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Segment reporting
 12 Months Ended
Aug. 31, 2017
Segment Reporting [Abstract]  
Segment reporting
Segment reporting
The Company has aligned its operations into three reportable segments: Retail Pharmacy USA, Retail Pharmacy International and Pharmaceutical Wholesale. The operating segments have been identified based on the financial data utilized by the Company’s Chief Executive Officer (the chief operating decision maker) to assess segment performance and allocate resources among the Company’s operating segments, which have been aggregated as described below. The chief operating decision maker uses adjusted operating income to assess segment profitability. The chief operating decision maker does not use total assets by segment to make decisions regarding resources, therefore the total asset disclosure by segment has not been included.

•
The Retail Pharmacy USA segment consists of the legacy Walgreens business, which includes the operation of retail drugstores and convenient care clinics and the provision of specialty pharmacy services. Sales for the segment are principally derived from the sale of prescription drugs and a wide assortment of general merchandise, including non-prescription drugs, beauty products, photo finishing, seasonal merchandise, greeting cards and convenience foods.
•
The Retail Pharmacy International segment consists primarily of the legacy Alliance Boots pharmacy-led health and beauty stores and optical practices. Stores are located in the United Kingdom, Mexico, Chile, Thailand, Norway, the Republic of Ireland, the Netherlands and Lithuania. Sales for the segment are principally derived from the sale of prescription drugs and retail health, beauty, toiletries and other consumer products.
•
The Pharmaceutical Wholesale segment consists of the legacy Alliance Boots pharmaceutical wholesaling and distribution businesses and an equity method investment in AmerisourceBergen reported on a two-month lag. Wholesale operations are located in France, the United Kingdom, Germany, Turkey, Spain, The Netherlands, Egypt, Norway, Romania, Czech Republic and Lithuania. Sales for the segment are principally derived from wholesaling and distribution of a comprehensive offering of brand-name pharmaceuticals (including specialty pharmaceutical products) and generic pharmaceuticals, health and beauty products, home healthcare supplies and equipment, and related services to pharmacies and other healthcare providers.
The results of operations for each reportable segment include procurement benefits, including WBAD operations and an allocation of corporate-related overhead costs. The “Eliminations” column contains items not allocable to the reportable segments, as the information is not utilized by the chief operating decision maker to assess segment performance and allocate resources.

The segment information reflects the operating results of the Company’s business segments. The Company began recording revenue and expense transactions using the new segments effective January 1, 2015. Beginning January 1, 2015, procurement benefits including WBAD operations have been allocated to the Retail Pharmacy USA, Retail Pharmacy International and Pharmaceutical Wholesale segments on a source of procurement benefit basis. Under this method, the procurement benefits are allocated to the segment whose purchase gave rise to the benefit. A procurement benefit arising on the purchase of an item for use in an entity in the Retail Pharmacy USA segment is recognized in the Retail Pharmacy USA segment and similarly for the Retail Pharmacy International and Pharmaceutical Wholesale segments. Procurement service income related to third parties is recognized in the Pharmaceutical Wholesale segment.

The Company’s Retail Pharmacy International and Pharmaceutical Wholesale segments were acquired as part of the Second Step Transaction in which the Company acquired the 55% of Alliance Boots that it did not already own on December 31, 2014. The Company has determined that it is impracticable to restate segment information for periods prior the completion of the Second Step Transaction, as well as to provide disclosures for such periods under both the old basis and new basis of reporting for certain items. Specifically, WBAD operations prior to December 31, 2014 were recorded in the Retail Pharmacy USA segment and have not been restated, as the Company believes it is impracticable to separate the information to the individual reportable segments. Equity earnings from Alliance Boots prior to the completion of the Second Step Transaction have been recorded within the Retail Pharmacy USA segment. The equity earnings of the 45% interest in Alliance Boots have not been separated into the Retail Pharmacy International and Pharmaceutical Wholesale segments for the prior period, as the Company believes it is impracticable. Accordingly, only eight months of results (January to August 2015) have been reported for these segments for fiscal 2015.
The following table reflects results of operations of the Company’s reportable segments (in millions):
 
Retail Pharmacy USA
 
Retail Pharmacy International
 
Pharmaceutical
Wholesale
 
Eliminations
 
Walgreens
Boots Alliance,
Inc.
For the year ended August 31, 2017
 
 
 
 
 
 
 
 
 
Sales to external customers
$
87,302

 
$
11,813

 
$
19,099

 
$
—

 
$
118,214

Intersegment sales
—

 
—

 
2,089

 
(2,089
)
 
—

Sales
$
87,302

 
$
11,813

 
$
21,188

 
$
(2,089
)
 
$
118,214

 
 
 
 
 
 
 
 
 
 
Adjusted operating income
$
5,707

 
$
909

 
$
924

 
$
—

 
$
7,540

 
 
 
 
 
 
 
 
 
 
Depreciation and amortization
$
1,090

 
$
414

 
$
150

 
$
—

 
$
1,654

Additions to property, plant and equipment
860

 
384

 
107

 
—

 
1,351

 
 
 
 
 
 
 
 
 
 
For the year ended August 31, 2016
 

 
 

 
 

 
 

 
 

Sales to external customers
$
83,802

 
$
13,256

 
$
20,293

 
$
—

 
$
117,351

Intersegment sales
—

 
—

 
2,278

 
(2,278
)
 
—

Sales
$
83,802

 
$
13,256

 
$
22,571

 
$
(2,278
)
 
$
117,351

 
 
 
 
 
 
 
 
 
 
Adjusted operating income
$
5,357

 
$
1,155

 
$
708

 
$
(12
)
 
$
7,208

 
 
 
 
 
 
 
 
 
 
Depreciation and amortization
$
1,134

 
$
401

 
$
166

 
$
17

 
$
1,718

Additions to property, plant and equipment
777

 
444

 
104

 
—

 
1,325

 
 
 
 
 
 
 
 
 
 
For the year ended August 31, 2015
 

 
 

 
 

 
 

 
 

Sales to external customers
$
80,974

 
$
8,657

 
$
13,813

 
$
—

 
$
103,444

Intersegment sales
—

 
—

 
1,514

 
(1,514
)
 
—

Sales
$
80,974

 
$
8,657

 
$
15,327

 
$
(1,514
)
 
$
103,444

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Adjusted operating income
$
5,098

 
$
616

 
$
450

 
$
(7
)
 
$
6,157

 
 
 
 
 
 
 
 
 
 
Depreciation and amortization
$
1,217

 
$
393

 
$
120

 
$
12

 
$
1,742

Additions to property, plant and equipment
951

 
249

 
51

 
—

 
1,251


The following table reconciles adjusted operating income to operating income (in millions):
 
Retail Pharmacy USA
Retail Pharmacy International
Pharmaceutical
Wholesale
Eliminations
Walgreens
Boots
Alliance, Inc.
For the year ended August 31, 2017
 
 
 
 
 
Adjusted operating income
$
5,707

$
909

$
924

$
—

$
7,540

Cost transformation
 

 

 

 

(835
)
Acquisition-related costs
 

 

 

 

(474
)
Acquisition-related amortization
 

 

 

 

(332
)
Adjustments to equity earnings in AmerisourceBergen
 
 
 
 
(187
)
LIFO provision
 

 

 

 

(166
)
Asset recovery
 

 

 

 

11

Operating income
 

 

 

 

$
5,557

 
 
 
 
 
 
For the year ended August 31, 2016
 

 

 

 

 

Adjusted operating income
$
5,357

$
1,155

$
708

$
(12
)
$
7,208

Cost transformation
 

 

 

 

(424
)
Acquisition-related costs
 
 
 
 
(102
)
Acquisition-related amortization
 

 

 

 

(369
)
Adjustments to equity earnings in AmerisourceBergen
 
 
 
 
(21
)
LIFO provision
 

 

 

 

(214
)
Legal settlement
 
 
 
 
(47
)
Asset impairment
 
 
 
 
(30
)
Operating income
 

 

 

 

$
6,001

 
 
 
 
 
 
For the year ended August 31, 2015
 

 

 

 

 

Adjusted operating income
$
5,098

$
616

$
450

$
(7
)
$
6,157

Cost transformation
 

 

 

 

(542
)
Acquisition-related costs
 
 
 
 
(87
)
Acquisition-related amortization
 

 

 

 

(485
)
LIFO provision
 

 

 

 

(285
)
Asset impairment
 
 
 
 
(110
)
Store closures and other optimization costs
 

 

 

 

(56
)
(Loss) on sale of business
 

 

 

 

(17
)
Adjustments to equity earnings in Alliance Boots
 

 

 

 

93

Operating income
 

 

 

 

$
4,668


No single customer accounted for more than 10% of the Company’s consolidated sales for any of the periods presented. Two payers accounted for approximately 25% of the Retail Pharmacy USA division’s sales in fiscal 2017 and approximately 22% in fiscal 2016. One customer in the Retail Pharmacy International division accounted for approximately 18% of the division’s sales in fiscal 2017 and approximately 18% in fiscal 2016.

Geographic data for sales is as follows (in millions):

 
2017
 
2016
 
2015
United States of America
$
87,302

 
$
83,802

 
$
80,974

United Kingdom
12,552

 
14,081

 
9,235

Europe (excluding the United Kingdom)
16,224

 
16,793

 
11,402

Other
2,136

 
2,675

 
1,833

Sales
$
118,214

 
$
117,351

 
$
103,444


Geographic data for long-lived assets, defined as property, plant and equipment, is as follows (in millions):

 
2017
 
2016
United States of America
$
10,344

 
$
10,924

United Kingdom
2,502

 
2,611

Europe (excluding the United Kingdom)
616

 
625

Other
180

 
175

Total long-lived assets
$
13,642

 
$
14,335