 | ||||||
Forfeited
|
(191,137 | ) | 33.31 | |||||
Vested
|
(88,555 | ) | 32.76 | |||||
Outstanding at August 31, 2011
|
1,911,237 | 33.94 |
Outstanding Shares
|
Shares
|
Weighted-Average Grant-Date Fair Value
|
||||||
Outstanding at August 31, 2010
|
996,621 | $ | 35.02 | |||||
Granted
|
840,101 | 28.30 | ||||||
Forfeited
|
(17,054 | ) | 29.21 | |||||
Vested
|
- | - | ||||||
Outstanding at August 31, 2011
|
1,819,668 | 31.83 |
2011
|
2010
|
2009
|
||||||||||
Risk-free interest rate (1)
|
2.12 | % | 3.14 | % | 3.47 | % | ||||||
Average life of option (years) (2)
|
7.2 | 7.3 | 6.8 | |||||||||
Volatility (3)
|
28.08 | % | 28.01 | % | 34.00 | % | ||||||
Dividend yield (4)
|
1.94 | % | 1.91 | % | 2.30 | % | ||||||
Weighted-average grant-date fair value
|
||||||||||||
Granted at market price
|
$ | 8.12 | $ | 9.80 | $ | 9.14 |
(1)
|
Represents the U.S. Treasury security rates for the expected term of the option.
|
(2)
|
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.
|
(3)
|
Volatility was based on historical and implied volatility of the Company’s common stock.
|
(4)
|
Represents the Company’s cash dividend for the expected term.
|
2011
|
2010
|
2009
|
||||||||||
Service cost
|
$ | 15 | $ | 11 | $ | 12 | ||||||
Interest cost
|
22 | 20 | 26 | |||||||||
Amortization of actuarial loss
|
14 | 7 | 4 | |||||||||
Amortization of prior service cost
|
(10 | ) | (10 | ) | (6 | ) | ||||||
Special retirement benefit
|
- | - | 4 | |||||||||
Curtailment gain
|
- | - | (16 | ) | ||||||||
Total postretirement benefit cost
|
$ | 41 | $ | 28 | $ | 24 |
2011
|
2010
|
|||||||
Benefit obligation at September 1
|
$ | 441 | $ | 328 | ||||
Service cost
|
15 | 11 | ||||||
Interest cost
|
22 | 20 | ||||||
Actuarial (gain) loss
|
(57 | ) | 92 | |||||
Benefit payments
|
(18 | ) | (14 | ) | ||||
Participants’ contributions
|
4 | 4 | ||||||
Benefit obligation at August 31
|
$ | 407 | $ | 441 |
2011
|
2010
|
|||||||
Plan assets at fair value at September 1
|
$ | - | $ | - | ||||
Plan participants’ contributions
|
4 | 4 | ||||||
Employer contributions
|
14 | 10 | ||||||
Benefits paid
|
(18 | ) | (14 | ) | ||||
Plan assets at fair value at August 31
|
$ | - | $ | - |
2011
|
2010
|
|||||||
Funded status
|
$ | (407 | ) | $ | (441 | ) | ||
Unrecognized actuarial gain
|
- | - | ||||||
Unrecognized prior service cost
|
- | - | ||||||
Accrued benefit cost at August 31
|
$ | (407 | ) | $ | (441 | ) |
2011
|
2010
|
|||||||
Current liabilities (present value of expected 2012 net benefit payments)
|
$ | (11 | ) | $ | (11 | ) | ||
Non-current liabilities
|
(396 | ) | (430 | ) | ||||
Net liability recognized at August 31
|
$ | (407 | ) | $ | (441 | ) |
2011
|
2010
|
|||||||
Prior service credit
|
$ | (121 | ) | $ | (131 | ) | ||
Net actuarial loss
|
117 | 188 |
2012
|
||||
Prior service credit
|
$ | (10 | ) | |
Net actuarial loss
|
8 |
1% Increase
|
1% Decrease
|
|||||||
