4. Restructuring

On April 8, 2015, the Company’s Board of Directors approved a plan to implement a new restructuring program (the “Cost Transformation Program”) as part of an initiative to reduce costs and increase operating efficiencies. The Cost Transformation Program included plans to close approximately 200 stores across the U.S.; reorganize corporate and field operations; drive operating efficiencies; and streamline information technology and other functions. The actions under the Cost Transformation Program focus primarily on the Retail Pharmacy USA division, but includes activities from all segments and are expected to be substantially complete by the end of fiscal 2017. The Company estimates that it will recognize cumulative pre-tax charges to its GAAP financial results of between $1.6 billion and $1.8 billion, including costs associated with lease obligations and other real estate payments, asset impairments and employee termination and other business transition and exit costs. The Company expects to incur pre-tax charges of between $525 million and $600 million for real estate costs, including lease obligations (net of estimated sublease income), between $650 million and $725 million for asset impairment charges relating primarily to asset write-offs from store closures, information technology, inventory and other non-operational real estate asset write-offs, and between $425 million and $475 million for employee severance and other business transition and exit costs. The Company incurred pre-tax charges of $542 million ($223 million related to asset impairment charges, $202 million in real estate costs and $117 million in severance and other business transition and exit costs) related to the Cost Transformation Program in fiscal 2015. The majority of the charges incurred in fiscal 2015 related to activities within the Retail Pharmacy USA division, but also included activities within Retail Pharmacy International. All charges related to the Cost Transformation Program have been recorded within selling, general and administrative expenses. As the program is implemented, the restructuring charges will be recognized as the costs are incurred over time in accordance with GAAP.

In March 2014, the Company’s Board of Directors approved a plan to close underperforming stores in efforts to optimize and focus resources within the Retail Pharmacy USA operations in a manner intended to increase shareholder value. In fiscal 2015, the Company incurred total pre-tax charges related to this plan of $17 million, primarily related to lease termination costs. In fiscal 2014, the Company incurred pre-tax charges of $209 million ($137 million from lease termination costs, $71 million from asset impairments and $1 million of other charges). All charges related to this plan have been recorded within selling, general and administrative expenses. The Company expects to incur no additional costs related to this plan.

Restructuring costs by segment are as follows (in millions):

	Retail Pharmacy
	USA		International		Pharmaceutical Wholesale		Consolidated
Fiscal 2015
Asset impairments	$	216	$	7	$	-	$	223
Real estate costs		219		-		-		219
Severance and other business transition and exit costs		105		12		-		117
Total restructuring costs		540	$	19	$	-	$	559

Fiscal 2014
Real estate costs	$	137	$	-	$	-	$	137
Asset impairments		71		-		-		71
Severance and other business transition and exit costs		1		-		-		1
Total restructuring costs	$	209	$	-	$	-	$	209