21. Supplemental Guarantor Condensed Consolidating Financial Information

The notes listed below are unsecured, unsubordinated debt obligations of WBA ("Parent Company") and rank equally in right of payment with all other unsecured and unsubordinated indebtedness of WBA from time to time outstanding. The notes are fully and unconditionally guaranteed on an unsecured and unsubordinated basis by Walgreens, a 100% owned subsidiary ("Guarantor Subsidiary"). Additionally, on December 31, 2014, WBA fully and unconditionally guaranteed the outstanding notes issued by Walgreens on an unsecured and unsubordinated basis. The guarantee, for so long as it is in place, is an unsecured, unsubordinated debt obligation of WBA and will rank equally in right of payment with all other unsecured and unsubordinated indebtedness of WBA.

The Walgreens guarantee, for so long as it is in place, is an unsecured, unsubordinated debt obligation of Walgreens and will rank equally in right of payment with all other unsecured and unsubordinated indebtedness of Walgreens from time to time outstanding. The purpose of the guarantee is to protect the notes against structural subordination to certain indebtedness of Walgreens. The Walgreens guarantee will automatically terminate, and the obligations of Walgreens under the Walgreens guarantee will be unconditionally released and discharged, if and when (i) the aggregate outstanding principal amount of Capital Markets Indebtedness (as defined), including the Existing Notes (as defined), and Commercial Bank Indebtedness (as defined), in each case, of Walgreens is less than $2.0 billion and (ii) Walgreens does not guarantee any Capital Markets Indebtedness (other than the notes or the Euro/Sterling Notes (as defined)) or Commercial Bank Indebtedness, in each case, of WBA. In addition, the Walgreens guarantee will automatically terminate, and the obligations of Walgreens under the Walgreens guarantee will be unconditionally released and discharged, with respect to any series of outstanding notes, upon (i) repayment of such series of outstanding notes in full, (ii) the satisfaction and discharge of the indenture with respect to such series of outstanding notes or (iii) the defeasance or covenant defeasance of such series of outstanding notes in accordance with the terms of the indenture. Once released in accordance with its terms, the Walgreens guarantee will not subsequently be required to be reinstated.

Notes Issued (in millions)		Maturity Date	Interest Rate
$	750	May 18, 2016	Variable; three-month U.S. dollar LIBOR, reset quarterly, plus 45 basis points
	750	November 17, 2017	Fixed 1.750%
	1,250	November 18, 2019	Fixed 2.700%
	1,250	November 18, 2021	Fixed 3.300%
	2,000	November 18, 2024	Fixed 3.800%
	500	November 18, 2034	Fixed 4.500%
	1,500	November 18, 2044	Fixed 4.800%
$	8,000

Notes Issued (in millions)		Maturity Date	Interest Rate
Euro Notes:
€	750	November 20, 2026	Fixed 2.125%

Pound Sterling Notes:
£	400	November 20, 2020	Fixed 2.875%
	300	November 20, 2025	Fixed 3.600%
£	700

The condensed consolidating financial information of the Guarantor Subsidiary is presented below.

This condensed consolidating financial information presents intercompany investments using the equity method. Under this method, investments are recorded at cost and adjusted for the ownership share of a subsidiary's cumulative results of operations, capital contributions and distributions, and other equity changes. There are no significant restrictions on the ability of the Guarantor Subsidiary to make distributions to the Company. The condensed consolidating financial information of the Guarantor Subsidiary should be read in connection with the Company's consolidated financial statements and related notes of which this note is an integral part.

