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Segment reporting
 12 Months Ended
Aug. 31, 2019
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. 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.

Retail Pharmacy USA
The Retail Pharmacy USA segment consists of the Walgreens business, which includes the operation of retail drugstores, convenient care clinics and mail and central specialty pharmacy services. Sales for the segment are principally derived from the sale of prescription drugs and a wide assortment of retail products, including health and wellness, beauty and personal care and consumables and general merchandise.

Retail Pharmacy International
The Retail Pharmacy International segment consists of pharmacy-led health and beauty retail businesses and optical practices. These businesses include Boots branded stores in the United Kingdom, Thailand, Norway, the Republic of Ireland and the Netherlands, Benavides in Mexico and Ahumada in Chile. Sales for the segment are principally derived from the sale of prescription drugs and health and wellness, beauty and personal care and other consumer products.

Pharmaceutical Wholesale
The Pharmaceutical Wholesale segment consists of the Alliance Healthcare pharmaceutical wholesaling and distribution businesses and an equity method investment in AmerisourceBergen. Wholesale operations are located in the United Kingdom, Germany, France, 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 includes procurement benefits 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 following table reflects results of operations of the Company's reportable segments (in millions):

 
For the years ending August 31,
 
2019
 
2018
 
2017
Sales:
 
 
 
 
 
Retail Pharmacy USA
$
104,532

 
$
98,392

 
$
87,302

Retail Pharmacy International
11,462

 
12,281

 
11,813

Pharmaceutical Wholesale
23,053

 
23,006

 
21,188

Eliminations1
(2,180
)
 
(2,142
)
 
(2,089
)
Walgreens Boots Alliance, Inc.
$
136,866

 
$
131,537

 
$
118,214

Adjusted Operating income:2
 
 
 
 
 
Retail Pharmacy USA
$
5,255

 
$
5,814

 
$
5,606

Retail Pharmacy International
747

 
929

 
939

Pharmaceutical Wholesale
939

 
936

 
922

Eliminations1
1

 

 

Walgreens Boots Alliance, Inc.
$
6,942

 
$
7,679

 
$
7,467

Depreciation and amortization:
 
 
 
 
 
Retail Pharmacy USA
$
1,459

 
$
1,196

 
$
1,090

Retail Pharmacy International
429

 
419

 
414

Pharmaceutical Wholesale
150

 
155

 
150

Walgreens Boots Alliance, Inc.
$
2,038

 
$
1,770

 
$
1,654

Capital expenditures:
 
 
 
 
 
Retail Pharmacy USA
$
1,323

 
$
1,022

 
$
860

Retail Pharmacy International
275

 
241

 
384

Pharmaceutical Wholesale
104

 
104

 
107

Walgreens Boots Alliance, Inc.
$
1,702

 
$
1,367

 
$
1,351


The following table reconciles adjusted operating income to operating income (in millions):
 
For the years ending August 31,
 
2019
 
2018
 
2017
Adjusted operating income2
$
6,942

 
$
7,679

 
$
7,467

Acquisition-related amortization and impairment3
(567
)
 
(448
)
 
(332
)
Transformational cost management
(477
)
 
—

 
—

Acquisition-related costs
(303
)
 
(231
)
 
(474
)
Adjustments to equity earnings in AmerisourceBergen
(233
)
 
(175
)
 
(187
)
Store optimization
(196
)
 
(100
)
 
—

LIFO provision
(136
)
 
(84
)
 
(166
)
Certain legal and regulatory accruals and settlements4
(31
)
 
(284
)
 
—

Asset recovery
—

 
15

 
11

Hurricane-related costs
—

 
(83
)
 
—

Cost Transformation
—

 
—

 
(835
)
Operating income2
$
4,998

 
$
6,289

 
$
5,484



1 
Eliminations relate to intersegment sales between the Pharmaceutical Wholesale and the Retail Pharmacy International segments.
2 
The Company adopted new accounting guidance in Accounting Standards Update 2017-07 as of September 1, 2018 (fiscal 2019) on a retrospective basis for the Consolidated Statements of Earnings presentation. See note 1, summary of major accounting policies, for further information.
3 
Includes impairment of $73 million for indefinite-lived pharmacy licenses intangible asset recorded during the three months ended August 31, 2019, in the Boots reporting unit within the Retail Pharmacy International segment.
4 
Beginning in the quarter ended August 31, 2018, management reviewed and refined its practice to include all charges related to the matters included in certain legal and regulatory accruals and settlements. This non-GAAP measure is presented on a consistent basis for fiscal year 2019.

No single customer accounted for more than 10% of the Company’s consolidated sales for any of the periods presented. Substantially all of our retail pharmacy sales are to customers covered by third-party payers (e.g., pharmacy benefit managers, insurance companies and governmental agencies) that agree to pay for all or a portion of a customer's eligible prescription purchases. In the Retail Pharmacy USA segment, two third-party payers, in the aggregate accounted for approximately 22% of the Company’s consolidated sales in fiscal 2019 and three third-party payers, in the aggregate accounted for approximately 32% of the Company’s consolidated sales in fiscal 2018. No third-party payer accounted for more than 10% of the Company’s consolidated sales in fiscal 2017.

Geographic data for sales is as follows (in millions):
 
2019
 
2018
 
2017
United States
$
104,532

 
$
98,392

 
$
87,302

United Kingdom
12,729

 
13,297

 
12,552

Europe (excluding the United Kingdom)
17,009

 
17,594

 
16,224

Other
2,597

 
2,254

 
2,136

Sales
$
136,866

 
$
131,537

 
$
118,214


Geographic data for long-lived assets, defined as property, plant and equipment, is as follows (in millions):
 
2019
 
2018
United States
$
10,598

 
$
10,678

United Kingdom
2,162

 
2,458

Europe (excluding the United Kingdom)
521

 
576

Other
197

 
199

Total long-lived assets
$
13,478

 
$
13,911