Walgreen benefited from a lower tax rate in the quarter of 35% vs. 36.7% in the year-ago quarter, primarily the result of a lower effective state tax rate.

For the year, cash and short-term investments decreased from $1.34 billion at the end of last year’s fourth quarter to a net commercial paper issuance of $624 million at the end of this year’s fourth quarter. The company closed on the $850 million acquisition of Option Care, Inc., in this year’s fourth quarter. Other factors also contributed to the change in the company’s cash position.

Accounts receivable increased 8.4%, while accounts payable decreased 7.6%.

- LIFO inventories rose 12.2% versus a year ago on a fourth quarter sales gain of 10.3%.
- Capital expenditures in fiscal 2007 were $1.8 billion compared to $1.3 billion in 2006.

The company expects to invest more than $2 billion in fiscal 2008 on capital investments, including new stores, technology and a new distribution center in Connecticut scheduled to open in fiscal 2009.

For the fiscal year 2007, Walgreen repurchased 15.5 million shares of stock for $688 million.

Approximately half of those shares were repurchased under the company’s 2004 share repurchase program, and the other half were purchased under the four-year, $1 billion share repurchase plan announced in January 2007.

Many of the challenges faced in this quarter will continue, including comparisons to last year’s blockbuster generics and growth in Medicare Part D prescriptions.

The management feels that the fundamentals of the business remain strong. Growth in pharmacy sales will continue as the population ages; the company’s store managers and corporate merchandisers will keep up the innovation that’s driving great front-end comparable sales increases; and new product and service introductions will give customers more reasons to shop in Walgreen’s stores.

Expansion will continue on all fronts.

- The company plans to open 550 new stores in fiscal 2008 for a net gain of 475 stores after relocations and closings.
- In addition, the management will look at acquisitions when the right opportunity arises.

Take Care Health Systems, Walgreen’s subsidiary that manages convenient care clinics inside the company’s drugstores, will grow dramatically over the next year with plans to have more than 400 clinics open by the end of calendar 2008.

There is no Question and Answer section associated with Walgreen’s fourth quarter fiscal 2007 earnings call conducted on October 1st, 2007.