Walgreens 2004 Annual Report Download - page 29

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29
Notes to Consolidated Financial Statements
Restatement and Reclassification of Financial Statements
The company has recorded a non-cash correction of lease accounting errors. These adjustments conform the accounting for
leases to accounting principles generally accepted in the United States of America as described in a recent letter issued by the
Chief Accountant of the Securities and Exchange Commission. Although the company does not believe that these errors resulted
in a material misstatement of its consolidated financial statements for any annual or interim period previously reported, the effect of
correcting the cumulative impact of the errors in the current quarter would have had a material effect on the current quarter and
fiscal year results.
Historically, when accounting for leases, the company recorded rent expense on a straight-
line basis over the firm term of the lease,
with the term commencing when actual rent payments began. Depreciation of buildings on leased land occurred over a period that
may have included both the firm term of the lease as well as certain option periods.
The company has revised its accounting such that the commencement date of all lease terms is the earlier of the date the company
becomes legally obligated to make rent payments or the date the company has the right to control the property. Additionally, the
company recognizes rent expense on a straight-line basis over a time period that equals or exceeds the time period used for
depreciation of buildings on leased land.
The following is a summary of the effects of the corrections (In Millions, Except Per Share Data):
Consolidated Statement of Earnings
For the Year Ended August 31, 2004
As Reported Adjustment As Restated
Selling, Occupancy and Administration $ 8,055.1
$ 16.6
$ 8,071.7
Earnings Before Income Tax Provision 2,176.3
(16.6)
2,159.7
Income Tax Provision 816.1
(6.2)
809.9
Net Earnings 1,360.2
(10.4)
1,349.8
Per Share-
Basic $ 1.33
$ (.01)
$ 1.32
Diluted 1.32
(.01)
1.31
Consolidated Statement of Earnings
For the Year Ended August 31, 2003
As Reported Adjustment As Restated
Selling, Occupancy and Administration $ 6,950.9
$ 17.0
$ 6,967.9
Earnings Before Income Tax Provision 1,888.7
(17.0)
1,871.7
Income Tax Provision 713.0
(6.4)
706.6
Net Earnings 1,175.7
(10.6)
1,165.1
Per Share-
Basic $ 1.15
$ (.01)
$ 1.14
Diluted 1.14
(.01)
1.13
Consolidated Statement of Earnings
For the Year Ended August 31, 2002
As Reported Adjustment As Restated
Selling, Occupancy and Administration $ 5,980.8
$ 17.9
$ 5,998.7
Earnings Before Income Tax Provision 1,637.3
(17.9)
1,619.4
Income Tax Provision 618.1
(6.8)
611.3
Net Earnings 1,019.2
(11.1)
1,008.1
Per Share-
Basic $ 1.00
$ (.01)
$ .99
Diluted .99
(.01)
.98