STATEMENT OF EARNINGS

(UNAUDITED)

(In millions)

	Three Months Ended February 28, 2015
	Guarantor/ Issuer Subsidiary			Non-guarantor Subsidiaries		Parent Company			Consolidating Adjustments			Consolidated

Net sales	$	14,379		$	12,545	$	-		$	(351	)	$	26,573

Cost of sales		9,949			10,033		-			(291	)		19,691
Gross Profit		4,430			2,512		-			(60	)		6,882

Selling, general and administrative expenses		4,596			1,117		(47	)		(60	)		5,606
Equity earnings in Alliance Boots		-			101		-			-			101
Operating Income (loss)		(166	)		1,496		47			-			1,377

Gain on previously held equity interest		-			706		-			-			706
Other income (expense)		(69	)		575		(2	)		-			504
Earnings (loss) before Interest and Tax Provision		(235	)		2,777		45			-			2,587

Interest expense, net		106			6		32			-			144
Earnings (loss) Before Income Tax Provision		(341	)		2,771		13			-			2,443
Income tax provision		(171	)		557		5			-			391
Post tax earnings from equity method investments		-			8		-			-			8
Equity in income of subsidiaries		2,222			-		2,052			(4,274	)		-
Net Earnings (loss)		2,052			2,222		2,060			(4,274	)		2,060
Net earnings attributable to noncontrolling interests		-			18		-			-			18
Net Earnings (loss) Attributable to Walgreens Boots Alliance, Inc.	$	2,052		$	2,204	$	2,060		$	(4,274	)	$	2,042

STATEMENT OF EARNINGS

(UNAUDITED)

(In millions)

	Three Months Ended February 28, 2014
	Guarantor/ Issuer Subsidiary		Non-guarantor Subsidiaries			Parent Company		Consolidating Adjustments			Consolidated

Net sales	$	13,364	$	6,363		$	-	$	(122	)	$	19,605

Cost of sales		9,027		4,985			-		(57	)		13,955
Gross Profit		4,337		1,378			-		(65	)		5,650

Selling, general and administrative expenses		4,095		539			-		(65	)		4,569
Equity earnings in Alliance Boots		-		136			-		-			136
Operating Income		242		975			-		-			1,217

Gain on previously held equity interest		-		-			-		-			-
Other income (expense)		-		(59	)		-		-			(59	)
Earnings Before Interest and Tax Provision		242		916			-		-			1,158

Interest expense, net		45		(8	)		-		-			37
Earnings Before Income Tax Provision		197		924			-		-			1,121
Income tax provision		69		322			-		-			391
Equity in income of subsidiaries		602		-			-		(602	)		-
Net Earnings (loss)		730		602			-		(602	)		730
Net earnings attributable to noncontrolling interests		-		14			-		-			14
Net Earnings (loss) Attributable to Walgreens Boots Alliance, Inc.	$	730	$	588		$	-	$	(602	)	$	716

STATEMENT OF EARNINGS

(UNAUDITED)

(In millions)

	Six Months Ended February 28, 2015
	Guarantor/ Issuer Subsidiary			Non-guarantor Subsidiaries		Parent Company			Consolidating Adjustments			Consolidated

Net sales	$	27,702		$	19,168	$	-		$	(743	)	$	46,127

Cost of sales		19,160			15,416		-			(627	)		33,949
Gross Profit		8,542			3,752		-			(116	)		12,178

Selling, general and administrative expenses		8,608			1,617		(47	)		(116	)		10,062
Equity earnings in Alliance Boots		-			315		-			-			315
Operating Income (loss)		(66	)		2,450		47			-			2,431

Gain on previously held equity interest		-			706		-			-			706
Other income (expense)		(166	)		871		(2	)		-			703
Earnings (loss) Before Interest and Tax Provision		(232	)		4,027		45			-			3,840

Interest expense, net		153			-		46			-			199
Earnings (loss) Before Income Tax Provision		(385	)		4,027		(1	)		-			3,641
Income tax provision		(190	)		902		-			-			712
Post tax earnings from equity method investments		-			8		-			-			8
Equity in income of subsidiaries		3,133			-		2,938			(6,071	)		-
Net Earnings (loss)		2,938			3,133		2,937			(6,071	)		2,937
Net earnings attributable to noncontrolling interests		-			45		-			-			45
Net Earnings (loss) Attributable to Walgreens Boots Alliance, Inc.	$	2,938		$	3,088	$	2,937		$	(6,071	)	$	2,892

