9. Business Segments
The Retail Pharmacy segment, which includes 4,087 retail drugstores located in 24 states and the District of Columbia, operates under the CVS/pharmacy name. The Retail Pharmacy segment is the Company's only reportable segment.
The PBM segment provides a full range of prescription benefit management services to managed care providers and other organizations. These services include plan design and administration, formulary management, mail order pharmacy services, claims processing and generic substitution. The PBM segment operates under the PharmaCare Management Services name.
The Specialty Pharmacy segment, which includes mail order facilities and 46 retail pharmacies located in 17 states and the District of Columbia, operates under the CVS ProCare name. The Specialty Pharmacy segment focuses on supporting individuals that require complex and expensive drug therapies.
The Internet Pharmacy segment, which includes a mail order facility and a complete online retail pharmacy, operates under the CVS.com name.
The accounting policies of the segments are substantially the same as those described in Note 1. The Company evaluates segment performance based on operating profit before the effect of nonrecurring charges and gains and intersegment profits.
Following is a reconciliation of the significant components of the Retail Pharmacy segment's net sales for the respective years.
The Company currently operates four business segments: Retail Pharmacy, Pharmacy Benefit Management ("PBM"), Specialty Pharmacy and Internet Pharmacy. The Company's business segments are operating units that offer different products and services, and require distinct technology and marketing strategies.
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2000 | 1999 | 1998 | |
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Pharmacy | 62.7% | 58.7% | 57.6% |
Front store | 37.3 | 41.3 | 42.4 |
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Total net sales | 100.0% | 100.0% | 100.0% |
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Following is a reconciliation of the Companys business segments to the consolidated financial statements:
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In millions | Retail Pharmacy Segment |
All Other Segments |
Intersegment Eliminations(1) |
Other Adjustments(2) |
Consolidated Totals |
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2000: Net sales |
$ 19,372.4 | $ 975.8 | $ (260.7) | $ | $ 20,087.5 |
Operating profit | 1,290.7 | 12.8 | | 19.2 | 1,322.7 |
Depreciation and amortization | 285.4 | 11.2 | | | 296.6 |
Total assets | 7,498.8 | 478.7 | (28.0) | | 7,949.5 |
Capital expenditures(3) | 679.2 | 16.1 | | | 695.3 |
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1999 Net sales |
$ 17,625.7 | $ 888.4 | $ (415.8) | $ | $ 18,098.3 |
Operating profit | 1,120.4 | 15.1 | | | 1,135.5 |
Depreciation and amortization | 274.6 | 3.3 | | | 277.9 |
Total assets | 7,146.1 | 173.4 | (44.1) | | 7,275.4 |
Capital expenditures(3) | 706.3 | 16.4 | | | 722.7 |
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1998: Net sales |
$ 15,081.1 | $ 488.4 | $ (295.9) | $ | $ 15,273.6 |
Operating profit | 927.8 | 12.7 | | (188.6) | 751.9 |
Depreciation and amortization | 248.6 | 1.1 | | | 249.7 |
Total assets | 6,602.1 | 119.6 | (35.5) | | 6,686.2 |
Capital expenditures(3) | 498.0 | 4.3 | | | 502.3 |
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