-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, Kb5vHV9HgIjTa3VLoIjA4d2Mlq/w3XQ19+/LSqJved2hLxwCTPEIKORVlWIr4rcn CH59AQMcznxnaKJxd1M7DQ== 0000912057-02-040183.txt : 20021030 0000912057-02-040183.hdr.sgml : 20021030 20021030080556 ACCESSION NUMBER: 0000912057-02-040183 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 20021030 ITEM INFORMATION: Other events ITEM INFORMATION: Financial statements and exhibits FILED AS OF DATE: 20021030 FILER: COMPANY DATA: COMPANY CONFORMED NAME: CVS CORP CENTRAL INDEX KEY: 0000064803 STANDARD INDUSTRIAL CLASSIFICATION: RETAIL-DRUG STORES AND PROPRIETARY STORES [5912] IRS NUMBER: 050494040 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 8-K SEC ACT: 1934 Act SEC FILE NUMBER: 001-01011 FILM NUMBER: 02802020 BUSINESS ADDRESS: STREET 1: ONE CVS DR. CITY: WOONSOCKET STATE: RI ZIP: 02895- BUSINESS PHONE: 4017651500 MAIL ADDRESS: STREET 1: ONE CVS DR. CITY: WOONSOCKET STATE: RI ZIP: 02895- FORMER COMPANY: FORMER CONFORMED NAME: MELVILLE SHOE CORP DATE OF NAME CHANGE: 19760630 FORMER COMPANY: FORMER CONFORMED NAME: MELVILLE CORP DATE OF NAME CHANGE: 19920703 8-K 1 a2092316z8-k.txt FORM 8-K - -------------------------------------------------------------------------------- UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 8-K CURRENT REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 Date of Report (Date of earliest event reported): October 30, 2002 CVS CORPORATION (Exact Name of Registrant as Specified in its Charter) DELAWARE 001-01011 050494040 -------- --------- --------- (State or other jurisdiction of (Commission File Number) (IRS Employer incorporation or organization) Identification No.) ONE CVS DRIVE WOONSOCKET, RHODE ISLAND 02895 ------------------------ ----- (Address of principal executive offices) (Zip Code) (401) 765-1500 (Registrant's telephone number, including area code) NOT APPLICABLE (Former name or former address, if changed since last report) - -------------------------------------------------------------------------------- ITEM 5. OTHER EVENTS On October 30, 2002, CVS Corporation issued a press release, a copy of which is being filed hereto as Exhibit 99, and is incorporated herein by reference. ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS (c) Exhibits 99 Press Release, dated October 30, 2002 of CVS Corporation SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized. CVS CORPORATION By: /s/ David B. Rickard ------------------------------------ David B. Rickard Executive Vice President, Chief Financial Officer and Chief Administrative Officer Dated: October 30, 2002 EX-99 3 a2092316zex-99.txt EXHIBIT 99 EXHIBIT 99 Investor Contact: Nancy Christal Media Contact: Todd Andrews Vice President Director Investor Relations Corporate Communications (914) 722-4704 (401) 770-5717 FOR IMMEDIATE RELEASE CVS CORPORATION REPORTS THIRD QUARTER DILUTED EPS OF 40 CENTS EPS UP 30% EXCLUDING NET NONRECURRING GAIN WOONSOCKET, RHODE ISLAND, October 30, 2002 - CVS Corporation (NYSE: CVS), America's #1 pharmacy, today announced record net earnings of $164.4 million or $0.40 per diluted share for the third quarter ended September 28, 2002, an increase of 33% compared with net earnings of $123.7 million or $0.30 per diluted share in the third quarter of 2001. Net earnings for the third quarter included a $4.4 million ($0.01 per diluted share) net gain from nonrecurring litigation items recorded during the quarter. Excluding the effect of this nonrecurring net litigation gain, earnings per share increased 30% to $0.39 per diluted share. Net sales for the third quarter of 2002 increased 8.6% to $5.9 billion, up from $5.4 billion during the third quarter of 2001. Same store sales (sales from stores open more than one year) for the quarter rose 8.4%, while pharmacy same store sales rose 12.0% and front-end same store sales increased 1.3%. Pharmacy same store sales were negatively impacted by approximately 190 basis points due to recent generic introductions, which are being substituted for higher priced brand name drugs. Pharmacy sales were 68.4% of total sales, while third party prescription sales were 92.1% of pharmacy sales for the quarter. "We are very pleased with our third quarter performance, which exceeded expectations," stated Tom Ryan, Chairman, President, and Chief Executive Officer of CVS Corporation. "Our results were driven by healthy sales growth, and a significant sequential improvement in our gross margin trend, which reflects the increasing usage of generic pharmaceuticals and improvements in inventory shrinkage. In addition, our year-over-year improvement in total operating expenses as a percentage of sales was the best we have experienced since 1999, despite increased advertising costs," stated Ryan. Excluding the $7.0 million pre-tax ($4.4 million after-tax) net gain from nonrecurring litigation items, total operating expenses were 20.6% of net sales for the third quarter of 2002, an improvement of approximately 70 basis points compared to 21.3% of net sales in the third quarter of 2001. The improvement primarily resulted from the continued benefits being realized from the 2001 strategic restructuring, the efficiencies gained from the EPIC pharmacy system rolled out last year, and the termination of goodwill amortization as a result of the adoption of SFAS 142. For the fourth quarter 2002, the Company expects earnings per share to be in the range of 46 to 48 cents per diluted share. For the year, this would result in growth in diluted earnings per share of 10% to 12%. During the third quarter of 2002, CVS opened 34 new stores, closed 9 and relocated 16 others. Year-to-date, CVS opened 108 new stores, closed 272 stores (224 of which related to the strategic restructuring) and relocated 71. As of September 28, 2002, CVS operated 4,027 retail and specialty pharmacy stores in 32 states and the District of Columbia. The Company will be holding a conference call today for the investment community at 8:30am (EST) to discuss the quarterly results. The call will be simulcast on the Company's web site for all interested parties. To access the webcast, visit the Company's web site at HTTP://WWW.CVS.COM on the Investor Relations page to hear the call live, or to listen to an archive of the call which will be available for a one-week period following the call. CVS is America's #1 pharmacy dispensing prescriptions in more stores than any other retailer. With annual revenues exceeding $22 billion, CVS has created innovative approaches to serve the healthcare needs of all of our customers through its over 4,000 CVS/pharmacy stores; CVS ProCare, its specialty pharmacy business; CVS.com, its online pharmacy; and PharmaCare, its pharmacy benefit management company. This press release contains certain forward-looking statements that are subject to risks and uncertainties that could cause actual results to differ materially. For these statements, the Company claims the protection of the safe harbor for forward-looking statements contained in the Private Securities Litigation Reform Act of 1995. The Company strongly recommends that you become familiar with the specific risks and uncertainties outlined under the caption "Cautionary Statement Concerning Forward-Looking Statements" in its Annual Report on Form 10-K for the fiscal year ended December 29, 2001. - Tables Follow - CVS CORPORATION CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
- ------------------------------------------------------------------------------------------------------------------------- 13 WEEKS ENDED 39 WEEKS ENDED SEPTEMBER 28, SEPTEMBER 29, SEPTEMBER 28, SEPTEMBER 29, IN MILLIONS, EXCEPT PER SHARE AMOUNTS 2002 2001 2002 2001 - ------------------------------------------------------------------------------------------------------------------------- Net sales $ 5,876.4 $ 5,410.8 $ 17,836.7 $ 16,290.9 Cost of goods sold, buying and warehousing costs 4,395.1 4,039.0 13,380.6 12,007.2 - ------------------------------------------------------------------------------------------------------------------------- Gross margin 1,481.3 1,371.8 4,456.1 4,283.7 Selling, general and administrative expenses 1,127.7 1,070.9 3,353.9 3,100.6 Depreciation and amortization 77.1 80.7 230.9 239.5 - ------------------------------------------------------------------------------------------------------------------------- Total operating expenses 1,204.8 1,151.6 3,584.8 3,340.1 - ------------------------------------------------------------------------------------------------------------------------- Operating