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John Spina - Treasurer
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Certain statements and projections of future Certain statements and projections of future results made in this presentation constitute results made in this presentation constitute forward looking information that is based on forward looking information that is based on current market, competitive, and regulatory current market, competitive, and regulatory
expectations that involve risks and uncertainties. expectations that involve risks and uncertainties. Please see our Form 10K for a discussion of Please see our Form 10K for a discussion of
factors as they relate to forward looking factors as they relate to forward looking statements dated August 31, 2007. statements dated August 31, 2007.
Safe Harbor LanguageSafe Harbor Language
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1Q08 and FY07 Results1Q08 and FY07 Results
1Q081Q08•• Sales up 10.4% to $14.0 billionSales up 10.4% to $14.0 billion•• Earnings up 5.5% to $455.5 millionEarnings up 5.5% to $455.5 million
FY07FY07•• Sales up 13.4% to $53.8 billionSales up 13.4% to $53.8 billion•• Earnings up 16.6% to $2.0 billionEarnings up 16.6% to $2.0 billion
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GP$ and SG&A$ Growth (%YOY)GP$ and SG&A$ Growth (%YOY)
*Adjusted for Hurricane Katrina in 4Q05
Source: Company Data
5.0%
10.0%
15.0%
20.0%
25.0%
1Q03 2Q03 3Q03 4Q03 1Q04 2Q04 3Q04 4Q04 1Q05 2Q05 3Q05 4Q05 1Q06 2Q06 3Q06 4Q06 1Q07 2Q07 3Q07 4Q07 1Q08
Gross Profit
SG&A*
16.7%
14.3%
5
$0
$10,000
$20,000
$30,000
$40,000
$50,000
$60,000
$0
$500
$1,000
$1,500
$2,000
$2,500
33 Years of Record Sales and EarningsSales CAGR: 12.8%Earnings CAGR: 18.5%Stock CAGR: 21.1%
Source: Company Data
1980-1982 1990-1991 2000-2001
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Sales 13.3% 15.4% 12.5% 12.3% 13.4%Rx Comp 13.2% 14.0% 9.8% 9.2% 9.5%Script Comp 6.4% 7.3% 6.7% 4.5% 5.7%FE Comp 1.7% 6.1% 5.5% 5.3% 5.8%Earnings 15.6% 15.9% 15.5% 12.3% 16.6%
FY03 FY04 FY05 FY06 FY07
Sales, Comp, and Earnings TrendsSales, Comp, and Earnings Trends
*Options expensed beginning in FY06Source: Company Data
7
WAG CVS RAD
Rx Comp SalesRx Comp Sales
(Percent Increase)
Feb.0.0%
2.0%
4.0%
6.0%
Dec. Jan.Nov.
Source: Walgreens, CVS and Rite Aid Press Releases
8
0
5
10
15
20
25
30
35
40
45
S O N D J F M A M J J A
Flu TrendFlu Trend
Source: SDI FAN
2006 - 2007
2007 - 2008
9
Filling More ScriptsEfficiently & Profitably
Prescriptions Per Day by Channel
0
50
100
150
200
250
300
Ind. Mass Food Chainw/o
WAG
WAG
Source: IMS Health (Data based on Calendar 2007 )
10
Pre-tax Earnings per Selling Square Foot
Outperforming Other RetailersOutperforming Other Retailers
$0
$10
$20
$30
$40
$50
$60
Food Chain w/oWAG
Wal-Mart WAG
Source: SEC Filings
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WAG16%
Chainw/o WAG
31%
Chainw/o WAG
31%
Independent21%
Mass11%
Food14%
Mail7%WAG
11%
Chainw/o WAG
36%
Chainw/o WAG
36%
Independent23%
Mass10%
Food14%
Mail5%
2001 – 3.0 Billion 2006 – 3.4 Billion
Number of Scripts Filled by Community Pharmacies and Mail
A Bigger Piece of a Bigger PieA Bigger Piece of a Bigger Pie
Source: NACDS and IMS
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22.7%22.8%23.1%23.7%24.1%
13.3%13.7%13.9%
14.4%14.8%
5.9% 6.5% 6.9% 6.7%
7.0%
16.3%15.5%14.7%
13.8%13.0%
40.7%41.2%41.4%41.6%42.2%
5.0%
10.0%
15.0%
20.0%
25.0%
30.0%
35.0%
40.0%
45.0%
Q104
Q204
Q304
Q404
Q105
Q205
Q305
Q405
Q106
Q206
Q306
Q406
Q107
Q207
Q307
Q407
Q108
Q208
Q308
Q408
Independents
Food Stores
Walgreens
Chain/Mass w/o WAG
-50 Bps
+80 Bps
Chain/Mass w/o WAG
WAG
Growing Rx MarketshareGrowing Rx Marketshare
Source: IMS and Company Data
13
0
5
10
15
20
25
