ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
(Exact name of registrant as specified in its charter) | ||||||||
(State of incorporation) | (I.R.S. Employer Identification No.) | |||||||
(Address of principal executive offices) | (Zip Code) |
Title of each class | Trading Symbol(s) | Name of each exchange on which registered | ||||||
Accelerated filer ☐ | ||||||||
Non-accelerated filer ☐ | Smaller reporting company | |||||||
Emerging growth company |
Part I | ||||||||
Page | ||||||||
Item 1. | ||||||||
Item 1A. | ||||||||
Item 1B. | ||||||||
Item 2. | ||||||||
Item 3. | ||||||||
Item 4. | ||||||||
Part II | ||||||||
Item 5. | ||||||||
Item 6. | ||||||||
Item 7. | ||||||||
Item 7A. | ||||||||
Item 8. | ||||||||
Item 9. | ||||||||
Item 9A. | ||||||||
Item 9B. | ||||||||
Part III | ||||||||
Item 10. | ||||||||
Item 11. | ||||||||
Item 12. | ||||||||
Item 13. | ||||||||
Item 14. | ||||||||
Part IV | ||||||||
Item 15. | ||||||||
Item 16. | ||||||||
Fiscal 2020 | Fiscal 2019 | Fiscal 2018 | ||||||||||||||||||
Pharmacy | 75 | % | 74 | % | 72 | % | ||||||||||||||
Retail | 25 | % | 26 | % | 28 | % | ||||||||||||||
Total | 100 | % | 100 | % | 100 | % |
Fiscal 2020 | Fiscal 2019 | Fiscal 2018 | ||||||||||||||||||
Pharmacy | 39 | % | 36 | % | 35 | % | ||||||||||||||
Retail | 61 | % | 64 | % | 65 | % | ||||||||||||||
Total | 100 | % | 100 | % | 100 | % |
Retail stores | |||||
Retail Pharmacy USA: | |||||
United States | 8,915 | ||||
Puerto Rico | 105 | ||||
U.S. Virgin Islands | 1 | ||||
9,021 | |||||
Retail Pharmacy International: | |||||
United Kingdom | 2,336 | ||||
Mexico | 1,165 | ||||
Chile | 317 | ||||
Thailand | 285 | ||||
Norway | 151 | ||||
The Republic of Ireland | 89 | ||||
The Netherlands | 59 | ||||
Lithuania | 26 | ||||
4,428 | |||||
Walgreens Boots Alliance total | 13,449 |
Name | Age | Office(s) held | ||||||||||||
James A. Skinner | 75 | Executive Chairman of the Board | ||||||||||||
Stefano Pessina | 79 | Executive Vice Chairman and Chief Executive Officer | ||||||||||||
Ornella Barra | 66 | Co-Chief Operating Officer | ||||||||||||
Alexander W. Gourlay | 60 | Co-Chief Operating Officer | ||||||||||||
James Kehoe | 57 | Executive Vice President and Global Chief Financial Officer | ||||||||||||
Marco Pagni | 58 | Executive Vice President, Global Chief Administrative Officer and General Counsel | ||||||||||||
Kathleen Wilson-Thompson | 63 | Executive Vice President and Global Chief Human Resources Officer | ||||||||||||
Heather Dixon | 48 | Senior Vice President, Global Controller and Chief Accounting Officer |
Issuer purchases of equity securities | ||||||||||||||||||||||||||
Period | Total number of shares purchased | Average price paid per share | Total number of shares purchased as part of publicly announced repurchase programs1 | Approximate dollar value of shares that may yet be purchased under the plans or programs1 | ||||||||||||||||||||||
6/1/20 - 6/30/20 | 3,766,035 | $ | 42.94 | 3,766,035 | $ | 2,056,933,590 | ||||||||||||||||||||
7/1/20 - 7/31/20 | 1,266,396 | 42.25 | 1,266,396 | 2,003,419,960 | ||||||||||||||||||||||
8/1/20 - 8/31/20 | — | — | — | 2,003,419,960 | ||||||||||||||||||||||
5,032,431 | $ | 42.77 | 5,032,431 | $ | 2,003,419,960 |
Fiscal year | 2020 | 2019 | 2018 | 2017 | 2016 | ||||||||||||||||||||||||
Sales | $ | 139,537 | $ | 136,866 | $ | 131,537 | $ | 118,214 | $ | 117,351 | |||||||||||||||||||
Cost of sales | 111,520 | 106,790 | 100,745 | 89,052 | 87,477 | ||||||||||||||||||||||||
Gross profit | 28,017 | 30,076 | 30,792 | 29,162 | 29,874 | ||||||||||||||||||||||||
Selling, general and administrative expenses1 | 27,045 | 25,242 | 24,694 | 23,813 | 23,841 | ||||||||||||||||||||||||
Equity earnings in AmerisourceBergen2 | 341 | 164 | 191 | 135 | 37 | ||||||||||||||||||||||||
Operating income | 1,312 | 4,998 | 6,289 | 5,484 | 6,070 | ||||||||||||||||||||||||
Other income (expense)1, 3 | 70 | 233 | 302 | 62 | (330) | ||||||||||||||||||||||||
Earnings before interest and income tax provision | 1,382 | 5,231 | 6,591 | 5,546 | 5,740 | ||||||||||||||||||||||||
Interest expense, net | 639 | 704 | 616 | 693 | 596 | ||||||||||||||||||||||||
Earnings before income tax provision | 743 | 4,527 | 5,975 | 4,853 | 5,144 | ||||||||||||||||||||||||
Income tax provision | 360 | 588 | 998 | 760 | 997 | ||||||||||||||||||||||||
Post tax earnings from other equity method investments | 41 | 23 | 54 | 8 | 44 | ||||||||||||||||||||||||
Net earnings | 424 | 3,962 | 5,031 | 4,101 | 4,191 | ||||||||||||||||||||||||
Net earnings attributable to noncontrolling interests | (32) | (20) | 7 | 23 | 18 | ||||||||||||||||||||||||
Net earnings attributable to Walgreens Boots Alliance, Inc. | $ | 456 | $ | 3,982 | $ | 5,024 | $ | 4,078 | $ | 4,173 | |||||||||||||||||||
Per Common Share | |||||||||||||||||||||||||||||
Net earnings | |||||||||||||||||||||||||||||
Basic | $ | 0.52 | $ | 4.32 | $ | 5.07 | $ | 3.80 | $ | 3.85 | |||||||||||||||||||
Diluted | 0.52 | 4.31 | 5.05 | 3.78 | 3.82 | ||||||||||||||||||||||||
Dividends declared | 1.840 | 1.778 | 1.640 | 1.525 | 1.455 | ||||||||||||||||||||||||
Balance Sheet | |||||||||||||||||||||||||||||
Total assets4 | $ | 87,174 | $ | 67,598 | $ | 68,124 | $ | 66,009 | $ | 72,688 | |||||||||||||||||||
Long-term debt | 12,203 | 11,098 | 12,431 | 12,684 | 18,705 | ||||||||||||||||||||||||
Total Walgreens Boots Alliance, Inc. shareholders’ equity | 20,637 | 23,512 | 26,007 | 27,466 | 29,880 | ||||||||||||||||||||||||
Noncontrolling interests | 498 | 641 | 682 | 808 | 401 | ||||||||||||||||||||||||
Total equity | $ | 21,136 | $ | 24,152 | $ | 26,689 | $ | 28,274 | $ | 30,281 |
Transformational Cost Program Activities | Range of Charges | ||||
Lease obligations and other real estate costs1 | $350 to 400 million | ||||
Asset impairments2 | $350 to 400 million | ||||
Employee severance and business transition costs | $850 to 950 million | ||||
Information technology transformation and other exit costs | $250 to 300 million | ||||
Total cumulative pre-tax exit and disposal charges | $1.8 to 2.1 billion | ||||
Other IT transformation costs | $300 to 350 million | ||||
Total estimated pre-tax charges | $2.1 to 2.4 billion |
Twelve Months Ended August 31, 2020 | Retail Pharmacy USA | Retail Pharmacy International | Pharmaceutical Wholesale | Walgreens Boots Alliance, Inc. | |||||||||||||||||||
Lease obligations and other real estate costs1 | $ | 204 | $ | 10 | $ | 2 | $ | 217 | |||||||||||||||
Asset impairments | 51 | 21 | 19 | 90 | |||||||||||||||||||
Employee severance and business transition costs | 159 | 95 | 42 | 295 | |||||||||||||||||||
Information technology transformation and other exit costs | 72 | 42 | 4 | 118 | |||||||||||||||||||
Total pre-tax exit and disposal charges | $ | 486 | $ | 168 | $ | 66 | $ | 720 | |||||||||||||||
Other IT transformation costs | 55 | 18 | 1 | 73 | |||||||||||||||||||
Total pre-tax charges | $ | 540 | $ | 186 | $ | 67 | $ | 793 |
Twelve Months Ended August 31, 2019 | Retail Pharmacy USA | Retail Pharmacy International | Pharmaceutical Wholesale | Walgreens Boots Alliance, Inc. | |||||||||||||||||||
Lease obligations and other real estate costs | $ | 5 | $ | 19 | $ | 1 | $ | 25 | |||||||||||||||
Asset impairments1 | 95 | 67 | 98 | 260 | |||||||||||||||||||
Employee severance and business transition costs | 42 | 34 | 49 | 125 | |||||||||||||||||||
Information technology transformation and other exit costs | 5 | 10 | 7 | 22 | |||||||||||||||||||
Total pre-tax exit and disposal charges | $ | 147 | $ | 130 | $ | 154 | $ | 432 | |||||||||||||||
Other IT transformation costs | 42 | 3 | 1 | 45 | |||||||||||||||||||
Total pre-tax charges | $ | 189 | $ | 133 | $ | 155 | 477 |
(in millions, except per share amounts) | ||||||||||||||||||||
2020 | 2019 | 2018 | ||||||||||||||||||
Sales | $ | 139,537 | $ | 136,866 | $ | 131,537 | ||||||||||||||
Gross profit | 28,017 | 30,076 | 30,792 | |||||||||||||||||
Selling, general and administrative expenses1 | 27,045 | 25,242 | 24,694 | |||||||||||||||||
Equity earnings in AmerisourceBergen | 341 | 164 | 191 | |||||||||||||||||
Operating income1 | 1,312 | 4,998 | 6,289 | |||||||||||||||||
Adjusted operating income (Non-GAAP measure)1,2 | 5,211 | 6,942 | 7,679 | |||||||||||||||||
Earnings before interest and income tax provision | 1,382 | 5,231 | 6,591 | |||||||||||||||||
Net earnings attributable to Walgreens Boots Alliance, Inc. | 456 | 3,982 | 5,024 | |||||||||||||||||
Adjusted net earnings attributable to Walgreens Boots Alliance, Inc. (Non-GAAP measure)2 | 4,175 | 5,529 | 5,985 | |||||||||||||||||
Net earnings per common share – diluted | 0.52 | 4.31 | 5.05 | |||||||||||||||||
Adjusted net earnings per common share – diluted (Non-GAAP measure)2 | 4.74 | 5.99 | 6.02 |
Percentage increases (decreases) | ||||||||||||||||||||
2020 | 2019 | 2018 | ||||||||||||||||||
Sales | 2.0 | 4.1 | 11.3 | |||||||||||||||||
Gross profit | (6.8) | (2.3) | 5.6 | |||||||||||||||||
Selling, general and administrative expenses1 | 7.1 | 2.2 | 3.7 | |||||||||||||||||
Operating income1 | (73.7) | (20.5) | 14.7 | |||||||||||||||||
Adjusted operating income (Non-GAAP measure)1,2 | (24.9) | (9.6) | 2.8 | |||||||||||||||||
Earnings before interest and income tax provision | (73.6) | (20.6) | 18.8 | |||||||||||||||||
Net earnings attributable to Walgreens Boots Alliance, Inc. | (88.5) | (20.7) | 23.2 | |||||||||||||||||
Adjusted net earnings attributable to Walgreens Boots Alliance, Inc. (Non-GAAP measure)2 | (24.5) | (7.6) | 8.8 | |||||||||||||||||
Net earnings per common share – diluted | (88.0) | (14.6) | 33.6 | |||||||||||||||||
Adjusted net earnings per common share – diluted (Non-GAAP measure)2 | (20.8) | (0.5) | 18.0 |
Percent to sales | ||||||||||||||||||||
2020 | 2019 | 2018 | ||||||||||||||||||
Gross margin | 20.1 | 22.0 | 23.4 | |||||||||||||||||
Selling, general and administrative expenses1 | 19.4 | 18.4 | 18.8 |
(in millions, except location amounts) | ||||||||||||||||||||
2020 | 2019 | 2018 | ||||||||||||||||||
Sales | $ | 107,701 | $ | 104,532 | $ | 98,392 | ||||||||||||||
Gross profit | 22,211 | 23,511 | 23,758 | |||||||||||||||||
Selling, general and administrative expenses1 | 19,515 | 19,424 | 18,971 | |||||||||||||||||
Operating income1 | 2,696 | 4,088 | 4,787 | |||||||||||||||||
Adjusted operating income (Non-GAAP measure)1,2 | 4,099 | 5,255 | 5,814 | |||||||||||||||||
Number of prescriptions3 | 818.0 | 843.7 | 823.1 | |||||||||||||||||
30-day equivalent prescriptions3,4 | 1,165.3 | 1,150.1 | 1,094.4 | |||||||||||||||||
Number of locations at period end | 9,028 | 9,285 | 9,569 |
Percentage increases (decreases) | ||||||||||||||||||||
2020 | 2019 | 2018 | ||||||||||||||||||
Sales | 3.0 | 6.2 | 12.7 | |||||||||||||||||
Gross profit | (5.5) | (1.0) | 5.8 | |||||||||||||||||
Selling, general and administrative expenses1 | 0.5 | 2.4 | 3.4 | |||||||||||||||||
Operating income1 | (34.1) | (14.6) | 16.9 | |||||||||||||||||
Adjusted operating income (Non-GAAP measure)1,2 | (22.0) | (9.6) | 3.7 | |||||||||||||||||
Comparable store sales5 | 2.8 | 2.0 | 1.5 | |||||||||||||||||
Pharmacy sales | 4.3 | 8.6 | 17.2 | |||||||||||||||||
Comparable pharmacy sales5 | 3.2 | 4.0 | 3.4 | |||||||||||||||||
Retail sales | (0.4) | — | 2.4 | |||||||||||||||||
Comparable retail sales5 | 1.6 | (2.4) | (2.4) | |||||||||||||||||
Comparable number of prescriptions4,5 | (1.3) | (0.1) | 0.8 | |||||||||||||||||
Comparable 30-day equivalent prescriptions3,4,5 | 2.9 | 3.0 | 3.5 |
Percent to sales | ||||||||||||||||||||
2020 | 2019 | 2018 | ||||||||||||||||||
Gross margin | 20.6 | 22.5 | 24.1 | |||||||||||||||||
Selling, general and administrative expenses1 | 18.1 | 18.6 | 19.3 |
(in millions, except location amounts) | ||||||||||||||||||||
2020 | 2019 | 2018 | ||||||||||||||||||
Sales | $ | 10,004 | $ | 11,462 | $ | 12,281 | ||||||||||||||
Gross profit | 3,741 | 4,522 | 4,958 | |||||||||||||||||
Selling, general and administrative expenses1 | 5,858 | 4,084 | 4,134 | |||||||||||||||||
Operating income (loss)1 | (2,117) | 438 | 824 | |||||||||||||||||
Adjusted operating income (Non-GAAP measure)1,2 | 130 | 747 | 929 | |||||||||||||||||
Number of locations at period end | 4,428 | 4,605 | 4,767 |
Percentage increases (decreases) | ||||||||||||||||||||
2020 | 2019 | 2018 | ||||||||||||||||||
Sales | (12.7) | (6.7) | 4.0 | |||||||||||||||||
Gross profit | (17.3) | (8.8) | 4.3 | |||||||||||||||||
Selling, general and administrative expenses1 | 43.4 | (1.2) | 3.8 | |||||||||||||||||
Operating income1 | (583.4) | (46.8) | 6.9 | |||||||||||||||||
Adjusted operating income (Non-GAAP measure)1,2 | (82.6) | (19.6) | (1.1) | |||||||||||||||||
Comparable store sales in constant currency3 | (10.4) | (1.7) | (1.4) | |||||||||||||||||
Pharmacy sales | (4.3) | (6.4) | 4.3 | |||||||||||||||||
Comparable pharmacy sales in constant currency3 | 0.3 | (0.9) | (1.2) | |||||||||||||||||
Retail sales | (17.4) | (6.8) | 3.8 | |||||||||||||||||
Comparable retail sales in constant currency3 | (17.2) | (2.2) | (1.5) |
Percent to sales | ||||||||||||||||||||
2020 | 2019 | 2018 | ||||||||||||||||||
Gross margin | 37.4 | 39.5 | 40.4 | |||||||||||||||||
Selling, general and administrative expenses1 | 58.6 | 35.6 | 33.7 |
(in millions) | ||||||||||||||||||||
2020 | 2019 | 2018 | ||||||||||||||||||
Sales | $ | 23,958 | $ | 23,053 | $ | 23,006 | ||||||||||||||
Gross profit | 2,063 | 2,041 | 2,081 | |||||||||||||||||
Selling, general and administrative expenses1 | 1,672 | 1,734 | 1,594 | |||||||||||||||||
Equity earnings from AmerisourceBergen | 341 | 164 | 191 | |||||||||||||||||
Operating income1 | 732 | 471 | 678 | |||||||||||||||||
Adjusted operating income (Non-GAAP measure)1,2 | 980 | 939 | 936 |
Percentage increases (decreases) | ||||||||||||||||||||
2020 | 2019 | 2018 | ||||||||||||||||||
Sales | 3.9 | 0.2 | 8.6 | |||||||||||||||||
Gross profit | 1.1 | (1.9) | 5.9 | |||||||||||||||||
Selling, general and administrative expenses1 | (3.6) | 8.8 | 7.6 | |||||||||||||||||
Equity earnings from AmerisourceBergen | 107.5 | (14.2) | 41.5 | |||||||||||||||||
Operating income1 | 55.2 | (30.4) | 9.5 | |||||||||||||||||
Adjusted operating income (Non-GAAP measure)1,2 | 4.4 | 0.4 | 1.5 | |||||||||||||||||
Comparable sales in constant currency3 | 6.5 | 8.0 | 4.2 |
Percent to sales | ||||||||||||||||||||
2020 | 2019 | 2018 | ||||||||||||||||||
Gross margin | 8.6 | 8.9 | 9.0 | |||||||||||||||||
Selling, general and administrative expenses1 | 7.0 | 7.5 | 6.9 |
(in millions) | ||||||||||||||||||||||||||||||||
Twelve months ended August 31, 2020 | ||||||||||||||||||||||||||||||||
Retail Pharmacy USA | Retail Pharmacy International | Pharmaceutical Wholesale | Eliminations | Walgreens Boots Alliance, Inc. | ||||||||||||||||||||||||||||
Operating income (GAAP) | $ | 2,696 | $ | (2,117) | $ | 732 | $ | 2 | $ | 1,312 | ||||||||||||||||||||||
Impairment of goodwill and intangible assets | 32 | 1,984 | — | — | 2,016 | |||||||||||||||||||||||||||
Transformational cost management | 540 | 186 | 67 | — | 793 | |||||||||||||||||||||||||||
Acquisition-related amortization | 309 | 75 | 77 | — | 461 | |||||||||||||||||||||||||||
Acquisition-related costs | 306 | 2 | 8 | — | 316 | |||||||||||||||||||||||||||
Adjustments to equity earnings in AmerisourceBergen | — | — | 97 | — | 97 | |||||||||||||||||||||||||||
LIFO provision | 95 | — | — | — | 95 | |||||||||||||||||||||||||||
Store damage and inventory losses1 | 68 | — | — | — | 68 | |||||||||||||||||||||||||||
Store optimization | 53 | — | — | — | 53 | |||||||||||||||||||||||||||
Adjusted operating income (Non-GAAP measure) | $ | 4,099 | $ | 130 | $ | 980 | $ | 2 | $ | 5,211 |
(in millions) | ||||||||||||||||||||||||||||||||
Twelve months ended August 31, 2019 | ||||||||||||||||||||||||||||||||
Retail Pharmacy USA | Retail Pharmacy International | Pharmaceutical Wholesale | Eliminations | Walgreens Boots Alliance, Inc. | ||||||||||||||||||||||||||||
Operating income (GAAP) | $ | 4,088 | $ | 438 | $ | 471 | $ | 1 | $ | 4,998 | ||||||||||||||||||||||
Impairment of goodwill and intangible assets | — | 73 | — | — | 73 | |||||||||||||||||||||||||||
Transformational cost management | 189 | 133 | 155 | — | 477 | |||||||||||||||||||||||||||
Acquisition-related amortization2 | 315 | 100 | 78 | — | 493 | |||||||||||||||||||||||||||
Acquisition-related costs | 300 | 3 | 1 | — | 303 | |||||||||||||||||||||||||||
Adjustments to equity earnings in AmerisourceBergen | — | — | 233 | — | 233 | |||||||||||||||||||||||||||
LIFO provision | 136 | — | — | — | 136 | |||||||||||||||||||||||||||
Store optimization | 196 | — | — | — | 196 | |||||||||||||||||||||||||||
Certain legal and regulatory accruals and settlements | 31 | — | — | — | 31 | |||||||||||||||||||||||||||
Adjusted operating income (Non-GAAP measure) | $ | 5,255 | $ | 747 | $ | 939 | $ | 1 | $ | 6,942 |
(in millions) | ||||||||||||||||||||||||||||||||
Twelve months ended August 31, 2018 | ||||||||||||||||||||||||||||||||
Retail Pharmacy USA | Retail Pharmacy International | Pharmaceutical Wholesale | Eliminations | Walgreens Boots Alliance, Inc. | ||||||||||||||||||||||||||||
Operating income (GAAP)3 | $ | 4,787 | $ | 824 | $ | 678 | $ | — | $ | 6,289 | ||||||||||||||||||||||
Acquisition-related amortization | 260 | 105 | 83 | — | 448 | |||||||||||||||||||||||||||
Acquisition-related costs | 231 | — | — | — | 231 | |||||||||||||||||||||||||||
Adjustments to equity earnings in AmerisourceBergen | — | — | 175 | — | 175 | |||||||||||||||||||||||||||
Store optimization | 100 | — | — | — | 100 | |||||||||||||||||||||||||||
LIFO provision | 84 | — | — | — | 84 | |||||||||||||||||||||||||||
Asset recovery | (15) | — | — | — | (15) | |||||||||||||||||||||||||||
Hurricane-related costs | 83 | — | — | — | 83 | |||||||||||||||||||||||||||
Certain legal and regulatory accruals and settlements | 284 | — | — | — | 284 | |||||||||||||||||||||||||||
Adjusted operating income (Non-GAAP measure)3 | $ | 5,814 | $ | 929 | $ | 936 | $ | — | $ | 7,679 |
(in millions) | ||||||||||||||||||||
2020 | 2019 | 2018 | ||||||||||||||||||
Net earnings attributable to Walgreens Boots Alliance, Inc. (GAAP) | $ | 456 | $ | 3,982 | $ | 5,024 | ||||||||||||||
Adjustments to operating income: | ||||||||||||||||||||
Impairment of goodwill and intangible assets | 2,016 | 73 | — | |||||||||||||||||
Transformational cost management | 793 | 477 | — | |||||||||||||||||
Acquisition-related amortization1 | 461 | 493 | 448 | |||||||||||||||||
Acquisition-related costs | 316 | 303 | 231 | |||||||||||||||||
Adjustments to equity earnings in AmerisourceBergen | 97 | 233 | 175 | |||||||||||||||||
LIFO provision | 95 | 136 | 84 | |||||||||||||||||
Store damage and inventory losses2 | 68 | — | — | |||||||||||||||||
Store optimization | 53 | 196 | 100 | |||||||||||||||||
Certain legal and regulatory accruals and settlements | — | 31 | 284 | |||||||||||||||||
Hurricane-related costs | — | — | 83 | |||||||||||||||||
Asset recovery | — | — | (15) | |||||||||||||||||
Total adjustments to operating income | 3,898 | 1,944 | 1,390 | |||||||||||||||||
Adjustments to other income (expense): | ||||||||||||||||||||
Impairment of equity method investment | 71 | — | 178 | |||||||||||||||||
Termination of option granted to Rite Aid | — | (173) | — | |||||||||||||||||
Gain on sale of equity method investment | (1) | — | (322) | |||||||||||||||||
Net investment hedging (gain) loss | (11) | 18 | (21) | |||||||||||||||||
Total adjustments to other income (expense) | 59 | (155) | (165) | |||||||||||||||||
Adjustments to interest expense, net: | ||||||||||||||||||||
Prefunded acquisition financing costs | — | — | 29 | |||||||||||||||||
Total adjustments to interest expense, net | — | — | 29 | |||||||||||||||||
Adjustments to income tax provision: | ||||||||||||||||||||
UK tax rate change3 | 139 | — | — | |||||||||||||||||
Equity method non-cash tax | 60 | 18 | 25 | |||||||||||||||||
U.S. tax law changes3 | (6) | (8) | (125) | |||||||||||||||||
Tax impact of adjustments4 | (458) | (291) | (193) | |||||||||||||||||
Total adjustments to income tax provision | (265) | (281) | (293) | |||||||||||||||||
Adjustments to post tax equity earnings from other equity method investments: | ||||||||||||||||||||
Adjustments to equity earnings in other equity method investments5 | 54 | 40 | — | |||||||||||||||||
Total adjustments to post tax equity earnings from other equity method investments | 54 | 40 | — | |||||||||||||||||
Adjustments to net earnings (loss) attributable to noncontrolling interests: | ||||||||||||||||||||
Impairment of goodwill and intangible assets | (14) | — | — | |||||||||||||||||
Transformational cost management | (10) | — | — | |||||||||||||||||
Acquisition-related amortization | (4) | — | — | |||||||||||||||||
LIFO provision | (1) | — | — | |||||||||||||||||
Total adjustments to net earnings (loss) attributable to noncontrolling interests | (29) | — | — | |||||||||||||||||
Adjusted net earnings attributable to Walgreens Boots Alliance, Inc. (Non-GAAP measure) | $ | 4,175 | $ | 5,529 | $ | 5,985 |
2020 | 2019 | 2018 | ||||||||||||||||||
Diluted net earnings per common share (GAAP) | $ | 0.52 | $ | 4.31 | $ | 5.05 | ||||||||||||||
Adjustments to operating income | 4.43 | 2.10 | 1.40 | |||||||||||||||||
Adjustments to other income (expense) | 0.07 | (0.17) | (0.17) | |||||||||||||||||
Adjustments to interest expense, net | — | — | 0.03 | |||||||||||||||||
Adjustments to income tax provision | (0.30) | (0.30) | (0.29) | |||||||||||||||||
Adjustments to post tax equity earnings from other equity method investments | 0.06 | 0.04 | — | |||||||||||||||||
Adjustments to net earnings (loss) attributable to noncontrolling interests | $ | (0.03) | $ | — | $ | — | ||||||||||||||
Adjusted diluted net earnings per common share (Non-GAAP measure) | $ | 4.74 | $ | 5.99 | $ | 6.02 | ||||||||||||||
Weighted average common shares outstanding, diluted | 880.3 | 923.5 | 995.0 |
2020 | 2019 | 2018 | ||||||||||||||||||
Retail Pharmacy USA | $ | 1,052 | $ | 1,323 | $ | 1,022 | ||||||||||||||
Retail Pharmacy International | 239 | 275 | 241 | |||||||||||||||||
Pharmaceutical Wholesale | 83 | 104 | 104 | |||||||||||||||||
Total | $ | 1,374 | $ | 1,702 | $ | 1,367 |
Rating agency | Long-term debt rating | Commercial paper rating | Outlook | ||||||||
Fitch | BBB- | F3 | Stable | ||||||||
Moody’s | Baa2 | P-2 | Negative | ||||||||
Standard & Poor’s | BBB | A-2 | Negative |
Payments due by period | ||||||||||||||||||||||||||||||||
Total | Less than 1 year | 1-3 years | 3-5 years | Over 5 years | ||||||||||||||||||||||||||||
Operating lease obligation1 | $ | 31,589 | $ | 3,529 | $ | 6,584 | $ | 5,917 | $ | 15,559 | ||||||||||||||||||||||
Finance lease obligations | 1,697 | 96 | 187 | 184 | 1,230 | |||||||||||||||||||||||||||
Purchase obligations: | 4,728 | 2,840 | 756 | 700 | 432 | |||||||||||||||||||||||||||
Open inventory purchase orders* | 2,227 | 2,226 | — | — | — | |||||||||||||||||||||||||||
Real estate development* | 137 | 137 | — | — | — | |||||||||||||||||||||||||||
Other obligations*2 | 2,364 | 476 | 755 | 700 | 432 | |||||||||||||||||||||||||||
Short-term debt and long-term debt** | 15,816 | 3,545 | 2,450 | 2,005 | 7,816 | |||||||||||||||||||||||||||
Interest payment on short-term debt and long-term debt* | 5,657 | 460 | 800 | 693 | 3,704 | |||||||||||||||||||||||||||
Retirement benefit obligations | 730 | 48 | 93 | 94 | 495 | |||||||||||||||||||||||||||
Investment commitment*3 | 750 | 200 | 550 | — | — | |||||||||||||||||||||||||||
Other liabilities reflected on the balance sheet4 | 1,136 | 138 | 500 | 188 | 311 | |||||||||||||||||||||||||||
Total | $ | 62,103 | $ | 10,855 | $ | 11,920 | $ | 9,781 | $ | 29,547 |
2020 | 2019 | |||||||||||||
Assets | ||||||||||||||
Current assets: | ||||||||||||||
Cash and cash equivalents | $ | $ | ||||||||||||
Accounts receivable, net | ||||||||||||||
Inventories | ||||||||||||||
Other current assets | ||||||||||||||
Total current assets | ||||||||||||||
Non-current assets: | ||||||||||||||
Property, plant and equipment, net | ||||||||||||||
Operating lease right-of-use asset | ||||||||||||||
Goodwill | ||||||||||||||
Intangible assets, net | ||||||||||||||
Equity method investments (see note 5) | ||||||||||||||
Other non-current assets | ||||||||||||||
Total non-current assets | ||||||||||||||
Total assets | $ | $ | ||||||||||||
Liabilities and equity | ||||||||||||||
Current liabilities: | ||||||||||||||
Short-term debt | $ | $ | ||||||||||||
Trade accounts payable (see note 18) | ||||||||||||||
Operating lease obligation | ||||||||||||||
Accrued expenses and other liabilities | ||||||||||||||
Income taxes | ||||||||||||||
Total current liabilities | ||||||||||||||
Non-current liabilities: | ||||||||||||||
Long-term debt | ||||||||||||||
Operating lease obligation | ||||||||||||||
Deferred income taxes | ||||||||||||||
Other non-current liabilities | ||||||||||||||
Total non-current liabilities | ||||||||||||||
Commitments and contingencies (see note 10) | ||||||||||||||
Equity: | ||||||||||||||
Preferred stock $ | ||||||||||||||
Common stock $ | ||||||||||||||
Paid-in capital | ||||||||||||||
Retained earnings | ||||||||||||||
Accumulated other comprehensive loss | ( | ( | ||||||||||||
Treasury stock, at cost; | ( | ( | ||||||||||||
Total Walgreens Boots Alliance, Inc. shareholders’ equity | ||||||||||||||
Noncontrolling interests | ||||||||||||||
Total equity | ||||||||||||||
Total liabilities and equity | $ | $ |
Equity attributable to Walgreens Boots Alliance, Inc. | |||||||||||||||||||||||||||||
Common stock shares | Common stock amount | Treasury stock amount | Paid-in capital | Employee stock loan receivable | Accumulated other comprehensive income (loss) | Retained earnings | Noncontrolling interests | Total equity | |||||||||||||||||||||
August 31, 2017 | $ | $ | ( | $ | $ | $ | ( | $ | $ | $ | |||||||||||||||||||
Net earnings | — | — | — | — | — | — | |||||||||||||||||||||||
Other comprehensive income (loss), net of tax | — | — | — | — | — | — | |||||||||||||||||||||||
Dividends declared and distributions | — | — | — | — | — | — | ( | ( | ( | ||||||||||||||||||||
Treasury stock purchases | ( | — | ( | — | — | — | — | — | ( | ||||||||||||||||||||
Employee stock purchase and option plans | — | — | — | — | — | ||||||||||||||||||||||||
Stock-based compensation | — | — | — | — | — | — | |||||||||||||||||||||||
Noncontrolling interests acquired and arising on business combinations | — | — | — | — | — | — | |||||||||||||||||||||||
August 31, 2018 | $ | $ | ( | $ | $ | $ | ( | $ | $ | $ | |||||||||||||||||||
Net earnings | — | — | — | — | — | — | ( | ||||||||||||||||||||||
Other comprehensive income (loss), net of tax | — | — | — | — | — | ( | — | ( | ( | ||||||||||||||||||||
Dividends declared and distributions | — | — | — | — | — | — | ( | ( | ( | ||||||||||||||||||||
Treasury stock purchases | ( | — | ( | — | — | — | — | — | ( | ||||||||||||||||||||
Employee stock purchase and option plans | — | — | — | — | — | ||||||||||||||||||||||||
Stock-based compensation | — | — | — | — | — | — | — | ||||||||||||||||||||||
Adoption of new accounting standards | — | — | — | — | — | — | ( | — | ( | ||||||||||||||||||||
Noncontrolling interests contribution and other | — | — | — | — | — | ( | ( | ( | |||||||||||||||||||||
August 31, 2019 | $ | $ | ( | $ | $ | $ | ( | $ | $ | $ | |||||||||||||||||||
Net earnings | — | — | — | — | — | — | ( | ||||||||||||||||||||||
Other comprehensive income (loss), net of tax | — | — | — | — | — | — | |||||||||||||||||||||||
Dividends declared and distributions | — | — | — | — | — | — | ( | ( | ( | ||||||||||||||||||||
Treasury stock purchases | ( | — | ( | — | — | — | — | — | ( | ||||||||||||||||||||
Employee stock purchase and option plans | — | ( | — | — | — | — | |||||||||||||||||||||||
Stock-based compensation | — | — | — | — | — | — | — | ||||||||||||||||||||||
Adoption of new accounting standards | — | — | — | — | — | — | ( | — | ( | ||||||||||||||||||||
Noncontrolling interests contribution and other | — | — | — | — | — | — | — | ||||||||||||||||||||||
August 31, 2020 | $ | $ | ( | $ | $ | $ | ( | $ | $ | $ |
2020 | 2019 | 2018 | ||||||||||||||||||
Sales | $ | $ | $ | |||||||||||||||||
Cost of sales | ||||||||||||||||||||
Gross profit | ||||||||||||||||||||
Selling, general and administrative expenses | ||||||||||||||||||||
Equity earnings in AmerisourceBergen | ||||||||||||||||||||
Operating income | ||||||||||||||||||||
Other income | ||||||||||||||||||||
Earnings before interest and income tax provision | ||||||||||||||||||||
Interest expense, net | ||||||||||||||||||||
Earnings before income tax provision | ||||||||||||||||||||
Income tax provision | ||||||||||||||||||||
Post tax earnings from other equity method investments | ||||||||||||||||||||
Net earnings | ||||||||||||||||||||
Net (loss) earnings attributable to noncontrolling interests | ( | ( | ||||||||||||||||||
Net earnings attributable to Walgreens Boots Alliance, Inc. | $ | $ | $ | |||||||||||||||||
Net earnings per common share: | ||||||||||||||||||||
Basic | $ | $ | $ | |||||||||||||||||
Diluted | $ | $ | $ | |||||||||||||||||
Weighted average common shares outstanding: | ||||||||||||||||||||
Basic | ||||||||||||||||||||
Diluted |
2020 | 2019 | 2018 | ||||||||||||||||||
Comprehensive income: | ||||||||||||||||||||
Net earnings | $ | $ | $ | |||||||||||||||||
Other comprehensive income (loss), net of tax: | ||||||||||||||||||||
Pension/postretirement obligations | ( | ( | ||||||||||||||||||
Unrealized gain on cash flow hedges | ( | |||||||||||||||||||
Net investment hedges (see note 15) | ( | |||||||||||||||||||
Share of other comprehensive income (loss) of equity method investments | ( | ( | ||||||||||||||||||
Currency translation adjustments | ( | ( | ||||||||||||||||||
Total other comprehensive income (loss) | ( | |||||||||||||||||||
Total comprehensive income | ||||||||||||||||||||
