10-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-K

x ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the fiscal year ended August 31, 2013

o TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the Transition Period From ____________ to ___________

Commission file number 1-604.

WALGREEN CO.
(Exact name of registrant as specified in its charter)
Illinois	36-1924025
(State of incorporation)	(I.R.S. Employer Identification No.)
108 Wilmot Road, Deerfield, Illinois	60015
(Address of principal executive offices)	(Zip Code)

Registrant's telephone number, including area code:  (847) 315-2500

Securities registered pursuant to Section 12(b) of the Act:

Title of each class	Name of each exchange on which registered
Common Stock ($.078125 Par Value)	New York Stock Exchange
	The NASDAQ Stock Market LLC
	Chicago Stock Exchange

Securities registered pursuant to Section 12(g) of the Act:    None

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.      Yes xNo o

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act.   Yes oNo x

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports) and (2) has been subject to such filing requirements for the past 90 days. Yes xNo o

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes  x  No o

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer or a smaller reporting company. See definition of "large accelerated filer," "accelerated filer" and "smaller reporting company" in Rule 12b-2 of the Exchange Act. (Check one):

Large accelerated filer xAccelerated filer o

Non-accelerated filer oSmaller reporting company o

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).Yes oNo x

As of February 28, 2013, the aggregate market value of Walgreen Co. common stock held by non-affiliates (based upon the closing transaction price on the New York Stock Exchange on February 28, 2013) was approximately $35.8 billion. As of August 31, 2013, there were 946,595,578 shares of Walgreen Co. common stock outstanding.

DOCUMENTS INCORPORATED BY REFERENCE

Portions of the Annual Report to Shareholders for the year ended August 31, 2013, to the extent stated in this Form 10-K, are incorporated by reference into Parts I, II and IV of this Form 10-K. Portions of the registrant's Proxy Statement for its Annual Meeting of Shareholders planned to be held January 8, 2014, are incorporated by reference into Part III of this Form 10-K as indicated herein.

TABLE OF CONTENTS

Part I
Item 1.	Business
Item 1A.	Risk Factors
Item 1B.	Unresolved Staff Comments
Item 2.	Properties
Item 3.	Legal Proceedings
Item 4.	Mine Safety Disclosures
	Executive Officers of the Registrant
Part II
Item 5.	Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities
Item 6.	Selected Financial Data
Item 7.	Management's Discussion and Analysis of Financial Condition and Results of Operations
Item 7A.	Qualitative and Quantitative Disclosures about Market Risk
Item 8.	Financial Statements and Supplementary Data
Item 9.	Changes in and Disagreements with Accountants on Accounting and Financial Disclosure
Item 9A.	Controls and Procedures
Item 9B.	Other Information
Part III
Item 10.	Directors, Executive Officers and Corporate Governance
Item 11.	Executive Compensation
Item 12.	Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters
Item 13.	Certain Relationships and Related Transactions and Director Independence
Item 14.	Principal Accounting Fees and Services
Part IV
Item 15.	Exhibits and Financial Statement Schedules

PART I

References in this Form 10-K to "Walgreens," the "Company," "we," "us" or "our" refer to Walgreen Co. and its subsidiaries included in the consolidated financial statements and do not include unconsolidated partially-owned entities, such as Alliance Boots GmbH (Alliance Boots), of which we own 45% of the outstanding share capital, except as otherwise indicated or the context otherwise requires. Our fiscal year ends on August 31, and references herein to "fiscal 2013" refer to our fiscal year ended August 31, 2013.

Overview

Walgreen Co., together with its subsidiaries, operates the largest drugstore chain in the United States with net sales of $72.2 billion in the fiscal year ended August 31, 2013. We provide our customers with convenient, omni-channel access to consumer goods and services, pharmacy, and health and wellness services in communities across America. We offer our products and services through drugstores, as well as through mail, by telephone and online.

We sell prescription and non-prescription drugs as well as general merchandise, including household items, convenience and fresh foods, personal care, beauty care, photofinishing and candy. Our pharmacy, health and wellness services include retail, specialty, infusion and respiratory services, mail service, convenient care clinics and worksite health and wellness centers. These services help improve health outcomes for patients and manage costs for payers including employers, managed care organizations, health systems, pharmacy benefit managers and the public sector. Our Take Care Health Systems subsidiary is a manager of worksite health and wellness centers and in-store convenient care clinics (Healthcare Clinic), with more than 700 locations throughout the United States.

Since August 2, 2012, we have held a 45% investment interest in Alliance Boots GmbH (Alliance Boots), a leading international pharmacy-led health and beauty group, which we account for using the equity method of accounting. Alliance Boots delivers a range of products and services to customers including pharmacy-led health and beauty retailing and pharmaceutical wholesaling and distribution. We also have the right, but not the obligation, to acquire the remaining 55% interest in Alliance Boots at any time during the period beginning February 2, 2015 and ending on August 2, 2015, as described under "Business Development" below.

Walgreen Co. was incorporated as an Illinois corporation in 1909 as a successor to a business founded in 1901. Our principal executive offices are located at 108 Wilmot Road, Deerfield, Illinois 60015. The Company is principally in the retail drugstore business and its operations are within one reportable segment.

Business Development

As of August 31, 2013, Walgreens operated 8,582 locations in 50 states, the District of Columbia, Guam and Puerto Rico. In 2013, the Company opened or acquired 350 locations for a net increase of 197 locations after relocations and closings. The USA Drug acquisition contributed 141 locations (70 net). Total locations do not include 398 Healthcare Clinics (formerly Take Care Clinics) that are operated primarily within our Walgreens locations or locations of unconsolidated partially owned entities such as Alliance Boots.

	Number of Locations
Location Type	2013		2012		2011
Drugstores		8,116		7,930		7,761
Worksite Health and Wellness Centers		371		366		355
Infusion and Respiratory Services Facilities		82		76		83
Specialty Pharmacies		11		11		9
Mail Service Facilities		2		2		2
Total		8,582		8,385		8,210

Walgreens goal is to provide the most convenient omni-channel access to consumer goods and services, and pharmacy, health and wellness services through our 8,116 community based drugstores, as well as through our specialty pharmacy, home infusion and respiratory services, worksite health and wellness centers and retail clinic businesses. As of August 2013, approximately 75% of the United States population lived within five miles of a Walgreens and an average of 6.2 million shoppers visited our stores daily in fiscal 2013. In addition to store traffic, our websites, including Walgreens.com and drugstore.com, received an average of approximately 54.3 million visits per month in fiscal 2013. Integrated with our e-commerce platform, the Walgreens mobile application allows shoppers to refill prescriptions through scan technology, receive text messages alerting when a refill is due and other front-end functionality of our photo features and shopping features. In fiscal 2013, customers uploaded 33 million photos to Walgreens.com and received over 106 million text message alerts.  Designed to reward our most valuable customers and encourage shopping in stores and online, in September 2012 we launched our loyalty program, Balance^® Rewards, where customers earn points for purchasing select merchandise and are eligible to receive special pricing on select products when shopping with a rewards card.  Customers have the ability to instantly redeem rewards at our stores or through Walgreens.com. We had 83 million Balance^® Rewards members as of August 31, 2013.

We seek to grow pharmacy, front-end and online market share through new store growth, comparable store sales increases, pharmacy prescription file purchases and strategic acquisitions. When evaluating strategic acquisitions and investment opportunities that meet our long-term growth objectives, consideration is given to retail, health and well-being enterprises and other acquisitions and investments that provide unique opportunities and fit our business objectives. In fiscal 2013, we acquired Stephen L. LaFrance Holdings, Inc. (USA Drug), which included 141 drugstore locations operating under the USA Drug, Super D Drug, May's Drug, Med-X and Drug Warehouse names. Additionally, the Company acquired an 80% interest in Cystic Fibrosis Foundation Pharmacy LLC, an investment which provides joint ownership in a specialty pharmacy for cystic fibrosis patients and their families and a provider of new product launch support and call center services for drug manufacturers.  Significant acquisitions in the prior year included assets of BioScrip Inc.'s (BioScrip) community specialty pharmacies, centralized specialty and mail services pharmacy business and Crescent Pharmacy Holdings, LLC (Crescent).  In September 2013, we entered into an agreement to acquire certain assets of Kerr Drug. The acquisition includes 76 retail drugstores, as well as a specialty pharmacy business and a distribution center all based in North Carolina. The transaction is subject to satisfaction of regulatory requirements and other conditions, and is expected to close in calendar 2013.

In August 2012, we acquired a 45% equity interest in Alliance Boots and a call option that provides Walgreens the right, but not the obligation, to elect to purchase the remaining 55% over a six month period beginning February 2, 2015 in exchange for £3.133 billion in cash, payable in British pounds Sterling, and 144,333,468 shares of Walgreens common stock, subject to certain specified adjustments (the "second step transaction"). If Walgreens exercises the call option, in certain limited circumstances, Walgreens may be required to make the entire second step transaction payment in cash. In addition, in certain specified cases, if Walgreens does not exercise the call option, or Walgreens has exercised the call option but the second step transaction does not close, Walgreens may be required to return to the sellers a 3% interest in Alliance Boots in exchange for a nominal amount. Additional information regarding our investment in Alliance Boots is available in our Current Reports on Form 8-K filed on June 19, 2012 and August 6, 2012 (as amended by the Form 8-K/A filed on September 10, 2012). The amendment to our August 6, 2012 Form 8-K filed on September 10, 2012, includes as exhibits thereto Alliance Boots audited consolidated financial statements for the years ended March 31, 2012, 2011 and 2010 (prepared in accordance with International Financial Reporting Standards as issued by the International Accounting Standards Board (IFRS) and audited in accordance with auditing standards generally accepted in the United States) and unaudited pro forma consolidated financial information related to our 45% investment in Alliance Boots. Alliance Boots audited consolidated financial statements for the years ended March 31, 2013 and 2012 (prepared in accordance with IFRS and audited in accordance with auditing standards generally accepted in the United States) are available on our Form 8-K filed on May 15, 2013.

Walgreens equity earnings, initial investment and the call option exclude the Alliance Boots minority interest in Galenica Ltd. (Galenica). The Alliance Boots investment in Galenica was distributed to the Alliance Boots shareholders other than Walgreens during May 2013, which had no impact to the Company. We account for our 45% investment in Alliance Boots using the equity method of accounting. Investments accounted for under the equity method are recorded initially at cost and subsequently adjusted for our share of the net income or loss and cash contributions and distributions to or from these entities. Net income reported by Alliance Boots is translated from British pounds Sterling at the average rate for the period. We utilize a three-month lag in reporting equity income from our investment in Alliance Boots, reported as equity earnings in Alliance Boots on the Consolidated Statements of Comprehensive Income. The investment is recorded as Equity investment in Alliance Boots in the Consolidated Balance Sheets. See "Description of Business-Overview of Alliance Boots" below for additional information.

On March 19, 2013, the Company, Alliance Boots and AmerisourceBergen Corporation (AmerisourceBergen) announced various agreements and arrangements, including a ten-year pharmaceutical distribution agreement between the Company and AmerisourceBergen pursuant to which the Company will source branded and generic pharmaceutical products from AmerisourceBergen; an agreement which provides AmerisourceBergen the ability to access generics and related pharmaceutical products through Walgreens Boots Alliance Development GmbH, a global sourcing joint venture between the Company and Alliance Boots; and agreements and arrangements pursuant to which the Company and Alliance Boots together have the right, but not the obligation, to purchase a minority equity position in AmerisourceBergen and gain associated representation on AmerisourceBergen's board of directors in certain circumstances. The distribution agreement resulted in the distribution by AmerisourceBergen of branded pharmaceutical products that Walgreens historically had sourced from distributors and suppliers, effective September 1, 2013.  Over time, beginning in calendar year 2014, distribution by AmerisourceBergen for the Company is expected to increasingly include generic pharmaceutical products that the Company currently self-distributes.  

We utilize our extensive retail network as a channel to provide affordable quality health and wellness services to our customers and patients, as illustrated by our ability to play a significant role in providing flu vaccines and other immunizations. We market our products and services to employers, governments, managed care organizations and pharmacy benefit managers, expanding beyond our traditional retail consumer model to contract directly with our payers. Through our more than 75,000 health care providers including pharmacists, pharmacy technicians, nurse practitioners and other health related professionals, Walgreens expects to continue to play a growing role in government and employer efforts to control escalating health care costs.

Prescription sales continued to be a large portion of the Company's business. In fiscal 2013, prescriptions accounted for 62.9% of sales compared to 63.2% in fiscal 2012. Third party sales, where reimbursement is received from managed care organizations, government and private insurance, were 95.8% of fiscal 2013 prescription sales consistent with 95.6% in fiscal 2012. Overall, Walgreens filled approximately 683 million prescriptions in fiscal 2013, an increase of 19 million from fiscal 2012. Adjusted to 30-day equivalents, prescriptions filled were 821 million in fiscal 2013, 784 million in fiscal 2012 and 819 million in fiscal 2011. Walgreens accounted for 19.1% of the U.S. retail prescription drug market in fiscal 2013 compared to 18.7% and 20.0% in fiscal 2012 and 2011, respectively. Walgreens expects the aging population and the continued development of innovative drugs that improve quality of life and control health care costs will continue to drive demand for prescription drugs.

During fiscal 2013, the Company added $1.2 billion to property and equipment, which included approximately $0.9 billion related to stores and $0.3 billion for information technology and other locations. The Company implemented new point-of-sale store technology chain wide in fiscal 2012 in preparation for the loyalty program that launched in September 2012. Capital expenditures for fiscal 2014 are currently expected to be $1.4 billion, excluding acquisitions and prescription file purchases, although the actual amount may vary depending upon a variety of factors, including, among other things, the timing of implementation of certain capital projects. We completed our three-year plan to refresh approximately 5,000 stores through our "customer-centric retailing" initiative in fiscal 2012. As of August 31, 2013, we had opened or converted stores with our pilot "Well Experience" store format in over 500 locations, including a market-wide transformation in the Indianapolis area and new flagship stores in select markets including Boston, Chicago, Los Angeles, New York City, San Francisco, Washington, D.C., Las Vegas and Puerto Rico.

We plan to continue pursuing our goal to become a global leader in pharmacy, health and well-being solutions and the first choice for health and daily living in communities we serve, all designed to help our customers get, stay and live well. Our strategies are designed to further transform our traditional drugstore into a "retail health and daily living" store, creating community-centric healthcare integration with expanded pharmacy, health and wellness solutions. We seek to continue to deliver an outstanding customer experience through enhanced employee engagement and to expand our product and service offerings across new channels and markets where, in addition to our stores, customers and patients can utilize our health system pharmacies, worksite clinics, Walgreens.com, mobile applications and social media sites.

Description of Business

Principal products produced and services rendered

The Company's drugstores are engaged in the retail sale of prescription and non-prescription drugs and general merchandise. General merchandise includes, among other things, household items, convenience and fresh foods, personal care, beauty care, photofinishing and candy.  Prescription drugs represent the Company's largest product class, followed by general merchandise and non-prescription drugs.  In fiscal 2013, fiscal 2012 and fiscal 2011, prescription drugs represented 63%, 63% and 65% of total sales, respectively, general merchandise represented 27%, 25% and 25% of total sales, respectively, and non-prescription drugs represented 10%, 12% and 10% of total sales, respectively.  Walgreens offers customers the choice to have prescriptions filled at the drugstore, as well as through the mail, and customers may also place orders by phone or online including through our mobile application.

We offer pharmacy, health and wellness solutions which include retail, specialty pharmacy, infusion and respiratory services, mail service, convenient care clinics and worksite clinics. Our drugstores sell prescription and non-prescription drugs and our pharmacists also provide drug consultations and administer flu vaccines and other immunizations. Our integrated network of pharmacies allows easy access for customers to fill their prescriptions at any of our drugstores. In addition, our stores sell branded and private brand general merchandise.  Take Care Health Systems, a wholly owned subsidiary, manages the Healthcare Clinics (formerly Take Care Clinics) at select Walgreens throughout the country.  Patient care at each of the Healthcare Clinics is provided by independently owned state professional corporations doing business as Take Care Health Services.  Additionally, Take Care Employer Solutions, a wholly owned subsidiary, manages primary care, health and wellness, occupational health, and fitness centers at large employer campuses.  These centers each provide medical services through an independent professional corporation, allowing employees and families to enjoy the full benefits of a dedicated physician or other licensed healthcare professional in a convenient worksite setting.  Nurse practitioners and physician assistants treat patients and are licensed to write prescriptions that can be filled at the patient's pharmacy of choice and to administer immunizations and other vaccines.

We offer specialty pharmacy services that provide customers nationwide access to a variety of medications, services and programs for managing complex and chronic health conditions. Medications delivered to these customers often require special handling, are only available through limited distributions or involve a time-sensitive delivery. Specialty pharmacy patients typically require customized treatments in managing their medical conditions.

In addition, we offer our customers infusion therapy services including the administration of intravenous (IV) medications for cancer treatments, chronic pain, heart failure, and other infections and disorders which must be treated by IV. Walgreens provides these infusion services at home, at the workplace, in a physician's office or at a Walgreens alternate treatment site. We also provide clinical services such as laboratory monitoring, medication profile review, nutritional assessments and patient and caregiver education.

Many customers choose to have their prescriptions refilled through our mail service which allows customers to submit prescription refill requests online, over the phone or through e-prescribing. Our advanced pharmacy system offers pharmacists easy access to patient prescription records, which allows access to refills and emergency supplies at any of our pharmacies, eases prescription transfers, and enables any Walgreens pharmacist to provide ongoing treatment consultation.

Customers also have access to our ecommerce solutions, which, through the walgreens.com and drugstore.com websites, including beauty.com and visiondirect.com, offer certain products available only online as well as most products available in Walgreens drugstores. Our mobile applications also allow customers to refill prescriptions through their mobile device, download weekly promotions and find the nearest Walgreens drugstore in addition to other features that are designed to enhance the user's experience.

Sources and availability of raw materials

Inventories are purchased from numerous domestic and foreign suppliers. We do not believe that the loss of any one supplier or group of suppliers under common control would have a material adverse effect on the Company's business.

Intellectual Property and Licenses

We market products and services under various trademarks, trade dress and trade names and rely on a combination of patent, copyright, trademark, service mark, and trade secret laws, as well as contractual restrictions to establish and protect our proprietary rights. We own numerous domain names, hold over 75 patents, have registered numerous trademarks, and have filed applications for the registration of a number of our other trademarks and service marks in various jurisdictions. We hold assorted business licenses (such as pharmacy, occupational, liquor and cigarette) having various lives within multiple legal jurisdictions, which are necessary for the normal operation of our business.

Seasonal variations in business

Our business is seasonal in nature, with the second fiscal quarter generating a higher proportion of front-end sales and earnings than other periods. Both prescription and non-prescription drug sales are affected by the timing and severity of the cough, cold and flu season. See the caption "Summary of Quarterly Results (Unaudited)" on page 45 of the Annual Report to Shareholders for the year ended August 31, 2013 (2013 Annual Report), which section is incorporated herein by reference.

Working capital practices

The Company generally finances its inventory and expansion needs with internally generated funds. See "Management's Discussion and Analysis of Results of Operations and Financial Condition" on pages 20 through 27 of the 2013 Annual Report, which section is incorporated herein by reference.

Customers

The Company sells to numerous customers including various managed care organizations within both the private and public sectors. No customer accounted for ten percent or more of the Company's consolidated net sales in fiscal 2013.

Government contracts

The Company fills prescriptions for many state Medicaid public assistance plans. Revenues from all such plans were approximately 5.2% of total sales in fiscal 2013.

Regulation

Our business is subject to federal, state and local laws, regulations, and administrative practices concerning the provision of and payment for health care services, including, without limitation:  federal, state and local licensure and registration requirements concerning the operation of pharmacies and the practice of pharmacy; Medicare, Medicaid and other publicly financed health benefit plan regulations prohibiting kickbacks, beneficiary inducement and the submission of false claims; the Health Insurance Portability and Accountability Act (HIPAA); the Patient Protection and Affordable Care Act (ACA); regulations of the U.S. Food and Drug Administration, the U.S. Federal Trade Commission, the U.S. Drug Enforcement Administration and the U.S. Consumer Product Safety Commission, as well as regulations promulgated by comparable state agencies concerning the sale, advertisement and promotion of the products we sell.  The Corporate Integrity Agreement (CIA) by and between the Company and the Office of Inspector General of the United States Department of Health and Human Services effective June 2, 2008, expired on June 2, 2013.  The Company is in the process of completing final reporting obligations specified in the CIA.

We are also governed by federal and state laws of general applicability, including laws regulating matters of working conditions, health and safety and equal employment opportunity. In connection with the operation of our stores, distribution centers and other sites, we are subject to laws and regulations relating to the protection of the environment and health and safety matters, including those governing exposure to, and the management and disposal of, hazardous substances. Federal, state and local environmental protection requirements did not have a material effect upon capital expenditures, earnings or the competitive position of the Company in fiscal 2013. In addition, as we increase our activities in markets outside the United States, we are, and expect to be, subject to an increasing number of foreign laws and regulations, including retail and wholesale pharmacy, licensing, tax, foreign trade, intellectual property, privacy and data protection, currency, political and other business restrictions and requirements and local laws and regulations.

Competitive conditions

The drugstore industry is highly competitive. As a leader in the retail drug industry and as a retailer of general merchandise, Walgreens competes with various retailers, including chain and independent drugstores, mail order prescription providers, grocery stores, convenience stores, mass merchants, online pharmacies and retailers, warehouse clubs, dollar stores and other discount merchandisers. The Company competes primarily on the basis of service, convenience, variety and price. The Company's geographic dispersion helps offset the impact of temporary, localized economic and competitive conditions in individual markets. The number and location of the Company's drugstores appears under Item 2 – "Properties" in this Form 10-K.

Employees

At August 31, 2013, the Company employed approximately 248,000 persons, approximately 75,000 of whom were part-time employees working less than 30 hours per week. The foregoing does not include employees of unconsolidated partially owned entities, such as Alliance Boots GmbH, of which we own 45%.

Research and Development

The Company does not engage in any material research and development activities.

Overview of Alliance Boots

Walgreens has owned a 45% equity interest in Alliance Boots GmbH since August 2, 2012 and has a call option to acquire the remaining 55% equity interest during the six-month period beginning February 2, 2015 as described above. We account for our 45% investment in Alliance Boots using the equity method of accounting on a three-month lag basis. Accordingly, because of the three-month lag and the timing of the closing of this investment on August 2, 2012, our financial statements for the fiscal year ended August 31, 2013 reflect 12 months of the dilutive effect of the incremental shares and interest expense associated with our Alliance Boots investment, but only 10 months (August 2012 through May 2013) of Alliance Boots results, reported as Equity earnings in Alliance Boots.

Alliance Boots is a leading international, pharmacy-led health and beauty retailing and pharmaceutical wholesaling and distribution business. As of March 31, 2013, its fiscal year end, Alliance Boots had, together with its associates and joint ventures, pharmacy-led health and beauty retail businesses in nine countries and operated more than 3,100 health and beauty retail stores, of which over 3,000 had a pharmacy. In addition, Alliance Boots had approximately 605 optical practices in the United Kingdom, approximately 190 of which operated on a franchise basis, and, through an associate investment, approximately 390 hearingcare practices, mainly operating as Boots hearingcare, in the United Kingdom. Its pharmaceutical wholesale businesses, together with its associates and joint ventures, supplied medicines, other healthcare products and related services to more than 170,000 pharmacies, doctors, health centers and hospitals from over 370 distribution centers in 20 countries.   Figures regarding Alliance Boots business activities are as of March 31, 2013, and include associates and joint ventures other than Galenica (which was excluded from the Company's investment in Alliance Boots and ceased to be an associate of Alliance Boots in May 2013).

Pharmacy-led Health and Beauty Retailing.  Alliance Boots is a market leader in the pharmacy industry with stores located in the United Kingdom, Norway, the Republic of Ireland, The Netherlands, Thailand and Lithuania and through its associates and joint ventures in China, Italy and Croatia. In addition, as of March 31, 2013, there were approximately 75 Boots branded stores operated in the Middle East on a franchised basis. Alliance Boots seeks to locate its stores in convenient locations and to put the pharmacist at the heart of healthcare. Alliance Boots pharmacists are well placed to provide a significant role in the provision of healthcare services, working closely with other primary healthcare providers in the communities they serve.  Alliance Boots principal retail brand in the Health & Beauty Division is Boots, which Alliance Boots trades under in the United Kingdom, Norway, the Republic of Ireland, The Netherlands and Thailand. The Boots offering is differentiated from that of competitors due to the product brands that Alliance Boots owns and the "only at Boots" exclusive products.

Pharmaceutical Wholesaling and Distribution.  Alliance Boots pharmaceutical wholesaling and distribution businesses seek to provide high core service levels to pharmacists in terms of frequency of delivery, product availability, delivery accuracy, timeliness and reliability at competitive prices. Alliance Boots also offers its customers added value services that help pharmacists develop their own businesses.  This includes membership in Alphega Pharmacy, Alliance Boots network for independent pharmacies, which had a membership of over 4,700 pharmacies in six countries as of March 31, 2013, and vivesco, a pharmacy network in Germany with approximately 1,100 members.  In addition to the wholesale of medicines and other healthcare products, Alliance Boots provides services to pharmaceutical manufacturers who are increasingly seeking to gain greater control over their product distribution while at the same time outsourcing non-core activities. These services include pre-wholesale and contract logistics, direct deliveries to pharmacies, and specialized medicine delivery including related home healthcare.

Product Brands.   In its Health & Beauty Division, Alliance Boots has product brands such as No7, Soltan and Botanics, together with newer brands launched in recent years, such as Boots Pharmaceuticals and Boots Laboratories. Alliance Boots is seeking to continue to internationalize its key product brands, selling them to independent pharmacies, retail partners and distributors, and on owned internet shopping sites in countries where Alliance Boots does not have a retail presence. In the United States, Alliance Boots is developing a program to sell Boots product brands in Walgreens drugstores and in Asia, it is working collaboratively with Dairy Farm Inc. to sell Boots product brands in their retail stores, starting with Mannings health and beauty stores in Hong Kong. In Europe, its Boots Laboratories line of products is sold by independent pharmacies in five countries as of March 31, 2013.  In addition, Alliance Boots has partnerships with a select number of third party brand owners to sell their products in Boots stores on an exclusive basis, sharing in the future brand equity. Alliance Boots also continues to manufacture a significant proportion of its most popular own brand and exclusive products. Through its Pharmaceutical Wholesale Division and several of its associates, Alliance Boots currently sells Almus, its line of generic medicines, in five countries and Alvita, its line of patient care products, in six countries.

Financial Information about Foreign and Domestic Operations and Export Sales

All Company sales during the last three fiscal years occurred within the United States, Puerto Rico and Guam. There were no export sales. We account for our 45% investment in Alliance Boots, described under "Overview of Alliance Boots" above, using the equity method of accounting on a three-month lag basis, as described in Note 5 to the Company's Consolidated Financial Statements in Item 8 of this Form 10-K. As a result, no Alliance Boots sales are included in the net sales reported by the Company in its consolidated financial statements.

Investments accounted for under the equity method are recorded initially at cost and subsequently adjusted for the Company's share of the net income or loss and cash contributions and distributions to or from these entities. The Company's investment in Alliance Boots and the related call option were recorded as assets with a $7.1 billion aggregate value on the Company's August 31, 2013 balance sheet, which represented 30.1% of the Company's long-lived assets as of that date. Because the Company's investment in Alliance Boots is denominated in a foreign currency (British pounds Sterling), translation gains or losses impact the value of the investment.  See Note 5 to the Company's Consolidated Financial Statements in Item 8 of this Form 10-K for additional information.

Available information

We file with the Securities and Exchange Commission (SEC) our annual report on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K and all amendments to those reports, proxy statements and registration statements. You may read and copy any material we file with the SEC at the SEC's Public Reference Room at 100 F Street, NE, Washington, D.C. 20549. You may also obtain information on the operation of the Public Reference Room by calling the SEC at 1-800-SEC-0330. In addition, the SEC maintains a website at http://www.sec.gov that contains reports, proxy and information statements, and other information regarding issuers, including us, that file electronically. We make available free of charge on or through our website at investor.walgreens.com our annual reports on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K and amendments to these reports filed or furnished pursuant to Section 13(a) or 15(d) of the Exchange Act as soon as reasonably practicable after we file or furnish them to the SEC. The contents of the Company's website are not, however, a part of this report.

Cautionary Note Regarding Forward Looking Statements

This report and other documents that we file or furnish with the Securities and Exchange Commission contain forward-looking statements that are based on current expectations, estimates, forecasts and projections about our future performance, our business, our beliefs and our management's assumptions. In addition, we, or others on our behalf, may make forward-looking statements in press releases or written statements, on the Company's website or in our communications and discussions with investors and analysts in the normal course of business through meetings, webcasts, phone calls, conference calls and other communications.  Some of such forward-looking statements may be based on certain data and forecasts relating to our business and industry that we have obtained from internal surveys, market research, publicly available information and industry publications.  Industry publications, surveys and market research generally state that the information they provide has been obtained from sources believed to be reliable, but that the accuracy and completeness of such information is not guaranteed.  Statements that are not historical facts are forward-looking statements, including, without limitation, statements regarding our future financial and operating performance, as well as forward-looking information concerning our investment in Alliance Boots GmbH and the other arrangements and transactions contemplated by the Purchase and Option Agreement with Alliance Boots and their possible effects, our commercial agreement with AmerisourceBergen, the arrangements and transactions contemplated by our framework agreement with AmerisourceBergen and Alliance Boots and their possible effects, levels of business with Express Scripts customers, estimates of the impact of developments on our earnings, earnings per share and other financial metrics, network participation, cough/cold and flu season, prescription volume, pharmacy sales trends, prescription margins, number and location of new store openings, vendor, payer and customer relationships and terms, possible new contracts or contract extensions, competition, economic and business conditions, outcomes of litigation and regulatory matters, the level of capital expenditures, industry trends, demographic trends, growth strategies, financial results, cost reduction initiatives, acquisition and joint venture synergies, competitive strengths and changes in legislation or regulations. Words such as "expect," "likely," "outlook," "forecast," "would," "could," "should," "can," "will," "project," "intend," "plan," "goal," "target," "continue," "sustain," "synergy," "on track," "believe," "seek," "estimate," "anticipate," "may," "possible," "assume," variations of such words and similar expressions are intended to identify such forward-looking statements, which are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995.

These forward-looking statements are not guarantees of future performance and are subject to risks, uncertainties and assumptions that could cause actual results to vary materially from those indicated, including, but not limited to, those relating to the Purchase and Option Agreement and other agreements relating to our strategic partnership with Alliance Boots, the arrangements and transactions contemplated thereby and their possible effects, our commercial agreement with AmerisourceBergen, the arrangements and transactions contemplated by our framework agreement with AmerisourceBergen and Alliance Boots and their possible effects, the occurrence of any event, change or other circumstance that could give rise to the termination, cross-termination or modification of any of the transaction documents, the parties' ability to realize anticipated synergies and achieve anticipated financial results, the amount of costs, fees, expenses and charges incurred in connection with strategic transactions, the risks associated with transitions in supply arrangements, the risks associated with international business operations, the risks associated with governance and control matters in minority investments, whether the option to acquire the remainder of the Alliance Boots equity interest will be exercised and the financial ramifications thereof, the risks associated with potential equity investments in AmerisourceBergen including whether the warrants to invest in AmerisourceBergen will be exercised and the financial ramifications thereof, changes in vendor, payer and customer relationships and terms, changes in network participation, levels of business with Express Scripts customers, the implementation, operation and growth of our customer loyalty program, changes in economic and business conditions generally or in the markets in which we or Alliance Boots participate, competition, risks associated with new business areas and activities, risks associated with acquisitions, joint ventures, strategic investments  and divestitures, the ability to realize anticipated results from capital expenditures and cost reduction initiatives, outcomes of legal and regulatory matters, and changes in legislation or regulations or interpretations thereof, and those described in Item 1A "Risk Factors" below and in other reports that we file or furnish with the Securities and Exchange Commission.  Should one or more of these risks or uncertainties materialize, or should underlying assumptions prove incorrect, actual results may vary materially from those indicated or anticipated by such forward-looking statements. Accordingly, you are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date they are made. Except to the extent required by law, we do not undertake, and expressly disclaim, any duty or obligation to update publicly any forward-looking statement after the date the statement is made, whether as a result of new information, future events, changes in assumptions or otherwise.

Item 1A.Risk Factors

In addition to the other information in this report and our other filings with the SEC, you should carefully consider the risks described below, which could materially and adversely affect our business, financial condition and results of operations.  These risks are not the only risks that we face.  Our business operations could also be affected by additional factors that are not presently known to us or that we currently consider to be immaterial to our operations.

We derive a significant portion of our sales from prescription drug sales reimbursed by pharmacy benefit management companies.

We derive a significant portion of our sales from prescription drug sales reimbursed through prescription drug plans administered by pharmacy benefit management (PBM) companies.  PBM companies typically administer multiple prescription drug plans that expire at various times and provide for varying reimbursement rates.  There can be no assurance that we will continue to participate in any particular pharmacy benefit manager network in any particular future time period.   If our participation in the prescription drug programs administered by one or more of the large PBM companies is restricted or terminated, we expect that our sales would be adversely affected, at least in the short term.  If we are unable to replace any such lost sales, either through an increase in other sales or through a resumption of participation in those plans, our operating results may be materially adversely affected.  For example, we were not part of the pharmacy provider network of Express Scripts, Inc., one of the largest PBMs, for more than eight months in 2012, which led most patients in plans administered by Express Scripts that we formerly served to transition to a new pharmacy and caused us to lose significant sales and adversely affected our operating results.  When we exit a pharmacy provider network and later resume network participation, there can be no assurance that we will achieve any particular level of business on any particular pace.  In addition, in such circumstances we may incur increased marketing and other costs in connection with initiatives to regain former patients and attract new patients covered by in-network plans. When we exit a pharmacy provider network and later resume network participation, there also can be no assurance that all clients of the PBM sponsor of the network will choose to include us again in their pharmacy network initially or at all.  For example, after we agreed with Express Scripts to again become part of the broadest network of pharmacies available to Express Scripts clients as of September 15, 2012, the United States Department of Defense TRICARE program, an Express Scripts client, announced that Walgreens would continue to be designated as a non-network pharmacy provider for TRICARE beneficiaries.

Reductions in third party reimbursement levels, from private or government plans, for prescription drugs could reduce our margin on pharmacy sales and could have a significant adverse effect on our profitability.

The substantial majority of the prescriptions we fill are reimbursed by third party payers, including private and governmental payers. The continued efforts of health maintenance organizations, managed care organizations, pharmacy benefit management companies, government entities, and other third party payers to reduce prescription drug costs and pharmacy reimbursement rates, as well as litigation relating to how drugs are priced, may adversely impact our profitability. Plan changes with rate adjustments often occur in January and our reimbursement arrangements may provide for rate adjustments at prescribed intervals during their term.  In addition, some of these entities may offer pricing terms that we may not be willing to accept or otherwise restrict our participation in their networks of pharmacy providers.  Certain provisions of the Deficit Reduction Act of 2005 (the DRA) sought to reduce federal spending by altering the Medicaid reimbursement formula for multi-source (i.e., generic) drugs (AMP).  While those reductions did not go into effect, the ACA, which was signed into law on March 23, 2010, enacted a modified reimbursement formula for multi-source drugs.  The modified formula, when implemented, is expected to reduce Medicaid reimbursements, which could adversely affect our revenues and profits.  There have also been a number of other recent proposals and enactments by the Federal government and various states to reduce Medicare Part D and Medicaid reimbursement levels in response to budget deficits. We expect other similar proposals in the future.

Our profitability can be adversely affected by a decrease in the introduction of new brand name and generic prescription drugs.

Our sales and profit margins can be adversely affected by the introduction of new brand name and generic drugs.  New brand name drugs can result in increased drug utilization and associated sales revenues, while the introduction of lower priced generic alternatives typically result in relatively lower sales revenues, but higher gross profit margins.  Accordingly, a decrease in the number of significant new brand name drugs or generics successfully introduced could adversely affect our results of operations.

Consolidation in the healthcare industry could adversely affect our business, financial condition and results of operations.  

Many organizations in the healthcare industry, including pharmacy benefit managers, have consolidated in recent years to create larger healthcare enterprises with greater bargaining power, which has resulted in greater pricing pressures.  For example, in April 2012 two of the three largest pharmacy benefit managers, Medco Health Solutions, Inc. and Express Scripts, Inc., merged.  The resulting entity is the largest pharmacy benefit manager in the United States.  If this consolidation trend continues, it could give the resulting enterprises even greater bargaining power, which may lead to further pressure on the prices for our products and services.  If these pressures result in reductions in our prices, our business will become less profitable unless we are able to achieve corresponding reductions in costs or develop profitable new revenue streams.  We expect that market demand, government regulation, third-party reimbursement policies, government contracting requirements, and societal pressures will continue to cause the healthcare industry to evolve, potentially resulting in further business consolidations and alliances among the industry participants we engage with, which may adversely impact our business, financial condition and results of operations.

The anticipated strategic and financial benefits of our transaction with Alliance Boots may not be realized.

Walgreens and Alliance Boots entered into the Purchase and Option Agreement with the expectation that the transactions contemplated thereby would result in various benefits including, among other things, procurement cost savings and operating efficiencies, revenue synergies, innovation, sharing of best practices and a strengthened market position that may serve as a platform for future growth. The processes and initiatives needed to achieve these potential benefits are complex, costly and time-consuming, and we have not previously completed a transaction comparable in size or scope.  Many of the expenses that will be incurred, by their nature, are difficult to estimate accurately at the present time.  Achieving the anticipated benefits of the Alliance Boots transaction is subject to a number of significant challenges and uncertainties, including, without limitation, whether unique corporate cultures will work collaboratively in an efficient and effective manner, the coordination of geographically separate organizations, the possibility of faulty assumptions underlying expectations regarding potential synergies and the integration process, unforeseen expenses or delays, and competitive factors in the marketplace.  In addition, there can be no assurance that we will decide to exercise the option to acquire the remaining 55% interest in Alliance Boots when we have the right to do so during a six-month period beginning February 2, 2015.  In the event that we do not exercise that option, under certain circumstances, our ownership interest in Alliance Boots would be reduced from 45% to 42% for nominal consideration to us. We could also encounter unforeseen transaction and integration-related costs or other circumstances such as unforeseen liabilities or other issues existing or arising with respect to the business of Alliance Boots or otherwise resulting from the transaction.  Many of these potential circumstances are outside of our control and any of them could result in increased costs, decreased revenue, decreased synergies and the diversion of management time and attention. If we are unable to achieve our objectives within the anticipated time frame, or at all, the expected benefits may not be realized fully or at all, or may take longer to realize than expected, which could have a material adverse impact on our business, financial condition and results of operations and the price of our common stock.

Our strategic relationship with Alliance Boots significantly increases our exposure to the risks of operating internationally.

Prior to our investment in Alliance Boots, substantially all of our operations were conducted within the United States and its territories. The transaction with Alliance Boots significantly increases the importance of international business to our future operations, growth and prospects.  A substantial portion of Alliance Boots revenues are generated in the Euro zone and neighboring countries.  Our investment in international business operations is subject to a number of risks, including:

· compliance with a wide variety of foreign laws and regulations, including retail and wholesale pharmacy, licensing, tax, foreign trade, intellectual property, privacy and data protection, currency, political and other business restrictions and requirements and local laws and regulations, whose interpretation and enforcement vary significantly among jurisdictions and can change significantly over time;

· additional U.S. and other regulation of non-domestic operations, including regulation under the Foreign Corrupt Practices Act, the U.K. Bribery Act and other anti-corruption laws;

· potential difficulties in managing foreign operations, enforcing agreements and collecting receivables through foreign legal systems;

· tariffs, duties, price controls or other restrictions on foreign currencies or trade barriers imposed by foreign countries;

· potential adverse tax consequences, including tax withholding laws and policies and restrictions on  repatriation of funds to the United States;

· fluctuations in currency exchange rates, including uncertainty regarding the Euro;

· impact of recessions and economic slowdowns in economies outside the United States, including foreign currency devaluation, higher interest rates, inflation, and increased government regulation or ownership of  traditional private businesses;

· the instability of foreign economies, governments and currencies and unexpected regulatory, economic or political changes in foreign markets; and

· developing and emerging markets may be especially vulnerable to periods of instability and unexpected changes, and consumers in those markets may have relatively limited resources to spend on products and services.

We cannot assure you that one or more of these factors will not have a material adverse effect on our or Alliance Boots business, results of operation or financial condition.

From time to time, we make investments in companies over which we do not have sole control, including our investment in Alliance Boots and our investment in AmerisourceBergen. Some of these companies may operate in sectors that differ from our current operations and have different risks.

From time to time, we make debt or equity investments in other companies that we may not control or over which we may not have sole control.  For example, we currently own only 45% of the outstanding Alliance Boots equity interests.  While we have four designees serving on the Alliance Boots Board of Directors and veto rights over certain significant Alliance Boots actions under the terms of our shareholder agreement with them, we do not have the ability to control day-to-day operations of that company.  Similarly, while we and Alliance Boots have the right, but not the obligation, to invest in AmerisourceBergen common stock and to designate up to two members of the AmerisourceBergen board of directors in certain circumstances if we achieve specified ownership milestones, we do not and will not have the ability to control day-to-day operations of that company.  Although the businesses in which we have made non-controlling investments generally have a significant health and daily living or prescription drug component, some of them operate in businesses that are different from our primary lines of business.  Investments in these businesses, among other risks, subject us to the operating and financial risks of the businesses we invest in and to the risk that we do not have sole control over the operations of these businesses.  From time to time, we may make additional investments in or acquire other entities that may subject us to similar risks.  Investments in entities over which we do not have sole control, including joint ventures and strategic alliances, present additional risks such as having differing objectives from our partners or the entities in which we invest, or becoming involved in disputes, or competing with those persons. In addition, we rely on the internal controls and financial reporting controls of these entities and their failure to maintain effectiveness or comply with applicable standards may adversely affect us.

We plan to use a single wholesaler of branded and generic pharmaceutical drugs as our primary source of such products. A disruption in this relationship could adversely affect our business and financial results.

We dispense significant volumes of brand-name and generic drugs through our pharmacies.  Prescription sales represented approximately 63% of our total net sales during fiscal 2013.  Currently, we self-distribute most generic drugs, which represented the substantial majority by unit volume of the prescription drugs we sold in fiscal 2013, by acquiring product directly from the manufacturer, and in recent years we have relied on a small number of wholesalers to procure most branded and specialty pharmaceutical drugs.   In March 2013, we entered into a ten year supply agreement with AmerisourceBergen to act as our primary wholesale distribution source with respect to the branded and generic prescription drugs we sell.  This agreement, when fully implemented, will significantly expand our relationship with AmerisourceBergen, which has distributed specialty pharmacy products to substantially all of our stores for a number of years.  We transitioned the supply of substantially all of our branded prescription drug business from our previous supplier to AmerisourceBergen on September 1, 2013.  Over time, beginning in calendar year 2014, we plan to gradually move the supply of our generic prescription drug business market-by-market from our distribution facilities to AmerisourceBergen.  Accordingly, we expect to continue to self-distribute a substantial but decreasing portion of our generic drug supply during this transition period.  Any unanticipated expense, capital expenditure or disruption of our business or operations relating to the transition to AmerisourceBergen could adversely affect our business, financial condition and results of operations.

In addition, our business may be adversely affected by any operational, financial or regulatory difficulties that AmerisourceBergen experiences. If AmerisourceBergen's operations are seriously disrupted for any reason, whether a natural disaster, labor disruption, regulatory action or otherwise, it could adversely affect our business and our sales and profitability.  Our distribution agreement with AmerisourceBergen is subject to early termination in certain circumstances, and, upon the expiration or termination of the agreement, there can be no assurance that we or AmerisourceBergen will be willing to renew the agreement or enter into a new agreement, on terms favorable to us or at all.  We believe that alternative sources of supply for most generic and brand-name pharmaceuticals are readily available, except to the extent that brand-name drugs are available to the market exclusively through the manufacturer. We believe we could obtain and qualify alternative sources, including through resuming self-distribution for many products, for substantially all of the prescription drugs we sell on an acceptable basis, and accordingly that the impact of any disruption would be temporary. However, there can be no assurance we would be able to engage alternative supply sources or implement self-distribution processes on a timely basis or on terms favorable to us, or effectively manage these transitions, any of which could adversely affect our business, financial condition and results of operations.

The anticipated strategic and financial benefits of our relationship with AmerisourceBergen may not be realized.

Walgreens entered into the arrangement with AmerisourceBergen and Alliance Boots with the expectation that the transactions contemplated thereby would result in various benefits including, among other things, procurement cost savings and operating efficiencies, innovation and sharing of best practices.  The processes and initiatives needed to achieve these potential benefits are complex, costly and time-consuming.   Many of the anticipated synergies and expenses that will be incurred, by their nature, are difficult to estimate accurately at the present time.  Achieving the anticipated benefits from the  arrangement is subject to a number of significant challenges and uncertainties, including, whether unique corporate cultures of separate organizations will work collaboratively in an efficient and effective manner, the possibility of faulty assumptions underlying expectations regarding potential synergies and the planned transition of our prescription drug distribution to AmerisourceBergen, unforeseen expenses or delays, and competitive factors in the marketplace.  In addition, we and Alliance Boots have the right, but not the obligation, under the transactions contemplated by the Framework Agreement dated as of March 18, 2013 by and among the Company, Alliance Boots and AmerisourceBergen (the "Framework Agreement") to invest in the equity of AmerisourceBergen.  There can be no assurance that we or Alliance Boots will complete any specific level of such potential equity investments in AmerisourceBergen, or that if completed, that such investments will ultimately be profitable.  If such investments are completed and the price of AmerisourceBergen common stock subsequently declines substantially, we could experience a loss on or impairment of such investment, which could adversely affect our financial condition and results of operations.  We could also encounter unforeseen costs, circumstances or issues existing or arising with respect to the transactions and collaboration we anticipate resulting from the Framework Agreement. Many of these potential circumstances are outside of our control and any of them could result in increased costs, decreased revenue, decreased synergies and the diversion of management time and attention. If we are unable to achieve our objectives within the anticipated time frame, or at all, the expected benefits may not be realized fully or at all, or may take longer to realize than expected, which could have a material adverse impact on our business, financial condition and results of operations and the price of our common stock.

Changes in economic conditions could adversely affect consumer buying practices and reduce our revenues and profitability.

Our performance has been, and may continue to be, adversely impacted by negative changes in national, regional or local economic conditions and consumer confidence.  The current economic environment has had a material impact on consumer behavior that could persist even as the economy starts to recover.  External factors that affect consumer confidence and over which we exercise no influence include unemployment rates, levels of personal disposable income, national, regional or local economic conditions and acts of war or terrorism. Changes in economic conditions and consumer confidence could adversely affect consumer preferences, purchasing power and spending patterns.  A decrease in overall consumer spending as a result of changes in economic conditions could adversely affect our front-end and pharmacy sales and negatively impact our profitability.  All these factors could impact our revenues, operating results and financial condition.

The industries in which we operate are highly competitive and further increases in competition could adversely affect us.

In our retail drugstore business, we face intense competition from local, regional and national companies, including other drugstore chains, independent drugstores, mail-order prescription providers and various other retailers such as grocery stores, convenience stores, mass merchants and dollar stores, many of which are aggressively expanding in markets we serve.  In the other markets in which we compete, including health and wellness services, we also operate in a highly competitive environment.  As competition increases in the markets in which we operate, a significant increase in general pricing pressures could occur, this could require us to reevaluate our pricing structures to remain competitive.  Our failure to reduce prices could result in decreased revenue and negatively affect our profitability.

If the merchandise and services that we offer fail to meet customer needs, our sales may be adversely affected.

Our success depends on our ability to offer a superior shopping experience, a quality assortment of available merchandise and superior customer service.  We must identify, obtain supplies of, and offer to our customers, attractive, innovative and high-quality merchandise on a continuous basis.  Our products and services must satisfy the needs and desires of our customers, whose preferences may change in the future.  It is difficult to predict consistently and successfully the products and services our customers will demand. If we misjudge either the demand for products and services we sell or our customers' purchasing habits and tastes, we may be faced with excess inventories of some products and missed opportunities for products and services we chose not to offer.  In addition, our sales may decline or we may be required to sell the merchandise we have obtained at lower prices. Failure to timely identify or effectively respond to changing consumer tastes, preferences and spending patterns could negatively affect our relationship with our customers, the demand for our products and services and our market share.

Our private brand offerings expose us to various additional risks.

In addition to brand name products, we offer our customers private brand products that are not available from other retailers. We seek to continue to grow our exclusive private brand offerings.  Maintaining consistent product quality, competitive pricing, and availability of our private brand offerings for our customers is important in developing and maintaining customer loyalty. We have invested in our development and procurement resources and marketing efforts relating to these private brand offerings. Although we believe that our private brand products offer value to our customers at each price point and typically provide us with higher gross margins than comparable national brand products we sell, the expansion of our private brand offerings also subjects us to certain risks in addition to those discussed elsewhere in this section, such as: potential product liability risks and mandatory or voluntary product recalls; our ability to successfully protect our proprietary rights and successfully navigate and avoid claims related to the proprietary rights of third parties; our ability to successfully administer and comply with applicable contractual obligations and regulatory requirements; and other risks generally encountered by entities that source, sell and market exclusive branded offerings for retail. An increase in sales of our private brands may also adversely affect sales of our vendors' products, which, in turn, could adversely affect our relationship with certain of our vendors.  Any failure to adequately address some or all of these risks could have a significant adverse effect on our business, results of operations and financial condition.

If we do not successfully develop and maintain a relevant omni-channel experience for our customers, our business and results of operations could be adversely impacted.

Omni-channel retailing is rapidly evolving and we must keep pace with changing customer expectations and new developments by our competitors. Our customers are increasingly using computers, tablets, mobile phones, and other devices to shop online. As part of our omni-channel strategy, we are making technology investments in our websites and applications for mobile phones and other electronic devices. If we are unable to make, improve, or develop relevant customer-facing technology in a timely manner, our ability to compete and our results of operations could be adversely affected. In addition, if our online businesses or our other customer-facing technology systems do not function as designed, we may experience a loss of customer confidence, data security breaches, lost sales, or be exposed to fraudulent purchases, any of which could adversely affect our business, reputation and results of operations.  

Our strategy is dependent, in part, upon the successful implementation of various strategic initiatives.

While our overall business strategy consists of many components and underlying initiatives, our long-term financial performance will be impacted by our ability to execute certain key initiatives.  In fiscal 2014, we plan to pursue strategies designed to create a "Well Experience" and further transform our traditional drugstore to a "retail health and daily living" store while delivering an outstanding customer experience through enhanced employee engagement; transform the role of community pharmacy to play a greater role in healthcare through integration and expanded services; and establish an efficient global platform enabling us to expand across new channels and markets.  If we are unable to effectively execute one or more of these key initiatives, our business, financial condition and results of operations may be materially adversely affected.

Our ability to grow our business may be constrained by our inability to find suitable new store locations at acceptable prices or by the expiration of our current leases.

Our ability to grow our business may be constrained if suitable new store locations cannot be identified with lease terms or purchase prices that are acceptable to us.  We compete with other retailers and businesses for suitable locations for our stores. Local land use and other regulations applicable to the types of stores we desire to construct may impact our ability to find suitable locations and influence the cost of constructing our stores.  The expiration of leases at existing store locations may adversely affect us if the renewal terms of those leases are unacceptable to us and we are forced to close or relocate stores.  Further, changing local demographics at existing store locations may adversely affect revenue and profitability levels at those stores.

A significant disruption in our computer systems could adversely affect our operations.

We rely extensively on our computer systems to manage our ordering, pricing, point-of-sale, inventory replenishment, customer loyalty program, finance and other processes. Our systems are subject to damage or interruption from power outages, computer and telecommunications failures, computer viruses, security breaches, vandalism, natural disasters, catastrophic events and human error, and our disaster recovery planning cannot account for all eventualities.  If any of our systems are damaged, fail to function properly or otherwise become unavailable, we may incur substantial costs to repair or replace them, and may experience loss or corruption of critical data and interruptions or delays in our ability to perform critical functions, which could adversely affect our business and results of operations.   In addition, we are currently making, and expect to continue to make, substantial investments in our information technology systems and infrastructure, some of which are significant. Upgrades involve replacing existing systems with successor systems, making changes to existing systems, or cost-effectively acquiring new systems with new functionality.  Implementing new systems carries significant potential risks, including failure to operate as designed, potential loss or corruption of data or information, cost overruns, implementation delays, disruption of operations, and the potential inability to meet business and reporting requirements.  While we are aware of inherent risks associated with replacing these systems and believe we are taking reasonable action to mitigate known risks, there can be no assurance that these technology initiatives will be deployed as planned or that they will be timely implemented without disruption to our operations.

Our growth strategy is partially dependent upon acquisitions, joint ventures and other strategic investments, some of which may not prove to be successful.

We have grown our business, in part, through acquisitions in recent years and expect to continue to acquire drugstore chains, independent drugstores, health and well-being businesses and other businesses in the future.  Acquisitions involve numerous risks, including difficulties in integrating the operations and personnel of the acquired companies, distraction of management from overseeing our existing operations, difficulties in entering markets or lines of business in which we have no or limited direct prior experience, the possible loss of key employees and customers and difficulties in achieving the synergies we anticipated.  These transactions may also cause us to significantly increase our interest expense, leverage and debt service requirements if we incur additional debt to pay for an acquisition or investment, issue common stock that would dilute our current shareholders' percentage ownership, or incur write-offs and restructuring and other related expenses.  Acquisitions, joint ventures and strategic investments involve numerous other risks, including potential exposure to unknown liabilities of acquired or investee companies.  In connection with acquisitions, joint ventures or strategic investments outside the United States, we may from time to time, in some instances enter into foreign currency contracts or other derivative instruments to hedge some or all of the foreign currency fluctuation risks, which subjects us to the risks associated with such derivative contracts and instruments.  No assurance can be given that our acquisitions, joint ventures and other strategic investments will be successful and will not materially adversely affect our business, financial condition or results of operations.

Changes in the health care regulatory environment may adversely affect our business.

Political, economic and regulatory influences are subjecting the healthcare industry to significant changes that could adversely affect our results of operations. In recent years, the healthcare industry has undergone significant changes in an effort to reduce costs and government spending. These changes include an increased reliance on managed care; cuts in certain Medicare and Medicaid funding; consolidation of competitors, suppliers and other market participants; and the development of large, sophisticated purchasing groups. We expect the healthcare industry to continue to change significantly in the future. Some of these potential changes, such as a reduction in governmental funding at the state or federal level for certain healthcare services or adverse changes in legislation or regulations governing prescription drug pricing, healthcare services or mandated benefits, may cause customers to reduce the amount of our products and services they purchase or the price they are willing to pay for our products and services. We expect continued government and private payer pressure to reduce pharmaceutical pricing. Changes in pharmaceutical manufacturers' pricing or distribution policies could also significantly reduce our profitability.

The ACA, enacted in 2010, is intended to expand health insurance coverage to more than 30 million uninsured Americans through a combination of insurance market reforms, an expansion of Medicaid, subsidies and health insurance mandates. When fully implemented, these provisions are expected to increase the number of people in the United States who have insurance coverage for at least a portion of prescription drug costs.  While certain provisions of the ACA took effect immediately, others have delayed effective dates or require further rulemaking action by governmental agencies to implement, which is not yet complete.  Future rulemaking under the ACA or otherwise could increase regulation of pharmacy services, result in changes to pharmacy reimbursement rates, and otherwise change the way we do business.  We cannot predict the timing or impact of any future rulemaking, but any such rulemaking could have an adverse impact on our results of operations.

We are subject to governmental regulations and procedures and other legal requirements. A significant change in, or noncompliance with, these regulations, procedures and requirements could have a material adverse effect on our profitability.

Our retail drugstore and health and wellness services businesses are subject to numerous federal, state and local regulations. Changes in these regulations may require extensive system and operating changes that may be difficult to implement.  Untimely compliance or noncompliance with applicable regulations could result in the imposition of civil and criminal penalties that could adversely affect the continued operation of our business, including:  suspension of payments from government programs; loss of required government certifications; loss of authorizations to participate in or exclusion from government reimbursement programs, such as the Medicare and Medicaid programs; loss of licenses; and significant fines or monetary penalties.The regulations to which we are subject include, but are not limited to: federal, state and local registration and regulation of pharmacies; applicable Medicare and Medicaid regulations; the Health Insurance Portability and Accountability Act, or HIPAA; the ACA; laws and regulations relating to the protection of the environment and health and safety matters, including those governing exposure to, and the management and disposal of, hazardous substances; regulations of the U.S. Food and Drug Administration (FDA), the U.S. Federal Trade Commission, the Drug Enforcement Administration (DEA), and the Consumer Product Safety Commission, as well as state regulatory authorities, governing the availability, sale, advertisement and promotion of products we sell; anti-kickback laws; data privacy and security laws; false claims laws; laws against the corporate practice of medicine; and federal and state laws governing the practice of the profession of pharmacy.   For example, the DEA, FDA and various state regulatory authorities regulate the distribution of pharmaceuticals and controlled substances. We are required to hold valid DEA and state-level licenses, meet various security and operating standards and comply with the Controlled Substance Act and its accompanying regulations governing the sale, marketing, packaging, holding and distribution of controlled substances. The DEA, FDA and state regulatory authorities have broad enforcement powers, including the ability to suspend our distribution centers' licenses to distribute pharmaceutical products (including controlled substances), seize or recall products and impose significant criminal, civil and administrative sanctions for violations of these laws and regulations.  In June 2013, the Company entered into a settlement agreement with the DEA and the United States Department of Justice relating to controlled substance matters that required the Company to pay $80 million and implement certain remedial actions.  In addition, we are party to a Corporate Integrity Agreement with the U.S. Department of Health and Human Services effective June 2, 2008 under which we agreed to maintain a corporate compliance program.  This CIA expired on June 2, 2013, and the Company is in the process of completing final reporting obligations specified in the CIA. We are also governed by federal and state laws of general applicability, including laws regulating matters of working conditions, health and safety and equal employment opportunity.  In addition, we could have exposure if we are found to have infringed another party's intellectual property rights.

Should a product liability issue, recall or personal injury issue arise it may damage our reputation, which may result in a material adverse effect on our business and financial condition and adversely affect our ability to maintain adequate product or other liability insurance coverage.  If we fail or are unable to maintain adequate product or other liability insurance coverage for any reason it may also result in a material adverse effect on our business and financial condition.

Products that we sell could become subject to contamination, product tampering, mislabeling, recall or other damage. In addition, errors in the dispensing and packaging of pharmaceuticals could lead to serious injury or death.  Product liability or personal injury claims may be asserted against us with respect to any of the products or pharmaceuticals we sell or services we provide.  Our health and wellness business also involves exposure to professional liability claims related to medical care.  Should a product or other liability issue arise, the coverage limits under our insurance programs and the indemnification amounts available to us may not be adequate to protect us against claims.  We also may not be able to maintain this insurance on acceptable terms in the future.  Damage to our reputation in the event of a product liability or personal injury issue or judgment against us or a product recall could have a significant adverse effect on our business, financial condition and results of operations.

If we do not maintain the privacy and security of sensitive customer and business information, we could damage our reputation, incur substantial additional costs and become subject to litigation.

Throughout our operations, we receive, retain and transmit certain personal information that our customers provide to purchase products or services, enroll in promotional programs, participate in our customer loyalty program, register on our websites, or otherwise communicate and interact with us.  In addition, aspects of our operations depend upon the secure transmission of confidential information over public networks.  A compromise of our data security systems or those of businesses we interact with that results in information related to our customers, employees or business being obtained by unauthorized persons could disrupt our operations, harm our reputation and expose us to regulatory actions and claims from customers, financial institutions, payment card associations and other persons, any of which could adversely affect our business, financial condition and results of operations.  In addition, a security breach could require that we expend additional resources related to the security of information systems and disrupt our business.  Compliance with changes in privacy and information security laws and standards may result in significant expense due to increased investment in technology and the development of new operational processes.  If we or those with whom we share information fail to comply with these laws and regulations or experience a data security breach, our reputation could be damaged and we could be subject to additional litigation and regulatory risks.  Our security measures may be undermined due to the actions of outside parties, employee error, malfeasance, or otherwise, and, as a result, an unauthorized party may obtain access to our data systems and misappropriate business and personal information. Because the techniques used to obtain unauthorized access, disable or degrade service, or sabotage systems change frequently and may not immediately produce signs of intrusion, we may be unable to anticipate these techniques or to implement adequate preventative measures. Any such breach or unauthorized access could result in significant legal and financial exposure, damage to our reputation, and potentially have an adverse effect on our business.

The Alliance Boots transaction reduced the percentage ownership interests of our current shareholders and the principal shareholders of Alliance Boots may have significant voting influence over matters requiring shareholder approval.

The principal shareholders of Alliance Boots, Stefano Pessina, Executive Chairman of Alliance Boots, and certain of his affiliates and affiliates of KKR & Co. L.P. (KKR), have the right to designate two members of our Board of Directors and are significant shareholders of our company.  In addition, if we elect to exercise the option to acquire the remaining 55% equity interest in Alliance Boots when we have the right to do so, we expect to issue approximately 144.3 million additional shares of our common stock, which amount is subject to adjustment in certain circumstances as described in the risk factor below. KKR and certain of its affiliates (the "KKR Investors") and Mr. Pessina and certain of his affiliates (the "SP Investors")  have agreed that, for so long as the SP Investors have the right to designate a person for service on our Board of Directors (or Mr. Pessina continues to serve as Executive Chairperson or Chief Executive Officer of Alliance Boots), and for so long as the KKR Investors have the right to designate a person for service on our Board, subject to certain exceptions, the SP Investors and the KKR Investors, as applicable, are obligated to vote all of their Company shares in accordance with the Board's recommendation on matters submitted to a vote of our shareholders (including the election of directors).  These shareholders may be able to exercise significant influence over matters requiring shareholder approval, including the election of directors and approval of significant corporate transactions, and this influence is expected to increase if we exercise the option and complete the second step transaction.

Shares issued to significant Alliance Boots shareholders may become available for future sale after the lapse of contractual transfer restrictions.

In connection with the closing of the first step transaction on August 2, 2012, we issued 83.4 million shares of our common stock to Alliance Boots shareholders and entered into a Shareholders Agreement regarding, among other things, certain rights and obligations of KKR with respect to the Company and of the SP Investors as shareholders of the Company (the "Company Shareholders Agreement").   These shares represented approximately 8.8% of our outstanding shares as of August 31, 2013, the substantial majority of which are held by the SP Investors (approximately 7.7% of our outstanding shares as of  August 31, 2013) controlled by Stefano Pessina.  Pursuant to the Company Shareholders Agreement, certain significant Alliance Boots shareholders, including the SP Investors and the KKR Investors, are subject to various contractual restrictions that generally prohibit them from transferring their shares for specified time periods.  With respect to the shares issued in the first step transaction in August 2012, and subject to certain permitted exceptions, (i) the SP Investors cannot transfer their shares until the first to occur of the closing of the second step transaction or Mr. Pessina's earlier death or permanent disability, and (ii) the KKR Investors cannot transfer their shares until the period beginning August 2, 2014 and ending February 2, 2015, and then again after the second step closing.  With respect to any Walgreens shares issued in the second step transaction (see the next risk factor below), all Alliance Boots holders receiving such shares will be subject to certain restrictions on transfer under the Company Shareholders Agreement until the date nine months after the second step closing.  We also granted, pursuant to the Company Shareholders Agreement, certain Alliance Boots shareholders, including the SP Investors and the KKR Investors, the right to cause us, in certain instances, at our expense, to file registration statements under the Securities Act of 1933, as amended (the "Securities Act"), covering resales of our common stock held by them or to piggyback on a registration statement in certain circumstances.  These shares also may be sold pursuant to Rule 144 under the Securities Act, depending on their holding period and subject to restrictions in the case of shares held by persons deemed to be our affiliates.  The sale or possibility of the sale, of a substantial number of shares of our common stock into the market could cause the market price of our common stock to decline.

The amount and mix of consideration required to be paid by us to Alliance Boots shareholders upon the exercise of the option in the second step transaction is subject to adjustment in certain circumstances.

If the option to exercise the remaining 55% interest in Alliance Boots is exercised when we have the ability to do so, Walgreens expects to pay £3.133 billion (equivalent to approximately $4.9 billion based on exchange rates as of August 31, 2013) in cash and issue 144.3 million shares for the remaining interest in Alliance Boots, subject to the volume weighted average price of Walgreens common stock not being below $31.18 per share during a period shortly before the closing of the second step transaction.  However, if the volume weighted average price per share is below that level and the option is exercised, the difference in value would be made up by a cash payment or the issuance of additional shares of common stock at Walgreens election.  In addition, in certain circumstances after a change of control of Walgreens (as defined in the Purchase and Option Agreement), the selling shareholder of Alliance Boots  has the right to elect to receive all second step consideration in cash if the option to acquire the remaining 55% interest in Alliance Boots is exercised.  These provisions potentially could make the exercise of the second step option more costly or inadvisable by increasing the amount of cash and/or stock consideration we are required to pay.  If the amount of cash we are required to pay increases, the amount of indebtedness we incur also may increase, and if the amount of stock we are required to deliver increases, the percentage ownership interests of our existing shareholders would further decrease.

We share certain directors with Alliance Boots and certain of our officers serve on the Alliance Boots Board of Directors, which may give rise to conflicts of interest.  Similar issues may arise in connection with other investments we make.

In connection with our initial 45% investment in Alliance Boots on August 2, 2012, four Walgreens executive officers, Gregory Wasson, President and Chief Executive Officer and a director of Walgreens, Wade Miquelon, Executive Vice President, Chief Financial Officer and President, International, Thomas J. Sabatino, Jr., Executive Vice President, General Counsel and Corporate Secretary, and Robert Zimmerman, Senior Vice President, International and International Chief Administration Officer, joined the Alliance Boots Board of Directors. In addition, Stefano Pessina, Executive Chairman of Alliance Boots, and Dominic Murphy, Director and Member of KKR, joined the Walgreens Board of Directors upon the closing. Mr. Pessina and his affiliates and KKR and its affiliates are significant shareholders of Alliance Boots.  These persons may have actual or apparent conflicts of interest with respect to matters involving or affecting each company. For example, while our contractual arrangements with Alliance Boots place restrictions on the parties' conduct in various potential conflict situations and related party transactions are subject to review and approval by independent directors in accordance with the related party transaction approval  procedures described in our proxy statement, the potential for a conflict of interest exists when we on one hand, and Alliance Boots on the other hand, consider acquisitions and other corporate opportunities that may be suitable to Alliance Boots and us.  Conflicts may also arise if there are issues or disputes under the commercial arrangements that exist between Alliance Boots and us.  Similar issues may arise in connection with other investments we make.  For example, we and Alliance Boots have the right, but not the obligation, to invest in AmerisourceBergen common stock and to designate up to two members of the AmerisourceBergen board of directors in certain circumstances if we achieve specified ownership milestones.

We have significant outstanding debt; our debt will increase if we incur additional debt in the future and do not retire existing debt, including if we decide to complete the second step transaction.

We have outstanding debt and other financial obligations and significant unused borrowing capacity. As of August 31, 2013, we had approximately $5.0 billion of outstanding indebtedness, including short-term borrowing.  As of March 31, 2013, Alliance Boots had approximately £6.7 billion (equivalent to approximately $10.1 billion based on exchange rates as of March 31, 2013) of outstanding indebtedness, including short-term borrowing.  If we exercise the call option and consummate the second step transaction, we are likely to incur significant additional debt in connection with the financing thereof and the assumption of the Alliance Boots debt then outstanding. Our debt level and related debt service obligations could have negative consequences, including:

· requiring us to dedicate significant cash flow from operations to the payment of principal and interest on our debt, which would reduce the funds we have available for other purposes, such as capital expenditures, acquisitions or dividends to shareholders;

· reducing our flexibility in planning for or reacting to changes in our business and market conditions; and

· exposing us to interest rate risk since a portion of our debt obligations is at variable rates.

We may incur or assume significantly more debt in the future, including, but not limited to, in connection with the second step transaction. If we add new debt and do not retire existing debt, the risks described above could increase.

Our long-term debt obligations include covenants that may adversely affect our ability to incur certain secured indebtedness or engage in certain types of sale and leaseback transactions. Our ability to comply with these restrictions and covenants may be affected by events beyond our control. If we breach any of these restrictions or covenants and do not obtain a waiver from the lenders, then, subject to applicable cure periods, our outstanding indebtedness could be declared immediately due and payable. Alliance Boots GmbH and its subsidiaries are not subsidiaries of Walgreens and therefore are not subject to these restrictions and covenants.

Our credit ratings are important to our business.

The major credit rating agencies have assigned us and our corporate debt investment grade credit ratings.  These ratings are based on a number of factors, which include their assessment of our financial strength and financial policies.  We aim to maintain investment grade ratings as they serve to lower our borrowing costs and facilitate our access to a variety of lenders and other creditors, including landlords for our leased stores, on terms that we consider advantageous to our business.  However, there can be no assurance that any particular rating assigned to us will remain in effect for any given period of time or that a rating will not be changed or withdrawn by a rating agency, if in that rating agency's judgment, future circumstances relating to the basis of the rating so warrant.  Incurrence of additional debt by Alliance Boots or us could adversely affect our credit ratings.  Any downgrade of our credit ratings could adversely affect our cost of funds, liquidity, competitive position and access to capital markets.

