CVS 2005 Annual Report Download - page 46

44 CVS CORPORATION 2005 ANNUAL REPORT
FIVE-YEAR FINANCIAL SUMMARY
In millions, except per share amounts 2005 (52 weeks) 2004 (52 weeks) 2003 (53 weeks) 2002 (52 weeks) 2001 (52 weeks)
Statement of operations data:
Net sales $ 37,006.2 $ 30,594.3 $ 26,588.0 $ 24,181.5 $ 22,241.4
Gross margin(1) 9,901.2 8,031.2 6,863.0 6,068.8 5,691.0
Selling, general and administrative expenses(2) 7,292.6 6,079.7 5,097.7 4,552.3 4,256.3
Depreciation and amortization(2)(3) 589.1 496.8 341.7 310.3 320.8
Merger, restructuring and other non-recurring charges ————343.3
Total operating expenses 7,881.7 6,576.5 5,439.4 4,862.6 4,920.4
Operating profit(4) 2,019.5 1,454.7 1,423.6 1,206.2 770.6
Interest expense, net 110.5 58.3 48.1 50.4 61.0
Income tax provision(5) 684.3 477.6 528.2 439.2 296.4
Net earnings(6) $1,224.7 $918.8 $847.3 $716.6 $413.2
Per common share data:
Net earnings:(6)
Basic $1.49 $ 1.13 $ 1.06 $ 0.89 $ 0.51
Diluted 1.45 1.10 1.03 0.88 0.50
Cash dividends per common share0.1450 0.1325 0.1150 0.1150 0.1150
Balance sheet and other data:
Total assets $ 15,283.4 $ 14,546.8 $ 10,543.1 $9,645.3 $8,636.3
Long-term debt 1,594.1 1,925.9 753.1 1,076.3 810.4
Total shareholders’ equity 8,331.2 6,987.2 6,021.8 5,197.0 4,566.9
Number of stores (at end of period) 5,471 5,375 4,179 4,087 4,191
(1) Gross margin includes the pre-tax effect of a $5.7 million ($3.6 million after-tax) non-recurring charge in 2001 related to the markdown of certain inventory contained in stores closed as part of a strategic restructuring program.
(2) In 2004, the Company conformed its accounting for operating leases and leasehold improvements to the views expressed by the Office of the Chief Accountant of the Securities and Exchange Commission to the American Institute of Certified Public
Accountants on February 7, 2005. As a result, the Company recorded a non-cash pre-tax adjustment of $9.0 million ($5.4 million after-tax) to selling, general and administrative expenses and $56.9 million ($35.1 million after-tax) to depreciation and amortization,
which represents the cumulative effect of the adjustment for a period of approximately 20 years. Since the effect of this non-cash adjustment was not material to 2004, or any previously reported fiscal year, the cumulative effect was recorded in the fourth quarter
of 2004.
(3) As a result of adopting SFAS No. 142, “Goodwill and Other Intangible Assets,” at the beginning of 2002, the Company no longer amortizes goodwill and other indefinite-lived intangible assets. Goodwill amortization totaled $31.4 million pre-tax ($28.2 million
after-tax) in 2001.
(4) Operating profit includes the pre-tax effect of the charge discussed in Note (1) above and the following merger, restructuring and other non-recurring charges and gains: (i) in 2004, $65.9 million ($40.5 million after-tax) charge relating to conforming the
Company’s accounting for operating leases and leasehold improvements, and (ii) in 2001, $346.8 million ($226.9 million after-tax) charge related to restructuring and asset impairment costs associated with the 2001 strategic restructuring and $3.5 million
($2.1 million after-tax) net non-recurring gain resulting from $50.3 million of settlement proceeds received from various lawsuits against certain manufacturers of brand name prescription drugs and offset in part, by the Company’s contribution of $46.8 million
of these settlement proceeds to the CVS/pharmacy Charitable Trust, Inc. to fund future charitable giving.
(5) Income tax provision includes the effect of the following: (i) in 2005, a $52.6 million reversal of previously recorded tax reserves through the tax provision principally based on resolving certain state tax matters, and (ii) in 2004, a $60.0 million reversal of
previously recorded tax reserves through the tax provision principally based on finalizing certain tax return years and on a 2004 court decision relevant to the industry.
(6) Net earnings and net earnings per common share include the after-tax effect of the charges and gains discussed in Notes (1), (2), (3), (4) and (5) above.