Walgreen Co.Third Quarter 2008 Earnings Conference

© Copyright 2008 Walgreen Co.

Third Quarter 2008 Conference CallJune 23, 2008

2© Copyright 2008 Walgreen Co.

• Introduction / Safe Harbor Rick HansDivisional VP - IR & Finance

• Q3 Highlights Jeff ReinChairman & CEO

• Senior Management Additions Wade MiquelonSenior VP & CFO

• Q3 Financials Bill RudolphsenSenior VP & CRO

• Current Environment Greg WassonPresident & COO

• Summary Jeff Rein

• Questions & Answers All

Third Quarter 2008 Agenda


Safe Harbor

• Certain statements and projections of future results made in this presentation constitute forward-looking information that is based on current market, competitive and regulatory expectations that involve risk and uncertainty.

• Please see our Form 10-K for a discussion of factors as they relate to forward-looking statements dated August 31, 2007.


Third Quarter Highlights

• Record sales and earnings• Strong front-of-store sales• Outpacing industry prescription growth• Continued organic growth – best locations,

strong brand• Disciplined and sustainable SGA expense

control


16.0%

9.3%

14.7%

10.0%

0.0%

5.0%

10.0%

15.0%

20.0%

25.0%

2Q03 3Q03 4Q03 1Q04 2Q04 3Q04 4Q04 1Q05 2Q05 3Q05 4Q05 1Q06 2Q06 3Q06 4Q06 1Q07 2Q07 3Q07 4Q07 1Q08 2Q08 3Q08

Year-Over-Year % Increase

SG&A

Gross Profit

Controlling SG&A

Note: SG&A data adjusted for Hurricane Katrina in the fourth quarter 2005

Source: Company Data


Senior Management Additions

Wade MiquelonChief Financial Officer

Bill RudolphsenChief Risk Officer

Sona ChawlaSenior VP of E-commerce

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Third Quarter FinancialsPercentage ChangeThree Months Ended

Prescription Sales 8.9% 13.8% 13.5%

May 31, 2008 May 31, 2007 May 31, 2006

Net Sales 9.6% 12.5% 12.4%

Net Earnings 2.0% 19.6% 14.2%

Comparable Drugstore Sales 3.4% 7.8% 7.6%

Comparable Front-End Sales 4.6% 5.6% 4.6%

Comparable Prescription Sales 2.7% 9.0% 9.3%

Comparable Prescriptions (Units) 1.1% 5.4% 4.0%

Selling, General and Administrative Expenses

Gross Margin

21.6%

27.5%

Percent to SalesThree Months Ended

22.1%22.1%

28.3%28.2%

May 31, 2006May 31, 2007May 31, 2008

*Fiscal 2008 third quarter includes a LIFO provision of $16.1 million versus a $3.5 million credit in the previous year.

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Additional Financial Information

• Q3 tax rate of 37.3% in 2008 vs. 35.2% in 2007 • Anticipated tax rate of 37.1% for FY2008• Accounts receivable increased 19.5%, driven

primarily by the inclusion of OptionCare• Inventories increased 9.4%, slower than sales • Total short-term debt of $1.1 billion• Cash flow from operations totaled $2.5 billion YTD

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Current Environment

• Excellent sales efforts and expense management

• Increased promotional activity• Our competitors have a pharmacy department,

Walgreens is a pharmacy• Low-cost pharmacy provider• Strong momentum toward e-prescribing

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• Walgreens offers discounts on more than 5,000 drugs, including a 90-day supply of more than 400 generics for only $12.99

• Encourages patients to have allof their prescriptions filled at Walgreens

• Allows our pharmacists to screen more completely for dangerous drug interactions

Prescription Savings Club

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Specialty Pharmacy is a Natural Extension

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Prime Doubled Our Access to the Blues

Questions and Answers

Prime Therapeutics BCBS ClientsPrime Therapeutics BCBS ClientsExisting BCBS ClientsExisting BCBS Clients

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http://www.bcbs.com/


Health and Wellness Division: Adding New Points of Care

Worksite ClinicsWorksite Clinics

Take Care Health ClinicsTake Care Health Clinics13


Integrated, Cost-effective Solutions

Take Take CareCareSMSM

Health ClinicsHealth Clinics

WorksiteWorksiteClinicsClinics

Home CareHome Care

Medical CampusesMedical Campuses

Mail ServiceMail Service

Specialty PharmacySpecialty Pharmacy

Retail StoresRetail Stores

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• Customers turn to Walgreens for value and convenience

• As the market leader in retail pharmacy we have tremendous assets to:

• Broaden access through expanded footprints• Leverage the box to drive top and bottom line

productivity• Expand into adjacent health care services to

strengthen the core• Right growth initiatives to enhance shareholder

value

The Right Strategies for Growth

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Questions and Answers

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20© Copyright 2008 Walgreen Co. 17


Appendix

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Calculation of Adjusted SG&A

4Q04 4Q05 4Q06

SGA$ under GAAP $ 2,102.1 $ 2,434.9 $ 2,732.4

Less: Katrina Expense $ - $ 54.7 $ -

Adjusted SGA$ $ 2,102.1 $ 2,380.2 $ 2,732.4

Adjusted YOY % Increase 13.2% 14.8%

($s in millions)

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23© Copyright 2008 Walgreen Co. 20

Walgreen Co.Third Quarter 2008 Earnings Conference

Economy & Finance