Our quarterly results and Alliance Boots operating results may fluctuate significantly.

Our operating results have historically varied on a quarterly basis and may continue to fluctuate significantly in the future. Factors that may affect our quarterly operating results include, but are not limited to, seasonality, the timing of the introduction of new generic and brand name prescription drugs, the timing and severity of the cough, cold and flu season, significant acquisitions, dispositions and other strategic initiatives, the relative magnitude of our LIFO provision in any particular quarter, variations in the earnings contribution from equity method investments such as Alliance Boots, fluctuations in the value of our warrants to acquire AmerisourceBergen common stock, inflation and the other risk factors discussed under this Item 1A.  Accordingly, we believe that quarter-to-quarter comparisons of our operating results are not necessarily meaningful and investors should not rely on the results of any particular quarter as an indication of our future performance.

In addition, Alliance Boots operating results have historically varied on a quarterly basis and may continue to fluctuate significantly in the future.  Alliance Boots faces risks similar to those we face and additional risks particular to its businesses, operations and markets, including macro-economic and political risks; regulatory risks  including, with respect to its Health & Beauty Division, the potential adverse effects of changes to licensing regimes for pharmacies, prescription processing regimes or reimbursement arrangements and, with respect to its Pharmaceutical Wholesale Division, the potential adverse effects of regulations relating to such things as product margins, product traceability and the conditions under which products must be stored; changes and trends in consumer behavior and spending; competitive risks resulting from intense competition from a wide variety of competitors including, with respect to its Health & Beauty Division, other pharmacies, supermarkets and department stores and, with respect to its Pharmaceutical Wholesale Division, from direct competitors and alternative supply sources such as importers and manufacturers who supply direct to pharmacies; health, safety and environmental risks; product/services risks, including risks associated with defective products, the provision of inadequate services,  the potential infiltration of counterfeit products into the supply chain, errors in re-labeling of products and contamination or product mishandling issues; risk of major operational business failures such as a major failure of its  distribution centers and logistics infrastructure, information technology systems or the operational systems of key third party suppliers; and risks relating to increased costs, not achieving, or delays in achieving, expected synergies, change management; acquisitions, currency exchange, funding and interest rates, pension contributions including the potential need to increase the funding of its defined benefit pension plans due to lower than expected pension fund investment returns and/or increased life expectancy of plan members, and protection of confidential personal and business data.

The equity income we report from Alliance Boots is subject to IFRS to U.S. GAAP conversion and currency translation and is reported on a three-month lag basis, which impacts the quarterly and fiscal year timing of when Alliance Boots results and synergies will be reflected in our financial statements.

Net income reported by Alliance Boots must be converted from the applicable IFRS standards to generally accepted accounting principles in the United States ("U.S. GAAP") and translated from British pounds Sterling at the average rate for the period, which subjects us to exchange rate fluctuations and other currency risks.  We account for our 45% interest in Alliance Boots using the equity method of accounting on a three-month lag basis, which impacts the quarterly and fiscal year timing of when Alliance Boots results and synergies will be reflected in the equity income from Alliance Boots included in our financial statements.  Alliance Boots quarterly results are not reflected in the equity income reported in our consolidated financial statements until our quarterly period ending three months after the end of the related Alliance Boots three-month period.

Our business is seasonal in nature, and adverse events during the holiday and cough, cold and flu seasons could impact our operating results negatively.

Our business is seasonal in nature, with the second fiscal quarter (December, January, and February) typically generating a higher proportion of front-end sales and earnings than other fiscal quarters.  We purchase significant amounts of seasonal inventory in anticipation of the holiday season.  Adverse events, such as deteriorating economic conditions, higher unemployment, higher gas prices, public transportation disruptions, or unanticipated adverse weather could result in lower-than-planned sales during the holiday season. This could lead to lower sales or to unanticipated markdowns, negatively impacting our financial condition and results of operations.  In addition, both prescription and non-prescription drug sales are affected by the timing and severity of the cough, cold and flu season which can vary considerably from year to year.  In addition, the Alliance Boots business is seasonal in nature, typically generating a higher proportion of revenue and earnings in the winter holiday and cold and flu season.  Because of the three-month lag in reporting equity income from our investment in Alliance Boots, the results of Alliance Boots for December, January and February are reflected in the equity income included in our financial statements for our third fiscal quarter ending May 31.

Changes in accounting standards and subjective assumptions, estimates and judgments by management related to complex accounting matters could significantly affect our financial condition and results of operations.

Generally accepted accounting principles and related accounting pronouncements, implementation guidelines and interpretations with regard to a wide range of matters that are relevant to our business, including, but not limited to, revenue recognition, sales returns reserves, asset impairment, impairment of goodwill and other intangible assets, inventories, vendor rebates and other vendor consideration, lease obligations, self-insurance liabilities, tax matters, unclaimed property laws and litigation and other contingent liabilities are highly complex and involve many subjective assumptions, estimates and judgments. Changes in these rules or their interpretation or changes in underlying assumptions, estimates or judgments could significantly change our reported or expected financial performance or financial condition.  For example, changes in accounting standards and the application of existing accounting standards particularly related to the measurement of fair value as compared to carrying value for the Company's reporting units, including goodwill, intangible assets and investments in equity interests, including investments held by our equity method investees, may have an adverse effect on the Company's financial condition and results of operations.  Factors that could lead to impairment of goodwill and intangible assets include significant adverse changes in the business climate and declines in the financial condition of a reporting unit.  Factors that could lead to impairment of investments in equity interests of the companies in which we invested or the investments held by those companies include a prolonged period of decline in their operating performance or adverse changes in the economic, regulatory and legal environments of the countries they operate in.  New accounting guidance also may require systems and other changes that could increase our operating costs and/or change our financial statements. For example, implementing future accounting guidance related to leases, contingencies and other areas impacted by the current convergence project between the Financial Accounting Standards Board ("FASB") and the International Accounting Standards Board ("IASB") could require us to make significant changes to our lease management system or other accounting systems, and could result in changes to our financial statements.

We are involved in a number of legal proceedings and audits and, while we cannot predict the outcomes of such proceedings and other contingencies with certainty, some of these outcomes could adversely affect our business, financial condition and results of operations.

We are involved in legal proceedings and subject to investigations, inspections, audits, inquiries and similar actions by governmental authorities, arising in the course of our business (see the discussion of Legal Proceedings in Note 12 to the consolidated financial statements included in Item 8 of this Report).  Litigation, in general, and securities and class action litigation, in particular, can be expensive and disruptive.  Some of these suits may purport or may be determined to be class actions and/or involve parties seeking large and/or indeterminate amounts, including punitive or exemplary damages, and may remain unresolved for several years.  From time to time, the Company is also involved in legal proceedings as a plaintiff involving antitrust, tax, contract, intellectual property and other matters.  We cannot predict with certainty the outcomes of these legal proceedings and other contingencies, and the costs incurred in litigation can be substantial, regardless of the outcome.  Substantial unanticipated verdicts, fines and rulings do sometimes occur.  As a result, we could from time to time incur judgments, enter into settlements or revise our expectations regarding the outcome of certain matters, and such developments could have a material adverse effect on our results of operations in the period in which the amounts are accrued and/or our cash flows in the period in which the amounts are paid.  The outcome of some of these legal proceedings and other contingencies could require us to take, or refrain from taking, actions which could negatively affect our operations.  Additionally, defending against these lawsuits and proceedings may involve significant expense and diversion of management's attention and resources.

We could be subject to adverse changes in tax laws, regulations and interpretations or challenges to our tax positions.

We compute our income tax provision based on enacted tax rates in the jurisdictions in which we operate. As the tax rates vary among jurisdictions, a change in earnings attributable to the various jurisdictions in which we operate could result in an unfavorable change in our overall tax provision. From time to time, legislative initiatives are proposed that could adversely affect our tax positions, effective tax rate, tax payments or financial condition.  In addition, tax laws are complex and subject to varying interpretations.  Any change in enacted tax laws, rules or regulatory or judicial interpretations, any adverse outcome in connection with tax audits in any jurisdiction or any change in the pronouncements relating to accounting for income taxes could adversely affect our effective tax rate, tax payments and results of operations.

Our insurance program may expose us to unexpected costs and negatively affect our financial performance.

We use a combination of insurance and self-insurance to provide for potential liability for workers' compensation, automobile and general liability, property, director and officers' liability, and employee health care benefits.  Provisions for losses related to self-insured risks generally are based upon actuarially determined estimates. Any actuarial projection of losses is subject to a high degree of variability. Changes in legal claims, trends and interpretations, variability in inflation rates, changes in the nature and method of claims settlement, benefit level changes due to changes in applicable laws, insolvency of insurance carriers, and changes in discount rates could all adversely affect our financial condition, results of operations and cash flows.

There are a number of additional business risks that could adversely affect our financial results.

Many other factors could adversely affect our financial results, including:

· If we are unsuccessful in establishing effective advertising, marketing and promotional programs, our sales or sales margins could be negatively affected.

· Our success depends on our continued ability to attract and retain store and management and professional personnel, and the loss of key personnel could have an adverse effect on the results of our operations, financial condition or cash flow.

· Natural disasters, severe weather conditions, terrorist activities, global political and economic developments, war, health epidemics or pandemics or the prospect of these events can impact our store operations or damage our facilities in affected areas or have an adverse impact on consumer confidence levels and spending in our stores.

· The long-term effects of climate change on general economic conditions and the pharmacy industry in particular are unclear, and changes in the supply, demand or available sources of energy and the regulatory and other costs associated with energy production and delivery may affect the availability or cost of goods and services, including natural resources, necessary to run our business.

· The products we sell are sourced from a wide variety of domestic and international vendors, and any future inability to find qualified vendors and access products in a timely and efficient manner could adversely impact our business.

Item 1B.  Unresolved Staff Comments

There are no unresolved staff comments outstanding with the Securities and Exchange Commission at this time.

Item 2.  Properties

The Company's locations by state at August 31, 2013 and 2012 are listed below.

State	2013	2012	State	2013	2012	State	2013	2012
Alabama	113	106	Louisiana	152	151	Oklahoma	121	104
Alaska	7	5	Maine	15	15	Oregon	80	76
Arizona	258	254	Maryland	80	73	Pennsylvania	138	138
Arkansas	78	60	Massachusetts	185	179	Rhode Island	29	29
California	663	651	Michigan	232	233	South Carolina	119	114
Colorado	172	170	Minnesota	164	160	South Dakota	14	14
Connecticut	125	119	Mississippi	79	71	Tennessee	271	268
Delaware	66	68	Missouri	221	204	Texas	729	718
District of Columbia	5	5	Montana	14	14	Utah	45	44
Florida	881	878	Nebraska	62	62	Vermont	4	4
Georgia	208	204	Nevada	92	92	Virginia	149	143
Hawaii	17	13	New Hampshire	36	35	Washington	140	137
Idaho	42	41	New Jersey	215	205	West Virginia	23	22
Illinois	620	610	New Mexico	68	66	Wisconsin	234	234
Indiana	218	216	New York	527	526	Wyoming	11	11
Iowa	72	73	North Carolina	221	211	Guam	1	1
Kansas	72	71	North Dakota	1	1	Puerto Rico	118	113
Kentucky	103	103	Ohio	272	270	TOTAL	8,582	8,385

The Company owned approximately 20% of its retail drugstore locations open at August 31, 2013. The remaining drugstore locations are leased. The leases are for various terms and periods. See Note 3, "Leases" on page 36 of the 2013 Annual Report, which section is incorporated herein by reference. Net retail selling space increased from 87 million square feet at August 31, 2012 to 89 million square feet at August 31, 2013. Not including the approximately 5,000 locations that were converted under the Customer Centric Retailing initiative concluded in fiscal 2012, approximately 24% of Company stores have been opened or remodeled during the past five years. As of August 31, 2013, we had opened or converted stores with our pilot "Well Experience" store format in over 500 locations, including a market-wide transformation in the Indianapolis area and new flagship stores in select markets including Boston, Chicago, Los Angeles, New York City, San Francisco, Washington, D.C., Las Vegas and Puerto Rico.

As of August 31, 2013:

· The Company's retail store operations were supported by 17 major distribution centers with a total of approximately 10 million square feet of space, of which 15 locations are owned. The remaining space is leased. All distribution centers are served by modern systems for order processing control and rapid merchandise delivery to stores. In addition, the Company uses public warehouses and third party wholesalers to handle certain distribution needs.

· The Company operated 34 principal office facilities containing approximately three million square feet, of which 12 locations were owned. The Company operated two mail service facilities containing approximately 237 thousand square feet, one of which was owned.

· The Company owned 32 strip shopping malls containing approximately two million square feet.

The foregoing does not include properties of unconsolidated partially owned entities, such as Alliance Boots GmbH, of which we own 45% of the outstanding share capital.

Item 3.  Legal Proceedings

The information in response to this item is incorporated herein by reference to Note 12 "Commitments and Contingencies" on page 41 of the 2013 Annual Report.

Item 4.   Mine Safety Disclosures

Not Applicable.

Executive Officers of the Registrant

The following table sets forth, for each person currently serving as an executive officer of Walgreens, the name, age (as of October 15, 2013) and office(s) held by such person.

Name	Age	Office(s) Held
Gregory D. Wasson	54	President and Chief Executive Officer
Sona Chawla	46	President, E-Commerce
Kermit R. Crawford	54	President, Pharmacy, Health and Wellness
Alexander W. Gourlay	53	Executive Vice President, President of Customer Experience and Daily Living
Wade D. Miquelon	48	Executive Vice President, Chief Financial Officer and President, International
Mark A. Wagner	52	President, Operations and Community Management
Thomas J. Sabatino, Jr.	54	Executive Vice President, General Counsel and Corporate Secretary
Graham W. Atkinson	62	Senior Vice President and Chief Marketing and Customer Experience Officer
Bradley M. Fluegel	52	Senior Vice President and Chief Strategy Officer
Mia M. Scholz	47	Senior Vice President, Corporate Financial Operations
Timothy J. Theriault	53	Senior Vice President and Chief Information, Innovation and Improvement Officer
Kathleen Wilson-Thompson	56	Senior Vice President and Chief Human Resources Officer
Robert G. Zimmerman	61	Senior Vice President, International and Global Chief Administration Officer
Theodore J. Heidloff	37	Divisional Vice President, Accounting and Controller

Set forth below is information regarding the principal occupations and employment and business experience over the past five years for each executive officer.  Executive officers are elected by, and serve at the discretion of, the Board of Directors.  Unless otherwise stated, employment is by Walgreens.  There are no family relationships between any of the Company's executive officers or directors.

Mr. Wasson has served as President and Chief Executive Officer and a director of Walgreens since February 2009.   From May 2007 to February 2009, he served as President and Chief Operating Officer.  Mr. Wasson has served as a director of Verizon Communications Inc., a provider of communications, information and entertainment products and services, since March 2013 and as a director of Alliance Boots GmbH since August 2012.

Ms. Chawla has served as President, E-Commerce of Walgreens since January 2011.   She served as Senior Vice President, E-Commerce of Walgreens from July 2008 to January 2011.  She has served as a director of Express, Inc., a specialty apparel and accessory retailer, since August 2012.

Mr. Crawford has served as President, Pharmacy, Health and Wellness of Walgreens since September 2010.  He previously served as Executive Vice President from January 2010 to September 2010 and as Senior Vice President from October 2007 to January 2010.  He has served as a director of The Allstate Corporation, an insurance holding company, since January 2013.

Mr. Gourlay has served as our Executive Vice President, President of Customer Experience and Daily Living since October 2013.  Mr. Gourlay is an employee of Alliance Boots and is seconded to Walgreens pursuant to an agreement between Alliance Boots and Walgreens.  He served as Chief Executive of the Health & Beauty Division, Alliance Boots, from January 2009 to September 2013, and previously was Managing Director of Boots U.K. and a member of the Alliance Boots Group operating committee following the acquisition of Alliance Boots plc by AB Acquisitions Ltd in 2007.  He has served as a director of Alliance Boots GmbH since January 2009.

Mr. Miquelon has served as Executive Vice President and Chief Financial Officer since July 2009 and as President, International since October 2012.  Previously, he served as Senior Vice President and Chief Financial Officer from June 2008 to July 2009.   He has served as a director of Acadia Healthcare Company, Inc., a provider of inpatient behavioral health care services, since January 2012 and as a director of Alliance Boots GmbH since August 2012.

Mr. Wagner has served as President, Operations and Community Management of Walgreens since September 2010.  He served as an Executive Vice President from March 2006 to September 2010.

Mr. Sabatino has served as Executive Vice President, General Counsel and Corporate Secretary since September 2011.   Previously, he served as Executive Vice President and General Counsel of UAL Corporation and United Air Lines, Inc. from March 2010 to December 2010 and as Executive Vice President and General Counsel of Schering-Plough Corporation from April 2004 to November 2009.  He has served as a director of Unigene Laboratories, Inc., a biopharmaceutical company focused on small proteins for medical use, since November 2011 and as a director of Alliance Boots GmbH since August 2012.

Mr. Atkinson has served as Senior Vice President and Chief Marketing and Customer Experience Officer since October 2012.  He served as Senior Vice President and Chief Customer Experience Officer from January 2011 to October 2012.  Previously, he served as Executive Vice President of UAL Corporation and United Air Lines, Inc. and President of Mileage Plus frequent flyer program from October 2008 to December 2010.

Mr. Fluegel has served as Senior Vice President and Chief Strategy Officer since October 2012.  Previously, he served as Executive in Residence at Health Evolution Partners from April 2011 to September 2012 and as Executive Vice President and Chief Strategy and External Affairs Officer of Wellpoint, Inc. from September 2007 to December 2010.

Ms. Scholz has served as Senior Vice President - Corporate Financial Operations since October 2012.   She has served as a Senior Vice President since January 2011 and served as Vice President from October 2007 to January 2011.   She served as Controller and Chief Accounting Officer from January 2004 to January 2013.

Mr. Theriault has served as Senior Vice President and Chief Information, Innovation and Improvement Officer of Walgreens since October 2012.   He served as Senior Vice President and Chief Information Officer from October 2009 to October 2012.   Previously, he served as President, Corporate and Institutional Services of Northern Trust Corporation from January 2006 to October 2009.

Ms. Wilson-Thompson has served as Senior Vice President and Chief Human Resources Officer of Walgreens since January 2010.  Previously, she served as Senior Vice President, Global Human Resources of Kellogg Company from July 2005 to December 2009.  She has served as a director of Vulcan Materials Company, a producer of construction aggregates, since 2009.

Mr. Zimmerman has served as Senior Vice President, International and Global Chief Administration Officer since October 2012.  He served as Senior Vice President and Chief Strategy Officer from September 2011 to September 2012.  He has served as a Senior Vice President since January 2011 and served as a Vice President from September 2007 to January 2011.  He has served as a director of Alliance Boots GmbH since August 2012.

Mr. Heidloff has served as Divisional Vice President, Accounting and Controller since January 2013.   He served as Assistant Controller from May 2011 to January 2013.  Previously, he served as Controller of Aon Hewitt, a division of Aon Corporation, from October 2010 to April 2011 and as Assistant Controller of Hewitt Associates, Inc. from September 2008 to September 2010.

PART II

Item 5.  Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities

The Company's common stock is listed on the New York Stock Exchange, Chicago Stock Exchange and The Nasdaq Stock Market LLC under the symbol WAG.  As of August 31, 2013, there were approximately 77,386 holders of record of Company common stock.

The range of the sales prices of the Company's common stock by quarters during the years ended August 31, 2013 and August 31, 2012 are incorporated herein by reference to the caption "Common Stock Prices" on page 45 of the 2013 Annual Report.

The Company's cash dividends per common share declared during the two fiscal years ended August 31 are as follows:

Quarter Ended	2013		2012
November	$	.275	$	.225
February		.275		.225
May		.275		.225
August		.315		.275
Fiscal Year	$	1.14	$	.95

The Company has paid cash dividends every quarter since 1933. Future dividends will be determined based on the Company's earnings, capital requirements, financial condition and other factors considered relevant by the Board of Directors.

The following table provides information about purchases by the Company during the quarter ended August 31, 2013 of equity securities that are registered by the Company pursuant to Section 12 of the Exchange Act. Subject to applicable law, share purchases may be made in open market transactions, privately negotiated transactions, or pursuant to instruments and plans complying with Rule 10b5-1.

Period	Total Number of Shares Purchased (1)		Average Price Paid per Share		Total Number of Shares Purchased as Part of Publicly Announced Repurchase Programs (2)
6/01/2013 - 6/30/2013		800,000	$	49.67		-
7/01/2013 - 7/31/2013		400,000		45.65		-
8/01/2013 - 8/31/2013		-		-		-
Total		1,200,000	$	48.33		-

(1)	The Company purchased 1,200,000 shares of its common stock in open-market transactions to satisfy the requirements of the Company's Omnibus Incentive Plan and employee stock purchase plan.
(2)	On July 13, 2011, the Board of Directors approved a share repurchase program (2012 repurchase program) that allows for the repurchase of up to $2.0 billion of the Company's common stock prior to its expiration on December 31, 2015.  The total remaining authorization under the 2012 repurchase program was $425 million as of August 31, 2013.

Item 6.  Selected Financial Data

The information in response to this item is incorporated herein by reference to the caption "Five-Year Summary of Selected Consolidated Financial Data" on page 19 of the 2013 Annual Report.

Item 7.  Management's Discussion and Analysis of Financial Condition and Results of Operations

The information in response to this item is incorporated herein by reference to the caption "Management's Discussion and Analysis of Results of Operations and Financial Condition" on pages 20 through 27 of the 2013 Annual Report.

Item 7A.  Qualitative and Quantitative Disclosures about Market Risk

We are exposed to interest rate volatility with regard to future issuances of fixed-rate debt, and existing and future issuances of floating-rate debt. Primary exposures include U.S. Treasury rates, LIBOR, and commercial paper rates. From time to time, we use interest rate swaps and forward-starting interest rate swaps to hedge our exposure to interest rate changes, to reduce the volatility of our financing costs and, based on current and projected market conditions, achieve a desired proportion of fixed versus floating-rate debt. Generally under these swaps, we agree with a counterparty to exchange the difference between fixed-rate and floating-rate interest amounts based on an agreed upon notional principal amount.

These financial instruments are sensitive to changes in interest rates. On August 31, 2013, we had $1.6 billion in long-term debt obligations that had floating interest rates. A one percentage point increase or decrease in interest rates would increase or decrease the annual interest expense we recognize and the cash we pay for interest expense by approximately $16 million.

In connection with our Purchase and Option Agreement with Alliance Boots and the transactions contemplated thereby, our exposure to foreign currency risks, primarily with respect to the British pound Sterling, and to a lesser extent the Euro and certain other foreign currencies, is expected to increase.  We are exposed to the translation of foreign currency earnings to the U.S. dollar as a result of our 45% interest in Alliance Boots GmbH, which we account for using the equity method of accounting on a three month lag.   Foreign currency forward contracts and other derivative instruments may be used from time to time in some instances to hedge in full or in part certain risks relating to foreign currency denominated assets and liabilities, intercompany transactions, and in connection with acquisitions, joint ventures or investments outside the United States.  As of August 31, 2013 and August 31, 2012, we did not have any outstanding foreign exchange derivative instruments.

Changes in AmerisourceBergen common stock price and equity volatility may have a significant impact on the value of the warrants to acquire AmerisourceBergen common stock. See "Notes to Consolidated Financial Statements" on pages 33 through 45 of the 2013 Annual Report, which section is incorporated herein by reference. As of August 31, 2013, a one dollar change in AmerisourceBergen's common stock would, holding other factors constant, increase or decrease fair value of the Company's warrants by $15 million and a one percent change in AmerisourceBergen's equity volatility would, holding other factors constant, increase or decrease fair value of the Company's warrants by $7 million.  Additionally, the Company holds an investment in AmerisourceBergen common stock.  As of August 31, 2013, a one dollar change in AmerisourceBergen's common stock would increase or decrease the fair value of the Company's investment by $4 million.

Item 8.  Financial Statements and Supplementary Data

See Item 15.

Item 9.  Changes in and Disagreements with Accountants on Accounting and Financial Disclosure

None.

Item 9A.  Controls and Procedures

Evaluation of Disclosure Controls and Procedures

Management conducted an evaluation of the effectiveness of the design and operation of our disclosure controls and procedures as of the end of the period covered by this Form 10-K. The controls evaluation was conducted under the supervision and with the participation of the Company's management, including its Chief Executive Officer (CEO) and Chief Financial Officer (CFO). Based upon the controls evaluation, our CEO and CFO have concluded that, as of the end of the period covered by this report, our disclosure controls and procedures were effective to provide reasonable assurance that information required to be disclosed in our Exchange Act reports is recorded, processed, summarized and reported within the time periods specified by the SEC, and that such information is accumulated and communicated to management, including the CEO and CFO, as appropriate to allow timely decisions regarding required disclosure.

Report on Internal Control Over Financial Reporting

Management's report on internal control over financial reporting and the report of Deloitte & Touche LLP, the Company's independent registered public accounting firm, related to their assessment of the effectiveness of internal control over financial reporting are included in our fiscal 2013 Annual Report and are incorporated in this Item 9A by reference.

Changes in Internal Control over Financial Reporting

In connection with the evaluation pursuant to Exchange Act Rule 13a-15(d) of the Company's internal control over financial reporting (as defined in Exchange Act Rule 13a-15(f)) by the Company's management, including its CEO and CFO, no changes during the quarter ended August 31, 2013 were identified that have materially affected, or are reasonably likely to materially affect, the Company's internal control over financial reporting.

Inherent Limitations on Effectiveness of Controls

Our management, including the CEO and CFO, do not expect that our disclosure controls and procedures or our internal control over financial reporting will prevent or detect all errors and all fraud. A control system, no matter how well designed and operated, can provide only reasonable, not absolute, assurance that the control system's objectives will be met. The design of a control system must reflect the fact that there are resource constraints, and the benefits of controls must be considered relative to their costs. Further, because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that misstatements due to error or fraud will not occur or that all control issues and instances of fraud, if any, within the Company have been detected. These inherent limitations include the realities that judgments in decision-making can be faulty and that breakdowns can occur because of simple error or mistake. Controls can also be circumvented by the individual acts of some persons, by collusion of two or more people, or by management override of the controls. The design of any system of controls is based in part on certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions. Projections of any evaluation of controls effectiveness to future periods are subject to risks. Over time, controls may become inadequate because of changes in conditions or deterioration in the degree of compliance with policies or procedures.

Item 9B.  Other Information

None.

PART III

Item 10.  Directors, Executive Officers and Corporate Governance

The information required by Item 10, with the exception of the information relating to the executive officers of the Company, which is presented in Part I above under the heading "Executive Officers of the Registrant," is incorporated herein by reference to the following sections of the Company's 2013 Proxy Statement:  Proposal 1, Election of Directors; The Board of Directors, Board Committees and Corporate Governance; and Section 16(a) Beneficial Ownership Reporting Compliance.

The Company has adopted a Code of Business Conduct applicable to all employees, officers and directors that incorporates policies and guidelines designed to deter wrongdoing and to promote honest and ethical conduct and compliance with applicable laws and regulations. The Company has also adopted a Code of Ethics for Financial Executives. This Code applies to and has been signed by the Chief Executive Officer, the Chief Financial Officer and the Controller. The Company intends to promptly disclose on its website in accordance with applicable rules required disclosure of changes to or waivers, if any, of the Code of Ethics for Financial Executives or the Code of Business Conduct for directors and executive officers.

Charters of all committees of the Company's Board of Directors, as well as the Company's Corporate Governance Guidelines and Code of Ethics for Financial Executives and Code of Business Conduct, are available on the Company's website at investor.walgreens.com or, upon written request, in printed hardcopy form. Written requests should be sent to Walgreen Co., Attention: Shareholder Relations, Mail Stop #1833, 108 Wilmot Road, Deerfield, Illinois 60015.

Item 11.  Executive Compensation

The information required by Item 11 is incorporated herein by reference to the following sections of the Company's 2013 Proxy Statement: Director Compensation; and Executive Compensation.

The material incorporated herein by reference to the material under the caption "Compensation Committee Report" in the Proxy Statement shall be deemed furnished, and not filed, in this Annual Report on Form 10-K and shall not be deemed incorporated by reference into any filing under the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as amended, as a result of this furnishing, except to the extent that the Company specifically incorporates it by reference.

Item 12.  Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters

The information required by Item 12 is incorporated herein by reference to the following sections of the Company's 2013 Proxy Statement: Security Ownership of Certain Beneficial Owners and Management; and Equity Compensation Plans.

Item 13.  Certain Relationships and Related Transactions and Director Independence

The information required by Item 13 is incorporated herein by reference to the following sections of the Company's 2013 Proxy Statement: Certain Relationships and Related Transactions; and The Board of Directors, Board Committees and Corporate Governance.

Item 14.  Principal Accounting Fees and Services

The information required by Item 14 is incorporated herein by reference to the following sections of the Company's 2013 Proxy Statement: Independent Registered Public Accounting Firm Fees and Services.

PART IV

Item 15.  Exhibits and Financial Statement Schedules

(a) Documents filed as part of this report:

(1) Financial statements. The following financial statements, supplementary data, and report of independent public accountants appearing in the 2013 Annual Report are incorporated herein by reference.

	2013 Annual Report Page Number (printed)
Management's Report on Internal Control		27
Reports of Independent Registered Public Accounting Firms		28
Consolidated Statements of Comprehensive Income and Shareholders' Equity for the years ended August 31, 2013, 2012 and 2011		29 – 30
Consolidated Balance Sheets at August 31, 2013 and 2012		31
Consolidated Statements of Cash Flows for the years ended August 31, 2013, 2012 and 2011		32
Notes to Consolidated Financial Statements		33 – 45

(2) Financial statement schedules and supplementary information

Schedules I, II, III, IV and V are not submitted because they are not applicable or not required or because the required information is included in the Financial Statements in (1) above or notes thereto.

Other Financial Statements -

Separate financial statements of the registrant have been omitted because it is primarily an operating company, and all of its subsidiaries are included in the consolidated financial statements.

Alliance Boots GmbH

Since August 2, 2012, we have had an investment in Alliance Boots GmbH that we account for using the equity method of accounting.  SEC Rule 3-09 of Regulation S-X requires that we include or incorporate by reference Alliance Boots GmbH financial statements in this Annual Report on Form 10-K since our investment was considered to be significant in the context of Rule 3-09 for the year ended August 31, 2013. Alliance Boots GmbH audited consolidated financial statements for the years ended March 31, 2013 and 2012 are filed as Exhibit 99.1 hereto and incorporated herein by reference.

(3) Exhibits. Exhibits 10.1 through 10.53 constitute management contracts or compensatory plans or arrangements required to be filed as exhibits pursuant to Item 15(b) of this Form 10-K.

The agreements included as exhibits to this report are included to provide information regarding their terms and not intended to provide any other factual or disclosure information about the Company or the other parties to the agreements. The agreements may contain representations and warranties by each of the parties to the applicable agreement that were made solely for the benefit of the other parties to the applicable agreement, and:

•    should not in all instances be treated as categorical statements of fact, but rather as a way of allocating the risk to one of the parties if those statements prove to be inaccurate;

•    may have been qualified by disclosures that were made to the other party in connection with the negotiation of the applicable agreement, which disclosures are not necessarily reflected in the agreement;

•    may apply standards of materiality in a way that is different from what may be viewed as material to you or other investors; and

•    were made only as of the date of the applicable agreement or such other date or dates as may be specified in the agreement and are subject to more recent developments.

Accordingly, these representations and warranties may not describe the actual state of affairs as of the date they were made or at any other time.

(b)Exhibits

Exhibit No.	Description	SEC Document Reference
2.1*	Purchase and Option Agreement by and among Walgreen Co., Alliance Boots GmbH  and AB Acquisitions Holdings Limited dated June 18, 2012  and related annexes.	Incorporated by reference to Exhibit 2.1 to Walgreen Co.'s Current Report on Form 8-K (File No. 1-00604) filed with the SEC on June 19, 2012.
3.1	Amended and Restated Articles of Incorporation of Walgreen Co.	Incorporated by reference to Exhibit 3.1 to Walgreen Co.'s Current Report on Form 8-K (File No. 1-00604) filed with the SEC on January 19, 2011.
3.2	Amended and Restated By-Laws of Walgreen Co., as amended effective as of August 2, 2012.	Incorporated by reference to Exhibit 3.1 to Walgreen Co.'s Current Report on Form 8-K (File No. 1-00604) filed with the SEC on August 6, 2012.
4.1**	Form of Indenture between Walgreen Co. and Wells Fargo Bank, National Association.	Incorporated by reference to Exhibit 4.1 to Walgreen Co.'s registration statement on Form S-3ASR (File No. 333-152315) filed with the SEC on July 14, 2008.
4.2	Form of 5.25% Note due 2019.	Incorporated by reference to Exhibit 4.1 to Walgreen Co.'s Current Report on Form 8-K (File No. 1-00604) filed with the SEC on January 13, 2009.
4.3	Form of Floating Rate Note due 2014.	Incorporated by reference to Exhibit 4.1 to Walgreen Co.'s Current Report on Form 8-K (File No. 1-00604) filed with the SEC on September 13, 2012.
4.4	Form of 1.000% Note due 2015.	Incorporated by reference to Exhibit 4.2 to Walgreen Co.'s Current Report on Form 8-K (File No. 1-00604) filed with the SEC on September 13, 2012.
4.5	Form of 1.800% Note due 2017.	Incorporated by reference to Exhibit 4.3 to Walgreen Co.'s Current Report on Form 8-K (File No. 1-00604) filed with the SEC on September 13, 2012.
4.6	Form of 3.100% Note due 2022.	Incorporated by reference to Exhibit 4.4 to Walgreen Co.'s Current Report on Form 8-K (File No. 1-00604) filed with the SEC on September 13, 2012.
4.7	Form of 4.400% Note due 2042.	Incorporated by reference to Exhibit 4.5 to Walgreen Co.'s Current Report on Form 8-K (File No. 1-00604) filed with the SEC on September 13, 2012.
4.8	Shareholders Agreement, dated as of August 2, 2012, among Walgreen Co., Stefano Pessina, KKR Sprint (European II) Limited, KKR Sprint (2006) Limited and KKR Sprint (KPE) Limited, Alliance Santé Participations S.A., Kohlberg Kravis Roberts & Co. L.P. and certain other investors party thereto.	Incorporated by reference to Exhibit 4.1 to Walgreen Co.'s Current Report on Form 8-K (File No. 1-00604) filed with the SEC on August 6, 2012.
10.1	Walgreen Co. Management Incentive Plan (as amended and restated effective September 1, 2008).	Incorporated by reference to Exhibit 10.3 to Walgreen Co.'s Annual Report on Form 10-K for the fiscal year ended August 31, 2008 (File No. 1-00604).
10.2	Walgreen Co. 2011 Cash-Based Incentive Plan.	Incorporated by reference to Exhibit 10.1 to Walgreen Co.'s Current Report on Form 8-K (File No. 1-00604) filed with the SEC on January 17, 2012.
10.3	Walgreen Co. 2013 Omnibus Incentive Plan.	Incorporated by reference to Exhibit 10.1 to Walgreen Co.'s Current Report on Form 8-K (File No. 1-00604) filed with the SEC on January 14, 2013.
10.4	Forms of Restricted Stock Unit Award agreement (effective October, 2013).	Filed herewith
10.5	Form of Performance Share Award agreement (effective January 10, 2013).	Incorporated by reference to Exhibit 10.3 to Walgreen Co.'s Current Report on Form 8-K (File No. 1-00604) filed with the SEC on January 14, 2013.
10.6	Form of Stock Option Award agreement (effective January 10, 2013).	Incorporated by reference to Exhibit 10.4 to Walgreen Co.'s Current Report on Form 8-K (File No. 1-00604) filed with the SEC on January 14, 2013.
10.7	Walgreen Co. Long-Term Performance Incentive Plan (amendment and restatement of the Walgreen Co. Restricted Performance Share Plan).	Incorporated by reference to Exhibit 10.1 to Walgreen Co.'s Current Report on Form 8-K (File No. 1-00604) filed with the SEC on January 11, 2007.
10.8	Walgreen Co. Long-Term Performance Incentive Plan Amendment No. 1 (effective January 10, 2007).	Incorporated by reference to Exhibit 10.2 to Walgreen Co.'s Quarterly Report on Form 10-Q for the quarter ended February 28, 2007 (File No. 1-00604).
10.9	Walgreen Co. Long-Term Performance Incentive Plan Amendment No. 2.	Incorporated by reference to Exhibit 10.1 to Walgreen Co.'s Current Report on Form 8-K (File No. 1-00604) filed with the SEC on April 14, 2011.
10.10	Form of Restricted Stock Unit Award Agreement (August 15, 2011 grants).	Incorporated by reference to Exhibit 10.5 to Walgreen Co.'s Annual Report on Form 10-K for the fiscal year ended August 31, 2011 (File No. 1-00604).
10.11	Form of Restricted Stock Unit Award Agreement (effective November 1, 2012).	Incorporated by reference to Exhibit 10.7 to Walgreen Co.'s Annual Report on Form 10-K for the fiscal year ended August 31, 2012 (File No. 1-00604).
10.12	Form of Performance Share Contingent Award Agreement (effective September 1, 2008).	Incorporated by reference to Exhibit 10.14 to Walgreen Co.'s Annual Report on Form 10-K for the fiscal year ended August 31, 2008 (File No. 1-00604).
10.13	Form of Performance Share Contingent Award Agreement (effective September 1, 2011).	Incorporated by reference to Exhibit 10.8 to Walgreen Co.'s Annual Report on Form 10-K for the fiscal year ended August 31, 2011 (File No. 1-00604).
10.14	Walgreen Co. Executive Stock Option Plan (as amended and restated effective January 13, 2010).	Incorporated by reference to Exhibit 99.1 to Walgreen Co.'s Current Report on Form 8-K (File No. 1-00604) filed with the SEC on January 20, 2010.
10.15	Form of Stock Option Agreement (Benefit Indicator 512 - 515) (effective September 1, 2011).	Incorporated by reference to Exhibit 10.11 to Walgreen Co.'s Annual Report on Form 10-K for the fiscal year ended August 31, 2011 (File No. 1-00604).
10.16	Form of Stock Option Agreement (Benefit Indicator 516 and above) (effective September 1, 2011).	Incorporated by reference to Exhibit 10.12 to Walgreen Co.'s Annual Report on Form 10-K for the fiscal year ended August 31, 2011 (File No. 1-00604).
10.17	Walgreen Co. 1986 Executive Deferred Compensation/Capital Accumulation Plan.	Incorporated by reference to Exhibit 10 to Walgreen Co.'s Annual Report on Form 10-K for the fiscal year ended August 31, 1986 (File No. 1-00604).
10.18	Walgreen Co. 1988 Executive Deferred Compensation/Capital Accumulation Plan.	Incorporated by reference to Exhibit 10 to Walgreen Co.'s Quarterly Report on Form 10-Q for the quarter ended November 30, 1987 (File No. 1-00604).
10.19	Amendments to Walgreen Co. 1986 and 1988 Executive Deferred Compensation/ Capital Accumulation Plans.	Incorporated by reference to Exhibit 10 to Walgreen Co.'s Quarterly Report on Form 10-Q for the quarter ended November 30, 1988 (File No. 1-00604).
10.20	Walgreen Co. 1992 Executive Deferred Compensation/Capital Accumulation Plan Series 1.	Incorporated by reference to Exhibit 10 to Walgreen Co.'s Annual Report on Form 10-K for the fiscal year ended August 31, 1992 (File No. 1-00604).
10.21	Walgreen Co. 1992 Executive Deferred Compensation/Capital Accumulation Plan Series 2.	Incorporated by reference to Exhibit 10 to Walgreen Co.'s Annual Report on Form 10-K for the fiscal year ended August 31, 1992 (File No. 1-00604).
10.22	Walgreen Co. 1997 Executive Deferred Compensation/Capital Accumulation Plan Series 1.	Incorporated by reference to Exhibit 10(c) to Walgreen Co.'s Quarterly Report on Form 10-Q for the quarter ended February 28, 1997 (File No. 1-00604).
10.23	Walgreen Co. 1997 Executive Deferred Compensation/Capital Accumulation Plan Series 2.	Incorporated by reference to Exhibit 10(d) to Walgreen Co.'s Quarterly Report on Form 10-Q for the quarter ended February 28, 1997 (File No. 1-00604).
10.24	Walgreen Co. 2001 Executive Deferred Compensation/Capital Accumulation Plan.	Incorporated by reference to Exhibit 10(g) to Walgreen Co.'s Annual Report on Form 10-K for the fiscal year ended August 31, 2001 (File No. 1-00604).
10.25	Walgreen Co. 2002 Executive Deferred Compensation/Capital Accumulation Plan.	Incorporated by reference to Exhibit 10(g) to Walgreen Co.'s Annual Report on Form 10-K for the fiscal year ended August 31, 2002 (File No. 1-00604).
10.26	Amendment to the Walgreen Co. 1986, 1988, 1992 (Series 1), 1992 (Series 2), 1997 (Series 1), 1997 (Series 2), 2001 and 2002 Executive Deferred Compensation/ Capital Accumulation Plans.	Incorporated by reference to Exhibit 10.3 to Walgreen Co.'s Quarterly Report on Form 10-Q for the fiscal quarter ended February 28, 2009 (File No. 1-00604).
10.27	Walgreen Co. 2006 Executive Deferred Compensation/Capital Accumulation Plan (effective January 1, 2006).	Incorporated by reference to Exhibit 10(b) to Walgreen Co.'s Quarterly Report on Form 10-Q for the fiscal quarter ended November 30, 2005 (File No. 1-00604).
10.28	Walgreen Co. 2011 Executive Deferred Compensation Plan.	Incorporated by reference to Exhibit 10.1 to Walgreen Co.'s Current Report on Form 8-K (File No. 1-00604) filed with the SEC on November 12, 2010.
10.29	Amendment No. 1 to the Walgreen Co. 2011 Executive Deferred Compensation Plan.	Incorporated by reference to Exhibit 10.1 to Walgreen Co.'s Current Report on Form 8-K (File No. 1-00604) filed with the SEC on January 19, 2011.
10.30	Walgreen Co. Executive Deferred Profit-Sharing Plan, as amended and restated effective January 1, 2012.	Incorporated by reference to Exhibit 10.2 to Walgreen Co.'s Current Report on Form 8-K (File No. 1-00604) filed with the SEC on July 15, 2011.
10.31	Amendment to Walgreen Co. Executive Deferred Profit-Sharing Plan.	Incorporated by reference to Exhibit 10.5 to Walgreen Co.'s Current Report on Form 8-K (File No. 1-00604) filed with the SEC on January 14, 2013.
10.32	Share Walgreens Stock Purchase/Option Plan (effective October 1, 1992), as amended.	Incorporated by reference to Exhibit 10(d) to Walgreen Co.'s Quarterly Report on Form 10-Q for the quarter ended February 28, 2003 (File No. 1-00604).
10.33	Share Walgreens Stock Purchase/Option Plan Amendment No. 4 (effective July 15, 2005), as amended.	Incorporated by reference to Exhibit 10(h)(ii) to Walgreen Co.'s Annual Report on Form 10-K for the fiscal year ended August 31, 2005 (File No. 1-00604).
10.34	Share Walgreens Stock Purchase/Option Plan Amendment No. 5 (effective October 11, 2006).	Incorporated by reference to Exhibit 10(b) to Walgreen Co.'s Quarterly Report on Form 10-Q for the quarter ended November 30, 2006 (File No. 1-00604).
10.35	Walgreen Select Senior Executive Retiree Medical Expense Plan.	Incorporated by reference to Exhibit 10(j) to Walgreen Co.'s Annual Report on Form 10-K for the fiscal year ended August 31, 1996 (File No. 1-00604).
10.36	Walgreen Select Senior Executive Retiree Medical Expense Plan Amendment No. 1 (effective August 1, 2002).	Incorporated by reference to Exhibit 10(a) to Walgreen Co.'s Quarterly Report on Form 10-Q for the quarter ended February 28, 2003 (File No. 1-00604).
10.37	Walgreen Co. 162(m) Deferred Compensation Plan, as amended and restated.	Incorporated by reference to Exhibit 10.1 to Walgreen Co.'s Current Report on Form 8-K (File No. 1-00604) filed with the SEC on October 17, 2011.
10.38	Walgreen Co. Nonemployee Director Stock Plan, as amended and restated (effective January 14, 2004).	Incorporated by reference to Exhibit 10(a) to Walgreen Co.'s Quarterly Report on Form 10-Q for the quarter ended February 29, 2004 (File No. 1-00604).
10.39	Walgreen Co. Nonemployee Director Stock Plan Amendment No. 1 (effective October 12, 2005).	Incorporated by reference to Exhibit 10(a) to Walgreen Co.'s Quarterly Report on Form 10-Q for the quarter ended November 30, 2005 (File No. 1-00604).
10.40	Walgreen Co. Nonemployee Director Stock Plan Amendment No. 2 (effective October 11, 2006).	Incorporated by reference to Exhibit 10(f) to Walgreen Co.'s Quarterly Report on Form 10-Q for the quarter ended November 30, 2006 (File No. 1-00604).
10.41	Walgreen Co. Nonemployee Director Stock Plan Amendment No. 3 (effective September 1, 2009).	Incorporated by reference to Exhibit 10.43 to Walgreen Co.'s Annual Report on Form 10-K for the fiscal year ended August 31, 2010 (File No. 1-00604).
10.42	Form of Change of Control Employment Agreements.	Incorporated by reference to Exhibit 10 to Walgreen Co.'s Current Report on Form 8-K dated October 18, 1988 (File No. 1-00604).
10.43	Form of Amendment to Change of Control Employment Agreements (effective January 1, 2009).	Incorporated by reference to Exhibit 10.2 to Walgreen Co.'s Quarterly Report on Form 10-Q for the fiscal quarter ended February 28, 2009 (File No. 1-00604).
10.44	Amendment to Employment Agreements adopted July 12, 1989.	Incorporated by reference to Exhibit 10 to Walgreen Co.'s Annual Report on Form 10-K for the fiscal year ended August 31, 1989 (File No. 1-00604).
10.45	Walgreen Co. Executive Severance and Change in Control Plan effective January 1, 2013.	Incorporated by reference to Exhibit 10.1 to Walgreen Co.'s Current Report on Form 8-K (File No. 1-00604) filed with the SEC on July 16, 2012.
10.46	Executive Stock Option Plan – Stock Option Agreement made as of October 10, 2008 between Alan G. McNally and Walgreen Co.	Incorporated by reference to Exhibit 10.8 to Walgreen Co.'s Quarterly Report on Form 10-Q for the fiscal quarter ended November 30, 2008 (File No. 1-00604).
10.47	Long-Term Performance Incentive Plan – Restricted Stock Unit Award Agreement made as of October 10, 2008 between Alan G. McNally and Walgreen Co.	Incorporated by reference to Exhibit 10.9 to Walgreen Co.'s Quarterly Report on Form 10-Q for the fiscal quarter ended November 30, 2008 (File No. 1-00604).
10.48	Offer letter agreement dated March 10, 2011 between Joseph C. Magnacca and Walgreen Co.	Incorporated by reference to Exhibit 10.3 to Walgreen Co.'s Quarterly Report on Form 10-Q for the fiscal quarter ended May 31, 2011 (File No. 1-00604).
10.49	Offer letter agreement dated August 9, 2011 between Thomas J. Sabatino and Walgreen Co.	Incorporated by reference to Exhibit 10.55 to Walgreen Co.'s Annual Report on Form 10-K for the fiscal year ended August 31, 2011 (File No. 1-00604).
10.50	drugstore.com, inc., 1998 Stock Plan, as amended.	Incorporated by reference to Exhibit 99.1 to Walgreen Co.'s Registration Statement on Form S-8 (File No. 333-174811) filed with the SEC on June 9, 2011.
10.51	drugstore.com, inc., 2008 Equity Incentive Plan, as amended.	Incorporated by reference to Exhibit 99.2 to Walgreen Co.'s Registration Statement on Form S-8 (File No. 333-174811) filed with the SEC on June 9, 2011.
10.52	Secondment Agreement dated September 27, 2013 between Alliance Boots Management Services Limited and Walgreen Co.	Filed herewith
10.53	Assignment Letter dated September 27, 2013 between Alexander Gourlay and Alliance Boots Management Services Ltd.	Filed herewith
10.54	Credit Agreement, dated as of July 23, 2012, among Walgreen Co., the lenders party thereto, Bank of America, N.A., as administrative agent and a letter of credit issuer, and Wells Fargo Bank, National Association, as a letter of credit issuer.	Incorporated by reference to Exhibit 10.2 to Walgreen Co.'s Current Report on Form 8-K (File No. 1-00604) filed with the SEC on July 26, 2012.
10.55	Second Amendment to Credit Agreement, dated as of July 23, 2012, by and among Walgreen Co., the lenders party thereto, Bank of America, N.A., as administrative agent and a letter of credit issuer and Wells Fargo Bank, National Association, as a letter of credit issuer (including the Credit Agreement, dated as of July 20, 2011, as amended by such Second Amendment to Credit Agreement, as an exhibit thereto).	Incorporated by reference to Exhibit 10.3 to Walgreen Co.'s Current Report on Form 8-K (File No. 1-00604) filed with the SEC on July 26, 2012.
10.56	Shareholders' Agreement, dated as of August 2, 2012, by and among Alliance Boots GmbH, AB Acquisition Holdings Limited and Walgreen Co.	Incorporated by reference to Exhibit 10.1 to Walgreen Co.'s Current Report on Form 8-K (File No. 1-00604) filed with the SEC on August 6, 2012.
10.57	Framework Agreement, dated as of March 18, 2013, by and among Walgreen Co., Alliance Boots GmbH and AmerisourceBergen Corporation, including as Annex B-1 thereto, the form of Warrant 1 and, as Annex B-2 thereto, the form of Warrant 2 (Walgreen Co. was issued 50% of each of the referenced Warrants).	Incorporated by reference to Exhibit 10.1 to Walgreen Co.'s Current Report on Form 8-K (File No. 1-00604) filed with the SEC on March 20, 2013.
10.58	Shareholders Agreement, dated as of March 18, 2013, by and among Walgreen Co., Alliance Boots GmbH and AmerisourceBergen Corporation.	Incorporated by reference to Exhibit 10.2 to Walgreen Co.'s Current Report on Form 8-K (File No. 1-00604) filed with the SEC on March 20, 2013.
10.59	Transaction Rights Agreement, dated as of March 18, 2013, by and among Walgreen Co., Walgreens Pharmacy Strategies, LLC, Alliance Boots GmbH, Alliance Boots Luxembourg S.à r.l., and WAB Holdings LLC.	Incorporated by reference to Exhibit 10.3 to Walgreen Co.'s Current Report on Form 8-K (File No. 1-00604) filed with the SEC on March 20, 2013.
10.60	Limited Liability Company Agreement of WAB Holdings LLC, dated as of March 18, 2013, by and between Walgreens Pharmacy Strategies, LLC and Alliance Boots Luxembourg S.à r.l.	Incorporated by reference to Exhibit 10.4 to Walgreen Co.'s Current Report on Form 8-K (File No. 1-00604) filed with the SEC on March 20, 2013.
12.	Computation of Ratio of Earnings to Fixed Charges.	Filed herewith.
13.	Portions of the Walgreen Co. Annual Report to Shareholders for the fiscal year ended August 31, 2013.	This report, except for those portions thereof which are expressly incorporated by reference in this Form 10-K, is being furnished for the information of the SEC and is not deemed to be "filed" as a part of the filing of this Form 10-K.
21.	Subsidiaries of the Registrant.	Filed herewith.
23.1	Consent of Deloitte & Touche LLP.	Filed herewith.
23.2	Consent of KPMG Audit Plc.	Filed herewith.
23.3	Consent of KPMG Audit Plc.	Filed herewith.
31.1	Certification of the Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.	Filed herewith.
31.2	Certification of the Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.	Filed herewith.
32.1	Certification of the Chief Executive Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, 18 U.S.C. Section 1350.	Furnished herewith.
32.2	Certification of the Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, 18 U.S.C. Section 1350.	Furnished herewith.
99.1	Alliance Boots GmbH audited consolidated financial statements for the years ended March 31, 2013 and 2012.	Incorporated by reference to Exhibit 99.1 to Walgreen Co.'s Current Report on Form 8-K (File No. 1-00604) filed with the SEC on May 15, 2013.
101	The following financial statements and footnotes from the Walgreen Co. Annual Report on Form 10-K for the year ended August 31, 2013, formatted in XBRL (eXtensible Business Reporting Language): (i) Consolidated Statement of Earnings; (ii) Consolidated Statement of Cash Flows; (iii) Consolidated Balance Sheet; (iv) Consolidated Statement of Shareholders' Equity, and (v) the Notes to Consolidated Financial Statements.	Filed herewith.

* Schedules and exhibits have been omitted pursuant to Item 601(b)(2) of Regulation S-K.  Copies of any omitted schedule or exhibit will be furnished supplementally to the SEC upon request.

** Other instruments defining the rights of holders of long-term debt of the registrant and its consolidated subsidiaries may be omitted from Exhibit 4 in accordance with Item 601(b)(4)(iii)(A) of Regulation S-K.  Copies of any such agreements will be furnished supplementally to the SEC upon request.

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

WALGREEN CO.

October 18, 2013By:   /s/    Wade D. Miquelon

Wade D. Miquelon

 Executive Vice President, Chief Financial Officer and President, International

Pursuant to the requirements of the Securities and Exchange Act of 1934 this report has been signed below by the following persons on behalf of the Registrant and in the capacities and on the dates indicated.

Name	Title	Date
/s/  Gregory D. Wasson	President and Chief Executive Officer	October 18, 2013
Gregory D. Wasson	(Principal Executive Officer) and Director
/s/  Wade D. Miquelon	Executive Vice President, Chief	October 18, 2013
Wade D. Miquelon	Financial Officer and President, International (Principal Financial Officer)
/s/  Theodore J. Heidloff	Divisional Vice President, Accounting	October 18, 2013
Theodore J. Heidloff	and Controller (Principal Accounting Officer)
/s/  James A. Skinner	Chairman of the Board	October 18, 2013
James A. Skinner
/s/  Janice M. Babiak	Director	October 18, 2013
Janice M. Babiak
/s/  David J. Brailer	Director	October 18, 2013
David J. Brailer
/s/  Steven A. Davis	Director	October 18, 2013
Steven A. Davis
/s/  William C. Foote	Director	October 18, 2013
William C. Foote
/s/  Mark P. Frissora	Director	October 18, 2013
Mark P. Frissora
/s/  Ginger L. Graham	Director	October 18, 2013
Ginger L. Graham
/s/  Alan G. McNally	Director	October 18, 2013
Alan G. McNally
/s/  Dominic P. Murphy	Director	October 18, 2013
Dominic P. Murphy
/s/  Stefano Pessina	Director	October 18, 2013
Stefano Pessina
/s/  Nancy M. Schlichting	Director	October 18, 2013
Nancy M. Schlichting
/s/  Alejandro Silva	Director	October 18, 2013
Alejandro Silva

INDEX

Exhibit No.	Description
10.4	Forms of Restricted Stock Unit Award agreement (effective October 2013).
10.52	Secondment Agreement dated September 27, 2013 between Alliance Boots Management Services Limited and Walgreen Co.
10.53	Assignment Letter dated September 27, 2013  between Alexander Gourlay and Alliance Boots Management Services Ltd.
12	Computation of Ratio of Earnings to Fixed Charges.
13	Portions of the Walgreen Co. Annual Report to shareholders for the fiscal year ended August 31, 2013. This report, except for those portions thereof which are expressly incorporated by reference in this Form 10-K, is being furnished for the information of the Securities and Exchange Commission and is not deemed to be "filed" as a part of the filing of this Form 10-K.
21	Subsidiaries of the Registrant.
23.1	Consent of Deloitte & Touche LLP.
23.2	Consent of KPMG Audit Plc.
23.3	Consent of KPMG Audit Plc.
31.1	Certification of the Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
31.2	Certification of the Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
32.1	Certification of the Chief Executive Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, 18 U.S.C. Section 1350.
32.2	Certification of the Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, 18 U.S.C. Section 1350.
101	The following financial statements and footnotes from the Walgreen Co. Annual Report on Form 10-K for the year ended August 31, 2013, formatted in XBRL (eXtensible Business Reporting Language): (i) Consolidated Statement of Comprehensive Income; (ii) Consolidated Statement of Cash Flows; (iii) Consolidated Balance Sheet; (iv) Consolidated Statement of Shareholders' Equity, and (v) the Notes to Consolidated Financial Statements.

EX-10.4

WALGREEN CO.

2013 OMNIBUS INCENTIVE PLAN

RESTRICTED STOCK UNIT AWARD AGREEMENT

These materials, which may include descriptions of company stock plans, prospectuses and other information and documents, and the information they contain, are provided by Walgreen Co., not by Fidelity, and are not an offer or solicitation by Fidelity for the purchase of any securities or financial instruments.  These materials were prepared by Walgreen Co., which is solely responsible for their contents and for compliance with legal and regulatory requirements.  Fidelity is not connected with any offering or acting as an underwriter in connection with any offering of securities or financial instruments of Walgreen Co.  Fidelity does not review, approve or endorse the contents of these materials and is not responsible for their content.

WALGREEN CO.

2013 OMNIBUS INCENTIVE PLAN

RESTRICTED STOCK UNIT AWARD AGREEMENT

Participant Name:

Participant ID:

Grant Date:

Units Granted:

Vesting:  Three years from grant date

Acceptance Date:

Electronic Signature:

This document (referred to below as this "Agreement") spells out the terms and conditions of the Restricted Stock Unit Award (the "Award") granted to you by Walgreen Co., an Illinois corporation (the "Company"), pursuant to the Walgreen Co. 2013 Omnibus Incentive Plan (the "Plan") on and as of the Grant Date designated above.  Except as otherwise defined herein, capitalized terms used in this Agreement have the respective meanings set forth in the Plan.  The Plan, as it may be amended from time to time, is incorporated into this Agreement by this reference.

You and the Company agree as follows:

1.Grant of Restricted Stock Units.  Pursuant to the approval and direction of the Compensation Committee of the Company's Board of Directors (the "Committee"), the Company hereby grants you the number of Restricted Stock Units specified above (the "Restricted Stock Units"), subject to the terms and conditions of the Plan and this Agreement.

2.Restricted Stock Unit Account and Dividend Equivalents.  The Company will maintain an account (the "Account") on its books in your name to reflect the number of Restricted Stock Units awarded to you as well as any additional Restricted Stock Units credited as a result of Dividend Equivalents.  The Account will be administered as follows:

(a) The Account is for recordkeeping purposes only, and no assets or other amounts shall be set aside from the Company's general assets with respect to such Account.

(b) As of each record date with respect to which a cash dividend is to paid with respect to shares of Company common stock, par value $.078125 per share ("Common Stock"), the Company will credit your Account with an equivalent amount of Restricted Stock Units determined by dividing the value of the cash dividend that would have been paid on your Restricted Stock Units if they had been shares of Common Stock, divided by the value of Common Stock on such date.

(c) If dividends are paid in the form of shares of Common Stock rather than cash, then your Account will be credited with one additional Restricted Stock Unit for each share of Common Stock that would have been received as a dividend had your outstanding Restricted Stock Units been shares of Common Stock.

(d) Additional Restricted Stock Units credited via dividend equivalents shall vest or be forfeited at the same time as the Restricted Stock Units to which they relate.

3.Restricted Period.  The period prior to the vesting date with respect each Restricted Stock Unit is referred to as the "Restricted Period."  Subject to the provisions of the Plan and this Agreement, unless vested or forfeited earlier as described in Section 4, 5, 6 or 7 of this Agreement, as applicable, your Restricted Stock Units will become vested and be settled as described in Section 8 below, as of the vesting date or dates indicated in the introduction to this Agreement, provided the performance goal in this Section 3, ("Performance Goal") is satisfied in the [performance period] ending [date].  The Performance Goal is attainment of [  ]% of threshold [performance metric] established as a goal for the [performance period] ending [date], as determined under the Management Incentive Plan and certified by the Committee.  If the Performance Goal is not attained as of the end of the [performance period], the Restricted Stock Units awarded hereunder shall be thereupon forfeited.

4.Disability or Death.  If during the Restricted Period you have a Termination of Service by reason of Disability or death, then the Restricted Stock Units will become fully vested as of the date of your Termination of Service and the Vesting Date shall become the date of your Termination of Service.  Any Restricted Stock Units becoming vested by reason of your Termination of Service by reason of Disability or death shall be settled as provided in Section 8.

5.Retirement and Involuntary Termination of Service.  If within 12 months of the Vesting Date you have a Termination of Service by reason of Retirement or you have an involuntary (as determined by the Committee) Termination of Service other than for Cause (as defined in Section 7), then the Vesting Date shall become the date of your Termination of Service.  Any Restricted Stock Units becoming vested by reason of your Retirement or involuntary termination shall be settled as provided in Section 8.

6.Termination of Service Following a Change in Control.  If during the Restricted Period there is a Change in Control of the Company and within the one-year period thereafter you have a Termination of Service initiated by the Company (or a Subsidiary of the Company if such Subsidiary is your direct employer) other than for Cause (as defined in Section 7), then your Restricted Stock Units shall become fully vested, and they shall be settled in accordance with Section 9.

7.Other Termination of Service.  If during the Restricted Period you have a Termination of Service by reason of voluntary quit or resignation, or if you are terminated for Cause, or if you have a Termination of Service for any reason other than as set forth in Section 4, 5, or 6 above or Section 10 below, as determined by the Committee, then you shall thereupon forfeit any Restricted Stock Units that are still in a Restricted Period on your termination date.  For purposes of this Section 7, "Cause" means any one or more of the following, as determined by the Committee in its sole discretion:

(a) your commission of a felony or any crime of moral turpitude;

(b) your dishonesty or material violation of standards of integrity in the course of fulfilling your employment duties to the Company or any Affiliate;

(c) your material violation of a material written policy of the Company or any Affiliate violation of which is grounds for immediate termination;

(d) your willful and deliberate failure to perform your employment duties to the Company or any Affiliate in any material respect, after reasonable notice of such failure and an opportunity to correct it; or

(e) your failure to comply in any material respect with the Foreign Corrupt Practices Act, the Securities Act of 1933, the Securities Exchange Act of 1934, the Sarbanes-Oxley Act of 2002, the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010, and the Truth in Negotiations Act, or any rules or regulations thereunder.

8.Settlement of Vested Restricted Stock Units.  Subject to the requirements of Section 13 below, as promptly as practicable after the applicable Vesting Date, whether occurring upon your Separation from Service or otherwise, but in no event later than 75 days after the Vesting Date, the Company shall transfer to you one share of Common Stock for each Restricted Stock Unit becoming vested at such time, net of any applicable tax withholding requirements in accordance with Section 10 below; provided, however, that, if you are a Specified Employee at the time of Separation from Service, then to the extent your Restricted Stock Units are deferred compensation subject to Section 409A of the Code, settlement of which is triggered by your Separation from Service (other than for death), payment shall not be made until the date which is six months after your Separation from Service.  Fractional shares shall be settled in cash at the same time as your shares of Common Stock are delivered.

9.Settlement Following Change in Control.  Notwithstanding any provision of this Agreement to the contrary, the Company may, in its sole discretion, fulfill its obligation with respect to all or any portion of the Restricted Stock Units that become vested in accordance with Section 6 above, by:

(a) delivery of (i) the number of shares of Common Stock that corresponds with the number of Restricted Stock Units that have become vested or (ii) such other ownership interest as such shares of Common Stock that correspond with the vested Restricted Stock Units may be converted into by virtue of the Change in Control transaction;

(b) payment of cash in an amount equal to the fair market value of the Common Stock that corresponds with the number of vested Restricted Stock Units at that time; or

(c) delivery of any combination of shares of Common Stock (or other converted ownership interest) and cash having an aggregate fair market value equal to the fair market value of the Common Stock that corresponds with the number of Restricted Stock Units that have become vested at that time.

Settlement shall be made as soon as practical after the Restricted Stock Units become fully vested under Section 7, but in no event later than 30 days after such date.

10.Tax Withholding.  The Company may make such provisions and take such actions as it may deem necessary or appropriate for the withholding of any Federal, state, local income and employment taxes and other taxes required by law to be withheld with respect to the Restricted Stock Units, including, but not limited to, deducting the amount of any such withholding taxes from the amount to be paid hereunder, whether in Common Stock or in cash, or from any other amount then or thereafter payable to you, or requiring you or your beneficiary or legal representative to pay to the Company the amount required to be withheld or to execute such documents as the Committee or its designee deems necessary or desirable to enable the Company to satisfy its withholding obligations.  The Company may refuse to deliver Common Stock if you, your beneficiary or legal representative fail to comply with your or its obligations under this Section.  Regardless of any action the Company takes with respect to any or all income tax, social security, payroll tax, payment on account or other tax-related withholding ("Taxes") that you are required to bear pursuant to all applicable laws, any and all Taxes are your responsibility.

11.Nontransferability.  During the Restricted Period and thereafter until Common Stock is transferred to you in settlement thereof, you may not sell, transfer, pledge, assign or otherwise alienate or hypothecate the Restricted Stock Units whether voluntarily or involuntarily or by operation of law, other than by beneficiary designation effective upon your death, or by will or by the laws of intestacy.

12.Rights as Shareholder.  You shall have no rights as a shareholder of the Company with respect to the Restricted Stock Units until such time as a certificate of stock for the Common Stock issued in settlement of such Restricted Stock Units has been issued to you or such shares of Common Stock have been recorded in your name in book entry form. Until that time, you shall not have any voting rights with respect to the Restricted Stock Units.  Except as provided in Section 9 above, no adjustment shall be made for dividends or distributions or other rights with respect to such shares for which the record date is prior to the date on which you become the holder of record thereof.  Anything herein to the contrary notwithstanding, if a law or any regulation of the Securities and Exchange Commission or of any other body having jurisdiction shall require the Company or you to take any action before shares of Common Stock can be delivered to you hereunder, then the date of delivery of such shares may be delayed accordingly.

13.Securities Laws.  If a Registration Statement under the Securities Act of 1933, as amended, is not in effect with respect to the shares of Common Stock to be delivered pursuant to this Agreement, you hereby represent that you are acquiring the shares of Common Stock for investment and with no present intention of selling or transferring them and that you will not sell or otherwise transfer the shares except in compliance with all applicable securities laws and requirements of any stock exchange on which the shares of Common Stock may then be listed.

14.Change in Common Stock.  In the event of any change in Common Stock, by reason of any stock dividend, recapitalization, reorganization, split-up, merger, consolidation, exchange of shares, or of any similar change affecting Common Stock, the number of Restricted Stock Units subject to this Agreement shall be equitably adjusted by the Committee.

15.No Guarantee of Employment.  Nothing in this Agreement shall interfere with or limit in any way the right of the Company or any of its subsidiaries to terminate your employment at any time, nor confer upon your or any employee any right to continue in the employ of the Company or any of its subsidiaries.  No employee shall have a right to be selected to be granted Restricted Stock Units or any other Award under the Plan.

16.Committee Authority; Recoupment.  It is expressly understood that the Committee is authorized to administer, construe and make all determinations necessary or appropriate for the administration of the Plan and this Agreement, including the enforcement of any recoupment policy, all of which shall be binding upon you and any claimant.  Any inconsistency between this Agreement and the Plan shall be resolved in favor of the Plan.

17.Non-Competition, Non-Solicitation and Confidentiality.  As a condition to the receipt of this Restricted Stock Unit Award, you must agree to the Non-Competition, Non-Solicitation and Confidentiality Agreement attached hereto as Exhibit A by executing that Agreement.  Failure to execute and return the Non-Competition, Non-Solicitation and Confidentiality Agreement within 120 days of the Award Date shall constitute your decision to decline to accept this Restricted Stock Unit Award.

18.Amendment or Modification, Waiver.  Except as set forth in the Plan, no provision of this Agreement may be amended or waived unless the amendment or waiver is agreed to in writing, signed by you and by a duly authorized officer of the Company. No waiver of any condition or provision of this Agreement shall be deemed a waiver of a similar or dissimilar condition or provision at the same time, any prior time or any subsequent time.

19.Governing Law and Jurisdiction.  This Agreement is governed by the substantive and procedural laws of the state of Illinois.  You and the Company shall submit to the exclusive jurisdiction of, and venue in, the courts in Illinois in any dispute relating to this Agreement.

20.Conformity with Applicable Law.  If any provision of this Agreement is determined to be invalid, illegal or unenforceable in any respect under any applicable law or rule in any jurisdiction, such invalidity, illegality or unenforceability shall not affect the validity, legality or enforceability of any other provision of this Agreement or the validity, legality or enforceability of such provision in any other jurisdiction, but this Agreement shall be reformed, construed and enforced in such jurisdiction as if such invalid, illegal or unenforceable provision had never been contained herein.

21.Successors.  This Agreement shall be binding upon and inure to the benefit of any successor or successors of the Company and any person or persons who shall, upon your death, acquire any rights hereunder.

****

This Agreement contains highly sensitive and confidential information.  Please handle it accordingly.

