3. Restructuring

On April 8, 2015, the Walgreens Boots Alliance 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 implemented and built on the cost-reduction initiative previously announced by the Company on August 6, 2014 and included plans to close 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 segment, but includes activities from all segments and are expected to be substantially complete by the end of the Company’s 2017 fiscal year. The Company estimates that it will recognize cumulative pre-tax charges to its GAAP financial results of between $1.3 billion and $1.5 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 incurred pre-tax charges of $424 million related to the Cost Transformation Program during fiscal 2016. The Company incurred pre-tax charges of $542 million related to the Cost Transformation Program in fiscal 2015. From inception through August 31, 2016, the Company incurred pre-tax charges of $966 million ($448 million related to asset impairment charges, $293 million in real estate costs and $225 million in severance and other business transition and exit costs) related to the Cost Transformation Program. All charges related to the Cost Transformation Program have been recorded within selling, general and administrative expenses. Restructuring charges are recognized as the costs are incurred over time in accordance with GAAP.

In March 2014, the Walgreens Board of Directors approved a plan to close underperforming stores in efforts to optimize and focus resources within the Retail Pharmacy USA segment in a manner intended to increase stockholder value. As of August 31, 2015, this plan was completed and no additional charges related to the plan are expected. For fiscal 2015, the Company incurred pre-tax charges of $17 million, which were primarily related to lease termination costs. In fiscal 2014, the Company incurred pre-tax charges of $209 million. All charges related to this plan have been recorded within selling, general and administrative expenses.

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

	Retail Pharmacy
Fiscal 2016	USA		International		Pharmaceutical Wholesale		Consolidated
Asset impairments		215		10		-		225
Real estate costs		89		1		1		91
Severance and other business transition and exit costs		70		18		20		108
Total restructuring costs	$	374	$	29	$	21	$	424

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