Comprehensive income (loss) attributable to noncontrolling interests | ( | ( | ||||||||||||||||||
Comprehensive income attributable to Walgreens Boots Alliance, Inc. | $ | $ | $ |
2020 | 2019 | 2018 | ||||||||||||||||||
Cash flows from operating activities: | ||||||||||||||||||||
Net earnings | $ | $ | $ | |||||||||||||||||
Adjustments to reconcile net earnings to net cash provided by operating activities: | ||||||||||||||||||||
Depreciation and amortization | ||||||||||||||||||||
Gain on previously held equity interest | ( | |||||||||||||||||||
Deferred income taxes | ( | ( | ||||||||||||||||||
Stock compensation expense | ||||||||||||||||||||
Equity earnings from equity method investments | ( | ( | ( | |||||||||||||||||
Goodwill and intangible asset impairment | ||||||||||||||||||||
Other | ||||||||||||||||||||
Changes in operating assets and liabilities: | ||||||||||||||||||||
Accounts receivable, net | ( | ( | ||||||||||||||||||
Inventories | ||||||||||||||||||||
Other current assets | ( | ( | ( | |||||||||||||||||
Trade accounts payable | ( | |||||||||||||||||||
Accrued expenses and other liabilities | ( | |||||||||||||||||||
Income taxes | ( | ( | ||||||||||||||||||
Other non-current assets and liabilities | ( | ( | ( | |||||||||||||||||
Net cash provided by operating activities | ||||||||||||||||||||
Cash flows from investing activities: | ||||||||||||||||||||
Additions to property, plant and equipment | ( | ( | ( | |||||||||||||||||
Proceeds from sale leaseback transactions | ||||||||||||||||||||
Proceeds from sale of other assets | ||||||||||||||||||||
Business, investment and asset acquisitions, net of cash acquired | ( | ( | ( | |||||||||||||||||
Other | ( | |||||||||||||||||||
Net cash used for investing activities | ( | ( | ( | |||||||||||||||||
Cash flows from financing activities: | ||||||||||||||||||||
Net change in short-term debt with maturities of 3 months or less | ( | |||||||||||||||||||
Proceeds from debt | ||||||||||||||||||||
Payments of debt | ( | ( | ( | |||||||||||||||||
Stock purchases | ( | ( | ( | |||||||||||||||||
Proceeds related to employee stock plans | ||||||||||||||||||||
Cash dividends paid | ( | ( | ( | |||||||||||||||||
Other | ( | ( | ||||||||||||||||||
Net cash used for financing activities | ( | ( | ( | |||||||||||||||||
Effect of exchange rate changes on cash, cash equivalents and restricted cash | ( | ( | ||||||||||||||||||
Changes in cash, cash equivalents and restricted cash | ||||||||||||||||||||
Net increase (decrease) in cash, cash equivalents, and restricted cash | ( | ( | ||||||||||||||||||
Cash, cash equivalents and restricted cash at beginning of period | ||||||||||||||||||||
Cash, cash equivalents and restricted cash at end of period | $ | $ | $ |
August 31, 2020 | August 31, 2019 | ||||||||||
Cash and cash equivalents | $ | $ | |||||||||
Restricted cash (included in other current assets) | |||||||||||
Cash, cash equivalents and restricted cash | $ | $ |
Estimated useful life | 2020 | 2019 | ||||||||||||||||||
Land and land improvements | $ | $ | ||||||||||||||||||
Buildings and building improvements | ||||||||||||||||||||
Fixtures and equipment | ||||||||||||||||||||
Capitalized system development costs and software | ||||||||||||||||||||
Finance lease properties | ||||||||||||||||||||
Less: accumulated depreciation and amortization | ||||||||||||||||||||
Balance at end of year | $ | $ |
As reported August 31, 2019 | Adjustments | As revised September 1, 2019 | |||||||||||||||
Consolidated Balance Sheets | |||||||||||||||||
Other current assets | $ | $ | ( | $ | |||||||||||||
Total current assets | ( | ||||||||||||||||
Property, plant and equipment, net | |||||||||||||||||
Operating lease right-of-use asset | — | ||||||||||||||||
Intangible assets, net | ( | ||||||||||||||||
Total assets | |||||||||||||||||
Operating lease obligation - current | — | ||||||||||||||||
Accrued expenses and other liabilities | ( | ||||||||||||||||
Total current liabilities | |||||||||||||||||
Operating lease obligation - non-current | — | ||||||||||||||||
Deferred income taxes | ( | ||||||||||||||||
Other non-current liabilities | ( | ||||||||||||||||
Total non-current liabilities | |||||||||||||||||
Retained earnings | ( | ||||||||||||||||
Total liabilities and equity | $ | $ | $ |
August 31, 2019 | |||||
Consideration | $ | ||||
Identifiable assets acquired and liabilities assumed | |||||
Inventories | $ | ||||
Property, plant and equipment | |||||
Intangible assets | |||||
Accrued expenses and other liabilities | ( | ||||
Deferred income taxes | |||||
Other non-current liabilities | ( | ||||
Total identifiable net assets | $ | ||||
Goodwill | $ |
Definite-lived intangible assets | Weighted-average useful life (in years) | Amount (in millions) | ||||||
Customer relationships | $ | |||||||
Favorable lease interests | ||||||||
Trade names | ||||||||
Total | $ |
(in millions) | 20181 | ||||||||||
Sales | $ |
(in millions) | 2018 | ||||
Sales | $ |
Twelve Months Ended August 31, 2020 | Retail Pharmacy USA | Retail Pharmacy International | Pharmaceutical Wholesale | Walgreens Boots Alliance, Inc. | |||||||||||||||||||
Lease obligations and other real estate costs1 | $ | $ | $ | $ | |||||||||||||||||||
Asset impairments2 | |||||||||||||||||||||||
Employee severance and business transition costs | |||||||||||||||||||||||
Information technology transformation and other exit costs | |||||||||||||||||||||||
Total pre-tax exit and disposal charges | $ | $ | $ | $ |
Twelve Months Ended August 31, 2019 | Retail Pharmacy USA | Retail Pharmacy International | Pharmaceutical Wholesale | Walgreens Boots Alliance, Inc. | |||||||||||||||||||
Lease obligations and other real estate costs | $ | $ | $ | $ | |||||||||||||||||||
Asset impairments1 | |||||||||||||||||||||||
Employee severance and business transition costs | |||||||||||||||||||||||
Information technology transformation and other exit costs | |||||||||||||||||||||||
Total pre-tax exit and disposal charges | $ | $ | $ | $ |
Lease obligations and other real estate costs | Asset Impairments | Employee severance and business transition costs | Information technology transformation and other exit costs | Total | ||||||||||||||||||||||||||||
Balance at August 31, 2018 | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||
Costs | ||||||||||||||||||||||||||||||||
Payments | ( | ( | ( | ( | ||||||||||||||||||||||||||||
Other - non cash | ( | ( | ( | |||||||||||||||||||||||||||||
Currency | ||||||||||||||||||||||||||||||||
Balance at August 31, 2019 | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||
Costs | ||||||||||||||||||||||||||||||||
Payments | ( | ( | ( | ( | ||||||||||||||||||||||||||||
Other1 | ( | ( | ( | ( | ||||||||||||||||||||||||||||
ASC 842 Leases adoption2 | ( | ( | ||||||||||||||||||||||||||||||
Currency | ||||||||||||||||||||||||||||||||
Balance at August 31, 2020 | $ | $ | $ | $ | $ |
2020 | 2019 | 2018 | |||||||||||||||
Lease obligations and other real estate costs1 | $ | $ | $ | ||||||||||||||
Employee severance and other exit costs | |||||||||||||||||
Total costs | $ | $ | $ |
Lease obligations and other real estate costs | Employee severance and other exit costs | Total | |||||||||||||||
Balance at August 31, 2018 | $ | $ | $ | ||||||||||||||
Costs | |||||||||||||||||
Payments | ( | ( | ( | ||||||||||||||
Other - non cash1 | ( | ||||||||||||||||
Balance at August 31, 2019 | $ | $ | $ | ||||||||||||||
Costs | |||||||||||||||||
Payments | ( | ( | ( | ||||||||||||||
Other - non cash2 | ( | ( | ( | ||||||||||||||
ASC 842 Leases adoption3 | ( | ( | |||||||||||||||
Balance at August 31, 2020 | $ | $ | $ |
August 31, 2020 | ||||||||
Operating Leases: | ||||||||
Operating lease right-of-use assets | $ | |||||||
Operating lease obligations - current | $ | |||||||
Operating lease obligations - non current | ||||||||
Total operating lease obligations | $ | |||||||
Finance Leases: | ||||||||
Right-of-use assets included in: | ||||||||
Property, plant and equipment, net | $ | |||||||
Lease obligations included in: | ||||||||
Accrued expenses and other liabilities | $ | |||||||
Other non-current liabilities | ||||||||
Total finance lease obligations | $ |
August 31, 2020 | ||||||||
Operating lease cost | ||||||||
Fixed | $ | |||||||
Variable1 | ||||||||
Finance lease cost | ||||||||
Amortization | $ | |||||||
Interest | ||||||||
Sublease income | ||||||||
Impairment of right-of-use assets2 | ||||||||
Impairment of finance lease assets 2 | ||||||||
Gains on sale-leaseback transactions3 |
August 31, 2020 | ||||||||
Cash paid for amounts included in the measurement of lease obligations | ||||||||
Operating cash flows from operating leases | $ | |||||||
Operating cash flows from finance leases | ||||||||
Financing cash flows from finance leases | ||||||||
Total | $ | |||||||
Right-of-use assets obtained in exchange for new lease obligations: | ||||||||
Operating leases | $ | |||||||
Finance leases | ||||||||
Total | $ |
August 31, 2020 | ||||||||
Weighted average remaining lease term in years: | ||||||||
Operating leases | ||||||||
Finance leases | ||||||||
Weighted average discount rate | ||||||||
Operating leases | % | |||||||
Finance leases | % |
Fiscal year | Finance lease | Operating lease | |||||||||
2021 | $ | $ | |||||||||
2022 | |||||||||||
2023 | |||||||||||
2024 | |||||||||||
2025 | |||||||||||
Later | |||||||||||
Total undiscounted minimum lease payments | $ | $ | |||||||||
Less: Present value discount | ( | ( | |||||||||
Lease liability | $ | $ |
2019 | ||||||||
Balance at beginning of period | $ | |||||||
Provision for present value of non-cancelable lease payments on closed facilities | ||||||||
Changes in assumptions | ||||||||
Accretion expense | ||||||||
Other - non cash1 | ||||||||
Cash payments, net of sublease income | ( | |||||||
Balance at end of period | $ |
2019 | 2018 | |||||||||||||
Minimum rentals | $ | $ | ||||||||||||
Contingent rentals | ||||||||||||||
Less: sublease rental income | ( | ( | ||||||||||||
$ | $ |
2020 | 2019 | |||||||||||||||||||||||||
Carrying value | Ownership percentage | Carrying value | Ownership percentage | |||||||||||||||||||||||
AmerisourceBergen | $ | $ | ||||||||||||||||||||||||
Others | ||||||||||||||||||||||||||
Total | $ | $ |
Year ended August 31, | |||||||||||
2020 | 2019 | ||||||||||
Current assets | $ | $ | |||||||||
Non-current assets | |||||||||||
Current liabilities | |||||||||||
Non-current liabilities | |||||||||||
Shareholders’ equity1 |
Year ended August 31, | |||||||||||||||||
2020 | 2019 | 2018 | |||||||||||||||
Sales | $ | $ | $ | ||||||||||||||
Gross profit | |||||||||||||||||
Net earnings | |||||||||||||||||
Share of earnings from equity method investments |
Retail Pharmacy USA | Retail Pharmacy International | Pharmaceutical Wholesale | Walgreens Boots Alliance, Inc. | |||||||||||||||||||||||
August 31, 2018 | $ | $ | $ | $ | ||||||||||||||||||||||
Acquisitions | ||||||||||||||||||||||||||
Dispositions | ( | ( | ||||||||||||||||||||||||
Currency translation adjustments | ( | ( | ( | |||||||||||||||||||||||
August 31, 2019 | $ | $ | $ | $ | ||||||||||||||||||||||
Acquisitions | $ | $ | $ | $ | ||||||||||||||||||||||
Impairment | ( | ( | ||||||||||||||||||||||||
Currency translation adjustments | ||||||||||||||||||||||||||
August 31, 2020 | $ | $ | $ | $ |
August 31, 2020 | August 31, 2019 | ||||||||||
Gross amortizable intangible assets | |||||||||||
Customer relationships and loyalty card holders1 | $ | $ | |||||||||
Favorable lease interests and non-compete agreements2 | |||||||||||
Trade names and trademarks | |||||||||||
Purchasing and payer contracts | |||||||||||
Total gross amortizable intangible assets | |||||||||||
Accumulated amortization | |||||||||||
Customer relationships and loyalty card holders1 | $ | $ | |||||||||
Favorable lease interests and non-compete agreements2 | |||||||||||
Trade names and trademarks | |||||||||||
Purchasing and payer contracts | |||||||||||
Total accumulated amortization | |||||||||||
Total amortizable intangible assets, net | $ | $ | |||||||||
Indefinite-lived intangible assets | |||||||||||
Trade names and trademarks | $ | $ | |||||||||
Pharmacy licenses | |||||||||||
Total indefinite-lived intangible assets | $ | $ | |||||||||
Total intangible assets, net | $ | $ |
2021 | 2022 | 2023 | 2024 | 2025 | ||||||||||||||||||||||||||||
Estimated annual amortization expense | $ | $ | $ | $ | $ |
August 31, 2020 | August 31, 2019 | ||||||||||
Short-term debt | |||||||||||
Commercial paper | $ | $ | |||||||||
Credit facilities | |||||||||||
$ | |||||||||||
£ | |||||||||||
Other2 | |||||||||||
Total short-term debt | $ | $ |
Long-term debt | |||||||||||
$ | |||||||||||
$ | $ | ||||||||||
$ | |||||||||||
$ | |||||||||||
£ | |||||||||||
€ | |||||||||||
$ | |||||||||||
Other4 | |||||||||||
Total long-term debt, less current portion | $ | $ |
Amount | |||||
2021 | $ | ||||
2022 | |||||
2023 | |||||
2024 | |||||
2025 | |||||
Later | |||||
Total estimated future maturities | $ |
August 31, 2020 | Notional | Fair value | Location in Consolidated Balance Sheets | |||||||||||||||||
Derivatives designated as hedges: | ||||||||||||||||||||
Cross currency interest rate swaps | $ | $ | Other non-current assets | |||||||||||||||||
Foreign currency forwards | Other current assets | |||||||||||||||||||
Cross currency interest rate swaps | Other current assets | |||||||||||||||||||
Foreign currency forwards | Other non-current liabilities | |||||||||||||||||||
Cross currency interest rate swaps | Other non-current liabilities | |||||||||||||||||||
Interest rate swaps | Other non-current liabilities | |||||||||||||||||||
Foreign currency forwards | Other current liabilities | |||||||||||||||||||
Cross currency interest rate swaps | Other current liabilities | |||||||||||||||||||
Derivatives not designated as hedges: | ||||||||||||||||||||
Foreign currency forwards | Other current assets | |||||||||||||||||||
Foreign currency forwards | Other current liabilities | |||||||||||||||||||
Total return swap | Other current liabilities | |||||||||||||||||||
August 31, 2019 | Notional | Fair value | Location in Consolidated Balance Sheets | |||||||||||||||||
Derivatives designated as hedges: | ||||||||||||||||||||
Cross currency interest rate swaps | $ | $ | Other non-current assets | |||||||||||||||||
Foreign currency forwards | Other current assets | |||||||||||||||||||
Derivatives not designated as hedges: | ||||||||||||||||||||
Foreign currency forwards | Other current assets | |||||||||||||||||||
Foreign currency forwards | Other current liabilities |
Location in Consolidated Statements of Earnings | 2020 | 2019 | 2018 | |||||||||||||||||||||||
Foreign currency forwards | Selling, general and administrative expense | $ | ( | $ | $ | |||||||||||||||||||||
Total return swap | Selling, general and administrative expense | |||||||||||||||||||||||||
Foreign currency forwards | Other income (expense) | ( |
August 31, 2020 | Level 1 | Level 2 | Level 3 | |||||||||||||||||||||||
Assets: | ||||||||||||||||||||||||||
Money market funds¹ | $ | $ | $ | $ | ||||||||||||||||||||||
Investments in equity securities² | ||||||||||||||||||||||||||
Foreign currency forwards³ | ||||||||||||||||||||||||||
Cross Currency interest rate swaps⁴ | ||||||||||||||||||||||||||
Liabilities: | ||||||||||||||||||||||||||
Foreign currency forwards3 | ||||||||||||||||||||||||||
Cross currency interest rate swaps4 | ||||||||||||||||||||||||||
Interest rate swaps4 | ||||||||||||||||||||||||||
Total return swap |
August 31, 2019 | Level 1 | Level 2 | Level 3 | |||||||||||||||||||||||
Assets: | ||||||||||||||||||||||||||
Money market funds¹ | $ | $ | $ | $ | ||||||||||||||||||||||
Investments in equity securities² | ||||||||||||||||||||||||||
Foreign currency forwards³ | ||||||||||||||||||||||||||
Cross currency interest rate swaps4 | ||||||||||||||||||||||||||
Liabilities: | ||||||||||||||||||||||||||
Foreign currency forwards³ | ||||||||||||||||||||||||||
2020 | 2019 | 2018 | ||||||||||||||||||
U.S. | $ | $ | $ | |||||||||||||||||
Non–U.S. | ( | |||||||||||||||||||
Total | $ | $ | $ |
2020 | 2019 | 2018 | ||||||||||||||||||
Current provision | ||||||||||||||||||||
Federal | $ | $ | $ | |||||||||||||||||
State | ||||||||||||||||||||
Non–U.S. | ||||||||||||||||||||
Deferred provision | ||||||||||||||||||||
Federal – tax law change | ( | |||||||||||||||||||
Federal – excluding tax law change | ( | |||||||||||||||||||
State | ||||||||||||||||||||
Non–U.S. – tax law change | ||||||||||||||||||||
Non–U.S. – excluding tax law change | ( | ( | ( | |||||||||||||||||
( | ( | |||||||||||||||||||
Income tax provision | $ | $ | $ |
2020 | 2019 | 2018 | ||||||||||||||||||
Federal statutory rate | % | % | % | |||||||||||||||||
State income taxes, net of federal benefit | ||||||||||||||||||||
Foreign income taxed at non-U.S. rates | ( | ( | ( | |||||||||||||||||
Non-taxable income | ( | ( | ( | |||||||||||||||||
Non-deductible expenses | ||||||||||||||||||||
Transition tax | ||||||||||||||||||||
Tax law changes | ( | ( | ||||||||||||||||||
Change in valuation allowance1 | ||||||||||||||||||||
Goodwill impairment | ||||||||||||||||||||
Tax credits | ( | ( | ( | |||||||||||||||||
Other | ( | |||||||||||||||||||
Effective income tax rate | % | % | % |
2020 | 2019 | |||||||||||||
Deferred tax assets: | ||||||||||||||
Compensation and benefits | $ | $ | ||||||||||||
Postretirement benefits | ||||||||||||||
Insurance | ||||||||||||||
Accrued rent & lease obligations | ||||||||||||||
Allowance for doubtful accounts | ||||||||||||||
Tax attributes | ||||||||||||||
Stock compensation | ||||||||||||||
Deferred income | ||||||||||||||
Other | ||||||||||||||
Less: valuation allowance | ||||||||||||||
Total deferred tax assets | ||||||||||||||
Deferred tax liabilities: | ||||||||||||||
Accelerated depreciation | ||||||||||||||
Inventory | ||||||||||||||
Intangible assets | ||||||||||||||
Equity method investment | ||||||||||||||
Lease right-of-use asset | ||||||||||||||
Net deferred tax liabilities | $ | $ |
2020 | 2019 | 2018 | ||||||||||||||||||
Balance at beginning of year | $ | $ | $ | |||||||||||||||||
Gross increases related to tax positions in a prior period | ||||||||||||||||||||
Gross decreases related to tax positions in a prior period | ( | ( | ( | |||||||||||||||||
Gross increases related to tax positions in the current period | ||||||||||||||||||||
Settlements with taxing authorities | ( | ( | ( | |||||||||||||||||
Lapse of statute of limitations | ( | ( | ( | |||||||||||||||||
Balance at end of year | $ | $ | $ |
August 31, 2020 | Level 1 | Level 2 | Level 3 | |||||||||||||||||||||||
Equity securities: | ||||||||||||||||||||||||||
Equity securities1 | $ | $ | $ | $ | ||||||||||||||||||||||
Debt securities: | ||||||||||||||||||||||||||
Fixed interest government bonds2 | ||||||||||||||||||||||||||
Index linked government bonds2 | ||||||||||||||||||||||||||
Corporate bonds3 | ||||||||||||||||||||||||||
Real estate: | ||||||||||||||||||||||||||
Real estate4 | ||||||||||||||||||||||||||
Other: | ||||||||||||||||||||||||||
Other investments, net5 | ( | |||||||||||||||||||||||||
Total | $ | $ | $ | $ |
August 31, 2019 | Level 1 | Level 2 | Level 3 | |||||||||||||||||||||||
Equity securities: | ||||||||||||||||||||||||||
Equity securities1 | $ | $ | $ | $ | ||||||||||||||||||||||
Debt securities: | ||||||||||||||||||||||||||
Fixed interest government bonds2 | ||||||||||||||||||||||||||
Index linked government bonds2 | ||||||||||||||||||||||||||
Corporate bonds3 | ||||||||||||||||||||||||||
Real estate: | ||||||||||||||||||||||||||
Real estate4 | ||||||||||||||||||||||||||
Other: | ||||||||||||||||||||||||||
Other investments, net5 | ||||||||||||||||||||||||||
Total | $ | $ | $ | $ |
Boots and other pension plans | ||||||||||||||||||||
2020 | 2019 | 2018 | ||||||||||||||||||
Service costs | $ | $ | $ | |||||||||||||||||
Interest costs | ||||||||||||||||||||
Expected returns on plan assets/other | ( | ( | ( | |||||||||||||||||
Total net periodic pension (income) cost | $ | ( | $ | ( | $ | ( |
2020 | 2019 | |||||||||||||
Benefit obligation at beginning of year | $ | $ | ||||||||||||
Service costs | ||||||||||||||
Interest costs | ||||||||||||||
Amendments/other | ||||||||||||||
Net actuarial loss | ||||||||||||||
Benefits paid | ( | ( | ||||||||||||
Currency translation adjustments | ( | |||||||||||||
Benefit obligation at end of year | $ | $ |
2020 | 2019 | |||||||||||||
Plan assets at fair value at beginning of year | $ | $ | ||||||||||||
Employer contributions | ||||||||||||||
Benefits paid | ( | ( | ||||||||||||
Return on assets/other | ( | |||||||||||||
Currency translation adjustments | ( | |||||||||||||
Plan assets at fair value at end of year | $ | $ |
2020 | 2019 | |||||||||||||
Other non-current assets | $ | $ | ||||||||||||
Accrued expenses and other liabilities | ( | ( | ||||||||||||
Other non-current liabilities | ( | ( | ||||||||||||
Net asset (liability) recognized at end of year | $ | ( | $ |
2020 | 2019 | |||||||||||||
Net actuarial loss | $ | $ | ||||||||||||
Prior service cost | ( | |||||||||||||
Total | $ | $ |
2020 | 2019 | |||||||||||||
Projected benefit obligation | $ | $ | ||||||||||||
Accumulated benefit obligation | ||||||||||||||
Fair value of plan assets |
Estimated future benefit payments | |||||
2021 | $ | ||||
2022 | |||||
2023 | |||||
2024 | |||||
2025 | |||||
2026-2030 |
2020 | 2019 | |||||||||||||
Weighted-average assumptions used to determine benefit obligations | ||||||||||||||
Discount rate | % | % | ||||||||||||
Rate of compensation increase | % | % | ||||||||||||
Weighted-average assumptions used to determine net periodic benefit cost | ||||||||||||||
Discount rate | % | % | ||||||||||||
Expected long-term return on plan assets | % | % | ||||||||||||
Rate of compensation increase | % | % |
Pension/post-retirement obligations | Unrealized gain (loss) on cash flow hedges | Net investment hedges2 | Share of OCI of equity method investments | Cumulative translation adjustments | Total | ||||||||||||||||||||||||||||||
Balance at August 31, 2017 | $ | ( | $ | ( | $ | $ | ( | $ | ( | $ | ( | ||||||||||||||||||||||||
Other comprehensive income (loss) before reclassification adjustments | ( | ( | |||||||||||||||||||||||||||||||||
Amounts reclassified from AOCI1 | ( | ( | |||||||||||||||||||||||||||||||||
Tax benefit (provision) | ( | ( | ( | ( | |||||||||||||||||||||||||||||||
Net change in other comprehensive income (loss) | ( | ||||||||||||||||||||||||||||||||||
Balance at August 31, 2018 | $ | $ | ( | $ | $ | $ | ( | $ | ( | ||||||||||||||||||||||||||
Other comprehensive income (loss) before reclassification adjustments | ( | ( | ( | ( | |||||||||||||||||||||||||||||||
Amounts reclassified from AOCI | ( | ( | |||||||||||||||||||||||||||||||||
Tax benefit (provision) | ( | ( | ( | ||||||||||||||||||||||||||||||||
Net change in other comprehensive income (loss) | ( | ( | ( | ( | |||||||||||||||||||||||||||||||
Balance at August 31, 2019 | $ | ( | $ | ( | $ | $ | $ | ( | $ | ( | |||||||||||||||||||||||||
Other comprehensive income (loss) before reclassification adjustments | ( | ( | ( | ( | ( | ||||||||||||||||||||||||||||||
Amounts reclassified from AOCI | ( | ||||||||||||||||||||||||||||||||||
Tax benefit (provision) | ( | ||||||||||||||||||||||||||||||||||
Net change in other comprehensive income (loss) | ( | ( | ( | ( | |||||||||||||||||||||||||||||||
Balance at August 31, 2020 | $ | ( | $ | ( | $ | ( | $ | ( | $ | ( | $ | ( |
For the years ending August 31, | |||||||||||||||||
2020 | 2019 | 2018 | |||||||||||||||
Sales: | |||||||||||||||||
Retail Pharmacy USA | $ | $ | $ | ||||||||||||||
Retail Pharmacy International | |||||||||||||||||
Pharmaceutical Wholesale | |||||||||||||||||
Eliminations1 | ( | ( | ( | ||||||||||||||
Walgreens Boots Alliance, Inc. | $ | $ | $ | ||||||||||||||
Adjusted Operating income:2 | |||||||||||||||||
Retail Pharmacy USA | $ | $ | $ | ||||||||||||||
Retail Pharmacy International | |||||||||||||||||
Pharmaceutical Wholesale | |||||||||||||||||
Eliminations1 | |||||||||||||||||
Walgreens Boots Alliance, Inc. | $ | $ | $ | ||||||||||||||
Depreciation and amortization: | |||||||||||||||||
Retail Pharmacy USA | $ | $ | $ | ||||||||||||||
Retail Pharmacy International | |||||||||||||||||
Pharmaceutical Wholesale | |||||||||||||||||
Walgreens Boots Alliance, Inc. | $ | $ | $ | ||||||||||||||
Capital expenditures: | |||||||||||||||||
Retail Pharmacy USA | $ | $ | $ | ||||||||||||||
Retail Pharmacy International | |||||||||||||||||
Pharmaceutical Wholesale | |||||||||||||||||
Walgreens Boots Alliance, Inc. | $ | $ | $ | ||||||||||||||
For the years ending August 31, | |||||||||||||||||
2020 | 2019 | 2018 | |||||||||||||||
Adjusted operating income2 | $ | $ | $ | ||||||||||||||
Impairment of goodwill and intangible assets | ( | ( | |||||||||||||||
Transformational cost management | ( | ( | |||||||||||||||
Acquisition-related amortization3 | ( | ( | ( | ||||||||||||||
Acquisition-related costs | ( | ( | ( | ||||||||||||||
Adjustments to equity earnings in AmerisourceBergen | ( | ( | ( | ||||||||||||||
LIFO provision | ( | ( | ( | ||||||||||||||
Store damage and inventory losses4 | ( | ||||||||||||||||
Store optimization | ( | ( | ( | ||||||||||||||
Certain legal and regulatory accruals and settlements | ( | ( | |||||||||||||||
Hurricane-related costs | ( | ||||||||||||||||
Asset recovery | |||||||||||||||||
Operating income2 | $ | $ | $ |
2020 | 2019 | 2018 | |||||||||||||||
United States | $ | $ | $ | ||||||||||||||
United Kingdom | |||||||||||||||||
Europe (excluding the United Kingdom) | |||||||||||||||||
Other | |||||||||||||||||
Sales | $ | $ | $ |
2020 | 2019 | ||||||||||
United States | $ | $ | |||||||||
United Kingdom | |||||||||||
Europe (excluding the United Kingdom) | |||||||||||
Other | |||||||||||
Total long-lived assets | $ | $ |
For the years ending August 31, | ||||||||||||||||||||
2020 | 2019 | 2018 | ||||||||||||||||||
Retail Pharmacy USA | ||||||||||||||||||||
Pharmacy | $ | $ | $ | |||||||||||||||||
Retail | ||||||||||||||||||||
Total | ||||||||||||||||||||
Retail Pharmacy International | ||||||||||||||||||||
Pharmacy | ||||||||||||||||||||
Retail | ||||||||||||||||||||
Total | ||||||||||||||||||||
Pharmaceutical Wholesale | ||||||||||||||||||||
Eliminations1 | ( | ( | ( | |||||||||||||||||
Walgreens Boots Alliance, Inc. | $ | $ | $ |
2020 | 2019 | 2018 | ||||||||||||||||||
Purchases, net | $ | $ | $ | |||||||||||||||||
Trade accounts payable, net | $ | $ | $ |
Quarter ended | |||||||||||||||||||||||||||||||||||
November | February | May | August | Fiscal year | |||||||||||||||||||||||||||||||
Fiscal 2020 | |||||||||||||||||||||||||||||||||||
Sales | $ | $ | $ | $ | $ | ||||||||||||||||||||||||||||||
Gross profit | |||||||||||||||||||||||||||||||||||
Net earnings attributable to Walgreens Boots Alliance, Inc. | ( | ||||||||||||||||||||||||||||||||||
Net earnings per common share: | |||||||||||||||||||||||||||||||||||
Basic | $ | $ | $ | ( | $ | $ | |||||||||||||||||||||||||||||
Diluted | ( | ||||||||||||||||||||||||||||||||||
Cash dividends declared per common share | $ | $ | $ | $ | $ | ||||||||||||||||||||||||||||||
Fiscal 2019 | |||||||||||||||||||||||||||||||||||
Sales | $ | $ | $ | $ | $ | ||||||||||||||||||||||||||||||
Gross profit | |||||||||||||||||||||||||||||||||||
Net earnings attributable to Walgreens Boots Alliance, Inc. | |||||||||||||||||||||||||||||||||||
Net earnings per common share: | |||||||||||||||||||||||||||||||||||
Basic | $ | $ | $ | $ | $ | ||||||||||||||||||||||||||||||
Diluted | |||||||||||||||||||||||||||||||||||
Cash dividends declared per common share | $ | $ | $ | $ | $ |
/s/ | Stefano Pessina | /s/ | James Kehoe | ||||||||||||||
Stefano Pessina | James Kehoe | ||||||||||||||||
Executive Vice Chairman and Chief Executive Officer | Executive Vice President and Global Chief Financial Officer |
Exhibit No. | Description | SEC Document Reference | |||||||||
2.1* | Purchase and Option Agreement by and among Walgreen Co., Alliance Boots GmbH and AB Acquisitions Holdings Limited dated June 18, 2012 and related annexes. | Incorporated by reference to Annex B-1 to the proxy statement/prospectus forming a part of the Registration Statement on Form S-4 (File No. 333-198768) filed with the SEC pursuant to Rule 424(b)(3) on November 24, 2014. | |||||||||
2.2* | Amendment No. 1 to Purchase and Option Agreement and Walgreen Co. Shareholders Agreement, dated August 5, 2014, by and among Walgreen Co., Alliance Boots GmbH, AB Acquisitions Holdings Limited, Walgreen Scotland Investments LP, KKR Sprint (European II) Limited, KKR Sprint (2006) Limited and KKR Sprint (KPE) Limited, Alliance Santé Participations S.A., Stefano Pessina and Kohlberg Kravis Roberts & Co. L.P. | Incorporated by reference to Annex B-2 to the proxy statement/prospectus forming a part of the Registration Statement on Form S-4 (File No. 333-198768) filed with the SEC pursuant to Rule 424(b)(3) on November 24, 2014. |
Agreement and Plan of Merger, dated October 17, 2014, by and among Walgreen Co., Walgreens Boots Alliance, Inc. and Ontario Merger Sub, Inc. | Incorporated by reference to Annex A to the proxy statement/prospectus forming a part of the Registration Statement on Form S-4 (File No. 333-198768) filed with the SEC pursuant to Rule 424(b)(3) on November 24, 2014. | ||||||||||
Amendment No. 1 to Agreement and Plan of Merger, dated December 23, 2014, by and among Walgreen Co., Walgreens Boots Alliance, Inc. and Ontario Merger Sub, Inc. | Incorporated by reference to Exhibit 2.1 to Walgreens Boots Alliance, Inc.’s Current Report on Form 8-K (File No. 1-36759) filed with the SEC on December 24, 2014. | ||||||||||
Amendment No. 2 to Agreement and Plan of Merger, dated December 29, 2014, by and among Walgreen Co., Walgreens Boots Alliance, Inc. and Ontario Merger Sub, Inc. | Incorporated by reference to Exhibit 2.3 to Walgreens Boots Alliance, Inc.’s Quarterly Report on Form 10-Q for the quarter ended November 30, 2014 (File No. 1-36759) filed with the SEC on December 30, 2014. | ||||||||||