STATEMENT OF EARNINGS

(UNAUDITED)

(In millions)

	Six Months Ended February 28, 2014
	Guarantor/ Issuer Subsidiary		Non-guarantor Subsidiaries			Parent Company		Consolidating Adjustments			Consolidated

Net sales	$	25,872	$	12,278		$	-	$	(216	)	$	37,934

Cost of sales		17,599		9,632			-		(99	)		27,132
Gross Profit		8,273		2,646			-		(117	)		10,802

Selling, general and administrative expenses		7,753		1,312			-		(117	)		8,948
Equity earnings in Alliance Boots		-		330			-		-			330
Operating Income (loss)		520		1,664			-		-			2,184

Gain on previously held equity interest		-		-			-		-			-
Other income (expense)		-		166			-		-			166
Earnings Before Interest and Tax Provision		520		1,830			-		-			2,350

Interest expense, net		90		(12	)		-		-			78
Earnings Before Income Tax Provision		430		1,842			-		-			2,272
Income tax provision		163		647			-		-			810
Equity in income of subsidiaries		1,195		-			-		(1,195	)		-
Net Earnings (loss)		1,462		1,195			-		(1,195	)		1,462
Net earnings attributable to noncontrolling interests		-		23			-		-			23
Net Earnings (loss) Attributable to Walgreens Boots Alliance, Inc.	$	1,462	$	1,172		$	-	$	(1,195	)	$	1,439

STATEMENT OF COMPREHENSIVE INCOME

(UNAUDITED)

(In millions)

	Three Months Ended February 28, 2015
	Guarantor/ Issuer Subsidiary			Non-guarantor Subsidiaries			Parent Company			Consolidating Adjustments			Consolidated
Comprehensive Income

Net Earnings (loss)	$	2,052		$	2,222		$	2,060		$	(4,274	)	$	2,060

Other comprehensive income (loss), net of tax:
Postretirement liability		(1	)		(7	)		-			-			(8	)
Unrealized gain (loss) on cash flow hedges		-			(1	)		1			-			-
Changes in unrecognized gain (loss) on available-for-sale investments		-			90			-			-			90
Share of other comprehensive income (loss) of Alliance Boots		-			92			-			-			92
Currency translation adjustments		-			(301	)		-			-			(301	)
Other Comprehensive Income (loss) of subsidiaries		(127	)		-			(128	)		255			-
Total Other Comprehensive Income (loss)		(128	)		(127	)		(127	)		255			(127	)
Total Comprehensive Income (loss)		1,924			2,095			1,933			(4,019	)		1,933

Comprehensive income attributable to noncontrolling interests		-			13			-			-			13
Comprehensive income attributable to Walgreens Boots Alliance, Inc.	$	1,924		$	2,082		$	1,933		$	(4,019	)	$	1,920

STATEMENT OF COMPREHENSIVE INCOME

(UNAUDITED)

(In millions)

	Six Months Ended February 28, 2015
	Guarantor/ Issuer Subsidiary			Non-guarantor Subsidiaries			Parent Company			Consolidating Adjustments			Consolidated
Comprehensive Income

Net Earnings (loss)	$	2,938		$	3,133		$	2,937		$	(6,071	)	$	2,937

Other comprehensive income (loss), net of tax:
Postretirement liability		(2	)		(7	)		-			-			(9	)
Unrealized gain (loss) on cash flow hedges		27			(1	)		(38	)		-			(12	)
Changes in unrecognized gain (loss) on available-for-sale investments		-			189			-			-			189
Share of other comprehensive income (loss) of Alliance Boots		-			113			-			-			113
Currency translation adjustments		-			(490	)		-			-			(490	)
Other Comprehensive Income (loss) of subsidiaries		(196	)		-			(171	)		367			-
Total Other Comprehensive Income (Loss)		(171	)		(196	)		(209	)		367			(209	)
Total Comprehensive Income (loss)		2,767			2,937			2,728			(5,704	)		2,728