The Boomer Wave is Rolling to ShoreThe Boomer Wave is Rolling to Shore
Drug Spend per YearPopulation in Millions, by Age Range
Source: U.S. Census Bureau and BLS
$97
$298
$612
$887
Under 25 25-45 45-65 Over 65
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Population GrowthPopulation Growth
20062006 20202020
65+ Population65+ Population(in millions)(in millions)
37,26037,260 54,63254,632
% of Total Population% of Total Population 12.4%12.4% 16.3%16.3%
GrowthGrowth -- 46.6%46.6%
Source: U.S. Census Bureau
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-2.0%
0.0%
2.0%
4.0%
6.0%
WAG CVS RAD
Front-End Comp SalesFront-End Comp Sales
(Percent Increase)
Feb.Nov. Jan.Dec.
Source: Walgreens, CVS and Rite Aid Press Releases
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Fron
t End
Com
p %
Incr
ease
(Dec
reas
e)
Front End Comp Sales
-5.0%
0.0%
5.0%
10.0%
15.0%M
ar/A
pr-0
3
Jul-0
3
Oct
-03
Jan-
04
May
-04
Aug-
04
Nov
-04
Feb-
05
Jun-
05
Sep
-05
Dec
-05
Mar
/Apr
-06
Jul-0
6
Oct
-06
Jan-
07
May
-07
Aug-
07
Nov
-07
Feb-
08
Source: Company Data
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Growing Marketshare inthe Front of the Store
% Increase in Our Top 60 Categories
Food Drug Mass WMT WAG
0.0
1.0
2.0
3.0
4.0
5.0
6.0
7.0
8.0
12 Weeks Ending 1/26/08Source: ACNielsen
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Growing Marketshare inthe Front of the Store
% Increase in Our Top 60 Categories
12 Weeks Ending 1/26/08Source: ACNielsen
Food Drugw/o WAG
Mass WMT WAG
-4.0
-2.0
0.0
2.0
4.0
6.0
8.0
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Private Label: Goal of 20%Private Label: Goal of 20%
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From Any Home,To Any Walgreens…
…To Any Home!
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Ski Vacation
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Printer Cartridge RefillsPrinter Cartridge Refills
•• 3,000 stores3,000 stores•• Drop off at photo counterDrop off at photo counter•• Up to 60% cheaper than new Up to 60% cheaper than new
cartridgescartridges•• 100% satisfaction guarantee100% satisfaction guarantee•• EnvironmentallyEnvironmentally friendlyfriendly
Source: Company Data
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Leveraging Our Front-endLeveraging Our Front-end
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• Freestanding Stores
• 24-Hour Pharmacies
• One Hour Photo
• Drive-thru Rx
• Total Stores
1,036
427
1,438
880
2,358
1997 2007
5,058
1,648
5,709
5,016
5,997
A Decade of TransitionA Decade of Transition
Source: Company Data
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The Best Corners in AmericaThe Best Corners in America
We Will Control OurCorners for Over 50 Years!
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Store GrowthStore Growth
6,237
6,245
5,054
1,500
2,000
2,500
3,000
3,500
4,000
4,500
5,000
5,500
6,000
6,500
Oct
-99
Feb-
00
Jun-
00
Oct
-00
Feb-
01
Jun-
01
Oct
-01
Feb-
02
Jun-
02
Oct
-02
Feb-
03
Jun-
03
Oct
-03
Feb-
04
Jun-
04
Oct
-04
Feb-
05
Jun-
05
Oct
-05
Feb-
06
Jun-
06
Oct
-06
Feb-
07
Jun-
07
Oct
-07
Feb-
08
CVS
WAG
Jean Coutu
Eckerd
RAD
Store Count - WAG vs. Our Competitors
Sources: Walgreens, CVS, Rite Aid, Eckerd and Jean Coutu Press Releases
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% Change, Number of Pharmacies, 2001–2006
Growth of CommunityPharmacy by Channel
Total Food Mass Ind. WAG
-10%
0%
10%
20%
30%
40%
50%
Chain
56,948 10,163 7,438 17,482 5,58621,865
Source: NACDS
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% Change, Number of Pharmacies, 2001–2006
Growth of CommunityPharmacy by Channel
Total Chain Food Mass Ind. WAGw/o WAG
56,948 10,163 7,438 17,482 5,58616,279
-10%
0%
10%
20%
30%
40%
50%
Fortune (September, 1935): “There are 58,400 drug stores in the U.S.”
