Cash and short-term investments decreased from $1.8 billion at the end of last year’s third quarter to $758 million at the end of this year’s third quarter.

Accounts receivable decreased 1.9% and accounts payable decreased 0.6%. The declines are a result of less Medicare Part D business in the pharmacy benefit management unit. The company’s PBM’s contract with United Health Group’s Ovations unit ended last Dec. 31.

LIFO inventories were $6.46 billion, a 16.5% increase from the year ago quarter.

Pharmacy inventories in the stores were impacted by recent generic introductions, which left the company with some excess supply of brand medicines. In addition, warehouse inventories were impacted by the new distribution center opening in Anderson, South Carolina.

For the first nine months depreciation and amortization increased 21.3% from $409 million to $496 million.

This is due in part to the amortization of intangibles from prescription file buys and the acquisitions of the Happy Harry’s pharmacy chain and Medmark Specialty Pharmacy Solutions.

Capital expenditures for the nine months were $1.25 billion versus $907 million last year.

Since announcing a new $1 billion share repurchase plan in January, the company has repurchased 5.6 million shares of stock for $257 million.

During the past quarter, the company’s main focus and biggest opportunity continued to be drugstore expansion.

- This is expected to drive the company’s company’s growth well into the future as Walgreen remains on track to operate more than 7,000 stores in 2010.
- As more industry consolidation takes place, the company will consider select acquisitions such as the one that resulted in this quarter’s opening of 30 former Familymeds Group pharmacies.

The company is also looking for other pharmacy-related healthcare opportunities, which is why it acquired convenient care clinic operator Take Care Health Systems in May.

Walgreen’s initial rollout of more than 400 clinics by the end of calendar 2008 won’t have the same impact as opening 400 drugstores but they will be central to the company’s future expansion of other patient-focused health care services.

Another milestone reached during the quarter was the opening of the company’s 12th distribution center in Anderson, South Carolina.

This new facility is special because of the inclusive work environment that the company’s distribution and logistics division created. More than 42% of the facility’s current workforce of 275 has a physical or cognitive disability, making it the first facility of its kind to employ a significant number of people with disabilities.

There is no Quaestion and Answer session associated with the third quarter fiscal 2007 earnings call conducted by Walgreen Company (WAG: chart) on June 25, 2007.