Please read the attached Exhibit A.  Once you have read and understood this Agreement and Exhibit A, please click the acceptance box to certify and confirm your agreement to be bound by the terms and conditions of this Agreement and Exhibit A, and to acknowledge your receipt of the Prospectus, the Plan and this Agreement and your acceptance of the terms and conditions of the Restricted Stock Unit Award granted hereunder.

EXHIBIT A

WALGREEN CO. NON-COMPETITION, NON-SOLICITATION AND CONFIDENTIALITY AGREEMENT

This Exhibit forms a part of the Restricted Stock Unit Agreement covering Restricted Stock Units awarded to an employee of Walgreen Co., on behalf of itself, its affiliates, subsidiaries, and successors (collectively referred to as "Employee" and the "Company").

WHEREAS, the Company develops and/or uses valuable business, technical, proprietary, customer and patient information it protects by limiting its disclosure and by keeping it secret or confidential;

WHEREAS, Employee acknowledges that during the course of employment, he or she has or will receive, contribute, or develop such confidential information; and

WHEREAS, the Company desires to protect from its competitors such confidential information and also desires to protect its legitimate business interests and goodwill in maintaining its employee and customer relationships.

NOW THEREFORE, in consideration of the Restricted Stock Unit Award issued to Employee pursuant the Agreement to which this is attached as Exhibit A, Employee agrees to be bound by the terms of this Agreement:

1.Confidentiality.  I understand that during the course of my employment with the Company, I have or will have access to the Company's Confidential Information, meaning information which is not generally ascertainable by proper means by the public, or which has limited disclosure within the Company, or which is treated or designated as confidential; the disclosure of which could reasonably be harmful to the Company's legitimate business interests.

I understand that "Confidential Information" includes, but is not limited to, the following:

(a) business or marketing plans, trade secrets, selling and pricing procedures and techniques, customer records,

(b) customer lists, requirements, and information,

(c) databases and software developed or used by the Company, financial information and projections, and other information for which the Company has assumed an obligation of confidentiality.

I agree to only use the Company's Confidential Information as necessary to perform my job during my employment with the Company.  I agree not to disclose any Confidential Information to anyone outside the Company without the Company's prior written consent, unless as necessary to perform my job during my employment with the Company.  I agree that these obligations apply during my employment with the Company and at all times thereafter.

2.Non-Competition.  I agree that during my employment with the Company and for one year after the termination of my employment, I will not, directly or indirectly, invest in, own, operate, finance, control, or provide Competing Services to any Competing Business Line, in both cases as defined below.  I understand that the restrictions in this paragraph apply no matter whether my employment is terminated by me or the Company and no matter whether that termination is voluntary or involuntary.  The above restrictions shall not apply to passive investments of less than 5% ownership interest in any entity. I understand that the term "Competing Business Line" used in this Agreement means any business that is in competition with any business engaged in by the Company with respect to which I provide substantial services during the last two years of my employment with the Company.

I understand that I will be deemed to be providing "Competing Services" if the nature of such services are sufficiently similar in position scope and geographic scope to any position held by me during the last two years of my employment with the Company, such that my engaging in such services on behalf of a Competing Business Line may pose competitive harm to the Company.

3.Non-Solicitation.  I agree that during my employment with the Company and for two years after the termination of my employment from the Company for any reason, whether voluntary or involuntary:

(a) I will not directly or indirectly, offer, provide or sell or participate in offering, providing or selling, products or services competitive with or similar to products or services offered by, developed by, designed by or distributed by the Company to any person, company or entity which was a customer, potential customer or referral source of the Company for such products or services and with which I had direct contact or about which I learned confidential information regarding such products or services at any time during the last two years of my employment with the Company;

(b) I will not directly or indirectly solicit or participate in soliciting products or services competitive with or similar to products or services offered by, developed by, designed by or distributed by the Company to any person, company or entity which was a customer, potential customer or referral source of the Company for such products or services and with which I had direct contact or about which I learned confidential information regarding such products or services at any time during the last two years of my employment with the Company

(c) I will not, nor will I assist any third party to, directly or indirectly (i) raid, hire, solicit, or attempt to persuade any employee of the Company or any person who was an employee of the Company during the 6 months preceding the termination of my employment with the Company,  who possesses or had access to confidential information of the Company, to leave the employ of the Company; (ii) interfere with the performance by any such persons of their duties for the Company; or (iii) communicate with any such persons for the purposes described in items (i) and (ii) in this paragraph.

4.Non-Inducement.  I will not directly or indirectly assist or encourage any person or entity in carrying out or conducting any activity that would be prohibited by this Agreement if such activity were carried out or conducted by me.

5.Nondisparagement.  I agree (whether or not I am then an Employee) not to make negative comments or otherwise disparage the Company, its Affiliates, or any of their officers, directors, employees, shareholders, members, agents or products other than in the good faith performance of my duties to the Company and its Affiliates while I am employed by the Company and its Affiliates and thereafter.  The foregoing shall not be violated by truthful statements in response to legal process, required governmental testimony or filings, or administrative or arbitral proceedings (including, without limitation, depositions in connection with such proceedings).

6.Return of Company Property.  I agree that I will not take any of the Company's property or information with me when I leave the Company's employ, no matter what form that property or information is in and no matter how I acquired it.  When my employment with the Company terminates, I will immediately return to the Company any and all Company information, documents, and electronics.

7.Consideration and Acknowledgments.  Employee acknowledges and agrees that the covenants described in this Agreement are essential terms, and the underlying Restricted Stock Unit Award would not be provided by the Company in the absence of these covenants.  Employee further acknowledges that these covenants are supported by adequate consideration as set forth in this Agreement, that full compliance with these covenants will not prevent Employee from earning a livelihood following the termination of his or her employment, and that these covenants do not place undue restraint on Employee and are not in conflict with any public interest.  Employee further acknowledges and agrees that Employee fully understands these covenants, has had full and complete opportunity to discuss and resolve any ambiguities or uncertainties regarding these covenants before signing this Agreement, that these covenants are reasonable and enforceable in every respect, and has voluntarily agreed to comply with these covenants for their stated term.  Employee agrees that in the event he or she is offered employment with a Competing Business at any time in the future, Employee shall immediately notify the Competing Business of the existence of the covenants set forth above.

8.Enforceability; General Provisions.

(a) I agree that the restrictions contained in this Agreement are reasonable and necessary to protect the Company's legitimate business interests and that full compliance with the terms of this Agreement will not prevent me from earning a livelihood following the termination of my employment, and that these covenants do not place undue restraint on me.

(b) Because the Company's current base of operations is in Illinois, I consent to the jurisdiction of the state and federal courts of Illinois with respect to any claim arising out of this Agreement.

(c) Because the Company's current base of operations is in Illinois, I agree that this Agreement shall be governed by the laws of Illinois without regard to its choice of law rules.

(d) In the event of a breach or a threatened breach of this Agreement, I acknowledge that the Company will face irreparable injury which may be difficult to calculate in dollar terms and that the Company shall be entitled, in addition to all remedies otherwise available in law or in equity, to temporary restraining orders and preliminary and final injunctions enjoining such breach or threatened breach in any court of competent jurisdiction without the necessity of posting a surety bond, as well as to obtain an equitable accounting of all profits or benefits arising out of any violation of this Agreement.

(e) I agree that if a court determines that any of the provisions in this Agreement is unenforceable or unreasonable in duration, territory, or scope, then that court shall modify those provisions so they are reasonable and enforceable, and enforce those provisions as modified.

(f) If any phrase or provision of this Agreement is declared invalid or unenforceable by a court of competent jurisdiction, that phrase, clause or provision shall be deemed severed from this Agreement, and will not affect the enforceability of any other provisions of this Agreement, which shall otherwise remain in full force and effect.

(g) Notwithstanding the foregoing provisions of this Agreement, the non-competition provisions of Paragraph 2 above shall not restrict Employee from performing legal services as a licensed attorney for a Competing Business to the extent that the attorney licensure requirements in the applicable jurisdiction do not permit Employee to agree to the otherwise applicable restrictions of Paragraph 2.

(h) Waiver of any of the provisions of this Agreement by the Company in any particular instance shall not be deemed to be a waiver of any provision in any other instance and/or of the Company's other rights at law or under this Agreement.

(i) I agree that the Company may assign this Agreement to its successors and that any such successor may stand in the Company's shoes for purposes of enforcing this Agreement.

(j) I agree to reimburse Company for all attorneys' fees, costs, and expenses that it reasonably incurs in connection with enforcing its rights and remedies under this Agreement, but only to the extent the Company is ultimately the prevailing party in the applicable legal proceedings.

(k) If I violate this Agreement, then the restrictions set out in Paragraphs 2 - 5 shall be extended by the same period of time as the period of time during which the violation(s) occurred.

(l) I fully understand my obligations in this Agreement, have had full and complete opportunity to discuss and resolve any ambiguities or uncertainties regarding these covenants before signing this Agreement, and have voluntarily agreed to comply with these covenants for their stated terms.

9.Relationship of Parties.  I acknowledge that my relationship with the Company is "terminable at will" by either party and that the Company or I can terminate the relationship with or without cause and without following any specific procedures.  Nothing contained in this Agreement is intended to or shall be relied upon to alter the "terminable at will" relationship between the parties.

10.Modifications and Other Agreements.  I agree that the terms of this Agreement may not be modified except by a written agreement signed by both me and the Company.  This Agreement shall not supersede any other restrictive covenants to which I may be subject under an employment contract, benefit program or otherwise, such that the Company may enforce the terms of any and all restrictive covenants to which I am subject.

11.Notification.  I agree that in the event I am offered employment at any time in the future with any entity that may be considered a Competing Business Line, I shall immediately notify such Competing business of the existence and terms of this Agreement.  I also understand and agree that the Company may notify anyone later employing me of the existence and provisions of this Agreement.

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By clicking the acceptance box for this grant agreement, I acknowledge receipt of the Restricted Stock Unit Agreement to which this Agreement is attached as Exhibit A, and I agree to the terms and conditions expressed in this Agreement.

15035180\V-3

(Alternate Form)

WALGREEN CO.

2013 OMNIBUS INCENTIVE PLAN

RESTRICTED STOCK UNIT AWARD AGREEMENT

WALGREEN CO.

2013 OMNIBUS INCENTIVE PLAN

RESTRICTED STOCK UNIT AWARD AGREEMENT

Participant Name ("you"):

Participant ID:

Grant Date:

Shares Granted:

Vesting Date:

Acceptance Date:

Electronic Signature:

This document (referred to below as this "Agreement") spells out the terms and conditions of the Restricted Stock Unit Award (the "Award") granted to you by Walgreen Co., an Illinois corporation (the "Company"), pursuant to the Walgreen Co. 2013 Omnibus Incentive Plan (the "Plan") on and as of the Grant Date designated above.  Except as otherwise defined herein, capitalized terms used in this Agreement have the respective meanings set forth in the Plan.  The Plan, as it may be amended from time to time, is incorporated into this Agreement by this reference.

You and the Company agree as follows:

1.Grant of Restricted Stock Units.  Pursuant to the approval and direction of the Compensation Committee of the Company's Board of Directors (the "Committee"), the Company hereby grants you the number of Restricted Stock Units specified above (the "Restricted Stock Units"), subject to the terms and conditions of the Plan and this Agreement.

2.Restricted Stock Unit Account and Dividend Equivalents.  The Company will maintain an account (the "Account") on its books in your name to reflect the number of Restricted Stock Units awarded to you as well as any additional Restricted Stock Units credited as a result of Dividend Equivalents.  The Account will be administered as follows:

(a) The Account is for recordkeeping purposes only, and no assets or other amounts shall be set aside from the Company's general assets with respect to such Account.

(b) As of each record date with respect to which a cash dividend is to paid with respect to shares of Company common stock, par value $.078125 per share ("Common Stock"), the Company will credit your Account with an equivalent amount of Restricted Stock Units determined by dividing the value of the cash dividend that would have been paid on your Restricted Stock Units if they had been shares of Common Stock, divided by the value of Common Stock on such date.

(c) If dividends are paid in the form of shares of Common Stock rather than cash, then your Account will be credited with one additional Restricted Stock Unit for each share of Common Stock that would have been received as a dividend had your outstanding Restricted Stock Units been shares of Common Stock.

(d) Additional Restricted Stock Units credited via dividend equivalents shall vest or be forfeited at the same time as the Restricted Stock Units to which they relate.

3.Restricted Period.  Subject to the provisions of the Plan and this Agreement, unless vested or forfeited earlier as described in Section 4, 5, 6 or 7 of this Agreement, as applicable, your Restricted Stock Units will become vested and be settled as described in Section 8 below, as of the vesting date or dates indicated in the introduction to this Agreement  The period prior to the vesting date with respect each Restricted Stock Unit is referred to as the "Restricted Period."

4.Disability or Death.  If during the Restricted Period you have a Termination of Service by reason of Disability or death, then the Restricted Stock Units will become fully vested as of the date of your Termination of Service and the Vesting Date shall become the date of your Termination of Service.  Any Restricted Stock Units becoming vested by reason of your Termination of Service by reason of Disability or death shall be settled as provided in Section 8.

5.Retirement and Involuntary Termination of Service.  If within 12 months of the Vesting Date you have a Termination of Service by reason of Retirement or you have an involuntary (as determined by the Committee) Termination of Service other than for Cause (as defined in Section 7), then the Vesting Date shall become the date of your Termination of Service.  Any Restricted Stock Units becoming vested by reason of your Retirement or involuntary termination shall be settled as provided in Section 8.

6.Termination of Service Following a Change in Control.  If during the Restricted Period there is a Change in Control of the Company and within the one-year period thereafter you have a Termination of Service initiated by the Company (or a Subsidiary of the Company if such Subsidiary is your direct employer) other than for Cause (as defined in Section 7), then your Restricted Stock Units shall become fully vested, and they shall be settled in accordance with Section 9.

7.Other Termination of Service.  If during the Restricted Period you have a Termination of Service by reason of voluntary quit or resignation, or if you are terminated for Cause, or if you have a Termination of Service for any reason other than as set forth in Section 4, 5, or 6 above or Section 10 below, as determined by the Committee, then you shall thereupon forfeit any Restricted Stock Units that are still in a Restricted Period on your termination date.  For purposes of this Section 7, "Cause" means any one or more of the following, as determined by the Committee in its sole discretion:

(a) your commission of a felony or any crime of moral turpitude;

(b) your dishonesty or material violation of standards of integrity in the course of fulfilling your employment duties to the Company or any Affiliate;

(c) your material violation of a material written policy of the Company or any Affiliate violation of which is grounds for immediate termination;

(d) your willful and deliberate failure to perform your employment duties to the Company or any Affiliate in any material respect, after reasonable notice of such failure and an opportunity to correct it; or

(e) your failure to comply in any material respect with the Foreign Corrupt Practices Act, the Securities Act of 1933, the Securities Exchange Act of 1934, the Sarbanes-Oxley Act of 2002, the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010, and the Truth in Negotiations Act, or any rules or regulations thereunder.

8.Settlement of Vested Restricted Stock Units.  Subject to the requirements of Section 13 below, as promptly as practicable after the applicable Vesting Date, whether occurring upon your Separation from Service or otherwise, but in no event later than 75 days after the Vesting Date, the Company shall transfer to you one share of Common Stock for each Restricted Stock Unit becoming vested at such time, net of any applicable tax withholding requirements in accordance with Section 10 below; provided, however, that, if you are a Specified Employee at the time of Separation from Service, then to the extent your Restricted Stock Units are deferred compensation subject to Section 409A of the Code, settlement of which is triggered by your Separation from Service (other than for death), payment shall not be made until the date which is six months after your Separation from Service.  Fractional shares shall be settled in cash at the same time as your shares of Common Stock are delivered.

9.Settlement Following Change in Control.  Notwithstanding any provision of this Agreement to the contrary, the Company may, in its sole discretion, fulfill its obligation with respect to all or any portion of the Restricted Stock Units that become vested in accordance with Section 6 above, by:

(a) delivery of (i) the number of shares of Common Stock that corresponds with the number of Restricted Stock Units that have become vested or (ii) such other ownership interest as such shares of Common Stock that correspond with the vested Restricted Stock Units may be converted into by virtue of the Change in Control transaction;

(b) payment of cash in an amount equal to the fair market value of the Common Stock that corresponds with the number of vested Restricted Stock Units at that time; or

(c) delivery of any combination of shares of Common Stock (or other converted ownership interest) and cash having an aggregate fair market value equal to the fair market value of the Common Stock that corresponds with the number of Restricted Stock Units that have become vested at that time.

Settlement shall be made as soon as practical after the Restricted Stock Units become fully vested under Section 7, but in no event later than 30 days after such date.

10.Tax Withholding.  The Company may make such provisions and take such actions as it may deem necessary or appropriate for the withholding of any Federal, state, local income and employment taxes and other taxes required by law to be withheld with respect to the Restricted Stock Units, including, but not limited to, deducting the amount of any such withholding taxes from the amount to be paid hereunder, whether in Common Stock or in cash, or from any other amount then or thereafter payable to you, or requiring you or your beneficiary or legal representative to pay to the Company the amount required to be withheld or to execute such documents as the Committee or its designee deems necessary or desirable to enable the Company to satisfy its withholding obligations.  The Company may refuse to deliver Common Stock if you, your beneficiary or legal representative fail to comply with your or its obligations under this Section.  Regardless of any action the Company takes with respect to any or all income tax, social security, payroll tax, payment on account or other tax-related withholding ("Taxes") that you are required to bear pursuant to all applicable laws, any and all Taxes are your responsibility.

11.Nontransferability.  During the Restricted Period and thereafter until Common Stock is transferred to you in settlement thereof, you may not sell, transfer, pledge, assign or otherwise alienate or hypothecate the Restricted Stock Units whether voluntarily or involuntarily or by operation of law, other than by beneficiary designation effective upon your death, or by will or by the laws of intestacy.

12.Rights as Shareholder.  You shall have no rights as a shareholder of the Company with respect to the Restricted Stock Units until such time as a certificate of stock for the Common Stock issued in settlement of such Restricted Stock Units has been issued to you or such shares of Common Stock have been recorded in your name in book entry form. Until that time, you shall not have any voting rights with respect to the Restricted Stock Units.  Except as provided in Section 9 above, no adjustment shall be made for dividends or distributions or other rights with respect to such shares for which the record date is prior to the date on which you become the holder of record thereof.  Anything herein to the contrary notwithstanding, if a law or any regulation of the Securities and Exchange Commission or of any other body having jurisdiction shall require the Company or you to take any action before shares of Common Stock can be delivered to you hereunder, then the date of delivery of such shares may be delayed accordingly.

13.Securities Laws.  If a Registration Statement under the Securities Act of 1933, as amended, is not in effect with respect to the shares of Common Stock to be delivered pursuant to this Agreement, you hereby represent that you are acquiring the shares of Common Stock for investment and with no present intention of selling or transferring them and that you will not sell or otherwise transfer the shares except in compliance with all applicable securities laws and requirements of any stock exchange on which the shares of Common Stock may then be listed.

14.Change in Common Stock.  In the event of any change in Common Stock, by reason of any stock dividend, recapitalization, reorganization, split-up, merger, consolidation, exchange of shares, or of any similar change affecting Common Stock, the number of Restricted Stock Units subject to this Agreement shall be equitably adjusted by the Committee.

15.No Guarantee of Employment.  Nothing in this Agreement shall interfere with or limit in any way the right of the Company or any of its subsidiaries to terminate your employment at any time, nor confer upon your or any employee any right to continue in the employ of the Company or any of its subsidiaries.  No employee shall have a right to be selected to be granted Restricted Stock Units or any other Award under the Plan.

16.Committee Authority; Recoupment.  It is expressly understood that the Committee is authorized to administer, construe and make all determinations necessary or appropriate for the administration of the Plan and this Agreement, including the enforcement of any recoupment policy, all of which shall be binding upon you and any claimant.  Any inconsistency between this Agreement and the Plan shall be resolved in favor of the Plan.

17.Non-Competition, Non-Solicitation and Confidentiality.  As a condition to the receipt of this Restricted Stock Unit Award, you must agree to the Non-Competition, Non-Solicitation and Confidentiality Agreement attached hereto as Exhibit A by executing that Agreement.  Failure to execute and return the Non-Competition, Non-Solicitation and Confidentiality Agreement within 120 days of the Award Date shall constitute your decision to decline to accept this Restricted Stock Unit Award.

18.Amendment or Modification, Waiver.  Except as set forth in the Plan, no provision of this Agreement may be amended or waived unless the amendment or waiver is agreed to in writing, signed by you and by a duly authorized officer of the Company. No waiver of any condition or provision of this Agreement shall be deemed a waiver of a similar or dissimilar condition or provision at the same time, any prior time or any subsequent time.

19.Governing Law and Jurisdiction.  This Agreement is governed by the substantive and procedural laws of the state of Illinois.  You and the Company shall submit to the exclusive jurisdiction of, and venue in, the courts in Illinois in any dispute relating to this Agreement.

20.Conformity with Applicable Law.  If any provision of this Agreement is determined to be invalid, illegal or unenforceable in any respect under any applicable law or rule in any jurisdiction, such invalidity, illegality or unenforceability shall not affect the validity, legality or enforceability of any other provision of this Agreement or the validity, legality or enforceability of such provision in any other jurisdiction, but this Agreement shall be reformed, construed and enforced in such jurisdiction as if such invalid, illegal or unenforceable provision had never been contained herein.

21.Successors.  This Agreement shall be binding upon and inure to the benefit of any successor or successors of the Company and any person or persons who shall, upon your death, acquire any rights hereunder.

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This Agreement contains highly sensitive and confidential information.  Please handle it accordingly.

Please read the attached Exhibit A.  Once you have read and understood this Agreement and Exhibit A, please click the acceptance box to certify and confirm your agreement to be bound by the terms and conditions of this Agreement and Exhibit A, and to acknowledge your receipt of the Prospectus, the Plan and this Agreement and your acceptance of the terms and conditions of the Restricted Stock Unit Award granted hereunder.

WALGREEN CO.

By_________________________

_________________________

EXHIBIT A

WALGREEN CO. NON-COMPETITION, NON-SOLICITATION AND CONFIDENTIALITY AGREEMENT

This Exhibit forms a part of the Restricted Stock Unit Agreement covering Restricted Stock Units awarded to an employee of Walgreen Co., on behalf of itself, its affiliates, subsidiaries, and successors (collectively referred to as "Employee" and the "Company").

WHEREAS, the Company develops and/or uses valuable business, technical, proprietary, customer and patient information it protects by limiting its disclosure and by keeping it secret or confidential;

WHEREAS, Employee acknowledges that during the course of employment, he or she has or will receive, contribute, or develop such confidential information; and

WHEREAS, the Company desires to protect from its competitors such confidential information and also desires to protect its legitimate business interests and goodwill in maintaining its employee and customer relationships.

NOW THEREFORE, in consideration of the Restricted Stock Unit Award issued to Employee pursuant the Agreement to which this is attached as Exhibit A, Employee agrees to be bound by the terms of this Agreement:

1.Confidentiality.  I understand that during the course of my employment with the Company, I have or will have access to the Company's Confidential Information, meaning information which is not generally ascertainable by proper means by the public, or which has limited disclosure within the Company, or which is treated or designated as confidential; the disclosure of which could reasonably be harmful to the Company's legitimate business interests.

I understand that "Confidential Information" includes, but is not limited to, the following:

(a) business or marketing plans, trade secrets, selling and pricing procedures and techniques, customer records,

(b) customer lists, requirements, and information,

(c) databases and software developed or used by the Company, financial information and projections, and other information for which the Company has assumed an obligation of confidentiality.

I agree to only use the Company's Confidential Information as necessary to perform my job during my employment with the Company.  I agree not to disclose any Confidential Information to anyone outside the Company without the Company's prior written consent, unless as necessary to perform my job during my employment with the Company.  I agree that these obligations apply during my employment with the Company and at all times thereafter.

2.Non-Competition.  I agree that during my employment with the Company and for one year after the termination of my employment, I will not, directly or indirectly, invest in, own, operate, finance, control, or provide Competing Services to any Competing Business Line, in both cases as defined below.  I understand that the restrictions in this paragraph apply no matter whether my employment is terminated by me or the Company and no matter whether that termination is voluntary or involuntary.  The above restrictions shall not apply to passive investments of less than 5% ownership interest in any entity. I understand that the term "Competing Business Line" used in this Agreement means any business that is in competition with any business engaged in by the Company with respect to which I provide substantial services during the last two years of my employment with the Company.

I understand that I will be deemed to be providing "Competing Services" if the nature of such services are sufficiently similar in position scope and geographic scope to any position held by me during the last two years of my employment with the Company, such that my engaging in such services on behalf of a Competing Business Line may pose competitive harm to the Company.

3.Non-Solicitation.  I agree that during my employment with the Company and for two years after the termination of my employment, I will not solicit or service any of the Company's customers or referral sources for a Competing Business Line; solicit or otherwise encourage any Company employees to leave the Company to work for a Competing Business Line; or hire any Company employees on behalf of a Competing Business Line.  I understand that the restrictions in this paragraph apply no matter whether my employment is terminated by me or the Company and no matter whether that termination is voluntary or involuntary.  I understand that the term "customer" used in this Agreement means any patient or other customer or prospective customer of any Company business unit with respect to which I provide substantial services during the last two years of my employment with the Company.

4.Non-Inducement.  I will not directly or indirectly assist or encourage any person or entity in carrying out or conducting any activity that would be prohibited by this Agreement if such activity were carried out or conducted by me.

5.Nondisparagement.  I agree (whether or not I am then an Employee) not to make negative comments or otherwise disparage the Company, its Affiliates, or any of their officers, directors, employees, shareholders, members, agents or products other than in the good faith performance of my duties to the Company and its Affiliates while I am employed by the Company and its Affiliates and thereafter.  The foregoing shall not be violated by truthful statements in response to legal process, required governmental testimony or filings, or administrative or arbitral proceedings (including, without limitation, depositions in connection with such proceedings).

6.Return of Company Property.  I agree that I will not take any of the Company's property or information with me when I leave the Company's employ, no matter what form that property or information is in and no matter how I acquired it.  When my employment with the Company terminates, I will immediately return to the Company any and all Company information, documents, and electronics.

7.Consideration and Acknowledgments.  Employee acknowledges and agrees that the covenants described in this Agreement are essential terms, and the underlying Restricted Stock Unit Award would not be provided by the Company in the absence of these covenants.  Employee further acknowledges that these covenants are supported by adequate consideration as set forth in this Agreement, that full compliance with these covenants will not prevent Employee from earning a livelihood following the termination of his or her employment, and that these covenants do not place undue restraint on Employee and are not in conflict with any public interest.  Employee further acknowledges and agrees that Employee fully understands these covenants, has had full and complete opportunity to discuss and resolve any ambiguities or uncertainties regarding these covenants before signing this Agreement, that these covenants are reasonable and enforceable in every respect, and has voluntarily agreed to comply with these covenants for their stated term.  Employee agrees that in the event he or she is offered employment with a Competing Business at any time in the future, Employee shall immediately notify the Competing Business of the existence of the covenants set forth above.

8.Enforceability; General Provisions.

(a) I agree that the restrictions contained in this Agreement are reasonable and necessary to protect the Company's legitimate business interests and that full compliance with the terms of this Agreement will not prevent me from earning a livelihood following the termination of my employment, and that these covenants do not place undue restraint on me.

(b) Because the Company's current base of operations is in Illinois, I consent to the jurisdiction of the state and federal courts of Illinois with respect to any claim arising out of this Agreement.

(c) Because the Company's current base of operations is in Illinois, I agree that this Agreement shall be governed by the laws of Illinois without regard to its choice of law rules.

(d) In the event of a breach or a threatened breach of this Agreement, I acknowledge that the Company will face irreparable injury which may be difficult to calculate in dollar terms and that the Company shall be entitled, in addition to all remedies otherwise available in law or in equity, to temporary restraining orders and preliminary and final injunctions enjoining such breach or threatened breach in any court of competent jurisdiction without the necessity of posting a surety bond, as well as to obtain an equitable accounting of all profits or benefits arising out of any violation of this Agreement.

(e) I agree that if a court determines that any of the provisions in this Agreement is unenforceable or unreasonable in duration, territory, or scope, then that court shall modify those provisions so they are reasonable and enforceable, and enforce those provisions as modified.

(f) If any phrase or provision of this Agreement is declared invalid or unenforceable by a court of competent jurisdiction, that phrase, clause or provision shall be deemed severed from this Agreement, and will not affect the enforceability of any other provisions of this Agreement, which shall otherwise remain in full force and effect.

(g) Notwithstanding the foregoing provisions of this Agreement, the non-competition provisions of Paragraph 2 above shall not restrict Employee from performing legal services as a licensed attorney for a Competing Business to the extent that the attorney licensure requirements in the applicable jurisdiction do not permit Employee to agree to the otherwise applicable restrictions of Paragraph 2.

(h) Waiver of any of the provisions of this Agreement by the Company in any particular instance shall not be deemed to be a waiver of any provision in any other instance and/or of the Company's other rights at law or under this Agreement.

(i) I agree that the Company may assign this Agreement to its successors and that any such successor may stand in the Company's shoes for purposes of enforcing this Agreement.

(j) I agree to reimburse Company for all attorneys' fees, costs, and expenses that it reasonably incurs in connection with enforcing its rights and remedies under this Agreement, but only to the extent the Company is ultimately the prevailing party in the applicable legal proceedings.

(k) If I violate this Agreement, then the restrictions set out in Paragraphs 2 - 5 shall be extended by the same period of time as the period of time during which the violation(s) occurred.

(l) I fully understand my obligations in this Agreement, have had full and complete opportunity to discuss and resolve any ambiguities or uncertainties regarding these covenants before signing this Agreement, and have voluntarily agreed to comply with these covenants for their stated terms.

9.Relationship of Parties.  I acknowledge that my relationship with the Company is "terminable at will" by either party and that the Company or I can terminate the relationship with or without cause and without following any specific procedures.  Nothing contained in this Agreement is intended to or shall be relied upon to alter the "terminable at will" relationship between the parties.

10.Modifications and Other Agreements.  I agree that the terms of this Agreement may not be modified except by a written agreement signed by both me and the Company.  This Agreement shall not supersede any other restrictive covenants to which I may be subject under an employment contract, benefit program or otherwise, such that the Company may enforce the terms of any and all restrictive covenants to which I am subject.

11.Notification.  I agree that in the event I am offered employment at any time in the future with any entity that may be considered a Competing Business Line, I shall immediately notify such Competing business of the existence and terms of this Agreement.  I also understand and agree that the Company may notify anyone later employing me of the existence and provisions of this Agreement.

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By clicking the acceptance box for this grant agreement, I acknowledge receipt of the Restricted Stock Unit Agreement to which this Agreement is attached as Exhibit A, and I agree to the terms and conditions expressed in this Agreement.

15035180\V-3

EX-10.52

Dated

27^th September 2013

Secondment agreement

between

Alliance Boots Management Services Limited

and

Walgreen co.

Contents

Clause

1. Interpretation

2. Secondment

3. Services

4. Secondees' employment

5. Payments

6. Management during the secondment

7. Relationship of Parties

8. Leave

9. Data protection

10. Confidentiality

11. Intellectual property rights

12. Summary termination

13. Obligations following termination

14. Liability

15. Notices

16. Entire agreement

17. Variation and waiver

18. Counterparts

19. Third Party rights

20. No Rights Conferred on Secondees12

21. Governing law and jurisdiction

THIS AGREEMENT is dated

Parties

(1) Alliance Boots Management Services Limited incorporated and registered in England with company number 07073433 whose registered office is at 2 The Heights, Brooklands, Weybridge, Surrey, KT13 0NY, UK (the Employer).

(2) Walgreen Co. incorporated and registered in Illinois whose registered office is at 200 Wilmot Road, Deerfield, Illinois 60015, USA (the Host).

(3) Employer and Host are referred to collectively in this Agreement as the "Parties" and singularly as a "Party".

Background

(A) The Employer employs a number of employees in a variety of roles and responsibilities.

(B) The Employer intends to second certain employees to the Host for temporary periods in order to provide certain agreed services for and on behalf of the Host.

(C) References in this agreement to the Employer shall be deemed to include references to the Employer's Affiliates so that the provisions of this agreement shall apply equally to secondments of employees of the Employer's Affiliates to the Host.

Agreed terms

1. Interpretation

1.1 The definitions and rules of interpretation in this clause apply in this agreement (unless the context requires otherwise).

Board: the board of directors from time to time of the Host (including any committee of the Board duly appointed by it).

Confidential Information: information relating to the business, products, affairs and finances of the relevant Party for the time being confidential to the relevant Party and trade secrets including, without limitation, technical data and know-how relating to the business of the relevant Party or any of its suppliers, clients, customers, agents, distributors, shareholders or management.

Employment Relationship: the terms and conditions of employment between the Employer and a Secondee at the date of this agreement subject to any changes in that Secondee's salary or other compensation and benefits in accordance with the Employer's usual procedures from time to time.

Employer's Affiliates: the Employer and its holding companies and subsidiaries and the subsidiaries of any such holding companies from time to time.

IP Rights: patents, rights to Inventions, copyright and related rights, trade marks, trade names and domain names, rights in get-up, goodwill and the right to sue for passing off or unfair competition, rights in designs, rights in computer software, database rights, rights to preserve the confidentiality of information (including know-how and trade secrets) and any other intellectual property rights, in each case whether registered or unregistered and including all applications (or rights to apply) for and be granted, renewals or extensions of, and rights to claim priority from, such rights and all similar or equivalent rights or forms of protection which may now or in the future subsist in any part of the world.

Inventions: inventions, ideas and improvements, whether or not patentable, and whether or not recorded in any medium.

Management Issues: all those matters under the Employment Relationship requiring action, investigation and/or decisions by the Employer including in particular (by way of illustration only and without limitation) appraisals and performance issues; pay reviews and the award of other payments and benefits under the Employment Relationship; periods of annual, sick or other leave; absence of the Secondee for any other reason; any complaint about the Secondee (whether or not that would be dealt with under the Employer's disciplinary procedure) and any complaint or grievance raised by the Secondee (whether or not that would be dealt with under the Employer's grievance procedure).

Pre-Secondment Statement: any undertaking, promise, assurance, statement, representation, warranty or understanding (whether in writing or not) of any person (whether party to this agreement or not) relating to the Secondment under this agreement other than as expressly set out in this agreement or any documents referred to in it.

Secondee: an employee of the Employer providing services to the Host on the terms of this agreement.

Secondment: the secondment of a Secondee by the Employer to the Host on the terms of this agreement.

Secondment Period: the period of this agreement as defined in clause 2.2.

Services: such services as may be agreed by the Parties from time to time.

1.2 The headings in this agreement are inserted for convenience only and shall not affect its construction.

1.3 A reference to a particular law is a reference to it as it is in force for the time being taking account of any amendment, extension, or re-enactment and includes any subordinate legislation for the time being in force made under it.

1.4 Unless the context otherwise requires, a reference to one gender shall include a reference to the other genders.

1.5 Unless the context otherwise requires, words in the singular include the plural and in the plural include the singular.

1.6 The schedules to this agreement form part of (and are incorporated into) this agreement.

2. Secondment

2.1 The Employer shall second Secondees to the Host on such dates and times as agreed by the Parties from time to time during the Secondment Period to provide the Services in accordance with the terms of this agreement.

2.2 The Secondment Period shall commence on the date of this agreement and shall continue until:

(a) terminated by either Party giving not less than three (3) calendar months' prior notice in writing to the other Party at any time; or

(b) terminated in accordance with clause 12.

3. Services

3.1 The Employer shall use its reasonable endeavours to procure that any Secondees shall provide the Services at the offices of the Host or such other place as the Host may reasonably require for the proper performance and exercise of the Services.

3.2 The Secondees may be required to travel on the Host's business to such places by such means and on such occasions as the Host may from time to time reasonably require.

3.3 The Employer shall use its reasonable endeavours to procure that the Secondees shall work such hours as are reasonable and necessary for the proper performance of the Services.

3.4 The Employer shall use its reasonable endeavours to procure that the Secondees shall during the Secondment:

(a) unless prevented by incapacity, devote such proportion of their working time, attention and abilities to the Services as reasonably required by the Host except for any work to be done for the Employer under clause 4.7;

(b) faithfully and diligently serve the Host and use their best endeavours to promote, protect, develop and extend the Host's business;

(c) not enter into any arrangement on behalf of the Host which is outside the normal course of business or their normal duties or which contains unusual or onerous terms;

(d) promptly make such reports to the Board of the Host on any matters concerning the affairs of the Host and at such times as are reasonably required; and

(e) comply with applicable laws, regulations and written policies and procedures of the Host, including the Host's insider trading policy.

4. Secondees' employment

4.1 The Employment Relationship shall remain in force during the Secondment Period.

4.2 As required, the Employer shall make the necessary changes to the terms of the Employment Relationships so that it can second the Secondees to the Host to provide the Services in accordance with the terms of this agreement.

4.3 As required, the Employer shall amend the Employment Relationships to require the Secondees to comply with any such of the Host's policies and procedures as agreed by the Parties from time to time.

4.4 The Employer shall comply with the terms and conditions of the Employment Relationships during the Secondment Period.

4.5 The Host shall not, and shall not require the Secondees to do anything that shall, breach the Employment Relationships and shall have no authority to vary the terms of the Employment Relationships or make any representations to the Secondees in relation to the terms of the Employment Relationships.

4.6 The Host shall provide the Employer with such information and assistance as it may reasonably require to carry out its obligations as the Secondees' employer.

4.7 The Secondees shall be required to undertake such work for the Employer at such times as agreed by the Parties during the Secondment Period.

4.8 If any Secondee is held to be employed by the Host at any time during the Secondment Period then the Host may dismiss the Secondee and the Employer shall offer the Secondee employment on the terms that applied immediately before that dismissal.

4.9 All documents, manuals, hardware and software provided for the Secondees' use by the Host, and any data or documents (including copies) produced, maintained or stored on the Host's computer systems or other electronic equipment (including mobile phones), remain the property of the Host.

4.10 Unless otherwise agreed, during the Secondment Period and for a period of twelve months beginning with the final day therof, the Host will not solicit or entice or endeavour to solicit or entice any Secondee or former Secondee away from the Employer or employ or offer to employ any Secondee or former Secondee whether or not they would commit any breach of their Employment Relationship by leaving the service of the Employer and the Host will procure that each of its fellow group companies will observe and comply with an equivalent restriction.

5. Payments

5.1 The Employer shall continue to pay the Secondees' salary, Secondment- related allowances and other compensation, provide any benefits due to the Secondees or their dependants and make any payments to third parties in relation to the Secondees.  From the Secondees' salary, Secondment-related allowances and other compensation, the Employer will make any deductions or withholdings for taxes that it is required to make under applicable law or agreed to by the Secondee.

5.2 The Host shall pay the Employer a sum equivalent to the total amount paid by the Employer to or in respect of the Secondees under the Employment Relationships for such periods of time that the Secondees are engaged in providing the Services, which shall include, but is not limited to:

(a) the Secondees' salaries as reviewed by the Employer in accordance with the policy for the Employer's employees;

(b) the Employer's  contributions in relation to the Secondees' retirement in accordance with applicable law and the policies and benefit plans for the Employer's employees;

(c) any other benefits, compensation and/or Secondment-related allowances paid to the Secondees by the Employer from time to time in accordance with the policies and benefit plans for the Employer's employees;

(d) all reasonable travel, accommodation and other expenses wholly, exclusively and necessarily incurred by the Secondees during the Secondment Period in or in connection with the exercise of the Services, if such expenses are evidenced and documented in such manner as the Employer may specify from time to time; and

(e) all National Insurance or other social security contributions made by the Employer in relation to the Secondees.

This sum will be subject to VAT, if applicable, at the current rate.

5.3 The Employer shall send the Host an invoice on or about the last day of each month of the Secondment Period, specifying the payment due under this agreement in relation to the preceding month and the amount of VAT due on the payment. Such invoices shall be payable by the Host within 30 days of receipt of the invoice.

6. Management during the secondment

6.1 Secondees shall have equal and equivalent position and rank as other officers and employees of the same level within the Host.

6.2 The Employer shall continue to deal with any Management Issues concerning the Secondees during the Secondment Period, where relevant following consultation with the Host.

6.3 The Host shall use its reasonable endeavours to provide any information, documentation, access to its premises and employees and assistance (including but not limited to giving witness evidence) to the Employer to deal with any Management Issues concerning the Secondees whether under the Employer's internal procedures or before any court of tribunal. The Employer will reimburse the reasonable costs and expenses incurred by the Host in doing so subject to the prior approval of the Employer.

6.4 Although the Employer retains the right to direct and control the Secondees, the Employer delegates to the Host the day-to-day control of the Secondees' activities during the provision of any Services.  As soon as reasonably practicable, the Host shall refer any Management Issues concerning the Secondees that come to its attention to the Employer.

6.5 Both Parties shall inform the other as soon as reasonably practicable of any other significant matter that may arise during the Secondment Period relating to the Secondees or their employment.

6.6 Prior to the Employer's determination of the compensation of the Secondees from time to time, the Employer shall consult with and receive input and information from the Host concerning the Secondees and their proposed compensation and the Employer shall reasonably consider such input and information in determining the Secondees' compensation.

7. Relationship of Parties

7.1 The relationship of Employer and Host established by this agreement is that of independent contractors, and nothing in this agreement shall be construed: (1) to give either Party the right or power to direct or control the daily activities of the other Party; (2) to constitute the Parties as principal and agent, employer and employee, partners, joint venturers, co-owners or otherwise as participants in a joint undertaking; or (3) to allow either Party (a) to create or assume any obligation on behalf of the other Party for any purpose whatsoever or (b) to represent to any person, firm or entity that such Party has any right or power to enter into any binding obligation on the other Party's behalf.

8.  Leave

8.1 To the extent allowed under applicable law, the Secondees shall continue to be eligible for sick pay, holiday pay and any absence entitlements in accordance with the Employment Relationship, and shall remain subject to the Employer's approval and notification procedures.

8.2 The Employer shall notify and agree with the Host of any dates on which any Secondee shall take holiday.

8.3 The Employer and Host shall notify each other as applicable,  if the Secondee is or shall be absent from work for any reason as soon as reasonably practicable.

9. Data protection

9.1 The Employer confirms that the Secondees have consented to the Host processing data relating to the Secondees for legal, personnel, administrative and management purposes.

9.2 The Employer confirms that the Secondees have consented to the Host making such information available to those who provide products or services to the Host (such as advisers and insurers), regulatory authorities, governmental or quasi-governmental organisations and potential purchasers of the Host or any part of its business.

10. Confidentiality

The Employer shall use its reasonable endeavours to procure that the Secondees shall not:

(a) (except in the proper course of the Services, as required by law or as authorised by the Host) during the Secondment Period or after its termination (howsoever arising) use or communicate to any person, company or other organisation whatsoever (and shall use their best endeavours to prevent the use or communication of) any Confidential Information relating to the Host that they create, develop, receive or obtain during the Secondment Period. This restriction does not apply to any information that is or comes in the public domain other than through the Secondees' unauthorised disclosure; or

(b) make (other than for the benefit of the Host) any record (whether on paper, computer memory, disc or otherwise) containing Confidential Information relating to the Host or use such records (or allow them to be used) other than for the benefit of the Host. All such records (and any copies of them) shall be the property of the Host and shall be handed over to the Host by the Secondees on the termination of this agreement or at the request of the Host at any time during the Secondment Period.

11. Intellectual property rights

As required, the Employer shall make the necessary changes to the terms and conditions of the Employment Relationships so that:

(a) the Secondees shall give the Host full written details of all Inventions and of all works embodying Intellectual Property Rights made wholly or partially by them at any time during the provision of the Services;

(b) the Secondees acknowledge that all Intellectual Property Rights subsisting (or which may in the future subsist) in all such Inventions and works made wholly or partially by them at any time during the provision of the Services shall automatically, on creation, vest in the Host absolutely and to the extent that they do not vest automatically, the Secondee holds them on trust for the Host; and

(c) the Secondees agree promptly to execute all documents and do all acts as may, in the opinion of the Host, be necessary to give effect to this clause 11.

12. Summary termination

12.1 The Employer may terminate the Secondment of a Secondee with immediate effect without notice or payment in lieu of notice:

(a) on the termination of a Secondee's Employment Relationship as a result of the Secondee's gross misconduct, resignation or retirement;

(b) if the Host is guilty of any serious or (after warning) repeated breach of the terms of this agreement; or

(c) if the Host becomes bankrupt or makes any arrangement or composition with or for the benefit of its creditors.

Any delay by the Employer in exercising the right to terminate shall not constitute a waiver of such rights.

12.2 The Host may terminate the Secondment of a Secondee with immediate effect without notice or payment in lieu of notice:

(a) on the termination of the Employment Relationship by the Employer;

(b) if the Employer is guilty of any serious or (after warning) repeated breach of the terms of this agreement;

(c) if the Employer becomes bankrupt or makes any arrangement or composition with or for the benefit of its creditors; or

(d) if a Secondee violates an applicable law or regulation or breaches any material term of any of the Host's written policies or procedures.

For the avoidance of doubt, the Employer's violation of clause 6.5 of this agreement shall be deemed a serious breach of the terms of this agreement.  Any delay by the Host in exercising the right to terminate shall not constitute a waiver of such rights.

13. Obligations following termination

On termination of a Secondment howsoever arising the Employer shall use its reasonable endeavours to procure that the Secondee shall (if the Host so requests):

(a) deliver to the Host all documents (including, but not limited to, correspondence, lists of clients or customers, plans, drawings, accounts and other documents of whatsoever nature and all copies thereof, whether on paper, computer disc or otherwise) made, compiled or acquired by him during the Secondment and relating to the business or affairs of the Host or its clients, customers or suppliers and any other property of the Host which is in his possession, custody, care or control;

(b) irretrievably delete any information relating to the business of the Host stored on any magnetic or optical disc or memory and all matter derived from such sources which is in his possession, custody, care or control outside the premises of the Host; and

(c) confirm in writing and produce such evidence as is reasonable to prove compliance with their obligations under this clause 13.

14. Liability

14.1 The Host shall take out and maintain in full force with a reputable insurance company for the Secondment Period adequate insurance coverage for any appropriate loss, injury and damage caused by or to the Secondees in the course of providing the Services.

14.2 During the Secondment Period, the Host shall fulfil all duties relating to the Secondees' health, safety and welfare as if it was their employer and shall comply with the Employer's reasonable requests in connection with the Employer's duties in relation to the Secondees.

14.3 The Employer shall use its reasonable endeavours to procure that the Secondees shall provide the Services with reasonable skill and care.

14.4 The Host shall indemnify the Employer fully and keep the Employer indemnified fully at all times against any loss, injury, damage or costs suffered, sustained or incurred by:

(a) the Secondees in relation to any loss, injury, damage or costs arising out of any act or omission by the Host or its employees or agents during the Secondment Period; or

(b) a third party, in relation to any loss, injury, damage or costs arising out of any act or omission of a Secondee in the course of carrying out the Services, except with respect to a violation by the Secondee of an applicable law or regulation or a breach by a Secondee of any material term of any of the Host's written policies or procedures.

14.5 The Employer shall indemnify the Host fully and keep the Host indemnified fully at all times against any claim or demand by the Secondees arising out of their employment by the Employer or its termination during the Secondment Period (except for any claim relating to any act or omission of the Host or its employees or agents).

15. Notices

15.1 Any notice given under this agreement shall be in writing and signed by or on behalf of the party giving it and shall be served by delivering it personally, or sending it by pre-paid recorded delivery or registered post to the relevant Party at its registered office for the time being or by sending it by fax to the fax number notified by the relevant Party to the other Party. Any such notice shall be deemed to have been received:

(a) if delivered personally, at the time of delivery; and

(b) in the case of pre-paid recorded delivery or registered post, 72 hours from the date of posting; and

(c) in the case of fax, at the time of transmission.

15.2 In proving such service it shall be sufficient to prove that the envelope containing such notice was addressed to the address of the relevant Party and delivered either to that address or into the custody of the postal authorities as a pre-paid recorded delivery or registered post or that the notice was transmitted by fax to the fax number of the relevant Party.

16. Entire agreement

Each Party acknowledges and agrees with the other Party that:

(a) this agreement constitutes the entire agreement and understanding between the Employer and the Host and supersedes any previous agreement between them relating to the Secondment (which shall be deemed to have been terminated by mutual consent);

(b) in entering into this agreement they have not relied on any Pre-Secondment Statement; and

(c) the only remedy available to it for breach of this agreement shall be for breach of contract under the terms of this agreement and it shall have no right of action against any other Party in respect of any Pre-Secondment Statement.

Nothing in this agreement shall, however, operate to limit or exclude any liability for fraud.

17. Variation and waiver

No modification, variation or amendment to this agreement shall be effective unless such modification, variation or amendment is in writing and has been signed by or on behalf of both Parties.

18. Counterparts

This agreement may be executed in any number of counterparts, each of which, when executed and delivered, shall be an original, and all the counterparts together shall constitute one and the same instrument.

19. Third Party rights

19.1 Subject to the remainder of this clause 19, no person other than the Employer and the Host shall have any rights under this agreement and it shall not be enforceable by any person other than the Employer and the Host.

19.2 References in this agreement to the Employer shall be deemed to include references to the Employer's Affiliates so that the provisions of this agreement shall apply equally to secondments of employees of the Employer's Affiliates to the Host.

19.3 The Host shall be entitled and obliged to rely upon the authority of the Employer as agent for the Employer's Affiliates in all matters relating to this agreement, unless the Employer gives the Host notice in writing to the contrary.

19.4 The Employer shall be entitled to enforce this agreement on behalf of the Employer's Affiliates and/or claim for costs/losses suffered by any of the Employer's Affiliates as though it was suffered by the Employer.

20. No Rights Conferred on Secondees

20.1 Nothing herein, expressed or implied, shall confer upon any Secondee or former Secondee any rights or remedies (including, without limitation, any right to employment by Employer or Secondment to the Host for any specified period) of any nature or kind whatsoever, under or by reason of this agreement.  It is expressly agreed that the provisions in this agreement are not intended to be for the benefit of or otherwise be enforceable by any Secondee or former Secondee.

21. Governing law and jurisdiction

21.1 This agreement and any dispute or claim arising out of or in connection with it or its subject matter or formation (including non-contractual disputes or claims) shall be governed by and construed in accordance with the laws of England & Wales.

21.2 The Parties irrevocably agree that the courts of England & Wales shall have non-exclusive jurisdiction to settle any dispute or claim that arises out of or in connection with this agreement or its subject matter or formation (including non-contractual disputes or claims).

This agreement has been entered into on the date stated at the beginning of it.

Signed by Marco Pagni for and on behalf of Alliance Boots Management Services Limited	/s/ Marco Pagni         Director
Signed by Kathleen Wilson-Thompson for and on behalf of Walgreen Co.	/s/  Kathleen Wilson-Thompson Senior Vice President and Chief Human Resources Officer

EX-10.53

Mr Alex Gourlay

26 September 2013

26 September 2013

PRIVATE & CONFIDENTIAL

Mr Alex Gourlay

(By e-mail)

Dear Alex

YOUR SECONDMENT TO WALGREEN CO.

This letter is to confirm the terms which will apply to you during your secondment toWalgreen Co. You will remain an employee of Alliance Boots Management Services Ltd ("the Company") and your secondment will begin with effect 1 October 2013. Your secondment will continue until 30 September 2015, subject to earlier termination (see paragraph 5 below).  Your secondment may continue beyond 30 September 2015 if both you and the Company agree to this but, in any event, the maximum duration of your secondment under these terms shall be two years. The Company will review the position with respect to the secondment duration within the last six months of the arrangement.

During this secondment you will be assigned on an accompanied status basis.

For the duration of your secondment, you will remain in the employment of the Company under the terms and conditions of your current employment contract with the Company (your "Employment Contract") and subject always to the terms set out below.  The policies developed for employees working in the UK will continue to apply to you during your secondment subject to any mandatory statutory minimum provisions which may apply to you and which are in force from time to time in the UK.

Your HR Director is currently Stephen Lehane and all consents and authorisations which you are required to obtain from the Company regarding policy should be sought from your HR Director. If you have any queries regarding support for your secondment, you should also contact Kate Low, the International Assignment Manager in the UK.

1Job title & expectations

Your job title whilst on secondment will be Executive Vice President, President of Customer Experience and Daily Living, Walgreen Co. and you will report directly to Greg Wasson, President and Chief Executive Officer. In this role, you will have equal and equivalent position and rank as other officers of the same level within Walgreen Co.  In this role, you will be a Section 16 Executive Officer of Walgreen Co., as defined by Rule 3b-7 of the Securities Exchange Act of 1934, as amended (the "Exchange Act").  As such, this agreement is subject to the approval of the Compensation Committee of the Board of Directors of Walgreen Co. (the "Committee") and the Committee will review and approve your compensation, including salary, incentive compensation, equity compensation, perks, and certify attainment of goals for performance-based compensation. You agree to comply with all rules and regulations, including disclosure requirements, applicable to your role.

Notwithstanding anything to the contrary in this letter, during any period that you are seconded by the Company to another entity, you shall not have any authority to negotiate on behalf of the Company, or to modify or accept contracts on behalf of the Company or to otherwise bind the Company to any contract with any third party or to conduct any business in the name of or on behalf of the Company.  Further, any contract presented to you that is intended to bind the Company must be entered into by a duly authorized officer of the Company located in the principal business offices of the Company in the UK.

Your Employment Contract currently requires you to keep the Company's and its affiliates' confidential information and trade and business secrets confidential. You are also required to keep confidential any confidential information and trade and business secrets related to Walgreen Co. and its affiliates to which you have access during the secondment.

Whilst on secondment, you must give Walgreen Co full written details of all inventions and of all works embodying any intellectual property made wholly or partially by you at any time during the term of the secondment. All intellectual property rights subsisting (or which may in the future subsist) in all such inventions and works made wholly or partially by you at any time during the secondment shall automatically, on creation, vest in Walgreen Co absolutely and to the extent that they do not vest automatically, you will hold them on trust for Walgreen Co. By accepting the terms of this letter, you agree to promptly execute all documents and do all acts as may, in the opinion of Walgreen Co, be necessary to give effect to these obligations.

Upon termination of the secondment (if requested by Walgreen Co), you must:

(a) deliver to Walgreen Co all documents (including, but not limited to, correspondence, lists of clients or customers, plans, drawings, accounts and other documents of whatsoever nature and all copies thereof, whether on paper, computer disc or otherwise) made, compiled or acquired by you during the secondment and relating to the business or affairs of Walgreen Co or its clients, customers or suppliers and any other property of Walgreen Co which is in your possession, custody, care or control;

(b) irretrievably delete any information relating to the business of Walgreen Co stored on any magnetic or optical disc or memory and all matter derived from such sources which is in your possession, custody, care or control outside the premises of Walgreen Co; and

(c) confirm in writing and produce such evidence as is reasonable to prove compliance with these obligations.

2.Place of work

Your normal place of work will be at Walgreen Co, Deerfield.  However, you will be required to travel to or work at other locations across the globe for the proper performance of your duties. We reserve the right to re-evaluate the ideal location for you to be based, subject to business requirements. This would be discussed with you fully were a further relocation to be required.

3.Hours of work

Your normal hours of work will be 40 hours per week.  You are required to work such additional hoursas are necessary for the proper performance of your duties.

4.Holiday

Your holiday entitlement will be 30 days in line with the current UK policy, and you will be required to take US publicholidays instead of UK bank and public holidays. You will be required to obtain Walgreen Co's prior approval before taking any such holiday and, at the same time as receiving such approval, notify the Company of the agreed holiday dates and duration.

5.Duration of, and terms applicable on termination of, your secondment and/or employment

(a) The start and continuation of your secondment will be subject to you obtaining appropriate documentary evidence of your entitlement to live and work in the USAand to you remaining entitled to live and work in the USA.  You may be required to register locally with the appropriate and/or relevant authorities in the USA.

(b) During your secondment the provisions of your Employment Contract relating to termination of your employment with the Company will continue to apply.  Your secondment and the terms under this secondment letter will end automatically on termination of your employment.

(c) Your secondment may be terminated by the Company giving you not less than three months notice (or in accordance with paragraphs 5(a) or (b) above or paragraph 13(c) below).

(d) At the end of your secondment these secondment terms will cease to apply and, provided your employment with the Company is not terminated, you may be offered (and if offered shall be expected to accept) an alternative role within the group at the same or a more senior grade and at a salary which would not be less than your current basic salary.  If such an alternative role is offered to you, you would not be in a redundancy situation nor would you be entitled to receive any redundancy pay from the Company (or any other Alliance Boots Group Company) whether or not you decided to accept the alternative role offered to you.

(For the purposes of this secondment letter "Alliance Boots Group Company" means the Company, its associated companies and any "holding" or "subsidiary" company of the Company as those terms are defined in the Companies Act 2006, whether in the UK or abroad.)

(e) If no such alternative employment is offered to you on termination of your secondment (whether in the UK or abroad), you may be in a redundancy situation and therefore subject to the relevant provisions applicable to redundancy in the UK.

6.Remuneration

(a) Your annual basic salary will be £572,000 (Five Hundred Seventy Two Thousand Pounds); this is your secondment salary and is effective from 1 October 2013.

(b) Your Cost of Living Allowance ("COLA") is £12,415 per year (Twelve Thousand, Four Hundred and Fifteen Pounds) Your COLA will not be Tax Equalised and it will be determined by the Company from time to time at its absolute discretion and may increase or decrease.  The COLA will be reviewed in June 2014 to take account of new COLA data which is not available until mid–June 2014.

(c) Your secondment salary will be Tax Equalised (see paragraph 9 (a) below).

(d) Your secondment salary will be paidto you in equal instalments (subject to appropriate deductions if applicable) monthly in arrears on or about the 28^th day of the month by credit transfer to your nominated UK bank account.

(e) Your UK basic salary (and consequently your secondment salary) will be reviewed by the Company from time to time in consultation with Walgreen Co.  Currently, these are reviewed annually in June though you can expect your next review in April 2014.

(f) During your secondment you will be eligible to participate in the Walgreen corporate bonus program.  Based on your position this is targeted at 100% of salary and will be determined according to the Walgreen fiscal year from September 1 through August 31, and is subject to the Walgreen Co. Board of Directors' approval of each year's bonus.    You will be eligible for a pro-rated bonus (April to September 2013 inclusive) under the Alliance Boots bonus scheme for the current Alliance Boots fiscal year only, payable in June of 2014.  You will also be eligible for a full-year bonus under the Walgreen plan for fiscal 2014, beginning September 1, 2013 and ending on August 31, 2014 (payable in November 2014).  Any bonus payment made to you will be Tax Equalised.

(g) During your secondment your Long-term Incentives will continue to be earned under the Alliance Boots programs for which you are currently eligible.  You will not be eligible for any long-term incentive awards under the Walgreen Co. 2013 Omnibus Incentive Plan.

7. Pension

Your pension provision will continue as currently, with a supplement payment of 40% of base salary.

8. UK Car Allowance

You will continue to be eligible to receive your UK Car Allowance whilst on secondment.

9.Tax and social security

(a) The Company will "Tax Equalise" your secondment salary and other remuneration and benefits identified as "Tax Equalised" in this secondment letter (the "Tax Equalised Amounts") and pursuant to the Company's assignment policy. This means that, at the end of each UK tax year in which you have been on secondment, the Company will review your overall tax position relating to employment related income to ensure you are no worse off from a tax perspective as a result of your secondment.

If actual taxes in the UK are no longer due, the Company will calculate the UK tax and Social Security Contributions, which would be due in respect of the Tax Equalised Amounts if you were working in the UK (your "UK Hypothetical Tax").   Please note that Tax Equalisation will not take account of the impact of your secondment on your personal investments.

(b) It is your responsibility to comply with UK, US and other tax and social insurance laws (including federal, state, local, provincial, cantonal, municipal, etc.)and to ensure that your tax returns are properly submitted within the relevant deadlines.  It is your responsibility to promptly recover any overpayment of tax or social security contributions made to any relevant authority for the benefit of the Company and to pay over any such sums recovered to the Company promptly.

(c) If any overpayment is made to you by the Company as a result of Tax Equalisation, the Company reserves the right to recover all or part of any sum(s) overpaid from you by making deductions in accordance with paragraph 10, and without prejudice to the Company's other rights and remedies for the recovery of such sums.

(d) You are eligible to receive tax advice annually at the Company's expense; from tax advisers nominated by the Company from time to time (and subject to such financial and/or other conditions as the Company may from time to time impose)in respect of both UK and UStax returns relating to your period of secondment. Such advice will be provided in relation to remuneration from your employment only.  The Company will not pay for additional tax planning advice, for example in relation to personal investments. The company will however consider, with the current provider, the additional services which you may require due to your absence from the UK and then make the appropriate consideration of the support required.

Any penalties or interest charges incurred because you fail to provide information or documentation requested by the nominated tax adviser promptly will be your responsibility.  The Company will not reimburse you in respect of any such costs.

10.Deductions

By signing this secondment letter you authorise the Company to deduct from your remuneration or any other sums owed to you by the Company (whether during or after termination of your employment) all (or part of) any sum(s) due from you to the Company, and without prejudice to Company's other rights and remedies for the recovery of such sums.

11.Business expenses

You will be reimbursed in respect of expenses incurred wholly and necessarily in the proper performance of your duties in accordance with the Company's policy from time to time.  Your expenses will be reimbursed in the USon behalf of the Company by direct credit transfer into your nominated bank account monthly in arrears, provided that you have supplied evidence satisfactory to the Company that the expenditure has been properly incurred in good time.

12.Existing Insurance Coverage

You will continue to be covered by the Company's existing insurance arrangements, in place prior to your secondment to the US.

13.Medical treatment and medical examination

(a) You will be eligible to participate in the Company's International Private Medical Scheme.   The Company reserves the right to amend and/or replace this scheme and/or the cover provided from time to time.  Further details of the current scheme will be available from your Secondment Manager.

(b) The Company may from time to time (whether before or during your secondment) require you to submit to a medical examination by a medical practitioner nominated by the Company at its sole discretion, and at the Company's expense.  You consent to the disclosure of the results of any such examination to the Company, in as far as they relate to your fitness to perform your duties and/or eligibility to receive benefits, and subject always to applicable laws.

(c) The Company reserves the right to withdraw any offer of secondment or terminate any secondment and require you to return to the UK without notice (or on short notice) if, in the Company's opinion, you are not fit to perform your duties or unlikely to return to work within a reasonable time period or if in the Company's opinion you should undergo medical treatment provided by the medical authorities in the UK.

14.Visas and permits

The Company will, at its expense, where appropriate apply for (and where appropriate assist you to obtain) any necessary work, residential and other permits or visas required for your secondment (and the Company will reimburse you for any reasonable costs incurred in obtaining such permits or visas). The Company will also assist with the application and associated costs for residential and other permits or visas required for your dependants. You are required to assist the Company in this regard.

15.Temporary Accommodation

The Company will meet the reasonable costs of your temporary accommodation whilst in the US up to a maximum of 90 days.

16.US Property Taxes

In recognition of the differences between UK and US property taxes, the Company will pay you an additional allowance to represent the difference between your pre-secondment UK property taxes on your principal residence and your US property taxes on your principal residence.

17.Relocation and repatriation expenses and home visits

The detail contained in this secondment letter supports the separate relocation document which you will have received from the relocation team in the UK.

Subject to Company policy in force from time to time (including applicable financial limits), the Company will also reimburse you the costs of the following:

(a) One business classone way air fare, for yourself and your dependents, between the UK and the US at the start of your secondment and, at the end of your secondment (provided that your employment does not terminate on grounds of your own conduct or resignation), between the USand the UK or the location of any alternative role within an Alliance Boots Group Company; and

(b) Six business class return trips per year between the UK and the US for use by you or your dependants.

(c) If required, transporting a reasonable amount of your personal belongings at the start and end of your secondment between the UK and the US.  The costs of the airfreight of 200 lbs per adult and a 40-foot sea freight container per relocation (approx 14,000 lbs), will be  paid for by the Company.  The relocation company will determine the best use of your total allowance when they review the items to be moved.

(d) If you let your property in the UK you may have items which you do not wish to leave in your property while overseas.  The Company will pay for storage and insurance costs up to 2,050 lbs to include items for you per year.  This may be increased if you rent furnished accommodation in the US.

18.Grievances

If you have any grievance relating to your secondment or your employment you should raise it with the Company's Human Resources Director.  You should make it clear that you wish to raise a formal grievance. You may be asked to put your grievance in writing.  If the grievance is not resolved to your satisfaction you may raise the matter with me in writing and my decision will be final.

19.Business Conduct

You are expected to comply with laws applicable to governmental payments. Except as permitted under the Alliance Boots Code of Conduct and Business Ethics and the Walgreen Co. Code of Business Conduct, you shall not, directly or indirectly, pay, give or offer anything of value to any foreign government officer, employee or representative, or to any foreign political party or candidate for or incumbent in any foreign political office, for any personal or business reasons, including in order to assist in obtaining, retaining or directing business. Further, it is understood that you will not engage in any employment or business enterprises that would in any way conflict with your service with, and the interest of, the Company or Walgreen Co.

20.Miscellaneous

(a) You hereby explicitly and unambiguously consent to the collection, use and transfer, in electronic or other form, of your personal data as described in this document by and among, as applicable, the Company and its affiliates and Walgreen Co. and its affiliates for the exclusive purpose of managing and administering your international assignment.

You understand that the Company and Walgreen Co. hold certain personal information about you, including, but not limited to, your name, home address and telephone number, date of birth, email address, family size, marital status, sex, beneficiary information, emergency contacts, passport/visa information, age, language skills, drivers license information, nationality, C.V. (or resume), wage history, employment references, social insurance number or other identification number, salary, job title, employment or severance contract, current wage and benefit information, personal bank account number, and tax related information for purposes of managing and administering your international assignment ("Data").

You understand that Data may be transferred to any third parties assisting in the management and administration of your international assignment, that these recipients may be located in your country or elsewhere, and that the recipient's country may have different data privacy laws and protections than your country. You understand that you may request a list with the names and addresses of any potential recipients of the Data by contacting me.

You authorize the recipients to receive, possess, use, retain and transfer the Data, in electronic or other form, for the purposes of managing and administering your international assignment. You understand that Data will be held only as long as is necessary to manage and administer your international assignment.

You understand that you may, at any time, view Data, request additional information about the storage and processing of Data, require any necessary amendments to Data or refuse or withdraw the consents herein, in any case without cost, by contacting in writing your HR Director.

 (b) This secondment letter and your Contract of Employment together record the whole Agreement between you and the Company in respect of your Secondment and supersede any prior agreements in this regard.

(c) This secondment letter shall be governed and construed in all respects by English law and you and the Company irrevocably submit to the non-exclusive jurisdiction of the Courts of England & Wales.

(d) You hereby acknowledge that you have understood the Company's international assignment policy

(e) A person, firm, company or corporation who or which is not a party to this agreement (including members of your family) shall have no right to enforce any term of this agreement.

Please would you sign, date and return to me the duplicate copy of this letter to confirm that you have read, understand and agree to its contents.  The additional copy is for you to keep.

Yours sincerely

/s/ Marco Pagni

Marco Pagni

Group Legal Counsel & Chief Administrative Officer

Signed on Behalf of Alliance Boots Management Services Ltd

I confirm that I have read, understand and agree to be bound by the contents of this secondment letter.

/s/ Alex Gourlay27 / 9/ 2013

Alex GourlayDate signed

- -

EX-12

Ratio of Earnings to Fixed Charges

	August 31, 2013			August 31, 2012			August 31, 2011			August 31, 2010			August 31, 2009
Income before income tax provision	$	3,895		$	3,376		$	4,294		$	3,373		$	3,164
Add:
Minority Interests		5			-			-			-			-
Fixed charges		1,383			1,260			1,212			1,100			996
Amortization of capitalized interest		7			6			5			-			-
Less: Capitalized interest		(7	)		(9	)		(10	)		(12	)		(16	)
Earnings as defined	$	5,283		$	4,633		$	5,501		$	4,461		$	4,144
Interest expense, net of capitalized interest	$	193		$	94		$	77		$	90		$	91
Capitalized interest		7			9			10			12			16
Portions of rentals representative of the interest factor		1,183			1,157			1,125			998			889
Fixed charges as defined	$	1,383		$	1,260		$	1,212		$	1,100		$	996
Ratio of earnings to fixed charges		3.82			3.68			4.54			4.06			4.16

EX-13

Five-Year Summary of Selected Consolidated Financial Data

Walgreen Co. and Subsidiaries

(Dollars in Millions, except per share and location amounts)

Fiscal Year	2013(1)			2012(1)			2011			2010(4)			2009
Net sales	$	72,217		$	71,633		$	72,184		$	67,420		$	63,335
Cost of sales		51,098			51,291			51,692			48,444			45,722
Gross Profit		21,119			20,342			20,492			18,976			17,613
Selling, general and administrative expenses		17,543			16,878			16,561			15,518			14,366
Gain on sale of business (2)		20			-			434			-			-
Equity earnings in Alliance Boots (1)		344			-			-			-			-
Operating Income		3,940			3,464			4,365			3,458			3,247
Interest expense, net (1)		(165	)		(88	)		(71	)		(85	)		(83	)
Other income (3)		120			-			-			-			-
Earnings Before Income Tax Provision		3,895			3,376			4,294			3,373			3,164
Income tax provision		1,445			1,249			1,580			1,282			1,158
Net Earnings	$	2,450		$	2,127		$	2,714		$	2,091		$	2,006
Per Common Share
Net earnings
Basic	$	2.59		$	2.43		$	2.97		$	2.13		$	2.03
Diluted		2.56			2.42			2.94			2.12			2.02
Dividends declared		1.14			.95			.75			.59			.48
Book value		20.55			19.32			16.69			15.34			14.54
Non-Current Liabilities
Long-term debt	$	4,477		$	4,073		$	2,396		$	2,389		$	2,336
Deferred income taxes		600			545			343			318			265
Other non-current liabilities		2,067			1,886			1,785			1,735			1,396
Assets and Equity
Total Assets	$	35,481		$	33,462		$	27,454		$	26,275		$	25,142
Shareholders' Equity		19,454			18,236			14,847			14,400			14,376
Return on average shareholders' equity		13.0	%		12.9	%		18.6	%		14.5	%		14.7	%
Locations
Year-end (5)		8,582			8,385			8,210			8,046			7,496

(1) On August 2, 2012, the Company completed the acquisition of 45% of the issued and outstanding share capital of Alliance Boots GmbH (Alliance Boots) in exchange for cash and Company shares.  The Company accounts for this investment using the equity method of accounting on a three-month lag basis.  Because the closing of this investment occurred in August 2012,  our financial statements for fiscal 2013 reflect 12 months of the dilutive effect of the incremental shares and interest expense associated with our Alliance Boots investment, but only 10 months (August 2012 through May 2013) of Alliance Boots results, reported as Equity earnings in Alliance Boots.  