profit 276.5 220.2 871.3 943.6 Interest expense, net 11.4 16.1 38.3 46.9 - ------------------------------------------------------------------------------------------------------------------------- Earnings before income tax provision 265.1 204.1 833.0 896.7 Income tax provision 100.7 80.4 316.5 353.2 - ------------------------------------------------------------------------------------------------------------------------- Net earnings 164.4 123.7 516.5 543.5 Preference dividends, net of income tax benefit 3.7 3.7 11.1 11.1 - ------------------------------------------------------------------------------------------------------------------------- Net earnings available to common shareholders $ 160.7 $ 120.0 $ 505.4 $ 532.4 ========================================================================================================================= BASIC EARNINGS PER COMMON SHARE: Net earnings $ 0.41 $ 0.31 $ 1.29 $ 1.36 - ------------------------------------------------------------------------------------------------------------------------- Weighted average basic common shares outstanding 392.7 391.5 392.1 392.6 ========================================================================================================================= DILUTED EARNINGS PER COMMON SHARE: Net earnings $ 0.40 $ 0.30 $ 1.26 $ 1.32 - ------------------------------------------------------------------------------------------------------------------------- Weighted average diluted common shares outstanding 405.4 406.0 405.4 409.7 - ------------------------------------------------------------------------------------------------------------------------- DIVIDENDS DECLARED PER COMMON SHARE $ 0.0575 $ 0.0575 $ 0.1725 $ 0.1725 =========================================================================================================================
During the third quarter ended September 28, 2002, the Company recorded a $7.0 million pre-tax ($4.4 million after-tax), or $0.01 per basic and diluted share nonrecurring net litigation gain representing the Company's share of settlement proceeds from certain anti-trust lawsuits in which the Company was either a co-plaintiff or class action member, offset by the costs associated with the Company's settlement of certain lawsuits in which the Company was the defendant. Effective in fiscal 2002, CVS adopted Statement of Financial Accounting Standard No. 142, "Goodwill and Other Intangible Assets." As a result of the adoption, goodwill and other indefinite-lived intangible assets are no longer being amortized. Amortization of these assets for the thirteen and thirty-nine weeks ended September 29, 2001 amounted to $8.8 million and $24.4 million, respectively. Removing this amortization expense and its related tax effect would have resulted in net earnings of $131.7 million, or $0.32 per diluted share, for the thirteen weeks ended September 29, 2001 and $565.5 million or $1.37 per share for the thirty-nine weeks ended September 29, 2001. CVS CORPORATION CONSOLIDATED BALANCE SHEETS
- ---------------------------------------------------------------------------------------------------------------------- (UNAUDITED) SEPTEMBER 28, DECEMBER 29, IN MILLIONS, EXCEPT SHARE AND PER SHARE AMOUNTS 2002 2001 - ---------------------------------------------------------------------------------------------------------------------- ASSETS: Cash and cash equivalents $ 217.3 $ 236.3 Accounts receivable, net 986.3 966.2 Inventories 3,983.0 3,918.6 Deferred income taxes 200.0 242.6 Other current assets 45.1 46.2 - ---------------------------------------------------------------------------------------------------------------------- TOTAL CURRENT ASSETS 5,431.7 5,409.9 Property and equipment, net 2,201.1 1,847.3 Goodwill, net 877.7 874.9 Intangible assets, net 342.3 318.0 Other assets 201.0 178.1 - ---------------------------------------------------------------------------------------------------------------------- TOTAL ASSETS $ 9,053.8 $ 8,628.2 ====================================================================================================================== LIABILITIES: Accounts payable $ 1,560.8 $ 1,535.8 Accrued expenses 1,270.1 1,267.9 Short-term borrowings 158.2 235.8 Current portion