CVS 2004 Annual Report Download - page 26
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Please find page 26 of the 2004 CVS annual report below. You can navigate through the pages in the report by either clicking on the pages listed below, or by using the keyword search tool below to find specific information within the annual report.Although we believe that the estimates discussed above are
reasonable and the related calculations conform to generally
accepted accounting principles, actual results could differ
from our estimates, and such differences could be material.
RECENT ACCOUNTING PRONOUNCEMENTS
Weadopted Emerging Issues Task Force (“EITF”) Issue No.
03-10, “Application of EITF Issue No. 02-16, ‘Accounting by a
Customer (Including a Reseller) for Certain Consideration
Received from a Vendor,’ by Resellers to Sales Incentives Offered
to Consumers by Manufacturers,” effective January 4, 2004.
The adoption of this pronouncement did not have an impact
on our consolidated results of operations or financial position.
We adopted Financial Accounting Standard Board’s
Staff Position No. FAS 106-2, “Accounting and Disclosure
Requirements Related to the Medicare Prescription Drug,
Improvement and Modernization Act of 2003,” effective June 15,
2004. This statement requires disclosure of the effects of the
Medicare Prescription Drug, Improvement and Modernization
Act and an assessment of the impact of the federal subsidy
on the accumulated postretirement benefit obligation and
net periodic postretirement benefit cost. The adoption of this
statement did not have a material impact on our consolidated
results of operations or financial position.
In December 2004, SFAS No. 123R, “Share-Based Payment”
was issued. This statement establishes standards for the
accounting for transactions in which an entity exchanges its
equity instruments for goods or services. The statement focuses
primarily on accounting for transactions in which an entity
obtains employee services in share-based payment transactions.
The provisions of this statement are required to be adopted for
interim or annual periods beginning after June 15, 2005. We are
currently evaluating the effect of adopting this statement.
CAUTIONARY STATEMENT CONCERNING FORWARD-LOOKING
STATEMENTS
The Private Securities Litigation Reform Act of 1995 (the
“Reform Act”) provides a safe harbor for forward-looking
statements made by or on behalf of CVS Corporation. The
Company and its representatives may, from time to time,
make written or verbal forward-looking statements, including
statements contained in the Company’s filings with the
Securities and Exchange Commission and in its reports to
stockholders. Generally, the inclusion of the words “believe,”
“expect,” “intend,” “estimate,” “project,” “anticipate,” “will”
andsimilar expressions identify statements that constitute
forward-looking statements. All statements addressing operating
performance of CVS Corporation or any subsidiary, events
ordevelopments that the Company expects or anticipates
will occur in the future, including statements relating to sales
growth, earnings or earnings per common share growth, free
cash flow, debt rating, inventory levels, inventory turn and
loss rates, store development, relocations and new market
entries, as well as statements expressing optimism or pessimism
about future operating results or events, are forward-looking
statements within the meaning of the Reform Act. The forward-
looking statements are and will be based upon management’s
then-current views and assumptions regarding future events and
operating performance, and are applicable only as of the dates
of such statements. The Company undertakes no obligation
to update or revise any forward-looking statements, whether
as a result of new information, future events or otherwise. By
their nature, all forward-looking statements involve risks and
uncertainties. Actual results may differ materially from those
contemplated by the forward-looking statements for a number
of reasons, including, but not limited to:
²The continued efforts of health maintenance organizations,
managed care organizations, pharmacy benefit management
companies, governmental entities and other third party
payors to reduce prescription drug costs and pharmacy
reimbursement rates;
²The growth of mail order pharmacies and changes to
pharmacy benefit plans requiring maintenance medications
to be filled exclusively through mail order pharmacies;
²Our ability to integrate successfully and improve
significantly the operating results of the Acquired Businesses
in accordance with plan;
²Increased competitionfrom other drugstore chains,
supermarkets, discount retailers, membership clubs and
internet companies, as well as changes in consumer
preferences or loyalties;
²Thefrequency and rate of introduction of successful new
prescription drugs;
²Our ability to generate sufficient cash flows to support
capital expansion and general operating activities;
²Interest rate fluctuations and changes in capital market
conditions or other events affecting our ability to obtain
necessary financing on favorable terms;
²Our ability to identify, implement and successfully manage
and finance strategic expansion opportunities including
entering new markets, acquisitions and joint ventures;
²Our ability to establish effective advertising, marketing and
promotional programs (including pricing strategies and price
reduction programs implemented in response to competitive
pressures and/or to drive demand);
²Our ability to continue to secure suitable new store locations
under acceptable lease terms;
²Our ability to attract, hire and retain suitable pharmacists
andmanagement personnel;
²Our ability to achieve cost efficiencies and other benefits
from various operational initiatives and technological
enhancements;
²Litigation risks as well as changes in laws and regulations,
including changes in accounting standards and taxation
24 | Management’s Discussion & Analysis of Financial Condition and Results of Operation