(2) In fiscal 2011, the Company sold its pharmacy benefit management business, Walgreens Health Initiatives, Inc., to Catalyst Health Solutions, Inc. and recorded a pre-tax gain of $434 million.  In fiscal 2013, the Company recorded an additional pre-tax gain of $20 million relating to a client retention escrow.

(3) The Company, Alliance Boots and AmerisourceBergen Corporation (AmerisourceBergen) entered into a Framework Agreement dated as of March 18, 2013, pursuant to which, among other things, the Company was issued warrants to purchase AmerisourceBergen common stock.  In fiscal 2013, the Company recorded pre-tax income of $120 million from fair value adjustments of the warrants and the amortization of the deferred credit associated with the initial value of the warrants.

(4) Includes results of Duane Reade operations since the April 9, 2010 acquisition date.

(5) Locations include drugstores, worksite health and wellness centers, infusion and respiratory services facilities, specialty pharmacies and mail service facilities.  The foregoing does not include locations of unconsolidated partially owned entities, such as Alliance Boots, of which the Company owns 45% of the outstanding share capital.

MANAGEMENT'S DISCUSSION AND ANALYSIS

OF RESULTS OF OPERATIONS AND FINANCIAL CONDITION

The following discussion and analysis of our financial condition and results of operations should be read together with the financial statements and the related notes included elsewhere herein. This discussion contains forward-looking statements that involve risks and uncertainties. Our actual results may differ materially from those discussed in forward-looking statements. Factors that might cause a difference include, but are not limited to, those discussed under "Cautionary Note Regarding Forward-Looking Statements" below and in Item 1A (Risk Factors) in our Annual Report on Form 10-K.   References herein to "Walgreens," the "Company," "we," "us" or "our" refer to Walgreen Co. and its subsidiaries included in the consolidated financial statements and do not include unconsolidated partially owned entities, such as Alliance Boots GmbH, of which we own 45% of the outstanding share capital, except as otherwise indicated or the context otherwise requires.

INTRODUCTION

Walgreens is principally a retail drugstore chain that sells prescription and non-prescription drugs and general merchandise.  General merchandise includes, among other things, household items, convenience and fresh foods, personal care, beauty care, photofinishing and candy.  Prescription drugs represent the Company's largest product class, followed by general merchandise and non-prescription drugs.  In fiscal 2013, fiscal 2012 and fiscal 2011, prescription drugs represented 63%, 63% and 65% of total sales, respectively, general merchandise represented 27%, 25% and 25% of total sales, respectively, and non-prescription drugs represented 10%, 12% and 10% of total sales, respectively.  The Company offers customers the choice to have prescriptions filled at its retail pharmacies, as well as through the mail, and customers may also place orders by phone or online including through the Company's mobile application.  All Company sales during the last three fiscal years occurred within the United States, Puerto Rico and Guam. There were no export sales.

At August 31, 2013, we operated 8,582 locations in 50 states, the District of Columbia, Guam and Puerto Rico.  Total locations do not include 398 Healthcare Clinics that are operated primarily within other Walgreens locations or locations of unconsolidated partially owned entities such as Alliance Boots GmbH (Alliance Boots).

	Number of Locations
Location Type	2013	2012	2011
Drugstores	8,116	7,930	7,761
Worksite Health and Wellness Centers	371	366	355
Infusion and Respiratory Services Facilities	82	76	83
Specialty Pharmacies	11	11	9
Mail Service Facilities	2	2	2
Total	8,582	8,385	8,210

The drugstore industry remains highly competitive where we compete with other drugstore chains, independent drugstores and mail order prescription providers.  We also compete with various other retailers including grocery stores, convenience stores, mass merchants, online pharmacies, warehouse clubs and dollar stores.

Our sales, gross profit margin and gross profit dollars are impacted by, among other things, both the percentage of prescriptions that we fill that are generic and the rate at which new generic drugs are introduced to the market.  In general, generic versions of drugs generate lower total sales dollars per prescription, but higher gross profit margins and gross profit dollars, as compared with patent-protected brand name drugs.  The positive impact on gross profit margins and gross profit dollars typically has been significant in the first several months after a generic version of a drug is first allowed to compete with the branded version, which is generally referred to as a "generic conversion."  In any given year, the number of major brand name drugs that undergo a conversion from branded to generic status can increase or decrease, which can have a significant impact on our sales, gross profit margins and gross profit dollars.  Because any number of factors outside of our control or ability to foresee can affect timing for a generic conversion, we face substantial uncertainty in predicting when such conversions will occur and what effect they will have on particular future periods.

The long-term outlook for prescription utilization is strong due in part to the aging population, the increasing utilization of generic drugs, the continued development of innovative drugs that improve quality of life and control healthcare costs, and the expansion of healthcare insurance coverage under the Patient Protection and Affordable Care Act (the ACA).  The ACA seeks to reduce federal spending by altering the Medicaid reimbursement formula (AMP) for multi-source drugs, and when implemented, is expected to reduce Medicaid reimbursements.  State Medicaid programs are also expected to continue to seek reductions in reimbursements independent of AMP.  We continuously face reimbursement pressure from pharmacy benefit management (PBM) companies, health maintenance organizations, managed care organizations and other commercial third party payers; our agreements with these payers are regularly subject to expiration, termination or renegotiation.  In addition, plan changes typically occur in January and in fiscal 2013, the high rate of introduction of new generic drugs moderated the impact of any associated rate adjustments.  We anticipate a significantly lower rate of introduction of new generics in the second quarter of fiscal 2014.

On July 19, 2012, Walgreens and Express Scripts announced their entry into a new multi-year agreement pursuant to which Walgreens began participating in the broadest Express Scripts retail pharmacy provider network available to Express Scripts clients as of September 15, 2012.  From January 1, 2012, until September 14, 2012, however, Express Scripts' network did not include Walgreens pharmacies.  The positive impact of this agreement generally has been incremental over time since September 15, 2012.  While we cannot predict with certainty which Express Scripts clients will choose to include us in their pharmacy networks in any particular future period, we expect that our pharmacies will participate in the pharmacy networks of most clients for which Express Scripts serves as pharmacy benefit manager.  However, one substantial client of Express Scripts, the United States Department of Defense TRICARE program, announced that Walgreens will continue to not be a part of its pharmacy network and will be designated as a non-network pharmacy provider for TRICARE beneficiaries.  Most of the patients we served in calendar 2011 who participated in a plan for which Express Scripts served as pharmacy benefit manager transitioned to another pharmacy after we exited the Express Scripts network on January 1, 2012. We have incurred marketing and other costs in connection with efforts to regain former patients and attract new patients covered by plans for which we became a network pharmacy provider as a result of our agreement with Express Scripts.

Rejoining the Express Scripts retail pharmacy provider network has positively affected our net sales, net earnings and cash flows over time relative to the levels we otherwise would have achieved if we were not in the Express Scripts network and partially mitigated the adverse effects related to our non-participation in the Express Scripts retail pharmacy provider network during the period from January 1, 2012, through September 14, 2012.  See "Cautionary Note Regarding Forward-Looking Statements" below.

On May 13, 2013, we announced a multi-year extension of our agreement to serve as a network pharmacy provider in the CVS Caremark pharmacy benefit management national retail network.

Periodically, we make strategic acquisitions and investments that fit our long-term growth objectives.  Consideration is given to retail, health and well-being enterprises and other potential acquisitions and investments that provide unique opportunities and fit our business objectives.  In fiscal 2013, we acquired Stephen L. LaFrance Holdings, Inc. (USA Drug), which includes 141 drugstore locations operating under the USA Drug, Super D Drug, May's Drug, Med-X and Drug Warehouse names.  Additionally, we acquired an 80% interest in Cystic Fibrosis Foundation Pharmacy LLC.  This investment provides joint ownership in a specialty pharmacy for cystic fibrosis patients and their families in addition to providing new product launch support and call center services for drug manufacturers.  Significant acquisitions in fiscal 2012 included assets of BioScrip Inc.'s (BioScrip) community specialty pharmacies, centralized specialty and mail services pharmacy business and Crescent Pharmacy Holdings, LLC (Crescent).  In September 2013, we entered into an agreement to acquire certain assets of Kerr Drug. The acquisition includes 76 retail drugstores, as well as a specialty pharmacy business and a distribution center, all based in North Carolina.  The transaction is subject to customary closing conditions, and is expected to close in calendar 2013.

In August 2012, we acquired a 45% equity interest in Alliance Boots and a call option that provides Walgreens the right, but not the obligation, to purchase the remaining 55% over a six-month period beginning February 2, 2015.  Additional information regarding our investment in Alliance Boots is available in our Current Reports on Form 8-K filed on June 19, 2012, and August 6, 2012 (as amended by the Form 8-K/A filed on September 10, 2012).  The amendment to our August 6, 2012 Form 8-K filed on September 10, 2012, includes as exhibits thereto Alliance Boots audited consolidated financial statements for the years ended March 31, 2012, 2011 and 2010 (prepared in accordance with International Financial Reporting Standards (IFRS) as issued by the International Accounting Standards Board) and unaudited pro forma consolidated financial information related to our 45% investment in Alliance Boots.  Alliance Boots audited consolidated financial statements for the years ended March 31, 2013 and 2012 (prepared in accordance with IFRS) are available on our Form 8-K filed on May 15, 2013.  Walgreens equity earnings, initial investment and the call option excludes the Alliance Boots minority interest in Galenica Ltd. (Galenica). The Alliance Boots investment in Galenica was distributed to the Alliance Boots shareholders other than Walgreens during May 2013, which had no impact to us.  We account for our 45% investment in Alliance Boots using the equity method of accounting.  Investments accounted for under the equity method are recorded initially at cost and subsequently adjusted for our share of the net income or loss and cash contributions and distributions to or from these entities.  Net income reported by Alliance Boots is translated from British pounds Sterling at the average rate for the period.  See Note 5 to our consolidated financial statements for additional information regarding our equity method investments.  We utilize a three-month lag in reporting equity income from our investment in Alliance Boots, reported as equity earnings in Alliance Boots on the Consolidated Statements of Comprehensive Income.  The investment is recorded as Equity investment in Alliance Boots in the Consolidated Balance Sheets.

Combined synergies across both companies were approximately $154 million in the first year following completion of our 45% investment in Alliance Boots.  Fiscal 2014 combined synergies are estimated to be between $350 million and $400 million. The three-month lag impacts the quarterly and fiscal year timing of when Alliance Boots results and synergies will be reflected in the equity earnings in Alliance Boots included in our financial statements.  Because of the three-month lag and the timing of the closing of this investment, our financial statements for the year ended August 31, 2013, reflect twelve months of the dilutive effect of the incremental shares and interest expense associated with our Alliance Boots investment, but only ten months (August 2012 through May 2013) of results of Alliance Boots are reflected in the equity earnings in Alliance Boots included in our Consolidated Statements of Comprehensive Income for the twelve-month period.  See "Cautionary Note Regarding Forward-Looking Statements" below.

On March 19, 2013, we, in conjunction with Alliance Boots and AmerisourceBergen Corporation (AmerisourceBergen) announced various agreements and arrangements, including a ten-year pharmaceutical distribution agreement between ourselves and AmerisourceBergen pursuant to which we will source branded and generic pharmaceutical products from AmerisourceBergen; an agreement which provides AmerisourceBergen the ability to access generics and related pharmaceutical products through Walgreens Boots Alliance Development GmbH, a global sourcing joint venture between ourselves and Alliance Boots; and agreements and arrangements pursuant to which we and Alliance Boots together have the right, but not the obligation, to purchase a minority equity position in AmerisourceBergen and gain associated representation on AmerisourceBergen's board of directors in certain circumstances.  AmerisourceBergen has begun to distribute all branded pharmaceutical products that we historically sourced from distributors and suppliers, effective September 1, 2013.  AmerisourceBergen began distribution of certain branded drugs in the fourth quarter.  Over time, beginning in calendar year 2014, AmerisourceBergen is expected to distribute increasingly significant levels of generic pharmaceutical products that we currently self-distribute.  In addition to the information in this report, please refer to our Current Report on Form 8-K filed on March 20, 2013, for more detailed information regarding these agreements and arrangements. See "Cautionary Note Regarding Forward-Looking Statements" below.

Investments accounted for under the equity method are recorded initially at cost and subsequently adjusted for the Company's share of the net income or loss and cash contributions and distributions to or from these entities. The Company's investment in Alliance Boots and the related call option were recorded as assets with a $7.1 billion aggregate value on the Company's August 31, 2013 balance sheet, which represented 30.1% of the Company's long-lived assets as of that date. Because the Company's investment in Alliance Boots is denominated in a foreign currency (British pounds Sterling), translation gains or losses impact the value of the investment.   See Note 5 to Consolidated Financial Statements for additional information.

RESTRUCTURING AND CUSTOMER CENTRIC RETAILING INITATIVE

We completed one of our strategic initiatives to enhance shareholder value in fiscal 2011, known as the "Rewiring for Growth" program, which was designed to, among other things, reduce cost and improve productivity.  In fiscal 2011, we recorded $42 million of pre-tax charges in selling, general and administrative expenses associated with the program.  In total, we incurred $403 million of pre-tax charges related to the program.  We realized total savings related to Rewiring for Growth of approximately $1.1 billion in fiscal 2011 compared to our base year of fiscal 2008.  Selling, general and administrative expenses realized total savings of $953 million, while cost of sales benefited by approximately $122 million.  The savings were primarily the result of reduced store labor and personnel and expense reductions.

Additionally, as a part of our Customer Centric Retailing (CCR) initiative, we have modified our store format to enhance category layouts and adjacencies, shelf heights and sight lines, and brand and private brand assortments, all of which were designed to positively impact the shopper experience.  This initiative was completed in the first quarter of fiscal 2012.  In total, we converted 5,843 stores and opened 559 new stores with the CCR format.  In fiscal 2012, we incurred $33 million in total program costs, of which $15 million was included in selling, general and administrative expenses and $18 million in capital costs.  In fiscal 2011, we incurred $144 million in total program costs, of which $84 million was included in selling, general and administrative expenses and $60 million in capital costs.

OPERATING STATISTICS

	Percentage Increases/ (Decreases)
Fiscal Year	2013		2012		2011
Net Sales		0.8		(0.8)		7.1
Net Earnings		15.2		(21.6)		29.8
Comparable Drugstore Sales		(1.3)		(3.6)		3.3
Prescription Sales		0.4		(3.1)		6.3
Comparable Drugstore Prescription Sales		(1.7)		(6.1)		3.3
Front-End Sales		1.5		3.6		8.5
Comparable Drugstore Front-End Sales		(0.7)		0.6		3.3
Gross Profit		3.8		(0.7)		8.0
Selling, General and Administrative Expenses		3.9		1.9		6.7

	Percent to Net Sales
Fiscal Year	2013		2012		2011
Gross Margin		29.3		28.4		28.4
Selling, General and Administrative Expenses		24.3		23.6		23.0

	Other Statistics
Fiscal Year	2013		2012		2011
Prescription Sales as a % of Net Sales		62.9		63.2		64.7
Third Party Sales as a % of Total Prescription Sales		95.8		95.6		95.6
Number of Prescriptions (in millions)		683		664		718
Comparable Prescription % Increase/(Decrease)		2.9		(8.4)		1.5
30-Day Equivalent Prescriptions (in millions) *		821		784		819
Comparable 30-Day Equivalent Prescription % Increase/(Decrease) *		4.8		(5.1)		3.7
Total Number of Locations		8,582		8,385		8,210

* Includes the adjustment to convert prescriptions greater than 84 days to the equivalent of three 30-day prescriptions. This adjustment reflects the fact that these prescriptions include approximately three times the amount of product days supplied compared to a normal prescription.

RESULTS OF OPERATIONS

Fiscal 2013 net earnings increased 15.2% to $2.5 billion, or $2.56 per diluted share, versus last year's earnings of $2.1 billion, or $2.42 per diluted share.   The increase was primarily attributable to higher sales, improved margins, equity earnings in Alliance Boots and other non-operating income related to our AmerisourceBergen warrants, partially offset by higher selling, general and administrative expenses as a percentage of sales.  Included in net earnings and net earnings per diluted share, respectively, were the negative impacts of $241 million, or $.25 per diluted share, in acquisition-related amortization; $151 million, or $.16 per diluted share, from the LIFO provision; $124 million, or $.13 per diluted share, in Alliance Boots related tax; $60 million, or $.06 per diluted share, of acquisition-related costs; $47 million, or $.05 per diluted share, relating to certain litigation matters including the DEA settlement; $24 million, or $.03 per diluted share, in costs related to Hurricane Sandy; and $8 million, or $.01 per diluted share, in costs related to the completion of a pharmaceutical distribution contract.  Net earnings were positively impacted by $110 million, or $.12 per diluted share, from fair value adjustments of warrants acquired through the AmerisourceBergen long-term partnership and the amortization of the deferred credit associated with the initial value of the warrants and $13 million, or $0.01 per diluted share, from an additional gain on the 2011 sale of the Walgreens Health Initiatives, Inc. business relating to a client retention escrow.  Included in fiscal 2012 net earnings and net earnings per diluted share, respectively, were $195 million, or $.22 per diluted share, from the year's LIFO provision and $161 million, or $.18 per diluted share, in acquisition-related amortization.  Fiscal 2012 net earnings and net earnings per diluted share, respectively, also included $82 million, or $.11 per diluted share, of transaction costs, some of which were non-deductible for tax purposes, and interest and share issuance impact (which affected net earnings per diluted share only) related to the Alliance Boots transaction.

Net sales increased by 0.8% to $72.2 billion in fiscal 2013 compared to a decrease of 0.8% in 2012 and an increase of 7.1% in 2011.  Net sales growth in fiscal 2013 was attributed to new store sales and our decision to rejoin the Express Scripts pharmacy provider network partially offset by lower comparable store sales.   The effect of generic drugs, which have a lower retail price, replacing brand name drugs reduced total sales by 3.0% in 2013.  Additionally, the acquisition of USA Drug and BioScrip assets increased total sales by 1.1% in fiscal 2013.  In fiscal 2012, sales were negatively impacted by our strategic decision to no longer be a part of the Express Scripts pharmacy provider network, partially offset by sales gains in existing stores and added sales from new stores, each of which included an indeterminate amount of market-driven price changes.  Sales in comparable drugstores were down 1.3% and 3.6% in 2013 and 2012, respectively, and up 3.3% in 2011.  Comparable drugstores are defined as those that have been open for at least twelve consecutive months without closure for seven or more consecutive days and without a major remodel or a natural disaster in the past twelve months.  Relocated and acquired stores are not included as comparable stores for the first twelve months after the relocation or acquisition.  We operated 8,582 locations (8,116 drugstores) at August 31, 2013, compared to 8,385 locations (7,930 drugstores) at August 31, 2012, and 8,210 locations (7,761 drugstores) at August 31, 2011.

Prescription sales increased 0.4% in 2013 compared to a decrease of 3.1% in 2012 and an increase of 6.3% in 2011.  Comparable drugstore prescription sales were down 1.7% in 2013 compared to a decrease of 6.1% in 2012 and an increase of 3.3% in 2011.  Prescription sales were positively impacted by the effects of our participation in the Express Scripts retail pharmacy provider network compared to fiscal 2012.  The effect of generic drugs, which have a lower retail price, replacing brand name drugs reduced prescription sales by 5.3% for 2013, 3.5% for 2012 and 2.4% for 2011, while the effect on total sales was 3.0% for 2013, 1.9% for 2012 and 1.4% for 2011.  New generic drug introductions have led to an increased effect of generics on total net sales.   Third party sales, where reimbursement is received from managed care organizations, the government, employers or private insurers, were 95.8% of prescription sales in 2013, and 95.6% of prescription sales in 2012 and 2011.  We receive market-driven reimbursements from third party payers, a number of which typically reset in January.  The total number of prescriptions filled (including immunizations) was approximately 683 million in 2013, 664 million in 2012 and 718 million in 2011.  Prescriptions adjusted to 30-day equivalents were 821 million in 2013, 784 million in 2012 and 819 million in 2011.

Front-end sales increased 1.5% in 2013, 3.6% in 2012 and 8.5% in 2011.  The increase over the prior year was due, in part, to new store openings and improved sales related to non-prescription drugs, photofinishing products, convenience and fresh foods and beer and wine categories.  Front-end sales were 37.1% of total sales in fiscal 2013, 36.8% of total sales in fiscal 2012 and 35.3% of total sales in fiscal 2011. Comparable drugstore front-end sales decreased 0.7% in 2013 compared to increases of 0.6% in 2012 and 3.3% in 2011.  The decrease in fiscal 2013 comparable front-end sales was primarily attributable to lower customer traffic, which was offset to a lesser extent through an increase in basket size.

Gross margin as a percent of sales was 29.3% in fiscal 2013 compared to 28.4% in 2012.  Gross margin in fiscal 2013 was positively impacted by higher retail pharmacy margins where the impact of new generics more than offset lower market driven reimbursements.  Front-end gross margin percentages improved from the non-prescription drug, personal care and beauty care categories.  In addition, costs associated with the points earned from our Balance® Rewards loyalty program negatively impacted front-end margins, but were partially offset by purchasing synergies realized from the joint venture formed by Walgreens and Alliance Boots.  A lower provision for LIFO positively impacted margins in fiscal 2013.  Gross margin as a percent of sales was 28.4% in fiscal 2012 and 2011.  Overall margins were positively impacted by higher front-end margins in the household items, convenience and fresh foods and non-prescription drug categories but offset by lower retail pharmacy margins where lower market-driven reimbursements and a higher provision for LIFO more than offset the impact of new generics, including the generic Lipitor.

Gross profit dollars in fiscal 2013 increased 3.8% over the prior year.  The increase is primarily attributed to higher retail pharmacy margins.  Gross profit dollars in fiscal 2012 decreased 0.7% over fiscal 2011.  The decrease is primarily attributed to lower sales volumes and a higher provision for LIFO.

We use the last-in, first-out (LIFO) method of inventory valuation.  The LIFO provision is dependent upon inventory levels, inflation rates and merchandise mix.  The effective LIFO inflation rates were 2.7% in 2013, 3.3% in 2012, and 2.4% in 2011, which resulted in charges to cost of sales of $239 million in 2013, $309 million in 2012 and $208 million in 2011.  Inflation on prescription inventory was 10.7% in 2013, 10.0% in 2012 and 4.6% in 2011.  As a result of declining inventory levels, the fiscal 2013 and 2012 LIFO provisions were reduced by $194 million and $268 million of LIFO liquidation, respectively.

Selling, general and administrative expenses were 24.3% of sales in fiscal 2013 compared to 23.6% in fiscal 2012.  The increase was primarily due to occupancy expense, investments in strategic initiatives and capabilities and store salaries attributable to new store growth, which were partially offset by lower expenses associated with our investment in Alliance Boots as compared to last year.  Selling, general and administrative expenses as a percentage of sales increased to 23.6% in 2012 as compared to 23.0% in fiscal 2011.  The increase was primarily due to higher occupancy expense, drugstore.com expenses, including costs associated with the acquisition and integration, investments in strategic initiatives and capabilities, expenses associated with our investment in Alliance Boots and store direct expense, which were partially offset by lower expenses associated with our CCR remodeling program which was completed in the first quarter of fiscal 2012.

Selling, general and administrative expense dollars increased $665 million, or 3.9%, over fiscal 2012.  The current year's growth is attributable to new store expenses of 2.4%, 0.5% from USA Drug operations, 0.2% of comparable store and headquarter expenses, 0.2% from Hurricane Sandy, 0.2% in acquisition-related amortization, 0.2% in costs related to the DEA settlement, 0.1% from acquisition-related costs and 0.1% in costs related to the completion of a pharmaceutical distribution contract.  Selling, general and administrative expense dollars in fiscal 2012 increased 1.9% over fiscal 2011.  Operating and integration costs related to drugstore.com added 0.6% and costs associated with our investment in Alliance Boots added 0.4%.  The remaining increase was primarily attributed to new stores.

Earnings in the 45% Alliance Boots equity method investment for the year were $344 million.  Alliance Boots earnings are reported on a three-month lag.  As a result, only August through May's results of operations of Alliance Boots are reflected in the equity earnings in Alliance Boots included in our reported net earnings for the year ended August 31, 2013.  Earnings included amortization expense resulting from the fair value of certain Alliance Boots assets of $57 million, $23 million of which was related to inventory.

Other income for the year was $120 million.  The increase in fair value of the Company's AmerisourceBergen warrants resulted in recording other income of $111 million in fiscal 2013.  The increase in the fair value of the warrants was primarily attributable to the increase in the price of AmerisourceBergen's common stock.  In addition, we recorded $9 million of other income relating to the amortization of the deferred credit associated with the initial value of the warrants.

Interest was a net expense of $165 million in fiscal 2013, $88 million in fiscal 2012 and $71 million in fiscal 2011.  Interest expense for fiscal 2013, 2012 and 2011 was net of $7 million, $9 million and $10 million, respectively, that was capitalized to construction projects.  The increase in 2013 was due to the $4.0 billion note issuance which occurred in September 2012 partially offset by the fixed to variable interest rate swaps on our $1.0 billion 5.250% notes and the repayment of our $1.3 billion 4.875% notes in August 2013.  The increase in interest expense from fiscal 2011 to fiscal 2012 was attributed to $21 million in interest expense on the bridge term loan facility in conjunction with our investment in Alliance Boots.  This was partially offset by lower interest expense as a result of additional fixed to variable interest rate swaps.

The effective income tax rate was 37.1% for fiscal 2013, 37.0% for 2012, and 36.8% for 2011.  The increase in the effective tax rate from fiscal 2012 was primarily attributed to higher non-tax deductible permanent differences.  Fiscal 2012 included certain non-deductible transaction costs associated with the investment in Alliance Boots.  We anticipate an effective tax rate of approximately 36% in fiscal 2014.

LIQUIDITY AND CAPITAL RESOURCES

Cash and cash equivalents were $2.1 billion at August 31, 2013, compared to $1.3 billion at August 31, 2012.  Short-term investment objectives are to minimize risk, maintain liquidity and maximize after-tax yields.  To attain these objectives, investment limits are placed on the amount, type and issuer of securities.  Investments are principally in U.S. Treasury market funds.

Our long-term capital policy is to maintain a strong balance sheet and financial flexibility; reinvest in our core strategies; invest in strategic opportunities that reinforce our core strategies and meet return requirements; and return surplus cash flow to shareholders in the form of dividends and share repurchases over the long term.  

Net cash provided by operating activities was $4.3 billion at August 31, 2013, compared to $4.4 billion a year ago.  The decrease was primarily a result of changes in working capital balances.  Prior year operating activities also benefited by increased efforts to reduce inventory during the period we were out of the Express Scripts network.  Cash provided by operations is the principal source of funds for expansion, investments, acquisitions, remodeling programs, dividends to shareholders and stock repurchases.

Net cash used for investing activities was $2.0 billion versus $5.9 billion last year.  Additions to property and equipment were $1.2 billion compared to $1.6 billion last year.  In fiscal 2013, we added a total of 350 locations (197 net) compared to last year's 266 locations (175 net).  The USA Drug acquisition contributed 141 locations (70 net) in fiscal 2013.  There were 39 owned locations added during the year and 41 under construction at August 31, 2013, versus 34 owned locations added and 41 under construction as of August 31, 2012.

	Drugstores			Worksites			Infusion and Respiratory Services			Specialty Pharmacy			Mail Service		Total
August 31, 2011		7,761			355			83			9			2		8,210
New/Relocated		169			36			5			2			-		212
Acquired		43			-			10			1			-		54
Closed/Replaced		(43	)		(25	)		(22	)		(1	)		-		(91	)
August 31, 2012		7,930			366			76			11			2		8,385
New/Relocated		172			14			10			2			-		198
Acquired		147			-			1			4			-		152
Closed/Replaced		(133	)		(9	)		(5	)		(6	)		-		(153	)
August 31, 2013		8,116			371			82			11			2		8,582

Business acquisitions this year were $630 million versus $491 million last year.  Business acquisitions in the current year include the purchase of the regional drugstore chain USA Drug from Stephen L. LaFrance Holdings, Inc. and members of the LaFrance family for $436 million net of assumed cash, an 80% interest in Cystic Fibrosis Foundation Pharmacy, LLC for $29 million net of assumed cash, and selected other assets (primarily prescription files).  In fiscal 2013, we purchased $224 million of AmerisourceBergen common stock.  Additionally, in the current year, we received client retention proceeds of $20 million in accordance with the June 2011 sales agreement of our pharmacy benefit management business, Walgreens Health Initiatives, Inc. (WHI).  Investing activities in 2012 include the August 2012 purchase of a 45% equity interest in Alliance Boots for $7.0 billion, of which $4.0 billion was cash.  This investment is accounted for as an equity method investment.  Business acquisitions in fiscal 2012 included certain assets from BioScrip's community specialty pharmacies and centralized specialty and mail services pharmacy businesses for $144 million plus inventory; the purchase of Crescent Pharmacy Holdings, LLC, an infusion pharmacy business, for $73 million, net of assumed cash; and selected other assets (primarily prescription files).  In fiscal 2012, we paid $45 million to Catalyst Health Solutions Inc. (Catalyst), which was the result of a working capital adjustment in accordance with the sale of WHI.

Capital expenditures for fiscal 2014 are expected to be approximately $1.4 billion, excluding business acquisitions, joint ventures and prescription file purchases, although the actual amount may vary depending upon a variety of factors, including, among other things, the timing of implementation of certain capital projects.  We expect to add approximately 85 to160 new drugstores in fiscal 2014.  In addition, we continue to allocate a portion of our capital budget to relocating stores to more convenient and profitable freestanding locations.

Net cash used by financing activities was $1.5 billion compared to the prior year which provided net cash of $1.2 billion.  In September 2012, we received proceeds from a public offering of $4.0 billion of notes with varying interest rates (see Note 9).  The notes were used, in part, to repay the $3.0 billion 364-day bridge term loan obtained in August 2012 in connection with the investment in Alliance Boots.  In addition, we repaid our $1.3 billion 4.875% notes upon maturity on August 1, 2013.  We repurchased shares totaling $615 million in the current year, all of which was to support the needs of the employee stock plans.  In the prior year, we repurchased shares totaling $1.2 billion, primarily in conjunction with our share buyback programs and $40 million to support the needs of the employee stock plans. We had proceeds related to employee stock plans of $486 million compared to $165 million last year.  Cash dividends paid were $1.0 billion versus $787 million a year ago.  On July 10, 2013, we announced an increase in the quarterly dividend to 31.5 cents per share from the previous rate of 27.5 cents per share.  The increase raises the annual dividend rate from $1.10 per share to $1.26 per share.

In connection with our long-term capital policy, our Board of Directors has authorized several share repurchase programs and set a long-term dividend payout ratio target between 30 and 35 percent of net earnings.  The 2009 and 2011 stock repurchase programs, which were both completed in fiscal 2011, allowed for the repurchase of up to $2.0 billion and $1.0 billion of the Company's common stock, respectively.  Additionally, on July 13, 2011, our Board of Directors authorized the 2012 stock repurchase program, which allows for the repurchase of up to $2.0 billion of the Company's common stock prior to its expiration on December 31, 2015.  Activity related to these programs was as follows (in millions):

	Fiscal Year Ended
	2013		2012		2011
2009 stock repurchase program	$	-	$	-	$	360
2011 stock repurchase program		-		-		1,000
2012 stock repurchase program		-		1,151		424
	$	-	$	1,151	$	1,784

We determine the timing and amount of repurchases from time to time based on our assessment of various factors including prevailing market conditions, alternate uses of capital, liquidity, the economic environment and other factors.  We anticipate that the pace of any future share repurchase will continue to be significantly curtailed from the levels achieved in fiscal 2012 and 2011 due to the debt levels incurred for the investment in Alliance Boots.  The timing and amount of these purchases may change at any time and from time to time.  The Company has repurchased and may from time to time in the future repurchase shares on the open market through Rule 10b5-1 plans, which enable a company to repurchase shares at times when it otherwise might be precluded from doing so under insider trading laws.

We had no commercial paper outstanding at August 31, 2013.  In connection with our commercial paper program, we maintain two unsecured backup syndicated lines of credit that total $1.35 billion.  The first $500 million facility expires on July 20, 2015, and allows for the issuance of up to $250 million in letters of credit.  The second $850 million facility expires on July 23, 2017, and allows for the issuance of up to $200 million in letters of credit.  The issuance of letters of credit under either of these facilities reduces available borrowings.  Our ability to access these facilities is subject to our compliance with the terms and conditions of the credit facility, including financial covenants.  The covenants require us to maintain certain financial ratios related to minimum net worth and priority debt, along with limitations on the sale of assets and purchases of investments.  At August 31, 2013, we were in compliance with all such covenants.  The Company pays a facility fee to the financing banks to keep these lines of credit active.  At August 31, 2013, there were no letters of credit issued against these facilities and we currently do not anticipate any future letters of credit to be issued against these facilities.

As of October 17, 2013, our credit ratings were:

Rating Agency	Long-Term Debt Rating	Commercial Paper Rating	Outlook
Moody's	Baa1	P-2	Negative
Standard & Poor's	BBB	A-2	Stable

In assessing our credit strength, both Moody's and Standard & Poor's consider our business model, capital structure, financial policies and financial statements.  There can be no assurance that any particular rating will be assigned or maintained.  Our credit ratings impact our borrowing costs, access to capital markets and operating lease costs.

Pursuant to our Purchase and Option Agreement with Alliance Boots GmbH, we have the right, but not the obligation, to purchase the remaining 55% interest in Alliance Boots during the period beginning February 2, 2015, and ending August 2, 2015.  If we exercise this call option, we would, subject to the terms and conditions of such agreement, be obligated to make a cash payment of £3.133 billion (equivalent to approximately $4.9 billion based on exchange rates as of August 31, 2013) and issue approximately 144.3 million shares of our common stock, with the amount and form of such consideration being subject to adjustment in certain circumstances including if the volume weighted-average price of our common stock is below $31.18 per share during a period shortly before the closing of the second step transaction.  We also would assume the then-outstanding debt of Alliance Boots upon the closing of the second step transaction.

Pursuant to our arrangements with AmerisourceBergen and Alliance Boots, we and Alliance Boots have the right, but not the obligation, to purchase a minority equity position in AmerisourceBergen over time pursuant to open market purchases and warrants to acquire AmerisourceBergen common stock.  WAB Holdings, LLC, a newly formed entity jointly owned by Walgreens and Alliance Boots, which is consolidated by Walgreens, can acquire up to 19,859,795 shares, which represents approximately 7% of the outstanding AmerisourceBergen common stock on a fully diluted basis, assuming exercise in full of the warrants.  The amount of permitted open market purchases is subject to increase in certain circumstances.   In fiscal 2013, we have purchased approximately 4.0 million AmerisourceBergen shares in the open market for $224 million.  We have funded and plan to continue funding these purchases over time through cash contributions to WAB Holdings.  Share purchases may be made from time to time in open market transactions or pursuant to instruments and plans complying with Rule 10b5-1.  

If we elect to exercise the two warrants issued by AmerisourceBergen in full, Walgreens would, subject to the terms and conditions of such warrants, be required to make a cash payment of approximately $584.4 million in connection with the exercise of the first warrant during a six-month period beginning in March 2016 and $595.8 million in connection with the exercise of the second warrant during a six-month period beginning in March 2017.  Similarly, if Alliance Boots elects to exercise the two warrants issued by AmerisourceBergen in full, Alliance Boots would, subject to the terms and conditions of such warrants, be required to pay AmerisourceBergen similar amounts upon the exercise of their warrants in 2016 and 2017.  Our and Alliance Boots ability to invest in equity in AmerisourceBergen above certain thresholds is subject to the receipt of regulatory approvals.

COMMITMENTS AND CONTINGENCIES

The information set forth in Note 12 to the Consolidated Financial Statements is incorporated herein by reference.

CRITICAL ACCOUNTING POLICIES

The consolidated financial statements are prepared in accordance with accounting principles generally accepted in the United States of America and include amounts based on management's prudent judgments and estimates.  Actual results may differ from these estimates.  Management believes that any reasonable deviation from those judgments and estimates would not have a material impact on our consolidated financial position or results of operations.  To the extent that the estimates used differ from actual results, however, adjustments to the statement of comprehensive income and corresponding balance sheet accounts would be necessary.  These adjustments would be made in future statements.  Some of the more significant estimates include goodwill and other intangible asset impairment, allowance for doubtful accounts, vendor allowances, asset impairments, liability for closed locations, liability for insurance claims, cost of sales, equity method investments and income taxes.  We use the following methods to determine our estimates:

Goodwill and other intangible asset impairment – Goodwill and other indefinite-lived intangible assets are not amortized, but are evaluated for impairment annually during the fourth quarter, or more frequently if an event occurs or circumstances change that would more likely than not reduce the fair value of a reporting unit below its carrying value.  As part of our impairment analysis for each reporting unit, we engage a third party appraisal firm to assist in the determination of estimated fair value for each reporting unit.  This determination includes estimating the fair value using both the income and market approaches.  The income approach requires management to estimate a number of factors for each reporting unit, including projected future operating results, economic projections, anticipated future cash flows and discount rates.  The market approach estimates fair value using comparable marketplace fair value data from within a comparable industry grouping.

The determination of the fair value of the reporting units and the allocation of that value to individual assets and liabilities within those reporting units requires us to make significant estimates and assumptions.  These estimates and assumptions primarily include, but are not limited to: the selection of appropriate peer group companies; control premiums appropriate for acquisitions in the industries in which we compete; the discount rate; terminal growth rates; and forecasts of revenue, operating income, depreciation and amortization and capital expenditures.  The allocation requires several analyses to determine fair value of assets and liabilities including, among other things, purchased prescription files, customer relationships and trade names.  Although we believe our estimates of fair value are reasonable, actual financial results could differ from those estimates due to the inherent uncertainty involved in making such estimates.  Changes in assumptions concerning future financial results or other underlying assumptions could have a significant impact on either the fair value of the reporting units, the amount of the goodwill impairment charge, or both.

We also compared the sum of the estimated fair values of the reporting units to the Company's total value as implied by the market value of the Company's equity and debt securities. This comparison indicated that, in total, our assumptions and estimates were reasonable.  However, future declines in the overall market value of the Company's equity and debt securities may indicate that the fair value of one or more reporting units has declined below its carrying value.

One measure of the sensitivity of the amount of goodwill impairment charges to key assumptions is the amount by which each reporting unit "passed" (fair value exceeds the carrying amount) or "failed" (the carrying amount exceeds fair value) the first step of the goodwill impairment test.  Our reporting units' fair values exceeded their carrying amounts ranging from approximately 15% to more than 180%.

Generally, changes in estimates of expected future cash flows would have a similar effect on the estimated fair value of the reporting unit.  That is, a 1% change in estimated future cash flows would change the estimated fair value of the reporting unit by approximately 1%.  The estimated long-term rate of net sales growth can have a significant impact on the estimated future cash flows, and therefore, the fair value of each reporting unit.  Of the other key assumptions that impact the estimated fair values, most reporting units have the greatest sensitivity to changes in the estimated discount rate.  The Company believes that its estimates of future cash flows and discount rates are reasonable, but future changes in the underlying assumptions could differ due to the inherent uncertainty in making such estimates.

We have not made any material changes to the method of evaluating goodwill and intangible asset impairments during the last three years.  Based on current knowledge, we do not believe there is a reasonable likelihood that there will be a material change in the estimates or assumptions used to determine impairment.

Allowance for doubtful accounts – The provision for bad debt is based on both historical write-off percentages and specifically identified receivables.  We have not made any material changes to the method of estimating our allowance for doubtful accounts during the last three years.  Based on current knowledge, we do not believe there is a reasonable likelihood that there will be a material change in the estimates or assumptions used to determine the allowance.

Vendor allowances – Vendor allowances are principally received as a result of purchases, sales or promotion of vendors' products.  Allowances are generally recorded as a reduction of inventory and are recognized as a reduction of cost of sales when the related merchandise is sold.  Those allowances received for promoting vendors' products are offset against advertising expense and result in a reduction of selling, general and administrative expenses to the extent of advertising incurred, with the excess treated as a reduction of inventory costs. We have not made any material changes to the method of estimating our vendor allowances during the last three years.  Based on current knowledge, we do not believe there is a reasonable likelihood that there will be a material change in the estimates or assumptions used to determine vendor allowances.

Asset impairments – The impairment of long-lived assets is assessed based upon both qualitative and quantitative factors, including years of operation and expected future cash flows, and tested for impairment annually or whenever events or circumstances indicate that a certain asset may be impaired.  If the future cash flows reveal that the carrying value of the asset group may not be recoverable, an impairment charge is immediately recorded.  We have not made any material changes to the method of estimating our asset impairments during the last three years.  Based on current knowledge, we do not believe there is a reasonable likelihood that there will be a material change in the estimates or assumptions used to determine asset impairments.

Liability for closed locations – The liability is based on the present value of future rent obligations and other related costs (net of estimated sublease rent) to the first lease option date.  We have not made any material changes to the method of estimating our liability for closed locations during the last three years.  Based on current knowledge, we do not believe there is a reasonable likelihood that there will be a material change in the estimates or assumptions used to determine the liability.

Liability for insurance claims – The liability for insurance claims is recorded based on estimates for claims incurred and is not discounted.  The provisions are estimated in part by considering historical claims experience, demographic factors and other actuarial assumptions.  We have not made any material changes to the method of estimating our liability for insurance claims during the last three years.  Based on current knowledge, we do not believe there is a reasonable likelihood that there will be a material change in the estimates or assumptions used to determine the liability.

Cost of sales – Drugstore cost of sales is derived based on point-of-sale scanning information with an estimate for shrinkage and adjusted based on periodic inventory counts. Inventories are valued at the lower of cost or market determined by the last-in, first-out (LIFO) method.  We have not made any material changes to the method of estimating cost of sales during the last three years.  Based on current knowledge, we do not believe there is a reasonable likelihood that there will be a material change in the estimates or assumptions used to determine cost of sales.

Equity method investments - We use the equity method to account for investments in companies if the investment provides the ability to exercise significant influence, but not control, over operating and financial policies of the investee.  Our proportionate share of the net income or loss of these companies is included in consolidated net earnings.  Judgment regarding the level of influence over each equity method investment includes considering key factors such as our ownership interest, representation on the board of directors, participation in policy-making decisions and material intercompany transactions.

The underlying net assets of the Company's equity method investment in Alliance Boots include goodwill and indefinite-lived intangible assets.  These assets are evaluated for impairment annually, or more frequently if an event occurs or circumstances change that would more likely than not reduce the fair value of a reporting unit below its carrying value.  Based on testing performed during fiscal 2013, the fair value of each Alliance Boots reporting unit exceeded its carrying value.  For certain reporting units, relatively modest changes in key assumptions may have resulted in the recognition of a goodwill impairment charge.  The Company's proportionate share of a potential impairment would be limited to its 45% ownership percentage. 

Income taxes – We are subject to routine income tax audits that occur periodically in the normal course of business.  U.S. federal, state, local and foreign tax authorities raise questions regarding our tax filing positions, including the timing and amount of deductions and the allocation of income among various tax jurisdictions. In evaluating the tax benefits associated with our various tax filing positions, we record a tax benefit for uncertain tax positions using the highest cumulative tax benefit that is more likely than not to be realized. Adjustments are made to our liability for unrecognized tax benefits in the period in which we determine the issue is effectively settled with the tax authorities, the statute of limitations expires for the return containing the tax position or when more information becomes available.  Our liability for unrecognized tax benefits, including accrued penalties and interest, is primarily included in other long-term liabilities and current income taxes on our consolidated balance sheets and in income tax expense in our consolidated statements of comprehensive income.

In determining our provision for income taxes, we use an annual effective income tax rate based on full-year income, permanent differences between book and tax income, and statutory income tax rates.  The effective income tax rate also reflects our assessment of the ultimate outcome of tax audits in addition to any foreign-based income deemed to be taxable in the United States. Discrete events such as audit settlements or changes in tax laws are recognized in the period in which they occur.  Based on current knowledge, we do not believe there is a reasonable likelihood that there will be a material change in the estimates or assumptions used to determine the amounts recorded for income taxes.

CONTRACTUAL OBLIGATIONS AND COMMITMENTS

The following table lists our contractual obligations and commitments at August 31, 2013 (in millions):

	Payments Due by Period
	Total		Less Than 1 Year		1-3 Years		3-5 Years		Over 5 Years
Operating leases (1)	$	35,260	$	2,518	$	4,939	$	4,638	$	23,165
Purchase obligations (2):
Open inventory purchase orders		1,771		1,771		-		-		-
Real estate development		195		148		37		10		-
Other corporate obligations		825		317		300		158		50
Long-term debt*		5,032		555		759		1,005		2,713
Interest payment on long-term debt		1,392		137		267		251		737
Insurance*		644		256		178		81		129
Retiree health*		350		10		25		32		283
Closed location obligations*		124		30		35		21		38
Capital lease obligations*(1)		191		6		14		11		160
Other long-term liabilities reflected on the balance sheet* (3)		1,162		100		183		213		666
Total	$	46,946	$	5,848	$	6,737	$	6,420	$	27,941

*Recorded on balance sheet.

(1)	Amounts for operating leases and capital leases do not include certain operating expenses under these leases such as common area maintenance, insurance and real estate taxes.  These expenses were $435 million for the fiscal year ended August 31, 2013.
(2)	Purchase obligations include agreements to purchase goods or services that are enforceable and legally binding and that specify all significant terms, including open purchase orders.
(3)	Includes $112 million ($49 million in 1-3 years, $39 million in 3-5 years and $24 million over 5 years) of unrecognized tax benefits recorded under Accounting Standards Codification Topic 740, Income Taxes.

The obligations and commitments included in the table above do not include unconsolidated partially owned entities, such as Alliance Boots, of which we own 45% of the outstanding share capital.  The expected timing of payments of the obligations above is estimated based on current information. Timing of payments and actual amounts paid may be different, depending on the time of receipt of goods or services, or changes to agreed-upon amounts for some obligations.

In connection with the Alliance Boots Purchase and Option Agreement dated June 18, 2012, we have the right, but not the obligation, to purchase the remaining 55% interest in Alliance Boots at any time during the period beginning February 2, 2015, and ending August 2, 2015.  If we exercise this call option, we would, subject to the terms and conditions of such agreement, be obligated to make a cash payment of £3.133 billion (equivalent to approximately $4.9 billion based on exchange rates as of August 31, 2013) and issue approximately 144.3 million shares of our common stock, with the amount and form of such consideration being subject to adjustment in certain circumstances including if the volume weighted-average price of our common stock is below $31.18 per share during a period shortly before the closing of the second step transaction.  We also would assume the then-outstanding debt of Alliance Boots upon the closing of the second step transaction.  In the event that we do not exercise the option, under certain circumstances, our ownership of Alliance Boots will reduce from 45% to 42% in exchange for nominal consideration to Walgreens.

In addition, pursuant to our arrangements with AmerisourceBergen and Alliance Boots, we and Alliance Boots have the right, but not the obligation, to purchase a minority equity position in AmerisourceBergen over time, including open market purchases and warrants to acquire AmerisourceBergen common stock.   If we elect to exercise the two warrants issued by AmerisourceBergen in full, Walgreens would, subject to the terms and conditions of such warrants, be required to make a cash payment of approximately $584.4 million in connection with the exercise of the first warrant during a six-month period beginning in March 2016 and $595.8 million in connection with the exercise of the second warrant during a six-month period beginning in March 2017.  Similarly, if Alliance Boots elects to exercise the two warrants issued by AmerisourceBergen in full, Alliance Boots would, subject to the terms and conditions of such warrants, be required to pay AmerisourceBergen similar amounts upon the exercise of their warrants in 2016 and 2017.  Our and Alliance Boots ability to invest in equity in AmerisourceBergen above certain thresholds is subject to the receipt of regulatory approvals.  See "Liquidity and Capital Resources" above.

OFF – BALANCE SHEET ARRANGEMENTS

We do not have any unconsolidated special purpose entities and, except as described herein, we do not have significant exposure to any off – balance sheet arrangements. The term "off – balance sheet arrangement" generally means any transaction, agreement or other contractual arrangement to which an entity unconsolidated with us is a party, under which we have: (i) any obligation arising under a guarantee contract, derivative instrument or variable interest; or (ii) a retained or contingent interest in assets transferred to such entity or similar arrangement that serves as credit, liquidity or market risk support for such assets.

Letters of credit are issued to support purchase obligations and commitments (as reflected on the Contractual Obligations and Commitments table) as follows (in millions):

	August 31, 2013
Inventory purchase commitments	$	197
Insurance		263
Real estate development		4
Total	$	464

We have no off – balance sheet arrangements other than those disclosed on the Contractual Obligations and Commitments table.  Both on – balance sheet and off – balance sheet financing alternatives are considered when pursuing our capital structure and capital allocation objectives.

RECENT ACCOUNTING PRONOUNCEMENTS

In July 2012, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update 2012-02, Intangibles – Goodwill and Other (Topic 350) – Testing Indefinite-Lived Intangible Assets for Impairment, which permits an entity to make a qualitative assessment to determine whether it is more likely than not that an indefinite-lived intangible asset, other than goodwill, is impaired.  If an entity concludes, based on an evaluation of all relevant qualitative factors, that it is not more likely than not that the fair value of an indefinite-lived intangible asset is less than its carrying amount, it will not be required to perform the quantitative impairment for that asset.  The ASU is effective for impairment tests performed for fiscal years beginning after September 15, 2012 (fiscal 2014), with early adoption permitted.  The ASU will not have a material impact on the Company's reported results of operations and financial position.  The impact is non-cash in nature and will not affect the Company's cash position.

In May 2013, the FASB reissued an exposure draft on lease accounting that would require entities to recognize assets and liabilities arising from lease contracts on the balance sheet.  The proposed exposure draft states that lessees and lessors should apply a "right-of-use model" in accounting for all leases.  Under the proposed model, lessees would recognize an asset for the right to use the leased asset, and a liability for the obligation to make rental payments over the lease term.  When measuring the asset and liability, variable lease payments are excluded, whereas renewal options that provide a significant economic incentive upon renewal would be included.  The accounting by a lessor would reflect its retained exposure to the risks or benefits of the underlying leased asset.  A lessor would recognize an asset representing its right to receive lease payments based on the expected term of the lease.  The lease expense from real estate based leases would continue to be recorded under a straight-line approach, but other leases not related to real estate would be expensed using an effective interest method that would accelerate lease expense.  A final standard is currently expected to be issued in 2014 and would be effective no earlier than annual reporting periods beginning on January 1, 2017 (fiscal 2018 for the Company).  The proposed standard, as currently drafted, would have a material impact on the Company's financial position and the impact on the Company's reported results of operations is being evaluated.  The impact of this exposure draft is non-cash in nature and would not affect the Company's cash position.

In July 2013, the FASB issued Accounting Standards Update 2013-11, Income Taxes (Topic 740) - Presentation of an Unrecognized Tax Benefit when a Net Operating Loss Carryforward or Tax Credit Carryforward Exists.  This update provides that an entity's unrecognized tax benefit, or a portion of its unrecognized tax benefit, should be presented in its financial statements as a reduction to a deferred tax asset for a net operating loss carryforward, a similar tax loss, or a tax credit carryforward.  This update applies prospectively to all entities that have unrecognized tax benefits when a net operating loss carryforward, a similar tax loss, or a tax credit carryforward exists at the reporting date.  Retrospective application is also permitted.  This update is effective for annual periods, and interim periods within those years, beginning after December 15, 2013 (fiscal 2014).  The standard will not have a material impact on the Company's reported results of operations and financial position.  The impact of this ASU is non-cash in nature and will not affect the Company's cash position.

FINANCING AND MARKET RISK

We are exposed to interest rate volatility with regard to future issuances of fixed-rate debt, and existing and future issuances of floating-rate debt.  Primary exposures include U.S. Treasury rates, LIBOR and commercial paper rates.  From time to time, we use interest rate swaps and forward-starting interest rate swaps to hedge our exposure to interest rate changes, to reduce the volatility of our financing costs, and to achieve a desired proportion of fixed versus floating-rate debt, based on current and projected market conditions.  Generally under these swaps, we agree with a counterparty to exchange the difference between fixed-rate and floating-rate interest rate amounts based on an agreed upon notional principal amount.

Information regarding our interest rate swap transactions is set forth in Note 10 to the Consolidated Financial Statements.  These financial instruments are sensitive to changes in interest rates.  On August 31, 2013, we had $1.6 billion in long-term debt obligations that had floating interest rates.  A one percentage point increase or decrease in interest rates would increase or decrease the annual interest expense we recognize and the cash we pay for interest expense by approximately $16 million.

In connection with our Purchase and Option Agreement with Alliance Boots and the transactions contemplated thereby, our exposure to foreign currency risks, primarily with respect to the British pound Sterling, and to a lesser extent the Euro and certain other foreign currencies, is expected to increase.  We are exposed to the translation of foreign currency earnings to the U.S. dollar as a result of our 45% interest in Alliance Boots, which we account for using the equity method of accounting on a three-month lag.  Foreign currency forward contracts and other derivative instruments may be used from time to time in some instances to hedge in full or in part certain risks relating to foreign currency denominated assets and liabilities, intercompany transactions, and in connection with acquisitions, joint ventures or investments outside the United States.  As of August 31, 2013 and August 31, 2012, we did not have any outstanding foreign exchange derivative instruments.

Changes in AmerisourceBergen common stock price and equity volatility may have a significant impact on the value of the warrants to acquire AmerisourceBergen common stock described in Note 10 to our consolidated financial statements.  As of August 31, 2013, a one dollar change in AmerisourceBergen's common stock would, holding other factors constant, increase or decrease fair value of the Company's warrants by $15 million and a one percent change in AmerisourceBergen's equity volatility would, holding other factors constant, increase or decrease the fair value of the Company's warrants by $7 million.  Additionally, the Company holds an investment in AmerisourceBergen common stock.  As of August 31, 2013, a one dollar change in AmerisourceBergen's common stock would increase or decrease the fair value of the Company's investment by $4 million.

CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS

This report and other documents that we file or furnish with the Securities and Exchange Commission contain forward-looking statements that are based on current expectations, estimates, forecasts and projections about our future performance, our business, our beliefs and our management's assumptions. In addition, we, or others on our behalf, may make forward-looking statements in press releases or written statements, on the Company's website or in our communications and discussions with investors and analysts in the normal course of business through meetings, webcasts, phone calls, conference calls and other communications.  Some of such forward-looking statements may be based on certain data and forecasts relating to our business and industry that we have obtained from internal surveys, market research, publicly available information and industry publications.  Industry publications, surveys and market research generally state that the information they provide has been obtained from sources believed to be reliable, but that the accuracy and completeness of such information is not guaranteed.  Statements that are not historical facts are forward-looking statements, including, without limitation, statements regarding our future financial and operating performance, as well as forward-looking information concerning our investment in Alliance Boots GmbH and the other arrangements and transactions contemplated by the Purchase and Option Agreement with Alliance Boots and their possible effects, our commercial agreement with AmerisourceBergen, the arrangements and transactions contemplated by our framework agreement with AmerisourceBergen and Alliance Boots and their possible effects, levels of business with Express Scripts customers, estimates of the impact of developments on our earnings, earnings per share and other financial metrics, network participation, cough/cold and flu season, prescription volume, pharmacy sales trends, prescription margins, number and location of new store openings, vendor, payer and customer relationships and terms, possible new contracts or contract extensions, competition, economic and business conditions, outcomes of litigation and regulatory matters, the level of capital expenditures, industry trends, demographic trends, growth strategies, financial results, cost reduction initiatives, acquisition and joint venture synergies, competitive strengths and changes in legislation or regulations. Words such as "expect," "likely," "outlook," "forecast," "would," "could," "should," "can," "will," "project," "intend," "plan," "goal," "target," "continue," "sustain," "synergy," "on track," "believe," "seek," "estimate," "anticipate," "may," "possible," "assume," variations of such words and similar expressions are intended to identify such forward-looking statements, which are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995.

These forward-looking statements are not guarantees of future performance and are subject to risks, uncertainties and assumptions that could cause actual results to vary materially from those indicated, including, but not limited to, those relating to the Purchase and Option Agreement and other agreements relating to our strategic partnership with Alliance Boots, the arrangements and transactions contemplated thereby and their possible effects, our commercial agreement with AmerisourceBergen, the arrangements and transactions contemplated by our framework agreement with AmerisourceBergen and Alliance Boots and their possible effects, the occurrence of any event, change or other circumstance that could give rise to the termination, cross-termination or modification of any of the transaction documents, the parties' ability to realize anticipated synergies and achieve anticipated financial results, the amount of costs, fees, expenses and charges incurred in connection with strategic transactions, the risks associated with transitions in supply arrangements, the risks associated with international business operations, the risks associated with governance and control matters in minority investments, whether the option to acquire the remainder of the Alliance Boots equity interest will be exercised and the financial ramifications thereof, the risks associated with potential equity investments in AmerisourceBergen including whether the warrants to invest in AmerisourceBergen will be exercised and the financial ramifications thereof, changes in vendor, payer and customer relationships and terms, changes in network participation, levels of business with Express Scripts customers, the implementation, operation and growth of our customer loyalty program, changes in economic and business conditions generally or in the markets in which we or Alliance Boots participate, competition, risks associated with new business areas and activities, risks associated with acquisitions, joint ventures, strategic investments  and divestitures, the ability to realize anticipated results from capital expenditures and cost reduction initiatives, outcomes of legal and regulatory matters, and changes in legislation or regulations or interpretations thereof, and those described in Item 1A (Risk Factors) in our Form 10-K for the fiscal year ended August 31, 2013, and in other reports that we file or furnish with the Securities and Exchange Commission.  Should one or more of these risks or uncertainties materialize, or should underlying assumptions prove incorrect, actual results may vary materially from those indicated or anticipated by such forward-looking statements. Accordingly, you are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date they are made. Except to the extent required by law, we do not undertake, and expressly disclaim, any duty or obligation to update publicly any forward-looking statement after the date the statement is made, whether as a result of new information, future events, changes in assumptions or otherwise.

Consolidated Statements of Comprehensive Income

Walgreen Co. and Subsidiaries

For the years ended August 31, 2013, 2012 and 2011

(In millions, except per share amounts)

	2013			2012			2011
Net sales	$	72,217		$	71,633		$	72,184
Cost of sales		51,098			51,291			51,692
Gross Profit		21,119			20,342			20,492
Selling, general and administrative expenses		17,543			16,878			16,561
Gain on sale of business		20			-			434
Equity earnings in Alliance Boots		344			-			-
Operating Income		3,940			3,464			4,365
Interest expense, net		(165	)		(88	)		(71	)
Other income		120			-			-
Earnings Before Income Tax Provision		3,895			3,376			4,294
Income tax provision		1,445			1,249			1,580
Net Earnings	$	2,450		$	2,127		$	2,714
Other comprehensive income (loss), net of tax:
Change in postretirement liability		(5	)		52			40
Share of other comprehensive income of Alliance Boots		(59	)		-			-
Unrecognized gain on available-for-sale investments		1			-			-
Cumulative translation adjustments		(103	)		-			-
Comprehensive Income	$	2,284		$	2,179		$	2,754
Net earnings per common share – basic	$	2.59		$	2.43		$	2.97
Net earnings per common share – diluted		2.56			2.42			2.94
Average shares outstanding		946.0			874.7			915.1
Dilutive effect of stock options		9.2			5.4			9.4
Average diluted shares		955.2			880.1			924.5

The accompanying Notes to Consolidated Financial Statements are integral parts of these statements.

Consolidated Statements of Shareholders' Equity

Walgreen Co. and Subsidiaries

For the years ended August 31, 2013, 2012 and 2011

(In millions, except shares and per share amounts)

	Shareholders' Equity
	Common Stock Shares			Common Stock Amount		Paid-In Capital			Employee Stock Loan Receivable			Retained Earnings			Accumulated Other Comprehensive Income(Loss)			Treasury Stock Amount
Balance, August 31, 2010		938,605,053		$	80	$	684		$	(87	)	$	16,848		$	(24	)	$	(3,101	)
Net earnings		-			-		-			-			2,714			-			-
Dividends declared ($.75 per share)		-			-		-			-			(685	)		-			-
Treasury stock purchases		(54,739,474	)		-		-			-			-			-			(2,028	)
Employee stock purchase and option plans		5,428,551			-		(12	)		-			-			-			203
Other		-			-		27			-			-			-			-
Stock-based compensation		-			-		135			-			-			-			-
Employee stock loan receivable		-			-		-			53			-			-			-
Reduction of postretirement liability, net of $22 tax expense		-			-		-			-			-			40			-
Balance, August 31, 2011		889,294,130		$	80	$	834		$	(34	)	$	18,877		$	16		$	(4,926	)
Net earnings		-			-		-			-			2,127			-			-
Dividends declared ($.95 per share)		-			-		-			-			(848	)		-			-
Treasury stock purchases		(34,720,215	)		-		-			-			-			-			(1,191	)
Employee stock purchase and option plans		6,088,749			-		(75	)		-			-			-			229
Stock-based compensation		-			-		99			-			-			-			-
Employee stock loan receivable		-			-		-			15			-			-			-
Shares issued for investment in Alliance Boots		83,392,670			0		78			-			-			-			2,903
Reduction of postretirement liability, net of $32 tax expense		-			-		-			-			-			52			-
Balance, August 31, 2012		944,055,334		$	80	$	936		$	(19	)	$	20,156		$	68		$	(2,985	)
Net earnings		-			-		-			-			2,450			-			-
Dividends declared ($1.14 per share)		-			-		-			-			(1,083	)		-			-
Treasury stock purchases		(13,797,490	)		-		-			-			-			-			(615	)
Employee stock purchase and option plans		16,337,734			-		34			-			-			-			486
Stock-based compensation		-			-		104			-			-			-			-
Employee stock loan receivable		-			-		-			8			-			-			-
Cumulative currency translation, net of $55 tax benefit		-			-		-			-			-			(103	)		-
Share of other comprehensive income of Alliance Boots, net of $32 tax benefit		-			-		-			-			-			(59	)		-
Unrecognized gain on available-for-sale investments, net of tax		-			-		-			-			-			1			-
Reduction of postretirement liability, net of $3 tax benefit		-			-		-			-			-			(5	)		-
Balance, August 31, 2013		946,595,578		$	80	$	1,074		$	(11	)	$	21,523		$	(98	)	$	(3,114	)

The accompanying Notes to Consolidated Financial Statements are integral parts of these statements.

Consolidated Balance Sheets

Walgreen Co. and Subsidiaries

At August 31, 2013 and 2012

(In millions, except shares and per share amounts)

Assets	2013			2012
Current Assets
Cash and cash equivalents	$	2,106		$	1,297
Accounts receivable, net		2,632			2,167
Inventories		6,852			7,036
Other current assets		284			260
Total Current Assets		11,874			10,760
Non-Current Assets
Property and equipment, at cost, less accumulated depreciation and amortization		12,138			12,038
Equity investment in Alliance Boots		6,261			6,140
Alliance Boots call option		839			866
Goodwill		2,410			2,161
Other non-current assets		1,959			1,497
Total Non-Current Assets		23,607			22,702
Total Assets	$	35,481		$	33,462
Liabilities and Shareholders' Equity
Current Liabilities
Short-term borrowings	$	570		$	1,319
Trade accounts payable		4,635			4,384
Accrued expenses and other liabilities		3,577			3,019
Income taxes		101			-
Total Current Liabilities		8,883			8,722
Non-Current Liabilities
Long-term debt		4,477			4,073
Deferred income taxes		600			545
Other non-current liabilities		2,067			1,886
Total Non-Current Liabilities		7,144			6,504
Commitments and Contingencies (see Note 12)
Shareholders' Equity
Preferred stock, $.0625 par value; authorized 32 million shares; none issued		-			-
Common stock, $.078125 par value; authorized 3.2 billion shares; issued and outstanding 1,028,180,150 shares in 2013 and 2012		80			80
Paid-in capital		1,074			936
Employee stock loan receivable		(11	)		(19	)
Retained earnings		21,523			20,156
Accumulated other comprehensive (loss) income		(98	)		68
Treasury stock at cost, 81,584,572 shares in 2013 and 84,124,816 shares in 2012		(3,114	)		(2,985	)
Total Shareholders' Equity		19,454			18,236
Total Liabilities and Shareholders' Equity	$	35,481		$	33,462

The accompanying Notes to Consolidated Financial Statements are integral parts of these statements.

Consolidated Statements of Cash Flows

Walgreen Co. and Subsidiaries

For the years ended August 31, 2013, 2012 and 2011

(In millions)

	2013			2012			2011
Cash Flows from Operating Activities
Net earnings	$	2,450		$	2,127		$	2,714
Adjustments to reconcile net earnings to net cash provided by operating activities –
Depreciation and amortization		1,283			1,166			1,086
Change in fair value of warrants and related amortization		(120	)		-			-
Gain on sale of business		-			-			(434	)
Deferred income taxes		148			265			132
Stock compensation expense		104			99			135
Equity earnings in Alliance Boots		(344	)		-			-
Other		113			43			53
Changes in operating assets and liabilities -
Accounts receivable, net		(449	)		394			(243	)
Inventories		321			1,083			(592	)
Other current assets		18			(4	)		(24	)
Trade accounts payable		182			(439	)		384
Accrued expenses and other liabilities		424			(184	)		218
Income taxes		103			(228	)		102
Other non-current assets and liabilities		68			109			112
Net cash provided by operating activities		4,301			4,431			3,643
Cash Flows from Investing Activities
Additions to property and equipment		(1,212	)		(1,550	)		(1,213	)
Return of (investment in) restricted cash		-			191			(191	)
Proceeds from sale of assets		145			123			79
Business and intangible asset acquisitions, net of cash received		(630	)		(491	)		(630	)
Purchases of short term investments held to maturity		(66	)		-			-
Proceeds from short term investments held to maturity		16			-			-
Proceeds (payments) from sale of business		20			(45	)		442
Investment in AmerisourceBergen		(224	)		-			-
Investment in Alliance Boots		-			(4,025	)		-
Other		(45	)		(63	)		(12	)
Net cash used for investing activities		(1,996	)		(5,860	)		(1,525	)
Cash Flows from Financing Activities
Proceeds from issuance of long-term debt		4,000			3,000			-
Payments of long-term debt		(4,300	)		-			(17	)
Stock purchases		(615	)		(1,191	)		(2,028	)
Proceeds related to employee stock plans		486			165			235
Cash dividends paid		(1,040	)		(787	)		(647	)
Other		(27	)		(17	)		15
Net cash (used for) provided by financing activities		(1,496	)		1,170			(2,442	)
Changes in Cash and Cash Equivalents
Net increase (decrease) in cash and cash equivalents		809			(259	)		(324	)
Cash and cash equivalents at beginning of year		1,297			1,556			1,880
Cash and cash equivalents at end of year	$	2,106		$	1,297		$	1,556

The accompanying Notes to Consolidated Financial Statements are integral parts of these statements.

Notes to Consolidated Financial Statements

(1)Summary of Major Accounting Policies

Description of Business

The Company is principally in the retail drugstore business and its operations are within one reportable segment.  At August 31, 2013, there were 8,582 drugstore and other locations in all 50 states, the District of Columbia, Guam and Puerto Rico.  Prescription sales were 62.9% of total sales for fiscal 2013 compared to 63.2% in 2012 and 64.7% in 2011.

Basis of Presentation

The consolidated financial statements include the accounts of the Company and its subsidiaries.  All intercompany transactions have been eliminated.  The consolidated financial statements are prepared in accordance with accounting principles generally accepted in the United States of America and include amounts based on management's prudent judgments and estimates. Actual results may differ from these estimates.

