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CVS HEALTH Corp Annual Report, Year Ended Dec 31, 1993

Filing Date
Filed March 31, 1994
Period End
December 31, 1993
Security
CVS
In the record · 2016–202610-K1110-Q328-K181

CVS filed 11 annual reports (10-K), 32 quarterly reports (10-Q) and 181 current reports (8-K) between 2016 and 2026.

  1. FY2016 annual report10-K · Feb ’17Feb ’17
  2. Leadership change8-K · Aug ’19Aug ’19
  3. Impairment8-K · Nov ’21Nov ’21
  4. Leadership change8-K · Apr ’25Apr ’25

01—Abstract

Summary

Summary of the 10-K filed March 31, 1994. Cited figures are marked; the original filing is the authoritative source.

Important discrepancy: the filing provided is Melville Corporation's Form 10-K for the fiscal year ended December 31, 1993 (Commission File No. 1-1011, Rye, NY).

It is not a CVS Health Corp filing. CVS is a banner within Melville's Prescription Drugs, Health and Beauty Aids segment, so this analysis covers Melville, the registrant. The analysis should not be read as CVS Health's own results.

Melville's 1993 net sales were flat at $10.44 billiona (1992: $10.43 billion), with same-store sales up only 0.1%. Operating profit rebounded to $623.3 million from $360.9 million, but the 1992 figure included a $347.0 million pre-tax strategic realignment charge. Net earnings rose to $331.8 million, or $3.00 per share, versus $1.13 in 1992.

Excluding the 1992 charges, EPS would have been about $3.50b in 1992, so underlying 1993 earnings declined. Management attributed the weakness to disappointing sales, heavier apparel markdowns, and a shift in mix toward lower-margin prescription sales, which pressured gross margin. Earnings were helped by a $10.0 million LIFO benefit from a change in retail price index methodology.

Balance sheet and cash flow were solid. Cash and equivalents were $81.0 millionc, down from $145.1 million. Operating cash flow was $419.7 million and capital expenditures were $386.7 million, with 1994 capex estimated at $395.0 million.

Commercial paper of $90.0 milliond was outstanding at year end, against a peak of $875.0 million during the year. Shareholders' equity was $2.25 billion, and long-term obligations were 14.0% of total capitalization. The company paid $1.52 per common share in dividends and operated 7,282 stores, down from 8,213, after closures and divestitures under the 1992 realignment program.

02—Key points

Key Highlights

  1. Net sales were flat at $10.44 billion in 1993 versus $10.43 billion in 1992, and same-store sales rose only 0.1%.
  2. Operating profit increased to $623.3 million from $360.9 million, but the prior-year comparison includes a $347.0 million pre-tax realignment charge.
  3. Net earnings were $331.8 million ($3.00 per share) versus $1.13 per share in 1992. Excluding 1992 charges, 1992 EPS would have been about $3.50, so underlying earnings declined.
  4. Prescription drugs, health and beauty aids (CVS, Peoples, Standard Drug, Austin Drug) was the largest segment at 37.9% of sales and $3.95 billion in net sales, but its operating profit fell about 6% before the realignment charge.
  5. Apparel (Marshalls, Wilsons) and footwear (Meldisco, FootAction, Thom McAn) faced weak same-store sales and heavier markdowns, with apparel operating profit down 21% before the realignment charge.
  6. Store count fell to 7,282 from 8,213 after the 1992 strategic realignment, including the 1993 sales of Chess King, Prints Plus and Accessory Lady and the closure of over 200 Thom McAn stores.
  7. Cash flow from operations was $419.7 million against $386.7 million of capital expenditures, with $90.0 million of year-end commercial paper and $1.52 per share in dividends.

03—Questions

Frequently Asked Questions

  1. Is this filing from CVS Health Corp?

    No. The document is Melville Corporation's 10-K for fiscal 1993. CVS is one of Melville's retail chains and is part of its prescription drugs segment. The filing provided does not match the CVS Health Corp request, so please confirm which company's filing you need.

  2. Why did Melville's reported earnings rise so sharply in 1993?

    Most of the increase reflects the absence of the $347.0 million pre-tax realignment charge taken in 1992. Net earnings were $331.8 million in 1993 versus $133.4 million in 1992, but underlying 1993 earnings fell year over year. Results were also helped by a $10.0 million LIFO benefit from a change in retail price index methodology.

  3. How did Melville's segments perform?

    Prescription drugs, health and beauty aids grew sales 8.7% to $3.95 billion but saw operating profit fall about 6% before the realignment charge, due to lower-margin prescription sales and new point-of-sale systems. Apparel sales fell 2.6% and operating profit before the charge fell 21%. Footwear sales fell 6.9% and toys and household furnishings sales fell 6.5%, though Linens 'n Things and This End Up grew.

  4. What are the company's liquidity and capital spending plans?

    Operating cash flow was $419.7 million, and cash ended the year at $81.0 million. Commercial paper of $90.0 million was outstanding at year end, down from a $875.0 million peak during the year, which is used to fund seasonal inventory builds. Capital expenditures were $386.7 million in 1993 and are estimated at $395.0 million for 1994, mainly for new stores and technology.

  5. Are there material contingent liabilities?

    Yes. Melville Realty Company guarantees rental obligations on 720 leases tied to prior dispositions, with a present value of about $189.0 million. Within that, it guarantees 423 Chess King leases worth about $91.0 million. The purchaser of the $29.4 million Chess King note filed for Chapter 11, and Melville sold the note at a $4.0 million loss. Melville is indemnified for 52.5% of guarantee costs during that bankruptcy, so the potential liability is uncertain.

04—Continue

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