Equity Method Investments

6 Months Ended

Feb. 29, 2016

Equity Method Investments [Abstract]

Note 5. Equity Method Investments

Equity method investments as of February 29, 2016 and August 31, 2015 were as follows (in millions, except percentages):

	February 29, 2016					August 31, 2015
	Carrying Value		Ownership Percentage			Carrying Value		Ownership Percentage
Equity method investments	$	1,217		12% - 50	%	$	1,242		12% - 50	%

The Company's principal equity method investments include its investments in Guangzhou Pharmaceuticals Corporation and Nanjing Pharmaceutical Corporation Limited, the Company’s pharmaceutical wholesale investments in China; and the equity method investment retained through the sale of a majority interest in Option Care Inc. in fiscal 2015. See Note 20, Subsequent Event for further information.

Equity method investments of the Company are recorded within other non-current assets on the Consolidated Condensed Balance Sheets. The Company reported $9 million and $20 million of post-tax equity earnings in equity method investments for the three and six month periods ended February 29, 2016, respectively, in the Consolidated Condensed Statements of Earnings. The Company reported $8 million of post-tax equity earnings from equity method investments other than Alliance Boots for the three and six month periods ended February 28, 2015. Additionally, for the three and six month periods ended February 28, 2015, the Company reported equity earnings in Alliance Boots of $101 million and $315 million, respectively, as its own line in the Consolidated Condensed Statements of Earnings.

Summarized Financial Information

Summarized financial information for the Company’s equity method investments is as follows:

Balance Sheets (in millions)

	February 29, 2016⁽¹⁾		August 31, 2015⁽¹⁾
Current assets	$	5,687	$	5,015
Noncurrent assets		1,592		1,548
Current liabilities		4,598		3,936
Noncurrent liabilities		876		837
Shareholders’ equity⁽²⁾		1,805		1,790

Statements of Earnings (in millions)

	Three Months Ended				Six Months Ended
	February 29, 2016⁽³⁾		February 28, 2015⁽³⁾⁽⁴⁾		February 29, 2016⁽³⁾		February 28, 2015⁽³⁾⁽⁴⁾

Net sales	$	3,286	$	5,317	$	6,489	$	14,978
Gross Profit		374		979		702		3,168
Net Income		26		246		50		743
Share of income from equity method investments		9		109		20		323

⁽¹⁾	Balance sheet information of foreign equity method investments are translated at their respective February 29, 2016 and August 31, 2015 spot rates.

⁽²⁾	Shareholders’ equity at February 29, 2016 and August 31, 2015 includes $170 million and $163 million, respectively, related to noncontrolling interests.

⁽³⁾	Statement of earnings information of foreign equity method investments are translated at their respective average exchange rates.

⁽⁴⁾	Includes equity method investment in Alliance Boots from Walgreen Co.’s pre-merger 45 percent interest for one month (December 2014) and four months (September through December 2014), respectively. See Note 1, Organization.