Effect on service and interest cost
|
$ | 7 | $ | (6 | ) | |||
Effect on postretirement obligation
|
73 | (59 | ) |
Estimated Future Benefit Payments
|
Estimated Federal Subsidy
|
|||||||
2012
|
$ | 13 | $ | 1 | ||||
2013
|
14 | 2 | ||||||
2014
|
15 | 2 | ||||||
2015
|
17 | 2 | ||||||
2016
|
19 | 3 | ||||||
2017-2021
|
133 | 21 |
2011
|
2010
|
|||||||
Accounts receivable -
|
||||||||
Accounts receivable
|
$ | 2,598 | $ | 2,554 | ||||
Allowance for doubtful accounts
|
(101 | ) | (104 | ) | ||||
$ | 2,497 | $ | 2,450 | |||||
Other non-current assets -
|
||||||||
Intangible assets, net (see Note 5)
|
$ | 1,212 | $ | 1,114 | ||||
Other
|
377 | 168 | ||||||
$ | 1,589 | $ | 1,282 | |||||
Accrued expenses and other liabilities -
|
||||||||
Accrued salaries
|
$ | 856 | $ | 781 | ||||
Taxes other than income taxes
|
489 | 419 | ||||||
Insurance
|
230 | 233 | ||||||
Profit sharing
|
253 | 197 | ||||||
Other
|
1,247 | 1,133 | ||||||
$ | 3,075 | $ | 2,763 | |||||
Other non-current liabilities -
|
||||||||
Postretirement health care benefits
|
$ | 396 | $ | 430 | ||||
Accrued rent
|
418 | 384 | ||||||
Insurance
|
346 | 330 | ||||||
Other
|
625 | 591 | ||||||
$ | 1,785 | $ | 1,735 |
Quarter Ended
|
||||||||||||||||||||
November
|
February
|
May
|
August
|
Fiscal Year
|
||||||||||||||||
Fiscal 2011
|
||||||||||||||||||||
Net Sales
|
$ | 17,344 | $ | 18,502 | $ | 18,371 | $ | 17,967 | $ | 72,184 | ||||||||||
Gross Profit
|
4,945 | 5,324 | 5,154 | 5,069 | 20,492 | |||||||||||||||
Net Earnings
|
580 | 739 | 603 | 792 | 2,714 | |||||||||||||||
Per Common Share -
|
||||||||||||||||||||
Basic
|
$ | .62 | $ | .80 | $ | .66 | $ | .88 | $ | 2.97 | ||||||||||
Diluted
|
.62 | .80 | .65 | .87 | 2.94 | |||||||||||||||
Cash Dividends Declared Per Common Share
|
$ | .1750 | $ | .1750 | $ | .1750 | $ | .2250 | $ | .7500 | ||||||||||
Fiscal 2010
|
||||||||||||||||||||
Net Sales
|
$ | 16,364 | $ | 16,987 | $ | 17,199 | $ | 16,870 | $ | 67,420 | ||||||||||
Gross Profit
|
4,538 | 4,897 | 4,749 | 4,792 | 18,976 | |||||||||||||||
Net Earnings
|
489 | 669 | 463 | 470 | 2,091 | |||||||||||||||
Per Common Share -
|
||||||||||||||||||||
Basic
|
$ | .49 | $ | .68 | $ | .47 | $ | .49 | $ | 2.13 | ||||||||||
Diluted
|
.49 | .68 | .47 | .49 | 2.12 | |||||||||||||||
Cash Dividends Declared Per Common Share
|
$ | .1375 | $ | .1375 | $ | .1375 | $ | .1750 | $ | .5875 |
Quarter Ended
|
|||||||||||||||||||||
November
|
February
|
May
|
August
|
Fiscal Year
|
|||||||||||||||||
Fiscal 2011
|
High
|
$ | 35.27 | $ | 42.91 | $ | 44.67 | $ | 44.91 | $ | 44.91 | ||||||||||
Low
|
27.17 | 35.17 | 38.82 | 34.11 | 27.17 | ||||||||||||||||
Fiscal 2010
|
High
|
$ | 40.37 | $ | 39.37 | $ | 37.83 | $ | 32.82 | $ | 40.37 | ||||||||||
Low
|
33.55 | 33.29 | 31.92 | 26.36 | 26.36 |
Value of Investment at August 31,
|
||||||||||||||||||||||||
2006
|
2007
|
2008
|
2009
|
2010
|
2011
|
|||||||||||||||||||
Walgreen Co.
