CVS 2005 Annual Report Download - page 25

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”
and similar expressions identify statements that constitute forward-looking statements. All statements
addressing operating performance of CVS Corporation or any subsidiary, events or developments 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:
%The continued efforts of health maintenance organizations, managed care organizations, pharmacy
benefit management companies and other third party payors to reduce prescription drug costs and
pharmacy reimbursement rates;
%The potential effect on pharmacy sales and gross margin rates attributable to the introduction in 2006
of a new Medicare prescription drug benefit and the continued efforts by various government entities to
reduce state Medicaid pharmacy reimbursement rates;
%The growth of mail order pharmacies and changes to pharmacy benefit plans requiring maintenance
medications to be filled exclusively through mail order pharmacies;
%The effect on PharmaCare of increased competition in the pharmacy benefit management industry,
a declining margin environment attributable to increased client demands for lower prices, enhanced
service offerings and/or higher service levels and the possible termination of, or unfavorable modification
to, contractual arrangements with key clients or providers;
%Our ability to continue to improve the operating results of the Acquired Businesses;
%Our ability to consummate the recently announced Albertson’s transaction and successfully integrate
the business to be acquired;
%Increased competition from other drugstore chains, supermarkets, discount retailers, membership clubs
and Internet companies, as well as changes in consumer preferences or loyalties;
%The frequency and rate of introduction of successful new prescription drugs;
%Our ability to generate sufficient cash flows to support capital expansion and general operating
activities;
%Interest rate fluctuations and changes in capital market conditions or other events affecting our ability
to obtain necessary financing on favorable terms;
%Our ability to identify, implement and successfully manage and finance strategic expansion opportunities
including entering new markets, acquisitions and joint ventures;
%Our 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);
%Our ability to continue to secure suitable new store locations under acceptable lease terms;
%Our ability to attract, hire and retain suitable pharmacists and management personnel;
%Our ability to achieve cost efficiencies and other benefits from various operational initiatives and
technological enhancements;
%Litigation risks as well as changes in laws and regulations, including changes in accounting standards
and taxation requirements (including tax rate changes, new tax laws and revised tax law interpretations);
%The creditworthiness of the purchasers of businesses formerly owned by CVS and whose leases are
guaranteed by CVS;
%Fluctuations in inventory cost, availability and loss levels and our ability to maintain relationships with
suppliers on favorable terms;
%Our ability to implement successfully and to manage new computer systems and technologies;
%The strength of the economy in general or in the markets served by CVS, including changes in
consumer purchasing power and/or spending patterns; and
%Other risks and uncertainties detailed from time to time in our filings with the Securities and Exchange
Commission.
The foregoing list is not exhaustive. There can be no assurance that the Company has correctly identified
and appropriately assessed all factors affecting its business. Additional risks and uncertainties not presently
known to the Company or that it currently believes to be immaterial also may adversely impact the
Company. Should any risks and uncertainties develop into actual events, these developments could have
material adverse effects on the Company’s business, financial condition and results of operations. For these
reasons, you are cautioned not to place undue reliance on the Company’s forward-looking statements.
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MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS