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. From inception through February 28, 2017, the Company incurred pre-tax charges of $1.4 billion ($563 million related to asset impairment charges, $542 million in real estate costs and $282 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 in accordance with GAAP.

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



Three Months Ended February 28, 2017	Retail Pharmacy USA		Retail Pharmacy International		Pharmaceutical Wholesale		Walgreens Boots Alliance, Inc.
Asset impairments	$	65	$	1	$	1	$	67
Real estate costs	240		—		—		240
Severance and other business transition and exit costs	11		18		4		33
Total restructuring costs	$	316	$	19	$	5	$	340

Three Months Ended February 29, 2016
Asset impairments	$	—	$	—	$	—	$	—
Real estate costs	—		—		—		—
Severance and other business transition and exit costs	25		3		—		28
Total restructuring costs	$	25	$	3	$	—	$	28



Six Months Ended February 28, 2017	Retail Pharmacy USA		Retail Pharmacy International		Pharmaceutical Wholesale		Walgreens Boots Alliance, Inc.
Asset impairments	$	111	$	3	$	1	$	115
Real estate costs	249		—		—		249
Severance and other business transition and exit costs	28		22		7		57
Total restructuring costs	$	388	$	25	$	8	$	421

Six Months Ended February 29, 2016
Asset impairments	$	25	$	—	$	—	$	25
Real estate costs	52		—		—		52
Severance and other business transition and exit costs	33		8		—		41
Total restructuring costs	$	110	$	8	$	—	$	118

The changes in Accrued expenses related to the Cost Transformation Program include the following (in millions):



	Asset Impairments			Real estate costs			Severance and other business transition and exit costs			Total
Balance at August 31, 2016	$	—		$	248		$	27		$	275
Restructuring Costs	115			249			57			421
Payments	—			(28		)	(29		)	(57		)
Other - non cash	(115		)	—			(13		)	(128		)
Currency translation adjustments	—			—			(1		)	(1		)
Balance at February 28, 2017	$	—		$	469		$	41		$	510