Walgreen Company, 1990: The Cash Distribution Decision
Drugstore chain Walgreen Company had hit upon a prescription for success by combining geographic expansion with cutting-edge technology investments. But by 1990, the company expected a significant decline in capital spending. Treasurer L. Daniel Jorndt, who was preparing to become president, asked his assistant to examine the implications, as cash and marketable securities were projected to nearly quadruple to more than $1 billion. Given the projections, the question was whether Walgreen should revamp its dividend policy or repurchase common stock, while considering the tax and market issues each option would entail. In this case, students examine Walgreen's expansion, past financials, its five-year forecast, and its dividend policy in order to analyze the company's options.
Case id: 080322