2.6* | Amended and Restated Asset Purchase Agreement, dated as of September 18, 2017, by and among Walgreens Boots Alliance, Inc., Walgreen Co. and Rite Aid Corporation | Incorporated by reference to Exhibit 10.1 to Walgreens Boots Alliance, Inc.’s Current Report on Form 8-K (File No. 1-36759) filed with the SEC on September 19, 2017. | |||||||||
Amended and Restated Certificate of Incorporation of Walgreens Boots Alliance, Inc. | Incorporated by reference to Exhibit 3.1 to Walgreens Boots Alliance, Inc.’s Current Report on Form 8-K12B (File No. 1-36759) filed with the SEC on December 31, 2014. | ||||||||||
Amended and Restated By-laws of Walgreens Boots Alliance, Inc. | Incorporated by reference to Exhibit 3.1 to Walgreens Boots Alliance, Inc.’s Current Report on Form 8-K (File No. 1-36759) filed with the SEC on June 10, 2016. | ||||||||||
4.1** | Indenture, dated as of July 17, 2008, between Walgreen Co. and Wells Fargo Bank, National Association, as trustee. | Incorporated by reference to Exhibit 4.3 to Walgreen Co.’s registration statement on Form S-3ASR (File No. 333-152315) filed with the SEC on July 14, 2008. | |||||||||
Form of Walgreen Co. 3.100% Note due 2022. | Incorporated by reference to Exhibit 4.4 to Walgreen Co.’s Current Report on Form 8-K (File No. 1-00604) filed with the SEC on September 13, 2012. | ||||||||||
Form of Walgreen Co. 4.400% Note due 2042. | Incorporated by reference to Exhibit 4.5 to Walgreen Co.’s Current Report on Form 8-K (File No. 1-00604) filed with the SEC on September 13, 2012. | ||||||||||
Form of Guarantee of Walgreens Boots Alliance, Inc. | Incorporated by reference to Exhibit 4.1 to Walgreens Boots Alliance, Inc.’s Current Report on Form 8-K12B (File No. 1-36759) filed with the SEC on December 31, 2014. | ||||||||||
Indenture dated November 18, 2014 among Walgreens Boots Alliance, Inc. and Wells Fargo Bank, National Association, as trustee. | Incorporated by reference to Exhibit 4.1 to Walgreen Co.’s Current Report on Form 8-K (File No. 1-00604) filed with the SEC on November 18, 2014. | ||||||||||
Form of 3.300% Notes due 2021. | Incorporated by reference to Exhibit 4.5 to Walgreen Co.’s Current Report on Form 8-K (File No. 1-00604) filed with the SEC on November 18, 2014. | ||||||||||
Form of 3.800% Notes due 2024. | Incorporated by reference to Exhibit 4.6 to Walgreen Co.’s Current Report on Form 8-K (File No. 1-00604) filed with the SEC on November 18, 2014. | ||||||||||
Form of 4.500% Notes due 2034. | Incorporated by reference to Exhibit 4.7 to Walgreen Co.’s Current Report on Form 8-K (File No. 1-00604) filed with the SEC on November 18, 2014. | ||||||||||
Form of 4.800% Notes due 2044. | Incorporated by reference to Exhibit 4.8 to Walgreen Co.’s Current Report on Form 8-K (File No. 1-00604) filed with the SEC on November 18, 2014. | ||||||||||
Form of 2.875% Notes due 2020 (£). | Incorporated by reference to Exhibit 4.2 to Walgreen Co.’s Current Report on Form 8-K (File No. 1-00604) filed with the SEC on November 20, 2014. | ||||||||||
Form of 3.600% Notes due 2025 (£). | Incorporated by reference to Exhibit 4.3 to Walgreen Co.’s Current Report on Form 8-K (File No. 1-00604) filed with the SEC on November 20, 2014. |
Form of 2.125% Notes due 2026 (€). | Incorporated by reference to Exhibit 4.4 to Walgreen Co.’s Current Report on Form 8-K (File No. 1-00604) filed with the SEC on November 20, 2014. | ||||||||||
Indenture, dated as of December 17, 2015, between Walgreens Boots Alliance, Inc. and Wells Fargo Bank, National Association, as trustee | Incorporated by reference to Exhibit 4.1 to the Registration Statement on Form S-3 (File No. 333-208587) filed with the SEC on December 17, 2015. | ||||||||||
Form of 3.450% Notes due 2026 | Incorporated by reference to Exhibit 4.5 to Walgreens Boots Alliance, Inc.’s Current Report on Form 8-K (File No. 1-36759) filed with the SEC on June 1, 2016. | ||||||||||
Form of 4.650% Notes due 2046 | Incorporated by reference to Exhibit 4.6 to Walgreens Boots Alliance, Inc.’s Current Report on Form 8-K (File No. 1-36759) filed with the SEC on June 1, 2016. | ||||||||||
Form of 3.200% Notes due 2030 | Incorporated by reference to Exhibit 4.1 to Walgreens Boots Alliance, Inc.’s Current Report on Form 8-K (File No. 1-36759) filed with the SEC on April 15, 2020. | ||||||||||
Form of 4.100% Notes due 2050 | Incorporated by reference to Exhibit 4.2 to Walgreens Boots Alliance, Inc.’s Current Report on Form 8-K (File No. 1-36759) filed with the SEC on April 15, 2020. | ||||||||||
Walgreen Co. Shareholders Agreement, dated as of August 2, 2012, among Walgreen Co., Stefano Pessina, KKR Sprint (European II) Limited, KKR Sprint (2006) Limited and KKR Sprint (KPE) Limited, Alliance Santé Participations S.A., Kohlberg Kravis Roberts & Co. L.P. and certain other investors party thereto. | Incorporated by reference to Exhibit 4.1 to Walgreen Co.’s Current Report on Form 8-K (File No. 1-00604) filed with the SEC on August 6, 2012. | ||||||||||
Letter Agreement between Stefano Pessina and Walgreens Boots Alliance, Inc., dated July 23, 2020 | Incorporated by reference to Exhibit 10.1 to Walgreens Boots Alliance, Inc.’s Current Report on Form 8-K (File No. 1-36759) filed with the SEC on July 27, 2020. | ||||||||||
Amendment No. 1 to Purchase and Option Agreement and Walgreen Co. Shareholders Agreement, dated August 5, 2014, by and among Walgreen Co., Alliance Boots GmbH, AB Acquisitions Holdings Limited, Walgreen Scotland Investments LP, KKR Sprint (European II) Limited, KKR Sprint (2006) Limited and KKR Sprint (KPE) Limited, Alliance Santé Participations S.A., Stefano Pessina and Kohlberg Kravis Roberts & Co. L.P. | Incorporated by reference to Annex B-2 to the proxy statement/prospectus forming a part of the Registration Statement on Form S-4 (File No. 333-198768) filed with the SEC pursuant to Rule 424(b)(3) on November 24, 2014. | ||||||||||
Amendment No. 2 to Purchase and Option Agreement and Walgreen Co. Shareholders Agreement, dated December 31, 2014, as Amended by Amendment No. 1, dated as of August 5, 2014, by and among Walgreen Co., Alliance Boots GmbH, AB Acquisitions Holdings Limited, Ontario Holdings WBS Limited, KKR Sprint (European II) Limited, KKR Sprint (2006) Limited and KKR Sprint (KPE) Limited, Alliance Santé Participations S.A., Stefano Pessina and Kohlberg Kravis Roberts & Co. L.P. | Incorporated by reference to Exhibit E to the Schedule 13D filed by Alliance Santé Participations S.A. (File No. 005-88481) filed with the SEC on December 31, 2014). | ||||||||||
Description of Registered Securities. | Filed herewith. | ||||||||||
Walgreens Boots Alliance, Inc. Management Incentive Plan (as amended and restated effective July 1, 2016). | Incorporated by reference to Exhibit 10.2 to Walgreens Boots Alliance, Inc.’s Annual Report on Form 10-K for the year ended August 31, 2016 (File No. 1-36759) filed with the SEC on October 20, 2016. |
Walgreens Boots Alliance, Inc. 2013 Omnibus Incentive Plan (as amended and restated). | Incorporated by reference to Exhibit 10.1 to Walgreens Boots Alliance, Inc.’s Current Report on Form 8-K (File No. 1-36759) filed with the SEC on January 19, 2018. | ||||||||||
Form of Performance Share Award agreement (effective October 2019). | Incorporated by reference to Exhibit 10.3 to Walgreens Boots Alliance, Inc.’s Annual Report on Form 10-K for the year ended August 31, 2019 (File No. 1-36759) filed with the SEC on October 28, 2019. | ||||||||||
Form of Performance Share Award agreement (effective October 2018). | Incorporated by reference to Exhibit 10.2 to Walgreens Boots Alliance, Inc.’s Quarterly Report on Form 10-Q for the quarter ended November 30, 2018 (File No. 1-36759) filed with the SEC on December 20, 2018. | ||||||||||
Form of Performance Share Award agreement (effective October 2017). | Incorporated by reference to Exhibit 10.5 to Walgreens Boots Alliance, Inc.’s Annual Report on Form 10-K for the year ended August 31, 2017 (File No. 1-36759) filed with the SEC on October 25, 2017. | ||||||||||
Form of Stock Option Award agreement (effective October 2019). | Incorporated by reference to Exhibit 10.6 to Walgreens Boots Alliance, Inc.’s Annual Report on Form 10-K for the year ended August 31, 2019 (File No. 1-36759) filed with the SEC on October 28, 2019. | ||||||||||
Form of Stock Option Award agreement (effective October 2018). | Incorporated by reference to Exhibit 10.3 to Walgreens Boots Alliance, Inc.’s Quarterly Report on Form 10-Q for the quarter ended November 30, 2018 (File No. 1-36759) filed with the SEC on December 20, 2018. | ||||||||||
Form of Stock Option Award agreement (effective October 2017). | Incorporated by reference to Exhibit 10.7 to Walgreens Boots Alliance, Inc.’s Annual Report on Form 10-K for the year ended August 31, 2017 (File No. 1-36759) filed with the SEC on October 25, 2017. | ||||||||||
Form of Restricted Stock Unit Award agreement (effective October 2019). | Incorporated by reference to Exhibit 10.20 to Walgreens Boots Alliance, Inc.’s Annual Report on Form 10-K for the year ended August 31, 2019 (File No. 1-36759) filed with the SEC on October 28, 2019. | ||||||||||
Form of Performance Share Award agreement for CEO (November 2019). | Incorporated by reference to Exhibit 10.10 to Walgreens Boots Alliance, Inc.’s Annual Report on Form 10-K for the year ended August 31, 2019 (File No. 1-36759) filed with the SEC on October 28, 2019. | ||||||||||
Form of Performance Share Award agreement for CEO (November 2018). | Incorporated by reference to Exhibit 10.5 to Walgreens Boots Alliance, Inc.’s Quarterly Report on Form 10-Q for the quarter ended November 30, 2018 (File No. 1-36759) filed with the SEC on December 20, 2018. | ||||||||||
Form of Performance Share Award agreement for CEO (November 2017). | Incorporated by reference to Exhibit 10.1 to Walgreens Boots Alliance, Inc.’s Quarterly Report on Form 10-Q for the quarter ended November 30, 2017 (File No. 1-36759) filed with the SEC on January 4, 2018. | ||||||||||
Form of Stock Option Award agreement for CEO (November 2019). | Incorporated by reference to Exhibit 10.14 to Walgreens Boots Alliance, Inc.’s Annual Report on Form 10-K for the year ended August 31, 2019 (File No. 1-36759) filed with the SEC on October 28, 2019. | ||||||||||
Form of Stock Option Award agreement for CEO (November 2018). | Incorporated by reference to Exhibit 10.6 to Walgreens Boots Alliance, Inc.’s Quarterly Report on Form 10-Q for the quarter ended November 30, 2018 (File No. 1-36759) filed with the SEC on December 20, 2018. | ||||||||||
Form of Stock Option Award agreement for CEO (November 2017). | Incorporated by reference to Exhibit 10.2 to Walgreens Boots Alliance, Inc.’s Quarterly Report on Form 10-Q for the quarter ended November 30, 2017 (File No. 1-36759) filed with the SEC on January 4, 2018. | ||||||||||
Form of Restricted Stock Unit Award agreement for CEO (November 2019). | Incorporated by reference to Exhibit 10.18 to Walgreens Boots Alliance, Inc.’s Annual Report on Form 10-K for the year ended August 31, 2019 (File No. 1-36759) filed with the SEC on October 28, 2019. |
Form of Restricted Stock Unit Award agreement for Executive Chairman (November 2019). | Incorporated by reference to Exhibit 10.19 to Walgreens Boots Alliance, Inc.’s Annual Report on Form 10-K for the year ended August 31, 2019 (File No. 1-36759) filed with the SEC on October 28, 2019. | ||||||||||
Form of Restricted Stock Unit Award agreement for Executive Chairman (November 2018). | Incorporated by reference to Exhibit 10.7 to Walgreens Boots Alliance, Inc.’s Quarterly Report on Form 10-Q for the quarter ended November 30, 2018 (File No. 1-36759) filed with the SEC on December 20, 2018. | ||||||||||
Form of Restricted Stock Unit Award agreement for Executive Chairman (November 2017). | Incorporated by reference to Exhibit 10.3 to Walgreens Boots Alliance, Inc.’s Quarterly Report on Form 10-Q for the quarter ended November 30, 2017 (File No. 1-36759) filed with the SEC on January 4, 2018. | ||||||||||
Form of Restricted Stock Unit Award agreement (September 2019). | Incorporated by reference to Exhibit 10.24 to Walgreens Boots Alliance, Inc.’s Annual Report on Form 10-K for the year ended August 31, 2019 (File No. 1-36759) filed with the SEC on October 28, 2019 | ||||||||||
Form of Restricted Stock Unit Award agreement for James Kehoe (June 2018). | Incorporated by reference to Exhibit 10.18 to Walgreens Boots Alliance, Inc.’s Annual Report on Form 10-K (File No. 1-36759) filed with the SEC on October 11, 2018. | ||||||||||
Form of Amendment to Stock Option Award agreements. | Incorporated by reference to Exhibit 10.11 to Walgreen Co.’s Annual Report on Form 10-K for the fiscal year ended August 31, 2014 (File No. 1-00604) filed with the SEC on October 20, 2014. | ||||||||||
Amendments to certain Omnibus Plan Award agreements (October 2018). | Incorporated by reference to Exhibit 10.7 to Walgreens Boots Alliance, Inc.’s Current Report on Form 8-K (File No. 1-36759) filed with the SEC on October 26, 2018. | ||||||||||
UK Sub-Plan under the Walgreens Boots Alliance, Inc. 2013 Omnibus Incentive Plan. | Incorporated by reference to Exhibit 10.16 to Walgreens Boots Alliance, Inc.’s Annual Report on Form 10-K (File No. 1-36759) filed with the SEC on October 28, 2015. | ||||||||||
Form of Stock Option Award agreement under UK Sub-plan (effective October 2019). | Incorporated by reference to Exhibit 10.29 to Walgreens Boots Alliance, Inc.’s Annual Report on Form 10-K for the year ended August 31, 2019 (File No. 1-36759) filed with the SEC on October 28, 2019. | ||||||||||
Form of Stock Option Award agreement under UK Sub-plan (effective October 2018). | Incorporated by reference to Exhibit 10.4 to Walgreens Boots Alliance, Inc.’s Quarterly Report on Form 10-Q for the quarter ended November 30, 2018 (File No. 1-36759) filed with the SEC on December 20, 2018. | ||||||||||
Form of Stock Option Award agreement under UK Sub-plan (effective October 2017). | Incorporated by reference to Exhibit 10.24 to Walgreens Boots Alliance, Inc.’s Annual Report on Form 10-K for the year ended August 31, 2017 (File No. 1-36759) filed with the SEC on October 25, 2017. | ||||||||||
Walgreen Co. Long-Term Performance Incentive Plan (amendment and restatement of the Walgreen Co. Restricted Performance Share Plan). | Incorporated by reference to Exhibit 10.1 to Walgreen Co.’s Current Report on Form 8-K (File No. 1-00604) filed with the SEC on January 11, 2007. | ||||||||||
Walgreen Co. Long-Term Performance Incentive Plan Amendment No. 1 (effective January 10, 2007). | Incorporated by reference to Exhibit 10.2 to Walgreen Co.’s Quarterly Report on Form 10-Q for the quarter ended February 28, 2007 (File No. 1-00604). | ||||||||||
Walgreen Co. Long-Term Performance Incentive Plan Amendment No. 2. | Incorporated by reference to Exhibit 10.1 to Walgreen Co.’s Current Report on Form 8-K (File No. 1-00604) filed with the SEC on April 14, 2011. | ||||||||||
Walgreen Co. Executive Stock Option Plan (as amended and restated effective January 13, 2010). | Incorporated by reference to Exhibit 99.1 to Walgreen Co.’s Current Report on Form 8-K (File No. 1-00604) filed with the SEC on January 20, 2010. | ||||||||||
Walgreen Co. 2002 Executive Deferred Compensation/Capital Accumulation Plan. | Incorporated by reference to Exhibit 10(g) to Walgreen Co.’s Annual Report on Form 10-K for the fiscal year ended August 31, 2002 (File No. 1-00604). |
Amendment to the Walgreen Co. 2002 et. al. Executive Deferred Compensation/Capital Accumulation Plans. | Incorporated by reference to Exhibit 10.3 to Walgreen Co.’s Quarterly Report on Form 10-Q for the fiscal quarter ended February 28, 2009 (File No. 1-00604). | ||||||||||
Walgreen Co. 2006 Executive Deferred Compensation/Capital Accumulation Plan (effective January 1, 2006). | Incorporated by reference to Exhibit 10(b) to Walgreen Co.’s Quarterly Report on Form 10-Q for the fiscal quarter ended November 30, 2005 (File No. 1-00604). | ||||||||||
Walgreen Co. 2011 Executive Deferred Compensation Plan. | Incorporated by reference to Exhibit 10.1 to Walgreen Co.’s Current Report on Form 8-K (File No. 1-00604) filed with the SEC on November 12, 2010. | ||||||||||
Amendment No. 1 to the Walgreen Co. 2011 Executive Deferred Compensation Plan. | Incorporated by reference to Exhibit 10.1 to Walgreen Co.’s Current Report on Form 8-K (File No. 1-00604) filed with the SEC on January 19, 2011. | ||||||||||
Walgreens Boots Alliance, Inc. Executive Retirement Savings Plan (as amended and restated effective January 1, 2020). | Incorporated by reference to Exhibit 10.43 to Walgreens Boots Alliance, Inc.’s Annual Report on Form 10-K for the year ended August 31, 2019 (File No. 1-36759) filed with the SEC on October 28, 2019. | ||||||||||
Share Walgreens Stock Purchase/Option Plan (effective October 1, 1992), as amended. | Incorporated by reference to Exhibit 10(d) to Walgreen Co.’s Quarterly Report on Form 10-Q for the quarter ended February 28, 2003 (File No. 1-00604). | ||||||||||
Share Walgreens Stock Purchase/Option Plan Amendment No. 4 (effective July 15, 2005), as amended. | Incorporated by reference to Exhibit 10(h)(ii) to Walgreen Co.’s Annual Report on Form 10-K for the fiscal year ended August 31, 2005 (File No. 1-00604). | ||||||||||
Share Walgreens Stock Purchase/Option Plan Amendment No. 5 (effective October 11, 2006). | Incorporated by reference to Exhibit 10(b) to Walgreen Co.’s Quarterly Report on Form 10-Q for the quarter ended November 30, 2006 (File No. 1-00604). | ||||||||||
Walgreens Boots Alliance, Inc. Executive Severance and Change in Control Plan (as amended and restated effective August 6, 2019). | Incorporated by reference to Exhibit 10.47 to Walgreens Boots Alliance, Inc.’s Annual Report on Form 10-K for the year ended August 31, 2019 (File No. 1-36759) filed with the SEC on October 28, 2019. | ||||||||||
Offer Letter agreement between Stefano Pessina and Walgreens Boots Alliance, Inc. | Incorporated by reference to Exhibit 10.29 to Walgreens Boots Alliance, Inc.’s Quarterly Report on Form 10-Q for the quarter ended February 28, 2015 (File No. 1-36759) filed with the SEC on April 9, 2015. | ||||||||||
Offer letter agreement dated as of March 6, 2018 between James Kehoe and Walgreens Boots Alliance, Inc. | Incorporated by reference to Exhibit 10.1 to Walgreens Boots Alliance, Inc.’s Current Report on Form 8-K (File No. 1-36759) filed with the SEC on March 8, 2018. | ||||||||||
Service Agreement between Boots UK Limited and Alex Gourlay, dated January 29, 2009. | Incorporated by reference to Exhibit 10.18 to Walgreens Boots Alliance, Inc.’s Quarterly Report on Form 10-Q for the quarter ended February 28, 2015 (File No. 1-36759) filed with the SEC on April 9, 2015. | ||||||||||
Letter Agreement between Alliance Boots Management Services Limited and Alex Gourlay, dated June 28, 2010. | Incorporated by reference to Exhibit 10.19 to Walgreens Boots Alliance, Inc.’s Quarterly Report on Form 10-Q for the quarter ended February 28, 2015 (File No. 1-36759) filed with the SEC on April 9, 2015. | ||||||||||
Employment Agreement between Alliance UniChem Plc and Ornella Barra dated December 10, 2002. | Incorporated by reference to Exhibit 10.20 to Walgreens Boots Alliance, Inc.’s Quarterly Report on Form 10-Q for the quarter ended February 28, 2015 (File No. 1-36759) filed with the SEC on April 9, 2015. | ||||||||||
Agreement among Alliance Boots plc, Alliance UniChem Plc and Ornella Barra, dated July 31, 2006. | Incorporated by reference to Exhibit 10.21 to Walgreens Boots Alliance, Inc.’s Quarterly Report on Form 10-Q for the quarter ended February 28, 2015 (File No. 1-36759) filed with the SEC on April 9, 2015. | ||||||||||
Novation of Service Agreement among Alliance Boots Holdings Limited, Alliance Boots Management Services MC S.A.M and Ornella Barra, dated June 1, 2013. | Incorporated by reference to Exhibit 10.22 to Walgreens Boots Alliance, Inc.’s Quarterly Report on Form 10-Q for the quarter ended February 28, 2015 (File No. 1-36759) filed with the SEC on April 9, 2015. | ||||||||||
Walgreens Boots Alliance, Inc. Long-Term Global Assignment Relocation Policy | Incorporated by reference to Exhibit 10.68 to Walgreens Boots Alliance, Inc.’s Annual Report on Form 10-K (File No. 1-36759) filed with the SEC on October 28, 2015. |
Secondment Agreement dated September 27, 2013 between Alliance Boots Management Services Limited and Walgreen Co. | Incorporated by reference to Exhibit 10.52 to Walgreen Co.’s Annual Report on Form 10-K for the fiscal year ended August 31, 2013 (File No. 1-00604). | ||||||||||
Assignment Letter dated September 27, 2013 between Alexander Gourlay and Alliance Boots Management Services Ltd. | Incorporated by reference to Exhibit 10.53 to Walgreen Co.’s Annual Report on Form 10-K for the fiscal year ended August 31, 2013 (File No. 1-00604). | ||||||||||
Extension, dated January 27, 2016, to Assignment Letter between Alexander Gourlay and Walgreens Boots Alliance Services Limited (formerly Alliance Boots Management Services Ltd.). | Incorporated by reference to Exhibit 10.1 to Walgreens Boots Alliance, Inc.’s Current Report on Form 8-K (File No. 1-36759) filed with the SEC on February 1, 2016. | ||||||||||
Extension, dated as of March 27, 2017, to Assignment Letter between Alexander Gourlay and Walgreens Boots Alliance Services Limited (formerly Alliance Boots Management Services Ltd.). | Incorporated by reference to Exhibit 10.6 to Walgreens Boots Alliance, Inc.’s Quarterly Report on Form 10-Q for the quarter ended February 28, 2017 (File No. 1-36759) filed with the SEC on April 5, 2017. | ||||||||||
Extension, dated as of July 13, 2017, to Assignment Letter between Alexander Gourlay and Walgreens Boots Alliance Services Limited (formerly Alliance Boots Management Services Ltd.). | Incorporated by reference to Exhibit 10.62 to Walgreens Boots Alliance, Inc.’s Annual Report on Form 10-K for the year ended August 31, 2017 (File No. 1-36759) filed with the SEC on October 25, 2017. | ||||||||||
Extension, dated as of August 1, 2018, to Assignment Letter between Alexander Gourlay and Walgreens Boots Alliance Services Limited. | Incorporated by reference to Exhibit 10.8 to Walgreens Boots Alliance, Inc.’s Current Report on Form 8-K (File No. 1-36759) filed with the SEC on October 26, 2018. | ||||||||||
Extension, effective as of October 22, 2019, to Assignment Letter between Alexander Gourlay and Walgreens Boots Alliance Services Limited. | Incorporated by reference to Exhibit 10.62 to Walgreens Boots Alliance, Inc.’s Annual Report on Form 10-K for the year ended August 31, 2019 (File No. 1-36759) filed with the SEC on October 28, 2019. | ||||||||||
Extension, dated as of July 1, 2020, to Assignment Letter between Alexander Gourlay and Walgreens Boots Alliance Services Limited. | Incorporated by reference to Exhibit 10.6 to Walgreens Boots Alliance, Inc.’s Quarterly Report on Form 10-Q for the quarter ended May 31, 2020 (File No. 1-36759) filed with the SEC on July 9, 2020. | ||||||||||
Shareholders’ Agreement, dated as of August 2, 2012, by and among Alliance Boots GmbH, AB Acquisition Holdings Limited and Walgreen Co. | Incorporated by reference to Exhibit 10.1 to Walgreen Co.’s Current Report on Form 8-K (File No. 1-00604) filed with the SEC on August 6, 2012. | ||||||||||
Framework Agreement, dated as of March 18, 2013, by and among Walgreen Co., Alliance Boots GmbH and AmerisourceBergen Corporation. | Incorporated by reference to Exhibit 10.1 to Walgreen Co.’s Current Report on Form 8-K (File No. 1-00604) filed with the SEC on March 20, 2013. | ||||||||||
Shareholders Agreement, dated as of March 18, 2013, by and among Walgreen Co., Alliance Boots GmbH and AmerisourceBergen Corporation. | Incorporated by reference to Exhibit 10.2 to Walgreen Co.’s Current Report on Form 8-K (File No. 1-00604) filed with the SEC on March 20, 2013. | ||||||||||
Revolving Credit Agreement, dated as of August 29, 2018, by and among Walgreens Boots Alliance, Inc., the lenders and letter of credit issuers from time to time party thereto, Wells Fargo Bank, National Association, as administrative agent, and the joint lead arrangers, joint bookrunners and co-syndication. | Incorporated by reference to Exhibit 10.1 to Walgreens Boots Alliance, Inc.’s Current Report on Form 8-K (File No. 001-36759) filed with the SEC on August 30, 2018. | ||||||||||
Credit Agreement, dated as of November 30, 2018, by and among Walgreens Boots Alliance, Inc., the lenders from time to time party thereto and Sumitomo Mitsui Banking Corporation, as sole lead arranger and administrative agent. | Incorporated by reference to Exhibit 10.1 to Walgreens Boots Alliance, Inc.’s Current Report on Form 8-K (File No. 001-36759) filed with the SEC on December 6, 2018. | ||||||||||
Amendment No. 1 to Credit Agreement, dated as of March 25, 2019, by and between Walgreens Boots Alliance, Inc. and Sumitomo Mitsui Banking Corporation, as sole lead arranger and administrative agent, amending that certain Credit Agreement, dated as of November 30, 2018, by and among Walgreens Boots Alliance, Inc., the lenders from time to time party thereto, and Sumitomo Mitsui Banking Corporation, as sole lead arranger and administrative agent. | Incorporated by reference to Exhibit 10.5 to Walgreens Boots Alliance, Inc.’s Quarterly Report on Form 10-Q for the quarter ended February 28, 2019 (File No. 1-36759) filed with the SEC on April 2, 2019. |
Amendment No. 2 to Credit Agreement, dated as of April 2, 2020, by and among Walgreens Boots Alliance, Inc. and Sumitomo Mitsui Banking Corporation, as administrative agent and sole lender. | Incorporated by reference to Exhibit 10.3 to Walgreens Boots Alliance, Inc.’s Current Report on Form 8-K (File No. 1-36759) filed with the SEC on April 6, 2020. | ||||||||||
Revolving Credit Agreement, dated as of December 21, 2018, by and among Walgreens Boots Alliance, Inc., the lenders from time to time party thereto and Bank of America, N.A., as administrative agent. | Incorporated by reference to Exhibit 10.1 to Walgreens Boots Alliance, Inc.’s Current Report on Form 8-K (File No. 001-36759) filed with the SEC on December 26, 2018. | ||||||||||
364-Day Revolving Credit Agreement, dated as of January 18, 2019, by and among Walgreens Boots Alliance, Inc., the lenders from time to time party thereto and Mizuho Bank, Ltd., as administrative agent. | Incorporated by reference to Exhibit 10.1 to Walgreens Boots Alliance, Inc.’s Current Report on Form 8-K (File No. 001-36759) filed with the SEC on January 22, 2019. | ||||||||||
Extension Agreement, dated as of December 18, 2019, by and among Walgreens Boots Alliance, Inc., the lenders party thereto and Mizuho Bank, Ltd., as administrative agent. | Incorporated by reference to Exhibit 10.1 to Walgreens Boots Alliance, Inc.’s Current Report on Form 8-K (File No. 001-36759) filed with the SEC on December 18, 2019. | ||||||||||
Revolving Credit Agreement, dated as of August 30, 2019, by and among Walgreens Boots Alliance, Inc., the lenders from time to time party thereto and HSBC Bank USA, N.A., as administrative agent, and HSBC Securities (USA), Inc., as sole lead arranger. | Incorporated by reference to Exhibit 10.1 to Walgreens Boots Alliance, Inc.’s Current Report on Form 8-K (File No. 001-36759) filed with the SEC on September 4, 2019. | ||||||||||
Revolving Credit Agreement, dated as of August 30, 2019, by and among Walgreens Boots Alliance, Inc., the lenders from time to time party thereto and Citibank, N.A., as administrative agent and sole lead arranger. | Incorporated by reference to Exhibit 10.2 to Walgreens Boots Alliance, Inc.’s Current Report on Form 8-K (File No. 001-36759) filed with the SEC on September 4, 2019. | ||||||||||
Revolving Credit Agreement, dated as of August 30, 2019, by and among Walgreens Boots Alliance, Inc., the lenders from time to time party thereto and UniCredit Bank AG, New York Branch, as administrative agent. | Incorporated by reference to Exhibit 10.3 to Walgreens Boots Alliance, Inc.’s Current Report on Form 8-K (File No. 001-36759) filed with the SEC on September 4, 2019. | ||||||||||
Revolving Credit Agreement, dated as of April 1, 2020, by and among Walgreens Boots Alliance, Inc., the lenders from time to time party thereto and JPMorgan Chase Bank, N.A., as administrative agent. | Incorporated by reference to Exhibit 10.1 to Walgreens Boots Alliance, Inc.’s Current Report on Form 8-K (File No. 1-36759) filed with the SEC on April 6, 2020. | ||||||||||
Revolving Credit Agreement, dated as of April 2, 2020, by and among Walgreens Boots Alliance, Inc., the lenders from time to time party thereto and JPMorgan Chase Bank, N.A., as administrative agent. | Incorporated by reference to Exhibit 10.2 to Walgreens Boots Alliance, Inc.’s Current Report on Form 8-K (File No. 1-36759) filed with the SEC on April 6, 2020. | ||||||||||
Amended and Restated Revolving Credit Agreement, dated as of April 2, 2020, by and among Walgreens Boots Alliance, Inc. and Wells Fargo Bank, National Association, as administrative agent and sole lender. | Incorporated by reference to Exhibit 10.4 to Walgreens Boots Alliance, Inc.’s Current Report on Form 8-K (File No. 1-36759) filed with the SEC on April 6, 2020. | ||||||||||
Revolving Credit Agreement, dated as of April 7, 2020, by and among Walgreens Boots Alliance, Inc., WBA Financial Services Limited, the lenders from time to time party thereto and HSBC Bank plc, as administrative agent. | Incorporated by reference to Exhibit 10.1 to Walgreens Boots Alliance, Inc.’s Current Report on Form 8-K (File No. 1-36759) filed with the SEC on April 7, 2020. | ||||||||||