Comprehensive income attributable to noncontrolling interests		-			40			-			-			40
Comprehensive income attributable to Walgreens Boots Alliance, Inc.	$	2,767		$	2,897		$	2,728		$	(5,704	)	$	2,688

STATEMENT OF COMPREHENSIVE INCOME

(UNAUDITED)

(In millions)

	Three Months Ended February 28, 2014
	Guarantor/ Issuer Subsidiary			Non-guarantor Subsidiaries			Parent Company		Consolidating Adjustments			Consolidated
Comprehensive Income

Net Earnings (loss)	$	730		$	602		$	-	$	(602	)	$	730

Other comprehensive income (loss), net of tax:
Postretirement liability		(2	)		-			-		-			(2	)
Unrealized gain (loss) on cash flow hedges		-			-			-		-			-
Changes in unrecognized gain (loss) on available-for-sale investments		-			(49	)		-		-			(49	)
Share of other comprehensive income (loss) of Alliance Boots		-			(19	)		-		-			(19	)
Currency translation adjustments		-			116			-		-			116
Other Comprehensive Income (loss) of subsidiaries		48			-			-		(48	)		-
Total Other Comprehensive Income (loss)		46			48			-		(48	)		46
Total Comprehensive Income (loss)		776			650			-		(650	)		776

Comprehensive income attributable to noncontrolling interests		-			14			-		-			14
Comprehensive income attributable to Walgreens Boots Alliance, Inc.	$	776		$	636		$	-	$	(650	)	$	762

STATEMENT OF COMPREHENSIVE INCOME

(UNAUDITED)

(In millions)

	Six Months Ended February 28, 2014
	Guarantor/ Issuer Subsidiary		Non-guarantor Subsidiaries			Parent Company		Consolidating Adjustments			Consolidated
Comprehensive Income

Net Earnings (loss)	$	1,462	$	1,195		$	-	$	(1,195	)	$	1,462

Other comprehensive income (loss), net of tax:
Postretirement liability		6		-			-		-			6
Unrealized gain (loss) on cash flow hedges		-		-			-		-			-
Changes in unrecognized gain (loss) on available-for-sale investments		-		35			-		-			35
Share of other comprehensive income (loss) of Alliance Boots		-		(56	)		-		-			(56	)
Currency translation adjustments		-		281			-		-			281
Other Comprehensive Income (loss) of subsidiaries		260		-			-		(260	)		-
Total Other Comprehensive Income (loss)		266		260			-		(260	)		266
Total Comprehensive Income (loss)		1,728		1,455			-		(1,455	)		1,728

Comprehensive income attributable to noncontrolling interests		-		23			-		-			23
Comprehensive income attributable to Walgreens Boots Alliance, Inc.	$	1,728	$	1,432		$	-	$	(1,455	)	$	1,705

CONSOLIDATED CONDENSED BALANCE SHEETS

(UNAUDITED)

(In millions)

	February 28, 2015
	Guarantor/ Issuer Subsidiary		Non-guarantor Subsidiaries		Parent Company		Consolidating Adjustments			Consolidated
Assets
Current Assets:
Cash and cash equivalents	$	1,840	$	1,165	$	-	$	-		$	3,005
Accounts receivable, net		2,027		4,990		-		-			7,017
Inventories		4,396		4,983		-		-			9,379
Current intercompany loan receivable		12,930		26,428		20,720		(60,078	)		-
Other current assets		533		1,005		11		(235	)		1,314
Total Current Assets		21,726		38,571		20,731		(60,313	)		20,715
Non-Current Assets:
Property, plant and equipment, at cost, less accumulated depreciation and amortization		6,500		9,146		-		-			15,646
Equity investment in Alliance Boots		-		-		-		-			-
Goodwill		8,382		8,662		-		-			17,044
Intangible assets		286		11,939		-		-			12,225
Other non-current assets		162		5,561		4		-			5,727
Non-current intercompany loan receivable		-		3,725		19,113		(22,838	)		-
Investment in subsidiaries		32,379		-		27,039		(59,418	)		-
Total Non-Current Assets		47,709		39,033		46,156		(82,256	)		50,642
Total Assets	$	69,435	$	77,604	$	66,887	$	(142,569	)	$	71,357