of long-term debt 26.3 26.4 - ---------------------------------------------------------------------------------------------------------------------- TOTAL CURRENT LIABILITIES 3,015.4 3,065.9 Long-term debt 807.7 810.4 Deferred income taxes 35.3 35.3 Other long-term liabilities 144.5 149.7 SHAREHOLDERS' EQUITY: Preference stock, series one ESOP convertible, par value $1.00: authorized 50,000,000 shares; issued and outstanding 4,716,000 shares at September 28, 2002 and 4,887,000 shares at December 29, 2001 252.0 261.2 Common stock, par value $0.01: authorized 1,000,000,000 shares; issued 409,112,000 shares at September 28, 2002 and 408,532,000 shares at December 29, 2001 4.1 4.1 Treasury stock, at cost: 16,285,000 shares at September 28, 2002 and 17,645,000 shares at December 29, 2001 (471.6) (510.8) Guaranteed ESOP obligation (219.9) (219.9) Capital surplus 1,544.8 1,539.6 Retained earnings 3,941.5 3,492.7 - ---------------------------------------------------------------------------------------------------------------------- TOTAL SHAREHOLDERS' EQUITY 5,050.9 4,566.9 - ---------------------------------------------------------------------------------------------------------------------- TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $ 9,053.8 $ 8,628.2 ======================================================================================================================
CVS CORPORATION CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
- ---------------------------------------------------------------------------------------------------------------------- 39 WEEKS ENDED SEPTEMBER 28, September 29, IN MILLIONS 2002 2001 - ---------------------------------------------------------------------------------------------------------------------- CASH FLOWS FROM OPERATING ACTIVITIES: Net earnings $ 516.5 $ 543.5 Adjustments required to reconcile net earnings to net cash provided by operating activities: Depreciation and amortization 230.9 239.5 Deferred income taxes and other noncash items 54.9 11.5 Change in operating assets and liabilities, providing/(requiring) cash, net of effects from acquisitions: Accounts receivable, net (20.1) (132.0) Inventories (64.4) (510.5) Other current assets 1.8 (7.8) Other assets (25.8) (2.7) Accounts payable 24.9 199.2 Accrued expenses 9.4 58.9 Other long-term liabilities (5.2) 2.0 - ---------------------------------------------------------------------------------------------------------------------- NET CASH PROVIDED BY OPERATING ACTIVITIES 722.9 401.6 ====================================================================================================================== CASH FLOWS FROM INVESTING ACTIVITIES: Additions to property and equipment (804.7) (473.0) Proceeds from sale-leaseback transactions 228.8 94.0 Acquisitions (net of cash acquired) and investments (68.5) (123.2) Proceeds from sale or disposal of assets 17.6 11.6 - ---------------------------------------------------------------------------------------------------------------------- NET CASH USED IN INVESTING ACTIVITIES (626.8) (490.6) ====================================================================================================================== CASH FLOW FROM FINANCING ACTIVITIES: (Reductions in) additions to short-term borrowings (77.6) 13.8 Dividends paid (67.6) (67.8) (Reductions in) additions to long-term debt (2.8) 296.2 Purchase of treasury shares -- (129.0) Proceeds from exercise of stock options 32.9 45.1 - ---------------------------------------------------------------------------------------------------------------------- NET CASH (USED IN) PROVIDED BY FINANCING ACTIVITIES (115.1) 158.3 ====================================================================================================================== Net (decrease) increase in cash and cash equivalents (19.0) 69.3 Cash and cash equivalents at beginning of period 236.3 337.3 - ---------------------------------------------------------------------------------------------------------------------- CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 217.3 $ 406.6 ======================================================================================================================
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