|
$ | 100.00 | $ | 91.80 | $ | 75.01 | $ | 70.95 | $ | 57.29 | $ | 76.50 | ||||||||||||
S&P 500 Index
|
100.00 | 115.13 | 102.31 | 83.63 | 87.74 | 103.97 | ||||||||||||||||||
Value Line Pharmacy
Services Industry Index
|
100.00 | 105.54 | 104.80 | 102.09 | 89.34 | 115.93 |
/s/
|
Gregory D. Wasson
|
/s/
|
Wade D. Miquelon
|
Gregory D. Wasson
|
Wade D. Miquelon
|
||
President and Chief Executive Officer
|
Executive Vice President and Chief Financial Officer
|
(1)
|
Walgreens Hastings Co. is a direct parent of Walgreen Arizona Drug Co. Walgreen Arizona Drug Co. is a direct parent of Walgreen Eastern Co. Walgreen Eastern Co is a direct parent of Bond Drug Company of Illinois, LLC. Bond Drug Company of Illinois, LLC is a direct parent of Waltrust Properties, Inc. Waltrust Properties, Inc. is a real estate investment trust. A minority interest in Waltrust Properties, Inc. is held by outside preferred shareholders.
|
(2)
|
Happy Harry’s Discount Drug Stores, Inc. (a Delaware Corporation) is a direct parent of Happy Harry’s Inc. Happy Harry’s Inc. is a direct parent of HHDH Corp. (a Delaware Corporation).
|
(3)
|
Walgreens Specialty Pharmacy Holdings, Inc. (a Delaware Corporation) is a direct parent of Walgreens Specialty Pharmacy, LLC (a Delaware LLC).
|
(4)
|
Subsidiary of drugstore.com, inc. (a Delaware Corporation).
|
(5)
|
Walgreen Realty Resources LLC is a direct parent of Walgreen Market Strategies LLC (an Illinois LLC).
|
(6)
|
Take Care Health Systems, LLC (a Delaware LLC) is a direct Subsidiary of Take Care Health Systems, Inc. (a Delaware Corporation).
|
(7)
|
Walgreens Infusion Services, Inc. (a Delaware Corporation) is a direct parent of Option Care Enterprises, Inc. (a Delaware Corporation). Option Care Enterprises, Inc. (a Delaware Corporation) is a direct parent of various subsidiaries (see footnote #8). Walgreens Infusion Services, Inc. (a Delaware Corporation) is a direct parent of various subsidiaries (see footnote # 9).
|
(8)
|
Subsidiary of Option Care Enterprises, Inc. (a Delaware Corporation).
|
(9)
|
Subsidiary of Walgreens Infusion Services, Inc. (a Delaware Corporation).
|
(10)
|
Trinity Home Care, LLC (a Delaware LLC ) is a direct subsidiary of Option Care of New York, Inc. (a New York Corporation).
|
(11)
|
Subsidiary of Bond Drug Company of Illinois, LLC (an Illinois LLC).
|
(12)
|
50% owned by Option Care Enterprises, Inc. (a Delaware Corporation) and 50% owned by Option Care, Inc. (a California Corporation).
|
(13)
|
Duane Reade (A New York General Partnership) is 99% owned by Duane Reade, Inc. (a Delaware Corporation) and 1% owned by DRI-I, Inc. (a Delaware Corporation).