Liabilities & Equity
Current Liabilities:
Short-term borrowings	$	757	$	304	$	-	$	-		$	1,061
Trade accounts payable		4,355		5,938		-		-			10,293
Current intercompany loan payable		12,258		24,604		23,216		(60,078	)		-
Accrued expenses and other liabilities		2,508		2,153		479		-			5,140
Income taxes		-		225		206		(235	)		196
Total Current Liabilities		19,878		33,224		23,901		(60,313	)		16,690
Non-Current Liabilities:
Long-term debt		3,737		128		12,136		-			16,001
Deferred income taxes		283		3,406		-		-			3,689
Non-current intercompany loan payable		15,983		6,855		-		(22,838	)		-
Other non-current liabilities		2,515		1,400		36		-			3,951
Total Non-Current Liabilities		22,518		11,789		12,172		(22,838	)		23,641

Equity:
Total Walgreens Boots Alliance, Inc. Shareholders' Equity		27,039		32,379		30,814		(59,418	)		30,814
Noncontrolling interests		-		212		-		-			212
Total Equity		27,039		32,591		30,814		(59,418	)		31,026
Total Liabilities & Equity	$	69,435	$	77,604	$	66,887	$	(142,569	)	$	71,357

CONSOLIDATED CONDENSED BALANCE SHEETS

(UNAUDITED)

(In millions)

	August 31, 2014
	Guarantor/ Issuer Subsidiary		Non-guarantor Subsidiaries		Parent Company		Consolidating Adjustments			Consolidated
Assets
Current Assets:
Cash and cash equivalents	$	2,224	$	422	$	-	$	-		$	2,646
Accounts receivable, net		1,860		1,358		-		-			3,218
Inventories		4,301		1,755		-		-			6,076
Current intercompany loan receivable		6,755		8,277		-		(15,032	)		-
Other current assets		176		141		-		(15	)		302
Total Current Assets		15,316		11,973		-		(15,047	)		12,242
Non-Current Assets:
Property, plant and equipment, at cost, less accumulated depreciation and amortization		6,932		5,325		-		-			12,257
Equity investment in Alliance Boots		-		7,336		-		-			7,336
Goodwill		343		2,016		-		-			2,359
Intangible assets		417		763		-		-			1,180
Other non-current assets		252		1,644		-		-			1,896
Non-current intercompany loan receivable		-		3,560		-		(3,560	)		-
Investment in subsidiaries		23,250		-		-		(23,250	)		-
Total Non-Current Assets		31,194		20,644		-		(26,810	)		25,028
Total Assets	$	46,510	$	32,617	$	-	$	(41,857	)	$	37,270

Liabilities & Equity
Current Liabilities:
Short-term borrowings	$	766	$	8	$	-	$	-		$	774
Trade accounts payable		3,850		465		-		-			4,315
Current intercompany loan payable		8,277		6,755		-		(15,032	)		-
Accrued expenses and other liabilities		3,044		657		-		-			3,701
Income taxes		-		120		-		(15	)		105
Total Current Liabilities	$	15,937		8,005		-		(15,047	)		8,895
Non-Current Liabilities:
Long-term debt		3,726		10		-		-			3,736
Deferred income taxes		404		676		-		-			1,080
Non-current intercompany loan payable		3,560		-		-		(3,560	)		-
Other non-current liabilities		2,370		572		-		-			2,942
Total Non-Current Liabilities		10,060		1,258		-		(3,560	)		7,758

Equity:
Total Walgreens Boots Alliance, Inc. Shareholders' Equity		20,513		23,250		-		(23,250	)		20,513
Noncontrolling interests		-		104		-		-			104
Total Equity		20,513		23,354		-		(23,250	)		20,617
Total Liabilities & Equity	$	46,510	$	32,617	$	-	$	(41,857	)	$	37,270

CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS

(UNAUDITED)

(In millions)

	Six Months Ended February 28, 2015
	Guarantor/ Issuer Subsidiary			Non-guarantor Subsidiaries			Parent Company			Consolidating Adjustments		Consolidated
Cash Flows from Operating Activities	$	1,011		$	1,254		$	72		$	-	$	2,337
Cash Flows from Investing Activities:
Additions to property, plant and equipment		(302	)		(341	)		-			-		(643	)
Proceeds from sale of assets		121			458			-			-		579
Return of restricted cash		-			74			-			-		74
Alliance Boots acquisition, net of cash received		-			-			(4,461	)		-		(4,461	)
Other business and intangible asset acquisitions, net of cash received		(27	)		(65	)		-			-		(92	)
Purchases of short-term investments held to maturity		-			(29	)		-			-		(29	)
Proceeds from short-term investments held to maturity		-			29			-			-		29
Investment in AmerisourceBergen		-			-			-			-		-
Other		(165	)		-			-			-		(165	)
Net cash used for investing activities		(373	)		126			(4,461	)		-		(4,708	)
Cash Flows from Financing Activities:
Payments of short-term borrowings		-			(324	)		(6	)		-		(330	)
Proceeds from issuance of long-term debt		-			-			12,279			-		12,279
Payments of long-term debt		-			(7,817	)		-			-		(7,817	)
Stock purchases		(500	)		-			(94	)		-		(594	)
Proceeds related to employee stock plans		154			-			139			-		293
Cash dividends paid		(642	)		-			-			-		(642	)
Intra-company financing activities, net		(36)			7,817			(7,781	)		-		-
Other		2			(286	)		(76	)		-		(360	)
Net cash (used for) provided by financing activities		(1,022	)		(610	)		4,461			-		2,829

Effect of exchange rate changes on cash and cash equivalents		-			(27	)		(72	)		-		(99	)

Changes in Cash and Cash Equivalents:
Net (decrease) increase in cash and cash equivalents		(384	)		743			-			-		359
Cash and cash equivalents at beginning of period		2,224			422			-			-		2,646
Cash and cash equivalents at end of period	$	1,840		$	1,165		$	-		$	-	$	3,005

CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS

(UNAUDITED)

(In millions)

	Six Months Ended February 28, 2014
	Guarantor/ Issuer Subsidiary			Non-guarantor Subsidiaries			Parent Company		Consolidating Adjustments			Consolidated
Cash Flows from Operating Activities	$	471		$	766		$	-	$	-		$	1,237
Cash Flows from Investing Activities:
Additions to property, plant and equipment		(342	)		(301	)		-		52			(591	)
Proceeds from sale of assets		201			60			-		(52	)		209
Proceeds from sale of business								-					-
Business and intangible asset acquisitions, net of cash received		(254	)		(43	)		-		-			(297	)
Purchases of short-term investments held to maturity		-			(34	)		-		-			(34	)
Proceeds from short-term investments held to maturity		-			34			-		-			34
Investment in AmerisourceBergen		-			(430	)		-		-			(430	)
Other		-			(59	)		-		-			(59	)
Net cash used for investing activities		(395	)		(773	)		-		-			(1,168	)
Cash Flows from Financing Activities:
Stock purchases		(205	)		-			-		-			(205	)
Proceeds related to employee stock plans		416			-			-		-			416
Cash dividends paid		(597	)		-			-		-			(597	)
Other		(12	)		-			-		-			(12	)
Net cash (used for) provided by financing activities		(398	)		-			-		-			(398	)
Changes in Cash and Cash Equivalents:
Net (decrease) increase in cash and cash equivalents		(322	)		(7	)		-		-			(329	)
Cash and cash equivalents at beginning of period		1,771			335			-		-			2,106
Cash and cash equivalents at end of period	$	1,449		$	328		$	-	$	-		$	1,777