The Company's 45% proportionate share of earnings in the Alliance Boots GmbH (Alliance Boots) equity method investment is included in consolidated net earnings.  The Company reports its share of equity earnings in Alliance Boots within the operating section in the Consolidated Statements of Comprehensive Income because operations of Alliance Boots are integral to Walgreens.  The companies share common board of director members, recognize purchasing synergies through Walgreens Boots Alliance Development GmbH, a 50/50 joint venture, as well as engage in intercompany sales transactions on select front-end merchandise.  Because of the three-month lag and the timing of the closing of this investment, only the ten months of August through May's results of operations are reflected in the equity earnings in Alliance Boots included in the Company's reported net earnings for year ended August 31, 2013.

The financial results of the Walgreens Boots Alliance Development GmbH joint venture are fully consolidated into the Company's consolidated financial statements and reported without a lag.  As the joint venture is included within the Company's operating results, Alliance Boots proportionate share of Walgreens Boots Alliance Development GmbH earnings is removed from equity earnings.

Cash and Cash Equivalents

Cash and cash equivalents include cash on hand and all highly liquid investments with an original maturity of three months or less.  Credit and debit card receivables from banks, which generally settle within two business days, of $160 million and $88 million were included in cash and cash equivalents at August 31, 2013 and 2012, respectively.  At August 31, 2013 and 2012, the Company had $1.6 billion and $820 million, respectively, in money market funds, all of which was included in cash and cash equivalents.

The Company's cash management policy provides for controlled disbursement.  As a result, the Company had outstanding checks in excess of funds on deposit at certain banks.  These amounts, which were $274 million at August 31, 2013, and $256 million at August 31, 2012, are included in trade accounts payable in the accompanying Consolidated Balance Sheets.

Allowance for Doubtful Accounts

The provision for bad debt is based on both historical write-off percentages and specifically identified receivables.  Activity in the allowance for doubtful accounts was as follows (in millions):

	2013			2012			2011
Balance at beginning of year	$	99		$	101		$	104
Bad debt provision		124			107			88
Write-offs		(69	)		(109	)		(91	)
Balance at end of year	$	154		$	99		$	101

Inventories

Inventories are valued on a lower of last-in, first-out (LIFO) cost or market basis.  At August 31, 2013 and 2012, inventories would have been greater by $2.1 billion and $1.9 billion, respectively, if they had been valued on a lower of first-in, first-out (FIFO) cost or market basis.  As a result of declining inventory levels, the fiscal 2013 and 2012 LIFO provisions were reduced by $194 million and $268 million of LIFO liquidation, respectively.  Inventory includes product costs, inbound freight, warehousing costs and vendor allowances not classified as a reduction of advertising expense.

Equity Method Investments

The Company uses the equity method to account for investments in companies if the investment provides the ability to exercise significant influence, but not control, over operating and financial policies of the investee.  The Company's proportionate share of the net income or loss of these companies is included in consolidated net earnings.  Judgment regarding the level of influence over each equity method investment includes considering key factors such as the Company's ownership interest, representation on the board of directors, participation in policy-making decisions and material intercompany transactions.

The Company purchases inventory from Alliance Boots in the ordinary course of business.  These related party inventory purchases, which began in fiscal 2013, were not material.

The underlying net assets of the Company's equity method investment in Alliance Boots include goodwill and indefinite-lived intangible assets.  These assets are evaluated for impairment annually, or more frequently if an event occurs or circumstances change that would more likely than not reduce the fair value of a reporting unit below its carrying value.  Based on testing performed during fiscal 2013, the fair value of each Alliance Boots reporting unit exceeded its carrying value.  For certain reporting units, relatively modest changes in key assumptions may have resulted in the recognition of a goodwill impairment charge.  The Company's proportionate share of a potential impairment would be limited to its 45% ownership percentage. 

Property and Equipment

Depreciation is provided on a straight-line basis over the estimated useful lives of owned assets.  Leasehold improvements and leased properties under capital leases are amortized over the estimated useful life of the property or over the term of the lease, whichever is shorter.  Estimated useful lives range from 10 to 39 years for land improvements, buildings and building improvements; and 2 to 13 years for equipment.  Major repairs, which extend the useful life of an asset, are capitalized; routine maintenance and repairs are charged against earnings.  The majority of the business uses the composite method of depreciation for equipment.  Therefore, gains and losses on retirement or other disposition of such assets are included in earnings only when an operating location is closed, completely remodeled or impaired. Fully depreciated property and equipment are removed from the cost and related accumulated depreciation and amortization accounts.  Property and equipment consists of (in millions):

	2013		2012
Land and land improvements
Owned locations	$	3,203	$	3,189
Distribution centers		97		96
Other locations		219		232
Buildings and building improvements
Owned locations		3,805		3,684
Leased locations (leasehold improvements only)		1,811		1,518
Distribution centers		620		608
Other locations		351		525
Equipment
Locations		5,334		4,995
Distribution centers		1,190		1,158
Other locations		755		586
Capitalized system development costs		581		420
Capital lease properties		215		149
		18,181		17,160
Less: accumulated depreciation and amortization		6,043		5,122
	$	12,138	$	12,038

Depreciation expense for property and equipment was $894 million in fiscal 2013, $841 million in fiscal 2012 and $809 million in fiscal 2011.

The Company capitalizes application stage development costs for significant internally developed software projects, such as upgrades to the store point-of-sale system.  These costs are amortized over a five-year period.  Amortization expense was $100 million in fiscal 2013, $70 million in fiscal 2012 and $58 million in fiscal 2011.  Unamortized costs at August 31, 2013 and 2012, were $374 million and $292 million, respectively.

Goodwill and Other Intangible Assets

Goodwill represents the excess of the purchase price over the fair value of assets acquired and liabilities assumed.  The Company accounts for goodwill and intangibles under ASC Topic 350, Intangibles – Goodwill and Other, which does not permit amortization, but requires the Company to test goodwill and other indefinite-lived assets for impairment annually or whenever events or circumstances indicate impairment may exist.

Impaired Assets and Liabilities for Store Closings

The Company tests long-lived assets for impairment whenever events or circumstances indicate that a certain asset may be impaired.  Store locations that have been open at least five years are reviewed for impairment indicators at least annually.  Once identified, the amount of the impairment is computed by comparing the carrying value of the assets to the fair value, which is based on the discounted estimated future cash flows.  Impairment charges included in selling, general and administrative expenses were $30 million in fiscal 2013, $27 million in fiscal 2012 and $44 million in fiscal 2011.

The Company also provides for future costs related to closed locations.  The liability is based on the present value of future rent obligations and other related costs (net of estimated sublease rent) to the first lease option date.  The reserve for store closings was $123 million and $117 million as of August 31, 2013 and 2012, respectively.  See Note 3 for additional disclosure regarding the Company's reserve for future costs related to closed locations.

Financial Instruments

The Company had $197 million and $157 million of outstanding letters of credit at August 31, 2013 and 2012, respectively, which guarantee the purchase of foreign goods, and additional outstanding letters of credit of $263 million and $38 million at August 31, 2013 and 2012, respectively, which guarantee payments of insurance claims.  The insurance claim letters of credit are annually renewable and will remain in place until the insurance claims are paid in full.  Letters of credit of $4 million and $229 million were outstanding at August 31, 2013, and August 31, 2012, respectively, to guarantee performance of construction contracts.  The Company pays a facility fee to the financing bank to keep these letters of credit active.  The Company had real estate development purchase commitments of $185 million and $206 million at August 31, 2013 and 2012, respectively.

The Company uses interest rate swaps to manage its interest rate exposure associated with some of its fixed-rate borrowings.  At August 31, 2013, $1.0 billion of fixed-rate debt was converted to variable rate.  These swaps are accounted for according to ASC Topic 815, Derivatives and Hedging. The swaps are measured at fair value in accordance with ASC Topic 820, Fair Value Measurement and Disclosures.  In  fiscal 2012, the Company entered into three forward starting interest rate swap transactions locking in fixed rates on $1.0 billion of the $4.0 billion debt that was issued in fiscal 2013 in connection with the Alliance Boots transaction.  These swaps were designated as cash flow hedges and measured at fair value.  See Notes 10 and 11 for additional disclosure regarding financial instruments.

Revenue Recognition

The Company recognizes revenue at the time the customer takes possession of the merchandise.  Customer returns are immaterial.  Sales taxes are not included in revenue.

Revenue from the pharmacy benefit management (PBM) business was included in the Company's Consolidated Statement of Comprehensive Income prior to being sold in fiscal 2011.  The services the Company provided to its PBM clients included: plan setup, claims adjudication with network pharmacies, formulary management, and reimbursement services.  Through its PBM, the Company acted as an agent in administering pharmacy reimbursement contracts and did not assume credit risk.  Therefore, revenue was recognized as only the differential between the amount receivable from the client and the amount owed to the network pharmacy.  The Company acted as an agent to its clients with respect to administrative fees for claims adjudication.  Those service fees were recognized as revenue.

Gift Cards

The Company sells Walgreens gift cards to retail store customers and through its website.  The Company does not charge administrative fees on unused gift cards and most gift cards do not have an expiration date.  Income from gift cards is recognized when (1) the gift card is redeemed by the customer; or (2) the likelihood of the gift card being redeemed by the customer is remote (gift card breakage) and there is no legal obligation to remit the value of unredeemed gift cards to the relevant jurisdictions.  The Company's gift card breakage rate is determined based upon historical redemption patterns.  Gift card breakage income, which is included in selling, general and administrative expenses, was not significant in fiscal 2013, 2012 or 2011.

Loyalty Program

The Company's rewards program, Balance^® Rewards, is accrued as a charge to cost of sales at the time a point is earned.  Points are funded internally and through vendor participation, and are credited to cost of sales at the time a vendor-sponsored point is earned.  Breakage is recorded as points expire as a result of a member's inactivity or if the points remain unredeemed after three years.  Breakage income, which is reported in cost of sales, was not significant in fiscal 2013.  

Cost of Sales

Cost of sales is derived based upon point-of-sale scanning information with an estimate for shrinkage and is adjusted based on periodic inventories.  In addition to product costs, cost of sales includes warehousing costs, purchasing costs, freight costs, cash discounts and vendor allowances.

Vendor Allowances

Vendor allowances are principally received as a result of purchases, sales or promotion of vendors' products.  Allowances are generally recorded as a reduction of inventory and are recognized as a reduction of cost of sales when the related merchandise is sold.  Those allowances received for promoting vendors' products are offset against advertising expense and result in a reduction of selling, general and administrative expenses to the extent of advertising costs incurred, with the excess treated as a reduction of inventory costs.

Selling, General and Administrative Expenses

Selling, general and administrative expenses mainly consist of store salaries, occupancy costs, and expenses directly related to stores.  In addition, other costs included are headquarters' expenses, advertising costs (net of advertising revenue) and insurance.

Advertising Costs

Advertising costs, which are reduced by the portion funded by vendors, are expensed as incurred.  Net advertising expenses, which are included in selling, general and administrative expenses, were $286 million in fiscal 2013, $291 million in fiscal 2012 and $271 million in fiscal 2011.  Included in net advertising expenses were vendor advertising allowances of $240 million in fiscal 2013, $239 million in fiscal 2012 and $218 million in fiscal 2011.

Insurance

The Company obtains insurance coverage for catastrophic exposures as well as those risks required by law to be insured.  It is the Company's policy to retain a significant portion of certain losses related to workers' compensation, property, comprehensive general, pharmacist and vehicle liability.  Liabilities for these losses are recorded based upon the Company's estimates for claims incurred and are not discounted.  The provisions are estimated in part by considering historical claims experience, demographic factors and other actuarial assumptions.

Available-for-Sale Investments

The Company, Alliance Boots and AmerisourceBergen Corporation (AmerisourceBergen) entered into a Framework Agreement dated as of March 18, 2013, pursuant to which Walgreens and Alliance Boots together were granted the right to purchase a minority equity position in AmerisourceBergen, beginning with the right, but not the obligation, to purchase up to 19,859,795 shares of AmerisourceBergen common stock (approximately 7 percent of the then fully diluted equity of AmerisourceBergen, assuming the exercise in full of the warrants described below) in open market transactions.

Warrants

The Company and Alliance Boots were each issued (a) a warrant to purchase up to 11,348,456 shares of AmerisourceBergen common stock at an exercise price of $51.50 per share exercisable during a six-month period beginning in March 2016, and (b) a warrant to purchase up to 11,348,456 shares of AmerisourceBergen common stock at an exercise price of $52.50 per share exercisable during a six-month period beginning in March 2017.  The Company's warrants are valued at the date of issuance and the end of the period using a Monte Carlo simulation.  Key assumptions used throughout the valuation include risk-free interest rates using constant maturity treasury rates; the dividend yield for AmerisourceBergen's common stock; AmerisourceBergen's common stock price at valuation date; AmerisourceBergen's equity volatility; the number of shares of AmerisourceBergen's common stock outstanding; the number of AmerisourceBergen employee stock options and the exercise price; and the details specific to the warrants.  The fair value of the Company's warrants on March 18, 2013, the date of issuance, was $77 million.  The Company recorded the fair value of its warrants as a non-current asset with a corresponding deferred credit in its Consolidated Balance Sheets.  The deferred credit attributable to the warrants will be amortized over the life of the warrants.  As of August 31, 2013, the fair value of the Company's warrants was $188 million, which resulted in the Company recording other income of $111 million for fiscal 2013 within its Consolidated Statements of Comprehensive Income.  The increase in the fair value of the warrants was primarily attributable to the increase in the price of AmerisourceBergen's common stock.  In addition, the Company recorded $9 million of other income relating to the amortization of the deferred credit in fiscal 2013.

Pre-Opening Expenses

Non-capital expenditures incurred prior to the opening of a new or remodeled store are expensed as incurred.

Stock-Based Compensation Plans

In accordance with ASC Topic 718, Compensation – Stock Compensation, the Company recognizes compensation expense on a straight-line basis over the employee's vesting period or to the employee's retirement eligible date, if earlier.

Total stock-based compensation expense for fiscal 2013, 2012 and 2011 was $104 million, $99 million and $135 million, respectively.  The recognized tax benefit was $30 million, $9 million and $49 million for fiscal 2013, 2012 and 2011, respectively.

Unrecognized compensation cost related to non-vested awards at August 31, 2013, was $189 million.  This cost is expected to be recognized over a weighted average of three years.

Interest Expense

The Company capitalized $7 million, $9 million and $10 million of interest expense as part of significant construction projects during fiscal 2013, 2012 and 2011, respectively.  Interest paid, which is net of capitalized interest, was $158 million in fiscal 2013, $108 million in fiscal 2012 and $89 million in fiscal 2011.

Income Taxes

The Company accounts for income taxes according to the asset and liability method. Under this method, deferred tax assets and liabilities are recognized based upon the estimated future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured pursuant to tax laws using rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled.  The effect on deferred tax assets and liabilities of a change in tax rate is recognized in income in the period that includes the enactment date. Valuation allowances are established when necessary to reduce deferred tax assets to the amounts more likely than not to be realized.

In determining the Company's provision for income taxes, an annual effective income tax rate based on full-year income, permanent differences between book and tax income, and statutory income tax rates are used. The effective income tax rate also reflects the Company's assessment of the ultimate outcome of tax audits in addition to any foreign-based income deemed to be taxable in the United States. Discrete events such as audit settlements or changes in tax laws are recognized in the period in which they occur.

The Company is subject to routine income tax audits that occur periodically in the normal course of business.  U.S. federal, state and local and foreign tax authorities raise questions regarding the Company's tax filing positions, including the timing and amount of deductions and the allocation of income among various tax jurisdictions. In evaluating the tax benefits associated with its various tax filing positions, the Company records a tax benefit for uncertain tax positions using the highest cumulative tax benefit that is more likely than not to be realized. Adjustments are made to the liability for unrecognized tax benefits in the period in which the Company determines the issue is effectively settled with the tax authorities, the statute of limitations expires for the return containing the tax position or when more information becomes available. The Company's liability for unrecognized tax benefits, including accrued penalties and interest, is included in other long-term liabilities on the Consolidated Balance Sheets and in income tax expense in the Consolidated Statements of Comprehensive Income.

Earnings Per Share

The dilutive effect of outstanding stock options on earnings per share is calculated using the treasury stock method.  Stock options are anti-dilutive and excluded from the earnings per share calculation if the exercise price exceeds the average market price of the common shares.  Outstanding options to purchase common shares that were anti-dilutive and excluded from earnings per share totaled 12,316,949, 32,593,870 and 16,869,061 in fiscal 2013, 2012 and 2011, respectively.

New Accounting Pronouncements

In July 2012, Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) 2012-02, Intangibles – Goodwill and Other (Topic 350) – Testing Indefinite-Lived Intangible Assets for Impairment, which permits an entity to make a qualitative assessment to determine whether it is more likely than not that an indefinite-lived intangible asset, other than goodwill, is impaired.  If an entity concludes, based on an evaluation of all relevant qualitative factors, that it is not more likely than not that the fair value of an indefinite-lived intangible asset is less than its carrying amount, it will not be required to perform the quantitative impairment for that asset.  The ASU is effective for impairment tests performed for fiscal years beginning after September 15, 2012 (fiscal year 2014), with early adoption permitted.  The ASU will not have a material impact on the Company's reported results of operations and financial position.  The impact is non-cash in nature and will not affect the Company's cash position.

In May 2013, the FASB reissued an exposure draft on lease accounting that would require entities to recognize assets and liabilities arising from lease contracts on the balance sheet.  The proposed exposure draft states that lessees and lessors should apply a "right-of-use model" in accounting for all leases.  Under the proposed model, lessees would recognize an asset for the right to use the leased asset, and a liability for the obligation to make rental payments over the lease term.  When measuring the asset and liability, variable lease payments are excluded, whereas renewal options that provide a significant economic incentive upon renewal would be included.  The accounting by a lessor would reflect its retained exposure to the risks or benefits of the underlying leased asset.  A lessor would recognize an asset representing its right to receive lease payments based on the expected term of the lease.  The lease expense from real estate based leases would continue to be recorded under a straight-line approach, but other leases not related to real estate would be expensed using an effective interest method that would accelerate lease expense.  A final standard is currently expected to be issued in 2014 and would be effective no earlier than annual reporting periods beginning on January 1, 2017 (fiscal 2018 for the Company).  The proposed standard, as currently drafted, would have a material impact on the Company's financial position and the impact on the Company's reported results of operations is being evaluated.  The impact of this exposure draft is non-cash in nature and would not affect the Company's cash position.

In July 2013, the FASB issued Accounting Standards Update 2013-11, Income Taxes (Topic 740) – Presentation of an Unrecognized Tax Benefit when a Net Operating Loss Carryforward or Tax Credit Carryforward Exists.  This update provides that an entity's unrecognized tax benefit, or a portion of its unrecognized tax benefit, should be presented in its financial statements as a reduction to a deferred tax asset for a net operating loss carryforward, a similar tax loss, or a tax credit carryforward.  This update applies prospectively to all entities that have unrecognized tax benefits when a net operating loss carryforward, a similar tax loss, or a tax credit carryforward exists at the reporting date.  Retrospective application is also permitted.  This update is effective for annual periods, and interim periods within those years, beginning after December 15, 2013 (fiscal 2014).  The standard will not have a material impact on the Company's reported results of operations and financial position.  The impact of this ASU is non-cash in nature and will not affect the Company's cash position.

(2)Restructuring

The Company completed one of its strategic initiatives to enhance shareholder value in fiscal 2011 known as the "Rewiring for Growth" program, which was designed to, among other things, reduce cost and improve productivity.  In fiscal 2011, the Company recorded $42 million of pre-tax charges in selling, general and administrative expenses associated with the program.

Additionally, as a part of the Company's Customer Centric Retailing (CCR) initiative, it has modified the store format to enhance category layouts and adjacencies, shelf heights and sight lines, and brand and private brand assortments, all of which were designed to positively impact the shopper experience.  This initiative was completed in the first quarter of fiscal 2012.  In total, the Company converted 5,843 stores and opened 559 new stores with the CCR format.  In fiscal 2012, the Company incurred $33 million in total program costs, of which $15 million was included in selling, general and administrative expenses and $18 million in capital costs.  In fiscal 2011, the Company incurred $144 million in total program costs, of which $84 million was included in selling, general and administrative expenses and $60 million in capital costs.

(3)Leases

The Company owns approximately 20% of its operating locations; the remaining locations are leased premises.  Initial terms are typically 20 to 25 years, followed by additional terms containing renewal options at five-year intervals, and may include rent escalation clauses.  The commencement date of all lease terms is the earlier of the date the Company becomes legally obligated to make rent payments or the date the Company has the right to control the property.  The Company recognizes rent expense on a straight-line basis over the term of the lease.  In addition to minimum fixed rentals, some leases provide for contingent rentals based upon a portion of sales.

Minimum rental commitments at August 31, 2013, under all leases having an initial or remaining non-cancelable term of more than one year are shown below (in millions):

	Capital Lease		Operating Lease
2014	$	19	$	2,536
2015		19		2,514
2016		18		2,464
2017		17		2,389
2018		15		2,292
Later		270		23,507
Total minimum lease payments	$	358	$	35,702

The capital lease amount includes $155 million of imputed interest and executory costs.  Total minimum lease payments have not been reduced by minimum sublease rentals of approximately $140 million on leases due in the future under non-cancelable subleases.

The Company provides for future costs related to closed locations.  The liability is based on the present value of future rent obligations and other related costs (net of estimated sublease rent) to the first lease option date.  In fiscal 2013, 2012 and 2011, the Company recorded charges of $43 million, $20 million and $54 million, respectively, for facilities that were closed or relocated under long-term leases.  These charges are reported in selling, general and administrative expenses on the Consolidated Statements of Comprehensive Income.

The changes in reserve for facility closings and related lease termination charges include the following (in millions):

	Twelve Months Ended August 31
	2013			2012
Balance – beginning of period	$	117		$	145
Provision for present value of non-cancellable lease      payments of closed facilities		34			6
Assumptions about future sublease income, terminations and changes in interest rates		(6	)		(11	)
Interest accretion		15			25
Cash payments, net of sublease income		(37	)		(48	)
Balance – end of period	$	123		$	117

The Company remains secondarily liable on 26 assigned leases.  The maximum potential undiscounted future payments are $18 million at August 31, 2013.  Lease option dates vary, with some extending to 2041.

Rental expense, which includes common area maintenance, insurance and taxes, was as follows (in millions):

	2013			2012			2011
Minimum rentals	$	2,644		$	2,585		$	2,506
Contingent rentals		6			6			9
Less:  Sublease rental income		(22	)		(20	)		(15	)
	$	2,628		$	2,571		$	2,500

(4)Acquisitions and Divestitures

In September 2012, the Company completed its acquisition of Stephen L. LaFrance Holdings, Inc. (USA Drug) for $436 million net of assumed cash, subject to adjustment in certain circumstances.  This acquisition increased the Company's presence in the mid-South region of the country.  The purchase price allocation for this acquisition added $220 million to goodwill and $156 million to intangible assets, primarily prescription files and non-compete agreements, with $60 million allocated to net tangible assets, primarily inventory.  The purchase price allocation is complete with the exception of the evaluation of certain deferred tax balances.  The USA Drug acquisition contributed $364 million of revenue and a pre-tax loss of $74 million in fiscal 2013, including transaction and store closure costs of $57 million.

In December 2012, the Company acquired an 80% interest in Cystic Fibrosis Foundation Pharmacy LLC for $29 million net of assumed cash, subject to working capital adjustments, and a call option to acquire the remaining 20% interest.  The investment provides joint ownership in a specialty pharmacy for cystic fibrosis patients and their families and a provider of new product launch support and call center services for drug manufacturers.  The investment added $16 million to goodwill and $21 million to intangible assets, primarily payer contracts.

The aggregate purchase price of all business and intangible asset acquisitions, excluding USA Drug and Cystic Fibrosis, was $165 million in fiscal 2013.  These acquisitions added $135 million to intangible assets, primarily prescription files.  The remaining fair value relates to immaterial amounts of tangible assets, less liabilities assumed.  Operating results of businesses acquired have been included in the Consolidated Statements of Comprehensive Income from their respective acquisition dates forward and were not material.

In fiscal 2012, the Company acquired certain assets of BioScrip, Inc.'s (BioScrip) community specialty pharmacies and centralized specialty and mail services pharmacy business for $144 million plus inventory.  The acquisition added $94 million to goodwill and $49 million to other intangible assets.  The addition of BioScrip's community specialty pharmacies and centralized specialty and mail services pharmacy businessesadvances community pharmacy and brings additional specialty pharmacy products and services closer to patients.  The Company also purchased Crescent Pharmacy Holdings, LLC (Crescent), an infusion pharmacy business, for $73 million, net of assumed cash.  The Crescent acquisition added $40 million to goodwill and $26 million to intangible assets, primarily payer contracts.  The acquisition is a strategic investment to expand the Company's infusion services in select California markets.

(5)  Equity Method Investments

Equity method investments as of August 31, 2013 and 2012, were as follows (in millions, except percentages):

	2013				2012
	Carrying Value		Ownership Percentage		Carrying Value		Ownership Percentage
Alliance Boots	$	6,261		45%	$	6,140		45%
Other equity method investments		7		30% - 50%		7		30% - 50%
Total Equity Method Investments	$	6,268			$	6,147

Alliance Boots

On August 2, 2012, pursuant to a Purchase and Option Agreement dated June 18, 2012, by and among the Company, Alliance Boots GmbH and AB Acquisitions Holdings Limited (the Purchase and Option Agreement), the Company acquired 45% of the issued and outstanding share capital of Alliance Boots in exchange for $4.025 billion in cash and approximately 83.4 million shares of Company common stock.  The Purchase and Option Agreement also provides, subject to the satisfaction or waiver of specified conditions, a call option that gives the Company the right, but not the obligation, to acquire the remaining 55% of Alliance Boots (second step transaction) in exchange for an additional £3.1 billion in cash (approximately $4.9 billion using August 31, 2013 exchange rates) as well as an additional 144.3 million Company shares, subject to certain adjustments.  If the Company exercises the call option, in certain limited circumstances, the Company may be required to make the entire second step transaction payment in cash.  The call option can be exercised by the Company during the six-month period beginning February 2, 2015.  In addition, in certain circumstances, if the Company does not exercise the call option, or the Company has exercised the call option but the second step transaction does not close, the Company's ownership of Alliance Boots will reduce from 45% to 42% in exchange for nominal consideration.  The Company's equity earnings, initial investment and the call option exclude the Alliance Boots minority interest in Galenica Ltd. (Galenica).  The Alliance Boots investment in Galenica was distributed to the Alliance Boots shareholders other than the Company in May 2013, which had no impact on the Company's financial results.

The call option was valued using a Monte Carlo simulation using assumptions surrounding Walgreens equity value as well as the potential impacts of certain provisions of the Purchase and Option Agreement that are described in the Form 8-K filed by the Company on June 19, 2012.  The call option is accounted for at cost and subsequently adjusted for foreign currency translation gains or losses.  The final purchase price allocation resulted in $6.1 billion of the total consideration being allocated to the investment and $866 million being allocated to the call option based on their relative fair values.

The Company accounts for its 45% investment in Alliance Boots using the equity method of accounting.   Investments accounted for under the equity method are recorded initially at cost and subsequently adjusted for the Company's share of the net income or loss and cash contributions and distributions to or from these entities.  Because the underlying net assets in Alliance Boots are denominated in a foreign currency, translation gains or losses will impact the recorded value of the Company's investment.  The Company utilizes a three-month lag in reporting equity income in Alliance Boots and as a result, only 10 months results of Alliance Boots were recorded in fiscal 2013.  The Company's investment is recorded as "Equity investment in Alliance Boots" in the Consolidated Balance Sheets.

The Company's initial investment in Alliance Boots exceeded its proportionate share of the net assets of Alliance Boots by $2.4 billion. This premium of $2.4 billion is recognized as part of the carrying value in the Company's equity investment in Alliance Boots.  The difference is primarily related to the fair value of Alliance Boots indefinite-lived intangible assets and goodwill.  The Company's equity method income from the investment in Alliance Boots is adjusted to reflect the amortization of fair value adjustments in certain definite-lived assets of Alliance Boots.  The Company's incremental amortization expense associated with the Alliance Boots investment was approximately $57 million during fiscal 2013, largely consisting of the inventory step-up, which was amortized over the first inventory turn.

During July 2013, the UK Government enacted a law to reduce the UK corporate tax rate applicable from April 2014.  The non-cash impact of this change will be recorded in fiscal 2014 due to the three-month lag.

Other Equity Method Investments

Other equity method investments relate to joint ventures associated with the Company's infusion and respiratory businesses.  These investments are included within other non-current assets on the Consolidated Balance Sheets.  The Company's share of equity income is reported within selling, general and administrative expenses in the Consolidated Statements of Comprehensive Income.

Summarized Financial Information

Summarized financial information for the Company's equity method investees is as follows:

Balance Sheet (in millions)

	At August 31,
	2013(1)		2012(1)
Current Assets	$	8,906	$	9,193
Non-Current Assets		19,484		20,085
Current Liabilities		7,204		7,254
Non-Current Liabilities		12,228		13,269
Shareholders' Equity (2)		8,958		8,755

Income Statement (in millions)

	Year Ended August 31,
	2013(3)		2012		2011
Net Sales	$	30,446	$	37	$	37
Gross Profit		6,391		17		19
Net Earnings		1,022		2		5
Share of income from investments accounted for using the equity method(3)		345		1		2

⁽¹⁾ Net assets in Alliance Boots are translated at the May 31, 2013 spot rate of $1.52 to one British pound Sterling, corresponding to the three-month lag.  Fiscal 2012 net assets in Alliance Boots were translated at a spot rate of $1.57 to one British pound Sterling.

⁽²⁾ Shareholders' equity at August 31, 2013 and 2012, includes $374 million and $380 million related to non-controlling interests, respectively.

⁽³⁾ The Company utilizes a three-month lag in reporting its share of equity income in Alliance Boots.  Earnings reflect $57 million, $44 million net of tax, of incremental acquisition-related amortization for the ten-month period ending August 31, 2013.  Earnings in Alliance Boots are translated at the average exchange rate of $1.57 to one British pound Sterling for the year ended August 31, 2013.  Ten months of operating results are presented for Alliance Boots in fiscal 2013 corresponding to the three-month lag after closing the investment on August 2, 2012.  Walgreens Boots Alliance Development GmbH operations are excluded from these results as the Company consolidates the joint venture.

(6)  Available-for-Sale Investments

In conjunction with its long-term relationship with AmerisourceBergen announced in fiscal 2013, the Company, as of August 31, 2013, has acquired approximately 4.0 million shares of AmerisourceBergen common stock.  The Company's cost basis of common shares acquired through open market transactions was $224 million in fiscal 2013.  The available-for-sale investment is classified as long-term and reported at fair value within other non-current assets in the Consolidated Balance Sheets.  The Company also holds other investments with maturities greater than 90 days that are reported at fair value within other current assets in the Consolidated Balance Sheets.

Fair value adjustments are based on quoted stock prices with the unrealized holding gains and losses reported in other comprehensive income.  Unrealized holding gains at August 31, 2013, were $1 million.  See Note 11 for additional fair value disclosures. Available-for-sale investments reported at fair value at August 31, 2013, were $225 million.

(7)Goodwill and Other Intangible Assets

Goodwill and other indefinite-lived intangible assets are not amortized, but are evaluated for impairment annually during the fourth quarter, or more frequently if an event occurs or circumstances change that would more likely than not reduce the fair value of a reporting unit below its carrying value.  The Company applies ASU 2011-08, Testing Goodwill for Impairment, which permits a qualitative assessment to determine whether it is more likely than not (a more than 50 percent likelihood) that the fair value of a reporting unit is less than its carrying amount, which would then require performing step one of impairment testing.  Otherwise, no further evaluation would be necessary.  As part of the Company's impairment analysis for each reporting unit, the Company engaged a third party appraisal firm to assist in the determination of estimated fair value for each unit.  This determination included estimating the fair value using both the income and market approaches.  The income approach requires management to estimate a number of factors for each reporting unit, including projected future operating results, economic projections, anticipated future cash flows and discount rates.  The market approach estimates fair value using comparable marketplace fair value data from within a comparable industry grouping.

The determination of the fair value of the reporting units and the allocation of that value to individual assets and liabilities within those reporting units requires the Company to make significant estimates and assumptions.  These estimates and assumptions primarily include, but are not limited to: the selection of appropriate peer group companies; control premiums appropriate for acquisitions in the industries in which the Company competes; the discount rate; terminal growth rates; and forecasts of revenue, operating income, depreciation and amortization and capital expenditures.  The allocation requires several analyses to determine the fair value of assets and liabilities including, among other things, purchased prescription files, customer relationships and trade names.  Although the Company believes its estimates of fair value are reasonable, actual financial results could differ from those estimates due to the inherent uncertainty involved in making such estimates.  Changes in assumptions concerning future financial results or other underlying assumptions could have a significant impact on either the fair value of the reporting units, the amount of the goodwill impairment charge, or both.  The Company also compared the sum of the estimated fair values of its reporting units to the Company's total value as implied by the market value of its equity and debt securities. This comparison indicated that, in total, its assumptions and estimates were reasonable.  However, future declines in the overall market value of the Company's equity and debt securities may indicate that the fair value of one or more reporting units has declined below its carrying value.

One measure of the sensitivity of the amount of goodwill impairment charges to key assumptions is the amount by which each reporting unit "passed" (fair value exceeds the carrying amount) or "failed" (the carrying amount exceeds fair value) the first step of the goodwill impairment test. The Company's reporting units' fair values exceeded their carrying amounts ranging from approximately 15% to more than 180%.

Generally, changes in estimates of expected future cash flows would have a similar effect on the estimated fair value of the reporting unit. That is, a 1% change in estimated future cash flows would change the estimated fair value of the reporting unit by approximately 1%. The estimated long-term rate of net sales growth can have a significant impact on the estimated future cash flows, and therefore, the fair value of each reporting unit.  Of the other key assumptions that impact the estimated fair values, most reporting units have the greatest sensitivity to changes in the estimated discount rate.  The Company believes that its estimates of future cash flows and discount rates are reasonable, but future changes in the underlying assumptions could differ due to the inherent uncertainty in making such estimates.

Changes in the carrying amount of goodwill consist of the following activity (in millions):

	2013		2012
Net book value – September 1	$	2,161	$	2,017
Acquisitions		236		120
Other (1)		13		24
Net book value – August 31	$	2,410	$	2,161

⁽¹⁾  "Other" primarily represents immaterial purchase accounting adjustments for the Company's acquisitions.

In September 2012, the Company purchased the regional drugstore chain USA Drug from Stephen L. LaFrance Holdings, Inc. and members of the LaFrance family for $436 million net of assumed cash and selected other assets (primarily prescription files).  In December 2012, the Company purchased an 80% interest in Cystic Fibrosis Foundation Pharmacy LLC for $29 million, net of assumed cash.  The USA Drug and Cystic Fibrosis acquisitions added $220 million and $16 million of goodwill, respectively.

The carrying amount and accumulated amortization of intangible assets consists of the following (in millions):

	2013			2012
Gross Intangible Assets
Purchased prescription files	$	1,099		$	984
Favorable lease interests		381			388
Purchasing and payer contracts		347			334
Non-compete agreements		153			120
Trade name		199			189
Other amortizable intangible assets		4			4
Total gross intangible assets		2,183			2,019
Accumulated amortization
Purchased prescription files		(467	)		(417	)
Favorable lease interests		(143	)		(109	)
Purchasing and payer contracts		(147	)		(119	)
Non-compete agreements		(67	)		(53	)
Trade name		(49	)		(32	)
Other amortizable intangible assets		(3	)		(3	)
Total accumulated amortization		(876	)		(733	)
Total intangible assets, net	$	1,307		$	1,286

Amortization expense for intangible assets was $289 million in fiscal 2013, $255 million in fiscal 2012 and $219 million in fiscal 2011.  The weighted-average amortization period for purchased prescription files was seven years for fiscal 2013 and 2012.  The weighted-average amortization period for favorable lease interests was 11 years for fiscal 2013 and 2012.  The weighted-average amortization period for purchasing and payer contracts was 13 years for fiscal 2013 and 2012.  The weighted-average amortization period for non-compete agreements was six years for fiscal 2013 and fiscal 2012.  The weighted-average amortization period for trade names was 12 years for fiscal 2013 and 13 years for fiscal 2012.  The weighted-average amortization period for other amortizable intangible assets was 10 years for fiscal 2013 and 2012.

Expected amortization expense for intangible assets recorded at August 31, 2013, not including amounts related to Alliance Boots that will be amortized through equity method investment income, is as follows (in millions):

2014		2015		2016		2017		2018
$	257	$	225	$	185	$	144	$	99

(8)Income Taxes

The components of Earnings Before Income Tax Provision were (in millions):

	2013
U.S.	$	3,477
Non-U.S.		418
Total	$	3,895

The non-U.S. amount reported above includes equity earnings in Alliance Boots of $344 million.  Prior to 2013, the non-U.S. component of the Earnings Before Income Tax provision was not material.

The provision for income taxes consists of the following (in millions):

	2013			2012			2011
Current provision -
Federal	$	1,122		$	890		$	1,301
State		134			120			147
Non-U.S.		15			-			-
		1,271			1,010			1,448
Deferred provision -
Federal		174			251			113
State		(2	)		(12	)		19
Non-U.S.		2			-			-
		174			239			132
Income tax provision	$	1,445		$	1,249		$	1,580

The difference between the statutory federal income tax rate and the effective tax rate is as follows:

	2013			2012			2011
Federal statutory rate		35.0	%		35.0	%		35.0	%
State income taxes, net of federal benefit		2.2			2.1			2.6
Other		(0.1	)		(0.1	)		(0.8	)
Effective income tax rate		37.1	%		37.0	%		36.8	%

The deferred tax assets and liabilities included in the Consolidated Balance Sheets consist of the following (in millions):

	2013		2012
Deferred tax assets -
Postretirement benefits	$	218	$	217
Compensation and benefits		136		182
Insurance		121		157
Accrued rent		157		142
Tax benefits		159		214
Stock compensation		159		189
Inventory		95		96
Other		96		92
Subtotal		1,141		1,289
Less: Valuation allowance		19		19
Total deferred tax assets		1,122		1,270
Deferred tax liabilities -
Accelerated depreciation		1,369		1,332
Inventory		491		534
Intangible assets		53		28
Equity method investment		21		-
Other		4		80
Subtotal		1,938		1,974
Net deferred tax liabilities	$	816	$	704

At August 31, 2013, the Company has recorded deferred tax assets of $119 million reflecting the benefit of $212 million in federal and $1.1 billion in state loss carryforwards.  These deferred tax assets will expire at various dates from 2014 through 2032.

The Company believes it is more likely than not that the benefit from certain net operating loss carryforwards will not be realized.  In recognition of this risk, the Company has recorded a valuation allowance of $19 million on certain deferred tax assets relating to these net operating losses as of August 31, 2013.

Income taxes paid were $1.2 billion for fiscal years 2013 and 2012 and $1.3 billion in fiscal 2011.

ASC Topic 740, Income Taxes, provides guidance regarding the recognition, measurement, presentation and disclosure in the financial statements of tax positions taken or expected to be taken on a tax return, including the decision whether to file in a particular jurisdiction.  As of August 31, 2013, approximately $32 million of  unrecognized tax benefits were reported as current income tax liabilities, with the balance classified as long-term liabilities on the Consolidated Balance Sheets.  The Company's unrecognized tax benefits at August 31, 2012, were all classified as long-term liabilities on the Consolidated Balance Sheets.

The following table provides a reconciliation of the total amounts of unrecognized tax benefits (in millions):

	2013			2012			2011
Balance at beginning of year	$	197		$	94		$	93
Gross increases related to tax positions in a prior period		18			100			25
Gross decreases related to tax positions in a prior period		(32	)		(49	)		(68	)
Gross increases related to tax positions in the current period		30			53			54
Settlements with taxing authorities		(2	)		(1	)		(8	)
Lapse of statute of limitations		(3	)		-			(2	)
Balance at end of year	$	208		$	197		$	94

At August 31, 2013, 2012 and 2011, $116 million, $118 million and $81 million, respectively, of unrecognized tax benefits would favorably impact the effective tax rate if recognized. 

The Company recognizes interest and penalties in the income tax provision in its Consolidated Statements of Comprehensive Income.  At August 31, 2013, and August 31, 2012, the Company had accrued interest and penalties of $28 million and $23 million, respectively.  For the year ended August 31, 2013, the amount reported in income tax expense related to interest and penalties was $5 million.

The Company files a consolidated U.S. federal income tax return, as well as income tax returns in various states.  It is no longer under audit examination for U.S. federal income tax purposes for any years prior to fiscal 2010.  With few exceptions, it is no longer subject to state and local income tax examinations by tax authorities for years before fiscal 2006.

It is reasonably possible that the amount of the unrecognized tax benefit with respect to certain unrecognized tax positions will decrease during the next 12 months by up to approximately $32 million.  The decrease is expected to occur as a result of settlements with the US federal tax authorities for fiscal years 2008 through 2011 and lapses in the statute of limitations.  The change will not have a material effect on the Company's results of operations or financial position.

During the year, the Company received tax holidays from Swiss cantonal income taxes relative to its Swiss operations.  The income tax holidays are expected to extend through September 2022.  The holidays had an immaterial impact in the current fiscal year.

(9)Short-Term Borrowings and Long-Term Debt

Short-term borrowings and long-term debt consist of the following at August 31 (in millions):

	2013		2012
Short-Term Borrowings -
Current maturities of loans assumed through the purchase of land and buildings; various interest rates from 5.000% to 8.750%; various maturities from 2015 to 2035	$	2	$	9
4.875% unsecured notes due 2013, net of unamortized discount and interest rate swap fair market value adjustment (see Note 10)		-		1,305
Unsecured variable rate notes due 2014, net of unamortized discount		550		-
Other		18		5
Total short-term borrowings	$	570	$	1,319

Long-Term Debt -
1.000% unsecured notes due 2015, net of unamortized discount	$	749		$	-
1.800% unsecured notes due 2017, net of unamortized discount		998			-
5.250% unsecured notes due 2019 net of unamortized discount and interest rate swap fair market value adjustment (see Note 10)		994			1,030
3.100% unsecured notes due 2022, net of unamortized discount		1,199			-
4.400% unsecured notes due 2042, net of unamortized discount		496			-
Bridge Facility		-			3,000
Loans assumed through the purchase of land and buildings; various interest rates from 5.000% to 8.750%; various maturities from 2015 to 2035		43			52
		4,479			4,082
Less current maturities		(2	)		(9	)
Total long-term debt	$	4,477		$	4,073

On July 17, 2008, the Company issued notes totaling $1.3 billion bearing an interest rate of 4.875% paid semiannually in arrears on February 1 and August 1 of each year, beginning on February 1, 2009.  The notes matured and were repaid in full on August 1, 2013.

On August 2, 2012, the Company borrowed $3.0 billion of its available $3.5 billion variable rate 364-day bridge term loan obtained in connection with the investment in Alliance Boots.  Interest was reset monthly based upon the one-month LIBOR plus a fixed margin, paid on a monthly basis.

On September 13, 2012, the Company repaid in full all amounts borrowed under the bridge term loan with a portion of the net proceeds from a public offering of $4.0 billion of notes with varying maturities and interest rates, the majority of which are fixed rate.  The following details each tranche of notes issued on September 13, 2012:

Notes Issued (In millions)		Maturity Date	Interest Rate	Interest Payment Dates
$	550	March 13, 2014	Variable; three-month U.S. Dollar LIBOR, reset quarterly, plus 50 basis points	March 13, June 13, September 13 and December 13; commencing on December 13, 2012
	750	March 13, 2015	Fixed 1.000%	March 13 and September 13; commencing on March 13, 2013
	1,000	September 15, 2017	Fixed 1.800%	March 15 and September 15; commencing on March 15, 2013
	1,200	September 15, 2022	Fixed 3.100%	March 15 and September 15; commencing on March 15, 2013
	500	September 15, 2042	Fixed 4.400%	March 15 and September 15; commencing on March 15, 2013
$	4,000

The Company may redeem the fixed rate notes at its option, at any time in whole, or from time to time in part, at a redemption price equal to the greater of: (1) 100% of the principal amount of the notes being redeemed; and (2) the sum of the present values of the remaining scheduled payments of principal and interest thereon (not including any portion of such payments of interest accrued as of the date of redemption), discounted to the date of redemption on a semiannual basis (assuming a 360-day year consisting of twelve 30-day months) at the Treasury Rate (as defined), plus 12 basis points for the notes due 2015, 20 basis points for the notes due 2017, 22 basis points for the notes due 2022 and 25 basis points for the notes due 2042.  If a change of control triggering event occurs, the Company will be required, unless it has exercised its right to redeem the notes, to offer to purchase the notes at a purchase price equal to 101% of their principal amount, plus accrued and unpaid interest, if any, on the notes repurchased to the date of repurchase.  The notes are unsecured senior debt obligations and rank equally with all other unsecured and unsubordinated indebtedness of the Company.  Total issuance costs relating to the notes, including underwriting discounts and fees, were $26 million.  The fair value of the notes as of August 31, 2013, was $3.9 billion.  Fair value for these notes was determined based upon quoted market prices.

On January 13, 2009, the Company issued notes totaling $1.0 billion bearing an interest rate of 5.250% paid semiannually in arrears on January 15 and July 15 of each year, beginning on July 15, 2009. The notes will mature on January 15, 2019. The Company may redeem the notes, at any time in whole or from time to time in part, at its option at a redemption price equal to the greater of: (1) 100% of the principal amount of the notes to be redeemed; or (2) the sum of the present values of the remaining scheduled payments of principal and interest, discounted to the date of redemption on a semiannual basis at the Treasury Rate, plus 45 basis points, plus accrued interest on the notes to be redeemed to, but excluding, the date of redemption.  If a change of control triggering event occurs, unless the Company has exercised its option to redeem the notes, it will be required to offer to repurchase the notes at a purchase price equal to 101% of the principal amount of the notes plus accrued and unpaid interest to the date of redemption.  The notes are unsecured senior debt obligations and rank equally with all other unsecured senior indebtedness of the Company. The notes are not convertible or exchangeable.  Total issuance costs relating to this offering were $8 million, primarily underwriting fees.  The fair value of the notes as of August 31, 2013 and 2012, was $1.1 billion and $1.2 billion, respectively.  Fair value for these notes was determined based upon quoted market prices.

The Company has had no activity or outstanding balances in its commercial paper program since fiscal 2009.  In connection with the commercial paper program, the Company maintains two unsecured backup syndicated lines of credit that total $1.35 billion.  The first $500 million facility expires on July 20, 2015, and allows for the issuance of up to $250 million in letters of credit.  The second $850 million facility expires on July 23, 2017, and allows for the issuance of up to $200 million in letters of credit.  The issuance of letters of credit under either of these facilities reduces available borrowings.  The Company's ability to access these facilities is subject to compliance with the terms and conditions of the credit facilities, including financial covenants.  The covenants require the Company to maintain certain financial ratios related to minimum net worth and priority debt, along with limitations on the sale of assets and purchases of investments.  At August 31, 2013, the Company was in compliance with all such covenants.  The Company pays a facility fee to the financing banks to keep these lines of credit active.  At August 31, 2013, there were no letters of credit issued against these credit facilities and the Company does not anticipate any future letters of credit to be issued against these facilities.  

(10)Financial Instruments

The Company uses derivative instruments to manage its interest rate exposure associated with some of its fixed-rate borrowings.  The Company does not use derivative instruments for trading or speculative purposes.  All derivative instruments are recognized in the Consolidated Balance Sheets at fair value.  The Company designates interest rate swaps as fair value hedges of fixed-rate borrowings.  For derivatives designated as fair value hedges, the change in the fair value of both the derivative instrument and the hedged item are recognized in earnings in the current period.  At the inception of a hedge transaction, the Company formally documents the hedge relationship and the risk management objective for undertaking the hedge.  In addition, it assesses both at inception of the hedge and on an ongoing basis whether the derivative in the hedging transaction has been highly effective in offsetting changes in fair value of the hedged item and whether the derivative is expected to continue to be highly effective.  The impact of any ineffectiveness is recognized currently in earnings.

Counterparties to derivative financial instruments expose the Company to credit-related losses in the event of nonperformance, but the Company regularly monitors the creditworthiness of each counterparty.

Cash Flow Hedges

In fiscal 2012, the Company entered into three forward starting interest rate swap transactions locking in the then current interest rate on $1.0 billion of its anticipated debt issuance in connection with the Alliance Boots investment.  The swaps were terminated when the hedged debt was issued in September 2012.  The swap transactions were designated as cash flow hedges.  The Company recorded an immaterial gain upon termination of the swaps.

Fair Value Hedges

For derivative instruments that are designated and qualify as fair value hedges, the gain or loss on the derivative, as well as the offsetting gain or loss on the hedged item attributable to the hedged risk, are recognized in interest expense on the Consolidated Statements of Comprehensive Income.  Fair value changes in derivatives that are designated and qualify as cash flow hedges are recorded in other comprehensive income, with any ineffectiveness recorded in interest expense.

In May 2011, the Company entered into interest rate swaps with two counterparties converting $250 million of its $1.0 billion 5.250% fixed rate notes to a floating interest rate based on the six-month LIBOR in arrears plus a constant spread.  In March 2012, the Company entered into interest rate swaps with the same two counterparties converting an additional $250 million of its 5.250% fixed-rate notes to a floating interest rate based on the one-month LIBOR in arrears plus a constant spread.  In June and July 2013, the Company converted the remaining $500 million 5.250% fixed-rate notes  to variable rate through two $250 million interest rate swaps, each with a single counterparty.  The variable rates for each of the swaps are based on the six-month LIBOR in arrears plus a constant credit spread.  All swap termination dates coincide with the notes maturity date, January 15, 2019.

In January 2010, the Company entered into six-month LIBOR in arrears swaps with two counterparties for all of its $1.3 billion 4.875% fixed-rate debt.  These swaps terminated on August 1, 2013, in conjunction with the notes maturity date.

The notional amounts of derivative instruments outstanding at August 31, 2013 and 2012, were as follows (in millions):

	2013		2012
Derivatives designated as hedges:
Interest rate swaps	$	1,000	$	1,800
Forward interest rate swaps		-		1,000

The changes in fair value of the notes attributable to the hedged risk are included in long-term debt on the Consolidated Balance Sheets (see Note 9) and amortized through maturity.  At August 31, 2013, the Company had a net unamortized asset fair value change of $3 million compared to a $40 million liability at August 31, 2012.  Changes in fair value of the cash flow hedges are included in other comprehensive income, with any ineffectiveness recorded directly to interest expense.  Upon termination of the cash flow hedges, cumulative changes included in other comprehensive income will be amortized with the debt's cash flow.  No material fair value changes or ineffectiveness was recorded through other comprehensive income in fiscal 2013.

The fair value and balance sheet presentation of derivative instruments at August 31, 2013, were as follows (in millions):

Location in Consolidated Balance Sheets		2013		2012
Asset derivatives designated as hedges:
Interest rate swaps	Other current assets	$	-	$	24
Forward interest rate swaps	Other non-current assets		-		-
Interest rate swaps	Other non-current assets		1		39

Gains and losses relating to the ineffectiveness of the Company's derivative instruments are recorded in interest expense on the Consolidated Statements of Comprehensive Income.  The Company recorded a $4 million loss in fiscal 2013 and a $2 million gain in fiscal 2012 due to ineffectiveness.

Warrants

The Company, Alliance Boots and AmerisourceBergen Corporation entered into a Framework Agreement dated as of March 18, 2013, pursuant to which (1) Walgreens and Alliance Boots together were granted the right to purchase a minority equity position in AmerisourceBergen, beginning with the right, but not the obligation, to purchase up to 19,859,795 shares of AmerisourceBergen common stock (approximately 7 percent of the then fully diluted equity of AmerisourceBergen, assuming the exercise in full of the warrants described below) in open market transactions; (2) the Company and Alliance Boots were each  issued (a) a warrant to purchase up to 11,348,456  shares of AmerisourceBergen common stock at an exercise price of $51.50 per share exercisable during a six-month period beginning in March 2016, and (b) a warrant to purchase up to 11,348,456 shares of AmerisourceBergen common stock at an exercise price of $52.50 per share exercisable during a six-month period beginning in March 2017.  The parties and affiliated entities also entered into certain related agreements governing relations between and among the parties thereto, including the Shareholders Agreement, the Transaction Rights Agreement and the Limited Liability Company Agreement of WAB Holdings LLC, a newly formed limited liability company jointly owned by the Company and Alliance Boots for the purpose of acquiring and holding AmerisourceBergen common stock, described in the Company's Current Report on Form 8-K filed on March 20, 2013.

The Company reports its warrants at fair value.  See Note 11 for additional fair value measurement disclosures.  The fair value and balance sheet presentation of derivative instruments not designated as hedges at August 31, 2013, was as follows (In millions):

	Location in Consolidated Balance Sheets	August 31, 2013
Asset derivatives not designated as hedges:
Warrants	Other non-current assets	$    188

(11)Fair Value Measurements

The Company measures certain assets and liabilities in accordance with ASC Topic 820, Fair Value Measurements and Disclosures.  ASC Topic 820 defines fair value as the price that would be received for an asset or paid to transfer a liability in an orderly transaction between market participants on the measurement date.  In addition, it establishes a fair value hierarchy that prioritizes observable and unobservable inputs used to measure fair value into three broad levels:

Level 1 -	Quoted prices in active markets that are accessible at the measurement date for identical assets and liabilities. The fair value hierarchy gives the highest priority to Level 1 inputs.
Level 2 -	Observable inputs other than quoted prices in active markets.
Level 3 -	Unobservable inputs for which there is little or no market data available. The fair value hierarchy gives the lowest priority to Level 3 inputs.

Assets and liabilities measured at fair value on a recurring basis were as follows (in millions):

	August 31, 2013		Level 1		Level 2		Level 3
Assets:
Money market funds	$	1,636	$	1,636	$	-	$	-
Interest rate swaps(1)		1		-		1		-
Investment in AmerisourceBergen(2)		225		225		-		-
Warrants(3)		188		-		188		-
Forward interest rate swaps		-		-		-		-

	August 31, 2012		Level 1		Level 2		Level 3
Assets:
Money market funds	$	820	$	820	$	-	$	-
Interest rate swaps(1)		63		-		63		-
Forward interest rate swaps		-		-		-		-

⁽¹⁾ Interest rate swaps are valued using the six-month and one-month LIBOR in arrears rates.  See Note 10 for additional disclosure regarding financial instruments.

⁽²⁾ The investment in AmerisourceBergen Corporation is valued using the closing stock price of AmerisourceBergen as of August 31, 2013.  See Note 6 for additional disclosures on available-for-sale investments.

⁽³⁾ Warrants were valued using a Monte Carlo simulation.  Key assumptions used in the valuation include risk-free interest rates using constant maturity treasury rates; the dividend yield for AmerisourceBergen's common stock; AmerisourceBergen's common stock price at valuation date; AmerisourceBergen's equity volatility; the number of shares of AmerisourceBergen's common stock outstanding; the number of AmerisourceBergen employee stock options and the exercise price; and the details specific to the warrants.

Assets measured at fair value on a nonrecurring basis were as follows (in millions):

	August 31, 2013		Level 1		Level 2		Level 3
Assets:
Alliance Boots call option	$	839	$	-	$	-	$	839

The call option was valued using a Monte Carlo simulation using assumptions surrounding Walgreens equity value as well as the potential impacts of certain provisions of the Purchase and Option Agreement dated June 18, 2012, by and among the Company, Alliance Boots and AB Acquisitions Holdings Limited.

The Company reports its debt instruments under the guidance of ASC Topic 825, Financial Instruments, which requires disclosure of the fair value of the Company's debt in the footnotes to the consolidated financial statements.  See Note 9 for further details.

(12) Commitments and Contingencies

The Company is involved in legal proceedings and is subject to investigations, inspections, audits, inquiries and similar actions by governmental authorities, arising in the normal course of the Company's business, including the matters described below.  Litigation, in general, and securities and class action litigation, in particular, can be expensive and disruptive.  Some of these suits may purport or may be determined to be class actions and/or involve parties seeking large and/or indeterminate amounts, including punitive or exemplary damages, and may remain unresolved for several years.  From time to time, the Company is also involved in legal proceedings as a plaintiff involving antitrust, tax, contract, intellectual property and other matters.  Gain contingencies, if any, are recognized when they are realized.  The results of legal proceedings are often uncertain and difficult to predict, and the costs incurred in litigation can be substantial, regardless of the outcome.  The Company believes that its defenses and assertions in pending legal proceedings have merit, and does not believe that any of these pending matters, after consideration of applicable reserves and rights to indemnification, will have a material adverse effect on the Company's consolidated financial position.  However, substantial unanticipated verdicts, fines and rulings do sometimes occur.  As a result, the Company could from time to time incur judgments, enter into settlements or revise expectations regarding the outcome of certain matters, and such developments could have a material adverse effect on its results of operations in the period in which the amounts are accrued and/or its cash flows in the period in which the amounts are paid.   

On a quarterly basis, the Company assesses its liabilities and contingencies for outstanding legal proceedings and reserves are established on a case-by-case basis for those legal claims for which management concludes that it is probable that a loss will be incurred and that the amount of such loss can be reasonably estimated. Substantially all of these contingencies are subject to significant uncertainties and, therefore, determining the likelihood of a loss and/or the measurement of any loss can be complex.  With respect to litigation and other legal proceedings where the Company has determined that a loss is reasonably possible, the Company is unable to estimate the amount or range of reasonably possible loss in excess of amounts reserved due to the inherent difficulty of predicting the outcome of and uncertainties regarding such litigation and legal proceedings.  The Company's assessments are based on estimates and assumptions that have been deemed reasonable by management, but that may prove to be incomplete or inaccurate, and unanticipated events and circumstances may occur that might cause the Company to change those estimates and assumptions.  Therefore, it is possible that an unfavorable resolution of one or more pending litigation or other contingencies could have a material adverse effect on the Company's consolidated financial statements in a future fiscal period.  Management's assessment of current litigation and other legal proceedings, including the corresponding accruals, could change because of the discovery of facts with respect to legal actions or other proceedings pending against the Company which are not presently known. Adverse rulings or determinations by judges, juries, governmental authorities or other parties could also result in changes to management's assessment of current liabilities and contingencies.  Accordingly, the ultimate costs of resolving these claims may be substantially higher or lower than the amounts reserved.

On April 4, 2012,  the United States Drug Enforcement Administration (DEA) served administrative inspection warrants on six Walgreen retail pharmacies in Florida and removed certain controlled substance prescription records and other related documents.  DEA also served an inspection warrant and an administrative subpoena for records on the Walgreens distribution center in Jupiter, Florida.  DEA issued a separate administrative subpoena for records from the Walgreens facility in Orlando, Florida, on August 8, 2012.  On September 14, 2012, DEA served an Order to Show Cause and Immediate Suspension Order (ISO) on the Jupiter distribution center and placed under seal the controlled substance inventory at that facility.  Walgreens timely requested a hearing to demonstrate why DEA should not permanently revoke the controlled substance registration from the Jupiter distribution center.  On October 10, 2012, Walgreens filed a petition in the U.S. Court of Appeals for the District of Columbia challenging DEA's authority to issue the ISO.

On June 11, 2013, the Company entered into a Settlement and Memorandum of Agreement with the United States Department of Justice and the DEA that settles and resolves all administrative and civil matters arising out of DEA's concerns relating to the Company's distribution and dispensing of controlled substances.  Under the terms of the agreement, the Company paid an $80 million settlement amount, surrendered its DEA registrations for the six pharmacies in Florida until May 26, 2014, and for its Jupiter distribution center until Sept. 13, 2014, and agreed to implement certain remedial actions.  In addition, the Company dismissed with prejudice its petition with the United States Court of Appeals for the District of Columbia Circuit.

On July 31, 2013 and August 13, 2013, putative shareholders filed derivative actions in federal court in the Northern District of Illinois against the Walgreens Board of Directors arising out of the Company's recent settlement with the United States Drug Enforcement Administration described above.  The actions assert claims for breach of fiduciary duty on the grounds that the directors allegedly should have prevented the events that led to the settlement.  The plaintiffs filed an amended consolidated complaint on October 4, 2013, pursuant to which they seek damages and other relief on behalf of the Company.  In accordance with the schedule set by the court, the defendants' motion to dismiss is due on December 3, 2013.

SEC regulations require disclosure of certain environmental matters when a governmental authority is a party to the proceedings and the proceedings involve potential monetary sanctions that management reasonably believes could exceed $100,000.  On July 2, 2012, a number of California District Attorneys served the Company with a civil complaint filed in the Alameda County Superior Court alleging certain violations of the state's hazardous waste regulations related to the proper disposal of various materials from the Company's retail stores and seeking injunctive relief, civil penalties and certain fees and expenses. The California District Attorneys filed an amended complaint on July 12, 2012, and a motion for preliminary injunction on August 6, 2012.  On December 13, 2012, the Alameda County Superior Court approved a settlement between the Company and the State of California.  The settlement requires the Company to pay penalties and costs and fund supplemental environmental projects in the total amount of approximately $17 million, which was paid during fiscal 2013 and includes certain injunctive relief.

 (13) Capital Stock

The Company's long-term capital policy is to maintain a strong balance sheet and financial flexibility; reinvest in its core strategies; invest in strategic opportunities that reinforce its core strategies and meet return requirements; and return surplus cash flow to shareholders in the form of dividends and share repurchases over the long term.  In connection with the Company's capital policy, the Board of Directors authorized a share repurchase program (2009 repurchase program) and set a long-term dividend payout ratio target between 30 and 35 percent of net income.  The 2009 repurchase program, which was completed in September 2010, allowed for the repurchase of up to $2.0 billion of the Company's common stock.  On October 13, 2010, the Board of Directors authorized the 2011 repurchase program, which was completed in July 2011, which allowed for the repurchase of up to $1.0 billion of the Company's common stock.  On July 13, 2011, the Board of Directors authorized the 2012 repurchase program, which allows for the repurchase of up to $2.0 billion of the Company's common stock prior to its expiration on December 31, 2015.  Activity related to these programs was as follows (in millions):

	Fiscal Year Ended
	2013		2012		2011
2009 stock repurchase program	$	-	$	-	$	360
2011 stock repurchase program		-		-		1,000
2012 stock repurchase program		-		1,151		424
	$	-	$	1,151	$	1,784

The Company determines the timing and amount of repurchases from time to time based on its assessment of various factors including prevailing market conditions, alternate uses of capital, liquidity, the economic environment and other factors.  The Company anticipates that the pace of any future share repurchase activity will continue to be significantly curtailed from the levels achieved in fiscal 2012 and 2011 due to the debt levels incurred for the investment in Alliance Boots.  The timing and amount of these purchases may change at any time and from time to time.  The Company has and may from time to time in the future repurchase shares on the open market through Rule 10b5-1 plans, which enable a company to repurchase shares at times when it otherwise might be precluded from doing so under insider trading laws.

In addition, the Company continued to repurchase shares to support the needs of the employee stock plans.  Shares totaling $615 million were purchased to support the needs of the employee stock plans during fiscal 2013 as compared to $40 million in fiscal 2012.  At August 31, 2013, 56.5 million shares of common stock were reserved for future issuances under the Company's various employee benefit plans.

(14) Stock Compensation Plans

On January 9, 2013, the 2013 Walgreen Co. Omnibus Incentive Plan (the "Omnibus Plan") became effective and the Company first made award grants under the Omnibus Plan in fiscal 2013. The Omnibus Plan provides for incentive compensation to Walgreens non-employee directors, officers and employees, and consolidates into a single plan several previously existing equity compensation plans: the Executive Stock Option Plan, the Long-Term Performance Incentive Plan, the Broad Based Employee Stock Option Plan, and the Nonemployee Director Stock Plan (collectively, the "Former Plans"). As of the effective date of the Omnibus Plan, no further grants may be made under the Former Plans and shares that were available for issuance under the Former Plans and not subject to outstanding awards became available for issuance (in addition to newly authorized shares) under the Omnibus Plan.

Upon shareholder approval of the Omnibus Plan at the Company's Annual Meeting of Shareholders on January 9, 2013, a total of 60.4 million shares became available for delivery under the Omnibus Plan including: (i) 40.0 million newly authorized shares; (ii) 9.3 million shares previously available for issuance under the former Executive Stock Option Plan; (iii) 3.2 million shares previously available for issuance under the former Long-Term Performance Incentive Plan, and (iv) 7.9 million shares previously available for issuance under the former Broad Based Employee Stock Option Plan. In addition, in accordance with the Omnibus Plan, shares that are subject to outstanding awards under the Former Plans and the Share Walgreens Stock Purchase Plan (Share Walgreens) that subsequently are cancelled, forfeited, lapsed or are otherwise terminated or settled without a distribution of shares also become available for awards under the Omnibus Plan.

A summary of the stock options authorized and available for future grants under the Omnibus Plan and Former Plans follows:

Authorized shares at August 31, 2012	-
Shares available for grants at August 31, 2012	-
Newly authorized options	40,000,000
Shares transferred from Former Plans	20,426,181
Granted	(5,642,763	)
Cancellation and forfeitures	104,087
Plan termination	1,566,994
Available for future grants at August 31, 2013	56,454,499

A summary of the Company's stock options outstanding under the Omnibus Plan and Former Plans follows:

Options	Shares			Weighted-Average Exercise Price		Weighted-Average Remaining Contractual Term (Years)		Aggregate Intrinsic Value (in millions)
Outstanding at August 31, 2012		50,035,969		$	34.18		5.60	$	175
Granted		8,629,392			35.86
Exercised		(14,281,816	)		33.07
Expired/Forfeited		(3,167,372	)		37.13
Outstanding at August 31, 2013		41,216,173		$	34.69		6.14	$	548
Unvested at August 31, 2013		21,174,374		$	33.32		8.01	$	312
Exercisable at August 31, 2013		19,288,591		$	36.40		4.04	$	228

The fair value of each option grant was determined using the Black-Scholes option pricing model with the following weighted-average assumptions used in fiscal 2013, 2012 and 2011:

	2013			2012			2011
Risk-free interest rate (1)		1.15	%		1.73	%		2.12	%
Average life of option (years) (2)		7.0			7.9			7.2
Volatility (3)		24.94	%		27.02	%		28.08	%
Dividend yield (4)		2.44	%		2.90	%		1.94	%
Weighted-average grant-date fair value	$	6.75		$	8.08		$	8.12

(1)	Represents the U.S. Treasury security rates for the expected term of the option.
(2)	Represents the period of time that options granted are expected to be outstanding.  The Company analyzed separate groups of employees with similar exercise behavior to determine the expected term.
(3)	Volatility was based on historical and implied volatility of the Company's common stock.
(4)	Represents the Company's cash dividend for the expected term.

The intrinsic value for options exercised in fiscal 2013, 2012 and 2011 was $159 million, $22 million and $33 million, respectively.  The total fair value of options vested in fiscal 2013, 2012 and 2011 was $51 million, $125 million and $58 million, respectively.

Cash received from the exercise of options in fiscal 2013 was $471 million compared to $89 million in the prior year.  The related tax benefit realized was $60 million in fiscal 2013 compared to $8 million in the prior year.

The Walgreen Co. 1982 Employees Stock Purchase Plan permits eligible employees to purchase common stock at 90% of the fair market value at the date of purchase.  Employees may make purchases by cash, loans or payroll deductions up to certain limits.  The aggregate number of shares that may be purchased under this Plan is 94 million.  At August 31, 2013, 14.4 million shares were available for future purchase.

Restricted Performance Shares issued under the Omnibus and Former Plans offer performance-based incentive awards and equity-based awards to key employees.  Restricted Stock Units are also equity-based awards with performance requirements that are granted to middle managers and key employees.  The Restricted Performance Shares and Restricted Stock Unit awards are both subject to restrictions as to continuous employment except in the case of death, normal retirement or total and permanent disability.  In accordance with ASC Topic 718, Compensation – Stock Compensation, compensation expense is recognized on a straight-line basis over the employee's vesting period or to the employee's retirement eligible date, if earlier.

A summary of information relative to the Company's restricted stock units follows:

Outstanding Shares	Shares			Weighted-Average Grant-Date Fair Value
Outstanding at August 31, 2012		1,810,551		$	34.04
Granted		2,600,429			44.07
Dividends		88,921			-
Forfeited		(228,406	)		37.90
Vested		(773,657	)		28.68
Outstanding at August 31, 2013		3,497,838		$	41.57

A summary of information relative to the Company's performance shares follows:

Outstanding Shares	Shares			Weighted-Average Grant-Date Fair Value
Outstanding at August 31, 2012		1,980,027		$	32.57
Granted		998,020			35.66
Forfeited		(170,415	)		34.64
Vested		(590,022	)		35.63
Outstanding at August 31, 2013		2,217,610		$	32.99

The Company also issues shares to nonemployee directors.  Each director receives an equity grant of shares every year on November 1.  The number of shares granted is determined by dividing $170,000 by the price of a share of common stock on November 1. Each nonemployee director may elect to receive this annual share grant in the form of shares or deferred stock units.  In fiscal 2013, each nonemployee director received a grant of 4,789 shares compared to 4,788 shares and 4,552 shares in fiscal 2012 and 2011, respectively.  New directors in any of the fiscal years earned a prorated amount.  Payment of the annual retainer is paid in the form of cash, which may be deferred.

