CVS 2003 Annual Report Download - page 44

(42) CVS Corporation 2003 Annual Report
Notes to Consolidated Financial Statements
Following is a reconciliation of the Company’s business segments to the consolidated financial statements:
RETAIL PHARMACY PBM OTHER CONSOLIDATED
In millions SEGMENT SEGMENT ADJUSTMENTS(1) TOTALS
2003:
Net sales $25,280.7 $ 1,307.3 $ — $ 26,588.0
Operating profit 1,323.1 100.5 — 1,423.6
Depreciation and amortization 326.5 15.2 — 341.7
To t a l assets 9,975.0 568.1 — 10,543.1
Goodwill 690.4 198.6 — 889.0
Additions to property and equipment 1,114.2 7.5 — 1,121.7
2002:
Net sales $ 23,060.2 $ 1,121.3 $ — $ 24,181.5
Operating profit 1,134.6 71.6 — 1,206.2
Depreciation and amortization 297.6 12.7 — 310.3
To tal assets 9,132.1 513.2 — 9,645.3
Goodwill 690.4 188.5 — 878.9
Additions to property and equipment 1,104.5 4.3 — 1,108.8
2001:
Net sales $ 21,328.7 $ 912.7 $ — $ 22,241.4
Operating profit 1,079.9 39.7 (349.0) 770.6
Depreciation and amortization 301.7 19.1 — 320.8
To tal assets 8,131.8 504.5 — 8,636.3
Goodwill 688.7 186.2 — 874.9
Additions to property and equipment 705.3 8.3 — 713.6
(1) In 2001, other adjustments relate to the $352.5 million Restructuring Charge and the $3.5 million Net Litigation Gain. See Note 11 for
further information on the Restructuring Charge and Note 1 for further information on the Net Litigation Gain. Nonrecurring charges
and gains are not considered when management assesses the stand-alone performance of the Company’s business segments.
11—RESTRUCTURING & ASSET IMPAIRMENT CHARGE
During the fourth quarter of 2001, management
approved a strategic restructuring, which resulted from
a comprehensive business review designed to streamline
operations and enhance operating efficiencies.
Following is a summary of the specific initiatives contained
in the 2001 strategic restructuring:
1. 229 CVS/pharmacy and CVS ProCare store locations
(the “Stores”) would be closed by no later than
March 2002. Since these locations were leased facilities,
management planned to either return the premises to
the respective landlords at the conclusion of the current
lease term or negotiate an early termination of the
contractual obligations. As of March 31, 2002, all
of the Stores had been closed.
2. The Henderson, North Carolina distribution center
(the “D.C.”) would be closed and its operations would
be transferred to the Company’s remaining distribution
centers by no later than May 2002. Since this location
was owned, management planned to sell the property
upon closure. The D.C. was closed in April 2002 and
sold in May 2002.
3. The Columbus, Ohio mail order facility (the “Mail
Facility”) would be closed and its operations would be
transferred to the Company’s Pittsburgh, Pennsylvania
mail order facility by no later than April 2002. Since
this location was a leased facility, management planned
to either return the premises to the landlord at the
conclusion of the lease or negotiate an early termination
of the contractual obligation. The Mail Facility was
closed in March 2002.
(42) CVS Corporation 2003 Annual Report
The Company evaluates segment performance based on operating profit before the effect of nonrecurring charges and gains
and certain intersegment activities and charges. The accounting policies of the segments are substantially the same as those
described in Note 1.