Subsidiaries of the Registrant. | Filed herewith. | ||||||||||
Consent of Deloitte & Touche LLP. | Filed herewith. |
Certification of the Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. | Filed herewith. | ||||||||||
Certification of the Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. | Filed herewith. | ||||||||||
Certification of the Chief Executive Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, 18 U.S.C. Section 1350. | Furnished herewith. | ||||||||||
Certification of the Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, 18 U.S.C. Section 1350. | Furnished herewith. | ||||||||||
101.INS | XBRL Instance Document (The following financial information from this Annual Report on Form 10-K for the fiscal year ended August 31, 2020 formatted in Inline XBRL (Extensive Business Reporting Language) includes: (i) the Consolidated Balance Sheets; (ii) the Consolidated Statements of Equity; (iii) the Consolidated Statement of Earnings; (iv) the Consolidated Statements of Comprehensive Income; (v) the Consolidated Statements of Cash Flows; and (vi) Notes to Financial Statements). | Filed herewith. | |||||||||
101.SCH | XBRL Taxonomy Extension Schema Document | Filed herewith. | |||||||||
101.CAL | XBRL Taxonomy Extension Calculation Linkbase Document | Filed herewith. | |||||||||
101.DEF | XBRL Taxonomy Extension Definition Linkbase Document | Filed herewith. | |||||||||
101.LAB | XBRL Taxonomy Extension Label Linkbase Document | Filed herewith. | |||||||||
101.PRE | XBRL Taxonomy Extension Presentation Linkbase Document | Filed herewith. | |||||||||
104 | Cover Page Interactive Data File (formatted as Inline XBRL document and included in Exhibit 101) | Filed herewith. |
WALGREENS BOOTS ALLIANCE, INC. | |||||||||||
October 15, 2020 | By: | /s/ James Kehoe | |||||||||
James Kehoe | |||||||||||
Executive Vice President and Global Chief Financial Officer |
Name | Title | Date | ||||||||||||
/s/ Stefano Pessina | Executive Vice Chairman and Chief Executive Officer (Principal Executive Officer) and Director | October 15, 2020 | ||||||||||||
Stefano Pessina | ||||||||||||||
/s/ James Kehoe | Executive Vice President and Global Chief Financial Officer (Principal Financial Officer) | October 15, 2020 | ||||||||||||
James Kehoe | ||||||||||||||
/s/ Heather Dixon | Senior Vice President, Global Controller and Chief Accounting Officer (Principal Accounting Officer) | October 15, 2020 | ||||||||||||
Heather Dixon | ||||||||||||||
/s/ James A. Skinner | Executive Chairman | October 15, 2020 | ||||||||||||
James A. Skinner | ||||||||||||||
/s/ José E. Almeida | Director | October 15, 2020 | ||||||||||||
José E. Almeida | ||||||||||||||
/s/ Janice M. Babiak | Director | October 15, 2020 | ||||||||||||
Janice M. Babiak | ||||||||||||||
/s/ David J. Brailer | Director | October 15, 2020 | ||||||||||||
David J. Brailer | ||||||||||||||
/s/ William C. Foote | Director | October 15, 2020 | ||||||||||||
William C. Foote | ||||||||||||||
/s/ Ginger L. Graham | Director | October 15, 2020 | ||||||||||||
Ginger L. Graham | ||||||||||||||
/s/ John A. Lederer | Director | October 15, 2020 | ||||||||||||
John A. Lederer | ||||||||||||||
/s/ Dominic P. Murphy | Director | October 15, 2020 | ||||||||||||
Dominic P. Murphy | ||||||||||||||
/s/ Nancy M. Schlichting | Director | October 15, 2020 | ||||||||||||
Nancy M. Schlichting |
Name | State or Country of Incorporation | ||||
Walgreen Arizona Drug Co. | Arizona | ||||
Walgreens Boots Alliance Holdings LLC | Delaware | ||||
Waltrust Properties, Inc. | Delaware | ||||
Walgreens Specialty Pharmacy, LLC | Delaware | ||||
Prime Therapeutics Specialty Pharmacy LLC | Delaware | ||||
WBA Investments, Inc. | Delaware | ||||
WBA Financial, LLC | Delaware | ||||
United Company of Pharmacists SAE | Egypt | ||||
Alliance Healthcare Répartition | France | ||||
Alliance Healthcare Deutschland AG | Germany | ||||
Walgreens Boots Alliance (Hong Kong) Investments Limited | Hong Kong | ||||
Walgreen Co. | Illinois | ||||
Bond Drug Company of Illinois, LLC | Illinois | ||||
Boots Retail (Ireland) Limited | Ireland | ||||
Walgreen Louisiana Co., Inc. | Louisiana | ||||
Walgreen International S.à r.l. | Luxembourg | ||||
Superior Luxco 1 S.à r.l. | Luxembourg | ||||
Walgreen Investments Luxembourg S.à r.l. | Luxembourg | ||||
WBA Luxembourg 7 S.à.r.l. | Luxembourg | ||||
WBA Luxembourg 6 S.à r.l. | Luxembourg | ||||
Farmacias Benavides S.A.B. de C.V. | Mexico | ||||
Walgreen Eastern Co., Inc. | New York | ||||
Duane Reade | New York | ||||
Walgreen of Puerto Rico, Inc. | Puerto Rico | ||||
Alliance Healthcare Romania SRL | Romania | ||||
Alliance Healthcare España S.A. | Spain | ||||
Alliance Healthcare Ecza Deposu Anonim Şirketi | Turkey | ||||
Boots UK Limited | United Kingdom | ||||
The Boots Company PLC | United Kingdom | ||||
Alliance Healthcare (Distribution) Limited | United Kingdom | ||||
Alliance Boots Holdings Limited | United Kingdom | ||||
WBA Acquisitions UK Holdco 7 Limited | United Kingdom | ||||
Superior Acquisitions Limited | United Kingdom | ||||
WBAD Holdings Limited | United Kingdom | ||||
WBA International Limited | United Kingdom | ||||
Walgreens Boots Alliance Limited | United Kingdom | ||||
WBA Acquisitions UK Topco Limited | United Kingdom | ||||
Superior Holdings Limited | United Kingdom | ||||
Walgreens Boots Alliance Scottish LP | United Kingdom |
/s/ | Stefano Pessina | Chief Executive Officer | Date: October 15, 2020 | ||||||||
Stefano Pessina |
/s/ | James Kehoe | Global Chief Financial Officer | Date: October 15, 2020 | ||||||||
James Kehoe |
CONSOLIDATED BALANCE SHEETS (Parenthetical) - $ / shares |
Aug. 31, 2020 |
Aug. 31, 2019 |
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Equity: | ||
Preferred stock, par value (in dollars per share) | $ 0.01 | $ 0.01 |
Preferred stock, authorized (in shares) | 32,000,000 | 32,000,000 |
Preferred stock, issued (in shares) | 0 | 0 |
Common stock, par value (in dollars per share) | $ 0.01 | $ 0.01 |
Common stock, authorized shares (in shares) | 3,200,000,000 | 3,200,000,000 |
Common stock, issued (in shares) | 1,172,513,618 | 1,172,513,618 |
Treasury stock, at cost (in shares) | 306,910,099 | 277,126,116 |
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME - USD ($) $ in Millions |
12 Months Ended | ||
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Aug. 31, 2020 |
Aug. 31, 2019 |
Aug. 31, 2018 |
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Comprehensive income: | |||
Net earnings | $ 424 | $ 3,962 | $ 5,031 |
Other comprehensive income (loss), net of tax: | |||
Pension/postretirement obligations | (700) | (149) | 240 |
Unrealized gain on cash flow hedges | (6) | 5 | 3 |
Net investment hedges (see note 15) | (90) | 55 | 0 |
Share of other comprehensive income (loss) of equity method investments | (14) | (1) | 5 |
Currency translation adjustments | 958 | (820) | (198) |
Total other comprehensive income (loss) | 148 | (909) | 50 |
Total comprehensive income | 572 | 3,053 | 5,081 |
Comprehensive income (loss) attributable to noncontrolling interests | (10) | (33) | 8 |
Comprehensive income attributable to Walgreens Boots Alliance, Inc. | $ 582 | $ 3,086 | $ 5,073 |
Summary of major accounting policies |
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Accounting Policies [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Summary of major accounting policies | Summary of major accounting policies Organization Walgreens Boots Alliance and its subsidiaries are a global leader in retail and wholesale pharmacy. Its operations are conducted through three reportable segments: Retail Pharmacy USA, Retail Pharmacy International and Pharmaceutical Wholesale. See note 16, segment reporting and note 17, sales, for further information. Basis of presentation The Consolidated Financial Statements include all subsidiaries in which the Company holds a controlling interest. The Company uses the equity-method of accounting for equity investments in less than majority-owned companies if the investment provides the ability to exercise significant influence. All intercompany transactions have been eliminated. The preparation of financial statements in accordance with accounting principles generally accepted in the United States of America (“GAAP”) requires management to use judgment in the application of accounting policies, including making estimates and assumptions. The Company bases its estimates on the information available at the time, its experiences and various other assumptions believed to be reasonable under the circumstances including estimates of the impact of COVID-19. The extent to which COVID-19 impacts the Company’s business and financial results will depend on numerous evolving factors discussed throughout this Annual Report on Form 10-K including, but not limited to, the severity and duration of COVID-19, the extent to which it will impact our customers, team members, suppliers, vendors, business partners and distribution channels. The Company assessed certain accounting matters that require consideration of estimates and assumptions in context with the information reasonably available to the Company and the unknown future impacts of COVID-19 as of August 31, 2020 and through the date of this report. The accounting matters assessed included, but were not limited to, the Company’s carrying value of goodwill, intangible and other long-lived assets including operating lease right-of-use assets. These estimates and assumptions, including the severity and duration of COVID-19, resulted in a material impact to the Company’s consolidated financial statements as of and for the fiscal year ended August 31, 2020. Refer to note 6, goodwill and other intangible assets for details. The Company’s future assessment of the magnitude and duration of COVID-19, as well as other factors, could result in material impacts to the Company’s consolidated financial statements in future reporting periods. Adjustments may be made in subsequent periods to reflect more current estimates and assumptions about matters that are inherently uncertain. Actual results may differ. The COVID-19 pandemic has severely impacted the economies of the U.S., the UK and other countries around the world. The impact of COVID-19 on the Company’s businesses, financial position, results of operations and cash flows for the fiscal year ended August 31, 2020, as well as information regarding certain expected or potential impacts of COVID-19 on the Company, is discussed throughout this Annual Report on Form 10-K. The impact of COVID-19, the influence of certain holidays, seasonality, foreign currency rates, changes in vendor, payer and customer relationships and terms, strategic transactions including acquisitions, changes in laws and general economic conditions in the markets in which the Company operates and other factors on the Company’s operations and net earnings for any period may not be comparable to the same period in previous years. Certain amounts in the Consolidated Financial Statements and associated notes may not add due to rounding. Percentages have been calculated using unrounded amounts for all periods presented. Cash and cash equivalents Cash and cash equivalents include cash on hand and highly liquid investments with an original maturity of three months or less. Credit and debit card receivables, which generally settle within to business days, of $101 million and $90 million were included in cash and cash equivalents at August 31, 2020 and 2019, respectively. Restricted cash and other cash flows from operating activities Restricted cash The Company is required to maintain cash deposits with certain banks which consist of deposits restricted under contractual agency agreements and cash restricted by law and other obligations. At August 31, 2020 and 2019, the amount of such restricted cash was $230 million and $184 million, respectively, and is reported in other current assets on the Consolidated Balance Sheets. The following represents a reconciliation of cash and cash equivalents in the Consolidated Balance Sheets to total cash, cash equivalents and restricted cash in the Consolidated Statements of Cash Flows as of August 31, 2020 and 2019, (in millions):
Other cash flows from operating activities Other cash flows from operating activities of $464 million for fiscal 2020 include asset impairments of $462 million offset by gains on sales-leaseback transactions of $308 million. Other cash flows from operating activities of $302 million for fiscal 2019 and $296 million for fiscal 2018 include asset impairments of $328 million and $240 million, respectively. Accounts receivable Accounts receivable are stated net of allowances for doubtful accounts. Accounts receivable balances primarily consist of trade receivables due from customers, including amounts due from third-party payers (e.g., pharmacy benefit managers, insurance companies and governmental agencies), clients and members. Trade receivables were $6.0 billion and $6.0 billion at August 31, 2020 and 2019, respectively. Other accounts receivable balances, which consist primarily of receivables from vendors and manufacturers, including receivables from AmerisourceBergen (see note 18, related parties), were $1.2 billion and $1.2 billion at August 31, 2020 and 2019, respectively. Charges to allowance for doubtful accounts are based on estimates of recoverability using both historical write-offs and specifically identified receivables. The allowance for doubtful accounts for trade receivables at August 31, 2020 and 2019 were $61 million and $95 million, respectively. Inventories The Company values inventories on a lower of cost and net realizable value or market basis. Inventories include product costs, inbound freight, direct labor, warehousing costs for retail pharmacy operations and distribution of products and vendor allowances not classified as a reduction of advertising expense. The Company’s Retail Pharmacy USA segment inventory is accounted for using the last-in-first-out (“LIFO”) method. The total carrying value of the segment inventory accounted for under the LIFO method was $6.4 billion and $6.6 billion at August 31, 2020 and 2019, respectively. At August 31, 2020 and 2019, Retail Pharmacy USA segment inventory would have been greater by $3.3 billion and $3.2 billion, respectively, if they had been valued on a lower of first-in-first-out (“FIFO”) cost and net realizable value. The Company’s Retail Pharmacy International and Pharmaceutical Wholesale segments’ inventory is primarily accounted for using the FIFO method. The total carrying value of the inventory for Retail Pharmacy International and Pharmaceutical Wholesale segments was $3.0 billion and $2.7 billion at August 31, 2020 and 2019, respectively. Property, plant and equipment Property, plant and equipment are stated at cost less accumulated depreciation. Major repairs, which extend the useful life of an asset, are capitalized; routine maintenance and repairs are charged against earnings. Depreciation is provided on a straight-line basis over the estimated useful lives of owned assets. Leasehold improvements, equipment under finance lease and finance lease properties are amortized over their respective estimate of useful life or over the term of the lease, whichever is shorter. The majority of the Company’s fixtures and equipment uses the composite method of depreciation. The following table summarizes the Company’s property, plant and equipment (in millions) and estimated useful lives (in years):
The Company capitalizes application development stage costs for internally developed software. These costs are amortized over a to year period. Amortization expense for capitalized system development costs and software was $314 million in fiscal 2020, $273 million in fiscal 2019 and $254 million in fiscal 2018. Unamortized costs were $1.7 billion and $1.5 billion at August 31, 2020 and 2019, respectively. Depreciation and amortization expense for property, plant and equipment including capitalized system development costs and software was $1.5 billion in fiscal 2020, $1.5 billion in fiscal 2019 and $1.4 billion in fiscal 2018. Leases The Company determines if an arrangement contains a lease at the inception of a contract. The lease classification is determined at the commencement date. Right-of-use assets represent the Company’s right to use an underlying asset for the lease term and lease liabilities represent the Company’s obligation to make lease payments arising from the lease during the lease term. Right-of-use assets and lease liabilities are recognized at the commencement date based on the present value of the remaining future minimum lease payments during the lease term. The commencement date of all lease terms is the earlier of the date the Company becomes legally obligated to make rent payments or the date the Company has the right to control the property. The Company utilizes its incremental borrowing rate to discount the lease payments. The incremental borrowing rate is based on the Company's estimated rate of interest for a collateralized borrowing over a similar term as the lease term. The operating lease right-of-use assets also include lease payments made before commencement, lease incentives and are recorded net of impairment. Operating leases are expensed on a straight line basis over the lease term. Initial terms for leased premises in the United States are typically 15 to 25 years, followed by additional terms containing renewal options at five-year intervals, and may include rent escalation clauses. Non-U.S. leases are typically for shorter terms and may include cancellation clauses or renewal options. The lease term of real estate leases includes renewal options that are reasonably certain of being exercised. Options to extend are considered reasonably certain of being exercised based on evaluation if there is significant investments within the leased property which have useful lives greater than the non-cancelable lease term, performance of the underlying store and the Company’s economic and strategic initiatives. Short-term leases with an initial term of 12 months or less are not recorded on the balance sheets. The Company accounts for lease components and non-lease components as a single lease component. Variable lease payment amounts that cannot be determined at the commencement of the lease such as increases in lease payments based on changes in index rates or usage, are not included in the right-of-use assets or lease liabilities. These are expensed as incurred. The Company has real estate leases which require additional payments based on sales volume, as well as reimbursement for real estate taxes, common area maintenance and insurance, which are expensed as incurred as variable lease costs and hence are not included in the lease payments used to calculate lease liability. Other real estate leases contain one fixed lease payment that includes real estate taxes, common area maintenance and insurance. These fixed payments are considered part of the lease payment and included in the right-of-use assets and lease liabilities. The Company does not separately account for the land portion of the leases involving land and building. Finance leases are recognized within property, plant and equipment and as a finance lease liability within accrued expenses and other liabilities and other noncurrent liabilities. See note 4, leases, for further information. Business combinations The Company allocates the fair value of purchase consideration to the tangible and intangible assets purchased and the liabilities assumed on the basis of their fair values at the date of acquisition. The determination of fair values of assets acquired and liabilities assumed requires estimates and the use of valuation techniques when a market value is not readily available. Any excess of purchase price over the fair value of net tangible and intangible assets acquired is allocated to goodwill. If the Company obtains new information about facts and circumstances that existed as of the acquisition date during the measurement period, which may be up to one year from the acquisition date, the Company may record adjustments to the assets acquired and liabilities assumed. Goodwill and indefinite-lived intangible assets Goodwill represents the excess of the purchase price over the fair value of assets acquired and liabilities assumed in business combinations. Acquired intangible assets are recorded at fair value. Goodwill and indefinite-lived intangible assets are evaluated for impairment annually during the fourth quarter, or more frequently if an event occurs or circumstances change that could more likely than not reduce the fair value of a reporting unit or intangible asset below its carrying value. As part of the Company’s impairment analysis, fair value of a reporting unit is determined using both the income and market approaches. The income approach requires management to estimate a number of factors for each reporting unit, including projected future operating results, economic projections, anticipated future cash flows and discount rates. The market approach estimates fair value using comparable marketplace fair value data from within a comparable industry grouping. Indefinite-lived intangible assets are tested for impairment by comparing the estimated fair value of the asset to its carrying value. If the carrying value of the asset exceeds its estimated fair value, an impairment loss is recognized and the asset is written down to its estimated fair value See note 6, goodwill and other intangible assets, for additional disclosure regarding the Company’s intangible assets. Equity method investments The Company uses the equity method of accounting for equity investments if the investment provides the ability to exercise significant influence, but not control, over operating and financial policies of the investee. The Company’s proportionate share of the net income or loss of these investees is included in consolidated net earnings. Judgment regarding the level of influence over each equity method investment includes considering key factors such as the Company’s ownership interest, legal form of the investee (e.g. limited liability partnership), representation on the board of directors, participation in policy-making decisions and material intra-entity transactions. The Company evaluates equity method investments for impairment whenever events or changes in circumstances indicate that the carrying amount of the investment might not be recoverable. Factors considered by the Company when reviewing an equity method investment for impairment include the length of time (duration) and the extent (severity) to which the fair value of the equity method investment has been less than cost, the investee’s financial condition and near-term prospects and the intent and ability to hold the investment for a period of time sufficient to allow for anticipated recovery. An impairment that is other-than-temporary is recognized in the period identified. See note 5, equity method investments, for further information. Financial instruments The Company uses derivative instruments to hedge its exposure to interest rate and currency risks arising from operating and financing activities. In accordance with its risk management policies, the Company does not hold or issue derivative instruments for trading or speculative purposes. Derivatives are recognized on the Consolidated Balance Sheets at their fair values. When the Company becomes a party to a derivative instrument and intends to apply hedge accounting, it formally documents the hedge relationship and the risk management objective for undertaking the hedge which includes designating the instrument for financial reporting purposes as a fair value hedge, a cash flow hedge, or a net investment hedge. The accounting for changes in fair value of a derivative instrument depends on whether the Company had designated it in a qualifying hedging relationship and on the type of hedging relationship. The Company applies the following accounting policies: •Changes in the fair value of a derivative designated as a fair value hedge, along with the gain or loss on the hedged asset or liability attributable to the hedged risk, are recorded in the Consolidated Statements of Earnings in the same line item, generally interest expense, net. •Changes in the fair value of a derivative designated as a cash flow hedge are recorded in accumulated other comprehensive income (loss) in the Consolidated Statements of Comprehensive Income and reclassified into earnings in the period or periods during which the hedged item affects earnings and is presented in the same line item as the earnings effect of the hedged item. •Changes in the fair value of a derivative designated as a hedge of a net investment in a foreign operation are recorded in cumulative translation adjustments within accumulated other comprehensive income (loss) in the Consolidated Statements of Comprehensive Income. Recognition in earnings of amounts previously recorded in cumulative translation adjustments is limited to circumstances such as complete or substantially complete liquidation of the net investment in the hedged investments in foreign operations. •Changes in the fair value of a derivative not designated in a hedging relationship are recognized in the Consolidated Statements of Earnings. Cash receipts or payments on a settlement of a derivative contract are reported in the Consolidated Statements of Cash Flows consistent with the nature of the underlying hedged item. For derivative instruments designated as hedges, the Company assesses, both at the hedge’s inception and on an ongoing basis, whether the derivatives that are used in hedging transactions are highly effective in offsetting changes in fair values or cash flows of hedged items. Highly effective means that cumulative changes in the fair value of the derivative are between 80% and 125% of the cumulative changes in the fair value of the hedged item. In addition, when the Company determines that a derivative is not highly effective as a hedge, hedge accounting is discontinued. When it is probable that a hedged forecasted transaction will not occur, the Company discontinues hedge accounting for the affected portion of the forecasted transaction and reclassifies any gains or losses in accumulated other comprehensive income (loss) to earnings in the Consolidated Statement of Earnings. When a derivative in a hedge relationship is terminated or the hedged item is sold, extinguished or terminated, hedge accounting is discontinued prospectively. Pension and postretirement benefits The Company has various defined benefit pension plans that cover some of its non-U.S. employees. The Company also has a postretirement healthcare plan that covers qualifying U.S. employees. Eligibility and the level of benefits for these plans vary depending on participants’ status, date of hire and or length of service. Pension and postretirement plan expenses and valuations are dependent on assumptions used by third-party actuaries in calculating those amounts. These assumptions include discount rates, healthcare cost trends, long-term return on plan assets, retirement rates, mortality rates and other factors. The Company funds its pension plans in accordance with applicable regulations. The Company records the service cost component of net pension cost and net postretirement benefit cost in selling, general and administrative expenses. The Company records all other net cost components of net pension cost and net postretirement benefit cost in other income (expense). The postretirement healthcare plan is not funded. See note 13, retirement benefits, for further information. Noncontrolling interests The Company presents noncontrolling interests as a component of equity on its Consolidated Balance Sheets and reports the portion of its earnings or loss for noncontrolling interest as net earnings attributable to noncontrolling interests in the Consolidated Statements of Earnings. Currency Assets and liabilities of non-U.S. dollar functional currency operations are translated into U.S. dollars at end-of-period exchange rates while revenues, expenses and cash flows are translated at average monthly exchange rates over the period. Equity is translated at historical exchange rates and the resulting cumulative translation adjustments are included as a component of accumulated other comprehensive income (loss) in the Consolidated Balance Sheets. Assets and liabilities not denominated in the functional currency are remeasured into the functional currency at end-of-period exchange rates, except for nonmonetary balance sheet amounts, which are remeasured at historical exchange rates. Revenues and expenses are recorded at average monthly exchange rates over the period, except for those expenses related to nonmonetary balance sheet amounts, which are remeasured at historical exchange rates. Gains or losses from foreign currency remeasurement are generally included in selling, general and administrative expenses within the Consolidated Statements of Earnings. Commitments and contingencies On a quarterly basis, the Company assesses its liabilities and contingencies for outstanding legal proceedings and reserves are established on a case-by-case basis for those legal claims for which management concludes that it is probable that a loss will be incurred and that the amount of such loss can be reasonably estimated. Substantially all of these contingencies are subject to significant uncertainties and, therefore, determining the likelihood of a loss and/or the measurement of any loss