A summary of total stock-based compensation expense follows (in millions):

	2013		2012		2011
Stock options	$	51	$	62	$	85
Restricted stock units		33		24		20
Performance shares		15		7		25
Share Walgreens		5		6		5
	$	104	$	99	$	135

(15)Retirement Benefits

The principal retirement plan for employees is the Walgreen Profit-Sharing Retirement Trust, to which both the Company and participating employees contribute.  The Company's contribution, which has historically related to FIFO earnings before interest and taxes and a portion of which is in the form of a guaranteed match, is determined annually at the discretion of the Board of Directors.  The profit-sharing provision was $342 million in fiscal 2013, $283 million in fiscal 2012 and $382 million in fiscal 2011.  The Company's contributions were $262 million in fiscal 2013, $372 million in fiscal 2012 and $322 million in fiscal 2011.

The Company provides certain health insurance benefits for retired employees who meet eligibility requirements, including age, years of service and date of hire.  The costs of these benefits are accrued over the service life of the employee. In fiscal 2012, the Company amended its prescription drug program for certain Medicare-eligible retirees to a group-based Company-sponsored Medicare Part D program, or  employer group waiver program, effective January 1, 2013.  The Company's postretirement health benefit plan is not funded.

Components of net periodic benefit costs (in millions):

	2013			2012			2011
Service cost	$	9		$	13		$	15
Interest cost		14			22			22
Amortization of actuarial loss		12			8			14
Amortization of prior service cost		(22	)		(10	)		(10	)
Total postretirement benefit cost	$	13		$	33		$	41

Change in benefit obligation (in millions):

	2013			2012
Benefit obligation at September 1	$	342		$	407
Service cost		9			13
Interest cost		14			22
Amendments		-			(139	)
Actuarial (gain) loss		(1	)		52
Benefit payments		(20	)		(18	)
Participants' contributions		6			5
Benefit obligation at August 31	$	350		$	342

Change in plan assets (in millions):

	2013			2012
Plan assets at fair value at September 1	$	-		$	-
Participants' contributions		6			5
Employer contributions		14			13
Benefits paid		(20	)		(18	)
Plan assets at fair value at August 31	$	-		$	-

Funded status (in millions):

	2013			2012
Funded status	$	(350	)	$	(342	)
Unrecognized actuarial gain		-			-
Unrecognized prior service cost		-			-
Accrued benefit cost at August 31	$	(350	)	$	(342	)

Amounts recognized in the Consolidated Balance Sheets (in millions):

	2013			2012
Current liabilities (present value of expected 2014 net benefit payments)	$	(10	)	$	(10	)
Non-current liabilities		(340	)		(332	)
Net liability recognized at August 31	$	(350	)	$	(342	)

Amounts recognized in accumulated other comprehensive (income) loss (in millions):

	2013			2012
Prior service credit	$	(228	)	$	(250	)
Net actuarial loss		148			161

Amounts expected to be recognized as components of net periodic costs for fiscal year 2014 (in millions):

	2014
Prior service credit	$	(22	)
Net actuarial loss		11

The measurement date used to determine postretirement benefits is August 31.

The discount rate assumption used to compute the postretirement benefit obligation at year-end was 5.20% for 2013 and 4.15% for 2012.  The discount rate assumption used to determine net periodic benefit cost was 4.15%, 5.40% and 4.95% for fiscal years ending 2013, 2012 and 2011, respectively.  The consumer price index assumption used to compute the postretirement benefit obligation was 2.00% for 2013 and 2012.

Future benefit costs were estimated assuming medical costs would increase at a 7.00% annual rate, gradually decreasing to 5.25% over the next nine years and then remaining at a 5.25% annual growth rate thereafter.  A one percentage point change in the assumed medical cost trend rate would have the following effects (in millions):

	1% Increase			1% Decrease
Effect on service and interest cost	$	(1	)	$	1
Effect on postretirement obligation		(1	)		5

Estimated future federal subsidies are immaterial for all periods presented.  Future benefit payments are as follows (in millions):

	Estimated Future Benefit Payments
2014	$	10
2015		12
2016		13
2017		15
2018		17
2019-2023		111

(16) Supplementary Financial Information

Significant non-cash transactions in fiscal 2013 include $77 million related to the initial valuation of the AmerisourceBergen warrants.  Significant non-cash transactions in fiscal 2012 include $2,981 million in stock issuance relating to the investment in Alliance Boots and $53 million decrease in the retiree medical liability.  Significant non-cash transactions in fiscal 2011 include $116 million in accrued liabilities related to the purchase of property and equipment and $62 million increase in the retiree medical benefit liability.

Included in the Consolidated Balance Sheets captions are the following assets and liabilities (in millions):

	2013			2012
Accounts receivable -
Accounts receivable	$	2,786		$	2,266
Allowance for doubtful accounts (see Note 1)		(154	)		(99	)
	$	2,632		$	2,167
Other non-current assets -
Intangible assets, net (see Note 7)	$	1,307		$	1,286
Other		652			211
	$	1,959		$	1,497
Accrued expenses and other liabilities -
Accrued salaries	$	928		$	772
Taxes other than income taxes		420			454
Insurance		285			268
Profit sharing		239			166
Other		1,705			1,359
	$	3,577		$	3,019
Other non-current liabilities -
Postretirement healthcare benefits	$	340		$	332
Accrued rent		382			347
Insurance		403			408
Other		942			799
	$	2,067		$	1,886

Summary of Quarterly Results (Unaudited)

(In millions, except per share amounts)

	Quarter Ended
	November		February		May		August		Fiscal Year
Fiscal 2013
Net Sales	$	17,316	$	18,647	$	18,313	$	17,941	$	72,217
Gross Profit		5,099		5,607		5,222		5,191		21,119
Net Earnings		413		756		624		657		2,450
Per Common Share -
Basic	$	.44	$	.80	$	.66	$	.69	$	2.59
Diluted		.43		.79		.65		.69		2.56
Cash Dividends Declared Per Common Share	$	.275	$	.275	$	.275	$	.315	$	1.14
Fiscal 2012
Net Sales	$	18,157	$	18,651	$	17,752	$	17,073	$	71,633
Gross Profit		5,104		5,389		5,014		4,835		20,342
Net Earnings		554		683		537		353		2,127
Per Common Share -
Basic	$	.63	$	.79	$	.63	$	.40	$	2.43
Diluted		.63		.78		.62		.39		2.42
Cash Dividends Declared Per Common Share	$	.225	$	.225	$	.225	$	.275	$	.950

Common Stock Prices (Unaudited)

Below is the Consolidated Transaction Reporting System high and low sales price for each quarter of fiscal 2013 and 2012.

		Quarter Ended
		November		February		May		August		Fiscal Year
Fiscal 2013	High	$	36.95	$	41.95	$	50.77	$	51.26	$	51.26
Low			32.16		34.27		39.96		44.12		32.16
Fiscal 2012	High	$	36.27	$	34.60	$	35.41	$	36.08	$	36.27
Low			30.10		31.95		30.28		28.77		28.77

Comparison of Five-Year Cumulative Total Return (Unaudited)

The following graph compares the five-year cumulative total return of the Company's common stock with the S&P 500 Index and the Value Line Pharmacy Services Industry Index.  The graph assumes a $100 investment made August 31, 2008, and the reinvestment of all dividends.  The historical performance of the Company's common stock is not necessarily indicative of future stock performance.

	Value of Investment at August 31,
	2008		2009		2010		2011		2012		2013
Walgreen Co.	$	100.00	$	94.64	$	76.43	$	102.05	$	106.58	$	147.14
S&P 500 Index		100.00		79.56		81.80		95.02		109.65		127.29
Value Line Pharmacy Services Industry Index		100.00		101.74		81.94		99.75		117.55		179.98

This performance graph and accompanying disclosure is not soliciting material, is not deemed filed with the SEC, and is not incorporated by reference in any of the Company's filings under the Securities Act or the Exchange Act, irrespective of the timing of and any general incorporation language in such filing.

Management's Report on Internal Control

Our management is responsible for establishing and maintaining adequate internal control over financial reporting, as such term is defined in Exchange Act Rule 13a-15(f).  Under the supervision and with the participation of our management, including our principal executive officer and principal financial officer, we conducted an evaluation of the effectiveness of our internal control over financial reporting based on the framework in Internal Control - Integrated Framework (1992) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).  Based on our evaluation, management concluded that our internal control over financial reporting was effective as of August 31, 2013.  Deloitte & Touche LLP, the Company's independent registered public accounting firm, has audited our internal control over financial reporting, as stated in its report which is included herein.

/s/	Gregory D. Wasson	/s/	Wade D. Miquelon
	Gregory D. Wasson		Wade D. Miquelon
	President and Chief Executive Officer		Executive Vice President and Chief Financial Officer and President, International

REPORTS OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRMS

To the Board of Directors and Shareholders of Walgreen Co.:

We have audited the accompanying consolidated balance sheets of Walgreen Co. and subsidiaries (the "Company") as of August 31, 2013 and 2012, and the related consolidated statements of comprehensive income, shareholders' equity, and cash flows for each of the three years in the period ended August 31, 2013. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audits.  We did not audit the financial statements of Alliance Boots GmbH ("Alliance Boots"), the Company's investment in which is accounted for by use of the equity method (see note 5 to the consolidated financial statements), for the year ended August 31, 2013.  The accompanying 2013 consolidated financial statements of the Company include its equity investment in Alliance Boots of $6,261 million as of August 31, 2013, and its equity earnings in Alliance Boots of $344 million for the year ended August 31, 2013.  The financial statements of Alliance Boots as of and for the ten months ended May 31, 2013, prepared in accordance with International Financial Reporting Standards as issued by the International Accounting Standards Board, were audited by other auditors whose report has been furnished to us, and our opinion, insofar as it relates to the amounts included for the Company's equity investment and equity earnings in Alliance Boots, on the basis of International Financial Reporting Standards as issued by the International Accounting Standards Board, is based on the report of the other auditors.  We have applied auditing procedures to the adjustments to reflect the Company's equity investment and equity earnings in Alliance Boots in accordance with accounting principles generally accepted in the United States of America.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits and the report of the other auditors provide a reasonable basis for our opinion.

In our opinion, based on our audits and the report of the other auditors, such consolidated financial statements present fairly, in all material respects, the financial position of Walgreen Co. and subsidiaries as of August 31, 2013 and 2012, and the results of their operations and their cash flows for each of the three years in the period ended August 31, 2013, in conformity with accounting principles generally accepted in the United States of America.

We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the Company's internal control over financial reporting as of August 31, 2013, based on the criteria established in Internal Control — Integrated Framework (1992) issued by the Committee of Sponsoring Organizations of the Treadway Commission and our report dated October 18, 2013 expressed an unqualified opinion on the Company's internal control over financial reporting based on our audit.

/s/ DELOITTE & TOUCHE LLP

Chicago, Illinois

October 18, 2013

To the Board of Directors and Shareholders of Walgreen Co.:

We have audited the internal control over financial reporting of Walgreen Co. and subsidiaries (the "Company") as of August 31, 2013, based on criteria established in Internal Control — Integrated Framework (1992) issued by the Committee of Sponsoring Organizations of the Treadway Commission. The Company's management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting, included in the accompanying Management's Report on Internal Control.  Our responsibility is to express an opinion on the Company's internal control over financial reporting based on our audit.

We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects. Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, testing and evaluating the design and operating effectiveness of internal control based on the assessed risk, and performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion.

A company's internal control over financial reporting is a process designed by, or under the supervision of, the company's principal executive and principal financial officers, or persons performing similar functions, and effected by the company's board of directors, management, and other personnel to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company's internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company's assets that could have a material effect on the financial statements.

Because of the inherent limitations of internal control over financial reporting, including the possibility of collusion or improper management override of controls, material misstatements due to error or fraud may not be prevented or detected on a timely basis. Also, projections of any evaluation of the effectiveness of the internal control over financial reporting to future periods are subject to the risk that the controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

In our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of August 31, 2013, based on the criteria established in Internal Control — Integrated Framework (1992) issued by the Committee of Sponsoring Organizations of the Treadway Commission.

We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the consolidated financial statements as of and for the year ended August 31, 2013 of the Company and our report dated October 18, 2013 expressed an unqualified opinion on those financial statements based on our audit and the report of other auditors.

/s/ DELOITTE & TOUCHE LLP

Chicago, Illinois

October 18, 2013

To the Board of Alliance Boots GmbH:

We have audited the interim consolidated financial statements of Alliance Boots GmbH and its subsidiaries (the "Group") (not presented separately herein), which comprise the Group statement of financial position as at 31 May 2013, and the related Group income statement, Group statement of comprehensive income, Group statement of changes in equity and Group statement of cash flows for the ten months then ended.  These interim consolidated financial statements are the responsibility of the Group's management.  Our responsibility is to express an opinion on these interim consolidated financial statements based on our audit.

We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States).  Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the interim consolidated financial statements are free from material misstatement.  An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the interim consolidated financial statements.  An audit also includes assessing the accounting principles used and the significant accounting estimates made by management, as well as evaluating the overall presentation of the interim consolidated financial statements.  We believe that our audit provides a reasonable basis for our opinion.

IAS 34 requires that interim financial statements be presented with comparative financial information. These interim consolidated financial statements have been prepared solely for the purpose of accounting for the Group as an equity method investee in the consolidated financial statements of Walgreen Co. as at and for the year ended 31 August 2013. Accordingly, no comparative financial information is presented.

In our opinion, except for the omission of comparative financial information as discussed in the previous paragraph, the interim consolidated financial statements present fairly, in all material respects, the financial position of the Group as at 31 May 2013, and the results of its operations and its cash flows for the ten months then ended in conformity with International Financial Reporting Standards as issued by the International Accounting Standards Board, including the requirements of IAS 34, Interim Financial Reporting.

/s/ KPMG Audit Plc

London

United Kingdom

10 July 2013

EX-21

As of August 31, 2013 Walgreen Co., (Registrant) had the following subsidiaries:

NAME		STATE OR COUNTRY OF INCORPORATION
	Smart Insurance Company	Arizona
	Walgreen Arizona Drug Co.	Arizona
	Consolidated Stores, Inc.	Arkansas
	Med-X Corporation	Arkansas
	Pharm-mart Pharmacy of Warren, Inc.	Arkansas
	Rich Mountain Pharmaceutical Services, Inc.	Arkansas
	S&W Pharmacy, Inc.	Arkansas
	Stephen L. LaFrance Pharmacy, Inc.	Arkansas
	Salu Australia Pty Ltd.	Australia
	Skincarestore Australia Pty Ltd.	Australia
	Superior Bermuda GP	Bermuda
	DS Distribution Canada, Ltd.	British Columbia
	Crescent Healthcare, Inc.	California
	Crescent Therafusion, Inc.	California
	Option Care, Inc.	California
	River City Pharmacy, Inc.	California
	Sunamerica Affordable Housing Partners XI (11)	California
	MedAvail Technologies, Inc.	Canada
	Walgreen Canada Limited	Canada
	Walgreen Drug (Ontario) Limited	Canada
	Walgreens China Business Trust	China
	Accountable Care Network of Arizona LLC	Delaware
	Accountable Care Network of Florida, LLC	Delaware
	Accountable Care Network of Illinois, LLC	Delaware
	Accountable Care Network of New Jersey, LLC	Delaware
	Accountable Care Network of Pennsylvania, LLC	Delaware
	Accountable Care Network of Tennessee, LLC	Delaware
	Accountable Care Network of Texas, LLC (7)	Delaware
	American Occupational Health Management, Inc.	Delaware
	CG Transportation, LLC	Delaware
	CHI Holding Corporation	Delaware
	Cystic Fibrosis Foundation Pharmacy, LLC (8)	Delaware
	Cystic Fibrosis Services, Inc. (8)	Delaware
	DR Employee Services, LLC	Delaware
	DRI-I, Inc.	Delaware
	drugstore.com, inc.	Delaware
	DS Pharmacy, Inc.	Delaware
	Duane Reade Holdings, Inc.	Delaware
	Duane Reade International, LLC	Delaware
	Duane Reade Realty, Inc.	Delaware
	Duane Reade, Inc.	Delaware
	Happy Harry's Discount Drug Stores, Inc.	Delaware
	Happy Harry's Inc.	Delaware
	HHDH, Inc.	Delaware
	I-Trax Health Management Solutions, Inc.	Delaware
	MedAvail, Inc.	Delaware
	MedNow Infusion, LLC (4)	Delaware
	Meridian COMP of New York, Inc.	Delaware
	Option Care Enterprises, Inc.	Delaware
	Optionet, Inc.	Delaware
	Pharma Dynamics, Inc. (8)	Delaware
	Rockville Travilah Square, LLC	Delaware
	Salu Beauty, Inc.	Delaware
	SIC Parent, LLC (10)	Delaware
	Smart Insurance Company Holdings Inc.	Delaware
	Smart Insurance Group Holdings, Inc.	Delaware
	Stephen L. LaFrance Holdings, Inc.	Delaware
	Super D. Drugs Acquisition Co.	Delaware
	Take Care Employer Solutions, LLC	Delaware
	Take Care Health Systems, Inc.	Delaware
	Take Care Health Systems, LLC	Delaware
	USA/Super D Franchising Inc.	Delaware
	WAB Holdings, LLC	Delaware
	WAGDCO, LLC	Delaware
	WAGHID, LLC	Delaware
	Walgreen International Investments, LLC	Delaware
	Walgreen Investments Co	Delaware
	Walgreens Assistance, Inc.	Delaware
	Walgreens Infusion Services Holding, Inc.	Delaware
	Walgreens Infusion Services, Inc.	Delaware
	Walgreens Network Health Services, LLC	Delaware
	Walgreens Sleep and Respiratory Services, LLC	Delaware
	Walgreens Specialty Care Centers, LLC	Delaware
	Walgreens Specialty Pharmacy Holdings, Inc.	Delaware
	Walgreens Specialty Pharmacy, LLC	Delaware
	Walgreens Store No. 3332, LLC	Delaware
	Walgreens Store No. 4650, LLC	Delaware
	Walgreens Store No. 4651, LLC	Delaware
	Walgreens Store No. 5576, LLC	Delaware
	Walgreens Store No. 5838, LLC	Delaware
	Walgreens Venture Capital, LLC	Delaware
	Walgreens Well Network of Modesto, LLC	Delaware
	Walgreens Well Network of Oakland, LLC	Delaware
	Walgreens Well Network of Palo Alto, LLC	Delaware
	Walgreens Well Network of Sacramento, LLC	Delaware
	Walgreens Well Network of San Francisco, LLC	Delaware
	Waltrust Properties, Inc.	Delaware
	Whole Health Management, LLC	Delaware
	WRA Partners, LLC	Delaware
	WVC Investments, LLC	Delaware
	Walgreen of Hawaii, LLC	Hawaii
	Walgreen of Maui, Inc.	Hawaii
	Walgreens (Hong Kong) Limited	Hong Kong
	Bond Drug Company of Illinois, LLC	Illinois
	Bowen Development Company	Illinois
	Deerfield Funding Corporation	Illinois
	East-West Distributing Co.	Illinois
	Medication Adherence Solutions, LLC	Illinois
	Riviera Brands LLC	Illinois
	The 1901 Group, LLC	Illinois
	WagBeau LLC	Illinois
	Walgreen Market Strategies, LLC	Illinois
	Walgreen Medical Supply, LLC	Illinois
	Walgreen Mercantile Corporation	Illinois
	Walgreen National Corporation	Illinois
	Walgreen Pharmacy Services Eastern, LLC	Illinois
	Walgreen Pharmacy Services Midwest, LLC	Illinois
	Walgreen Pharmacy Services Southern, LLC	Illinois
	Walgreen Pharmacy Services Western, LLC	Illinois
	Walgreen Pharmacy Services WHS, LLC	Illinois
	Walgreen Realty Resources LLC	Illinois
	Walgreens Business Services, LLC	Illinois
	Walgreens Home Care, Inc.	Illinois
	Walgreens Mail Service, Inc.	Illinois
	Walgreens Personal Financial Services, LLC	Illinois
	Walgreens Pharmacy Strategies, LLC	Illinois
	Walgreens Store No. 3680, LLC	Illinois
	Walgreens Store No. 7839, LLC	Illinois
	Walgreens.com, Inc.	Illinois
	Salient Business Solutions, Ltd. (2)	India
	CHDM, LLC	Indiana
	Baxter Drug, Inc.	Kansas
	Walgreen Louisiana Co., Inc.	Louisiana
	Superior LuxCo 1 S.a.r.l.	Luxembourg
	Superior LuxCo 2 S.a.r.l.	Luxembourg
	Walgreen International S.a.r.l.	Luxembourg
	Walgreen Investments Luxembourg SCS	Luxembourg
	Eager Park Pharmacy and Health Services, LLC (6)	Maryland
	Walgreens of Massachusetts, LLC	Massachusetts
	Full Road Holdings, Ltd.	Mauritius
	Jim Bain's Pharmacy	Mississippi
	Walgreen Hastings Co.	Nebraska
	Walgreen of Nevada, LLC	Nevada
	Hunterdon Infusion Services, L.L.C. (1)	New Jersey
	Trinity Home Care, LLC	New Jersey
	Corporate Health Dimensions, Inc.	New York
	Duane Reade	New York
	Option Care of New York, Inc.	New York
	Springville Pharmacy Infusion Therapy, Inc.	New York
	Walgreen Eastern Co., Inc.	New York
	Walgreens Store No. 3288, LLC	New York
	Option Home Health, Inc.	Ohio
	University Option Care, LLC (3)	Ohio
	May's Drug Stores, Inc.	Oklahoma
	Medicenter, Inc.	Oklahoma
	M-X corporation	Oklahoma
	Walgreens Infusion Services at Legacy Health, LLC (3)	Oregon
	Option Care Enterprises, Inc.	Pennsylvania
	Walgreen of Hato Rey, Inc.	Puerto Rico
	Walgreen of Puerto Rico, Inc.	Puerto Rico
	Walgreen of San Patricio, Inc.	Puerto Rico
	Walgreen Scotland Investments, LP	Scotland
	Walgreen Scotland, Ltd	Scotland
	Walgreens (Singapore) PTE, Ltd.	Singapore
	Walgreens (Sourcing) Pte. Ltd.	Singapore
	Alliance Boots GmbH (5)	Switzerland
	Walgreen Swiss International GmbH	Switzerland
	Walgreens Boots Alliance Development GmbH	Switzerland
	Walgreens Infusion and Respiratory Services, LLC (3)	Tennessee
	Vision Direct Inc.	Texas
	Walgreen UK Development Services Limited	United Kingdom
	Green Hills Insurance Company, A Risk Retention Group	Vermont
	LCA Insurance Co., Inc.	Vermont
	Walgreen of US Virgin Islands, LLC	Virgin Islands
	RxAlly, LLC (9)	Virginia
	Option Care Home Health, LLC	Washington
	Walgreen Oshkosh, Inc.	Wisconsin
	Notes

(1)	50% owned by Option Care Enterprises, Inc.  (a Pennsylvania Corporation).
(2)	30% owned by Full Road Holdings, Ltd. (a Mauritius Entity).
(3)	50% owned by Option Care Enterprises, Inc. (a Delaware Corporation).
(4)	51% owned by Option Care Enterprises, Inc. (a Delaware Corporation).
(5)	Walgreen Swiss International GmbH (a Swiss Entity) owns 45% of Alliance Boots GmbH (a Swiss Entity) and 55% is owned by unrelated parties.  Alliance Boots GmbH owns over 300 entities which are not listed on Exhibit 21, due to the registrant's minority ownership of 45%.
(6)	50% owned by Walgreen Co. (an Illinois Corporation)
(7)	50% owned by Walgreen Pharmacy Services Midwest, LLC. (an Illinois LLC)
(8)	Walgreens Specialty Pharmacy, LLC (a Delaware LLC) directly owns 80% of Cystic Fibrosis Foundation Pharmacy, LLC (a Delaware LLC).  Walgreens Specialty Pharmacy, LLC indirectly owns 80% of Pharma Dynamics, Inc., (a Delaware Corporation) and Cystic Fibrosis Services, Inc. (a Delaware Corporation).
(9)	46.295% owned by Walgreen Co. (an Illinois Corporation)
(10)	51% owned by WRA Partners, LLC. (a Delaware LLC)
(11)	99% owned by Walgreen Co. (an Illinois Corporation)

EX-23.1

CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

We consent to the incorporation by reference in Registration Statement Nos. 333-19467, 333-19501, 333-106967, 333-107841, 333-112343, 333-164382, 333-167836, 333-174810, 333-174811, 333-175642 and 333-186491 on Form S-8 and No. 333-175649 on Form S-3 of our reports dated October 18, 2013, relating to the consolidated financial statements of Walgreen Co. and Subsidiaries, and the effectiveness of Walgreen Co. and Subsidiaries' internal control over financial reporting, appearing in or incorporated by reference in the Annual Report on Form 10-K of Walgreen Co. for the year ended August 31, 2013.

/s/ DELOITTE & TOUCHE LLP

Chicago, Illinois

October 18, 2013

EX-23.2

Consent of Independent Auditors

To the Board of Alliance Boots GmbH:

We consent to the incorporation by reference in the registration statements on Form S-3 (No. 333-175649) and Form S-8 (Nos. 333-19467, 333-19501, 333-106967, 333-107841, 333-112343, 333-164382, 333-167836, 333-174810, 333-174811, 333-175642 and 333-186491) of Walgreen Co. of our report dated May 13, 2013, with respect to the Group statements of financial position of Alliance Boots GmbH as of March 31, 2013 and 2012, and the related Group income statement, Group statement of comprehensive income, Group statement of changes in equity and Group statement of cash flows for the years then ended, which report appears in the Form 8-K of Walgreen Co. dated May 15, 2013.

/s/ KPMG Audit Plc

London, United Kingdom

October 18, 2013

EX-23.3

Consent of Independent Registered Public Accounting Firm

To the Board of Alliance Boots GmbH:

We consent to the incorporation by reference in the registration statements on Form S-3 (No. 333-175649) and Form S-8 (Nos. 333-19467, 333-19501, 333-106967, 333-107841, 333 112343, 333-164382, 333-167836, 333-174810, 333-174811, 333-175642 and 333-186491) of Walgreen Co. of our report dated July 10, 2013, with respect to the Group statement of financial position of Alliance Boots GmbH as of May 31, 2013, and the related Group income statement, Group statement of comprehensive income, Group statement of changes in equity and Group statement of cash flows for the ten months then ended, which report appears in August 31, 2013 annual report on Form 10-K of Walgreen Co.

Our qualified report dated July 10, 2013, contains an explanatory paragraph that states that these interim consolidated financial statements have been prepared solely for the purpose of accounting for Alliance Boots GmbH as an equity method investee in the consolidated financial statements of Walgreen Co. as of and for the year ended August 31, 2013 and that no comparative financial information is presented.

/s/ KPMG Audit Plc

London, United Kingdom

October 18, 2013

EX-31.1

EXHIBIT 31.1

CERTIFICATION

I, Gregory D. Wasson, certify that:

1.	I have reviewed this annual report on Form 10-K of Walgreen Co.;
2.	Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3.	Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4.	The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rule 13a-15(f) and 15d-15(f)) for the registrant and have:
	a)	Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
	b)	Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
	c)	Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
	d)	Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and
5.	The registrant's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):
	a)	All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and
	b)	Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.
/s/		Gregory D. Wasson	Chief Executive Officer	Date:  October 18, 2013
		Gregory D. Wasson

EX-31.2

EXHIBIT 31.2

CERTIFICATION

I, Wade D. Miquelon, certify that:

1.	I have reviewed this annual report on Form 10-K of Walgreen Co.;
2.	Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3.	Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4.	The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rule 13a-15(f) and 15d-15(f)) for the registrant and have:
	a)	Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
	b)	Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
	c)	Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
	d)	Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and
5.	The registrant's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):
	a)	All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and
	b)	Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.
/s/		Wade D. Miquelon	Chief Financial Officer	Date:  October 18, 2013
		Wade D. Miquelon

EX-32.1

Exhibit 32.1

CERTIFICATION PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

(18 U.S.C. SECTION 1350)

In connection with the Annual Report of Walgreen Co., an Illinois corporation (the "Company"), on Form 10-K for the year ended August 31, 2013 as filed with the Securities and Exchange Commission (the "Report"), I, Gregory D. Wasson, Chief Executive Officer of the Company, certify, pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, to the best of my knowledge:

(1)The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2)The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

/s/ Gregory D. Wasson

Gregory D. Wasson

Chief Executive Officer

Dated:  October 18, 2013

A signed original of this written statement required by Section 906 has been provided to Walgreen Co. and will be retained by Walgreen Co. and furnished to the Securities and Exchange Commission or its staff upon request.

EX-32.2

Exhibit 32.2

CERTIFICATION PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

(18 U.S.C. SECTION 1350)

In connection with the Annual Report of Walgreen Co., an Illinois corporation (the "Company"), on Form 10-K for the year ended August 31, 2013 as filed with the Securities and Exchange Commission (the "Report"), I, Wade D. Miquelon, Chief Financial Officer of the Company, certify, pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, to the best of my knowledge:

(1)The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2)The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

/s/ Wade D. Miquelon

Wade D. Miquelon

Chief Financial Officer

Dated:  October 18, 2013

A signed original of this written statement required by Section 906 has been provided to Walgreen Co. and will be retained by Walgreen Co. and furnished to the Securities and Exchange Commission or its staff upon request.

XML

Financial Instruments

12 Months Ended

Aug. 31, 2013

Financial Instruments [Abstract]

Financial Instruments

(10)Financial Instruments

The Company uses derivative instruments to manage its interest rate exposure associated with some of its fixed-rate borrowings.  The Company does not use derivative instruments for trading or speculative purposes.  All derivative instruments are recognized in the Consolidated Balance Sheets at fair value.  The Company designates interest rate swaps as fair value hedges of fixed-rate borrowings.  For derivatives designated as fair value hedges, the change in the fair value of both the derivative instrument and the hedged item are recognized in earnings in the current period.  At the inception of a hedge transaction, the Company formally documents the hedge relationship and the risk management objective for undertaking the hedge.  In addition, it assesses both at inception of the hedge and on an ongoing basis whether the derivative in the hedging transaction has been highly effective in offsetting changes in fair value of the hedged item and whether the derivative is expected to continue to be highly effective.  The impact of any ineffectiveness is recognized currently in earnings.

Counterparties to derivative financial instruments expose the Company to credit-related losses in the event of nonperformance, but the Company regularly monitors the creditworthiness of each counterparty.

Cash Flow Hedges

In fiscal 2012, the Company entered into three forward starting interest rate swap transactions locking in the then current interest rate on $1.0 billion of its anticipated debt issuance in connection with the Alliance Boots investment.  The swaps were terminated when the hedged debt was issued in September 2012.  The swap transactions were designated as cash flow hedges.  The Company recorded an immaterial gain upon termination of the swaps.

Fair Value Hedges

For derivative instruments that are designated and qualify as fair value hedges, the gain or loss on the derivative, as well as the offsetting gain or loss on the hedged item attributable to the hedged risk, are recognized in interest expense on the Consolidated Statements of Comprehensive Income.  Fair value changes in derivatives that are designated and qualify as cash flow hedges are recorded in other comprehensive income, with any ineffectiveness recorded in interest expense.

In May 2011, the Company entered into interest rate swaps with two counterparties converting $250 million of its $1.0 billion 5.250% fixed rate notes to a floating interest rate based on the six-month LIBOR in arrears plus a constant spread.  In March 2012, the Company entered into interest rate swaps with the same two counterparties converting an additional $250 million of its 5.250% fixed-rate notes to a floating interest rate based on the one-month LIBOR in arrears plus a constant spread.  In June and July 2013, the Company converted the remaining $500 million 5.250% fixed-rate notes  to variable rate through two $250 million interest rate swaps, each with a single counterparty.  The variable rates for each of the swaps are based on the six-month LIBOR in arrears plus a constant credit spread.  All swap termination dates coincide with the notes maturity date, January 15, 2019.

In January 2010, the Company entered into six-month LIBOR in arrears swaps with two counterparties for all of its $1.3 billion 4.875% fixed-rate debt.  These swaps terminated on August 1, 2013, in conjunction with the notes maturity date.

The notional amounts of derivative instruments outstanding at August 31, 2013 and 2012, were as follows (in millions):

	2013		2012
Derivatives designated as hedges:
Interest rate swaps	$	1,000	$	1,800
Forward interest rate swaps		-		1,000

The changes in fair value of the notes attributable to the hedged risk are included in long-term debt on the Consolidated Balance Sheets (see Note 9) and amortized through maturity.  At August 31, 2013, the Company had a net unamortized asset fair value change of $3 million compared to a $40 million liability at August 31, 2012.  Changes in fair value of the cash flow hedges are included in other comprehensive income, with any ineffectiveness recorded directly to interest expense.  Upon termination of the cash flow hedges, cumulative changes included in other comprehensive income will be amortized with the debt's cash flow.  No material fair value changes or ineffectiveness was recorded through other comprehensive income in fiscal 2013.

The fair value and balance sheet presentation of derivative instruments at August 31, 2013, were as follows (in millions):

Location in Consolidated Balance Sheets		2013		2012
Asset derivatives designated as hedges:
Interest rate swaps	Other current assets	$	-	$	24
Forward interest rate swaps	Other non-current assets		-		-
Interest rate swaps	Other non-current assets		1		39

Gains and losses relating to the ineffectiveness of the Company's derivative instruments are recorded in interest expense on the Consolidated Statements of Comprehensive Income.  The Company recorded a $4 million loss in fiscal 2013 and a $2 million gain in fiscal 2012 due to ineffectiveness.

Warrants

The Company, Alliance Boots and AmerisourceBergen Corporation entered into a Framework Agreement dated as of March 18, 2013, pursuant to which (1) Walgreens and Alliance Boots together were granted the right to purchase a minority equity position in AmerisourceBergen, beginning with the right, but not the obligation, to purchase up to 19,859,795 shares of AmerisourceBergen common stock (approximately 7 percent of the then fully diluted equity of AmerisourceBergen, assuming the exercise in full of the warrants described below) in open market transactions; (2) the Company and Alliance Boots were each  issued (a) a warrant to purchase up to 11,348,456  shares of AmerisourceBergen common stock at an exercise price of $51.50 per share exercisable during a six-month period beginning in March 2016, and (b) a warrant to purchase up to 11,348,456 shares of AmerisourceBergen common stock at an exercise price of $52.50 per share exercisable during a six-month period beginning in March 2017.  The parties and affiliated entities also entered into certain related agreements governing relations between and among the parties thereto, including the Shareholders Agreement, the Transaction Rights Agreement and the Limited Liability Company Agreement of WAB Holdings LLC, a newly formed limited liability company jointly owned by the Company and Alliance Boots for the purpose of acquiring and holding AmerisourceBergen common stock, described in the Company's Current Report on Form 8-K filed on March 20, 2013.

The Company reports its warrants at fair value.  See Note 11 for additional fair value measurement disclosures.  The fair value and balance sheet presentation of derivative instruments not designated as hedges at August 31, 2013, was as follows (In millions):

	Location in Consolidated Balance Sheets	August 31, 2013
Asset derivatives not designated as hedges:
Warrants	Other non-current assets	$    188

XML

Consolidated Balance Sheets (Parenthetical) (USD $)	Aug. 31, 2013	Aug. 31, 2012
Shareholders' Equity
Preferred stock, par value	$ 0.0625	$ 0.0625
Preferred stock, authorized	32,000,000	32,000,000
Common stock, par value	$ 0.078125	$ 0.078125
Common stock, authorized	3,200,000,000	3,200,000,000
Common stock, issued	1,028,180,150	1,028,180,150
Treasury stock, issued	81,584,572	84,124,816

XML

Leases

12 Months Ended

Aug. 31, 2013

Leases [Abstract]

Leases

(3)Leases

The Company owns approximately 20% of its operating locations; the remaining locations are leased premises.  Initial terms are typically 20 to 25 years, followed by additional terms containing renewal options at five-year intervals, and may include rent escalation clauses.  The commencement date of all lease terms is the earlier of the date the Company becomes legally obligated to make rent payments or the date the Company has the right to control the property.  The Company recognizes rent expense on a straight-line basis over the term of the lease.  In addition to minimum fixed rentals, some leases provide for contingent rentals based upon a portion of sales.

Minimum rental commitments at August 31, 2013, under all leases having an initial or remaining non-cancelable term of more than one year are shown below (in millions):

	Capital Lease		Operating Lease
2014	$	19	$	2,536
2015		19		2,514
2016		18		2,464
2017		17		2,389
2018		15		2,292
Later		270		23,507
Total minimum lease payments	$	358	$	35,702

The capital lease amount includes $155 million of imputed interest and executory costs.  Total minimum lease payments have not been reduced by minimum sublease rentals of approximately $140 million on leases due in the future under non-cancelable subleases.

The Company provides for future costs related to closed locations.  The liability is based on the present value of future rent obligations and other related costs (net of estimated sublease rent) to the first lease option date.  In fiscal 2013, 2012 and 2011, the Company recorded charges of $43 million, $20 million and $54 million, respectively, for facilities that were closed or relocated under long-term leases.  These charges are reported in selling, general and administrative expenses on the Consolidated Statements of Comprehensive Income.

The changes in reserve for facility closings and related lease termination charges include the following (in millions):

	Twelve Months Ended August 31
	2013			2012
Balance – beginning of period	$	117		$	145
Provision for present value of non-cancellable lease      payments of closed facilities		34			6
Assumptions about future sublease income, terminations and changes in interest rates		(6	)		(11	)
Interest accretion		15			25
Cash payments, net of sublease income		(37	)		(48	)
Balance – end of period	$	123		$	117

The Company remains secondarily liable on 26 assigned leases.  The maximum potential undiscounted future payments are $18 million at August 31, 2013.  Lease option dates vary, with some extending to 2041.

Rental expense, which includes common area maintenance, insurance and taxes, was as follows (in millions):

	2013			2012			2011
Minimum rentals	$	2,644		$	2,585		$	2,506
Contingent rentals		6			6			9
Less:  Sublease rental income		(22	)		(20	)		(15	)
	$	2,628		$	2,571		$	2,500

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Summary of Major Accounting Policies (Policies)

12 Months Ended

Aug. 31, 2013

Summary of Major Accounting Policies [Abstract]

Basis of Presentation

Description of Business

The Company is principally in the retail drugstore business and its operations are within one reportable segment.  At August 31, 2013, there were 8,582 drugstore and other locations in all 50 states, the District of Columbia, Guam and Puerto Rico.  Prescription sales were 62.9% of total sales for fiscal 2013 compared to 63.2% in 2012 and 64.7% in 2011.

Basis of Presentation

The consolidated financial statements include the accounts of the Company and its subsidiaries.  All intercompany transactions have been eliminated.  The consolidated financial statements are prepared in accordance with accounting principles generally accepted in the United States of America and include amounts based on management's prudent judgments and estimates. Actual results may differ from these estimates.

The Company's 45% proportionate share of earnings in the Alliance Boots GmbH (Alliance Boots) equity method investment is included in consolidated net earnings.  The Company reports its share of equity earnings in Alliance Boots within the operating section in the Consolidated Statements of Comprehensive Income because operations of Alliance Boots are integral to Walgreens.  The companies share common board of director members, recognize purchasing synergies through Walgreens Boots Alliance Development GmbH, a 50/50 joint venture, as well as engage in intercompany sales transactions on select front-end merchandise.  Because of the three-month lag and the timing of the closing of this investment, only the ten months of August through May's results of operations are reflected in the equity earnings in Alliance Boots included in the Company's reported net earnings for year ended August 31, 2013.

The financial results of the Walgreens Boots Alliance Development GmbH joint venture are fully consolidated into the Company's consolidated financial statements and reported without a lag.  As the joint venture is included within the Company's operating results, Alliance Boots proportionate share of Walgreens Boots Alliance Development GmbH earnings is removed from equity earnings.

Cash and Cash Equivalents

Cash and Cash Equivalents

Cash and cash equivalents include cash on hand and all highly liquid investments with an original maturity of three months or less.  Credit and debit card receivables from banks, which generally settle within two business days, of $160 million and $88 million were included in cash and cash equivalents at August 31, 2013 and 2012, respectively.  At August 31, 2013 and 2012, the Company had $1.6 billion and $820 million, respectively, in money market funds, all of which was included in cash and cash equivalents.

The Company's cash management policy provides for controlled disbursement.  As a result, the Company had outstanding checks in excess of funds on deposit at certain banks.  These amounts, which were $274 million at August 31, 2013, and $256 million at August 31, 2012, are included in trade accounts payable in the accompanying Consolidated Balance Sheets.

Allowance for Doubtful Accounts

Allowance for Doubtful Accounts

The provision for bad debt is based on both historical write-off percentages and specifically identified receivables.  Activity in the allowance for doubtful accounts was as follows (in millions):

	2013			2012			2011
Balance at beginning of year	$	99		$	101		$	104
Bad debt provision		124			107			88
Write-offs		(69	)		(109	)		(91	)
Balance at end of year	$	154		$	99		$	101

Inventories

Inventories

Inventories are valued on a lower of last-in, first-out (LIFO) cost or market basis.  At August 31, 2013 and 2012, inventories would have been greater by $2.1 billion and $1.9 billion, respectively, if they had been valued on a lower of first-in, first-out (FIFO) cost or market basis.  As a result of declining inventory levels, the fiscal 2013 and 2012 LIFO provisions were reduced by $194 million and $268 million of LIFO liquidation, respectively.  Inventory includes product costs, inbound freight, warehousing costs and vendor allowances not classified as a reduction of advertising expense.

Equity Method Investments

Equity Method Investments

The Company uses the equity method to account for investments in companies if the investment provides the ability to exercise significant influence, but not control, over operating and financial policies of the investee.  The Company's proportionate share of the net income or loss of these companies is included in consolidated net earnings.  Judgment regarding the level of influence over each equity method investment includes considering key factors such as the Company's ownership interest, representation on the board of directors, participation in policy-making decisions and material intercompany transactions.

The Company purchases inventory from Alliance Boots in the ordinary course of business.  These related party inventory purchases, which began in fiscal 2013, were not material.

The underlying net assets of the Company's equity method investment in Alliance Boots include goodwill and indefinite-lived intangible assets.  These assets are evaluated for impairment annually, or more frequently if an event occurs or circumstances change that would more likely than not reduce the fair value of a reporting unit below its carrying value.  Based on testing performed during fiscal 2013, the fair value of each Alliance Boots reporting unit exceeded its carrying value.  For certain reporting units, relatively modest changes in key assumptions may have resulted in the recognition of a goodwill impairment charge.  The Company's proportionate share of a potential impairment would be limited to its 45% ownership percentage. 

Property and Equipment

Property and Equipment

Depreciation is provided on a straight-line basis over the estimated useful lives of owned assets.  Leasehold improvements and leased properties under capital leases are amortized over the estimated useful life of the property or over the term of the lease, whichever is shorter.  Estimated useful lives range from 10 to 39 years for land improvements, buildings and building improvements; and 2 to 13 years for equipment.  Major repairs, which extend the useful life of an asset, are capitalized; routine maintenance and repairs are charged against earnings.  The majority of the business uses the composite method of depreciation for equipment.  Therefore, gains and losses on retirement or other disposition of such assets are included in earnings only when an operating location is closed, completely remodeled or impaired. Fully depreciated property and equipment are removed from the cost and related accumulated depreciation and amortization accounts.  Property and equipment consists of (in millions):

	2013		2012
Land and land improvements
Owned locations	$	3,203	$	3,189
Distribution centers		97		96
Other locations		219		232
Buildings and building improvements
Owned locations		3,805		3,684
Leased locations (leasehold improvements only)		1,811		1,518
Distribution centers		620		608
Other locations		351		525
Equipment
Locations		5,334		4,995
Distribution centers		1,190		1,158
Other locations		755		586
Capitalized system development costs		581		420
Capital lease properties		215		149
		18,181		17,160
Less: accumulated depreciation and amortization		6,043		5,122
	$	12,138	$	12,038

Depreciation expense for property and equipment was $894 million in fiscal 2013, $841 million in fiscal 2012 and $809 million in fiscal 2011.

The Company capitalizes application stage development costs for significant internally developed software projects, such as upgrades to the store point-of-sale system.  These costs are amortized over a five-year period.  Amortization expense was $100 million in fiscal 2013, $70 million in fiscal 2012 and $58 million in fiscal 2011.  Unamortized costs at August 31, 2013 and 2012, were $374 million and $292 million, respectively.

Goodwill and Other Intangible Assets

Goodwill and Other Intangible Assets

Goodwill represents the excess of the purchase price over the fair value of assets acquired and liabilities assumed.  The Company accounts for goodwill and intangibles under ASC Topic 350, Intangibles – Goodwill and Other, which does not permit amortization, but requires the Company to test goodwill and other indefinite-lived assets for impairment annually or whenever events or circumstances indicate impairment may exist.

Impaired Assets and Liabilities for Store Closings

Impaired Assets and Liabilities for Store Closings

The Company tests long-lived assets for impairment whenever events or circumstances indicate that a certain asset may be impaired.  Store locations that have been open at least five years are reviewed for impairment indicators at least annually.  Once identified, the amount of the impairment is computed by comparing the carrying value of the assets to the fair value, which is based on the discounted estimated future cash flows.  Impairment charges included in selling, general and administrative expenses were $30 million in fiscal 2013, $27 million in fiscal 2012 and $44 million in fiscal 2011.

The Company also provides for future costs related to closed locations.  The liability is based on the present value of future rent obligations and other related costs (net of estimated sublease rent) to the first lease option date.  The reserve for store closings was $123 million and $117 million as of August 31, 2013 and 2012, respectively.  See Note 3 for additional disclosure regarding the Company's reserve for future costs related to closed locations.

Financial Instruments

Financial Instruments

The Company had $197 million and $157 million of outstanding letters of credit at August 31, 2013 and 2012, respectively, which guarantee the purchase of foreign goods, and additional outstanding letters of credit of $263 million and $38 million at August 31, 2013 and 2012, respectively, which guarantee payments of insurance claims.  The insurance claim letters of credit are annually renewable and will remain in place until the insurance claims are paid in full.  Letters of credit of $4 million and $229 million were outstanding at August 31, 2013, and August 31, 2012, respectively, to guarantee performance of construction contracts.  The Company pays a facility fee to the financing bank to keep these letters of credit active.  The Company had real estate development purchase commitments of $185 million and $206 million at August 31, 2013 and 2012, respectively.

The Company uses interest rate swaps to manage its interest rate exposure associated with some of its fixed-rate borrowings.  At August 31, 2013, $1.0 billion of fixed-rate debt was converted to variable rate.  These swaps are accounted for according to ASC Topic 815, Derivatives and Hedging. The swaps are measured at fair value in accordance with ASC Topic 820, Fair Value Measurement and Disclosures.  In  fiscal 2012, the Company entered into three forward starting interest rate swap transactions locking in fixed rates on $1.0 billion of the $4.0 billion debt that was issued in fiscal 2013 in connection with the Alliance Boots transaction.  These swaps were designated as cash flow hedges and measured at fair value.  See Notes 10 and 11 for additional disclosure regarding financial instruments.

Revenue Recognition

Revenue Recognition

The Company recognizes revenue at the time the customer takes possession of the merchandise.  Customer returns are immaterial.  Sales taxes are not included in revenue.

Revenue from the pharmacy benefit management (PBM) business was included in the Company's Consolidated Statement of Comprehensive Income prior to being sold in fiscal 2011.  The services the Company provided to its PBM clients included: plan setup, claims adjudication with network pharmacies, formulary management, and reimbursement services.  Through its PBM, the Company acted as an agent in administering pharmacy reimbursement contracts and did not assume credit risk.  Therefore, revenue was recognized as only the differential between the amount receivable from the client and the amount owed to the network pharmacy.  The Company acted as an agent to its clients with respect to administrative fees for claims adjudication.  Those service fees were recognized as revenue.

Gift Cards

Gift Cards

The Company sells Walgreens gift cards to retail store customers and through its website.  The Company does not charge administrative fees on unused gift cards and most gift cards do not have an expiration date.  Income from gift cards is recognized when (1) the gift card is redeemed by the customer; or (2) the likelihood of the gift card being redeemed by the customer is remote (gift card breakage) and there is no legal obligation to remit the value of unredeemed gift cards to the relevant jurisdictions.  The Company's gift card breakage rate is determined based upon historical redemption patterns.  Gift card breakage income, which is included in selling, general and administrative expenses, was not significant in fiscal 2013, 2012 or 2011.

Loyalty Program

Loyalty Program

The Company's rewards program, Balance^® Rewards, is accrued as a charge to cost of sales at the time a point is earned.  Points are funded internally and through vendor participation, and are credited to cost of sales at the time a vendor-sponsored point is earned.  Breakage is recorded as points expire as a result of a member's inactivity or if the points remain unredeemed after three years.  Breakage income, which is reported in cost of sales, was not significant in fiscal 2013.  

Cost of Sales

Cost of Sales

Cost of sales is derived based upon point-of-sale scanning information with an estimate for shrinkage and is adjusted based on periodic inventories.  In addition to product costs, cost of sales includes warehousing costs, purchasing costs, freight costs, cash discounts and vendor allowances.

Vendor Allowances

Vendor Allowances

Vendor allowances are principally received as a result of purchases, sales or promotion of vendors' products.  Allowances are generally recorded as a reduction of inventory and are recognized as a reduction of cost of sales when the related merchandise is sold.  Those allowances received for promoting vendors' products are offset against advertising expense and result in a reduction of selling, general and administrative expenses to the extent of advertising costs incurred, with the excess treated as a reduction of inventory costs.

Selling, General and Administrative Expenses

Selling, General and Administrative Expenses

Selling, general and administrative expenses mainly consist of store salaries, occupancy costs, and expenses directly related to stores.  In addition, other costs included are headquarters' expenses, advertising costs (net of advertising revenue) and insurance.

Advertising Costs

Advertising Costs

Advertising costs, which are reduced by the portion funded by vendors, are expensed as incurred.  Net advertising expenses, which are included in selling, general and administrative expenses, were $286 million in fiscal 2013, $291 million in fiscal 2012 and $271 million in fiscal 2011.  Included in net advertising expenses were vendor advertising allowances of $240 million in fiscal 2013, $239 million in fiscal 2012 and $218 million in fiscal 2011.

Insurance Policy

Insurance

The Company obtains insurance coverage for catastrophic exposures as well as those risks required by law to be insured.  It is the Company's policy to retain a significant portion of certain losses related to workers' compensation, property, comprehensive general, pharmacist and vehicle liability.  Liabilities for these losses are recorded based upon the Company's estimates for claims incurred and are not discounted.  The provisions are estimated in part by considering historical claims experience, demographic factors and other actuarial assumptions.

Available-for-Sale Investments

Available-for-Sale Investments

The Company, Alliance Boots and AmerisourceBergen Corporation (AmerisourceBergen) entered into a Framework Agreement dated as of March 18, 2013, pursuant to which Walgreens and Alliance Boots together were granted the right to purchase a minority equity position in AmerisourceBergen, beginning with the right, but not the obligation, to purchase up to 19,859,795 shares of AmerisourceBergen common stock (approximately 7 percent of the then fully diluted equity of AmerisourceBergen, assuming the exercise in full of the warrants described below) in open market transactions.

Warrants

Warrants

The Company and Alliance Boots were each issued (a) a warrant to purchase up to 11,348,456 shares of AmerisourceBergen common stock at an exercise price of $51.50 per share exercisable during a six-month period beginning in March 2016, and (b) a warrant to purchase up to 11,348,456 shares of AmerisourceBergen common stock at an exercise price of $52.50 per share exercisable during a six-month period beginning in March 2017.  The Company's warrants are valued at the date of issuance and the end of the period using a Monte Carlo simulation.  Key assumptions used throughout the valuation include risk-free interest rates using constant maturity treasury rates; the dividend yield for AmerisourceBergen's common stock; AmerisourceBergen's common stock price at valuation date; AmerisourceBergen's equity volatility; the number of shares of AmerisourceBergen's common stock outstanding; the number of AmerisourceBergen employee stock options and the exercise price; and the details specific to the warrants.  The fair value of the Company's warrants on March 18, 2013, the date of issuance, was $77 million.  The Company recorded the fair value of its warrants as a non-current asset with a corresponding deferred credit in its Consolidated Balance Sheets.  The deferred credit attributable to the warrants will be amortized over the life of the warrants.  As of August 31, 2013, the fair value of the Company's warrants was $188 million, which resulted in the Company recording other income of $111 million for fiscal 2013 within its Consolidated Statements of Comprehensive Income.  The increase in the fair value of the warrants was primarily attributable to the increase in the price of AmerisourceBergen's common stock.  In addition, the Company recorded $9 million of other income relating to the amortization of the deferred credit in fiscal 2013.

Preopening Expense Policy

Pre-Opening Expenses

Non-capital expenditures incurred prior to the opening of a new or remodeled store are expensed as incurred.

Stock-Based Compensation Plans

Stock-Based Compensation Plans

In accordance with ASC Topic 718, Compensation – Stock Compensation, the Company recognizes compensation expense on a straight-line basis over the employee's vesting period or to the employee's retirement eligible date, if earlier.

Total stock-based compensation expense for fiscal 2013, 2012 and 2011 was $104 million, $99 million and $135 million, respectively.  The recognized tax benefit was $30 million, $9 million and $49 million for fiscal 2013, 2012 and 2011, respectively.

Unrecognized compensation cost related to non-vested awards at August 31, 2013, was $189 million.  This cost is expected to be recognized over a weighted average of three years.

Interest Expense

Interest Expense

The Company capitalized $7 million, $9 million and $10 million of interest expense as part of significant construction projects during fiscal 2013, 2012 and 2011, respectively.  Interest paid, which is net of capitalized interest, was $158 million in fiscal 2013, $108 million in fiscal 2012 and $89 million in fiscal 2011.

Income Taxes

Income Taxes

The Company accounts for income taxes according to the asset and liability method. Under this method, deferred tax assets and liabilities are recognized based upon the estimated future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured pursuant to tax laws using rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled.  The effect on deferred tax assets and liabilities of a change in tax rate is recognized in income in the period that includes the enactment date. Valuation allowances are established when necessary to reduce deferred tax assets to the amounts more likely than not to be realized.

In determining the Company's provision for income taxes, an annual effective income tax rate based on full-year income, permanent differences between book and tax income, and statutory income tax rates are used. The effective income tax rate also reflects the Company's assessment of the ultimate outcome of tax audits in addition to any foreign-based income deemed to be taxable in the United States. Discrete events such as audit settlements or changes in tax laws are recognized in the period in which they occur.

The Company is subject to routine income tax audits that occur periodically in the normal course of business.  U.S. federal, state and local and foreign tax authorities raise questions regarding the Company's tax filing positions, including the timing and amount of deductions and the allocation of income among various tax jurisdictions. In evaluating the tax benefits associated with its various tax filing positions, the Company records a tax benefit for uncertain tax positions using the highest cumulative tax benefit that is more likely than not to be realized. Adjustments are made to the liability for unrecognized tax benefits in the period in which the Company determines the issue is effectively settled with the tax authorities, the statute of limitations expires for the return containing the tax position or when more information becomes available. The Company's liability for unrecognized tax benefits, including accrued penalties and interest, is included in other long-term liabilities on the Consolidated Balance Sheets and in income tax expense in the Consolidated Statements of Comprehensive Income.

Earnings Per Share

Earnings Per Share

The dilutive effect of outstanding stock options on earnings per share is calculated using the treasury stock method.  Stock options are anti-dilutive and excluded from the earnings per share calculation if the exercise price exceeds the average market price of the common shares.  Outstanding options to purchase common shares that were anti-dilutive and excluded from earnings per share totaled 12,316,949, 32,593,870 and 16,869,061 in fiscal 2013, 2012 and 2011, respectively.

New Accounting Pronouncements

New Accounting Pronouncements

In July 2012, Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) 2012-02, Intangibles – Goodwill and Other (Topic 350) – Testing Indefinite-Lived Intangible Assets for Impairment, which permits an entity to make a qualitative assessment to determine whether it is more likely than not that an indefinite-lived intangible asset, other than goodwill, is impaired.  If an entity concludes, based on an evaluation of all relevant qualitative factors, that it is not more likely than not that the fair value of an indefinite-lived intangible asset is less than its carrying amount, it will not be required to perform the quantitative impairment for that asset.  The ASU is effective for impairment tests performed for fiscal years beginning after September 15, 2012 (fiscal year 2014), with early adoption permitted.  The ASU will not have a material impact on the Company's reported results of operations and financial position.  The impact is non-cash in nature and will not affect the Company's cash position.

In May 2013, the FASB reissued an exposure draft on lease accounting that would require entities to recognize assets and liabilities arising from lease contracts on the balance sheet.  The proposed exposure draft states that lessees and lessors should apply a "right-of-use model" in accounting for all leases.  Under the proposed model, lessees would recognize an asset for the right to use the leased asset, and a liability for the obligation to make rental payments over the lease term.  When measuring the asset and liability, variable lease payments are excluded, whereas renewal options that provide a significant economic incentive upon renewal would be included.  The accounting by a lessor would reflect its retained exposure to the risks or benefits of the underlying leased asset.  A lessor would recognize an asset representing its right to receive lease payments based on the expected term of the lease.  The lease expense from real estate based leases would continue to be recorded under a straight-line approach, but other leases not related to real estate would be expensed using an effective interest method that would accelerate lease expense.  A final standard is currently expected to be issued in 2014 and would be effective no earlier than annual reporting periods beginning on January 1, 2017 (fiscal 2018 for the Company).  The proposed standard, as currently drafted, would have a material impact on the Company's financial position and the impact on the Company's reported results of operations is being evaluated.  The impact of this exposure draft is non-cash in nature and would not affect the Company's cash position.

In July 2013, the FASB issued Accounting Standards Update 2013-11, Income Taxes (Topic 740) – Presentation of an Unrecognized Tax Benefit when a Net Operating Loss Carryforward or Tax Credit Carryforward Exists.  This update provides that an entity's unrecognized tax benefit, or a portion of its unrecognized tax benefit, should be presented in its financial statements as a reduction to a deferred tax asset for a net operating loss carryforward, a similar tax loss, or a tax credit carryforward.  This update applies prospectively to all entities that have unrecognized tax benefits when a net operating loss carryforward, a similar tax loss, or a tax credit carryforward exists at the reporting date.  Retrospective application is also permitted.  This update is effective for annual periods, and interim periods within those years, beginning after December 15, 2013 (fiscal 2014).  The standard will not have a material impact on the Company's reported results of operations and financial position.  The impact of this ASU is non-cash in nature and will not affect the Company's cash position.

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Fair Value Measurements

12 Months Ended

Aug. 31, 2013

Fair Value Measurements [Abstract]

Fair Value Measurements

(11)Fair Value Measurements

The Company measures certain assets and liabilities in accordance with ASC Topic 820, Fair Value Measurements and Disclosures.  ASC Topic 820 defines fair value as the price that would be received for an asset or paid to transfer a liability in an orderly transaction between market participants on the measurement date.  In addition, it establishes a fair value hierarchy that prioritizes observable and unobservable inputs used to measure fair value into three broad levels:

Level 1 -	Quoted prices in active markets that are accessible at the measurement date for identical assets and liabilities. The fair value hierarchy gives the highest priority to Level 1 inputs.
Level 2 -	Observable inputs other than quoted prices in active markets.
Level 3 -	Unobservable inputs for which there is little or no market data available. The fair value hierarchy gives the lowest priority to Level 3 inputs.

Assets and liabilities measured at fair value on a recurring basis were as follows (in millions):

	August 31, 2013		Level 1		Level 2		Level 3
Assets:
Money market funds	$	1,636	$	1,636	$	-	$	-
Interest rate swaps(1)		1		-		1		-
Investment in AmerisourceBergen(2)		225		225		-		-
Warrants(3)		188		-		188		-
Forward interest rate swaps		-		-		-		-

	August 31, 2012		Level 1		Level 2		Level 3
Assets:
Money market funds	$	820	$	820	$	-	$	-
Interest rate swaps(1)		63		-		63		-
Forward interest rate swaps		-		-		-		-

⁽¹⁾ Interest rate swaps are valued using the six-month and one-month LIBOR in arrears rates.  See Note 10 for additional disclosure regarding financial instruments.

⁽²⁾ The investment in AmerisourceBergen Corporation is valued using the closing stock price of AmerisourceBergen as of August 31, 2013.  See Note 6 for additional disclosures on available-for-sale investments.

⁽³⁾ Warrants were valued using a Monte Carlo simulation.  Key assumptions used in the valuation include risk-free interest rates using constant maturity treasury rates; the dividend yield for AmerisourceBergen's common stock; AmerisourceBergen's common stock price at valuation date; AmerisourceBergen's equity volatility; the number of shares of AmerisourceBergen's common stock outstanding; the number of AmerisourceBergen employee stock options and the exercise price; and the details specific to the warrants.

Assets measured at fair value on a nonrecurring basis were as follows (in millions):

	August 31, 2013		Level 1		Level 2		Level 3
Assets:
Alliance Boots call option	$	839	$	-	$	-	$	839

The call option was valued using a Monte Carlo simulation using assumptions surrounding Walgreens equity value as well as the potential impacts of certain provisions of the Purchase and Option Agreement dated June 18, 2012, by and among the Company, Alliance Boots and AB Acquisitions Holdings Limited.

The Company reports its debt instruments under the guidance of ASC Topic 825, Financial Instruments, which requires disclosure of the fair value of the Company's debt in the footnotes to the consolidated financial statements.  See Note 9 for further details.

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Capital Stock (Details) (USD $) Share data in Millions, unless otherwise specified	12 Months Ended
	Aug. 31, 2013	Aug. 31, 2012	Aug. 31, 2011
Equity, Class of Treasury Stock [Line Items]
Long-term dividend payout ratio target, lower range (in hundredths)	30.00%
Long-term dividend payout ratio target, upper range (in hundredths)	35.00%
Stock repurchased during current fiscal year, value	$ 615,000,000	$ 40,000,000
Shares of common stock reserved for future issuances (in shares)	56.5
Common Stock [Member]
Equity, Class of Treasury Stock [Line Items]
Stock repurchased during current fiscal year, value	0	1,151,000,000	1,784,000,000
Common Stock [Member] | 2009 Repurchase Program [Member]
Equity, Class of Treasury Stock [Line Items]
Share repurchase program, authorized maximum amount	2,000,000,000
Stock repurchased during current fiscal year, value	0	0	360,000,000
Common Stock [Member] | 2011 Repurchase Program [Member]
Equity, Class of Treasury Stock [Line Items]
Share repurchase program, authorized maximum amount	1,000,000,000
Stock repurchased during current fiscal year, value	0	0	1,000,000,000
Common Stock [Member] | 2012 Repurchase Program [Member]
Equity, Class of Treasury Stock [Line Items]
Share repurchase program, authorized maximum amount	2,000,000,000
Stock repurchased during current fiscal year, value	$ 0	$ 1,151,000,000	$ 424,000,000

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Leases (Details) (USD $) In Millions, unless otherwise specified	12 Months Ended
	Aug. 31, 2013	Aug. 31, 2012	Aug. 31, 2011
Leases [Abstract]
Percentage of operating locations (in hundredths)	20.00%
Initial term of operating lease, lower range	20
Initial term of operating lease, upper range	25
Cancellation option intervals related to additional terms of lease	renewal options at five-year intervals, and may include rent escalation clauses.
Executory costs and imputed interest	$ 155
Minimum sublease rentals	140
Charges related to facilities that were closed or relocated	43	20	54
Number of assigned leases (in number of lease)	26
Maximum potential undiscounted future payments	18
Capital Leases, Future Minimum Payments Due [Abstract]
2014	19
2015	19
2016	18
2017	17
2018	15
Later	270
Total minimum lease payments	358
Operating Leases, Future Minimum Payments Due [Abstract]
2014	2,536
2015	2,514
2016	2,464
2017	2,389
2018	2,292
Later	23,507
Total minimum lease payments	35,702
Changes in Reserve for Facility Closings and Related Lease Termination Charges [Roll Forward]
Balance - beginning of period	117	145
Provision for present value of non-cancellable lease payments of closed facilities	34	6
Assumptions about future sublease income, terminations, and changes in interest rates	(6)	(11)
Interest accretion	15	25
Cash payments, net of sublease income	(37)	(48)
Balance - end of period	123	117	145
Rent Expense, Net [Abstract]
Minimum rentals	2,644	2,585	2,506
Contingent rentals	6	6	9
Less: Sublease rental income	(22)	(20)	(15)
Total rental expense	$ 2,628	$ 2,571	$ 2,500

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Equity Method Investments (Tables)

12 Months Ended

Aug. 31, 2013

Equity Method Investments [Abstract]

Equity method investment

Equity method investments as of August 31, 2013 and 2012, were as follows (in millions, except percentages):

	2013				2012
	Carrying Value		Ownership Percentage		Carrying Value		Ownership Percentage
Alliance Boots	$	6,261		45%	$	6,140		45%
Other equity method investments		7		30% - 50%		7		30% - 50%
Total Equity Method Investments	$	6,268			$	6,147

Summarized balance sheet and income statement information of equity method investees

Summarized financial information for the Company's equity method investees is as follows:

Balance Sheet (in millions)

	At August 31,
	2013(1)		2012(1)
Current Assets	$	8,906	$	9,193
Non-Current Assets		19,484		20,085
Current Liabilities		7,204		7,254
Non-Current Liabilities		12,228		13,269
Shareholders' Equity (2)		8,958		8,755

Income Statement (in millions)

	Year Ended August 31,
	2013(3)		2012		2011
Net Sales	$	30,446	$	37	$	37
Gross Profit		6,391		17		19
Net Earnings		1,022		2		5
Share of income from investments accounted for using the equity method(3)		345		1		2

⁽¹⁾ Net assets in Alliance Boots are translated at the May 31, 2013 spot rate of $1.52 to one British pound Sterling, corresponding to the three-month lag.  Fiscal 2012 net assets in Alliance Boots were translated at a spot rate of $1.57 to one British pound Sterling.

⁽²⁾ Shareholders' equity at August 31, 2013 and 2012, includes $374 million and $380 million related to non-controlling interests, respectively.

⁽³⁾ The Company utilizes a three-month lag in reporting its share of equity income in Alliance Boots.  Earnings reflect $57 million, $44 million net of tax, of incremental acquisition-related amortization for the ten-month period ending August 31, 2013.  Earnings in Alliance Boots are translated at the average exchange rate of $1.57 to one British pound Sterling for the year ended August 31, 2013.  Ten months of operating results are presented for Alliance Boots in fiscal 2013 corresponding to the three-month lag after closing the investment on August 2, 2012.  Walgreens Boots Alliance Development GmbH operations are excluded from these results as the Company consolidates the joint venture.

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Leases (Tables)

12 Months Ended

Aug. 31, 2013

Leases [Abstract]

Schedule of Future Minimum Lease Payments for Capital Lease and Operating Lease

Minimum rental commitments at August 31, 2013, under all leases having an initial or remaining non-cancelable term of more than one year are shown below (in millions):

	Capital Lease		Operating Lease
2014	$	19	$	2,536
2015		19		2,514
2016		18		2,464
2017		17		2,389
2018		15		2,292
Later		270		23,507
Total minimum lease payments	$	358	$	35,702

Reserve for Facility Closings and Related Lease Termination Charges

The changes in reserve for facility closings and related lease termination charges include the following (in millions):

	Twelve Months Ended August 31
	2013			2012
Balance – beginning of period	$	117		$	145
Provision for present value of non-cancellable lease      payments of closed facilities		34			6
Assumptions about future sublease income, terminations and changes in interest rates		(6	)		(11	)
Interest accretion		15			25
Cash payments, net of sublease income		(37	)		(48	)
Balance – end of period	$	123		$	117

Schedule of Rental Expense

Rental expense, which includes common area maintenance, insurance and taxes, was as follows (in millions):

	2013			2012			2011
Minimum rentals	$	2,644		$	2,585		$	2,506
Contingent rentals		6			6			9
Less:  Sublease rental income		(22	)		(20	)		(15	)
	$	2,628		$	2,571		$	2,500

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Fair Value Measurements (Details) (USD $) In Millions, unless otherwise specified	12 Months Ended
	Aug. 31, 2013	Aug. 31, 2013 Estimate of Fair Value, Fair Value Disclosure [Member]	Aug. 31, 2012 Estimate of Fair Value, Fair Value Disclosure [Member]	Aug. 31, 2013 Fair Value, Inputs, Level 1 [Member]	Aug. 31, 2012 Fair Value, Inputs, Level 1 [Member]	Aug. 31, 2013 Fair Value, Inputs, Level 2 [Member]	Aug. 31, 2012 Fair Value, Inputs, Level 2 [Member]	Aug. 31, 2013 Fair Value, Inputs, Level 3 [Member]	Aug. 31, 2012 Fair Value, Inputs, Level 3 [Member]
Fair Value, Assets Measured on Recurring Basis, Financial Statement Captions [Line Items]
Money market funds		$ 1,636	$ 820	$ 1,636	$ 820	$ 0	$ 0	$ 0	$ 0
Interest rate swaps		1	63	0	0	1	63	0	0
Investment in AmerisourceBergen		225		225		0		0
Warrant assets		188		0		188		0
Forward interest rate swaps		$ 0	$ 0	$ 0	$ 0	$ 0	$ 0	$ 0	$ 0
Swap and Warrant valuation methods	(1) Interest rate swaps are valued using the six-month and one-month LIBOR in arrears rates. See Note 10 for additional disclosure regarding financial instruments.(2) The investment in AmerisourceBergen Corporation is valued using the closing stock price of AmerisourceBergen as of August 31, 2013. See Note 6 for additional disclosures on available-for-sale investments. (3) Warrants were valued using a Monte Carlo simulation. Key assumptions used in the valuation include risk-free interest rates using constant maturity treasury rates; the dividend yield for AmerisourceBergen's common stock; AmerisourceBergen's common stock price at valuation date; AmerisourceBergen's equity volatility; the number of shares of AmerisourceBergen's common stock outstanding; the number of AmerisourceBergen employee stock options and the exercise price; and the details specific to the warrants. Assets measured at fair value on a nonrecurring basis were as follows (in millions): August 31, 2013 Level 1 Level 2 Level 3 Assets: Alliance Boots call option $839 $- $- $839 The call option was valued using a Monte Carlo simulation using assumptions surrounding Walgreens equity value as well as the potential impacts of certain provisions of the Purchase and Option Agreement dated June 18, 2012, by and among the Company, Alliance Boots and AB Acquisitions Holdings Limited.

