Note 5.

Related Party

Walgreen Co., on behalf of Walgreens Boots Alliance, Inc., entered into a series of forward starting interest rate swap transactions locking in the then current three-month LIBOR interest rate on $1.75 billion of anticipated debt issuance, with maturity tenures of 10 and 30 years. The swap transactions were designated as cash flow hedges where the changes in fair value were recorded in other comprehensive income. The cash flow hedges were terminated upon issuance of the hedged debt in November 2014, resulting in $63 million of unrecognized loss that was transferred from Walgreens to WBA and recorded within other comprehensive income. The loss is amortized through interest expense over the period of the related debt using the effective interest method. The related tax benefit is presented as an offset to “due to parent” on the Company’s Balance Sheet as the underlying tax asset was not transferred to WBA. Additionally, certain debt issuance costs incurred by WBA were paid by Walgreens.