Equity method investments

3 Months Ended

Nov. 30, 2017

Equity Method Investments and Joint Ventures [Abstract]

Equity method investments as of November 30, 2017 and August 31, 2017, were as follows (in millions, except percentages):



	November 30, 2017			August 31, 2017
	Carrying value		Ownership percentage	Carrying value		Ownership percentage
AmerisourceBergen	$	4,895	26%	$	5,024	26%
Others	1,133		8% - 50%	1,296		8% - 50%
Total	$	6,028		$	6,320

AmerisourceBergen investment

As of November 30, 2017 and August 31, 2017, the Company owned 56,854,867 AmerisourceBergen Corporation (“AmerisourceBergen”) common shares, representing approximately 26% of the outstanding AmerisourceBergen common stock. The Company accounts for its equity investment in AmerisourceBergen using the equity method of accounting, with the net earnings attributable to the Company’s investment being classified within the operating income of its Pharmaceutical Wholesale segment. Due to the timing and availability of financial information of AmerisourceBergen, the Company accounts for this equity method investment on a financial reporting lag of two months. Equity earnings from AmerisourceBergen is reported as a separate line in the Consolidated Condensed Statements of Earnings. The level 1 fair market value of the Company’s equity investment in AmerisourceBergen common stock at November 30, 2017 is $4.8 billion.

The Company’s investment in AmerisourceBergen carrying value exceeded its proportionate share of the net assets of AmerisourceBergen by $4.4 billion. This premium of $4.4 billion was recognized as part of the carrying value in the Company’s equity investment in AmerisourceBergen. The difference was primarily related to goodwill and the fair value of AmerisourceBergen intangible assets.

Other investments

The Company’s other equity method investments include its investments in Guangzhou Pharmaceuticals Corporation (“Guangzhou Pharmaceuticals”) 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.

The Company reported $13 million and $12 million of post-tax equity earnings from equity method investments other than AmerisourceBergen for the three months ended November 30, 2017 and 2016, respectively. During the three months period ended November 30, 2017, the Company recorded an impairment of $170 million in its equity interest in Guangzhou Pharmaceuticals, which was included in other income (expense) in the Consolidated Condensed Statements of Earnings. The fair value of the Company's equity interest in Guangzhou Pharmaceuticals was determined using the proposed sale price and thus represents Level 3 measurement.