This summary is based on the fourth quarter fiscal 2008 earnings call conducted by Walgreen Co. (WAG: chart) on September 29, 2008.

Management:

- Chairman and Chief Executive Officer: Jeff Rein
- Senior Vice President and Chief Financial Officer: Wade Miquelon
- President: Greg Wasson
- Vice President and Treasurer: John Spina
- Divisional Vice President of Inventor Relations and Finance: Rick Hans

Key Investors Issues

- Sales were $14.6 billion, up 8.8%.
- Net earnings rose 11.7% to $443 million or 45 cents a share, from $397 million or 40 cents a share in the prior period.

Full Year Highlights:

- Sales increased 9.8% to $59 billion, from $53.8 billion in the prior year.
- Net earnings grew 5.7% to $2.2 billion or $2.17 per share diluted.

Fourth Quarter Highlights

Sales were $14.6 billion, up 8.8% from $13.4 billion in 2007 as comp store sales grew 3.7% and total comps grew 2.6%.

- Customers are finding value in the firm’s products, services and convenient close to home locations especially as gas prices skyrocket..
- Prescription sales which represented 56% of total sales rose 7.9% and 2% on a comparable store basis.
- The firm had a $79 million positive adjustment for employee vacation accrual.
- LIFO provision of $24.9 million, compared to a provision of $32 million a year ago.

SG&A expense dollars increased 5.5% benefiting from the vacation accrual credit and net of this adjustment SG&A expense dollars increased only 8% which is less than the 8.8% sales gain.

- Total gross profit dollars were just over $4 billion a 7.4% increase reflecting the slow growth rate in prescription sales as margins decreased 34 basis points to 27.64%.
- Retail pharmacy margins increased due to a greater use of generics but total pharmacy margins were impacted negatively from the higher growth rate of specialty pharmacy which has a high dollar ring but a lower margin as a percent of sales.
- Front end margins were essentially flat and helping the front end was a shift toward high margin items such as the private label brand products but hurting front end margins were heavier than normal promotions.

Net earnings rose 11.7% to $443 million or 45 cents a share, from $397 million or 40 cents a share in the prior year despite heavier promotional spending than originally planned, and a fairly significant LIFO provision.

- Accounts receivable were up 13% driven primarily by third party sales and slower Medicaid payments by states such as California and Illinois while accounts payable increased 14.9%, primarily due to the timing a few major payments.
- Capital expenditures including new stores, distribution centers and IT development reached $2.2 billion.
- Net debt was $977 million compared to a net debt of $651 million a year ago, inclusive of $82.7 million of short term debt and $1.34 billion of long term debt, offset by cash and cash equivalences of $443 million.

Competitive position:

- The industry is facing a continuation of the slowest growing prescription drug market in 47 years according to IMS Health.
- First is the switch of the allergy drug Zyrtec from prescription to over the counter status earlier this year and some fewer new drug interactions as well as some safety concerns over new medications.
- The economic challenges have resulted in 22% of Americans reducing their doctor visits and 11% are scaling back on medication use according to a survey by the National Association of Insurance Commissioners.

In fiscal 2008, the firm implemented its growth strategy through a number of short term and long term initiatives designed to deliver significant value to shareholders.

- Worksite healthcare acquisitions in the Health and Wellness Division are integrating well and the company has established the foundation to provide compelling future growth across all platforms.
- The firm has a relentless focus on reducing costs through disciplined control today and over the long term.

Strategic Thrusts:

- The firm is broadening access to its products and services for organic expansion and acquisitions by building an impressive network of healthcare access.
- It is in the early stages of a process intended to create a very convenient shopping experience in the stores, to offer an efficient assortment of products, price points and promotions.
- Initiatives include the Walgreen Prescription Savings Club, which is making medications more affordable for more than 45 million uninsured Americans.
- The Prescription Savings Club goes well beyond the discount generic programs at other retailers by offering savings on more than 5,000 name brand and generic medications

Growth Outlook: