Walgreens 2004 Annual Report Download - page 28

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28
2004 2003 2002
(Restated- See Restatement Note on Pages 29-30)
Net earnings $1,349.8
$1,165.1
$1,008.1
Add: Stock-based employee
compensation expenses
included in reported net income,
net of related tax effects .4
.7
6.9
Deduct: Total stock-based employee
compensation expense
determined under fair value
based method for all awards, net
of related tax effects (44.1)
(57.0)
(67.3)
Pro forma net income $1,306.1
$1,108.8
$ 947.7
Earnings per share:
Basic – as reported $ 1.32
$ 1.14
$ .99
Basic - pro forma 1.27
1.08
.93
Diluted – as reported 1.31
1.13
.98
Diluted - pro forma 1.27
1.07
.92
Income Taxes
The company provides for federal and state income taxes on items included in the Consolidated Statements of Earnings
regardless of the period when such taxes are payable. Deferred taxes are recognized for temporary differences between financial
and income tax reporting based on enacted tax laws and rates.
Earnings Per Share
In fiscal year 2004 and 2003, the diluted earnings per share calculation excluded certain stock options, because the options’
exercise price was greater than the average market price of the common shares for the year. If they were included, anti-dilution
would have resulted. At August 31, 2004 and August 31, 2003, outstanding options to purchase 2,902,996 and 10,716,109
common shares granted at a price ranging from $35.67 to $45.625 and $30.76 to $45.625 per share were excluded from the fiscal year
2004 and 2003 calculations, respectively.
Interest Expense
The company capitalized $1.1 million, $1.6 million and $8.5 million of interest expense as part of significant construction projects
during fiscal 2004, 2003 and 2002, respectively. Interest paid, net of amounts capitalized, was $.2 million in 2004, $.2 million in 2003
and $.3 million in 2002.
Other Income
The company had pre-tax income of $16.3 million ($.010 per share) in fiscal 2004, $29.6 million ($.018 per share) in 2003 and $6.2
million ($.004 per share) in 2002 from the receipt of litigation settlements. Receipts in fiscal 2004 represent pharmaceutical
manufacturer antitrust litigation settlements. Receipts in fiscal 2003 represent settlements from brand name drug litigation,
pharmaceutical manufacturer antitrust litigation, and vitamin antitrust litigation. Receipts in 2002 were a result of a pharmacy class
action against drug manufacturers.