|
(14)
|
50% owned by Option Care Enterprises, Inc. (a Pennsylvania Corporation).
|
(15)
|
Foreign subsidiary of Walgreens Infusion Services, Inc. (a Delaware Corporation).
|
(16)
|
30% owned by Full Road Holdings, Ltd. (a Mauritius Entity).
|
(17)
|
50% owned by Option Care Enterprises, Inc. (a Delaware Corporation).
|
(18)
|
51% owned by Option Care Enterprises, Inc. (a Delaware Corporation).
|
(19)
|
97% owned by Bond Drug Company of Illinois, LLC; 2% owned by Walgreens Louisiana Co., Inc.; 1% owned by Happy Harry’s, Inc.
|
(20)
|
Subsidiary of Walgreens Pharmacy Services Midwest, LLC (an Illinois LLC).
|
(21)
|
Subsidiary of Walgreens Long-Term Care Pharmacy, LLC (an Illinois LLC).
|
(22)
|
Subsidiary of Walgreens Mail Services, Inc. (an Illinois Corporation).
|
(23)
|
Subsidiary of Take Care Health Systems, Inc. (a Delaware Corporation).
|
(24)
|
Subsidiary of Take Care Employer Solutions, LLC. (a Delaware LLC).
|
(25)
|
99.96% owned by Take Care Employer Solutions, LLC. (a Delaware LLC) and .01% is owned by Take Care Health Systems, Inc. (a Delaware Corporation).
|
(26)
|
99% owned by Medicenter, Inc. (an Oklahoma Corporation); 1% owned by Corporate Health Dimensions, Inc. (a New York Corporation).
|
(27)
|
Walgreens Specialty Care Centers, LLC (a Delware LLC) is a direct subsidiary of Walgreens Specialty Pharmacy, LLC (a Delware LLC).
|
(28)
|
Subsidiary of Duane Reade (A New York General Partnership).
|
(29)
|
Whole Health Management LLC (a Delaware LLC) is a direct subsidiary of Take Care Health Systems, Inc. (a Delaware Corporation).
|
(30)
|
Subsidiary of Mosso’s Medical Supply Company, LLC (a Delaware LLC).
|
(31)
|
25% owned by Walgreen Co.
|
(32)
|
Walgreens (Singapore) PTE, Ltd. (a Singapore Entity) is a wholly owned by Walgreens China Business Trust (a China Entity).
|
(33)
|
Duane Reade Holdings, Inc. (a Delaware Corporation) is a direct parent of Duane Reade, Inc. (a Delaware Corporation). Duane Reade, Inc. (a Delaware Corporation) is a direct parent of various subsidiaries (see footnote 34).
|
(34)
|
Subsidiary of Duane Reade, Inc. (a Delaware Corporation).
|
(35)
|
Walgreens China Business Trust (a China Entity) is 10% owned by Walgreen Mercantile Corporation (an Illinois Corporation) and 90% owned by East-West Distributing Co. (an Illinois Corporation).
|
(36)
|
Subsidiary of Walgreen Eastern Co., Inc. (a New York Corporation).
|
(37)
|
Salu Australia PTY Ltd. (an Australia Company) is a direct subsidiary of Salu Beauty, Inc. (a Delaware Corporation). Skincarestore Australia PTY Ltd. (an Australia Company) is a direct subsidiary of Salu Australia PTY Ltd.
|
1.
|
I have reviewed this annual report on Form 10-K 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.
|
|||
/s/
|
Gregory D. Wasson
|
Chief Executive Officer
|
Date: October 25, 2011
|
|
Gregory D. Wasson
|
1.
|
I have reviewed this annual report on Form 10-K 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.
|
|||
/s/
|
Wade D. Miquelon
|
Chief Financial Officer
|
Date: October 25, 2011
|
|
Wade D. Miquelon
|