Source: NACDS
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Abilene, TXAlbuquerque, NMAmarillo, TXAppleton, WIAustin, TXBaton Rouge, LABeaumont, TXBenton Harbor, MIBloomington-Normal, ILBoulder-Longmont, COBrazoria, TXBryan-College Station, TXCasper, WYCape-Coral-Fort Myers, FLChicago, ILCincinnati, OHClarksville, TN - Hopkinsville, KYColorado Springs, COColumbus, GADallas-Fort Worth, TXDayton, OHDecatur, ILDeltona-Daytona Beach, FLDenver, CODes Moines, IADothan, ALDover, DEDuluth-Superior, MNEau Claire, WIEl Paso, TXEnid, OK
Where We Are Number One (121 Markets)Where We Are Number One (121 Markets)Fort Collins, COFort Lauderdale, FLFort Wayne, INFt. Walton Beach, FLGalveston, TXGary-Hammond, INGrand Rapids, MIGreeley, COGreen Bay, WIGreenville, NCHamilton, OHHouston, TXHuntsville, ALJackson, MSJackson, TNJacksonville, FLJanesville, WIJonesboro, ARKalamazoo, MIKankakee, ILKenosha, WIKnoxville, TNLa Crosse, WILafayette, LALake Charles, LALakeland, FLLas Cruces, NMLas Vegas, NVLawrence, KSLawton, OKLincoln, NE
Little Rock, ARLouisville, KYLubbock, TXMadison, WIMemphis, TNMerced, CAMiami, FLMilwaukee, WIMinneapolis, MNMobile, ALMuncie, INNaples, FLNashville, TNNew Orleans, LAOakland, CAOcala, FLOdessa-Midland, TXOklahoma City, OKOlympia, WAOmaha, NEOrlando, FLPalm Bay-Melbourne-Titusville, FLPeoria, ILPhoenix, AZPocatello, IDPort St. Lucie-Ft. Pierce, FLPortland, ORPueblo, COPunta Gorda, FLRacine, WIRock Island, IL – Davenport, IA
Rockford, ILSalt Lake City, UTSan Angelo, TXSan Antonio, TXSan Francisco, CA Santa Fe, NMSarasota, FLSeattle, WASheboygan, WISioux City, IASpokane, WASpringfield, ILSpringfield, MOSt. Cloud, MNSt. Joseph, MOSt. Louis, MOTacoma, WATampa-St. Petersburg, FLTexarkana, TXTopeka, KSTucson, AZVictoria, TXWest Palm Beach, FLWichita Falls, TXWichita, KSWilmington, DEYuba City, CAYuma, AZ
Source: Company Data
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Growing Market PresenceGrowing Market Presence
•• Retail pharmacy acquisitionsRetail pharmacy acquisitions–– Rite Aid files (Las Vegas; 27 locations closed)Rite Aid files (Las Vegas; 27 locations closed)–– El El AmalAmal (Puerto Rico; 20 locations acquired)(Puerto Rico; 20 locations acquired)
•• Industry consolidationIndustry consolidation–– IndependentsIndependents–– FredFred’’s (closing approx. 10% of existing locations)s (closing approx. 10% of existing locations)
•• ROIC ImprovingROIC Improving•• Consistent FE & Rx productivityConsistent FE & Rx productivity
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Consistent Front-End ProductivityConsistent Front-End Productivity
20062006 $2,092$2,092
20052005 $2,551$2,551 $2,076$2,076
20042004 $2,748$2,748 $2,431$2,431 $2,030$2,030
20032003 $3,015$3,015 $2,743$2,743 $2,411$2,411 $2,032$2,032
20022002 $3,224$3,224 $2,958$2,958 $2,693$2,693 $2,422$2,422 $2,002$2,002
AverageAverage $3,224$3,224 $2,985$2,985 $2,728$2,728 $2,452$2,452 $2,045$2,045
Year 5Year 5 Year 4Year 4 Year 3Year 3 Year 2Year 2 Year 1Year 1
Front-End Sales/Store by Class Year
Notes: Data based on net new drugstores, excluding acquired stores and stores converting to or from a 24-hour format
Class Year is calculated on a Calendar Year basis; includes only stores open at least 12 months as of 10/1/2007
Source: Company Data
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Consistent Pharmacy ProductivityConsistent Pharmacy Productivity
20062006 125125
20052005 181181 118118
20042004 213213 177177 121121