can be complex. With respect to litigation and other legal proceedings where the Company has determined that a loss is reasonably possible, the Company may be unable to estimate the amount or range of reasonably possible loss due to the inherent difficulty of predicting the outcome of and uncertainties regarding such litigation and legal proceedings. The Company’s assessments are based on estimates and assumptions that have been deemed reasonable by management, but that may prove to be incomplete or inaccurate, and unanticipated events and circumstances may occur that might cause the Company to change those estimates and assumptions. Therefore, it is possible that an unfavorable resolution of one or more pending litigation or other contingencies could have a material adverse effect on the Company’s Consolidated Financial Statements in a future fiscal period. Management’s assessment of current litigation and other legal proceedings, including the corresponding accruals, could change because of the discovery of facts with respect to legal actions or other proceedings pending against the Company which are not presently known. Adverse rulings or determinations by judges, juries, governmental authorities or other parties could also result in changes to management’s assessment of current liabilities and contingencies. Accordingly, the ultimate costs of resolving these claims may be substantially higher or lower than the amounts reserved. See note 10, commitments and contingencies, for further information. Revenue recognition Sales are recognized at an amount that reflects the consideration to which the Company expects to be entitled in exchange for transferring control of goods or services to the customer. Sales are reported on the gross amount billed to a customer less discounts if it has earned revenue as a principal from the sale of goods and services. Sales are reported on the net amount retained (that is, the amount billed to the customer less the amount paid to a vendor) if it has earned a commission or a fee as an agent. Retail Pharmacy USA and Retail Pharmacy International The Company recognizes revenue, net of taxes and expected returns, at the time it sells merchandise or dispenses prescription drugs to the customer. The Company estimates revenue based on expected reimbursements from third-party payers (e.g., pharmacy benefit managers, insurance companies and governmental agencies) for dispensing prescription drugs. The estimates are based on all available information including historical experience and are updated to actual reimbursement amounts. Pharmaceutical Wholesale Wholesale revenue is recognized, net of taxes and expected returns, upon shipment of goods, which is generally also the day of delivery. Loyalty programs and gift cards The Company’s loyalty rewards programs represent a separate performance obligation and are accounted for using the deferred revenue approach. When goods are sold, the transaction price is allocated between goods sold and loyalty points awarded based upon the relative standalone selling price. The revenue allocated to the loyalty points is recognized upon redemption. Loyalty programs breakage is recognized as revenue based on the redemption pattern. Customer purchases of gift cards are not recognized as revenue until the card is redeemed. Gift card breakage (i.e., unused gift card) is recognized as revenue based on the redemption pattern. Cost of sales Cost of sales includes the purchase price of goods and cost of services rendered, store and warehouse inventory loss, inventory obsolescence and supplier rebates. In addition to product costs, cost of sales includes warehousing costs for retail operations, purchasing costs, freight costs, cash discounts and vendor allowances. Vendor allowances and supplier rebates Vendor allowances are principally received as a result of purchases, sales or promotion of vendors’ products. Allowances are generally recorded as a reduction of inventory and are recognized as a reduction of cost of sales when the related merchandise is sold. Allowances received for promoting vendors’ products are offset against advertising expense and result in a reduction of selling, general and administrative expenses to the extent of advertising costs incurred, with the excess treated as a reduction of inventory costs. Rebates or refunds received by the Company from its suppliers, mostly in cash, are considered as an adjustment of the prices of the supplier’s products purchased by the Company. Selling, general and administrative expenses Selling, general and administrative expenses mainly consist of salaries and employee costs, occupancy costs, depreciation and amortization, credit and debit card fees and expenses directly related to stores. In addition, other costs included are headquarters’ expenses, advertising costs (net of vendor advertising allowances), wholesale warehousing costs and insurance. Advertising costs Advertising costs, which are reduced by the portion funded by vendors, are expensed as incurred or when services have been received. Net advertising expenses, which are included in selling, general and administrative expenses, were $534 million in fiscal 2020, $585 million in fiscal 2019 and $665 million in fiscal 2018. Impairment of long-lived assets The Company evaluates the recoverability of long-lived assets whenever events or changes in circumstances indicate that the carrying value of such an asset may not be recoverable. The evaluation of long-lived assets is performed at the lowest level of identifiable cash flows. Long-lived assets related to the Company’s retail operations include property, plant and equipment, definite-lived intangibles, right of use asset as well as operating lease liability. If the asset group fails the recoverability test, then an impairment charge is determined based on the difference between the fair value of the asset group compared to its carrying value. Fair value of the asset group is generally determined using income approach based on cash flows expected from the use and eventual disposal of the asset group. Impairment charges for definite-lived assets included in selling, general and administrative expenses were $422 million, $260 million and $57 million for fiscal years 2020, 2019 and 2018 respectively. The determination of the fair value of the asset group requires management to estimate a number of factors including anticipated future cash flows and discount rates. Although we believe these estimates are reasonable, actual results could differ from those estimates due to the inherent uncertainty involved in making such estimates. Stock compensation plans Stock based compensation is measured at fair value at the grant date. The Company grants stock options, performance shares and restricted units to the Company’s non-employee directors, officers and employees. The Company recognizes compensation expense on a straight-line basis over the substantive service period. The fair value of each performance share granted assumes that performance goals will be achieved at 100 percent. If such goals are not met, no compensation expense is recognized and any recognized compensation expense is reversed. See note 12, stock compensation plans, for more information on the Company’s stock-based compensation plans. Insurance The Company obtains insurance coverage for catastrophic exposures as well as those risks required by law to be insured. In general, the Company’s U.S. subsidiaries retain a significant portion of losses related to workers’ compensation, property, comprehensive general, pharmacist and vehicle liability, while non-U.S. subsidiaries manage their exposures through insurance coverage with third-party carriers. Management regularly reviews the probable outcome of claims and proceedings, the expenses expected to be incurred, the availability and limits of the insurance coverage and the established accruals for liabilities. Liabilities for losses are recorded based upon the Company’s estimates for both claims incurred and claims incurred but not reported. The provisions are estimated in part by considering historical claims experience, demographic factors and other actuarial assumptions. Income taxes The Company accounts for income taxes according to the asset and liability method. Under this method, deferred tax assets and liabilities are recognized based upon the estimated future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax basis. Deferred tax assets and liabilities are measured pursuant to tax laws using rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rate is recognized in income in the period that includes the enactment date. Valuation allowances are established when necessary to reduce deferred tax assets to the amounts more likely than not to be realized. In determining the provision for income taxes, the Company uses income, permanent differences between book and tax income, the relative proportion of foreign and domestic income, enacted statutory income tax rates, projections of income subject to Subpart F rules and unrecognized tax benefits related to current year results. Discrete events such as the assessment of the ultimate outcome of tax audits, audit settlements, recognizing previously unrecognized tax benefits due to lapsing of the applicable statute of limitations, recognizing or de-recognizing benefits of deferred tax assets due to future year financial statement projections and changes in tax laws are recognized in the period in which they occur. The Company is subject to routine income tax audits that occur periodically in the normal course of business. U.S. federal, state, local and foreign tax authorities raise questions regarding the Company’s tax filing positions, including the timing and amount of deductions and the allocation of income among various tax jurisdictions. In evaluating the tax benefits associated with the various tax filing positions, the Company records a tax benefit for uncertain tax positions using the highest cumulative tax benefit that is more likely than not to be realized. Adjustments are made to the liability for unrecognized tax benefits in the period in which the Company determines the issue is effectively settled with the tax authorities, the statute of limitations expires for the return containing the tax position or when more information becomes available. Earnings per share The dilutive effect of outstanding stock options on earnings per share is calculated using the treasury stock method. Stock options are anti-dilutive and excluded from the earnings per share calculation if the exercise price exceeds the average market price of the common shares. Outstanding options to purchase common shares that were anti-dilutive and excluded from earnings per share totaled 19.0 million, 14.9 million and 10.1 million in fiscal 2020, 2019 and 2018, respectively. New accounting pronouncements Adoption of new accounting pronouncements Financial instruments - hedging and derivatives In October 2018, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2018-16, Derivatives and Hedging (Topic 815): Inclusion of the Secured Overnight Financing Rate (“SOFR”) Overnight Index Swap (“OIS”) Rate as Benchmark Interest Rate for Hedge Accounting Purposes. This ASU permits use of the OIS rate based on the SOFR as a U.S. benchmark interest rate for hedge accounting purposes. The Company adopted this new accounting standard on September 1, 2019 on a prospective basis. The adoption of this ASU had no impact on the Company’s results of operations, cash flows or financial position. Intangibles – goodwill and other – internal-use software In August 2018, the FASB issued ASU 2018-15, Intangibles-Goodwill and Other- Internal-Use Software (Subtopic 350-40). This ASU addresses customer’s accounting for implementation costs incurred in a cloud computing arrangement that is a service contract and also adds certain disclosure requirements related to implementation costs incurred for internal-use software and cloud computing arrangements. The amendment aligns the requirements for capitalizing implementation costs incurred in a hosting arrangement that is a service contract with the requirements for capitalizing implementation costs incurred to develop or obtain internal-use software (and hosting arrangements that include an internal-use software license). The Company early adopted this new accounting standard on September 1, 2019 on a prospective basis. The adoption of this ASU did not have a material impact on the Company’s results of operations or financial position. Contributions made In June 2018, the FASB issued ASU 2018-08, Clarifying the Scope and the Accounting Guidance for Contributions Received and Contributions Made (Topic 958). This ASU clarifies and improves guidance about whether a transfer of assets (or reduction of liabilities) is a contribution or an exchange transaction, and whether a contribution is conditional. The ASU applies to all entities, including business entities, that receive or make contributions of cash or other assets, including promises to give. The Company adopted this new accounting standard on September 1, 2019 on a prospective basis. The adoption of this ASU did not have a material impact on the Company’s results of operations or financial position. Compensation – stock compensation In June 2018, the FASB issued ASU 2018-07, Compensation-Stock Compensation (Topic 718). This ASU eliminated most of the differences between accounting guidance for share-based compensation granted to nonemployees and the guidance for share-based compensation granted to employees. The ASU supersedes the guidance for nonemployees and expands the scope of the guidance for employees to include both. The Company adopted this new accounting standard on September 1, 2019. The adoption of this ASU had no impact on the Company’s results of operations, cash flows or financial position. Accounting for reclassification of certain tax effects from accumulated other comprehensive income In February 2018, the FASB issued ASU 2018-02, Income Statement-Reporting Comprehensive Income (Topic 220): Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income. This ASU addresses the income tax effects of items in accumulated other comprehensive income (“AOCI”) which were originally recognized in other comprehensive income, rather than in income from continuing operations. Specifically, it permits a reclassification from AOCI to retained earnings for the adjustment of deferred taxes due to the reduction of the historical corporate income tax rate to the newly enacted corporate income tax rate resulting from the U.S. tax law changes enacted in December 2017. It also requires certain disclosures about these reclassifications. The Company adopted this new accounting standard on September 1, 2019 on a prospective basis. The Company elected not to reclassify the income tax effects of change in historical corporate tax rate from AOCI to retained earnings. The adoption of this ASU had no impact on the Company’s results of operations, cash flows or financial position. Leases In February 2016, the FASB issued , which supersedes Topic 840, Leases. Subsequently, the FASB issued additional ASUs which further clarify this guidance. This ASU increases the transparency and comparability of organizations by requiring the capitalization of substantially all leases on the balance sheet and disclosures of key information about leasing arrangements. Under this new guidance, at the lease commencement date, a lessee recognizes a right-of-use asset and lease liability, which is initially measured at the present value of the future lease payments. For income statement purposes, a dual model was retained for lessees, requiring leases to be classified as either operating or finance leases. Under the operating lease model, lease expense is recognized on a straight-line basis over the lease term. Under the finance lease model, interest on the lease liability is recognized separately from amortization of the right-of-use asset. In addition, a new ASU was issued in July 2018, to provide relief to companies from restating the comparative periods. The Company adopted this new accounting standard on September 1, 2019 on a modified retrospective basis and applied the new standard to all leases through a cumulative-effect adjustment to beginning retained earnings. As a result, comparative financial information has not been restated and continues to be reported under the accounting standards in effect for those periods. The Company elected the package of practical expedients permitted under the transition guidance, which among other things, allows the carryforward of historical lease classification. The adoption of this new accounting standard resulted in recognition of lease liabilities of $24 billion and recognition of right-of-use assets of $22 billion net of liabilities for facility closing, deferred rent, favorable lease interest intangible asset, unfavorable lease interest liability, lease incentives and prepaid rent as of August 31, 2019. The adoption also resulted in a decrease to retained earnings of $0.4 billion due to transition date impairment of right-of-use assets related to previously impaired long-lived assets of $0.8 billion, net of tax, partially offset by de-recognition of deferred gains on historical sale-leaseback transactions of $0.4 billion, net of tax. See note 4. Leases for further information. The impact to the Company's opening Consolidated Balance Sheets as of September 1, 2019 was as follows (in millions):
According to the guidance provided in the FASB staff Q&A Topic 842 Leases – Accounting for lease concessions related to the effects of COVID-19, released on April 2020, the Company elected to account for certain lease concessions related to COVID-19 as a reduction to rent expense for the period. During the fiscal year ended August 31, 2020, these rent concessions related to COVID-19 were not material. New accounting pronouncements not yet adopted Effects of Reference Rate Reform on Financial Reporting In March 2020, the FASB issued ASU 2020-04, Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting. This ASU provides optional expedient and exceptions for applying generally accepted accounting principles to contracts, hedging relationships, and other transactions affected by reference rate reform if certain criteria are met. In response to the concerns about structural risks of interbank offered rates ("IBORs") and, particularly, the risk of cessation of the London Interbank Offered Rate ("LIBOR"), regulators in several jurisdictions around the world have undertaken reference rate reform initiatives to identify alternative reference rates that are more observable or transaction based and less susceptible to manipulation. The ASU provides companies with optional guidance to ease the potential accounting burden associated with transitioning away from reference rates that are expected to be discontinued. The ASU can be adopted no later than December 1, 2022 (fiscal 2023) with early adoption permitted. The Company is evaluating the effect of adopting this new accounting guidance. Financial Instruments In March 2020, FASB issued ASU 2020-03. This ASU improves and clarifies various financial instruments topics, including the current expected credit losses ("CECL") standard issued in 2016. The ASU includes seven different issues that describe the areas of improvement and the related amendments to GAAP, intended to make the standards easier to understand and apply by eliminating inconsistencies and providing clarifications. The amendments have different effective dates. The Company is evaluating the effect of adopting this new accounting guidance, but does not expect adoption will have a material impact on the Company’s financial statements. Investments - equity securities; Investments—Equity Method and Joint Ventures; Derivatives and Hedging In January 2020, the FASB issued ASU 2020-01, Investments—Equity Securities (Topic 321), Investments—Equity Method and Joint Ventures (Topic 323), and Derivatives and Hedging (Topic 815). The amendments in this ASU clarify the interaction between the accounting for investments in equity securities, investment in equity method and certain derivatives instruments. The ASU is expected to reduce diversity in practice and increase comparability of the accounting for these interactions. This ASU is effective for fiscal years beginning after December 15, 2021 (fiscal 2023). The adoption of this ASU is not expected to have any impact on the Company's results of operations, cash flows or financial position. Income taxes - simplifying the accounting for income taxes In December 2019, the FASB issued ASU 2019-12: Simplifying the Accounting for Income Taxes (Topic 740), which removes certain exceptions to the general principles in Topic 740 and improves consistent application of and simplifies GAAP for other areas of Topic 740 by clarifying and amending existing guidance. This ASU is effective for fiscal years beginning after December 15, 2020 (fiscal 2022), and interim periods within those fiscal years, with early adoption permitted. The Company is evaluating the effect of adopting this new accounting guidance but does not expect adoption will have a material impact on the Company's disclosures. Investments - equity securities In April 2019, the FASB issued ASU 2019-04, Codification Improvements to Financial Instruments-Credit Losses (Topic 326), Derivatives and Hedging (Topic 815), and Financial Instruments (Topic 825). This extensive ASU provides clarifications for three topics related to financial instruments accounting, some of which apply to the Company. For example, this ASU clarifies the disclosure requirements that apply to equity securities without a readily determinable fair value for which the measurement alternative is elected. This ASU is effective for fiscal years beginning after December 15, 2019 (fiscal 2021). The adoption of this ASU is not expected to have a significant impact on the Company's results of operations, cash flows or financial position. Collaborative arrangements In November 2018, the FASB issued ASU 2018-18, Collaborative Arrangements (Topic 808). This ASU clarifies the interaction between Topic 808, Collaborative Arrangements, and Topic 606, Revenue from Contracts with Customers. This ASU is effective for fiscal years beginning after December 15, 2019 (fiscal 2021). The adoption of this ASU is not expected to have a significant impact on the Company’s results of operations, cash flows or financial position. Compensation – retirement benefits – defined benefit plans In August 2018, the FASB issued ASU 2018-14, Compensation - Retirement benefits (Topic 715-20). This ASU amends ASC 715 to add, remove and clarify disclosure requirements related to defined benefit pension and other postretirement plans. The ASU eliminates the requirement to disclose the amounts in accumulated other comprehensive income expected to be recognized as part of net periodic benefit cost over the next year. The ASU also removes the disclosure requirements for the effects of a one-percentage-point change on the assumed health care costs and the effect of this change in rates on service cost, interest cost and the benefit obligation for postretirement health care benefits. This ASU is effective for fiscal years ending after December 15, 2020 (fiscal 2021) and must be applied on a retrospective basis. The Company is evaluating the effect of adopting this new accounting guidance, but does not expect adoption will have a material impact on the Company's financial position. Fair value measurement In August 2018, the FASB issued ASU 2018-13, Fair Value Measurement (Topic 820). The ASU eliminates such disclosures as the amount of and reasons for transfers between Level 1 and Level 2 of the fair value hierarchy. The ASU adds new disclosure requirements for Level 3 measurements. This ASU is effective for fiscal years beginning after December 15, 2019 (fiscal 2021), and interim periods within those fiscal years, with early adoption permitted for any eliminated or modified disclosures. The Company is evaluating the effect of adopting this new accounting guidance, but does not expect adoption will have a material impact on the Company's disclosures. Financial instruments - credit losses In June 2016, the FASB issued ASU 2016-13: Measurement of Credit Losses on Financial Instruments (Topic 326), which amends the Board’s guidance on the impairment of financial instruments. The ASU adds to U.S. GAAP an impairment model that is based on expected losses rather than incurred losses, which is known as the CECL model. The CECL model applies to most debt instruments (other than those measured at fair value), trade and other receivables, financial guarantee contracts, and loan commitments. This ASU is effective for fiscal years beginning after December 15, 2019 (fiscal 2021), and interim periods within those fiscal years, with early adoption permitted. The Company is evaluating the effect of adopting this new accounting guidance, but does not expect adoption will have a material impact on the Company’s financial position or results of operations.
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Acquisitions |
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Acquisitions | Acquisitions Acquisition of certain Rite Aid assets During the fiscal year ended August 31, 2020, pursuant to the amended and restated asset purchase agreement entered into with Rite Aid Corporation ("Rite Aid") in September 2017, the Company acquired the remaining two of three distribution centers including related inventory for cash consideration of $91 million. The Company acquired the other distribution center and related inventory from Rite Aid for cash consideration of $61 million in fiscal 2019. During the fiscal year ended August 31, 2018, the Company purchased 1,932 stores for total cash consideration of $4.2 billion. The purchases of these stores were accounted for as business combinations and occurred in waves during fiscal 2018. As of May 31, 2019, the Company completed the analysis to assign fair values for assets acquired and liabilities assumed for the acquired stores. During the fiscal year ended August 31, 2019, the Company recorded certain measurement period adjustments based on additional information primarily to other non-current liabilities, intangible assets and deferred income taxes, which did not have a material impact on goodwill. The following table summarizes the consideration paid and the amounts of identified assets acquired and liabilities assumed for purchase of 1,932 stores as of the fiscal year ended August 31, 2019.
The identified definite-lived intangible assets were as follows:
Consideration included cash of $4,157 million and the fair value of the option granted to Rite Aid to become a member of the Company’s group purchasing organization, Walgreens Boots Alliance Development GmbH. The fair value for this option was determined using the income approach methodology. The fair value estimates were based on the market compensation for such services and appropriate discount rate, as relevant, that market participants would consider when estimating fair values. During fiscal 2019, this option was terminated resulting in recognition of a gain in other income (expense). The goodwill of $1,331 million arising from the business combinations primarily reflects the expected operational synergies and cost savings generated from the Store Optimization Program as well as the expected growth from new customers. See note 3, exit and disposal activities, for additional information. The goodwill was allocated to the Retail Pharmacy USA segment. Substantially all of the goodwill recognized is expected to be deductible for income tax purposes. The fair value for customer relationships was determined using the multi-period excess earnings method, a form of the income approach. Real property fair values were determined using primarily the income approach and sales comparison approach. The fair value measurements of the intangible assets are based on significant inputs not observable in the market and thus represent Level 3 measurements. The fair value estimates for the intangible assets are based on projected discounted cash flows, historical and projected financial information and attrition rates, as relevant, that market participants would consider when estimating fair values. The following table presents supplemental unaudited pro forma consolidated sales for the fiscal year ended 2018 as if all 1,932 stores were acquired on September 1, 2016. Pro forma net earnings of the Company, assuming these purchases had occurred at the beginning of each period presented, would not be materially different from the results reported. See note 3, exit and disposal activities, for additional information. The unaudited pro forma information has been prepared for comparative purposes only and is not intended to be indicative of what the Company’s results would have been had the purchases occurred at the beginning of the periods presented or results which may occur in the future.
1Impacted by store closures due to the Store Optimization Program. Actual sales from acquired Rite Aid stores for the fiscal year ended 2018 included in the Consolidated Statement of Earnings are as follows:
The 1,932 Rite Aid stores acquired did not have a material impact on net earnings of the Company for the fiscal year ended 2018. Other acquisitions The Company acquired certain prescription files and related pharmacy inventory primarily in Retail Pharmacy USA for the aggregate purchase price of $258 million and $304 million during the fiscal year ended 2020 and 2019, respectively.
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Exit and disposal activities |
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Exit and disposal activities | Exit and disposal activities Transformational Cost Management Program On December 20, 2018, the Company announced a transformational cost management program that was expected to deliver in excess of $1.0 billion of annual cost savings by fiscal 2022 (the “Transformational Cost Management Program”). As of the date of this report, the Company expects annual cost savings to be in excess of $2.0 billion by fiscal 2022, an increase from the previously reported expectations of annual cost savings in excess of $1.8 billion in October 2019 and $1.5 billion in April 2019. The Transformational Cost Management Program, which is multi-faceted and includes divisional optimization initiatives, global smart spending, global smart organization and the transformation of the Company’s information technology (IT) capabilities, is designed to help the Company achieve increased cost efficiencies. To date, the Company has taken actions across all aspects of the Transformational Cost Management Program. The actions under the Transformational Cost Management Program focus on all reportable segments and the Company’s global functions. Divisional optimization within each of the Company’s segments includes activities such as optimization of stores including plans to exit approximately 200 Boots stores in the United Kingdom and approximately 250 stores in the United States, as compared to the 200 stores previously reported in July 2020. The Company currently estimates that the Transformational Cost Management Program will result in cumulative pre-tax charges to its GAAP financial results of approximately $2.1 billion to $2.4 billion, of which $1.8 billion to $2.1 billion are expected to be recorded as exit and disposal activities. In addition to these impacts, as a result of the actions related to store closures taken under the Transformational Cost Management Program, the Company recorded $508 million of transition adjustments to decrease retained earnings due to the adoption of the new lease accounting standard (Topic 842) that became effective on September 1, 2019. See note 1, summary of major accounting policies, for additional information. Since the inception of the Transformational Cost Management Program to August 31, 2020, the Company has recognized cumulative pre-tax charges to its financial results in accordance with GAAP of $1.2 billion, which were primarily recorded within selling, general and administrative expenses. These charges included $242 million related to lease obligations and other real estate costs, $350 million in asset impairments, $420 million in employee severance and business transition costs and $140 million of information technology transformation and other exit costs. Costs related to exit and disposal activities under the Transformational Cost Management Program for the fiscal year ended August 31, 2020 and 2019 were as follows (in millions):
1Includes $166 million of impairments relating to operating lease right-of-use and finance lease assets. Refer to note 4, leases for additional information. 2Primarily includes write down of leasehold improvements, certain software and inventory.
1Primarily includes write down of leasehold improvements, certain software and inventory. The changes in liabilities and assets related to the exit and disposal activities under Transformational Cost Management Program include the following (in millions):
1Includes $166 million of impairments relating to operating lease right-of-use and finance lease assets. Refer to note 4, leases for additional information. 2Represents liability for facility closings and related lease termination charges recorded as an offset to right-of-use assets upon the adoption of ASC 842. Refer to note 1, summary of major accounting policies and note 4, leases for additional information. Store Optimization Program On October 24, 2017, the Company’s Board of Directors approved a plan to implement a program (the “Store Optimization Program”) to optimize store locations through the planned closure of approximately 600 stores and related assets within the Company’s Retail Pharmacy USA segment upon completion of the acquisition of certain stores and related assets from Rite Aid. The Company closed 769 stores and related assets, as compared to its previous estimate of 750 stores and related assets. The actions under the Store Optimization Program commenced in March 2018 and were completed in the fourth quarter of fiscal 2020. The Company recognized cumulative pre-tax charges to its GAAP financial results of approximately $349 million, primarily within selling, general and administrative expenses, including costs associated with lease obligations and other real estate costs and employee severance and other exit costs. The Company incurred approximately $160 million for lease obligations and other real estate costs, and approximately $189 million for employee severance and other exit costs. All these cumulative pre-tax charges mostly resulted in cash expenditures for the Company. Costs related to the Store Optimization Program for the twelve months ended August 31, 2020, 2019 and 2018 were as follows (in millions):
1Includes $11 million operating lease right-of-use impairments for the fiscal year ended August 31, 2020. Refer to note 4, leases for additional information. The changes in liabilities related to the Store Optimization Program for the fiscal years ended August 31, 2020 and 2019 include the following (in millions):
1Primarily represents unfavorable lease liabilities from acquired Rite Aid stores. 2Includes write down of operating lease right-of-use assets and inventory. 3Represents liability for facility closings and related lease termination charges recorded as an offset to right-of-use assets upon the adoption of ASC 842. Refer to note 1, summary of major accounting policies and note 4, leases for additional information. Cost Transformation Program On April 8, 2015, the Walgreens Boots Alliance Board of Directors approved a plan to implement a 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 United States; reorganize corporate and field operations; drive operating efficiencies; and streamline information technology and other functions. The actions under the Cost Transformation Program focused primarily on the Retail Pharmacy USA segment, but included activities from all segments. The Company completed the Cost Transformation Program in the fourth quarter of fiscal 2017. During fiscal 2020, the liabilities related to the Cost Transformation Program declined by $382 million representing liability for facility closings and related lease termination charges recorded as an offset to right-of-use assets upon the adoption of ASC 842 on September 1, 2019. The remaining liabilities as of August 31, 2020 were not material.
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Leases |
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Leases [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Leases | LeasesThe Company leases certain retail stores, warehouses, distribution centers, office space, land and equipment. For leases in the United States, the initial lease term is typically 15 to 25 years, followed by additional terms containing renewal options typically at five-year intervals, and may include rent escalation clauses. Non-U.S. leases are typically for shorter terms and may include cancellation clauses or renewal options. The commencement date of all lease terms is the earlier of the date the Company becomes legally obligated to make rent payments or the date the Company has the right to control the property. The Company recognizes operating lease rent expense on a straight-line basis over the term of the lease. In addition to minimum fixed rentals, some leases provide for contingent rentals based upon a portion of sales. See note 1, summary of major accounting policies for additional information. Supplemental balance sheet information related to leases were as follows (in millions):
Supplemental income statement information related to leases were as follows (in millions):
1Includes real estate property taxes, common area maintenance, insurance and rental payments based on sales volume. 2For the fiscal year August 31, 2020, total impairments include $177 million to Transformational Cost Management and Store Optimization programs. See note 3, exit and disposal activities. 3Recorded within selling, general and administrative expenses. Other supplemental information were as follows (in millions):
Average lease term and discount rate as of August 31, 2020 were as follows:
The aggregate future lease payments for operating and finance leases as of August 31, 2020 were as follows (in millions):
Comparative disclosures prior to the adoption of ASC 842 Leases On September 1, 2019, upon adoption of ASC 842 Leases, the liability for facility closings and related termination charges were transferred as an offset to right-of-of use assets . In fiscal 2019 and 2018, prior to the adoption of ASC 842 Leases, the Company recorded charges of $185 million and $129 million, respectively, for closed or relocated facilities. These charges are reported in selling, general and administrative expenses in the Consolidated Statements of Earnings. The changes in liability for facility closings and related lease termination charges include the following (in millions):
1Primarily unfavorable lease liabilities from acquired Rite Aid stores. Rental expense prior to the adoption of ASC 842 Leases, which includes common area maintenance, insurance and taxes, where appropriate, was as follows (in millions):
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Leases | LeasesThe Company leases certain retail stores, warehouses, distribution centers, office space, land and equipment. For leases in the United States, the initial lease term is typically 15 to 25 years, followed by additional terms containing renewal options typically at five-year intervals, and may include rent escalation clauses. Non-U.S. leases are typically for shorter terms and may include cancellation clauses or renewal options. The commencement date of all lease terms is the earlier of the date the Company becomes legally obligated to make rent payments or the date the Company has the right to control the property. The Company recognizes operating lease rent expense on a straight-line basis over the term of the lease. In addition to minimum fixed rentals, some leases provide for contingent rentals based upon a portion of sales. See note 1, summary of major accounting policies for additional information. Supplemental balance sheet information related to leases were as follows (in millions):
Supplemental income statement information related to leases were as follows (in millions):
1Includes real estate property taxes, common area maintenance, insurance and rental payments based on sales volume. 2For the fiscal year August 31, 2020, total impairments include $177 million to Transformational Cost Management and Store Optimization programs. See note 3, exit and disposal activities. 3Recorded within selling, general and administrative expenses. Other supplemental information were as follows (in millions):
Average lease term and discount rate as of August 31, 2020 were as follows:
The aggregate future lease payments for operating and finance leases as of August 31, 2020 were as follows (in millions):
Comparative disclosures prior to the adoption of ASC 842 Leases On September 1, 2019, upon adoption of ASC 842 Leases, the liability for facility closings and related termination charges were transferred as an offset to right-of-of use assets . In fiscal 2019 and 2018, prior to the adoption of ASC 842 Leases, the Company recorded charges of $185 million and $129 million, respectively, for closed or relocated facilities. These charges are reported in selling, general and administrative expenses in the Consolidated Statements of Earnings. The changes in liability for facility closings and related lease termination charges include the following (in millions):
1Primarily unfavorable lease liabilities from acquired Rite Aid stores. Rental expense prior to the adoption of ASC 842 Leases, which includes common area maintenance, insurance and taxes, where appropriate, was as follows (in millions):
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Equity method investments |
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Equity Method Investments and Joint Ventures [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Equity method investments | Equity method investments Equity method investments as of August 31, 2020 and 2019 were as follows (in millions, except percentages):
AmerisourceBergen Corporation (“AmerisourceBergen”) investment As of August 31, 2020 and 2019, the Company owned 56,854,867 AmerisourceBergen common shares, representing approximately 28% and 27% of the outstanding AmerisourceBergen common stock, respectively, in each case based on the most recent share count information publicly reported by AmerisourceBergen as of that date. 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 are reported as a separate line in the Consolidated Statements of Earnings. The financial performance of AmerisourceBergen, including any charges which may arise relating to its ongoing opioid litigation, will impact the Company’s results of operations. The Level 1 fair market value of the Company’s equity investment in AmerisourceBergen common stock at August 31, 2020 and 2019 were $5.5 billion and $4.7 billion, respectively. As of August 31, 2020, 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; its investment in Sinopharm Holding Guoda Drugstores Co., Ltd., the Company's retail pharmacy investment in China, the Company’s investment in VillageMD, PharMerica Corporation, Shields Health Solutions and BioScrip (resulting from its merger with Option Care Inc.) in the United States. The Company reported $41 million, $23 million and $53 million of post-tax equity earnings from other equity method investments, including equity method investments classified as operating, for the fiscal years ended August 31, 2020, 2019 and 2018, respectively. During the fiscal year ended August 31, 2020, the Company recorded within other income (expense) impairment charges of $86 million in its other equity method investments using fair values primarily based on level 1 inputs. During the fiscal year ended August 31, 2018, 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 Statement of Earnings. The fair value of the Company’s equity interest in Guangzhou Pharmaceuticals was determined using the proposed sale price and thus represented Level 3 measurement. During the fiscal year ended August 31, 2018, the Company completed the sale of a 30 percent interest in Guangzhou Pharmaceuticals to its joint venture partner Guangzhou Baiyunshan Pharmaceutical Holdings resulting in a $172 million reduction in carrying value and a $8 million cumulative translation adjustment loss. In July 2018, the Company completed the sale of its minority equity interest in Premise Health Holding Corp., resulting in an after-tax gain on disposition of $245 million and a reduction in carrying value of $76 million. Summarized financial information Summarized financial information for the Company’s equity method investments in aggregate is as follows: Balance sheet (in millions)
Statements of earnings (in millions)
1Shareholders’ equity at August 31, 2020 and 2019 includes $387 million and $411 million, respectively, related to noncontrolling interests. The summarized financial information for equity method investments has been included on an aggregated basis for all investments as reported at the end of each fiscal year end.
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Goodwill and other intangible assets |
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Goodwill and Intangible Assets Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Goodwill and other intangible assets | Goodwill and other intangible assets Goodwill and indefinite-lived intangible assets are evaluated for impairment annually during the fourth quarter, or more frequently if an event occurs or circumstances change that would more likely than not reduce the fair value of a reporting unit or intangible asset below its carrying value. During the three months ended May 31, 2020, the Company completed a quantitative impairment analysis for goodwill and certain indefinite-lived intangible assets related to its two reporting units within Retail Pharmacy International division, Boots and Other international, as a result of the significant impact of COVID-19 on their financial performance. Based on this analysis, the Company recorded impairment charges of $1.7 billion on Boots goodwill and $0.3 billion on certain indefinite-lived Boots tradename assets. Based on the annual evaluation as of June 1, 2020 valuation date, the fair values of the Company’s reporting units exceeded their carrying amounts ranging from approximately 4% to approximately 239% excluding Boots reporting unit for which the excess of fair value over carrying amount was nominal due to an impairment charge recognized during the three months ended May 31, 2020. Other international reporting unit's fair value was in excess of its carrying value by approximately 4% compared to 16% on June 1, 2019. As of August 31, 2020, the carrying values of goodwill were $1.1 billion and $0.5 billion for Boots reporting unit and Other international reporting unit, respectively. The fair values of certain indefinite-lived intangibles within the Boots reporting unit exceeded their carrying amounts ranging from approximately 4% to approximately 31%, excluding certain indefinite-lived Boots tradename assets for which the excess of fair values over carrying amounts were nominal due to impairment charges recognized during the three months ended May 31, 2020. As of August 31, 2020, the carrying value of the indefinite-lived intangibles within the Boots reporting unit was $7.2 billion. During the fiscal year ended August 31, 2019, the Company recorded an impairment of $73 million on its pharmacy licenses in the Boots reporting unit. As part of the Company’s impairment analysis, fair value of a reporting unit is determined using both the income and market approaches. The income approach requires management to estimate a number of factors for each reporting unit, including the projected future operating results, economic projections, anticipated future cash flows and discount rates considering the impact of COVID-19, among other potential impacts. The market approach estimates fair value using comparable marketplace fair value data from within a comparable industry grouping. The determination of the fair value of the reporting units requires the Company to make significant estimates and assumptions including the business and financial performance of the Company’s reporting units, as well as how such performance may be impacted by COVID-19. These estimates and assumptions primarily include, but are not limited to: the selection of appropriate peer group companies, control premiums appropriate for acquisitions in the industries in which we compete, discount rates, terminal growth rates, and forecasts of revenue, operating income, depreciation, amortization and capital expenditures, including considering the impact of COVID-19. Indefinite-lived intangible assets fair values are estimated using the relief from royalty method and excess earnings method of the income approach. The determination of the fair value of the indefinite-lived intangibles requires the Company to make significant estimates and assumptions. These estimates and assumptions primarily include, but are not limited to: forecasts of revenue, the selection of appropriate royalty rate and discount rates. Although the Company believes its estimates of fair value are reasonable, actual financial results could differ from those estimates due to the inherent uncertainty involved in making such estimates. Changes in assumptions concerning future financial results or other underlying assumptions, including the impact of COVID-19, could have a significant impact on either the fair value of the reporting units and indefinite-lived intangibles, the amount of any goodwill and indefinite-lived intangible impairment charges, or both. These estimates can be affected by a number of factors including, but not limited to, the impact of COVID-19, its severity, duration and its impact on global economies, general economic conditions as well as our profitability. The Company will continue to monitor these potential impacts, including the impact of COVID-19 and economic, industry and market trends and the impact these may have on Boots and Other international reporting units. Definite-lived intangible assets are evaluated for impairment whenever events or circumstances indicate that a certain asset or asset group may be impaired. During the year ended August 31, 2020, the Company evaluated certain definite-lived intangibles for impairment resulting in impairment charge of $47 million. Changes in the carrying amount of goodwill by reportable segment consist of the following activity (in millions):
During the fiscal year ended August 31, 2020, the Company acquired the remaining two of three Rite Aid distribution centers including related inventory for cash consideration of $91 million resulting in an increase to goodwill of $62 million. During fiscal year ended August 31, 2019, the Company completed the analysis to assign fair values for assets acquired and liabilities assumed for the 1,932 Rite Aid stores acquired in fiscal 2018 resulting in a decrease to goodwill of $13 million. See note 2, acquisitions, for additional information. The carrying amount and accumulated amortization of intangible assets consists of the following (in millions):
1Includes purchased prescription files. 2Transferred favorable lease interest to right-of-use assets upon adoption of ASC 842. Refer to note 1, summary of major accounting policies for additional information. Amortization expense for intangible assets was $461 million, $552 million and $493 million in fiscal 2020, 2019 and 2018, respectively. Estimated future annual amortization expense for the next five fiscal years for intangible assets recorded at August 31, 2020 is as follows (in millions):
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Debt |
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Debt Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Debt | Debt Debt carrying values are presented net of unamortized discount and debt issuance costs, where applicable, and foreign currency denominated debt is translated using the spot rates as of the balance sheet date. Debt consists of the following (all amounts are presented in millions of U.S. dollars and debt issuances are denominated in U.S. dollars, unless otherwise noted):
1Notes are unsubordinated debt obligations of Walgreens Boots Alliance and rank equally in right of payment with all other unsecured and unsubordinated indebtedness of Walgreens Boots Alliance from time to time outstanding. On September 17, 2020, the Company provided notice to the trustee and the holders of its 2.875% notes due 2020 issued by the Company on November 20, 2014 that it will redeem in full the £400 million aggregate principal amount outstanding of the notes on October 20, 2020. 2Other short-term debt represents a mix of fixed and variable rate debt with various maturities and working capital facilities denominated in various currencies. 3Notes are senior debt obligations of Walgreen Co. and rank equally with all other unsecured and unsubordinated indebtedness of Walgreen Co. On December 31, 2014, Walgreens Boots Alliance fully and unconditionally guaranteed the outstanding notes on an unsecured and unsubordinated basis. The guarantee, for so long as it is in place, is an unsecured, unsubordinated debt obligation of Walgreens Boots Alliance and will rank equally in right of payment with all other unsecured and unsubordinated indebtedness of Walgreens Boots Alliance. 4Other long-term debt represents a mix of fixed and variable rate debt in various currencies with various maturities. At August 31, 2020, the future maturities of short-term and long-term debt, excluding debt discounts and issuance costs and finance lease obligations (see note 4, leases, for the future lease payments), consisted of the following (in millions):
$1.5 Billion Note Issuance On April 15, 2020, the Company issued in an underwritten public offering $0.5 billion of 3.20% notes due 2030 and $1.0 billion of 4.10% notes due 2050. Total issuance costs relating to the notes, including underwriting discounts and offering expenses were $13.3 million. Credit facilities April 7, 2020 Revolving Credit Agreement On April 7, 2020, the Company entered into a $500 million revolving credit agreement (the “April 7, 2020 Revolving Credit Agreement”) with WBA Financial Services Limited, a private limited company incorporated under the laws of England and Wales (“WBAFSL”), and the lenders from time to time party thereto. The April 7, 2020 Revolving Credit Agreement is a senior unsecured revolving credit facility, with a facility termination date of the earlier of (a) 364-days from April 7, 2020 and (b) the date of termination in whole of the aggregate amount of the commitments pursuant to the April 7, 2020 Revolving Credit Agreement. The Company and WBAFSL will be the borrowers under the April 7, 2020 Revolving Credit Agreement. Pursuant to the terms of the April 7, 2020 Revolving Credit Agreement, the Company provides a guarantee of any obligations of WBAFSL under the April 7, 2020 Revolving Credit Agreement. As of August 31, 2020, there were no borrowings outstanding under the April 7, 2020 Revolving Credit Agreement. April 2020 Revolving Bilateral and Club Credit Agreements The Company entered into a $750 million revolving credit agreement on April 1, 2020 (the “April 2020 Revolving Bilateral Credit Agreement”) and a $1.325 billion revolving credit agreement on April 2, 2020 (the “April 2020 Revolving Club Credit Agreement” and together with the April 2020 Revolving Bilateral Credit Agreement, the “Other April 2020 Revolving Credit Agreements”) with the lenders from time to time party thereto. Each of the Other April 2020 Revolving Credit Agreements is a senior unsecured revolving credit facility, with a facility termination date of the earlier of (a) March 31, 2021 (which date shall be shortened pursuant to the terms of the applicable Other April 2020 Revolving Credit Agreement if the Company does not extend the maturity date of certain of its existing credit agreements or enter into new bank or bond financings with a certain maturity date and above an aggregate principal amount as described in the applicable Other April 2020 Revolving Credit Agreement) and (b) the date of termination in whole of the aggregate amount of the commitments pursuant to the applicable Other April 2020 Revolving Credit Agreement. As of August 31, 2020, there were no borrowings outstanding under the Other April 2020 Revolving Credit Agreements. August 2019 Revolving Credit Agreements On August 30, 2019, the Company entered into three $500 million revolving credit agreements (together, the “August 2019 Revolving Credit Agreements” and each individually, an “August 2019 Revolving Credit Agreement”) with the lenders from time to time party thereto. Each of the August 2019 Revolving Credit Agreements are senior unsecured revolving credit facilities, with facility termination dates of the earlier of (a) 18 months following August 30, 2019, subject to extension thereof pursuant to the applicable August 2019 Revolving Credit Agreement and (b) the date of termination in whole of the aggregate amount of the commitments pursuant to the applicable August 2019 Revolving Credit Agreement. As of August 31, 2020, there were no borrowings outstanding under the August 2019 Revolving Credit Agreements. January 2019 364-Day Revolving Credit Agreement On January 18, 2019, the Company entered into a $2.0 billion 364-day revolving credit agreement (as extended, the “January 2019 364-Day Revolving Credit Agreement”) with the lenders from time to time party thereto. The January 2019 364-Day Revolving Credit Agreement is a senior unsecured 364-day revolving credit facility, with a facility termination date of the earlier of (a) 364 days following January 31, 2019, the date of the effectiveness of the commitments pursuant to the January 364-Day Revolving Credit Agreement, subject to extension thereof pursuant to the January 2019 364-Day Revolving Credit Agreement and (b) the date of termination in whole of the aggregate amount of the commitments pursuant to the January 2019 364-Day Revolving Credit Agreement. On December 18, 2019, the Company entered into an Extension Agreement (the “Extension Agreement”) relating to the January 2019 364-Day Revolving Credit Agreement with the lenders party thereto and Mizuho, as administrative agent. The Extension Agreement extends the Maturity Date (as defined in the January 2019 364-Day Revolving Credit Agreement) for an additional period of 364 days to January 28, 2021. Such extension became effective on January 30, 2020. As of August 31, 2020, there were no borrowings outstanding under the January 364-Day Revolving Credit Agreement. December 2018 Revolving Credit Agreement On December 21, 2018, the Company entered into a $1.0 billion revolving credit agreement (the “December 2018 Revolving Credit Agreement”) with the lenders from time to time party thereto. On July 27, 2020, the December 2018 Revolving Credit Agreement matured and the Company paid all amounts due in connection therewith. A&R December 2018 Credit Agreement On December 5, 2018, the Company entered into a $1.0 billion term loan credit agreement with the lenders from time to time party thereto and, on August 9, 2019, the Company entered into an amendment to such credit agreement (such credit agreement as so amended, the “December 2018 Credit Agreement”) to permit the Company to borrow, repay and reborrow amounts borrowed thereunder prior to the maturity date. On April 2, 2020, the Company amended and restated the December 2018 Credit Agreement (such credit agreement as so amended and restated, the “A&R December 2018 Credit Agreement”). The A&R December 2018 Credit Agreement governs a $2.0 billion senior unsecured revolving credit facility, consisting of the initial $1.0 billion senior unsecured revolving facility previously governed by the December 2018 Credit Agreement and a new $1.0 billion senior unsecured revolving credit facility. The facility termination date is the earlier of (a) January 29, 2021 (which date shall be extended to February 26, 2021 or July 31, 2021 pursuant to the terms of the A&R December 2018 Credit Agreement if the Company extends the maturity date of certain of its existing credit agreements or enters into new bank or bond financings with a certain maturity date and above an aggregate principal amount as described in the A&R December 2018 Credit Agreement ) and (b) the date of termination in whole of the aggregate amount of the commitments pursuant to the A&R December 2018 Credit Agreement. As of August 31, 2020, there were $0.1 billion borrowings outstanding under the A&R December 2018 Credit Agreement. Amended November 2018 Credit Agreement On November 30, 2018, the Company entered into a credit agreement with the lenders from time to time party thereto, on March 25, 2019, the Company entered into an amendment to such credit agreement (such credit agreement as so amended, the “November 2018 Credit Agreement”) reflecting certain changes to the borrowing notice provisions thereto, and on April 2, 2020, the Company entered into a second amendment to the November 2018 Credit Agreement (such credit agreement as so further amended, the “Amended November 2018 Credit Agreement”) which second amendment became effective as of May 29, 2020. As of May 29, 2020, the $500 million revolving credit facility portion of the November 2018 Credit Agreement was converted into a term loan facility, such that the Amended November 2018 Credit Agreement consists of a $1.0 billion senior unsecured term loan facility. The facility termination date is the earlier of (a) May 29, 2021 and (b) the date of acceleration of all loans under the Amended November 2018 Credit Agreement pursuant to its terms. As of August 31, 2020, there were $1.0 billion borrowings outstanding under the Amended November 2018 Credit Agreement. August 2018 Revolving Credit Agreement On August 29, 2018, the Company entered into a revolving credit agreement (the “August 2018 Revolving Credit Agreement”) with the lenders and letter of credit issuers from time to time party thereto. The August 2018 Revolving Credit Agreement is an unsecured revolving credit facility with an aggregate commitment in the amount of $3.5 billion, with a letter of credit subfacility commitment amount of $500 million. The facility termination date is the earlier of (a) August 29, 2023, subject to extension thereof pursuant to the August 2018 Revolving Credit Agreement and (b) the date of termination in whole of the aggregate amount of the revolving commitments pursuant to the August 2018 Revolving Credit Agreement. As of August 31, 2019, there were no borrowings outstanding under the August 2018 Revolving Credit Agreement. Debt covenants Each of the Company’s credit facilities described above contain a covenant to maintain, as of the last day of each fiscal quarter, a ratio of consolidated debt to total capitalization not to exceed 0.60:1.00, subject to increase in certain circumstances set forth in the applicable credit agreement. The credit facilities contain various other customary covenants. Commercial paper The Company periodically borrows under its commercial paper program and may borrow under it in future periods. The Company had average daily commercial paper outstanding of $2.5 billion at a weighted average interest rate of 2.15% for the fiscal year ended August 31, 2020. The Company had average daily commercial paper outstanding of $2.7 billion at a weighted average interest rate of 3.07% for the fiscal year ended August 31, 2019. Interest Interest paid was $584 million in fiscal 2020, $676 million in fiscal 2019 and $577 million in fiscal 2018.
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Financial instruments |
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Derivative Instruments and Hedging Activities Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Financial instruments | Financial instruments The Company uses derivative instruments to manage its exposure to interest rate and foreign currency exchange risks. The Company has non-U.S. dollar denominated net investments and uses foreign currency denominated financial instruments, specifically foreign currency derivatives and foreign currency denominated debt, to hedge its foreign currency risk. The notional amounts and fair value of derivative instruments outstanding were as follows (in millions):
Net investment hedges The Company uses cross currency interest rate swaps as hedges and foreign currency forward contracts to hedge net investments in subsidiaries with non-U.S. dollar functional currencies. For qualifying net investment hedges, changes in the fair value of the derivatives are recorded in the currency translation adjustment within accumulated other comprehensive income (loss). Cash flow hedges The Company uses interest rate swaps to hedge the variability in forecasted cash flows of certain floating-rate debt. For qualifying cash flow hedges, changes in the fair value of the derivatives are recorded in accumulated other comprehensive income (loss), and released to the Consolidated Statements of Earnings when the hedged cash flows affect earnings. Derivatives not designated as hedges The Company enters into derivative transactions that are not designated as accounting hedges. These derivative instruments are economic hedges of foreign currency risks. The Company also utilizes total return swaps to economically hedge variability in compensation charges related to certain deferred compensation obligations. The income and (expense) due to changes in fair value of these derivative instruments were recognized in earnings as follows (in millions):
Derivatives credit risk Counterparties to derivative financial instruments expose the Company to credit-related losses in the event of counterparty nonperformance, and the Company regularly monitors the credit worthiness of each counterparty. Derivatives offsetting The Company does not offset the fair value amounts of derivative instruments subject to master netting agreements in the Consolidated Balance Sheets.
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Fair Value Disclosures [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Fair value measurements | Fair value measurements The Company measures certain assets and liabilities in accordance with Accounting Standards Codification ("ASC") Topic 820, Fair Value Measurements and Disclosures, which defines fair value as the price that would be received for an asset or paid to transfer a liability in an orderly transaction between market participants on the measurement date. In addition, it establishes a fair value hierarchy that prioritizes observable and unobservable inputs used to measure fair value into three broad Levels: Level 1 -Quoted prices in active markets that are accessible at the measurement date for identical assets and liabilities. The fair value hierarchy gives the highest priority to Level 1 inputs. Level 2 -Observable inputs other than quoted prices in active markets. Level 3 -Unobservable inputs for which there is little or no market data available. The fair value hierarchy gives the lowest priority to Level 3 inputs. Assets and liabilities measured at fair value on a recurring basis were as follows (in millions):
1Money market funds are valued at the closing price reported by the fund sponsor. 2Fair values of quoted investments are based on current bid prices as of August 31, 2020 and 2019. 3The fair value of forward currency contracts is estimated by discounting the difference between the contractual forward price and the current available forward price for the residual maturity of the contract using observable market rates. 4The fair value of interest rate swaps and cross currency interest rate swaps is calculated by discounting the estimated future cash flows based on the applicable observable yield curves. See note 8, financial instruments, for additional information. There were no transfers between Levels in fiscal 2020 or 2019. The carrying value of the Company's commercial paper and credit facilities approximated their respective fair values due to their short-term nature. The Company reports its debt instruments under the guidance of ASC Topic 825, Financial Instruments, which requires disclosure of the fair value of the Company’s debt in the footnotes to the Consolidated Financial Statements. As of August 31, 2020, the carrying amounts and estimated fair values of long term notes outstanding including the current portion were $12.7 billion and $13.7 billion, respectively. The fair values of the notes outstanding are Level 1 fair value measures and determined based on quoted market price and translated at the August 31, 2020 spot rate, as applicable. The fair values and carrying values of these issuances do not include notes that have been redeemed or repaid as of August 31, 2020. See note 7, debt, for further information. The carrying values of accounts receivable and trade accounts payable approximated their respective fair values due to their short-term nature.
