Walgreens 2013 Annual Report Download - page 48

The information above provides reconciliations of the supplemental non-GAAP financial
measures, as defined under SEC rules, presented in this Annual Report to the most
directly comparable financial measures calculated and presented in accordance with
generally accepted accounting principles in the United States (GAAP). The Company
has provided these supplemental non-GAAP financial measures in the Annual Report,
which are not calculated or presented in accordance with GAAP, as supplemental
information and in addition to the financial measures that are calculated and presented
in accordance with GAAP. These supplemental non-GAAP financial measures are
presented because management has evaluated the Company’s financial results both
including and excluding the adjusted items and believes that the supplemental non-
GAAP financial measures presented provide additional perspective and insights when
Reconciliation of Non-GAAP Financial Measures
The supplemental information in the tables below is provided to reconcile certain financial disclosures in this Annual Report.
(Dollars in millions, except per share amounts)
2013 2012 2011 2010 2009 2008
Net cash provided by operating activities $ 4,301
Additions to property and equipment (1,212)
Free cash flow (Non-GAAP) $ 3,089
Net Earnings – as reported $ 2,450 $ 2,127 $ 2,714 $ 2,091 $ 2,006
LIFO provision 151 195 131 87 109
Acquisition-related amortization 241 161 138 116 94
Acquisition-related costs 60 82 — — —
Alliance Boots related tax 124 — — — —
DEA settlement costs 47 — — — —
Hurricane Sandy costs 24 — — — —
Distributor transition costs 8 — — — —
Medicare Part D — — — 43 —
Increase in fair market value of warrants (110) — — — —
Gain on sale of Walgreens Health Initiatives, Inc. (13) — (273) — —
Net Earnings – as adjusted (Non-GAAP) $ 2,982 $ 2,565 $ 2,710 $ 2,337 $ 2,209
Net Earnings – as adjusted growth (Non-GAAP) 16.3%
Net Earnings per Common Share (diluted) – as reported $ 2.56 $ 2.42
LIFO provision 0.16 0.22
Acquisition-related amortization 0.25 0.18
Acquisition-related costs 0.06 0.09
Alliance Boots related tax 0.13 —
DEA settlement costs 0.05 —
Hurricane Sandy costs 0.03 —
Distributor transition costs 0.01 —
Alliance Boots share issuance effect — 0.02
Increase in fair market value of warrants (0.12) —
Gain on sale of Walgreens Health Initiatives, Inc. (0.01) —
Net Earnings per Common Share (diluted) –
as adjusted (Non-GAAP) $ 3.12 $ 2.93
Net Earnings per Common Share (diluted) –
as adjusted growth (Non-GAAP) 6.5%
Selling, general and administrative expenses – as reported $ 17,543 $ 16,878 $ 16,561 $ 15,518 $ 14,366 $ 13,202
Acquisition-related amortization (289) (255) (219) (182) (148) (107)
Acquisition-related costs (96) (69) — — — —
DEA settlement costs (28) — — — — —
Hurricane Sandy costs (39) — — — — —
Distributor transition costs (13) — — — — —
Selling, general and administrative expenses –
as adjusted (Non-GAAP) $ 17,078 $ 16,554 $ 16,342 $ 15,336 $ 14,218 $ 13,095
Selling, general and administrative expense –
as adjusted growth (Non-GAAP) 3.2% 1.3% 6.6% 7.9% 8.6%
analyzing the core operating performance of the Company’s business from period to
period and trends in the Company’s historical operating results. The Company defines
free cash flow as net cash provided by operating activities in a period minus additions
to property and equipment (capital expenditures) made in that period. This measure
does not represent residual cash flows available for discretionary expenditures as the
measure does not deduct the payments required for debt service and other contractual
obligations or payments for future business acquisitions. Therefore, the Company
believes it is important to view free cash flow as a measure that provides supplemental
information to our entire statements of cash flows. These supplemental non-GAAP
financial measures should not be considered superior to, as a substitute for, or as an
alternative to, and should not be considered in conjunction with, the GAAP financial
measures presented in the Annual Report.
46 2013 Walgreens Annual Report