20032003 252252 226226 190190 129129
20022002 266266 243243 218218 184184 124124
AverageAverage 266266 247247 219219 183183 123123
Year 5Year 5 Year 4Year 4 Year 3Year 3 Year 2Year 2 Year 1Year 1
Prescriptions/Day/Store by Class Year
Notes: Data based on net new drugstores, excluding acquired stores and stores converting to or from a 24-hour format
Class Year is calculated on a Calendar Year basis; includes only stores open at least 12 months as of 10/1/2007
Source: Company Data
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ROIC ImprovingROIC Improving
20032003 20042004 20052005 20062006 20072007
NOPATNOPAT $1,465$1,465 $1,687$1,687 $1,938$1,938 $2,154$2,154 $2,514$2,514
Average Average Invested Invested CapitalCapital
$15,221$15,221 $17,341$17,341 $19,412$19,412 $21,501$21,501 $23,896$23,896
ROIC*ROIC* 9.6%9.6% 9.7%9.7% 10.0%10.0% 10.0%10.0% 10.5%10.5%NOPAT = Net Operating Profit After TaxROIC = Return on Average Invested Capital
*Source of methodology: McKinsey & Company, Inc. & Copeland, T., et. al. (2000). Valuation: Measuring and Managing the Value of Companies. New York: Wiley.
Source: Company Data
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Over $2.0 Billion in CapExOver $2.0 Billion in CapEx
Stores
Other
Technology
Distribution
35
Net New StoresNet New Stores
162 191
272344 355 363 353 361 372
476
0
100
200
300
400
500
600
1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 08'Est.
09'Est.
2010
475536
500+
Source: Company Data
36
Sales Area Square Footage GrowthSales Area Square Footage Growth
9.2%8.6%
9.5%
11.6%
13.5%
15.2%
12.3%
8.2%8.7%
0%
2%
4%
6%
8%
10%
12%
14%
16%
1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 08' 09' 2010
8.2%
9.8%
8.8%
Est Est
8.0%
Source: Company Data
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In-Store ClinicsIn-Store Clinics
•• Acquired Take Care Health Systems in MayAcquired Take Care Health Systems in May•• Staffed by certified nurse practitionersStaffed by certified nurse practitioners•• Open 7 days a weekOpen 7 days a week•• Treat common acute ailments including: colds, Treat common acute ailments including: colds,
flu, ear infections, and pink eyeflu, ear infections, and pink eye•• Open in 15 cities across 12 statesOpen in 15 cities across 12 states•• Over 145 currently operatingOver 145 currently operating•• 400 by December 2008400 by December 2008
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39
Pharmacy Benefit Management
Home Care
Specialty PharmacyClinic Pharmacy
Retail Pharmacy
AssistedLiving
Mail Service
Expand Into Additional Sectors of Pharmacy and Healthcare
Expand Into Additional Sectors of Pharmacy and Healthcare
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Investing in Our FutureInvesting in Our Future
•• Store GrowthStore Growth–– 550 total, 475 net550 total, 475 net
•• Leverage the convenient store locationLeverage the convenient store location–– Take Care, Printer Cartridges, DHL, CafTake Care, Printer Cartridges, DHL, Caféé WW
•• Leverage pharmacy servicesLeverage pharmacy services–– Option Care, Option Care, FamilymedsFamilymeds, , MedmarkMedmark
•• Acquisitions that strengthen the retail base Acquisitions that strengthen the retail base andandhealthcare serviceshealthcare services
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Age of the Company
Median Store Age
Average Manager Tenure
Average DM Tenure
Average Store Ops VP Tenure
Old, New, and ExperiencedOld, New, and Experienced
Source: Company Data
