Walgreens 2004 Annual Report Download - page 20

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20
Contractual Obligations and Commitments
The following table lists our contractual obligations and commitments at August 31, 2004 (In Millions):
Payments Due by Period
Total
Less than 1
Year 1-3 Years 3-5 Years
Over 5
Years
Operating leases* $21,692.7
$1,279.8
$2,606.1
$2,425.3
$15,381.5
Purchase obligations:
Open inventory purchase orders* 770.0
770.0
-
-
-
Real estate development* 378.4
378.4
-
-
-
Other corporate obligations* 84.4
44.6
39.8
-
-
Insurance 353.3
130.2
119.0
68.7
35.4
Retiree health & life 204.5
7.1
14.6
19.2
163.6
Closed location obligations 77.6
19.4
28.1
16.8
13.3
Long-term debt 14.7
2.3
9.7
0.6
2.1
Capital lease obligations 36.0
2.0
2.0
2.0
30.0
Other long-term liabilities reflected on
the balance sheet 160.6
12.3
11.4
17.7
119.2
Total $23,772.2
$2,646.1
$2,830.7
$2,550.3
$15,745.1
* Not on balance sheet.
Off-Balance Sheet Arrangements
Letters of credit are issued to support purchase obligations and commitments (as reflected on the Contractual Obligations and
Commitments table) as follows (In Millions):
Inventory obligations $ 77.2
Real estate development 1.6
Insurance 156.2
Total $235.0
We have no other off-balance sheet arrangements other than those disclosed on the previous Contractual Obligations and
Commitments table.
Both on- and off-balance sheet financing are considered when targeting debt to equity ratios to balance the interest of equity
and debt (real estate) investors. This balance allows us to lower our cost of capital while maintaining a prudent level of financial
risk.
Recent Accounting Pronouncements
In November 2003, the Emerging Issues Task Force (EITF) reached a consensus on 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," which will be effective in fiscal year 2005. We are already in
conformity with this new pronouncement; therefore, the implementation will not impact the financial statements.
In December 2003, the Financial Accounting Standards Board (FASB) revised SFAS No. 132, "Employers' Disclosures about
Pensions and Other Postretirement Benefits-an Amendment of FASB Statements No. 87, 88, and 106," to include additional
disclosures. The interim disclosure requirements were presented in our fiscal year 2004 third quarter statements. The annual
disclosure requirements are reflected in our fiscal 2004 annual financial statements. (See Note "Retirement Benefits" in the Notes
to Consolidated Financial Statements.)