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Retirement Benefits (Tables)

12 Months Ended

Aug. 31, 2013

Retirement Benefits [Abstract]

Schedule of retirement benefit plans disclosures

Components of net periodic benefit costs (in millions):

	2013			2012			2011
Service cost	$	9		$	13		$	15
Interest cost		14			22			22
Amortization of actuarial loss		12			8			14
Amortization of prior service cost		(22	)		(10	)		(10	)
Total postretirement benefit cost	$	13		$	33		$	41

Change in benefit obligation (in millions):

	2013			2012
Benefit obligation at September 1	$	342		$	407
Service cost		9			13
Interest cost		14			22
Amendments		-			(139	)
Actuarial (gain) loss		(1	)		52
Benefit payments		(20	)		(18	)
Participants' contributions		6			5
Benefit obligation at August 31	$	350		$	342

Change in plan assets (in millions):

	2013			2012
Plan assets at fair value at September 1	$	-		$	-
Participants' contributions		6			5
Employer contributions		14			13
Benefits paid		(20	)		(18	)
Plan assets at fair value at August 31	$	-		$	-

Funded status (in millions):

	2013			2012
Funded status	$	(350	)	$	(342	)
Unrecognized actuarial gain		-			-
Unrecognized prior service cost		-			-
Accrued benefit cost at August 31	$	(350	)	$	(342	)

Amounts recognized in the Consolidated Balance Sheets (in millions):

	2013			2012
Current liabilities (present value of expected 2014 net benefit payments)	$	(10	)	$	(10	)
Non-current liabilities		(340	)		(332	)
Net liability recognized at August 31	$	(350	)	$	(342	)

Amounts recognized in accumulated other comprehensive (income) loss (in millions):

	2013			2012
Prior service credit	$	(228	)	$	(250	)
Net actuarial loss		148			161

Amounts expected to be recognized as components of net periodic costs for fiscal year 2014 (in millions):

	2014
Prior service credit	$	(22	)
Net actuarial loss		11

Effect of one percentage point change in assumed health care cost trend rate

Future benefit costs were estimated assuming medical costs would increase at a 7.00% annual rate, gradually decreasing to 5.25% over the next nine years and then remaining at a 5.25% annual growth rate thereafter.  A one percentage point change in the assumed medical cost trend rate would have the following effects (in millions):

	1% Increase			1% Decrease
Effect on service and interest cost	$	(1	)	$	1
Effect on postretirement obligation		(1	)		5

Estimated future benefit payments and federal subsidy

Estimated future federal subsidies are immaterial for all periods presented.  Future benefit payments are as follows (in millions):

	Estimated Future Benefit Payments
2014	$	10
2015		12
2016		13
2017		15
2018		17
2019-2023		111

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Equity Method Investments (Details)	12 Months Ended				12 Months Ended
	Aug. 31, 2013 USD ($)	Aug. 31, 2012 USD ($)	Aug. 31, 2011 USD ($)	May 31, 2013	Aug. 31, 2013 Alliance Boots [Member] USD ($)	Aug. 31, 2013 Alliance Boots [Member] GBP (£)	Aug. 31, 2012 Alliance Boots [Member] USD ($)	Aug. 31, 2013 Other equity method investments [Member] USD ($)	Aug. 31, 2012 Other equity method investments [Member] USD ($)	Aug. 31, 2013 Other equity method investments [Member] Minimum [Member]	Aug. 31, 2012 Other equity method investments [Member] Minimum [Member]	Aug. 31, 2013 Other equity method investments [Member] Maximum [Member]	Aug. 31, 2012 Other equity method investments [Member] Maximum [Member]	Aug. 31, 2013 Total [Member] USD ($)	Aug. 31, 2012 Total [Member] USD ($)
Schedule of Equity Method Investments [Line Items]
Carrying value	$ 6,261,000,000	$ 6,140,000,000			$ 6,261,000,000		$ 6,140,000,000	$ 7,000,000	$ 7,000,000					$ 6,268,000,000	$ 6,147,000,000
Ownership percentage (in hundredths)					45.00%		45.00%			30.00%	30.00%	50.00%	50.00%
Cash paid to acquire investment	0	4,025,000,000	0		4,025,000,000
Shares issued for Investment in Alliance Boots (in shares)					83,400,000
Remaining ownership subject to call option (in hundredths)					0.55
Cash price to exercise call option					4,900,000,000	3,100,000,000
Shares to be issued upon exercise of call option (in shares)					144,300,000
Exercise dates	March 2016				The call option can be exercised by the Company during the six-month period beginning February 2, 2015.
Reduced ownership percentage if call option is not exercised (in hundredths)					42.00%
Fair value of call option	839,000,000	866,000,000					866,000,000
Final purchase price allocation, excluding call option					6,100,000,000
Lag period for financial reporting of equity method investee					3 months
Alliance Boots, Number of months results included in fiscal year					10
Incremental acquisition related amortization					57,000,000
Alliance Boots excess purchase price							2,400,000,000
Non-controlling interests	374,000,000	380,000,000
Translation rate (1 GBP to USD)		1.57		1.52
Balance Sheet [Abstract]
Current assets	8,906,000,000	9,193,000,000
Noncurrent assets	19,484,000,000	20,085,000,000
Current liabilities	7,204,000,000	7,254,000,000
Noncurrent liabilities	12,228,000,000	13,269,000,000
Shareholders' Equity	8,958,000,000	8,755,000,000
Income Statement [Abstract]
Net revenue	30,446,000,000	37,000,000	37,000,000
Gross Profit	6,391,000,000	17,000,000	19,000,000
Net income	1,022,000,000	2,000,000	5,000,000
Share of income from investments accounted for using the equity method	$ 345,000,000	$ 1,000,000	$ 2,000,000

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Stock Compensation Plans (Details) (USD $)	12 Months Ended
	Aug. 31, 2013	Aug. 31, 2012	Aug. 31, 2011
Stock options authorized and available for future grant [Roll Forward]
Outstanding shares at beginning of period (in shares)	0
Newly authorized shares under the Omnibus Plan	40,000,000
Total shares transferred from former plans	20,426,181
Granted (in shares)	(5,642,763)
Forfeited (in shares)	104,087
Plan termination	1,566,994
Outstanding shares at end of period (in shares)	56,454,499	0
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Total shares authorized under Omnibus Plan	60,400,000
Newly authorized shares under the Omnibus Plan	40,000,000
Shares previously available under the Executive Stock Option Plan	9,300,000
Shares previously available under the Long Term Performance Incentive Plan	3,200,000
Shares previously available under the Broad Based Employee Stock Option Plan	7,900,000
Outstanding shares [Roll Forward]
Outstanding shares at beginning of period (in shares)	0
Granted (in shares)	(5,642,763)
Exercised (in shares)	(14,281,816)
Forfeited (in shares)	104,087
Outstanding shares at end of period (in shares)	56,454,499	0
Exercisable at end of period (in shares)	19,288,591
Weighted Average Price [Roll Forward]
Exercised (in dollars per share)	$ 33.07
Exercisable at end of period (in dollars per share)	$ 36.40
Number of options granted in period	8,629,392
Total stock based compensation expense for the period	$ 104,000,000	$ 99,000,000	$ 135,000,000
Grant date fair value	$ 35.86
Dividend yield (in hundredths)	2.44%	2.90%	1.94%
Average life of option (in years)	7 years	7 years 10 months 24 days	7 years 2 months 12 days
The value of the annual stock grant made to directors after November 1, 2009	170,000
Number of shares each nonemployee director was granted (in shares)	4,789	4,788	4,552
Number of options granted in period	8,629,392
Outstanding stock options [Roll Forward]
Outstanding at beginning of period (in shares)	50,035,969
Granted (in shares)	8,629,392
Exercised (in shares)	(14,281,816)
Expired/Forfeited (in shares)	(3,167,372)
Outstanding at end of period (in shares)	41,216,173	50,035,969
Vested or expected to vest at end of period (in shares)	21,174,374
Exercisable at end of period (in shares)	19,288,591
Weighted Average Price [Roll Forward]
Outstanding at beginning of period (in dollars per share)	$ 34.18
Granted (in dollars per share)	$ 35.86
Exercised (in dollars per share)	$ 33.07
Expired/Forfeited (in dollars per share)	$ 37.13
Outstanding at end of period (in dollars per share)	$ 34.69	$ 34.18
Vested or expected to vest at end of period (in dollars per share)	$ 33.32
Exercisable at end of period (in dollars per share)	$ 36.40
Remaining Contractual Terms [Roll Forward]
Outstanding at beginning of period	5 years 7 months 6 days
Outstanding at end of period	5 years 7 months 6 days
Vested or expected to vest at end of period	8 years 4 days
Exercisable at end of period	4 years 14 days
Aggregate Intrinsic Value (Roll Forward]
Outstanding at beginning of period	175,000,000
Outstanding at end of period	548,000,000	175,000,000
Vested or expected to vest at end of period	312,000,000
Exercisable at end of period	228,000,000
Intrinsic value for options exercised	159,000,000	22,000,000	33,000,000
Fair value of options vested	51,000,000	125,000,000	58,000,000
Cash received from the exercise of options	471,000,000	89,000,000
Related tax benefit realized	$ 60,000,000	$ 8,000,000
Option Pricing Model Assumptions [Abstract]
Risk-free interest rate (in hundredths)	1.15%	1.73%	2.12%
Average life of option (in years)	7 years	7 years 10 months 24 days	7 years 2 months 12 days
Volatility (in hundredths)	24.94%	27.02%	28.08%
Dividend yield (in hundredths)	2.44%	2.90%	1.94%
Weighted-average grant-date fair value granted at market price (in dollars per share)	$ 6.75	$ 8.08	$ 8.12
Employee Stock Purchase Plan 1982 [Member]
Weighted Average Price [Roll Forward]
Number of options that may be granted under this plan (in shares)	94,000,000
Percentage of the fair market value that the plan permits eligible employees to purchase common stock	90.00%
Share-based Compensation Arrangement by Share-based Payment Award, Number of Shares Available for Grant	14,400,000
Walgreen Co. Omnibus and former Restricted Stock Unit Award Program [Member]
Stock options authorized and available for future grant [Roll Forward]
Outstanding shares at beginning of period (in shares)	1,810,551
Granted (in shares)	2,600,429
Forfeited (in shares)	(228,406)
Outstanding shares at end of period (in shares)	3,497,838
Outstanding shares [Roll Forward]
Outstanding shares at beginning of period (in shares)	1,810,551
Granted (in shares)	2,600,429
Dividends (in shares)	88,921
Forfeited (in shares)	(228,406)
Vested or expected to vest at end of period (in shares)	(773,657)
Outstanding shares at end of period (in shares)	3,497,838
Weighted Average Price [Roll Forward]
Outstanding at beginning of period (in dollars per share)	$ 34.04
Granted (in dollars per share)	$ 44.07
Dividends (in dollars per share)	$ 0
Forfeited (in dollars per share)	$ 37.90
Vested or expected to vest at end of period (in dollars per share)	$ 28.68
Outstanding at end of period (in dollars per share)	$ 41.57
Outstanding stock options [Roll Forward]
Dividends (in shares)	88,921
Weighted Average Price [Roll Forward]
Dividends (in dollars per share)	$ 0
Walgreen Co. Omnibus and former Performance Share Program [Member]
Stock options authorized and available for future grant [Roll Forward]
Outstanding shares at beginning of period (in shares)	1,980,027
Granted (in shares)	998,020
Forfeited (in shares)	(170,415)
Outstanding shares at end of period (in shares)	2,217,610
Outstanding shares [Roll Forward]
Outstanding shares at beginning of period (in shares)	1,980,027
Granted (in shares)	998,020
Forfeited (in shares)	(170,415)
Vested or expected to vest at end of period (in shares)	(590,022)
Outstanding shares at end of period (in shares)	2,217,610
Weighted Average Price [Roll Forward]
Outstanding at beginning of period (in dollars per share)	$ 32.57
Granted (in dollars per share)	$ 35.66
Forfeited (in dollars per share)	$ 34.64
Vested or expected to vest at end of period (in dollars per share)	$ 35.63
Outstanding at end of period (in dollars per share)	$ 32.99

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Financial Instruments (Tables)

12 Months Ended

Aug. 31, 2013

Financial Instruments [Abstract]

Notional Amounts Of Derivative Instruments Outstanding

The notional amounts of derivative instruments outstanding at August 31, 2013 and 2012, were as follows (in millions):

	2013		2012
Derivatives designated as hedges:
Interest rate swaps	$	1,000	$	1,800
Forward interest rate swaps		-		1,000

Fair Value and Balance Sheet Presentation of Derivative Instruments

The fair value and balance sheet presentation of derivative instruments at August 31, 2013, were as follows (in millions):

Location in Consolidated Balance Sheets		2013		2012
Asset derivatives designated as hedges:
Interest rate swaps	Other current assets	$	-	$	24
Forward interest rate swaps	Other non-current assets		-		-
Interest rate swaps	Other non-current assets		1		39

Schedule of Derivative Assets at Fair Value

The Company reports its warrants at fair value.  See Note 11 for additional fair value measurement disclosures.  The fair value and balance sheet presentation of derivative instruments not designated as hedges at August 31, 2013, was as follows (In millions):

	Location in Consolidated Balance Sheets	August 31, 2013
Asset derivatives not designated as hedges:
Warrants	Other non-current assets	$    188

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Income Taxes (Details) (USD $)	12 Months Ended
	Aug. 31, 2013	Aug. 31, 2012	Aug. 31, 2011
Income Taxes [Abstract]
Income (Loss) from Continuing Operations before Income Taxes, Domestic	$ 3,477,000,000
Income (Loss) from Continuing Operations before Income Taxes, Foreign	418,000,000
Earnings Before Income Tax Provision	3,895,000,000	3,376,000,000	4,294,000,000
Equity earnings in Alliance Boots	344,000,000	0	0
Current provision [Abstract]
Federal	1,122,000,000	890,000,000	1,301,000,000
State	134,000,000	120,000,000	147,000,000
Current Foreign Tax Expense (Benefit)	15,000,000	0	0
Total Current Provisions for income taxes	1,271,000,000	1,010,000,000	1,448,000,000
Deferred provision [Abstract]
Federal	174,000,000	251,000,000	113,000,000
State	(2,000,000)	(12,000,000)	19,000,000
Deferred Foreign Income Tax Expense (Benefit)	2,000,000	0	0
Total Deferred Provision for income taxes	174,000,000	239,000,000	132,000,000
Total Current and Deferred Provision for income taxes	1,445,000,000	1,249,000,000	1,580,000,000
Difference between statutory federal income tax rate and effective tax rate [Abstract]
Federal statutory rate	35.00%	35.00%	35.00%
State income taxes, net of federal benefit	2.20%	2.10%	2.60%
Other	(0.10%)	(0.10%)	(0.80%)
Effective income tax rate	37.10%	37.00%	36.80%
Deferred tax assets [Abstract]
Postretirement benefits	218,000,000	217,000,000
Compensation and benefits	136,000,000	182,000,000
Insurance	121,000,000	157,000,000
Accrued rent	157,000,000	142,000,000
Tax benefits	159,000,000	214,000,000
Stock compensation	159,000,000	189,000,000
Inventory	95,000,000	96,000,000
Other	96,000,000	92,000,000
Subtotal deferred tax assets	1,141,000,000	1,289,000,000
Less: Valuation Allowance	19,000,000	19,000,000
Total Deferred Tax Assets	1,122,000,000	1,270,000,000
Deferred tax liabilities [Abstract]
Accelerated depreciation	1,369,000,000	1,332,000,000
Inventory	491,000,000	534,000,000
Intangible assets	53,000,000	28,000,000
Equity method investment	21,000,000	0
Other	4,000,000	80,000,000
Total Deferred Tax Liabilities	1,938,000,000	1,974,000,000
Operating Loss Carryforwards [Line Items]
Deferred Tax Assets, Operating Loss Carryforwards	119,000,000
Net deferred tax liabilities	816,000,000	704,000,000
Income taxes paid	1,200,000,000	1,200,000,000	1,300,000,000
Unrecognized tax benefit reported in current income tax liabilities	32,000,000
Balance at beginning of year	197,000,000	94,000,000	93,000,000
Gross increases related to tax positions in a prior period	18,000,000	100,000,000	25,000,000
Gross decreases related to tax positions in a prior period	(32,000,000)	(49,000,000)	(68,000,000)
Gross increases related to tax positions in the current period	30,000,000	53,000,000	54,000,000
Settlements with taxing authorities	(2,000,000)	(1,000,000)	(8,000,000)
Lapse of statute of limitations	(3,000,000)	0	(2,000,000)
Balance at end of year	208,000,000	197,000,000	94,000,000
Unrecognized tax benefits would favorably impact the effective tax rate if recognized	116,000,000	118,000,000	81,000,000
Accrued Interest and penalties in income tax provision	28,000,000	23,000,000
Interest and penalties included in income tax expense	5,000,000
Number of months of increase(decrease) in unrecognized tax benefit with respect to uncertain unrecognized tax positions (in months)	12
Minimum [Member]
Operating Loss Carryforwards [Line Items]
Operating Loss Carryforwards, Expiration Dates	2014
Maximum [Member]
Operating Loss Carryforwards [Line Items]
Operating Loss Carryforwards, Expiration Dates	2032
Internal Revenue Service (IRS) [Member]
Operating Loss Carryforwards [Line Items]
Operating Loss Carryforwards	212,000,000
State and Local Jurisdiction [Member]
Operating Loss Carryforwards [Line Items]
Operating Loss Carryforwards	$ 1,100,000,000

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Summary of Major Accounting Policies (Tables)

12 Months Ended

Aug. 31, 2013

Summary of Major Accounting Policies [Abstract]

Schedule of property, plant and equipment

Depreciation is provided on a straight-line basis over the estimated useful lives of owned assets.  Leasehold improvements and leased properties under capital leases are amortized over the estimated useful life of the property or over the term of the lease, whichever is shorter.  Estimated useful lives range from 10 to 39 years for land improvements, buildings and building improvements; and 2 to 13 years for equipment.  Major repairs, which extend the useful life of an asset, are capitalized; routine maintenance and repairs are charged against earnings.  The majority of the business uses the composite method of depreciation for equipment.  Therefore, gains and losses on retirement or other disposition of such assets are included in earnings only when an operating location is closed, completely remodeled or impaired. Fully depreciated property and equipment are removed from the cost and related accumulated depreciation and amortization accounts.  Property and equipment consists of (in millions):

	2013		2012
Land and land improvements
Owned locations	$	3,203	$	3,189
Distribution centers		97		96
Other locations		219		232
Buildings and building improvements
Owned locations		3,805		3,684
Leased locations (leasehold improvements only)		1,811		1,518
Distribution centers		620		608
Other locations		351		525
Equipment
Locations		5,334		4,995
Distribution centers		1,190		1,158
Other locations		755		586
Capitalized system development costs		581		420
Capital lease properties		215		149
		18,181		17,160
Less: accumulated depreciation and amortization		6,043		5,122
	$	12,138	$	12,038

Allowance for Doubtful Accounts table

The provision for bad debt is based on both historical write-off percentages and specifically identified receivables.  Activity in the allowance for doubtful accounts was as follows (in millions):

	2013			2012			2011
Balance at beginning of year	$	99		$	101		$	104
Bad debt provision		124			107			88
Write-offs		(69	)		(109	)		(91	)
Balance at end of year	$	154		$	99		$	101

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Consolidated Statements of Shareholders' Equity (USD $) In Millions, except Share data	Total	Common Stock [Member]	Pain-In Capital [Member]	Employee Stock Loan Receivable [Member]	Retained Earnings [Member]	Accumulated Other Comprehensive Income (Loss) [Member]	Treasury Stock Amount [Member]
Beginning Balance at Aug. 31, 2010		$ 80	$ 684	$ (87)	$ 16,848	$ (24)	$ (3,101)
Beginning Balance (in shares) at Aug. 31, 2010		938,605,053
Net earnings	2,714				2,714
Dividends declared					(685)
Treasury stock purchases (in shares)		(54,739,474)
Treasury stock purchases							(2,028)
Employee stock purchase and option plans (in shares)		5,428,551
Employee stock purchase and option plans			(12)				203
Other			27
Stock-based compensation			135
Employee stock loan receivable				53
Cumulative translation adjustments	0
Share of other comprehensive income of Alliance Boots	0
Unrecognized gain on available-for-sale investments	0
Change in postretirement liability, net of tax						40
Ending Balance at Aug. 31, 2011		80	834	(34)	18,877	16	(4,926)
Ending Balance (in shares) at Aug. 31, 2011		889,294,130
Net earnings	2,127				2,127
Dividends declared					(848)
Treasury stock purchases (in shares)		(34,720,215)
Treasury stock purchases							(1,191)
Employee stock purchase and option plans (in shares)		6,088,749
Employee stock purchase and option plans			(75)				229
Stock-based compensation			99
Employee stock loan receivable				15
Cumulative translation adjustments	0
Share of other comprehensive income of Alliance Boots	0
Unrecognized gain on available-for-sale investments	0
Change in postretirement liability, net of tax						52
Shares issued for Investment in Alliance Boots (in shares)		83,392,670
Shares issued for Investment in Alliance Boots (in dollars)	2,981	0	78				2,903
Ending Balance at Aug. 31, 2012	18,236	80	936	(19)	20,156	68	(2,985)
Ending Balance (in shares) at Aug. 31, 2012		944,055,334
Net earnings	2,450				2,450
Dividends declared					(1,083)
Treasury stock purchases (in shares)		(13,797,490)
Treasury stock purchases							(615)
Employee stock purchase and option plans (in shares)		16,337,734
Employee stock purchase and option plans			34				486
Stock-based compensation			104
Employee stock loan receivable				8
Cumulative translation adjustments	(103)					(103)
Share of other comprehensive income of Alliance Boots	(59)					(59)
Unrecognized gain on available-for-sale investments	1					1
Change in postretirement liability, net of tax						(5)
Ending Balance at Aug. 31, 2013	$ 19,454	$ 80	$ 1,074	$ (11)	$ 21,523	$ (98)	$ (3,114)
Ending Balance (in shares) at Aug. 31, 2013		946,595,578

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Summary of Major Accounting Policies

12 Months Ended

Aug. 31, 2013

Summary of Major Accounting Policies [Abstract]

Summary of major accounting policies

(1)Summary of Major Accounting Policies

Description of Business

The Company is principally in the retail drugstore business and its operations are within one reportable segment.  At August 31, 2013, there were 8,582 drugstore and other locations in all 50 states, the District of Columbia, Guam and Puerto Rico.  Prescription sales were 62.9% of total sales for fiscal 2013 compared to 63.2% in 2012 and 64.7% in 2011.

Basis of Presentation

The consolidated financial statements include the accounts of the Company and its subsidiaries.  All intercompany transactions have been eliminated.  The consolidated financial statements are prepared in accordance with accounting principles generally accepted in the United States of America and include amounts based on management's prudent judgments and estimates. Actual results may differ from these estimates.

The Company's 45% proportionate share of earnings in the Alliance Boots GmbH (Alliance Boots) equity method investment is included in consolidated net earnings.  The Company reports its share of equity earnings in Alliance Boots within the operating section in the Consolidated Statements of Comprehensive Income because operations of Alliance Boots are integral to Walgreens.  The companies share common board of director members, recognize purchasing synergies through Walgreens Boots Alliance Development GmbH, a 50/50 joint venture, as well as engage in intercompany sales transactions on select front-end merchandise.  Because of the three-month lag and the timing of the closing of this investment, only the ten months of August through May's results of operations are reflected in the equity earnings in Alliance Boots included in the Company's reported net earnings for year ended August 31, 2013.

The financial results of the Walgreens Boots Alliance Development GmbH joint venture are fully consolidated into the Company's consolidated financial statements and reported without a lag.  As the joint venture is included within the Company's operating results, Alliance Boots proportionate share of Walgreens Boots Alliance Development GmbH earnings is removed from equity earnings.

Cash and Cash Equivalents

Cash and cash equivalents include cash on hand and all highly liquid investments with an original maturity of three months or less.  Credit and debit card receivables from banks, which generally settle within two business days, of $160 million and $88 million were included in cash and cash equivalents at August 31, 2013 and 2012, respectively.  At August 31, 2013 and 2012, the Company had $1.6 billion and $820 million, respectively, in money market funds, all of which was included in cash and cash equivalents.

The Company's cash management policy provides for controlled disbursement.  As a result, the Company had outstanding checks in excess of funds on deposit at certain banks.  These amounts, which were $274 million at August 31, 2013, and $256 million at August 31, 2012, are included in trade accounts payable in the accompanying Consolidated Balance Sheets.

Allowance for Doubtful Accounts

The provision for bad debt is based on both historical write-off percentages and specifically identified receivables.  Activity in the allowance for doubtful accounts was as follows (in millions):

	2013			2012			2011
Balance at beginning of year	$	99		$	101		$	104
Bad debt provision		124			107			88
Write-offs		(69	)		(109	)		(91	)
Balance at end of year	$	154		$	99		$	101

Inventories

Inventories are valued on a lower of last-in, first-out (LIFO) cost or market basis.  At August 31, 2013 and 2012, inventories would have been greater by $2.1 billion and $1.9 billion, respectively, if they had been valued on a lower of first-in, first-out (FIFO) cost or market basis.  As a result of declining inventory levels, the fiscal 2013 and 2012 LIFO provisions were reduced by $194 million and $268 million of LIFO liquidation, respectively.  Inventory includes product costs, inbound freight, warehousing costs and vendor allowances not classified as a reduction of advertising expense.

Equity Method Investments

The Company uses the equity method to account for investments in companies if the investment provides the ability to exercise significant influence, but not control, over operating and financial policies of the investee.  The Company's proportionate share of the net income or loss of these companies is included in consolidated net earnings.  Judgment regarding the level of influence over each equity method investment includes considering key factors such as the Company's ownership interest, representation on the board of directors, participation in policy-making decisions and material intercompany transactions.

The Company purchases inventory from Alliance Boots in the ordinary course of business.  These related party inventory purchases, which began in fiscal 2013, were not material.

The underlying net assets of the Company's equity method investment in Alliance Boots include goodwill and indefinite-lived intangible assets.  These assets are evaluated for impairment annually, or more frequently if an event occurs or circumstances change that would more likely than not reduce the fair value of a reporting unit below its carrying value.  Based on testing performed during fiscal 2013, the fair value of each Alliance Boots reporting unit exceeded its carrying value.  For certain reporting units, relatively modest changes in key assumptions may have resulted in the recognition of a goodwill impairment charge.  The Company's proportionate share of a potential impairment would be limited to its 45% ownership percentage. 

Property and Equipment

Depreciation is provided on a straight-line basis over the estimated useful lives of owned assets.  Leasehold improvements and leased properties under capital leases are amortized over the estimated useful life of the property or over the term of the lease, whichever is shorter.  Estimated useful lives range from 10 to 39 years for land improvements, buildings and building improvements; and 2 to 13 years for equipment.  Major repairs, which extend the useful life of an asset, are capitalized; routine maintenance and repairs are charged against earnings.  The majority of the business uses the composite method of depreciation for equipment.  Therefore, gains and losses on retirement or other disposition of such assets are included in earnings only when an operating location is closed, completely remodeled or impaired. Fully depreciated property and equipment are removed from the cost and related accumulated depreciation and amortization accounts.  Property and equipment consists of (in millions):

	2013		2012
Land and land improvements
Owned locations	$	3,203	$	3,189
Distribution centers		97		96
Other locations		219		232
Buildings and building improvements
Owned locations		3,805		3,684
Leased locations (leasehold improvements only)		1,811		1,518
Distribution centers		620		608
Other locations		351		525
Equipment
Locations		5,334		4,995
Distribution centers		1,190		1,158
Other locations		755		586
Capitalized system development costs		581		420
Capital lease properties		215		149
		18,181		17,160
Less: accumulated depreciation and amortization		6,043		5,122
	$	12,138	$	12,038

Depreciation expense for property and equipment was $894 million in fiscal 2013, $841 million in fiscal 2012 and $809 million in fiscal 2011.

The Company capitalizes application stage development costs for significant internally developed software projects, such as upgrades to the store point-of-sale system.  These costs are amortized over a five-year period.  Amortization expense was $100 million in fiscal 2013, $70 million in fiscal 2012 and $58 million in fiscal 2011.  Unamortized costs at August 31, 2013 and 2012, were $374 million and $292 million, respectively.

Goodwill and Other Intangible Assets

Goodwill represents the excess of the purchase price over the fair value of assets acquired and liabilities assumed.  The Company accounts for goodwill and intangibles under ASC Topic 350, Intangibles – Goodwill and Other, which does not permit amortization, but requires the Company to test goodwill and other indefinite-lived assets for impairment annually or whenever events or circumstances indicate impairment may exist.

Impaired Assets and Liabilities for Store Closings

The Company tests long-lived assets for impairment whenever events or circumstances indicate that a certain asset may be impaired.  Store locations that have been open at least five years are reviewed for impairment indicators at least annually.  Once identified, the amount of the impairment is computed by comparing the carrying value of the assets to the fair value, which is based on the discounted estimated future cash flows.  Impairment charges included in selling, general and administrative expenses were $30 million in fiscal 2013, $27 million in fiscal 2012 and $44 million in fiscal 2011.

The Company also provides for future costs related to closed locations.  The liability is based on the present value of future rent obligations and other related costs (net of estimated sublease rent) to the first lease option date.  The reserve for store closings was $123 million and $117 million as of August 31, 2013 and 2012, respectively.  See Note 3 for additional disclosure regarding the Company's reserve for future costs related to closed locations.

Financial Instruments

The Company had $197 million and $157 million of outstanding letters of credit at August 31, 2013 and 2012, respectively, which guarantee the purchase of foreign goods, and additional outstanding letters of credit of $263 million and $38 million at August 31, 2013 and 2012, respectively, which guarantee payments of insurance claims.  The insurance claim letters of credit are annually renewable and will remain in place until the insurance claims are paid in full.  Letters of credit of $4 million and $229 million were outstanding at August 31, 2013, and August 31, 2012, respectively, to guarantee performance of construction contracts.  The Company pays a facility fee to the financing bank to keep these letters of credit active.  The Company had real estate development purchase commitments of $185 million and $206 million at August 31, 2013 and 2012, respectively.

The Company uses interest rate swaps to manage its interest rate exposure associated with some of its fixed-rate borrowings.  At August 31, 2013, $1.0 billion of fixed-rate debt was converted to variable rate.  These swaps are accounted for according to ASC Topic 815, Derivatives and Hedging. The swaps are measured at fair value in accordance with ASC Topic 820, Fair Value Measurement and Disclosures.  In  fiscal 2012, the Company entered into three forward starting interest rate swap transactions locking in fixed rates on $1.0 billion of the $4.0 billion debt that was issued in fiscal 2013 in connection with the Alliance Boots transaction.  These swaps were designated as cash flow hedges and measured at fair value.  See Notes 10 and 11 for additional disclosure regarding financial instruments.

Revenue Recognition

The Company recognizes revenue at the time the customer takes possession of the merchandise.  Customer returns are immaterial.  Sales taxes are not included in revenue.

Revenue from the pharmacy benefit management (PBM) business was included in the Company's Consolidated Statement of Comprehensive Income prior to being sold in fiscal 2011.  The services the Company provided to its PBM clients included: plan setup, claims adjudication with network pharmacies, formulary management, and reimbursement services.  Through its PBM, the Company acted as an agent in administering pharmacy reimbursement contracts and did not assume credit risk.  Therefore, revenue was recognized as only the differential between the amount receivable from the client and the amount owed to the network pharmacy.  The Company acted as an agent to its clients with respect to administrative fees for claims adjudication.  Those service fees were recognized as revenue.

Gift Cards

The Company sells Walgreens gift cards to retail store customers and through its website.  The Company does not charge administrative fees on unused gift cards and most gift cards do not have an expiration date.  Income from gift cards is recognized when (1) the gift card is redeemed by the customer; or (2) the likelihood of the gift card being redeemed by the customer is remote (gift card breakage) and there is no legal obligation to remit the value of unredeemed gift cards to the relevant jurisdictions.  The Company's gift card breakage rate is determined based upon historical redemption patterns.  Gift card breakage income, which is included in selling, general and administrative expenses, was not significant in fiscal 2013, 2012 or 2011.

Loyalty Program

The Company's rewards program, Balance^® Rewards, is accrued as a charge to cost of sales at the time a point is earned.  Points are funded internally and through vendor participation, and are credited to cost of sales at the time a vendor-sponsored point is earned.  Breakage is recorded as points expire as a result of a member's inactivity or if the points remain unredeemed after three years.  Breakage income, which is reported in cost of sales, was not significant in fiscal 2013.  

Cost of Sales

Cost of sales is derived based upon point-of-sale scanning information with an estimate for shrinkage and is adjusted based on periodic inventories.  In addition to product costs, cost of sales includes warehousing costs, purchasing costs, freight costs, cash discounts and vendor allowances.

Vendor Allowances

Vendor allowances are principally received as a result of purchases, sales or promotion of vendors' products.  Allowances are generally recorded as a reduction of inventory and are recognized as a reduction of cost of sales when the related merchandise is sold.  Those allowances received for promoting vendors' products are offset against advertising expense and result in a reduction of selling, general and administrative expenses to the extent of advertising costs incurred, with the excess treated as a reduction of inventory costs.

Selling, General and Administrative Expenses

Selling, general and administrative expenses mainly consist of store salaries, occupancy costs, and expenses directly related to stores.  In addition, other costs included are headquarters' expenses, advertising costs (net of advertising revenue) and insurance.

Advertising Costs

Advertising costs, which are reduced by the portion funded by vendors, are expensed as incurred.  Net advertising expenses, which are included in selling, general and administrative expenses, were $286 million in fiscal 2013, $291 million in fiscal 2012 and $271 million in fiscal 2011.  Included in net advertising expenses were vendor advertising allowances of $240 million in fiscal 2013, $239 million in fiscal 2012 and $218 million in fiscal 2011.

Insurance

The Company obtains insurance coverage for catastrophic exposures as well as those risks required by law to be insured.  It is the Company's policy to retain a significant portion of certain losses related to workers' compensation, property, comprehensive general, pharmacist and vehicle liability.  Liabilities for these losses are recorded based upon the Company's estimates for claims incurred and are not discounted.  The provisions are estimated in part by considering historical claims experience, demographic factors and other actuarial assumptions.

Available-for-Sale Investments

The Company, Alliance Boots and AmerisourceBergen Corporation (AmerisourceBergen) entered into a Framework Agreement dated as of March 18, 2013, pursuant to which Walgreens and Alliance Boots together were granted the right to purchase a minority equity position in AmerisourceBergen, beginning with the right, but not the obligation, to purchase up to 19,859,795 shares of AmerisourceBergen common stock (approximately 7 percent of the then fully diluted equity of AmerisourceBergen, assuming the exercise in full of the warrants described below) in open market transactions.

Warrants

The Company and Alliance Boots were each issued (a) a warrant to purchase up to 11,348,456 shares of AmerisourceBergen common stock at an exercise price of $51.50 per share exercisable during a six-month period beginning in March 2016, and (b) a warrant to purchase up to 11,348,456 shares of AmerisourceBergen common stock at an exercise price of $52.50 per share exercisable during a six-month period beginning in March 2017.  The Company's warrants are valued at the date of issuance and the end of the period using a Monte Carlo simulation.  Key assumptions used throughout the valuation include risk-free interest rates using constant maturity treasury rates; the dividend yield for AmerisourceBergen's common stock; AmerisourceBergen's common stock price at valuation date; AmerisourceBergen's equity volatility; the number of shares of AmerisourceBergen's common stock outstanding; the number of AmerisourceBergen employee stock options and the exercise price; and the details specific to the warrants.  The fair value of the Company's warrants on March 18, 2013, the date of issuance, was $77 million.  The Company recorded the fair value of its warrants as a non-current asset with a corresponding deferred credit in its Consolidated Balance Sheets.  The deferred credit attributable to the warrants will be amortized over the life of the warrants.  As of August 31, 2013, the fair value of the Company's warrants was $188 million, which resulted in the Company recording other income of $111 million for fiscal 2013 within its Consolidated Statements of Comprehensive Income.  The increase in the fair value of the warrants was primarily attributable to the increase in the price of AmerisourceBergen's common stock.  In addition, the Company recorded $9 million of other income relating to the amortization of the deferred credit in fiscal 2013.

Pre-Opening Expenses

Non-capital expenditures incurred prior to the opening of a new or remodeled store are expensed as incurred.

Stock-Based Compensation Plans

In accordance with ASC Topic 718, Compensation – Stock Compensation, the Company recognizes compensation expense on a straight-line basis over the employee's vesting period or to the employee's retirement eligible date, if earlier.

Total stock-based compensation expense for fiscal 2013, 2012 and 2011 was $104 million, $99 million and $135 million, respectively.  The recognized tax benefit was $30 million, $9 million and $49 million for fiscal 2013, 2012 and 2011, respectively.

Unrecognized compensation cost related to non-vested awards at August 31, 2013, was $189 million.  This cost is expected to be recognized over a weighted average of three years.

Interest Expense

The Company capitalized $7 million, $9 million and $10 million of interest expense as part of significant construction projects during fiscal 2013, 2012 and 2011, respectively.  Interest paid, which is net of capitalized interest, was $158 million in fiscal 2013, $108 million in fiscal 2012 and $89 million in fiscal 2011.

Income Taxes

The Company accounts for income taxes according to the asset and liability method. Under this method, deferred tax assets and liabilities are recognized based upon the estimated future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured pursuant to tax laws using rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled.  The effect on deferred tax assets and liabilities of a change in tax rate is recognized in income in the period that includes the enactment date. Valuation allowances are established when necessary to reduce deferred tax assets to the amounts more likely than not to be realized.

In determining the Company's provision for income taxes, an annual effective income tax rate based on full-year income, permanent differences between book and tax income, and statutory income tax rates are used. The effective income tax rate also reflects the Company's assessment of the ultimate outcome of tax audits in addition to any foreign-based income deemed to be taxable in the United States. Discrete events such as audit settlements or changes in tax laws are recognized in the period in which they occur.

The Company is subject to routine income tax audits that occur periodically in the normal course of business.  U.S. federal, state and local and foreign tax authorities raise questions regarding the Company's tax filing positions, including the timing and amount of deductions and the allocation of income among various tax jurisdictions. In evaluating the tax benefits associated with its various tax filing positions, the Company records a tax benefit for uncertain tax positions using the highest cumulative tax benefit that is more likely than not to be realized. Adjustments are made to the liability for unrecognized tax benefits in the period in which the Company determines the issue is effectively settled with the tax authorities, the statute of limitations expires for the return containing the tax position or when more information becomes available. The Company's liability for unrecognized tax benefits, including accrued penalties and interest, is included in other long-term liabilities on the Consolidated Balance Sheets and in income tax expense in the Consolidated Statements of Comprehensive Income.

Earnings Per Share

The dilutive effect of outstanding stock options on earnings per share is calculated using the treasury stock method.  Stock options are anti-dilutive and excluded from the earnings per share calculation if the exercise price exceeds the average market price of the common shares.  Outstanding options to purchase common shares that were anti-dilutive and excluded from earnings per share totaled 12,316,949, 32,593,870 and 16,869,061 in fiscal 2013, 2012 and 2011, respectively.

New Accounting Pronouncements

In July 2012, Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) 2012-02, Intangibles – Goodwill and Other (Topic 350) – Testing Indefinite-Lived Intangible Assets for Impairment, which permits an entity to make a qualitative assessment to determine whether it is more likely than not that an indefinite-lived intangible asset, other than goodwill, is impaired.  If an entity concludes, based on an evaluation of all relevant qualitative factors, that it is not more likely than not that the fair value of an indefinite-lived intangible asset is less than its carrying amount, it will not be required to perform the quantitative impairment for that asset.  The ASU is effective for impairment tests performed for fiscal years beginning after September 15, 2012 (fiscal year 2014), with early adoption permitted.  The ASU will not have a material impact on the Company's reported results of operations and financial position.  The impact is non-cash in nature and will not affect the Company's cash position.

In May 2013, the FASB reissued an exposure draft on lease accounting that would require entities to recognize assets and liabilities arising from lease contracts on the balance sheet.  The proposed exposure draft states that lessees and lessors should apply a "right-of-use model" in accounting for all leases.  Under the proposed model, lessees would recognize an asset for the right to use the leased asset, and a liability for the obligation to make rental payments over the lease term.  When measuring the asset and liability, variable lease payments are excluded, whereas renewal options that provide a significant economic incentive upon renewal would be included.  The accounting by a lessor would reflect its retained exposure to the risks or benefits of the underlying leased asset.  A lessor would recognize an asset representing its right to receive lease payments based on the expected term of the lease.  The lease expense from real estate based leases would continue to be recorded under a straight-line approach, but other leases not related to real estate would be expensed using an effective interest method that would accelerate lease expense.  A final standard is currently expected to be issued in 2014 and would be effective no earlier than annual reporting periods beginning on January 1, 2017 (fiscal 2018 for the Company).  The proposed standard, as currently drafted, would have a material impact on the Company's financial position and the impact on the Company's reported results of operations is being evaluated.  The impact of this exposure draft is non-cash in nature and would not affect the Company's cash position.

In July 2013, the FASB issued Accounting Standards Update 2013-11, Income Taxes (Topic 740) – Presentation of an Unrecognized Tax Benefit when a Net Operating Loss Carryforward or Tax Credit Carryforward Exists.  This update provides that an entity's unrecognized tax benefit, or a portion of its unrecognized tax benefit, should be presented in its financial statements as a reduction to a deferred tax asset for a net operating loss carryforward, a similar tax loss, or a tax credit carryforward.  This update applies prospectively to all entities that have unrecognized tax benefits when a net operating loss carryforward, a similar tax loss, or a tax credit carryforward exists at the reporting date.  Retrospective application is also permitted.  This update is effective for annual periods, and interim periods within those years, beginning after December 15, 2013 (fiscal 2014).  The standard will not have a material impact on the Company's reported results of operations and financial position.  The impact of this ASU is non-cash in nature and will not affect the Company's cash position.

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Acquisitions

12 Months Ended

Aug. 31, 2013

Acquisitions [Abstract]

Acquisitions

(4)Acquisitions and Divestitures

In September 2012, the Company completed its acquisition of Stephen L. LaFrance Holdings, Inc. (USA Drug) for $436 million net of assumed cash, subject to adjustment in certain circumstances.  This acquisition increased the Company's presence in the mid-South region of the country.  The purchase price allocation for this acquisition added $220 million to goodwill and $156 million to intangible assets, primarily prescription files and non-compete agreements, with $60 million allocated to net tangible assets, primarily inventory.  The purchase price allocation is complete with the exception of the evaluation of certain deferred tax balances.  The USA Drug acquisition contributed $364 million of revenue and a pre-tax loss of $74 million in fiscal 2013, including transaction and store closure costs of $57 million.

In December 2012, the Company acquired an 80% interest in Cystic Fibrosis Foundation Pharmacy LLC for $29 million net of assumed cash, subject to working capital adjustments, and a call option to acquire the remaining 20% interest.  The investment provides joint ownership in a specialty pharmacy for cystic fibrosis patients and their families and a provider of new product launch support and call center services for drug manufacturers.  The investment added $16 million to goodwill and $21 million to intangible assets, primarily payer contracts.

The aggregate purchase price of all business and intangible asset acquisitions, excluding USA Drug and Cystic Fibrosis, was $165 million in fiscal 2013.  These acquisitions added $135 million to intangible assets, primarily prescription files.  The remaining fair value relates to immaterial amounts of tangible assets, less liabilities assumed.  Operating results of businesses acquired have been included in the Consolidated Statements of Comprehensive Income from their respective acquisition dates forward and were not material.

In fiscal 2012, the Company acquired certain assets of BioScrip, Inc.'s (BioScrip) community specialty pharmacies and centralized specialty and mail services pharmacy business for $144 million plus inventory.  The acquisition added $94 million to goodwill and $49 million to other intangible assets.  The addition of BioScrip's community specialty pharmacies and centralized specialty and mail services pharmacy businessesadvances community pharmacy and brings additional specialty pharmacy products and services closer to patients.  The Company also purchased Crescent Pharmacy Holdings, LLC (Crescent), an infusion pharmacy business, for $73 million, net of assumed cash.  The Crescent acquisition added $40 million to goodwill and $26 million to intangible assets, primarily payer contracts.  The acquisition is a strategic investment to expand the Company's infusion services in select California markets.

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Restructuring

12 Months Ended

Aug. 31, 2013

Restructuring [Abstract]

Restructuring

(2)Restructuring

The Company completed one of its strategic initiatives to enhance shareholder value in fiscal 2011 known as the "Rewiring for Growth" program, which was designed to, among other things, reduce cost and improve productivity.  In fiscal 2011, the Company recorded $42 million of pre-tax charges in selling, general and administrative expenses associated with the program.

Additionally, as a part of the Company's Customer Centric Retailing (CCR) initiative, it has modified the store format to enhance category layouts and adjacencies, shelf heights and sight lines, and brand and private brand assortments, all of which were designed to positively impact the shopper experience.  This initiative was completed in the first quarter of fiscal 2012.  In total, the Company converted 5,843 stores and opened 559 new stores with the CCR format.  In fiscal 2012, the Company incurred $33 million in total program costs, of which $15 million was included in selling, general and administrative expenses and $18 million in capital costs.  In fiscal 2011, the Company incurred $144 million in total program costs, of which $84 million was included in selling, general and administrative expenses and $60 million in capital costs.

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Available-for-Sale Investments (Details) (AmerisourceBergen Common Stock [Member], USD $) In Millions, unless otherwise specified	Aug. 31, 2013
AmerisourceBergen Common Stock [Member]
Schedule of Available-for-sale Securities [Line Items]
Shares of stock acquired (in shares)	4.0
Purchase price of shares	$ 224
Unrealized holding gains on Available-for-sale investment	1
Available-for-sale investments at fair value	$ 225

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Goodwill and Intangibles (Tables)

12 Months Ended

Aug. 31, 2013

Goodwill and Intangibles [Abstract]

Schedule of Goodwill

Changes in the carrying amount of goodwill consist of the following activity (in millions):

	2013		2012
Net book value – September 1	$	2,161	$	2,017
Acquisitions		236		120
Other (1)		13		24
Net book value – August 31	$	2,410	$	2,161

⁽¹⁾  "Other" primarily represents immaterial purchase accounting adjustments for the Company's acquisitions.

Schedule of Finite-Lived Intangible Assets by Major Class

The carrying amount and accumulated amortization of intangible assets consists of the following (in millions):

	2013			2012
Gross Intangible Assets
Purchased prescription files	$	1,099		$	984
Favorable lease interests		381			388
Purchasing and payer contracts		347			334
Non-compete agreements		153			120
Trade name		199			189
Other amortizable intangible assets		4			4
Total gross intangible assets		2,183			2,019
Accumulated amortization
Purchased prescription files		(467	)		(417	)
Favorable lease interests		(143	)		(109	)
Purchasing and payer contracts		(147	)		(119	)
Non-compete agreements		(67	)		(53	)
Trade name		(49	)		(32	)
Other amortizable intangible assets		(3	)		(3	)
Total accumulated amortization		(876	)		(733	)
Total intangible assets, net	$	1,307		$	1,286

Schedule of Finite-Lived Intangible Assets, Future Amortization Expense

Expected amortization expense for intangible assets recorded at August 31, 2013, not including amounts related to Alliance Boots that will be amortized through equity method investment income, is as follows (in millions):

2014		2015		2016		2017		2018
$	257	$	225	$	185	$	144	$	99

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Fair Value Measurements (Tables)

12 Months Ended

Aug. 31, 2013

Fair Value Measurements [Abstract]

Assets measured at fair value on a recurring basis

Assets and liabilities measured at fair value on a recurring basis were as follows (in millions):

	August 31, 2013		Level 1		Level 2		Level 3
Assets:
Money market funds	$	1,636	$	1,636	$	-	$	-
Interest rate swaps(1)		1		-		1		-
Investment in AmerisourceBergen(2)		225		225		-		-
Warrants(3)		188		-		188		-
Forward interest rate swaps		-		-		-		-

	August 31, 2012		Level 1		Level 2		Level 3
Assets:
Money market funds	$	820	$	820	$	-	$	-
Interest rate swaps(1)		63		-		63		-
Forward interest rate swaps		-		-		-		-

Fair Value Measurements, Nonrecurring

Assets measured at fair value on a nonrecurring basis were as follows (in millions):

	August 31, 2013		Level 1		Level 2		Level 3
Assets:
Alliance Boots call option	$	839	$	-	$	-	$	839

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Restructuring (Details) (USD $) In Millions, unless otherwise specified	12 Months Ended
	Aug. 31, 2012	Aug. 31, 2011	Aug. 31, 2011 Restructuring Expense [Member] Selling General And Administrative Expense Total [Member]	Aug. 31, 2013 Customer Centric Retailing [Member] Existing Stores [Member]	Aug. 31, 2013 Customer Centric Retailing [Member] New Stores [Member]
Restructuring [Line Items]
Pre-tax charges associated with Company's restructuring initiatives			$ 42
Customer Centric Retailing Initiative [Abstract]
Customer Centric Retailing program costs - selling, general and administrative expenses	15	84
Number of stores converted to date				5,843
Number of new stores opened to date					559
Total restructuring program costs related to the Customer Centric Retailing initiative	33	144
Amount of total restructuring program costs included in selling, general and administrative expenses	15	84
Amount of total restructuring program costs that were capitalized	$ 18	$ 60

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Retirement Benefits (Details) (USD $) In Millions, unless otherwise specified	12 Months Ended
	Aug. 31, 2013	Aug. 31, 2012	Aug. 31, 2011
Retirement Benefits [Abstract]
Profit-sharing provision	$ 342	$ 283	$ 382
Contributions to profit sharing	262	372	322
Components of net periodic benefit costs [Abstract]
Service cost	9	13	15
Interest cost	14	22	22
Amortization of actuarial loss	12	8	14
Amortization of prior service cost	(22)	(10)	(10)
Total postretirement benefit cost	13	33	41
Change in benefit obligation [Roll Forwad]
Benefit obligation at September 1	342	407
Service cost	9	13	15
Interest cost	14	22	22
Amendments	0	(139)
Actuarial (gain) loss	(1)	52
Benefit payments	(20)	(18)
Participants contributions	6	5
Benefit obligation, end of period	350	342	407
Change in plan assets [Roll Forward]
Plan assets at fair value, beginning of period	0	0
Plan participants contributions	6	5
Employer contributions	14	13
Benefits paid	(20)	(18)
Plan assets at fair value, end of period	0	0	0
Funded status [Abstract]
Funded status	(350)	(342)
Unrecognized actuarial gain	0	0
Unrecognized prior service cost	0	0
Accrued benefit cost at August 31	(350)	(342)
Amounts recognized in balance sheet [Abstract]
Current liabilities (present value of expected 2014 net benefit payments)	(10)	(10)
Non-current liabilities	(340)	(332)
Net liability recognized at August 31	(350)	(342)
Amounts recognized in accumulated other comprehensive (income) loss [Abstract]
Prior service credit	(228)	(250)
Net actuarial loss	148	161
Amounts expected to be recognized as components of net periodic costs [Abstract]
Prior service credit	(22)
Net actuarial loss	11
Assumptions used to compute postretirement benefit obligation [Abstract]
Discount rate assumption used to compute the postretirement benefit obligation, (in hundredths)	5.20%	4.15%
Discount rate assumption used to determine net periodic benefit cost (in hundredths)	4.15%	5.40%	4.95%
Percentage value of consumer price index used in assumptions to compute the postretirement benefit obligation (in hundredths)	2.00%	2.00%
Assumed Health Care Cost Trend Rates [Abstract]
Health care cost trend rate (in hundredths)	7.00%
Description of direction and pattern of change for assumed health care cost trend rate	gradually decreasing to 5.25% over the next nine years
Ultimate health care cost trend rate (in hundredths)	5.25%
Effect of One-Percentage Point Change in Assumed Health Care Cost Trend Rates [Abstract]
Effect of one percentage point increase on service and interest cost	(1)
Effect of one percentage point decrease on service and interest cost	1
Effect of one percentage point increase on postretirement obligation	(1)
Effect of one percentage point decrease on postretirement obligation	5
Estimated future benefit payments and federal subsidy [Abstract]
2014	10
2015	12
2016	13
2017	15
2018	17
2019-2023	$ 111

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Financial Instruments (Details) (USD $) In Millions, except Share data, unless otherwise specified	12 Months Ended
	Aug. 31, 2013	Aug. 31, 2012
Derivative [Line Items]
Net unamortized fair value changes in long-term debt	$ 3	$ 40
AmerisourceBergen Corporation [Line Items]
Option exercise date, beginning date of 6-month period	March 2016
First warrant to purchase shares (shares)	11,348,456
First warrant to purchase shares (dollars per share)	$ 51.50
Second warrant to purchase shares (shares)	11,348,456
Second warrant to purchase shares (dollars per share)	$ 52.50
Date of AmerisourceBergen Corporation deal	Mar. 18, 2013
Number of shares eligible for purchase	19,859,795
Percentage of fully diluted equity eligible for purchase	7.00%
Interest Rate Swap [Member]
Derivative [Line Items]
Amount of hedged debt		1,800
Gain on hedge ineffectiveness		2
Loss on hedge ineffectiveness	4
Interest Rate Swap [Member] | Other Current Assets [Member]
Derivative [Line Items]
Fair value of derivative asset designated as hedging instrument	0	24
Interest Rate Swap [Member] | Other Non-Current Assets [Member]
Derivative [Line Items]
Fair value of derivative asset designated as hedging instrument	1	39
Forward Interest Rate Swaps [Member]
Derivative [Line Items]
Amount of hedged debt		1,000
Forward Interest Rate Swaps [Member] | Other Non-Current Assets [Member]
Derivative [Line Items]
Fair value of derivative asset designated as hedging instrument	0	0
$1.0 billion 5.25% Note [Member]
Derivative [Line Items]
Amount of hedged debt	1,000
Warrants [Member] | Other Non-Current Assets [Member]
Derivative [Line Items]
Fair value of derivative asset not designated as hedging instrument	$ 188

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Consolidated Balance Sheets (USD $) In Millions, unless otherwise specified	Aug. 31, 2013	Aug. 31, 2012
Current Assets
Cash and cash equivalents	$ 2,106	$ 1,297
Accounts receivable, net	2,632	2,167
Inventories	6,852	7,036
Other current assets	284	260
Total Current Assets	11,874	10,760
Non-Current Assets
Property and equipment, at cost, less accumulated depreciation and amortization	12,138	12,038
Equity investment in Alliance Boots	6,261	6,140
Alliance Boots call option	839	866
Goodwill	2,410	2,161
Other non-current assets	1,959	1,497
Total Non-Current Assets	23,607	22,702
Total Assets	35,481	33,462
Current Liabilities
Short-term borrowings	570	1,319
Trade accounts payable	4,635	4,384
Accrued expenses and other liabilities	3,577	3,019
Income taxes	101	0
Total Current Liabilities	8,883	8,722
Non-Current Liabilities
Long-term debt	4,477	4,073
Deferred income taxes	600	545
Other non-current liabilities	2,067	1,886
Total Non-Current Liabilities	7,144	6,504
Shareholders' Equity
Preferred stock, $.0625 par value; authorized 32 million shares; none issued	0	0
Common stock, $.078125 par value; authorized 3.2 billion shares; issued and outstanding 1,028,180,150 shares in 2013 and 2012	80	80
Paid-in capital	1,074	936
Employee stock loan receivable	(11)	(19)
Retained earnings	21,523	20,156
Accumulated other comprehensive (loss) income	(98)	68
Treasury stock at cost, 81,584,572 shares in 2013 and 84,124,816 shares in 2012	(3,114)	(2,985)
Total Shareholders' Equity	19,454	18,236
Total Liabilities and Shareholders' Equity	$ 35,481	$ 33,462

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Goodwill and Intangibles

12 Months Ended

Aug. 31, 2013

Goodwill and Intangibles [Abstract]

Goodwill and Intangibles

(7)Goodwill and Other Intangible Assets

Goodwill and other indefinite-lived intangible assets are not amortized, but are evaluated for impairment annually during the fourth quarter, or more frequently if an event occurs or circumstances change that would more likely than not reduce the fair value of a reporting unit below its carrying value.  The Company applies ASU 2011-08, Testing Goodwill for Impairment, which permits a qualitative assessment to determine whether it is more likely than not (a more than 50 percent likelihood) that the fair value of a reporting unit is less than its carrying amount, which would then require performing step one of impairment testing.  Otherwise, no further evaluation would be necessary.  As part of the Company's impairment analysis for each reporting unit, the Company engaged a third party appraisal firm to assist in the determination of estimated fair value for each unit.  This determination included estimating the fair value using both the income and market approaches.  The income approach requires management to estimate a number of factors for each reporting unit, including projected future operating results, economic projections, anticipated future cash flows and discount rates.  The market approach estimates fair value using comparable marketplace fair value data from within a comparable industry grouping.

The determination of the fair value of the reporting units and the allocation of that value to individual assets and liabilities within those reporting units requires the Company to make significant estimates and assumptions.  These estimates and assumptions primarily include, but are not limited to: the selection of appropriate peer group companies; control premiums appropriate for acquisitions in the industries in which the Company competes; the discount rate; terminal growth rates; and forecasts of revenue, operating income, depreciation and amortization and capital expenditures.  The allocation requires several analyses to determine the fair value of assets and liabilities including, among other things, purchased prescription files, customer relationships and trade names.  Although the Company believes its estimates of fair value are reasonable, actual financial results could differ from those estimates due to the inherent uncertainty involved in making such estimates.  Changes in assumptions concerning future financial results or other underlying assumptions could have a significant impact on either the fair value of the reporting units, the amount of the goodwill impairment charge, or both.  The Company also compared the sum of the estimated fair values of its reporting units to the Company's total value as implied by the market value of its equity and debt securities. This comparison indicated that, in total, its assumptions and estimates were reasonable.  However, future declines in the overall market value of the Company's equity and debt securities may indicate that the fair value of one or more reporting units has declined below its carrying value.

One measure of the sensitivity of the amount of goodwill impairment charges to key assumptions is the amount by which each reporting unit "passed" (fair value exceeds the carrying amount) or "failed" (the carrying amount exceeds fair value) the first step of the goodwill impairment test. The Company's reporting units' fair values exceeded their carrying amounts ranging from approximately 15% to more than 180%.

Generally, changes in estimates of expected future cash flows would have a similar effect on the estimated fair value of the reporting unit. That is, a 1% change in estimated future cash flows would change the estimated fair value of the reporting unit by approximately 1%. The estimated long-term rate of net sales growth can have a significant impact on the estimated future cash flows, and therefore, the fair value of each reporting unit.  Of the other key assumptions that impact the estimated fair values, most reporting units have the greatest sensitivity to changes in the estimated discount rate.  The Company believes that its estimates of future cash flows and discount rates are reasonable, but future changes in the underlying assumptions could differ due to the inherent uncertainty in making such estimates.

Changes in the carrying amount of goodwill consist of the following activity (in millions):

	2013		2012
Net book value – September 1	$	2,161	$	2,017
Acquisitions		236		120
Other (1)		13		24
Net book value – August 31	$	2,410	$	2,161

⁽¹⁾  "Other" primarily represents immaterial purchase accounting adjustments for the Company's acquisitions.

In September 2012, the Company purchased the regional drugstore chain USA Drug from Stephen L. LaFrance Holdings, Inc. and members of the LaFrance family for $436 million net of assumed cash and selected other assets (primarily prescription files).  In December 2012, the Company purchased an 80% interest in Cystic Fibrosis Foundation Pharmacy LLC for $29 million, net of assumed cash.  The USA Drug and Cystic Fibrosis acquisitions added $220 million and $16 million of goodwill, respectively.

The carrying amount and accumulated amortization of intangible assets consists of the following (in millions):

	2013			2012
Gross Intangible Assets
Purchased prescription files	$	1,099		$	984
Favorable lease interests		381			388
Purchasing and payer contracts		347			334
Non-compete agreements		153			120
Trade name		199			189
Other amortizable intangible assets		4			4
Total gross intangible assets		2,183			2,019
Accumulated amortization
Purchased prescription files		(467	)		(417	)
Favorable lease interests		(143	)		(109	)
Purchasing and payer contracts		(147	)		(119	)
Non-compete agreements		(67	)		(53	)
Trade name		(49	)		(32	)
Other amortizable intangible assets		(3	)		(3	)
Total accumulated amortization		(876	)		(733	)
Total intangible assets, net	$	1,307		$	1,286

Amortization expense for intangible assets was $289 million in fiscal 2013, $255 million in fiscal 2012 and $219 million in fiscal 2011.  The weighted-average amortization period for purchased prescription files was seven years for fiscal 2013 and 2012.  The weighted-average amortization period for favorable lease interests was 11 years for fiscal 2013 and 2012.  The weighted-average amortization period for purchasing and payer contracts was 13 years for fiscal 2013 and 2012.  The weighted-average amortization period for non-compete agreements was six years for fiscal 2013 and fiscal 2012.  The weighted-average amortization period for trade names was 12 years for fiscal 2013 and 13 years for fiscal 2012.  The weighted-average amortization period for other amortizable intangible assets was 10 years for fiscal 2013 and 2012.

Expected amortization expense for intangible assets recorded at August 31, 2013, not including amounts related to Alliance Boots that will be amortized through equity method investment income, is as follows (in millions):

2014		2015		2016		2017		2018
$	257	$	225	$	185	$	144	$	99

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Consolidated Statements of Cash Flows (USD $) In Millions, unless otherwise specified	12 Months Ended
	Aug. 31, 2013	Aug. 31, 2012	Aug. 31, 2011
Cash Flows from Operating Activities
Net earnings	$ 2,450	$ 2,127	$ 2,714
Adjustments to reconcile net earnings to net cash provided by operating activities -
Depreciation and amortization	1,283	1,166	1,086
Change in fair value of warrants and related amortization	(120)	0	0
Gains on sale of business	0	0	(434)
Deferred income taxes	148	265	132
Equity earnings in Alliance Boots	(344)	0	0
Stock compensation expense	104	99	135
Other	113	43	53
Changes in operating assets and liabilities -
Accounts receivable, net	(449)	394	(243)
Inventories	321	1,083	(592)
Other current assets	18	(4)	(24)
Trade accounts payable	182	(439)	384
Accrued expenses and other liabilities	424	(184)	218
Income taxes	103	(228)	102
Other non-current assets and liabilities	68	109	112
Net cash provided by operating activities	4,301	4,431	3,643
Cash Flows from Investing Activities
Additions to property and equipment	(1,212)	(1,550)	(1,213)
Return of (investment in) restricted cash	0	191	(191)
Proceeds from sale of assets	145	123	79
Business and intangible asset acquisitions, net of cash received	(630)	(491)	(630)
Purchases of short term investments held to maturity	(66)	0	0
Proceeds from short term investments held to maturity	16	0	0
Proceeds (payments) from sale of business	20	(45)	442
Investment in AmerisourceBergen	(224)	0	0
Investment in Alliance Boots	0	(4,025)	0
Other	(45)	(63)	(12)
Net cash used for investing activities	(1,996)	(5,860)	(1,525)
Cash Flows from Financing Activities
Proceeds from issuance of long-term debt	4,000	3,000	0
Payments of long-term debt	(4,300)	0	(17)
Stock purchases	(615)	(1,191)	(2,028)
Proceeds related to employee stock plans	486	165	235
Cash dividends paid	(1,040)	(787)	(647)
Other	(27)	(17)	15
Net cash (used for) provided by financing activities	(1,496)	1,170	(2,442)
Net increase (decrease) in cash and cash equivalents	809	(259)	(324)
Cash and cash equivalents at beginning of year	1,297	1,556	1,880
Cash and cash equivalents at end of year	$ 2,106	$ 1,297	$ 1,556

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Consolidated Statements of Comprehensive Income (USD $) In Millions, except Per Share data, unless otherwise specified	12 Months Ended
	Aug. 31, 2013	Aug. 31, 2012	Aug. 31, 2011
Consolidated Statements of Earnings [Abstract]
Net sales	$ 72,217	$ 71,633	$ 72,184
Cost of sales	51,098	51,291	51,692
Gross Profit	21,119	20,342	20,492
Selling, general and administrative expenses	17,543	16,878	16,561
Equity earnings in Alliance Boots	344	0	0
Gain on sale of business	20	0	434
Operating Income	3,940	3,464	4,365
Interest expense, net	(165)	(88)	(71)
Other Income	120	0	0
Earnings Before Income Tax Provision	3,895	3,376	4,294
Income tax provision	1,445	1,249	1,580
Net Earnings	2,450	2,127	2,714
Other comprehensive income (loss), net of tax:
Change in postretirement liability	(5)	52	40
Share of other comprehensive income of Alliance Boots	(59)	0	0
Unrecognized gain on available-for-sale investments	1	0	0
Cumulative translation adjustments	(103)	0	0
Comprehensive Income	$ 2,284	$ 2,179	$ 2,754
Net earnings per common share - basic	$ 2.59	$ 2.43	$ 2.97
Net earnings per common share - diluted	$ 2.56	$ 2.42	$ 2.94
Average shares outstanding	946.0	874.7	915.1
Dilutive effect of stock options	9.2	5.4	9.4
Average diluted shares	955.2	880.1	924.5

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Supplementary Financial Information (Details) (USD $) In Millions, except Per Share data, unless otherwise specified	3 Months Ended								12 Months Ended
	Aug. 31, 2013	May 31, 2013	Feb. 28, 2013	Nov. 30, 2012	Aug. 31, 2012	May 31, 2012	Feb. 29, 2012	Nov. 30, 2011	Aug. 31, 2013	Aug. 31, 2012	Aug. 31, 2011	Aug. 31, 2010	Aug. 31, 2009	Aug. 31, 2008
Non-cash transactions [Abstract]
Initial fair market value adjustments for the AmerisourceBergen warrant									$ 77
Changes in retiree medical benefit liability										53	62
Accrued liabilities related to purchase of property and equipment											116
Shares issued for Investment in Alliance Boots (in dollars)										2,981
Accounts receivable [Abstract]
Accounts receivable	2,786				2,266				2,786	2,266
Allowance for doubtful accounts	(154)				(99)				(154)	(99)
Net, Total	2,632				2,167				2,632	2,167
Other non-current assets [Abstract]
Intangible assets, net (see Note 6)	1,307				1,286				1,307	1,286
Other	652				211				652	211
Other non-current assets, Total	1,959				1,497				1,959	1,497
Accrued expenses and other liabilities [Abstract]
Accrued salaries	928				772				928	772
Taxes other than income taxes	420				454				420	454
Insurance	285				268				285	268
Profit sharing	239				166				239	166
Other	1,705				1,359				1,705	1,359
Accrued expenses and other liabilities, Total	3,577				3,019				3,577	3,019
Other non-current liabilities [Abstract]
Postretirement health care benefits	340				332				340	332
Accrued rent	382				347				382	347
Insurance	403				408				403	408
Other	942				799				942	799
Other non-current liabilities, Total	2,067				1,886				2,067	1,886
Net sales	17,941	18,313	18,647	17,316	17,073	17,752	18,651	18,157	72,217	71,633	72,184
Gross Profit	5,191	5,222	5,607	5,099	4,835	5,014	5,389	5,104	21,119	20,342	20,492
Net Earnings	657	624	756	413	353	537	683	554	2,450	2,127	2,714
Per Common Share [Abstract]
Basic (in dollars per share)	$ 0.69	$ 0.66	$ 0.80	$ 0.44	$ 0.40	$ 0.63	$ 0.79	$ 0.63	$ 2.59	$ 2.43	$ 2.97
Diluted (in dollars per share)	$ 0.69	$ 0.65	$ 0.79	$ 0.43	$ 0.39	$ 0.62	$ 0.78	$ 0.63	$ 2.56	$ 2.42	$ 2.94
Cash Dividends Declared Per Common Share (in dollars per share)	$ 0.315	$ 0.275	$ 0.275	$ 0.275	$ 0.275	$ 0.225	$ 0.225	$ 0.225	$ 1.14	$ 0.95	$ 0.75
Gain on sale of business									20	0	434
Common stock price for quarter per Consolidated Transaction Reporting System, High	$ 51.26	$ 50.77	$ 41.95	$ 36.95	$ 36.08	$ 35.41	$ 34.60	$ 36.27	$ 51.26	$ 36.27
Common stock price for quarter per Consolidated Transaction Reporting System, Low	$ 44.12	$ 39.96	$ 34.27	$ 32.16	$ 28.77	$ 30.28	$ 31.95	$ 30.10	$ 32.16	$ 28.77
Assumed investment made at August 31, 2008	$ 100								$ 100
Cumulative return on Company's common stock	$ 147.14				$ 106.58				$ 147.14	$ 106.58	$ 102.05	$ 76.43	$ 94.64	$ 100.00
Cumulative return on Standard and Poor 500 Index	$ 127.29				$ 109.65				$ 127.29	$ 109.65	$ 95.02	$ 81.80	$ 79.56	$ 100.00
Cumulative return on Value Line Pharmacy Services Industry Index	$ 179.98				$ 117.55				$ 179.98	$ 117.55	$ 99.75	$ 81.94	$ 101.74	$ 100.00

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Income Taxes (Tables)

12 Months Ended

Aug. 31, 2013

Income Taxes [Abstract]

Schedule of Income before Income Tax, Domestic and Foreign [Table Text Block]

The components of Earnings Before Income Tax Provision were (in millions):

	2013
U.S.	$	3,477
Non-U.S.		418
Total	$	3,895

Provisions for income taxes and the difference between the statutory federal income tax rate and effective tax rate

The provision for income taxes consists of the following (in millions):

	2013			2012			2011
Current provision -
Federal	$	1,122		$	890		$	1,301
State		134			120			147
Non-U.S.		15			-			-
		1,271			1,010			1,448
Deferred provision -
Federal		174			251			113
State		(2	)		(12	)		19
Non-U.S.		2			-			-
		174			239			132
Income tax provision	$	1,445		$	1,249		$	1,580

Deferred Tax Assets and Liabilities Included in the Consolidated Balance Sheet

The deferred tax assets and liabilities included in the Consolidated Balance Sheets consist of the following (in millions):

	2013		2012
Deferred tax assets -
Postretirement benefits	$	218	$	217
Compensation and benefits		136		182
Insurance		121		157
Accrued rent		157		142
Tax benefits		159		214
Stock compensation		159		189
Inventory		95		96
Other		96		92
Subtotal		1,141		1,289
Less: Valuation allowance		19		19
Total deferred tax assets		1,122		1,270
Deferred tax liabilities -
Accelerated depreciation		1,369		1,332
Inventory		491		534
Intangible assets		53		28
Equity method investment		21		-
Other		4		80
Subtotal		1,938		1,974
Net deferred tax liabilities	$	816	$	704

Reconciliation of the total amounts of unrecognized tax benefits

The following table provides a reconciliation of the total amounts of unrecognized tax benefits (in millions):

	2013			2012			2011
Balance at beginning of year	$	197		$	94		$	93
Gross increases related to tax positions in a prior period		18			100			25
Gross decreases related to tax positions in a prior period		(32	)		(49	)		(68	)
Gross increases related to tax positions in the current period		30			53			54
Settlements with taxing authorities		(2	)		(1	)		(8	)
Lapse of statute of limitations		(3	)		-			(2	)
Balance at end of year	$	208		$	197		$	94

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Supplementary Financial Information

12 Months Ended

Aug. 31, 2013

Supplementary Financial Information [Abstract]

Supplementary Financial Information

(16) Supplementary Financial Information

Significant non-cash transactions in fiscal 2013 include $77 million related to the initial valuation of the AmerisourceBergen warrants.  Significant non-cash transactions in fiscal 2012 include $2,981 million in stock issuance relating to the investment in Alliance Boots and $53 million decrease in the retiree medical liability.  Significant non-cash transactions in fiscal 2011 include $116 million in accrued liabilities related to the purchase of property and equipment and $62 million increase in the retiree medical benefit liability.