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Commitments and contingencies |
12 Months Ended |
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Aug. 31, 2020 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments and contingencies | Commitments and contingencies The Company is involved in legal proceedings, including litigation, arbitration and other claims, and investigations, inspections, subpoenas, audits, claims, inquiries and similar actions by pharmacy, healthcare, tax and other governmental authorities, arising in the normal course of the Company’s business, including the matters described below. Legal proceedings, in general, and securities, class action and multi-district litigation, in particular, can be expensive and disruptive. Some of these suits may purport or may be determined to be class actions and/or involve parties seeking large and/or indeterminate amounts, including punitive or exemplary damages, and may remain unresolved for several years. From time to time, the Company is also involved in legal proceedings as a plaintiff involving antitrust, tax, contract, intellectual property and other matters. Gain contingencies, if any, are recognized when they are realized. Like other companies in the retail pharmacy and pharmaceutical wholesale industries, the Company is subject to extensive regulation by national, state and local government agencies in the United States and other countries in which it operates. There continues to be a heightened level of review and/or audit by regulatory authorities of, and increased litigation regarding, the Company’s and the rest of the health care and related industry’s business, compliance and reporting practices. As a result, the Company regularly is the subject of government actions of the types described above. The Company also may be named from time to time in qui tam actions initiated by private third parties. In such actions, the private parties purport to act on behalf of federal or state governments, allege that false claims have been submitted for payment by the government and may receive an award if their claims are successful. After a private party has filed a qui tam action, the government must investigate the private party's claim and determine whether to intervene in and take control over the litigation. These actions may remain under seal while the government makes this determination. If the government declines to intervene, the private party may nonetheless continue to pursue the litigation on his or her own purporting to act on behalf of the government. The results of legal proceedings, including government investigations, are often uncertain and difficult to predict, and the costs incurred in these matters can be substantial, regardless of the outcome. With respect to litigation and other legal proceedings where the Company has determined that a material loss is reasonably possible, the Company is unable to estimate the amount or range of reasonably possible loss due to the inherent difficulty of predicting the outcome of and uncertainties regarding such litigation and legal proceedings. The Company believes that its defenses and assertions in pending legal proceedings have merit and does not believe that any of these pending matters, after consideration of applicable reserves and rights to indemnification, will have a material adverse effect on the Company’s consolidated financial position. However, substantial unanticipated verdicts, fines and rulings do sometimes occur. As a result, the Company could from time to time incur judgments, enter into settlements or revise its expectations regarding the outcome of certain matters, and such developments could have a material adverse effect on its results of operations in the period in which the amounts are accrued and/or its cash flows in the period in which the amounts are paid. In addition, as a result of governmental investigations or proceedings, the Company may be subject to damages, civil or criminal fines or penalties, or other sanctions, including the possible suspension or loss of licensure and/or suspension or exclusion from participation in government programs. On December 29, 2014, a putative shareholder filed a derivative action in federal court in the Northern District of Illinois against certain current and former directors and officers of Walgreen Co. and Walgreen Co., as a nominal defendant, arising out of certain public statements the Company made regarding its former fiscal 2016 goals. (Cutler v. Wasson et al., No. 1:14-cv-10408 (N.D. Ill.)) The action asserts claims for breach of fiduciary duty, waste and unjust enrichment. On May 18, 2015, the case was stayed in light of a securities class action that was filed on April 10, 2015, described below. On November 3, 2016, the Court entered a stipulation and order extending the stay until the resolution of the securities class action. On April 10, 2015, a putative shareholder filed a securities class action in federal court in the Northern District of Illinois against Walgreen Co. and certain former officers of Walgreen Co. (Washtenaw County Employees’ Retirement System v. Walgreen Co. et al., No. 1:15-cv-3187 (N.D. Ill.)) The action asserts claims for violation of the federal securities laws arising out of certain public statements the Company made regarding its former fiscal 2016 goals. A motion to dismiss a consolidated class action complaint filed on August 17, 2015 was granted in part and denied in part on September 30, 2016. The court granted plaintiff’s motion for class certification on March 29, 2018 and plaintiff filed a first amended complaint on December 19, 2018. A motion to dismiss the first amended complaint was granted in part and denied in part on September 23, 2019. Discovery is proceeding. On December 11, 2017, purported Rite Aid shareholders filed an amended complaint in a putative class action lawsuit in the United States District Court for the Middle District of Pennsylvania (the “M.D. Pa. action”) arising out of transactions contemplated by the merger agreement between the Company and Rite Aid. The amended complaint alleged that the Company and certain of its officers made false or misleading statements regarding the transactions. The Court denied the Company’s motion to dismiss the amended complaint on April 15, 2019. The Company filed an answer and affirmative defenses, discovery commenced, and the Court granted plaintiffs' motion for class certification. In June 2019, a Fred’s, Inc. shareholder filed a nearly identical lawsuit to the M.D. Pa. action in the United States District Court for the Western District of Tennessee, except naming Fred’s, Inc. and one of its former officers along with the Company and certain of its officers. Lead plaintiffs filed an amended complaint on November 4, 2019, which is substantially the same as the original complaint. The Company's motion to dismiss to the amended complaint is fully briefed and awaits the Court's ruling. In December 2017, the United States Judicial Panel on Multidistrict Litigation consolidated numerous cases filed against an array of defendants by various plaintiffs such as counties, cities, hospitals, Indian tribes, and others, alleging claims generally concerning the impacts of widespread opioid abuse. The consolidated multidistrict litigation, captioned In re National Prescription Opiate Litigation (MDL No. 2804, Case No. 17-md-2804), is pending in the U.S. District Court for the Northern District of Ohio ("N.D. Ohio"). The Company is involved in the following MDL bellwether cases: (1) two consolidated cases in N.D. Ohio (County of Summit, Ohio, et al. v. Purdue Pharma L.P., et al., Case No. 18-op-45090; County of Cuyahoga, Ohio, et al. v. Purdue Pharma L.P., Case No. 18-op-45004), previously scheduled for trial in November 2020 but postponed indefinitely; (2) one remanded to the U. S. District Court for the Eastern District of Oklahoma (The Cherokee Nation v. McKesson Corp., et al., Case No. 18-CV-00056-RAW-SPS); (3) one remanded to the U. S. District Court for the Northern District of California (City and County of San Francisco, et al. v. Purdue Pharma L.P., et al., Case No. 3:18-cv-07591-CRB), scheduled for trial in June 2021; and (4) two additional consolidated cases in N.D. Ohio (County of Lake, Ohio v. Purdue Pharma L.P., et al., Case No. 18-op-45032; County of Trumbull, Ohio v. Purdue Pharma L.P., et al., Case No. 18-op-45079), scheduled for trial in May 2021. The Company also has been named as a defendant in numerous lawsuits brought in state courts relating to opioid matters. Trial dates have been set in cases pending in state courts in New Mexico (State of New Mexico, ex rel. Hector Balderas, Attorney General v. Purdue Pharma L.P., et al., Case No. D-101-cv-2017-02541, First Judicial District Court, Santa Fe County, New Mexico - September 2021); West Virginia (In re: Opioid Litigation, Circuit Court of Kanawha County, West Virginia, Civil Action No. 19-C-9000 - November 2021); Missouri (Jefferson County, Missouri v. Dannie E. Williams, M.D., et al., Cause No. 20JE-CC00029, Twenty-Third Judicial Circuit, Jefferson County, Missouri - November 2021); Maryland (Anne Arundel County, Maryland v. Purdue Pharma L.P., et al., Case No. C-02-cv-18-000021, Circuit Court for Anne Arundel County, Maryland - December 2021); Florida (State of Florida, Office of the Attorney General, Department of Legal Affairs v. Purdue Pharma L.P., et al., Case No. 2018-CA-001438, Sixth Judicial Circuit in and for Pasco County, Florida - April 2022); and Nevada (State of Nevada v. McKesson Corporation, et al., Case No. A-19-796755-B, Eighth Judicial District Court, Clark County, Nevada - April 2022). A trial in two consolidated cases in New York state court (County of Suffolk v. Purdue Pharma L.P., et al., Index No. 400001/2017; County of Nassau v. Purdue Pharma L.P., et al., Index No. 400008/2017, Supreme Court of the State of New York, Suffolk County, NY) that had been scheduled for March 2021 was postponed, and no new trial date has been set. The relief sought by various plaintiffs in these matters is compensatory and punitive damages, as well as injunctive relief. Additionally, the Company has received from the Department of Justice and the Attorney Generals of numerous states subpoenas, civil investigative demands, and/or other requests concerning opioid matters. The Company has also had communications with the Department of Justice with respect to purported violations of the federal Controlled Substances Act and the federal False Claims Act in dispensing prescriptions at certain Walgreens locations. As discussed above, legal proceedings, including government investigations, are often uncertain and difficult to predict, and the costs and penalties incurred in these matters can be substantial. On January 22, 2019, the Company announced that it had reached an agreement to resolve a civil investigation involving allegations under the False Claims Act by a United States Attorney’s Office, working in conjunction with several states, regarding certain dispensing practices. Pursuant to the agreement, the Company paid $209 million to the United States and the various states involved in the matter, substantially all of which was reserved for in the Company’s Consolidated Financial Statements as of November 30, 2018.
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Income taxes |
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Income Tax Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Income taxes | Income taxes U.S. tax law changes The U.S. tax law changes, enacted in December 2017, include broad and complex changes. Among other things, the U.S. tax law changes reduced the federal corporate tax rate from 35% to 21% effective January 1, 2018 and required companies to immediately accrue for a one-time transition tax on certain un-repatriated earnings of foreign subsidiaries, which is generally payable over an eight-year period. The U.S. tax law changes modified the taxation of foreign earnings, repealed the deduction for domestic production activities, limited interest deductibility and established a global intangible low tax income (GILTI) regime. The lower corporate income tax rate of 21% became effective January 1, 2018 and was phased in as a result of our August 31 fiscal year-end. This resulted in a blended U.S. statutory federal tax rate of approximately 26% for fiscal 2018. This statutory federal tax rate is 21% for fiscal 2019 and subsequent fiscal years, which provided a benefit to the Company’s fiscal 2019 tax provision of approximately $89 million. In fiscal 2018, as a direct result of the U.S. tax law changes, the Company performed preliminary analysis and recorded a provisional estimated net tax benefit of $125 million. This provisional net tax benefit arose from a benefit of $648 million from re-measuring the Company’s net U.S. deferred tax liabilities, partially offset by the Company’s accrual for the transition tax and other U.S. tax law changes of $523 million. In fiscal 2019, in accordance with SEC Staff Accounting Bulletin 118 (SAB 118), the Company finalized its provisional estimates and recognized incremental net income tax expense, which was not material to our Consolidated Financial Statements. During 2019, the U.S. Treasury Department issued regulations to apply retroactively covering certain components of the 2017 U.S. tax law changes. Certain guidance included in these regulations is inconsistent with the Company’s interpretation that led to the recognition of $247 million of tax benefits in prior periods. Despite this guidance, the Company remains confident in its interpretation of the U.S. tax law changes and intends to defend this position through litigation, if necessary. However, if the Company is ultimately unsuccessful in defending its position, it may be required to reverse all or a portion of the benefits previously recorded. By establishing the GILTI regime, the Act created a minimum tax on certain foreign sourced earnings. The taxability of the foreign earnings and the applicable tax rates are dependent on future events. The Company’s accounting policy for the minimum tax on foreign sourced earnings is to report the tax effects on the basis that the minimum tax will be recognized in tax expense in the year it is incurred as a period expense. As the Company repatriates the undistributed earnings of its foreign subsidiaries for use in the United States, the earnings from its foreign subsidiaries will generally not be subject to U.S. federal tax. The Company continuously evaluates the amount of foreign earnings that are not necessary to be permanently reinvested in its foreign subsidiaries. United Kingdom tax law changes On July 22, 2020 the UK Finance Bill 2020 was enacted increasing the UK tax rate from 17% to 19% effective April 1, 2020. The Company recorded tax expense of $139 million from re-measuring the net UK deferred tax liability. The components of earnings before income tax provision were (in millions):
The provision for income taxes consists of the following (in millions):
The difference between the statutory federal income tax rate and the effective tax rate is as follows:
1Net of changes in related tax attributes. The deferred tax assets and liabilities included in the Consolidated Balance Sheets consist of the following (in millions):
As of August 31, 2020, the Company has recorded deferred tax assets for tax attributes of $6.9 billion, primarily reflecting the benefit of $2.9 billion in U.S. federal, $276 million in state and $24.1 billion in non-U.S. ordinary and capital losses. In addition, these deferred tax assets include $71 million of income tax credits. Of these deferred tax assets, $6.2 billion will expire at various dates from 2021 through 2037. The residual deferred tax assets of $692 million have no expiration date. The Company believes it is more likely than not that the benefit from certain deferred tax assets will not be realized. The assessment of realization of deferred tax assets is performed based on the weight of the positive and negative evidence available to indicate whether the asset is recoverable, including tax planning strategies that are prudent and feasible. In recognition of this risk, the Company has recorded a valuation allowance of $6.6 billion against those deferred tax assets as of August 31, 2020. Income taxes paid, net of refunds were $0.6 billion, $0.9 billion and $0.6 billion for fiscal years 2020, 2019 and 2018, respectively. ASC Topic 740, Income Taxes, provides guidance regarding the recognition, measurement, presentation and disclosure in the financial statement of tax positions taken or expected to be taken on a tax return, including the decision whether to file in a particular jurisdiction. As of August 31, 2020, unrecognized tax benefits of $552 million were reported as long-term liabilities on the Consolidated Balance Sheets while an immaterial amount is reported as current tax liabilities. Both of these amounts include interest and penalties, when applicable. The following table provides a reconciliation of the total amounts of unrecognized tax benefits (in millions):
At August 31, 2020, 2019 and 2018, $353 million, $311 million and $331 million, respectively, of unrecognized tax benefits would favorably impact the effective tax rate if recognized. During the next twelve months, based on current knowledge, it is reasonably possible the amount of unrecognized tax benefits could decrease by up to $2 million due to anticipated tax audit settlements and the expirations of statutes of limitations associated with tax positions related to multiple tax jurisdictions. The Company recognizes interest and penalties in the income tax provision in its Consolidated Statements of Earnings. At August 31, 2020 and August 31, 2019, the Company had accrued interest and penalties of $58 million and $47 million, respectively. For the year ended August 31, 2020, the amount reported in income tax expense related to interest and penalties was $11 million income tax expense. The Company files a consolidated U.S. federal income tax return as well as income tax returns in various states and multiple foreign jurisdictions. It is generally no longer under audit examinations for U.S. federal income tax purposes for any years prior to fiscal 2014. With few exceptions, it is no longer subject to state and local income tax examinations by tax authorities for years before fiscal 2008. In foreign tax jurisdictions, the Company is generally no longer subject to examination by the tax authorities in the United Kingdom prior to 2015, Luxembourg prior to 2016, in Germany prior to 2014, in France prior to 2016 and in Turkey prior to 2015. The Company has received tax holidays from Swiss cantonal income taxes relative to certain of its Swiss operations. The income tax holidays are set to expire in September 2022. Upon expiration, a reduced tax rate will extend through December 2029. The holidays had a beneficial impact of $124 million and $127 million (inclusive of capital GILTI tax cost) during fiscal 2020 and 2019, respectively. This benefit is primarily included as part of the foreign income taxed at non-U.S. rates line in the effective tax rate reconciliation table above. At August 31, 2020, it is not practicable for the Company to determine the amount of the unrecognized deferred tax liability it has with respect to temporary differences related to investments in foreign subsidiaries and foreign corporate joint ventures that are essentially permanent in duration.
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Stock compensation plans |
12 Months Ended |
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Aug. 31, 2020 | |
Share-based Payment Arrangement [Abstract] | |
Stock compensation plans | Stock compensation plans The Walgreens Boots Alliance, Inc. 2013 Omnibus Incentive Plan (the “Omnibus Plan”), which became effective in fiscal 2013, provides for incentive compensation to the Company’s non-employee directors, officers and employees and consolidates several previously existing equity compensation plans into a single plan. The Company grants stock options, performance shares and restricted units under the Omnibus Plan. Performance shares issued under the Omnibus Plan offer performance-based incentive awards to certain employees. Restricted stock units are also equity-based awards with vesting requirements that are granted to key employees. The performance shares and restricted stock unit awards are both subject to restrictions as to continuous employment except in the case of death, normal retirement or total and permanent disability. Total stock-based compensation expense for fiscal 2020, 2019 and 2018 was $137 million, $119 million and $130 million, respectively. Unrecognized compensation cost related to non-vested awards at August 31, 2020 was $188 million, which will be fully recognized over the next three years.
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Retirement benefits |
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Retirement Benefits [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Retirement benefits | Retirement benefits The Company sponsors several retirement plans, including defined benefit plans, defined contribution plans and a postretirement health plan. Defined benefit pension plans (non-U.S. plans) The Company has various defined benefit pension plans outside the United States. The principal defined benefit pension plan is the Boots Pension Plan (the “Boots Plan”), which covers certain employees in the United Kingdom. The Boots Plan is a funded final salary defined benefit plan providing pensions and death benefits to members. The Boots Plan was closed to future accrual effective July 1, 2010, with pensions calculated based on salaries up until that date. The Boots Plan is governed by a trustee board, which is independent of the Company. The plan is subject to a full funding actuarial valuation on a triennial basis. The investment strategy of the principal defined benefit pension plan is to hold the majority of its assets in a diverse portfolio ("Matching Portfolio") which aims to broadly match the characteristics of the plan’s liabilities by investing in bonds, derivatives and other fixed income assets, with the remainder invested in predominantly return-seeking assets. Interest rate and inflation rate swaps are also employed to complement the role of fixed and index-linked bond holdings in liability risk management. During 2020, the target strategic allocation to the Matching Portfolio was changed from 85% to 75%, with a corresponding increase in the allocation to return seeking assets. The following tables present classes of defined benefit pension plan assets by fair value hierarchy (in millions):
1Equity securities, which mainly comprise of investments in commingled funds, are valued based on quoted prices and are primarily exchange-traded. Securities for which official close or last trade pricing on an active exchange is available are classified as Level 1 investments. If closing prices are not available, or the investments are in a commingled fund, securities are valued at the last quoted bid price and typically are categorized as Level 2 investments. 2Debt securities: government bonds comprise of fixed interest and index linked bonds issued by central governments and are valued based on quotes received from independent pricing services or from dealers who make markets in such securities. Pricing services utilize pricing which considers readily available inputs such as the yield or price of bonds of comparable quality, coupon, maturity and type, as well as dealer-supplied prices. 3Debt securities: corporate bonds comprise bonds issued by corporations in both segregated and commingled funds and are valued using recently executed transactions, or quoted market prices for similar assets and liabilities in active markets, or for identical assets and liabilities in markets that are not active. If there have been no market transactions in a particular fixed income security, its fair value is calculated by pricing models that benchmark the security against other securities with actual market prices. 4Real estate comprise of investments in certain property funds which are valued based on the underlying properties. These properties are valued using a number of standard industry techniques such as cost, discounted cash flows, independent appraisals and market based comparable data. Real estate investments are categorized as Level 3 investments. Changes in Level 3 investments during fiscal 2020 were driven by actual return on plan assets still held at August 31, 2020 and purchases during the year. 5Other investments mainly comprise of net receivable (payable) amounts for unsettled transactions, cash and cash equivalents, derivatives and direct private placements. Cash is categorized as a Level 1 investment and cash in commingled funds is categorized as Level 2 investments. Amounts receivable (payable) are categorized as level 2 investments. Cash equivalents are valued using observable yield curves, discounting and interest rates and are categorized as Level 2 investments. Derivatives which are exchange-traded and for which market quotations are readily available are valued at the last reported sale price or official closing price as reported by an independent pricing service on the primary market, or exchange on which they are traded, and are categorized as Level 1 investments. Over-the-counter derivatives typically are valued by independent pricing services and are categorized as Level 2 investments. Direct private placements are typically bonds valued by reference to comparable bonds and are categorized as Level 3 investments. Changes in Level 3 investments during fiscal 2020 were primarily driven by purchases during the year. Components of net periodic pension costs for the defined benefit pension plans (in millions):
Change in benefit obligations for the defined benefit pension plans (in millions):
Change in plan assets for the defined benefit pension plans (in millions):
Amounts recognized in the Consolidated Balance Sheets (in millions):
Cumulative pre-tax amounts recognized in accumulated other comprehensive (income) loss (in millions):
The projected benefit obligation, accumulated benefit obligation and fair value of plan assets for all pension plans, including accumulated benefit obligations in excess of plan assets, at August 31 were as follows (in millions):
Pension plans with projected benefit obligation and accumulated benefit obligations in excess of plan assets were not material for periods presented. Estimated future benefit payments for the next 10 years from defined benefit pension plans to participants are as follows (in millions):
The assumptions used in accounting for the defined benefit pension plans were as follows:
Based on current actuarial estimates, the Company plans to make contributions of $39 million to its defined benefit pension plans in fiscal 2021 and expects to make contributions beyond 2021, which will vary based upon many factors, including the performance of the defined benefit pension plan assets. Defined contribution plans The principal retirement plan for U.S. employees is the Walgreen Profit-Sharing Retirement Trust, to which both the Company and participating employees contribute. The Company’s contribution is in the form of a guaranteed match which is made pursuant to the applicable plan document approved by the Walgreen Co. Board of Directors. Plan activity is reviewed periodically by certain Committees of the Walgreens Boots Alliance Board of Directors. The profit-sharing provision was an expense of $227 million, $239 million and $217 million in fiscal 2020, 2019 and 2018, respectively. The Company’s contributions were $226 million, $234 million and $366 million in fiscal 2020, 2019 and 2018, respectively. The Company also has certain contract based defined contribution arrangements. The principal one is the Alliance Healthcare & Boots Retirement Savings Plan, which is United Kingdom based and to which both the Company and participating employees contribute. The cost recognized in the Consolidated Statement of Earnings was $119 million in fiscal 2020, $124 million in fiscal 2019 and $142 million in fiscal 2018. Postretirement healthcare plan The Company provides certain health insurance benefits to retired U.S. employees who meet eligibility requirements, including age, years of service and date of hire. The costs of these benefits are accrued over the service life of the employee. An amendment to this plan during the fourth quarter of fiscal 2018 resulted in a reduction in the benefit plan obligation of $201 million and the recognition of a curtailment gain of $112 million. The Company’s postretirement health benefit plan obligation was $182 million and $161 million in fiscal 2020 and 2019, respectively and is not funded. The expected benefit to be paid net of the estimated federal subsidy during fiscal 2021 is $10.6 million.
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Capital Stock [Abstract] | |
Capital stock | Capital stock In June 2018, Walgreens Boots Alliance authorized a new stock repurchase program, which authorized the repurchase of up to $10.0 billion of Walgreens Boots Alliance common stock, which program has no specified expiration date. The Company purchased 30 million and 57 million shares under stock repurchase programs in fiscal 2020 and 2019 at a cost of $1.5 billion and $3.8 billion, respectively. In July 2020, the Company announced that it had suspended activities under this program. The Company determines the timing and amount of repurchases based on its assessment of various factors including prevailing market conditions, alternate uses of capital, liquidity, the economic environment and other factors. The timing and amount of these purchases may change at any time and from time to time. The Company has repurchased, and may from time to time in the future repurchase, shares on the open market through Rule 10b5-1 plans, which enable a company to repurchase shares at times when it otherwise might be precluded from doing so under insider trading laws. In addition, the Company continued to repurchase shares to support the needs of the employee stock plans. Shares totaling $103 million were purchased to support the needs of the employee stock plans during fiscal 2020 as compared to $339 million and $289 million in fiscal 2019 and fiscal 2018, respectively. At August 31, 2020, 16 million shares of common stock were reserved for future issuances under the Company’s various employee benefit plans.
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Accumulated other comprehensive income (loss) | Accumulated other comprehensive income (loss) The following is a summary of net changes in accumulated other comprehensive income by component and net of tax for fiscal 2020, 2019 and 2018 (in millions):
1Includes amendment to U.S. postretirement healthcare plan resulting in a curtailment gain. See note 13, retirement benefits. 2Previously disclosed as Unrealized gain (loss) on cash flow hedges.
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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, health and wellness services, 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):
The following table reconciles adjusted operating income to operating income (in millions):
1Eliminations relate to intersegment sales between the Pharmaceutical Wholesale and the Retail Pharmacy International segments. 2The Company adopted Topic 715 as of September 1, 2018 (fiscal 2019) on a retrospective basis. The impact on our previously reported net periodic costs as a result of the retrospective adoption of this standard results in a reclassification from selling, general and administrative expenses to other income (expense) of $125 million for the fiscal year ended August 31, 2018. 3Excludes 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, which has been presented as "Impairment of goodwill and intangible asset" line. 4Store damage and inventory losses as a result of looting in the U.S., net of insurance recoveries. 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, one third-party payer accounted for approximately 11% of the consolidated sales in fiscal 2020, 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. Geographic data for sales is as follows (in millions):
Geographic data for long-lived assets, defined as property, plant and equipment, is as follows (in millions):
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Sales |
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Revenue from Contract with Customer [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Sales | Sales The following table summarizes the Company’s sales by segment and by major source (in millions):
1Eliminations relate to intersegment sales between the Pharmaceutical Wholesale and the Retail Pharmacy International segments. Contract balances with customers Contract liabilities primarily represent the Company’s obligation to transfer additional goods or services to a customer for which the Company has received consideration, for example the Company’s Balance Rewards® and Boots Advantage Card loyalty programs. Under such programs, customers earn reward points on purchases for redemption at a later date. See note 1, summary of major accounting policies, for further information on receivables from contracts with customers.
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Related parties |
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Related Party Transactions [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Related parties | Related parties The Company has a long-term pharmaceutical distribution agreement with AmerisourceBergen pursuant to which the Company sources branded and generic pharmaceutical products from AmerisourceBergen principally for its U.S. operations. Additionally, AmerisourceBergen receives sourcing services for generic pharmaceutical products. Related party transactions with AmerisourceBergen (in millions):
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Supplementary financial information |
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Supplementary Financial Information [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Supplementary financial information | Supplementary financial information Summary of Quarterly Results (Unaudited) (in millions, except per share amounts)
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Summary of major accounting policies (Policies) |
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Accounting Policies [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Basis of presentation | Basis of presentation The Consolidated Financial Statements include all subsidiaries in which the Company holds a controlling interest. The Company uses the equity-method of accounting for equity investments in less than majority-owned companies if the investment provides the ability to exercise significant influence. All intercompany transactions have been eliminated. The preparation of financial statements in accordance with accounting principles generally accepted in the United States of America (“GAAP”) requires management to use judgment in the application of accounting policies, including making estimates and assumptions. The Company bases its estimates on the information available at the time, its experiences and various other assumptions believed to be reasonable under the circumstances including estimates of the impact of COVID-19. The extent to which COVID-19 impacts the Company’s business and financial results will depend on numerous evolving factors discussed throughout this Annual Report on Form 10-K including, but not limited to, the severity and duration of COVID-19, the extent to which it will impact our customers, team members, suppliers, vendors, business partners and distribution channels. The Company assessed certain accounting matters that require consideration of estimates and assumptions in context with the information reasonably available to the Company and the unknown future impacts of COVID-19 as of August 31, 2020 and through the date of this report. The accounting matters assessed included, but were not limited to, the Company’s carrying value of goodwill, intangible and other long-lived assets including operating lease right-of-use assets. These estimates and assumptions, including the severity and duration of COVID-19, resulted in a material impact to the Company’s consolidated financial statements as of and for the fiscal year ended August 31, 2020. Refer to note 6, goodwill and other intangible assets for details. The Company’s future assessment of the magnitude and duration of COVID-19, as well as other factors, could result in material impacts to the Company’s consolidated financial statements in future reporting periods. Adjustments may be made in subsequent periods to reflect more current estimates and assumptions about matters that are inherently uncertain. Actual results may differ. The COVID-19 pandemic has severely impacted the economies of the U.S., the UK and other countries around the world. The impact of COVID-19 on the Company’s businesses, financial position, results of operations and cash flows for the fiscal year ended August 31, 2020, as well as information regarding certain expected or potential impacts of COVID-19 on the Company, is discussed throughout this Annual Report on Form 10-K. The impact of COVID-19, the influence of certain holidays, seasonality, foreign currency rates, changes in vendor, payer and customer relationships and terms, strategic transactions including acquisitions, changes in laws and general economic conditions in the markets in which the Company operates and other factors on the Company’s operations and net earnings for any period may not be comparable to the same period in previous years. Certain amounts in the Consolidated Financial Statements and associated notes may not add due to rounding. Percentages have been calculated using unrounded amounts for all periods presented.
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Cash and cash equivalents | Cash and cash equivalents Cash and cash equivalents include cash on hand and highly liquid investments with an original maturity of three months or less. Credit and debit card receivables, which generally settle within to business days, of $101 million and $90 million were included in cash and cash equivalents at August 31, 2020 and 2019, respectively.
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Restricted cash and other cash flows from operating activities | Restricted cash and other cash flows from operating activities Restricted cash The Company is required to maintain cash deposits with certain banks which consist of deposits restricted under contractual agency agreements and cash restricted by law and other obligations.
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Accounts receivable | Accounts receivable Accounts receivable are stated net of allowances for doubtful accounts. Accounts receivable balances primarily consist of trade receivables due from customers, including amounts due from third-party payers (e.g., pharmacy benefit managers, insurance companies and governmental agencies), clients and members. Trade receivables were $6.0 billion and $6.0 billion at August 31, 2020 and 2019, respectively. Other accounts receivable balances, which consist primarily of receivables from vendors and manufacturers, including receivables from AmerisourceBergen (see note 18, related parties), were $1.2 billion and $1.2 billion at August 31, 2020 and 2019, respectively. Charges to allowance for doubtful accounts are based on estimates of recoverability using both historical write-offs and specifically identified receivables.