Included in the Consolidated Balance Sheets captions are the following assets and liabilities (in millions):

	2013			2012
Accounts receivable -
Accounts receivable	$	2,786		$	2,266
Allowance for doubtful accounts (see Note 1)		(154	)		(99	)
	$	2,632		$	2,167
Other non-current assets -
Intangible assets, net (see Note 7)	$	1,307		$	1,286
Other		652			211
	$	1,959		$	1,497
Accrued expenses and other liabilities -
Accrued salaries	$	928		$	772
Taxes other than income taxes		420			454
Insurance		285			268
Profit sharing		239			166
Other		1,705			1,359
	$	3,577		$	3,019
Other non-current liabilities -
Postretirement healthcare benefits	$	340		$	332
Accrued rent		382			347
Insurance		403			408
Other		942			799
	$	2,067		$	1,886

Summary of Quarterly Results (Unaudited)

(In millions, except per share amounts)

	Quarter Ended
	November		February		May		August		Fiscal Year
Fiscal 2013
Net Sales	$	17,316	$	18,647	$	18,313	$	17,941	$	72,217
Gross Profit		5,099		5,607		5,222		5,191		21,119
Net Earnings		413		756		624		657		2,450
Per Common Share -
Basic	$	.44	$	.80	$	.66	$	.69	$	2.59
Diluted		.43		.79		.65		.69		2.56
Cash Dividends Declared Per Common Share	$	.275	$	.275	$	.275	$	.315	$	1.14
Fiscal 2012
Net Sales	$	18,157	$	18,651	$	17,752	$	17,073	$	71,633
Gross Profit		5,104		5,389		5,014		4,835		20,342
Net Earnings		554		683		537		353		2,127
Per Common Share -
Basic	$	.63	$	.79	$	.63	$	.40	$	2.43
Diluted		.63		.78		.62		.39		2.42
Cash Dividends Declared Per Common Share	$	.225	$	.225	$	.225	$	.275	$	.950

Common Stock Prices (Unaudited)

Below is the Consolidated Transaction Reporting System high and low sales price for each quarter of fiscal 2013 and 2012.

		Quarter Ended
		November		February		May		August		Fiscal Year
Fiscal 2013	High	$	36.95	$	41.95	$	50.77	$	51.26	$	51.26
Low			32.16		34.27		39.96		44.12		32.16
Fiscal 2012	High	$	36.27	$	34.60	$	35.41	$	36.08	$	36.27
Low			30.10		31.95		30.28		28.77		28.77

Comparison of Five-Year Cumulative Total Return (Unaudited)

The following graph compares the five-year cumulative total return of the Company's common stock with the S&P 500 Index and the Value Line Pharmacy Services Industry Index.  The graph assumes a $100 investment made August 31, 2008, and the reinvestment of all dividends.  The historical performance of the Company's common stock is not necessarily indicative of future stock performance.

	Value of Investment at August 31,
	2008		2009		2010		2011		2012		2013
Walgreen Co.	$	100.00	$	94.64	$	76.43	$	102.05	$	106.58	$	147.14
S&P 500 Index		100.00		79.56		81.80		95.02		109.65		127.29
Value Line Pharmacy Services Industry Index		100.00		101.74		81.94		99.75		117.55		179.98

This performance graph and accompanying disclosure is not soliciting material, is not deemed filed with the SEC, and is not incorporated by reference in any of the Company's filings under the Securities Act or the Exchange Act, irrespective of the timing of and any general incorporation language in such filing.

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Short-Term Borrowings and Long-Term Debt (Details) (USD $)	12 Months Ended		12 Months Ended								12 Months Ended				12 Months Ended					12 Months Ended			12 Months Ended		12 Months Ended		12 Months Ended		12 Months Ended
	Aug. 31, 2013	Aug. 31, 2012	Aug. 31, 2013 Syndicated Line of Credit Expiring 2015 [Member]	Aug. 31, 2013 Syndicated Line of Credit Expiring 2017 [Member]	Aug. 31, 2012 Bridge Facility [Member]	Aug. 31, 2013 Bridge Facility [Member]	Aug. 31, 2013 Other Short Term Debt [Member]	Aug. 31, 2012 Other Short Term Debt [Member]	Aug. 31, 2013 Assumed loans [Member]	Aug. 31, 2012 Assumed loans [Member]	Aug. 31, 2013 Assumed loans [Member] Loans payable [Member]	Aug. 31, 2012 Assumed loans [Member] Loans payable [Member]	Aug. 31, 2013 Notes due 2013 [Member]	Aug. 31, 2012 Notes due 2013 [Member]	Aug. 31, 2013 Notes due 2013 [Member] Unsecured debt [Member]	Aug. 31, 2013 Notes due 2019 [Member] Unsecured debt [Member]	Aug. 31, 2012 Notes due 2019 [Member] Unsecured debt [Member]	Aug. 31, 2013 Notes Due 2014 [Member]	Aug. 31, 2012 Notes Due 2014 [Member]	Aug. 31, 2013 Notes Due 2014 [Member] Unsecured debt [Member]	Aug. 31, 2013 Notes Due 2015 [Member] Unsecured debt [Member]	Aug. 31, 2012 Notes Due 2015 [Member] Unsecured debt [Member]	Aug. 31, 2013 Notes Due 2017 [Member] Unsecured debt [Member]	Aug. 31, 2012 Notes Due 2017 [Member] Unsecured debt [Member]	Aug. 31, 2013 Notes Due 2022 [Member] Unsecured debt [Member]	Aug. 31, 2012 Notes Due 2022 [Member] Unsecured debt [Member]	Aug. 31, 2013 Notes Due 2042 [Member] Unsecured debt [Member]	Aug. 31, 2012 Notes Due 2042 [Member] Unsecured debt [Member]	Aug. 31, 2013 Total $4.0 billion debt issuance [Member] Unsecured debt [Member]
Short-term Debt [Line Items]
Current maturities of loans assumed through the purchase of land, buildings and equipment	$ (2,000,000)	$ (9,000,000)							$ 2,000,000	$ 9,000,000
Other short term borrowings							18,000,000	5,000,000
4.875% unsecured notes due 2013 net of unamortized discount and interest rate swap fair market value adjustment (See Note 8)													0	1,305,000,000
Unsecured variable rate notes due 2014, net of unamortized discount																		550,000,000	0
Total short-term borrowings	570,000,000	1,319,000,000
Long-Term Debt [Abstract]
Carrying value of notes, net of discount and FMV adjustment, if applicable					3,000,000,000	0										994,000,000	1,030,000,000				749,000,000	0	998,000,000	0	1,199,000,000	0	496,000,000	0
Loans assumed through the purchase of land and buildings											43,000,000	52,000,000
Long-term debt	4,479,000,000	4,082,000,000
Current maturities	(2,000,000)	(9,000,000)							2,000,000	9,000,000
Total-long term debt	4,477,000,000	4,073,000,000
Minimum interest rate (in hundredths)											5.00%
Maximum interest rate (in hundredths)											8.75%
Maturity date start											Jan. 01, 2015
Maturity date end											Jan. 01, 2035
Debt Instrument, Description of Variable Rate Basis					Interest was reset monthly based upon the one-month LIBOR plus a fixed margin															Variable; three-month U.S. Dollar LIBOR, reset quarterly, plus 50 basis points
Stated interest rate (in hundredths															4.875%	5.25%					1.00%		1.80%		3.10%		4.40%
Issuance date of note					Aug. 02, 2012										Jul. 17, 2008	Jan. 13, 2009													Sep. 13, 2012
Maturity date of note															Aug. 01, 2013	Jan. 15, 2019				Mar. 13, 2014	Mar. 13, 2015		Sep. 15, 2017		Sep. 15, 2022		Sep. 15, 2042
Face amount of notes issued					3,000,000,000										1,300,000,000	1,000,000,000				550,000,000	750,000,000		1,000,000,000		1,200,000,000		500,000,000		4,000,000,000
Interest payment frequency															semiannually in arrears on February 1 and August 1	semiannually in arrears on January 15 and July 15				March 13, June 13, September 13 and December 13	March 13 and September 13		March 15 and September 15		March 15 and September 15		March 15 and September 15
Date of first payment															Feb. 01, 2009	Jul. 15, 2009				Dec. 13, 2012	Mar. 13, 2013		Mar. 15, 2013		Mar. 15, 2013		Mar. 15, 2013
Call feature																The Company may redeem the notes, at any time in whole or from time to time in part, at its option at a redemption price equal to the greater of: (1) 100% of the principal amount of the notes to be redeemed; or (2) the sum of the present values of the remaining scheduled payments of principal and interest, discounted to the date of redemption on a semiannual basis at the Treasury Rate, plus 45 basis points, plus accrued interest on the notes to be redeemed to, but excluding, the date of redemption.													The Company may redeem the fixed rate notes at its option, at any time in whole, or from time to time in part, at a redemption price equal to the greater of: (1) 100% of the principal amount of the notes being redeemed; and (2) the sum of the present values of the remaining scheduled payments of principal and interest thereon (not including any portion of such payments of interest accrued as of the date of redemption), discounted to the date of redemption on a semiannual basis (assuming a 360-day year consisting of twelve 30-day months) at the Treasury Rate (as defined), plus 12 basis points for the notes due 2015, 20 basis points for the notes due 2017, 22 basis points for the notes due 2022 and 25 basis points for the notes due 2042.
Percentage of principal amount of notes company may redeem																100.00%													100.00%
Basis points added to treasury rate to calculate redemption rate																45					12		20		22		25
Percentage of principal amount required on triggering event to repurchase notes (in hundredths)																101.00%													101.00%
Total issuance costs																8,000,000													26,000,000
Fair value of the notes																1,100,000,000	1,200,000,000												3,900,000,000
Basis for fair value measurement																Fair value for these notes was determined based upon quoted market prices.													Fair value for these notes was determined based upon quoted market prices.
Available loan					3,500,000,000
Description of variable rate					Interest was reset monthly based upon the one-month LIBOR plus a fixed margin															Variable; three-month U.S. Dollar LIBOR, reset quarterly, plus 50 basis points
Line of Credit Facility [Line Items]
Maximum borrowing capacity	1,350,000,000		500,000,000	850,000,000
Expiration date			Jul. 20, 2015	Jul. 23, 2017
Maximum Letter Of Credit Amount Allowed For Issuance Under Syndicated Line Of Credit			250,000,000	200,000,000
Covenant Terms	The covenants require the Company to maintain certain financial ratios related to minimum net worth and priority debt, along with limitations on the sale of assets and purchases of investments.
Covenant compliance	At August 31, 2013, the Company was in compliance with all such covenants.
Facility fee description	The Company pays a facility fee to the financing banks to keep these lines of credit active.
Letters of credit issued	$ 0

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Acquisitions (Details) (USD $) In Millions, unless otherwise specified	12 Months Ended								12 Months Ended
	Aug. 31, 2013	Aug. 31, 2012	Aug. 31, 2011	Aug. 31, 2013 Trade Name [Member]	Aug. 31, 2012 Trade Name [Member]	Aug. 31, 2013 Other Intangible Assets [Member]	Aug. 31, 2012 Other Intangible Assets [Member]	Aug. 31, 2012 BioScrip [Member]	Aug. 31, 2013 Usa Drug Acquisition [Member]	Sep. 18, 2012 Usa Drug Acquisition [Member]	Dec. 15, 2012 Cystic Fibrosis Foundation LLC [Member]	Aug. 31, 2012 Crescent [Member]	Aug. 31, 2013 All business and intangible asset acquisitions, excluding USA Drug and Cystic Fibrosis [Member]
Business Acquisition [Line Items]
Inventory										$ 60
Intangible assets								49		156	21	26	135
Goodwill								94		220	16	40
Net cash paid								144		436	29	73	165
Percentage Acquired											80.00%
Remaining ownership subject to call option (in hundredths)											20.00%
Net sales									364
Net earnings									74
Costs incurred related to the acquisition									57
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items]
Pre-tax gain on sale of business	$ 20	$ 0	$ 434
Acquired Finite-Lived Intangible Assets [Line Items]
Acquired finite-lived intangible asset, weighted average useful life (in years)				12 years	12 years	10 years	10 years

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Supplementary Financial Information (Tables)

12 Months Ended

Aug. 31, 2013

Supplementary Financial Information [Abstract]

Assets and liabilities included in consolidated balance sheet captions

Included in the Consolidated Balance Sheets captions are the following assets and liabilities (in millions):

	2013			2012
Accounts receivable -
Accounts receivable	$	2,786		$	2,266
Allowance for doubtful accounts (see Note 1)		(154	)		(99	)
	$	2,632		$	2,167
Other non-current assets -
Intangible assets, net (see Note 7)	$	1,307		$	1,286
Other		652			211
	$	1,959		$	1,497
Accrued expenses and other liabilities -
Accrued salaries	$	928		$	772
Taxes other than income taxes		420			454
Insurance		285			268
Profit sharing		239			166
Other		1,705			1,359
	$	3,577		$	3,019
Other non-current liabilities -
Postretirement healthcare benefits	$	340		$	332
Accrued rent		382			347
Insurance		403			408
Other		942			799
	$	2,067		$	1,886

Summary of quarterly results

Summary of Quarterly Results (Unaudited)

(In millions, except per share amounts)

	Quarter Ended
	November		February		May		August		Fiscal Year
Fiscal 2013
Net Sales	$	17,316	$	18,647	$	18,313	$	17,941	$	72,217
Gross Profit		5,099		5,607		5,222		5,191		21,119
Net Earnings		413		756		624		657		2,450
Per Common Share -
Basic	$	.44	$	.80	$	.66	$	.69	$	2.59
Diluted		.43		.79		.65		.69		2.56
Cash Dividends Declared Per Common Share	$	.275	$	.275	$	.275	$	.315	$	1.14
Fiscal 2012
Net Sales	$	18,157	$	18,651	$	17,752	$	17,073	$	71,633
Gross Profit		5,104		5,389		5,014		4,835		20,342
Net Earnings		554		683		537		353		2,127
Per Common Share -
Basic	$	.63	$	.79	$	.63	$	.40	$	2.43
Diluted		.63		.78		.62		.39		2.42
Cash Dividends Declared Per Common Share	$	.225	$	.225	$	.225	$	.275	$	.950

Common stock price high and low sales price for each quarter.

Below is the Consolidated Transaction Reporting System high and low sales price for each quarter of fiscal 2013 and 2012.

		Quarter Ended
		November		February		May		August		Fiscal Year
Fiscal 2013	High	$	36.95	$	41.95	$	50.77	$	51.26	$	51.26
Low			32.16		34.27		39.96		44.12		32.16
Fiscal 2012	High	$	36.27	$	34.60	$	35.41	$	36.08	$	36.27
Low			30.10		31.95		30.28		28.77		28.77

Five-year cumulative total return on common stock

	Value of Investment at August 31,
	2008		2009		2010		2011		2012		2013
Walgreen Co.	$	100.00	$	94.64	$	76.43	$	102.05	$	106.58	$	147.14
S&P 500 Index		100.00		79.56		81.80		95.02		109.65		127.29
Value Line Pharmacy Services Industry Index		100.00		101.74		81.94		99.75		117.55		179.98

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Summary of Major Accounting Policies (Details) (USD $)	12 Months Ended
	Aug. 31, 2013	Aug. 31, 2012	Aug. 31, 2011	Mar. 18, 2013
Summary of Major Accounting Policies [Abstract]
Number of drugstores and other locations (in stores)	8,582
Number of states that have store locations	50
Prescription sales as a percentage of total sales (in hundredths)	62.90%	63.20%	64.70%
Percentage ownership in Alliance Boots	45.00%
Credit and debit card receivables	$ 160,000,000	$ 88,000,000
Money market funds	1,600,000,000	820,000,000
Outstanding checks in excess of funds on deposit at certain banks	274,000,000	256,000,000
Allowance for Doubtful Accounts Receivable
Outstanding letters of credit that guarantee foreign trade purchases	197,000,000	157,000,000
Outstanding letters of credit that guarantee payments of insurance claims	263,000,000	38,000,000
Outstanding letters of credit that guarantee performance of construction contracts	4,000,000	229,000,000
Real estate development purchase commitments	185,000,000	206,000,000
Value of debt converted from fixed to variable rate	1,000,000,000
Inventory increase in carrying amount if valued on FIFO basis	2,100,000,000	1,900,000,000
LIFO liquidation	194,000,000	268,000,000
Property, Plant and Equipment [Line Items]
Property and equipment	18,181,000,000	17,160,000,000
Less: accumulated depreciation and amortization	6,043,000,000	5,122,000,000
Property and equipment, net	12,138,000,000	12,038,000,000
Depreciation expense for property and equipment	894,000,000	841,000,000	809,000,000
Internally developed software amortization	100,000,000	70,000,000	58,000,000
Unamortized capitalized software costs	374,000,000	292,000,000
Impairment charges included in selling, general and administrative expenses	30,000,000	27,000,000	44,000,000
Reserve for store closings	123,000,000	117,000,000
Net advertising expenses	286,000,000	291,000,000	271,000,000
Vendor advertising allowances	240,000,000	239,000,000	218,000,000
AmerisourceBergen Corporation [Line Items]
Option exercise date, beginning date of 6-month period	March 2016
First warrant to purchase shares (shares)	11,348,456
First warrant to purchase shares (dollars per share)	$ 51.50
Second warrant to purchase shares (shares)	11,348,456
Second warrant to purchase shares (dollars per share)	$ 52.50
Fair value of AmerisourceBergen warrants	188,000,000			77,000,000
Change in fair value of AmerisourceBergen warrants	111,000,000
Amortization of AmerisourceBergen warrants	9,000,000
Date of AmerisourceBergen Corporation deal	Mar. 18, 2013
Number of shares eligible for purchase	19,859,795
Percentage of fully diluted equity eligible for purchase	7.00%
Total stock-based compensation expense	104,000,000	99,000,000	135,000,000
Recognized tax benefit, stock-based compensation	30,000,000	9,000,000	49,000,000
Unrecognized compensation cost related to non-vested awards	189,000,000
Outstanding options to purchase common shares excluded from earnings per share calculations (in shares)	12,316,949	32,593,870	16,869,061
Capitalized interest as a part of significant construction projects	7,000,000	9,000,000	10,000,000
Interest paid, net of capitalized interest	158,000,000	108,000,000	89,000,000
Land and Land Improvements [Member] | Owned Locations [Member]
Property, Plant and Equipment [Line Items]
Property and equipment	3,203,000,000	3,189,000,000
Land and Land Improvements [Member] | Distribution Centers [Member]
Property, Plant and Equipment [Line Items]
Property and equipment	97,000,000	96,000,000
Land and Land Improvements [Member] | Other Locations [Member]
Property, Plant and Equipment [Line Items]
Property and equipment	219,000,000	232,000,000
Land and Land Improvements [Member] | Minimum [Member]
Property, Plant and Equipment [Line Items]
Estimated useful lives range (in years)	10
Land and Land Improvements [Member] | Maximum [Member]
Property, Plant and Equipment [Line Items]
Estimated useful lives range (in years)	39
Building and Building Improvements [Member] | Owned Locations [Member]
Property, Plant and Equipment [Line Items]
Property and equipment	3,805,000,000	3,684,000,000
Building and Building Improvements [Member] | Distribution Centers [Member]
Property, Plant and Equipment [Line Items]
Property and equipment	620,000,000	608,000,000
Building and Building Improvements [Member] | Other Locations [Member]
Property, Plant and Equipment [Line Items]
Property and equipment	351,000,000	525,000,000
Building and Building Improvements [Member] | Leased Location (Leasehold Improvement) [Member]
Property, Plant and Equipment [Line Items]
Property and equipment	1,811,000,000	1,518,000,000
Equipment [Member] | Owned Locations [Member]
Property, Plant and Equipment [Line Items]
Property and equipment	5,334,000,000	4,995,000,000
Equipment [Member] | Distribution Centers [Member]
Property, Plant and Equipment [Line Items]
Property and equipment	1,190,000,000	1,158,000,000
Equipment [Member] | Other Locations [Member]
Property, Plant and Equipment [Line Items]
Property and equipment	755,000,000	586,000,000
Equipment [Member] | Minimum [Member]
Property, Plant and Equipment [Line Items]
Estimated useful lives range (in years)	2
Equipment [Member] | Maximum [Member]
Property, Plant and Equipment [Line Items]
Estimated useful lives range (in years)	13
Capitalized System Development Costs [Member]
Property, Plant and Equipment [Line Items]
Property and equipment	581,000,000	420,000,000
Capital Lease Properties [Member]
Property, Plant and Equipment [Line Items]
Property and equipment	215,000,000	149,000,000
Trade Accounts Receivable [Member]
Allowance for Doubtful Accounts Receivable
Balance at beginning of year	99,000,000	101,000,000	104,000,000
Bad debt provision	124,000,000	107,000,000	88,000,000
Write-offs	(69,000,000)	(109,000,000)	(91,000,000)
Balance at end of year	$ 154,000,000	$ 99,000,000	$ 101,000,000

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Available-for-Sale Investments

12 Months Ended

Aug. 31, 2013

Available-for-Sale Investments [Abstract]

Available-for-Sale Investments [Text Block]

(6)  Available-for-Sale Investments

In conjunction with its long-term relationship with AmerisourceBergen announced in fiscal 2013, the Company, as of August 31, 2013, has acquired approximately 4.0 million shares of AmerisourceBergen common stock.  The Company's cost basis of common shares acquired through open market transactions was $224 million in fiscal 2013.  The available-for-sale investment is classified as long-term and reported at fair value within other non-current assets in the Consolidated Balance Sheets.  The Company also holds other investments with maturities greater than 90 days that are reported at fair value within other current assets in the Consolidated Balance Sheets.

Fair value adjustments are based on quoted stock prices with the unrealized holding gains and losses reported in other comprehensive income.  Unrealized holding gains at August 31, 2013, were $1 million.  See Note 11 for additional fair value disclosures. Available-for-sale investments reported at fair value at August 31, 2013, were $225 million.

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Short-Term Borrowings and Long-Term Debt (Tables)

12 Months Ended

Aug. 31, 2013

Short-Term Borrowings and Long-Term Debt [Abstract]

Short-Term and Long-Term Borrowings

Short-term borrowings and long-term debt consist of the following at August 31 (in millions):

	2013		2012
Short-Term Borrowings -
Current maturities of loans assumed through the purchase of land and buildings; various interest rates from 5.000% to 8.750%; various maturities from 2015 to 2035	$	2	$	9
4.875% unsecured notes due 2013, net of unamortized discount and interest rate swap fair market value adjustment (see Note 10)		-		1,305
Unsecured variable rate notes due 2014, net of unamortized discount		550		-
Other		18		5
Total short-term borrowings	$	570	$	1,319

Long-Term Debt

Short-term borrowings and long-term debt consist of the following at August 31 (in millions):

Long-Term Debt -
1.000% unsecured notes due 2015, net of unamortized discount	$	749		$	-
1.800% unsecured notes due 2017, net of unamortized discount		998			-
5.250% unsecured notes due 2019 net of unamortized discount and interest rate swap fair market value adjustment (see Note 10)		994			1,030
3.100% unsecured notes due 2022, net of unamortized discount		1,199			-
4.400% unsecured notes due 2042, net of unamortized discount		496			-
Bridge Facility		-			3,000
Loans assumed through the purchase of land and buildings; various interest rates from 5.000% to 8.750%; various maturities from 2015 to 2035		43			52
		4,479			4,082
Less current maturities		(2	)		(9	)
Total long-term debt	$	4,477		$	4,073

September 2012 Debt Issuance

On September 13, 2012, the Company repaid in full all amounts borrowed under the bridge term loan with a portion of the net proceeds from a public offering of $4.0 billion of notes with varying maturities and interest rates, the majority of which are fixed rate.  The following details each tranche of notes issued on September 13, 2012:

Notes Issued (In millions)		Maturity Date	Interest Rate	Interest Payment Dates
$	550	March 13, 2014	Variable; three-month U.S. Dollar LIBOR, reset quarterly, plus 50 basis points	March 13, June 13, September 13 and December 13; commencing on December 13, 2012
	750	March 13, 2015	Fixed 1.000%	March 13 and September 13; commencing on March 13, 2013
	1,000	September 15, 2017	Fixed 1.800%	March 15 and September 15; commencing on March 15, 2013
	1,200	September 15, 2022	Fixed 3.100%	March 15 and September 15; commencing on March 15, 2013
	500	September 15, 2042	Fixed 4.400%	March 15 and September 15; commencing on March 15, 2013
$	4,000

XML

Goodwill and Intangibles (Details) (USD $) In Millions, unless otherwise specified	12 Months Ended
	Aug. 31, 2013	Aug. 31, 2012	Aug. 31, 2011
Goodwill and Intangibles [Abstract]
Percentage by which fair value exceeds carrying amount, minimum (in hundredths)	15.00%
Percentage by which fair value exceeds carrying amount, more than this percentage, maximum (in hundredths)	180.00%
Goodwill [Roll Forward]
Net book value - September 1	$ 2,161	$ 2,017
Acquisitions	236	120
Other	13	24
Net book value - August 31	2,410	2,161	2,017
Finite-Lived Intangible Assets [Line Items]
Gross Intangible Assets	2,183	2,019
Accumulated amortization	(876)	(733)
Intangible assets, Net	1,307	1,286
Amortization expense for intangible assets	289	255	219
Estimated annual intangible assets amortization expense [Abstract]
2014	257
2015	225
2016	185
2017	144
2018	99
Purchased Prescription File [Member]
Finite-Lived Intangible Assets [Line Items]
Gross Intangible Assets	1,099	984
Accumulated amortization	(467)	(417)
Weighted-average amortization period (in years)	7 years	7 years
Lease Agreements [Member]
Finite-Lived Intangible Assets [Line Items]
Gross Intangible Assets	381	388
Accumulated amortization	(143)	(109)
Weighted-average amortization period (in years)	11 years	11 years
Purchasing and Payer Contract [Member]
Finite-Lived Intangible Assets [Line Items]
Gross Intangible Assets	347	334
Accumulated amortization	(147)	(119)
Weighted-average amortization period (in years)	13 years	13 years
Non-compete Agreements [Member]
Finite-Lived Intangible Assets [Line Items]
Gross Intangible Assets	153	120
Accumulated amortization	(67)	(53)
Weighted-average amortization period (in years)	6 years	6 years
Trade Names [Member]
Finite-Lived Intangible Assets [Line Items]
Gross Intangible Assets	199	189
Accumulated amortization	(49)	(32)
Weighted-average amortization period (in years)	12 years	12 years
Other Amortizable Intangible Assets [Member]
Finite-Lived Intangible Assets [Line Items]
Gross Intangible Assets	4	4
Accumulated amortization	$ (3)	$ (3)
Weighted-average amortization period (in years)	10 years	10 years

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Short-Term Borrowings and Long-Term Debt

12 Months Ended

Aug. 31, 2013

Short-Term Borrowings and Long-Term Debt [Abstract]

Short-Term Borrowings and Long-Term Debt

(9)Short-Term Borrowings and Long-Term Debt

Short-term borrowings and long-term debt consist of the following at August 31 (in millions):

	2013		2012
Short-Term Borrowings -
Current maturities of loans assumed through the purchase of land and buildings; various interest rates from 5.000% to 8.750%; various maturities from 2015 to 2035	$	2	$	9
4.875% unsecured notes due 2013, net of unamortized discount and interest rate swap fair market value adjustment (see Note 10)		-		1,305
Unsecured variable rate notes due 2014, net of unamortized discount		550		-
Other		18		5
Total short-term borrowings	$	570	$	1,319

Long-Term Debt -
1.000% unsecured notes due 2015, net of unamortized discount	$	749		$	-
1.800% unsecured notes due 2017, net of unamortized discount		998			-
5.250% unsecured notes due 2019 net of unamortized discount and interest rate swap fair market value adjustment (see Note 10)		994			1,030
3.100% unsecured notes due 2022, net of unamortized discount		1,199			-
4.400% unsecured notes due 2042, net of unamortized discount		496			-
Bridge Facility		-			3,000
Loans assumed through the purchase of land and buildings; various interest rates from 5.000% to 8.750%; various maturities from 2015 to 2035		43			52
		4,479			4,082
Less current maturities		(2	)		(9	)
Total long-term debt	$	4,477		$	4,073

On July 17, 2008, the Company issued notes totaling $1.3 billion bearing an interest rate of 4.875% paid semiannually in arrears on February 1 and August 1 of each year, beginning on February 1, 2009.  The notes matured and were repaid in full on August 1, 2013.

On August 2, 2012, the Company borrowed $3.0 billion of its available $3.5 billion variable rate 364-day bridge term loan obtained in connection with the investment in Alliance Boots.  Interest was reset monthly based upon the one-month LIBOR plus a fixed margin, paid on a monthly basis.

On September 13, 2012, the Company repaid in full all amounts borrowed under the bridge term loan with a portion of the net proceeds from a public offering of $4.0 billion of notes with varying maturities and interest rates, the majority of which are fixed rate.  The following details each tranche of notes issued on September 13, 2012:

Notes Issued (In millions)		Maturity Date	Interest Rate	Interest Payment Dates
$	550	March 13, 2014	Variable; three-month U.S. Dollar LIBOR, reset quarterly, plus 50 basis points	March 13, June 13, September 13 and December 13; commencing on December 13, 2012
	750	March 13, 2015	Fixed 1.000%	March 13 and September 13; commencing on March 13, 2013
	1,000	September 15, 2017	Fixed 1.800%	March 15 and September 15; commencing on March 15, 2013
	1,200	September 15, 2022	Fixed 3.100%	March 15 and September 15; commencing on March 15, 2013
	500	September 15, 2042	Fixed 4.400%	March 15 and September 15; commencing on March 15, 2013
$	4,000

The Company may redeem the fixed rate notes at its option, at any time in whole, or from time to time in part, at a redemption price equal to the greater of: (1) 100% of the principal amount of the notes being redeemed; and (2) the sum of the present values of the remaining scheduled payments of principal and interest thereon (not including any portion of such payments of interest accrued as of the date of redemption), discounted to the date of redemption on a semiannual basis (assuming a 360-day year consisting of twelve 30-day months) at the Treasury Rate (as defined), plus 12 basis points for the notes due 2015, 20 basis points for the notes due 2017, 22 basis points for the notes due 2022 and 25 basis points for the notes due 2042.  If a change of control triggering event occurs, the Company will be required, unless it has exercised its right to redeem the notes, to offer to purchase the notes at a purchase price equal to 101% of their principal amount, plus accrued and unpaid interest, if any, on the notes repurchased to the date of repurchase.  The notes are unsecured senior debt obligations and rank equally with all other unsecured and unsubordinated indebtedness of the Company.  Total issuance costs relating to the notes, including underwriting discounts and fees, were $26 million.  The fair value of the notes as of August 31, 2013, was $3.9 billion.  Fair value for these notes was determined based upon quoted market prices.

On January 13, 2009, the Company issued notes totaling $1.0 billion bearing an interest rate of 5.250% paid semiannually in arrears on January 15 and July 15 of each year, beginning on July 15, 2009. The notes will mature on January 15, 2019. The Company may redeem the notes, at any time in whole or from time to time in part, at its option at a redemption price equal to the greater of: (1) 100% of the principal amount of the notes to be redeemed; or (2) the sum of the present values of the remaining scheduled payments of principal and interest, discounted to the date of redemption on a semiannual basis at the Treasury Rate, plus 45 basis points, plus accrued interest on the notes to be redeemed to, but excluding, the date of redemption.  If a change of control triggering event occurs, unless the Company has exercised its option to redeem the notes, it will be required to offer to repurchase the notes at a purchase price equal to 101% of the principal amount of the notes plus accrued and unpaid interest to the date of redemption.  The notes are unsecured senior debt obligations and rank equally with all other unsecured senior indebtedness of the Company. The notes are not convertible or exchangeable.  Total issuance costs relating to this offering were $8 million, primarily underwriting fees.  The fair value of the notes as of August 31, 2013 and 2012, was $1.1 billion and $1.2 billion, respectively.  Fair value for these notes was determined based upon quoted market prices.

The Company has had no activity or outstanding balances in its commercial paper program since fiscal 2009.  In connection with the commercial paper program, the Company maintains two unsecured backup syndicated lines of credit that total $1.35 billion.  The first $500 million facility expires on July 20, 2015, and allows for the issuance of up to $250 million in letters of credit.  The second $850 million facility expires on July 23, 2017, and allows for the issuance of up to $200 million in letters of credit.  The issuance of letters of credit under either of these facilities reduces available borrowings.  The Company's ability to access these facilities is subject to compliance with the terms and conditions of the credit facilities, including financial covenants.  The covenants require the Company to maintain certain financial ratios related to minimum net worth and priority debt, along with limitations on the sale of assets and purchases of investments.  At August 31, 2013, the Company was in compliance with all such covenants.  The Company pays a facility fee to the financing banks to keep these lines of credit active.  At August 31, 2013, there were no letters of credit issued against these credit facilities and the Company does not anticipate any future letters of credit to be issued against these facilities.  

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Equity Method Investments

12 Months Ended

Aug. 31, 2013

Equity Method Investments [Abstract]

Equity Method Investments [Text Block]

(5)  Equity Method Investments

Equity method investments as of August 31, 2013 and 2012, were as follows (in millions, except percentages):

	2013				2012
	Carrying Value		Ownership Percentage		Carrying Value		Ownership Percentage
Alliance Boots	$	6,261		45%	$	6,140		45%
Other equity method investments		7		30% - 50%		7		30% - 50%
Total Equity Method Investments	$	6,268			$	6,147

Alliance Boots

On August 2, 2012, pursuant to a Purchase and Option Agreement dated June 18, 2012, by and among the Company, Alliance Boots GmbH and AB Acquisitions Holdings Limited (the Purchase and Option Agreement), the Company acquired 45% of the issued and outstanding share capital of Alliance Boots in exchange for $4.025 billion in cash and approximately 83.4 million shares of Company common stock.  The Purchase and Option Agreement also provides, subject to the satisfaction or waiver of specified conditions, a call option that gives the Company the right, but not the obligation, to acquire the remaining 55% of Alliance Boots (second step transaction) in exchange for an additional £3.1 billion in cash (approximately $4.9 billion using August 31, 2013 exchange rates) as well as an additional 144.3 million Company shares, subject to certain adjustments.  If the Company exercises the call option, in certain limited circumstances, the Company may be required to make the entire second step transaction payment in cash.  The call option can be exercised by the Company during the six-month period beginning February 2, 2015.  In addition, in certain circumstances, if the Company does not exercise the call option, or the Company has exercised the call option but the second step transaction does not close, the Company's ownership of Alliance Boots will reduce from 45% to 42% in exchange for nominal consideration.  The Company's equity earnings, initial investment and the call option exclude the Alliance Boots minority interest in Galenica Ltd. (Galenica).  The Alliance Boots investment in Galenica was distributed to the Alliance Boots shareholders other than the Company in May 2013, which had no impact on the Company's financial results.

The call option was valued using a Monte Carlo simulation using assumptions surrounding Walgreens equity value as well as the potential impacts of certain provisions of the Purchase and Option Agreement that are described in the Form 8-K filed by the Company on June 19, 2012.  The call option is accounted for at cost and subsequently adjusted for foreign currency translation gains or losses.  The final purchase price allocation resulted in $6.1 billion of the total consideration being allocated to the investment and $866 million being allocated to the call option based on their relative fair values.

The Company accounts for its 45% investment in Alliance Boots using the equity method of accounting.   Investments accounted for under the equity method are recorded initially at cost and subsequently adjusted for the Company's share of the net income or loss and cash contributions and distributions to or from these entities.  Because the underlying net assets in Alliance Boots are denominated in a foreign currency, translation gains or losses will impact the recorded value of the Company's investment.  The Company utilizes a three-month lag in reporting equity income in Alliance Boots and as a result, only 10 months results of Alliance Boots were recorded in fiscal 2013.  The Company's investment is recorded as "Equity investment in Alliance Boots" in the Consolidated Balance Sheets.

The Company's initial investment in Alliance Boots exceeded its proportionate share of the net assets of Alliance Boots by $2.4 billion. This premium of $2.4 billion is recognized as part of the carrying value in the Company's equity investment in Alliance Boots.  The difference is primarily related to the fair value of Alliance Boots indefinite-lived intangible assets and goodwill.  The Company's equity method income from the investment in Alliance Boots is adjusted to reflect the amortization of fair value adjustments in certain definite-lived assets of Alliance Boots.  The Company's incremental amortization expense associated with the Alliance Boots investment was approximately $57 million during fiscal 2013, largely consisting of the inventory step-up, which was amortized over the first inventory turn.

During July 2013, the UK Government enacted a law to reduce the UK corporate tax rate applicable from April 2014.  The non-cash impact of this change will be recorded in fiscal 2014 due to the three-month lag.

Other Equity Method Investments

Other equity method investments relate to joint ventures associated with the Company's infusion and respiratory businesses.  These investments are included within other non-current assets on the Consolidated Balance Sheets.  The Company's share of equity income is reported within selling, general and administrative expenses in the Consolidated Statements of Comprehensive Income.

Summarized Financial Information

Summarized financial information for the Company's equity method investees is as follows:

Balance Sheet (in millions)

	At August 31,
	2013(1)		2012(1)
Current Assets	$	8,906	$	9,193
Non-Current Assets		19,484		20,085
Current Liabilities		7,204		7,254
Non-Current Liabilities		12,228		13,269
Shareholders' Equity (2)		8,958		8,755

Income Statement (in millions)

	Year Ended August 31,
	2013(3)		2012		2011
Net Sales	$	30,446	$	37	$	37
Gross Profit		6,391		17		19
Net Earnings		1,022		2		5
Share of income from investments accounted for using the equity method(3)		345		1		2

⁽¹⁾ Net assets in Alliance Boots are translated at the May 31, 2013 spot rate of $1.52 to one British pound Sterling, corresponding to the three-month lag.  Fiscal 2012 net assets in Alliance Boots were translated at a spot rate of $1.57 to one British pound Sterling.

⁽²⁾ Shareholders' equity at August 31, 2013 and 2012, includes $374 million and $380 million related to non-controlling interests, respectively.

⁽³⁾ The Company utilizes a three-month lag in reporting its share of equity income in Alliance Boots.  Earnings reflect $57 million, $44 million net of tax, of incremental acquisition-related amortization for the ten-month period ending August 31, 2013.  Earnings in Alliance Boots are translated at the average exchange rate of $1.57 to one British pound Sterling for the year ended August 31, 2013.  Ten months of operating results are presented for Alliance Boots in fiscal 2013 corresponding to the three-month lag after closing the investment on August 2, 2012.  Walgreens Boots Alliance Development GmbH operations are excluded from these results as the Company consolidates the joint venture.

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Consolidated Statements of Shareholders' Equity (Parenthetical) (USD $) In Millions, except Per Share data, unless otherwise specified	12 Months Ended
	Aug. 31, 2013	Aug. 31, 2012	Aug. 31, 2011
Consolidated Statements of Shareholders' Equity [Abstract]
Cash dividends declared (in dollars per share)	$ 1.14	$ 0.95	$ 0.75
Postretirement liability tax (expense) benefit	$ 3	$ 32	$ 22
Currency translation, tax impact	55
Share of comprehensive income in Alliance Boots, tax impact	$ 32

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Commitments and Contingencies (Details) (Litigation, USD $)	12 Months Ended
	Aug. 31, 2013
Environmental Matters [Member]
Loss Contingencies [Line Items]
Minimum disclosure on environmental matters	$ 100,000
Reserve for litigation settlements	17,000,000
DEA Settlement [Member]
Loss Contingencies [Line Items]
Reserve for litigation settlements	$ 80,000,000

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Stock Compensation Plans (Tables)

12 Months Ended

Aug. 31, 2013

Stock Compensation Plans [Abstract]

Stock Option Plans

A summary of the Company's stock options outstanding under the Omnibus Plan and Former Plans follows:

Options	Shares			Weighted-Average Exercise Price		Weighted-Average Remaining Contractual Term (Years)		Aggregate Intrinsic Value (in millions)
Outstanding at August 31, 2012		50,035,969		$	34.18		5.60	$	175
Granted		8,629,392			35.86
Exercised		(14,281,816	)		33.07
Expired/Forfeited		(3,167,372	)		37.13
Outstanding at August 31, 2013		41,216,173		$	34.69		6.14	$	548
Unvested at August 31, 2013		21,174,374		$	33.32		8.01	$	312
Exercisable at August 31, 2013		19,288,591		$	36.40		4.04	$	228

Restricted Stock Awards and Stock Unit Plan

A summary of information relative to the Company's restricted stock units follows:

Outstanding Shares	Shares			Weighted-Average Grant-Date Fair Value
Outstanding at August 31, 2012		1,810,551		$	34.04
Granted		2,600,429			44.07
Dividends		88,921			-
Forfeited		(228,406	)		37.90
Vested		(773,657	)		28.68
Outstanding at August 31, 2013		3,497,838		$	41.57

Assumptions Used to Determined Fair Value of Each Option Grant Using the Black-Scholes Option Pricing Model

The fair value of each option grant was determined using the Black-Scholes option pricing model with the following weighted-average assumptions used in fiscal 2013, 2012 and 2011:

	2013			2012			2011
Risk-free interest rate (1)		1.15	%		1.73	%		2.12	%
Average life of option (years) (2)		7.0			7.9			7.2
Volatility (3)		24.94	%		27.02	%		28.08	%
Dividend yield (4)		2.44	%		2.90	%		1.94	%
Weighted-average grant-date fair value	$	6.75		$	8.08		$	8.12

Summary information relative to the Performance Share Plan

A summary of information relative to the Company's performance shares follows:

Outstanding Shares	Shares			Weighted-Average Grant-Date Fair Value
Outstanding at August 31, 2012		1,980,027		$	32.57
Granted		998,020			35.66
Forfeited		(170,415	)		34.64
Vested		(590,022	)		35.63
Outstanding at August 31, 2013		2,217,610		$	32.99

Stock-based Compensation Expense by Plan

A summary of total stock-based compensation expense follows (in millions):

	2013		2012		2011
Stock options	$	51	$	62	$	85
Restricted stock units		33		24		20
Performance shares		15		7		25
Share Walgreens		5		6		5
	$	104	$	99	$	135

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Commitments and Contingencies

12 Months Ended

Aug. 31, 2013

Commitments and Contingencies [Abstract]

Commitments and Contingencies

(12) Commitments and Contingencies

The Company is involved in legal proceedings and is subject to investigations, inspections, audits, inquiries and similar actions by governmental authorities, arising in the normal course of the Company's business, including the matters described below.  Litigation, in general, and securities and class action litigation, in particular, can be expensive and disruptive.  Some of these suits may purport or may be determined to be class actions and/or involve parties seeking large and/or indeterminate amounts, including punitive or exemplary damages, and may remain unresolved for several years.  From time to time, the Company is also involved in legal proceedings as a plaintiff involving antitrust, tax, contract, intellectual property and other matters.  Gain contingencies, if any, are recognized when they are realized.  The results of legal proceedings are often uncertain and difficult to predict, and the costs incurred in litigation can be substantial, regardless of the outcome.  The Company believes that its defenses and assertions in pending legal proceedings have merit, and does not believe that any of these pending matters, after consideration of applicable reserves and rights to indemnification, will have a material adverse effect on the Company's consolidated financial position.  However, substantial unanticipated verdicts, fines and rulings do sometimes occur.  As a result, the Company could from time to time incur judgments, enter into settlements or revise expectations regarding the outcome of certain matters, and such developments could have a material adverse effect on its results of operations in the period in which the amounts are accrued and/or its cash flows in the period in which the amounts are paid.   

On a quarterly basis, the Company assesses its liabilities and contingencies for outstanding legal proceedings and reserves are established on a case-by-case basis for those legal claims for which management concludes that it is probable that a loss will be incurred and that the amount of such loss can be reasonably estimated. Substantially all of these contingencies are subject to significant uncertainties and, therefore, determining the likelihood of a loss and/or the measurement of any loss can be complex.  With respect to litigation and other legal proceedings where the Company has determined that a loss is reasonably possible, the Company is unable to estimate the amount or range of reasonably possible loss in excess of amounts reserved due to the inherent difficulty of predicting the outcome of and uncertainties regarding such litigation and legal proceedings.  The Company's assessments are based on estimates and assumptions that have been deemed reasonable by management, but that may prove to be incomplete or inaccurate, and unanticipated events and circumstances may occur that might cause the Company to change those estimates and assumptions.  Therefore, it is possible that an unfavorable resolution of one or more pending litigation or other contingencies could have a material adverse effect on the Company's consolidated financial statements in a future fiscal period.  Management's assessment of current litigation and other legal proceedings, including the corresponding accruals, could change because of the discovery of facts with respect to legal actions or other proceedings pending against the Company which are not presently known. Adverse rulings or determinations by judges, juries, governmental authorities or other parties could also result in changes to management's assessment of current liabilities and contingencies.  Accordingly, the ultimate costs of resolving these claims may be substantially higher or lower than the amounts reserved.

On April 4, 2012,  the United States Drug Enforcement Administration (DEA) served administrative inspection warrants on six Walgreen retail pharmacies in Florida and removed certain controlled substance prescription records and other related documents.  DEA also served an inspection warrant and an administrative subpoena for records on the Walgreens distribution center in Jupiter, Florida.  DEA issued a separate administrative subpoena for records from the Walgreens facility in Orlando, Florida, on August 8, 2012.  On September 14, 2012, DEA served an Order to Show Cause and Immediate Suspension Order (ISO) on the Jupiter distribution center and placed under seal the controlled substance inventory at that facility.  Walgreens timely requested a hearing to demonstrate why DEA should not permanently revoke the controlled substance registration from the Jupiter distribution center.  On October 10, 2012, Walgreens filed a petition in the U.S. Court of Appeals for the District of Columbia challenging DEA's authority to issue the ISO.

On June 11, 2013, the Company entered into a Settlement and Memorandum of Agreement with the United States Department of Justice and the DEA that settles and resolves all administrative and civil matters arising out of DEA's concerns relating to the Company's distribution and dispensing of controlled substances.  Under the terms of the agreement, the Company paid an $80 million settlement amount, surrendered its DEA registrations for the six pharmacies in Florida until May 26, 2014, and for its Jupiter distribution center until Sept. 13, 2014, and agreed to implement certain remedial actions.  In addition, the Company dismissed with prejudice its petition with the United States Court of Appeals for the District of Columbia Circuit.

On July 31, 2013 and August 13, 2013, putative shareholders filed derivative actions in federal court in the Northern District of Illinois against the Walgreens Board of Directors arising out of the Company's recent settlement with the United States Drug Enforcement Administration described above.  The actions assert claims for breach of fiduciary duty on the grounds that the directors allegedly should have prevented the events that led to the settlement.  The plaintiffs filed an amended consolidated complaint on October 4, 2013, pursuant to which they seek damages and other relief on behalf of the Company.  In accordance with the schedule set by the court, the defendants' motion to dismiss is due on December 3, 2013.

SEC regulations require disclosure of certain environmental matters when a governmental authority is a party to the proceedings and the proceedings involve potential monetary sanctions that management reasonably believes could exceed $100,000.  On July 2, 2012, a number of California District Attorneys served the Company with a civil complaint filed in the Alameda County Superior Court alleging certain violations of the state's hazardous waste regulations related to the proper disposal of various materials from the Company's retail stores and seeking injunctive relief, civil penalties and certain fees and expenses. The California District Attorneys filed an amended complaint on July 12, 2012, and a motion for preliminary injunction on August 6, 2012.  On December 13, 2012, the Alameda County Superior Court approved a settlement between the Company and the State of California.  The settlement requires the Company to pay penalties and costs and fund supplemental environmental projects in the total amount of approximately $17 million, which was paid during fiscal 2013 and includes certain injunctive relief.

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Income Taxes

12 Months Ended

Aug. 31, 2013

Income Taxes [Abstract]

Income Taxes

(8)Income Taxes

The components of Earnings Before Income Tax Provision were (in millions):

	2013
U.S.	$	3,477
Non-U.S.		418
Total	$	3,895

The non-U.S. amount reported above includes equity earnings in Alliance Boots of $344 million.  Prior to 2013, the non-U.S. component of the Earnings Before Income Tax provision was not material.

The provision for income taxes consists of the following (in millions):

	2013			2012			2011
Current provision -
Federal	$	1,122		$	890		$	1,301
State		134			120			147
Non-U.S.		15			-			-
		1,271			1,010			1,448
Deferred provision -
Federal		174			251			113
State		(2	)		(12	)		19
Non-U.S.		2			-			-
		174			239			132
Income tax provision	$	1,445		$	1,249		$	1,580

The difference between the statutory federal income tax rate and the effective tax rate is as follows:

	2013			2012			2011
Federal statutory rate		35.0	%		35.0	%		35.0	%
State income taxes, net of federal benefit		2.2			2.1			2.6
Other		(0.1	)		(0.1	)		(0.8	)
Effective income tax rate		37.1	%		37.0	%		36.8	%

The deferred tax assets and liabilities included in the Consolidated Balance Sheets consist of the following (in millions):

	2013		2012
Deferred tax assets -
Postretirement benefits	$	218	$	217
Compensation and benefits		136		182
Insurance		121		157
Accrued rent		157		142
Tax benefits		159		214
Stock compensation		159		189
Inventory		95		96
Other		96		92
Subtotal		1,141		1,289
Less: Valuation allowance		19		19
Total deferred tax assets		1,122		1,270
Deferred tax liabilities -
Accelerated depreciation		1,369		1,332
Inventory		491		534
Intangible assets		53		28
Equity method investment		21		-
Other		4		80
Subtotal		1,938		1,974
Net deferred tax liabilities	$	816	$	704

At August 31, 2013, the Company has recorded deferred tax assets of $119 million reflecting the benefit of $212 million in federal and $1.1 billion in state loss carryforwards.  These deferred tax assets will expire at various dates from 2014 through 2032.

The Company believes it is more likely than not that the benefit from certain net operating loss carryforwards will not be realized.  In recognition of this risk, the Company has recorded a valuation allowance of $19 million on certain deferred tax assets relating to these net operating losses as of August 31, 2013.

Income taxes paid were $1.2 billion for fiscal years 2013 and 2012 and $1.3 billion in fiscal 2011.

ASC Topic 740, Income Taxes, provides guidance regarding the recognition, measurement, presentation and disclosure in the financial statements of tax positions taken or expected to be taken on a tax return, including the decision whether to file in a particular jurisdiction.  As of August 31, 2013, approximately $32 million of  unrecognized tax benefits were reported as current income tax liabilities, with the balance classified as long-term liabilities on the Consolidated Balance Sheets.  The Company's unrecognized tax benefits at August 31, 2012, were all classified as long-term liabilities on the Consolidated Balance Sheets.

The following table provides a reconciliation of the total amounts of unrecognized tax benefits (in millions):

	2013			2012			2011
Balance at beginning of year	$	197		$	94		$	93
Gross increases related to tax positions in a prior period		18			100			25
Gross decreases related to tax positions in a prior period		(32	)		(49	)		(68	)
Gross increases related to tax positions in the current period		30			53			54
Settlements with taxing authorities		(2	)		(1	)		(8	)
Lapse of statute of limitations		(3	)		-			(2	)
Balance at end of year	$	208		$	197		$	94

At August 31, 2013, 2012 and 2011, $116 million, $118 million and $81 million, respectively, of unrecognized tax benefits would favorably impact the effective tax rate if recognized. 

The Company recognizes interest and penalties in the income tax provision in its Consolidated Statements of Comprehensive Income.  At August 31, 2013, and August 31, 2012, the Company had accrued interest and penalties of $28 million and $23 million, respectively.  For the year ended August 31, 2013, the amount reported in income tax expense related to interest and penalties was $5 million.

The Company files a consolidated U.S. federal income tax return, as well as income tax returns in various states.  It is no longer under audit examination for U.S. federal income tax purposes for any years prior to fiscal 2010.  With few exceptions, it is no longer subject to state and local income tax examinations by tax authorities for years before fiscal 2006.

It is reasonably possible that the amount of the unrecognized tax benefit with respect to certain unrecognized tax positions will decrease during the next 12 months by up to approximately $32 million.  The decrease is expected to occur as a result of settlements with the US federal tax authorities for fiscal years 2008 through 2011 and lapses in the statute of limitations.  The change will not have a material effect on the Company's results of operations or financial position.

During the year, the Company received tax holidays from Swiss cantonal income taxes relative to its Swiss operations.  The income tax holidays are expected to extend through September 2022.  The holidays had an immaterial impact in the current fiscal year.

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Retirement Benefits

12 Months Ended

Aug. 31, 2013

Retirement Benefits [Abstract]

Retirement Benefits

(15)Retirement Benefits

The principal retirement plan for employees is the Walgreen Profit-Sharing Retirement Trust, to which both the Company and participating employees contribute.  The Company's contribution, which has historically related to FIFO earnings before interest and taxes and a portion of which is in the form of a guaranteed match, is determined annually at the discretion of the Board of Directors.  The profit-sharing provision was $342 million in fiscal 2013, $283 million in fiscal 2012 and $382 million in fiscal 2011.  The Company's contributions were $262 million in fiscal 2013, $372 million in fiscal 2012 and $322 million in fiscal 2011.

The Company provides certain health insurance benefits for retired employees who meet eligibility requirements, including age, years of service and date of hire.  The costs of these benefits are accrued over the service life of the employee. In fiscal 2012, the Company amended its prescription drug program for certain Medicare-eligible retirees to a group-based Company-sponsored Medicare Part D program, or  employer group waiver program, effective January 1, 2013.  The Company's postretirement health benefit plan is not funded.

Components of net periodic benefit costs (in millions):

	2013			2012			2011
Service cost	$	9		$	13		$	15
Interest cost		14			22			22
Amortization of actuarial loss		12			8			14
Amortization of prior service cost		(22	)		(10	)		(10	)
Total postretirement benefit cost	$	13		$	33		$	41

Change in benefit obligation (in millions):

	2013			2012
Benefit obligation at September 1	$	342		$	407
Service cost		9			13
Interest cost		14			22
Amendments		-			(139	)
Actuarial (gain) loss		(1	)		52
Benefit payments		(20	)		(18	)
Participants' contributions		6			5
Benefit obligation at August 31	$	350		$	342

Change in plan assets (in millions):

	2013			2012
Plan assets at fair value at September 1	$	-		$	-
Participants' contributions		6			5
Employer contributions		14			13
Benefits paid		(20	)		(18	)
Plan assets at fair value at August 31	$	-		$	-

Funded status (in millions):

	2013			2012
Funded status	$	(350	)	$	(342	)
Unrecognized actuarial gain		-			-
Unrecognized prior service cost		-			-
Accrued benefit cost at August 31	$	(350	)	$	(342	)

Amounts recognized in the Consolidated Balance Sheets (in millions):

	2013			2012
Current liabilities (present value of expected 2014 net benefit payments)	$	(10	)	$	(10	)
Non-current liabilities		(340	)		(332	)
Net liability recognized at August 31	$	(350	)	$	(342	)

Amounts recognized in accumulated other comprehensive (income) loss (in millions):

	2013			2012
Prior service credit	$	(228	)	$	(250	)
Net actuarial loss		148			161

Amounts expected to be recognized as components of net periodic costs for fiscal year 2014 (in millions):

	2014
Prior service credit	$	(22	)
Net actuarial loss		11

The measurement date used to determine postretirement benefits is August 31.

The discount rate assumption used to compute the postretirement benefit obligation at year-end was 5.20% for 2013 and 4.15% for 2012.  The discount rate assumption used to determine net periodic benefit cost was 4.15%, 5.40% and 4.95% for fiscal years ending 2013, 2012 and 2011, respectively.  The consumer price index assumption used to compute the postretirement benefit obligation was 2.00% for 2013 and 2012.

Future benefit costs were estimated assuming medical costs would increase at a 7.00% annual rate, gradually decreasing to 5.25% over the next nine years and then remaining at a 5.25% annual growth rate thereafter.  A one percentage point change in the assumed medical cost trend rate would have the following effects (in millions):

	1% Increase			1% Decrease
Effect on service and interest cost	$	(1	)	$	1
Effect on postretirement obligation		(1	)		5

Estimated future federal subsidies are immaterial for all periods presented.  Future benefit payments are as follows (in millions):

	Estimated Future Benefit Payments
2014	$	10
2015		12
2016		13
2017		15
2018		17
2019-2023		111

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Capital Stock

12 Months Ended

Aug. 31, 2013

Capital Stock [Abstract]

Capital Stock

 (13) Capital Stock

The Company's long-term capital policy is to maintain a strong balance sheet and financial flexibility; reinvest in its core strategies; invest in strategic opportunities that reinforce its core strategies and meet return requirements; and return surplus cash flow to shareholders in the form of dividends and share repurchases over the long term.  In connection with the Company's capital policy, the Board of Directors authorized a share repurchase program (2009 repurchase program) and set a long-term dividend payout ratio target between 30 and 35 percent of net income.  The 2009 repurchase program, which was completed in September 2010, allowed for the repurchase of up to $2.0 billion of the Company's common stock.  On October 13, 2010, the Board of Directors authorized the 2011 repurchase program, which was completed in July 2011, which allowed for the repurchase of up to $1.0 billion of the Company's common stock.  On July 13, 2011, the Board of Directors authorized the 2012 repurchase program, which allows for the repurchase of up to $2.0 billion of the Company's common stock prior to its expiration on December 31, 2015.  Activity related to these programs was as follows (in millions):

	Fiscal Year Ended
	2013		2012		2011
2009 stock repurchase program	$	-	$	-	$	360
2011 stock repurchase program		-		-		1,000
2012 stock repurchase program		-		1,151		424
	$	-	$	1,151	$	1,784

The Company determines the timing and amount of repurchases from time to time based on its assessment of various factors including prevailing market conditions, alternate uses of capital, liquidity, the economic environment and other factors.  The Company anticipates that the pace of any future share repurchase activity will continue to be significantly curtailed from the levels achieved in fiscal 2012 and 2011 due to the debt levels incurred for the investment in Alliance Boots.  The timing and amount of these purchases may change at any time and from time to time.  The Company has and may from time to time in the future repurchase shares on the open market through Rule 10b5-1 plans, which enable a company to repurchase shares at times when it otherwise might be precluded from doing so under insider trading laws.

In addition, the Company continued to repurchase shares to support the needs of the employee stock plans.  Shares totaling $615 million were purchased to support the needs of the employee stock plans during fiscal 2013 as compared to $40 million in fiscal 2012.  At August 31, 2013, 56.5 million shares of common stock were reserved for future issuances under the Company's various employee benefit plans.

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Document and Entity Information (USD $) In Billions, except Share data, unless otherwise specified	12 Months Ended
	Aug. 31, 2013	Feb. 28, 2013
Document and Entity Information [Abstract]
Entity Registrant Name	Walgreen Co
Entity Central Index Key	0000104207
Current Fiscal Year End Date	--08-31
Entity Well-known Seasoned Issuer	Yes
Entity Voluntary Filers	No
Entity Current Reporting Status	Yes
Entity Filer Category	Large Accelerated Filer
Entity Public Float		$ 35.8
Entity Common Stock, Shares Outstanding	946,595,578
Document Fiscal Year Focus	2013
Document Fiscal Period Focus	FY
Document Type	10-K
Amendment Flag	false
Document Period End Date	Aug. 31, 2013

XML

Stock Compensation Plans

12 Months Ended

Aug. 31, 2013

Stock Compensation Plans [Abstract]

Stock Compensation Plans

(14) Stock Compensation Plans

On January 9, 2013, the 2013 Walgreen Co. Omnibus Incentive Plan (the "Omnibus Plan") became effective and the Company first made award grants under the Omnibus Plan in fiscal 2013. The Omnibus Plan provides for incentive compensation to Walgreens non-employee directors, officers and employees, and consolidates into a single plan several previously existing equity compensation plans: the Executive Stock Option Plan, the Long-Term Performance Incentive Plan, the Broad Based Employee Stock Option Plan, and the Nonemployee Director Stock Plan (collectively, the "Former Plans"). As of the effective date of the Omnibus Plan, no further grants may be made under the Former Plans and shares that were available for issuance under the Former Plans and not subject to outstanding awards became available for issuance (in addition to newly authorized shares) under the Omnibus Plan.

Upon shareholder approval of the Omnibus Plan at the Company's Annual Meeting of Shareholders on January 9, 2013, a total of 60.4 million shares became available for delivery under the Omnibus Plan including: (i) 40.0 million newly authorized shares; (ii) 9.3 million shares previously available for issuance under the former Executive Stock Option Plan; (iii) 3.2 million shares previously available for issuance under the former Long-Term Performance Incentive Plan, and (iv) 7.9 million shares previously available for issuance under the former Broad Based Employee Stock Option Plan. In addition, in accordance with the Omnibus Plan, shares that are subject to outstanding awards under the Former Plans and the Share Walgreens Stock Purchase Plan (Share Walgreens) that subsequently are cancelled, forfeited, lapsed or are otherwise terminated or settled without a distribution of shares also become available for awards under the Omnibus Plan.

A summary of the stock options authorized and available for future grants under the Omnibus Plan and Former Plans follows:

Authorized shares at August 31, 2012	-
Shares available for grants at August 31, 2012	-
Newly authorized options	40,000,000
Shares transferred from Former Plans	20,426,181
Granted	(5,642,763	)
Cancellation and forfeitures	104,087
Plan termination	1,566,994
Available for future grants at August 31, 2013	56,454,499

A summary of the Company's stock options outstanding under the Omnibus Plan and Former Plans follows:

Options	Shares			Weighted-Average Exercise Price		Weighted-Average Remaining Contractual Term (Years)		Aggregate Intrinsic Value (in millions)
Outstanding at August 31, 2012		50,035,969		$	34.18		5.60	$	175
Granted		8,629,392			35.86
Exercised		(14,281,816	)		33.07
Expired/Forfeited		(3,167,372	)		37.13
Outstanding at August 31, 2013		41,216,173		$	34.69		6.14	$	548
Unvested at August 31, 2013		21,174,374		$	33.32		8.01	$	312
Exercisable at August 31, 2013		19,288,591		$	36.40		4.04	$	228

The fair value of each option grant was determined using the Black-Scholes option pricing model with the following weighted-average assumptions used in fiscal 2013, 2012 and 2011:

	2013			2012			2011
Risk-free interest rate (1)		1.15	%		1.73	%		2.12	%
Average life of option (years) (2)		7.0			7.9			7.2
Volatility (3)		24.94	%		27.02	%		28.08	%
Dividend yield (4)		2.44	%		2.90	%		1.94	%
Weighted-average grant-date fair value	$	6.75		$	8.08		$	8.12

(1)	Represents the U.S. Treasury security rates for the expected term of the option.
(2)	Represents the period of time that options granted are expected to be outstanding.  The Company analyzed separate groups of employees with similar exercise behavior to determine the expected term.
(3)	Volatility was based on historical and implied volatility of the Company's common stock.
(4)	Represents the Company's cash dividend for the expected term.

The intrinsic value for options exercised in fiscal 2013, 2012 and 2011 was $159 million, $22 million and $33 million, respectively.  The total fair value of options vested in fiscal 2013, 2012 and 2011 was $51 million, $125 million and $58 million, respectively.

Cash received from the exercise of options in fiscal 2013 was $471 million compared to $89 million in the prior year.  The related tax benefit realized was $60 million in fiscal 2013 compared to $8 million in the prior year.

The Walgreen Co. 1982 Employees Stock Purchase Plan permits eligible employees to purchase common stock at 90% of the fair market value at the date of purchase.  Employees may make purchases by cash, loans or payroll deductions up to certain limits.  The aggregate number of shares that may be purchased under this Plan is 94 million.  At August 31, 2013, 14.4 million shares were available for future purchase.

Restricted Performance Shares issued under the Omnibus and Former Plans offer performance-based incentive awards and equity-based awards to key employees.  Restricted Stock Units are also equity-based awards with performance requirements that are granted to middle managers and key employees.  The Restricted Performance Shares and Restricted Stock Unit awards are both subject to restrictions as to continuous employment except in the case of death, normal retirement or total and permanent disability.  In accordance with ASC Topic 718, Compensation – Stock Compensation, compensation expense is recognized on a straight-line basis over the employee's vesting period or to the employee's retirement eligible date, if earlier.

A summary of information relative to the Company's restricted stock units follows:

Outstanding Shares	Shares			Weighted-Average Grant-Date Fair Value
Outstanding at August 31, 2012		1,810,551		$	34.04
Granted		2,600,429			44.07
Dividends		88,921			-
Forfeited		(228,406	)		37.90
Vested		(773,657	)		28.68
Outstanding at August 31, 2013		3,497,838		$	41.57

A summary of information relative to the Company's performance shares follows:

Outstanding Shares	Shares			Weighted-Average Grant-Date Fair Value
Outstanding at August 31, 2012		1,980,027		$	32.57
Granted		998,020			35.66
Forfeited		(170,415	)		34.64
Vested		(590,022	)		35.63
Outstanding at August 31, 2013		2,217,610		$	32.99

The Company also issues shares to nonemployee directors.  Each director receives an equity grant of shares every year on November 1.  The number of shares granted is determined by dividing $170,000 by the price of a share of common stock on November 1. Each nonemployee director may elect to receive this annual share grant in the form of shares or deferred stock units.  In fiscal 2013, each nonemployee director received a grant of 4,789 shares compared to 4,788 shares and 4,552 shares in fiscal 2012 and 2011, respectively.  New directors in any of the fiscal years earned a prorated amount.  Payment of the annual retainer is paid in the form of cash, which may be deferred.

A summary of total stock-based compensation expense follows (in millions):

	2013		2012		2011
Stock options	$	51	$	62	$	85
Restricted stock units		33		24		20
Performance shares		15		7		25
Share Walgreens		5		6		5
	$	104	$	99	$	135