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Inventories | Inventories The Company values inventories on a lower of cost and net realizable value or market basis. Inventories include product costs, inbound freight, direct labor, warehousing costs for retail pharmacy operations and distribution of products and vendor allowances not classified as a reduction of advertising expense. The Company’s Retail Pharmacy USA segment inventory is accounted for using the last-in-first-out (“LIFO”) method. The total carrying value of the segment inventory accounted for under the LIFO method was $6.4 billion and $6.6 billion at August 31, 2020 and 2019, respectively. At August 31, 2020 and 2019, Retail Pharmacy USA segment inventory would have been greater by $3.3 billion and $3.2 billion, respectively, if they had been valued on a lower of first-in-first-out (“FIFO”) cost and net realizable value. The Company’s Retail Pharmacy International and Pharmaceutical Wholesale segments’ inventory is primarily accounted for using the FIFO method.
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Property, plant and equipment | Property, plant and equipment Property, plant and equipment are stated at cost less accumulated depreciation. Major repairs, which extend the useful life of an asset, are capitalized; routine maintenance and repairs are charged against earnings. Depreciation is provided on a straight-line basis over the estimated useful lives of owned assets. Leasehold improvements, equipment under finance lease and finance lease properties are amortized over their respective estimate of useful life or over the term of the lease, whichever is shorter. The majority of the Company’s fixtures and equipment uses the composite method of depreciation. The following table summarizes the Company’s property, plant and equipment (in millions) and estimated useful lives (in years):
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Leases | Leases The Company determines if an arrangement contains a lease at the inception of a contract. The lease classification is determined at the commencement date. Right-of-use assets represent the Company’s right to use an underlying asset for the lease term and lease liabilities represent the Company’s obligation to make lease payments arising from the lease during the lease term. Right-of-use assets and lease liabilities are recognized at the commencement date based on the present value of the remaining future minimum lease payments during the lease term. The commencement date of all lease terms is the earlier of the date the Company becomes legally obligated to make rent payments or the date the Company has the right to control the property. The Company utilizes its incremental borrowing rate to discount the lease payments. The incremental borrowing rate is based on the Company's estimated rate of interest for a collateralized borrowing over a similar term as the lease term. The operating lease right-of-use assets also include lease payments made before commencement, lease incentives and are recorded net of impairment. Operating leases are expensed on a straight line basis over the lease term. Initial terms for leased premises in the United States are typically 15 to 25 years, followed by additional terms containing renewal options at five-year intervals, and may include rent escalation clauses. Non-U.S. leases are typically for shorter terms and may include cancellation clauses or renewal options. The lease term of real estate leases includes renewal options that are reasonably certain of being exercised. Options to extend are considered reasonably certain of being exercised based on evaluation if there is significant investments within the leased property which have useful lives greater than the non-cancelable lease term, performance of the underlying store and the Company’s economic and strategic initiatives. Short-term leases with an initial term of 12 months or less are not recorded on the balance sheets. The Company accounts for lease components and non-lease components as a single lease component. Variable lease payment amounts that cannot be determined at the commencement of the lease such as increases in lease payments based on changes in index rates or usage, are not included in the right-of-use assets or lease liabilities. These are expensed as incurred. The Company has real estate leases which require additional payments based on sales volume, as well as reimbursement for real estate taxes, common area maintenance and insurance, which are expensed as incurred as variable lease costs and hence are not included in the lease payments used to calculate lease liability. Other real estate leases contain one fixed lease payment that includes real estate taxes, common area maintenance and insurance. These fixed payments are considered part of the lease payment and included in the right-of-use assets and lease liabilities. The Company does not separately account for the land portion of the leases involving land and building. Finance leases are recognized within property, plant and equipment and as a finance lease liability within accrued expenses and other liabilities and other noncurrent liabilities.
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Business combinations | Business combinations The Company allocates the fair value of purchase consideration to the tangible and intangible assets purchased and the liabilities assumed on the basis of their fair values at the date of acquisition. The determination of fair values of assets acquired and liabilities assumed requires estimates and the use of valuation techniques when a market value is not readily available. Any excess of purchase price over the fair value of net tangible and intangible assets acquired is allocated to goodwill. If the Company obtains new information about facts and circumstances that existed as of the acquisition date during the measurement period, which may be up to one year from the acquisition date, the Company may record adjustments to the assets acquired and liabilities assumed.
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Goodwill and indefinite-lived intangible assets | Goodwill and indefinite-lived intangible assets Goodwill represents the excess of the purchase price over the fair value of assets acquired and liabilities assumed in business combinations. Acquired intangible assets are recorded at fair value. Goodwill and indefinite-lived intangible assets are evaluated for impairment annually during the fourth quarter, or more frequently if an event occurs or circumstances change that could more likely than not reduce the fair value of a reporting unit or intangible asset below its carrying value. As part of the Company’s impairment analysis, fair value of a reporting unit is determined using both the income and market approaches. The income approach requires management to estimate a number of factors for each reporting unit, including projected future operating results, economic projections, anticipated future cash flows and discount rates. The market approach estimates fair value using comparable marketplace fair value data from within a comparable industry grouping. Indefinite-lived intangible assets are tested for impairment by comparing the estimated fair value of the asset to its carrying value. If the carrying value of the asset exceeds its estimated fair value, an impairment loss is recognized and the asset is written down to its estimated fair value
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Equity method investments | Equity method investments The Company uses the equity method of accounting for equity investments if the investment provides the ability to exercise significant influence, but not control, over operating and financial policies of the investee. The Company’s proportionate share of the net income or loss of these investees is included in consolidated net earnings. Judgment regarding the level of influence over each equity method investment includes considering key factors such as the Company’s ownership interest, legal form of the investee (e.g. limited liability partnership), representation on the board of directors, participation in policy-making decisions and material intra-entity transactions. The Company evaluates equity method investments for impairment whenever events or changes in circumstances indicate that the carrying amount of the investment might not be recoverable. Factors considered by the Company when reviewing an equity method investment for impairment include the length of time (duration) and the extent (severity) to which the fair value of the equity method investment has been less than cost, the investee’s financial condition and near-term prospects and the intent and ability to hold the investment for a period of time sufficient to allow for anticipated recovery. An impairment that is other-than-temporary is recognized in the period identified.
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Financial instruments | Financial instruments The Company uses derivative instruments to hedge its exposure to interest rate and currency risks arising from operating and financing activities. In accordance with its risk management policies, the Company does not hold or issue derivative instruments for trading or speculative purposes. Derivatives are recognized on the Consolidated Balance Sheets at their fair values. When the Company becomes a party to a derivative instrument and intends to apply hedge accounting, it formally documents the hedge relationship and the risk management objective for undertaking the hedge which includes designating the instrument for financial reporting purposes as a fair value hedge, a cash flow hedge, or a net investment hedge. The accounting for changes in fair value of a derivative instrument depends on whether the Company had designated it in a qualifying hedging relationship and on the type of hedging relationship. The Company applies the following accounting policies: •Changes in the fair value of a derivative designated as a fair value hedge, along with the gain or loss on the hedged asset or liability attributable to the hedged risk, are recorded in the Consolidated Statements of Earnings in the same line item, generally interest expense, net. •Changes in the fair value of a derivative designated as a cash flow hedge are recorded in accumulated other comprehensive income (loss) in the Consolidated Statements of Comprehensive Income and reclassified into earnings in the period or periods during which the hedged item affects earnings and is presented in the same line item as the earnings effect of the hedged item. •Changes in the fair value of a derivative designated as a hedge of a net investment in a foreign operation are recorded in cumulative translation adjustments within accumulated other comprehensive income (loss) in the Consolidated Statements of Comprehensive Income. Recognition in earnings of amounts previously recorded in cumulative translation adjustments is limited to circumstances such as complete or substantially complete liquidation of the net investment in the hedged investments in foreign operations. •Changes in the fair value of a derivative not designated in a hedging relationship are recognized in the Consolidated Statements of Earnings. Cash receipts or payments on a settlement of a derivative contract are reported in the Consolidated Statements of Cash Flows consistent with the nature of the underlying hedged item. For derivative instruments designated as hedges, the Company assesses, both at the hedge’s inception and on an ongoing basis, whether the derivatives that are used in hedging transactions are highly effective in offsetting changes in fair values or cash flows of hedged items. Highly effective means that cumulative changes in the fair value of the derivative are between 80% and 125% of the cumulative changes in the fair value of the hedged item. In addition, when the Company determines that a derivative is not highly effective as a hedge, hedge accounting is discontinued. When it is probable that a hedged forecasted transaction will not occur, the Company discontinues hedge accounting for the affected portion of the forecasted transaction and reclassifies any gains or losses in accumulated other comprehensive income (loss) to earnings in the Consolidated Statement of Earnings. When a derivative in a hedge relationship is terminated or the hedged item is sold, extinguished or terminated, hedge accounting is discontinued prospectively.
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Pension and postretirement benefits | Pension and postretirement benefits The Company has various defined benefit pension plans that cover some of its non-U.S. employees. The Company also has a postretirement healthcare plan that covers qualifying U.S. employees. Eligibility and the level of benefits for these plans vary depending on participants’ status, date of hire and or length of service. Pension and postretirement plan expenses and valuations are dependent on assumptions used by third-party actuaries in calculating those amounts. These assumptions include discount rates, healthcare cost trends, long-term return on plan assets, retirement rates, mortality rates and other factors. The Company funds its pension plans in accordance with applicable regulations. The Company records the service cost component of net pension cost and net postretirement benefit cost in selling, general and administrative expenses. The Company records all other net cost components of net pension cost and net postretirement benefit cost in other income (expense). The postretirement healthcare plan is not funded.
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Noncontrolling interests | Noncontrolling interestsThe Company presents noncontrolling interests as a component of equity on its Consolidated Balance Sheets and reports the portion of its earnings or loss for noncontrolling interest as net earnings attributable to noncontrolling interests in the Consolidated Statements of Earnings | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Currency | Currency Assets and liabilities of non-U.S. dollar functional currency operations are translated into U.S. dollars at end-of-period exchange rates while revenues, expenses and cash flows are translated at average monthly exchange rates over the period. Equity is translated at historical exchange rates and the resulting cumulative translation adjustments are included as a component of accumulated other comprehensive income (loss) in the Consolidated Balance Sheets. Assets and liabilities not denominated in the functional currency are remeasured into the functional currency at end-of-period exchange rates, except for nonmonetary balance sheet amounts, which are remeasured at historical exchange rates. Revenues and expenses are recorded at average monthly exchange rates over the period, except for those expenses related to nonmonetary balance sheet amounts, which are remeasured at historical exchange rates. Gains or losses from foreign currency remeasurement are generally included in selling, general and administrative expenses within the Consolidated Statements of Earnings.
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Commitments and contingencies | Commitments and contingencies On a quarterly basis, the Company assesses its liabilities and contingencies for outstanding legal proceedings and reserves are established on a case-by-case basis for those legal claims for which management concludes that it is probable that a loss will be incurred and that the amount of such loss can be reasonably estimated. Substantially all of these contingencies are subject to significant uncertainties and, therefore, determining the likelihood of a loss and/or the measurement of any loss can be complex. With respect to litigation and other legal proceedings where the Company has determined that a loss is reasonably possible, the Company may be unable to estimate the amount or range of reasonably possible loss due to the inherent difficulty of predicting the outcome of and uncertainties regarding such litigation and legal proceedings. The Company’s assessments are based on estimates and assumptions that have been deemed reasonable by management, but that may prove to be incomplete or inaccurate, and unanticipated events and circumstances may occur that might cause the Company to change those estimates and assumptions. Therefore, it is possible that an unfavorable resolution of one or more pending litigation or other contingencies could have a material adverse effect on the Company’s Consolidated Financial Statements in a future fiscal period. Management’s assessment of current litigation and other legal proceedings, including the corresponding accruals, could change because of the discovery of facts with respect to legal actions or other proceedings pending against the Company which are not presently known. Adverse rulings or determinations by judges, juries, governmental authorities or other parties could also result in changes to management’s assessment of current liabilities and contingencies. Accordingly, the ultimate costs of resolving these claims may be substantially higher or lower than the amounts reserved.
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Revenue recognition, Loyalty programs and gift card, Cost of sales | Revenue recognition Sales are recognized at an amount that reflects the consideration to which the Company expects to be entitled in exchange for transferring control of goods or services to the customer. Sales are reported on the gross amount billed to a customer less discounts if it has earned revenue as a principal from the sale of goods and services. Sales are reported on the net amount retained (that is, the amount billed to the customer less the amount paid to a vendor) if it has earned a commission or a fee as an agent. Retail Pharmacy USA and Retail Pharmacy International The Company recognizes revenue, net of taxes and expected returns, at the time it sells merchandise or dispenses prescription drugs to the customer. The Company estimates revenue based on expected reimbursements from third-party payers (e.g., pharmacy benefit managers, insurance companies and governmental agencies) for dispensing prescription drugs. The estimates are based on all available information including historical experience and are updated to actual reimbursement amounts. Pharmaceutical Wholesale Wholesale revenue is recognized, net of taxes and expected returns, upon shipment of goods, which is generally also the day of delivery. Loyalty programs and gift cards The Company’s loyalty rewards programs represent a separate performance obligation and are accounted for using the deferred revenue approach. When goods are sold, the transaction price is allocated between goods sold and loyalty points awarded based upon the relative standalone selling price. The revenue allocated to the loyalty points is recognized upon redemption. Loyalty programs breakage is recognized as revenue based on the redemption pattern. Customer purchases of gift cards are not recognized as revenue until the card is redeemed. Gift card breakage (i.e., unused gift card) is recognized as revenue based on the redemption pattern. Cost of sales Cost of sales includes the purchase price of goods and cost of services rendered, store and warehouse inventory loss, inventory obsolescence and supplier rebates. In addition to product costs, cost of sales includes warehousing costs for retail operations, purchasing costs, freight costs, cash discounts and vendor allowances. Vendor allowances and supplier rebates Vendor allowances are principally received as a result of purchases, sales or promotion of vendors’ products. Allowances are generally recorded as a reduction of inventory and are recognized as a reduction of cost of sales when the related merchandise is sold. Allowances received for promoting vendors’ products are offset against advertising expense and result in a reduction of selling, general and administrative expenses to the extent of advertising costs incurred, with the excess treated as a reduction of inventory costs. Rebates or refunds received by the Company from its suppliers, mostly in cash, are considered as an adjustment of the prices of the supplier’s products purchased by the Company.
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Selling, general and administrative expenses | Selling, general and administrative expenses Selling, general and administrative expenses mainly consist of salaries and employee costs, occupancy costs, depreciation and amortization, credit and debit card fees and expenses directly related to stores. In addition, other costs included are headquarters’ expenses, advertising costs (net of vendor advertising allowances), wholesale warehousing costs and insurance.
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Advertising costs | Advertising costs Advertising costs, which are reduced by the portion funded by vendors, are expensed as incurred or when services have been received. Net advertising expenses, which are included in selling, general and administrative expenses, were $534 million in fiscal 2020, $585 million in fiscal 2019 and $665 million in fiscal 2018.
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Impairment of long-lived assets | Impairment of long-lived assets The Company evaluates the recoverability of long-lived assets whenever events or changes in circumstances indicate that the carrying value of such an asset may not be recoverable. The evaluation of long-lived assets is performed at the lowest level of identifiable cash flows. Long-lived assets related to the Company’s retail operations include property, plant and equipment, definite-lived intangibles, right of use asset as well as operating lease liability. If the asset group fails the recoverability test, then an impairment charge is determined based on the difference between the fair value of the asset group compared to its carrying value. Fair value of the asset group is generally determined using income approach based on cash flows expected from the use and eventual disposal of the asset group.
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Stock compensation plans | Stock compensation plansStock based compensation is measured at fair value at the grant date. The Company grants stock options, performance shares and restricted units to the Company’s non-employee directors, officers and employees. The Company recognizes compensation expense on a straight-line basis over the substantive service period. | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Insurance | Insurance The Company obtains insurance coverage for catastrophic exposures as well as those risks required by law to be insured. In general, the Company’s U.S. subsidiaries retain a significant portion of losses related to workers’ compensation, property, comprehensive general, pharmacist and vehicle liability, while non-U.S. subsidiaries manage their exposures through insurance coverage with third-party carriers. Management regularly reviews the probable outcome of claims and proceedings, the expenses expected to be incurred, the availability and limits of the insurance coverage and the established accruals for liabilities. Liabilities for losses are recorded based upon the Company’s estimates for both claims incurred and claims incurred but not reported. The provisions are estimated in part by considering historical claims experience, demographic factors and other actuarial assumptions.
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Income taxes | Income taxes The Company accounts for income taxes according to the asset and liability method. Under this method, deferred tax assets and liabilities are recognized based upon the estimated future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax basis. Deferred tax assets and liabilities are measured pursuant to tax laws using rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rate is recognized in income in the period that includes the enactment date. Valuation allowances are established when necessary to reduce deferred tax assets to the amounts more likely than not to be realized. In determining the provision for income taxes, the Company uses income, permanent differences between book and tax income, the relative proportion of foreign and domestic income, enacted statutory income tax rates, projections of income subject to Subpart F rules and unrecognized tax benefits related to current year results. Discrete events such as the assessment of the ultimate outcome of tax audits, audit settlements, recognizing previously unrecognized tax benefits due to lapsing of the applicable statute of limitations, recognizing or de-recognizing benefits of deferred tax assets due to future year financial statement projections and changes in tax laws are recognized in the period in which they occur. The Company is subject to routine income tax audits that occur periodically in the normal course of business. U.S. federal, state, local and foreign tax authorities raise questions regarding the Company’s tax filing positions, including the timing and amount of deductions and the allocation of income among various tax jurisdictions. In evaluating the tax benefits associated with the various tax filing positions, the Company records a tax benefit for uncertain tax positions using the highest cumulative tax benefit that is more likely than not to be realized. Adjustments are made to the liability for unrecognized tax benefits in the period in which the Company determines the issue is effectively settled with the tax authorities, the statute of limitations expires for the return containing the tax position or when more information becomes available.
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Earnings per share | Earnings per shareThe dilutive effect of outstanding stock options on earnings per share is calculated using the treasury stock method. Stock options are anti-dilutive and excluded from the earnings per share calculation if the exercise price exceeds the average market price of the common shares. | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
New accounting pronouncements | New accounting pronouncements Adoption of new accounting pronouncements Financial instruments - hedging and derivatives In October 2018, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2018-16, Derivatives and Hedging (Topic 815): Inclusion of the Secured Overnight Financing Rate (“SOFR”) Overnight Index Swap (“OIS”) Rate as Benchmark Interest Rate for Hedge Accounting Purposes. This ASU permits use of the OIS rate based on the SOFR as a U.S. benchmark interest rate for hedge accounting purposes. The Company adopted this new accounting standard on September 1, 2019 on a prospective basis. The adoption of this ASU had no impact on the Company’s results of operations, cash flows or financial position. Intangibles – goodwill and other – internal-use software In August 2018, the FASB issued ASU 2018-15, Intangibles-Goodwill and Other- Internal-Use Software (Subtopic 350-40). This ASU addresses customer’s accounting for implementation costs incurred in a cloud computing arrangement that is a service contract and also adds certain disclosure requirements related to implementation costs incurred for internal-use software and cloud computing arrangements. The amendment aligns the requirements for capitalizing implementation costs incurred in a hosting arrangement that is a service contract with the requirements for capitalizing implementation costs incurred to develop or obtain internal-use software (and hosting arrangements that include an internal-use software license). The Company early adopted this new accounting standard on September 1, 2019 on a prospective basis. The adoption of this ASU did not have a material impact on the Company’s results of operations or financial position. Contributions made In June 2018, the FASB issued ASU 2018-08, Clarifying the Scope and the Accounting Guidance for Contributions Received and Contributions Made (Topic 958). This ASU clarifies and improves guidance about whether a transfer of assets (or reduction of liabilities) is a contribution or an exchange transaction, and whether a contribution is conditional. The ASU applies to all entities, including business entities, that receive or make contributions of cash or other assets, including promises to give. The Company adopted this new accounting standard on September 1, 2019 on a prospective basis. The adoption of this ASU did not have a material impact on the Company’s results of operations or financial position. Compensation – stock compensation In June 2018, the FASB issued ASU 2018-07, Compensation-Stock Compensation (Topic 718). This ASU eliminated most of the differences between accounting guidance for share-based compensation granted to nonemployees and the guidance for share-based compensation granted to employees. The ASU supersedes the guidance for nonemployees and expands the scope of the guidance for employees to include both. The Company adopted this new accounting standard on September 1, 2019. The adoption of this ASU had no impact on the Company’s results of operations, cash flows or financial position. Accounting for reclassification of certain tax effects from accumulated other comprehensive income In February 2018, the FASB issued ASU 2018-02, Income Statement-Reporting Comprehensive Income (Topic 220): Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income. This ASU addresses the income tax effects of items in accumulated other comprehensive income (“AOCI”) which were originally recognized in other comprehensive income, rather than in income from continuing operations. Specifically, it permits a reclassification from AOCI to retained earnings for the adjustment of deferred taxes due to the reduction of the historical corporate income tax rate to the newly enacted corporate income tax rate resulting from the U.S. tax law changes enacted in December 2017. It also requires certain disclosures about these reclassifications. The Company adopted this new accounting standard on September 1, 2019 on a prospective basis. The Company elected not to reclassify the income tax effects of change in historical corporate tax rate from AOCI to retained earnings. The adoption of this ASU had no impact on the Company’s results of operations, cash flows or financial position. Leases In February 2016, the FASB issued , which supersedes Topic 840, Leases. Subsequently, the FASB issued additional ASUs which further clarify this guidance. This ASU increases the transparency and comparability of organizations by requiring the capitalization of substantially all leases on the balance sheet and disclosures of key information about leasing arrangements. Under this new guidance, at the lease commencement date, a lessee recognizes a right-of-use asset and lease liability, which is initially measured at the present value of the future lease payments. For income statement purposes, a dual model was retained for lessees, requiring leases to be classified as either operating or finance leases. Under the operating lease model, lease expense is recognized on a straight-line basis over the lease term. Under the finance lease model, interest on the lease liability is recognized separately from amortization of the right-of-use asset. In addition, a new ASU was issued in July 2018, to provide relief to companies from restating the comparative periods. The Company adopted this new accounting standard on September 1, 2019 on a modified retrospective basis and applied the new standard to all leases through a cumulative-effect adjustment to beginning retained earnings. As a result, comparative financial information has not been restated and continues to be reported under the accounting standards in effect for those periods. The Company elected the package of practical expedients permitted under the transition guidance, which among other things, allows the carryforward of historical lease classification. The adoption of this new accounting standard resulted in recognition of lease liabilities of $24 billion and recognition of right-of-use assets of $22 billion net of liabilities for facility closing, deferred rent, favorable lease interest intangible asset, unfavorable lease interest liability, lease incentives and prepaid rent as of August 31, 2019. The adoption also resulted in a decrease to retained earnings of $0.4 billion due to transition date impairment of right-of-use assets related to previously impaired long-lived assets of $0.8 billion, net of tax, partially offset by de-recognition of deferred gains on historical sale-leaseback transactions of $0.4 billion, net of tax. See note 4. Leases for further information. The impact to the Company's opening Consolidated Balance Sheets as of September 1, 2019 was as follows (in millions):
According to the guidance provided in the FASB staff Q&A Topic 842 Leases – Accounting for lease concessions related to the effects of COVID-19, released on April 2020, the Company elected to account for certain lease concessions related to COVID-19 as a reduction to rent expense for the period. During the fiscal year ended August 31, 2020, these rent concessions related to COVID-19 were not material. New accounting pronouncements not yet adopted Effects of Reference Rate Reform on Financial Reporting In March 2020, the FASB issued ASU 2020-04, Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting. This ASU provides optional expedient and exceptions for applying generally accepted accounting principles to contracts, hedging relationships, and other transactions affected by reference rate reform if certain criteria are met. In response to the concerns about structural risks of interbank offered rates ("IBORs") and, particularly, the risk of cessation of the London Interbank Offered Rate ("LIBOR"), regulators in several jurisdictions around the world have undertaken reference rate reform initiatives to identify alternative reference rates that are more observable or transaction based and less susceptible to manipulation. The ASU provides companies with optional guidance to ease the potential accounting burden associated with transitioning away from reference rates that are expected to be discontinued. The ASU can be adopted no later than December 1, 2022 (fiscal 2023) with early adoption permitted. The Company is evaluating the effect of adopting this new accounting guidance. Financial Instruments In March 2020, FASB issued ASU 2020-03. This ASU improves and clarifies various financial instruments topics, including the current expected credit losses ("CECL") standard issued in 2016. The ASU includes seven different issues that describe the areas of improvement and the related amendments to GAAP, intended to make the standards easier to understand and apply by eliminating inconsistencies and providing clarifications. The amendments have different effective dates. The Company is evaluating the effect of adopting this new accounting guidance, but does not expect adoption will have a material impact on the Company’s financial statements. Investments - equity securities; Investments—Equity Method and Joint Ventures; Derivatives and Hedging In January 2020, the FASB issued ASU 2020-01, Investments—Equity Securities (Topic 321), Investments—Equity Method and Joint Ventures (Topic 323), and Derivatives and Hedging (Topic 815). The amendments in this ASU clarify the interaction between the accounting for investments in equity securities, investment in equity method and certain derivatives instruments. The ASU is expected to reduce diversity in practice and increase comparability of the accounting for these interactions. This ASU is effective for fiscal years beginning after December 15, 2021 (fiscal 2023). The adoption of this ASU is not expected to have any impact on the Company's results of operations, cash flows or financial position. Income taxes - simplifying the accounting for income taxes In December 2019, the FASB issued ASU 2019-12: Simplifying the Accounting for Income Taxes (Topic 740), which removes certain exceptions to the general principles in Topic 740 and improves consistent application of and simplifies GAAP for other areas of Topic 740 by clarifying and amending existing guidance. This ASU is effective for fiscal years beginning after December 15, 2020 (fiscal 2022), and interim periods within those fiscal years, with early adoption permitted. The Company is evaluating the effect of adopting this new accounting guidance but does not expect adoption will have a material impact on the Company's disclosures. Investments - equity securities In April 2019, the FASB issued ASU 2019-04, Codification Improvements to Financial Instruments-Credit Losses (Topic 326), Derivatives and Hedging (Topic 815), and Financial Instruments (Topic 825). This extensive ASU provides clarifications for three topics related to financial instruments accounting, some of which apply to the Company. For example, this ASU clarifies the disclosure requirements that apply to equity securities without a readily determinable fair value for which the measurement alternative is elected. This ASU is effective for fiscal years beginning after December 15, 2019 (fiscal 2021). The adoption of this ASU is not expected to have a significant impact on the Company's results of operations, cash flows or financial position. Collaborative arrangements In November 2018, the FASB issued ASU 2018-18, Collaborative Arrangements (Topic 808). This ASU clarifies the interaction between Topic 808, Collaborative Arrangements, and Topic 606, Revenue from Contracts with Customers. This ASU is effective for fiscal years beginning after December 15, 2019 (fiscal 2021). The adoption of this ASU is not expected to have a significant impact on the Company’s results of operations, cash flows or financial position. Compensation – retirement benefits – defined benefit plans In August 2018, the FASB issued ASU 2018-14, Compensation - Retirement benefits (Topic 715-20). This ASU amends ASC 715 to add, remove and clarify disclosure requirements related to defined benefit pension and other postretirement plans. The ASU eliminates the requirement to disclose the amounts in accumulated other comprehensive income expected to be recognized as part of net periodic benefit cost over the next year. The ASU also removes the disclosure requirements for the effects of a one-percentage-point change on the assumed health care costs and the effect of this change in rates on service cost, interest cost and the benefit obligation for postretirement health care benefits. This ASU is effective for fiscal years ending after December 15, 2020 (fiscal 2021) and must be applied on a retrospective basis. The Company is evaluating the effect of adopting this new accounting guidance, but does not expect adoption will have a material impact on the Company's financial position. Fair value measurement In August 2018, the FASB issued ASU 2018-13, Fair Value Measurement (Topic 820). The ASU eliminates such disclosures as the amount of and reasons for transfers between Level 1 and Level 2 of the fair value hierarchy. The ASU adds new disclosure requirements for Level 3 measurements. This ASU is effective for fiscal years beginning after December 15, 2019 (fiscal 2021), and interim periods within those fiscal years, with early adoption permitted for any eliminated or modified disclosures. The Company is evaluating the effect of adopting this new accounting guidance, but does not expect adoption will have a material impact on the Company's disclosures. Financial instruments - credit losses In June 2016, the FASB issued ASU 2016-13: Measurement of Credit Losses on Financial Instruments (Topic 326), which amends the Board’s guidance on the impairment of financial instruments. The ASU adds to U.S. GAAP an impairment model that is based on expected losses rather than incurred losses, which is known as the CECL model. The CECL model applies to most debt instruments (other than those measured at fair value), trade and other receivables, financial guarantee contracts, and loan commitments. This ASU is effective for fiscal years beginning after December 15, 2019 (fiscal 2021), and interim periods within those fiscal years, with early adoption permitted. The Company is evaluating the effect of adopting this new accounting guidance, but does not expect adoption will have a material impact on the Company’s financial position or results of operations.
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Summary of major accounting policies (Tables) |
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Accounting Policies [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Restrictions on Cash and Cash Equivalents [Table Text Block] | The following represents a reconciliation of cash and cash equivalents in the Consolidated Balance Sheets to total cash, cash equivalents and restricted cash in the Consolidated Statements of Cash Flows as of August 31, 2020 and 2019, (in millions):
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Schedule of property, plant and equipment | The following table summarizes the Company’s property, plant and equipment (in millions) and estimated useful lives (in years):
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Schedule of new accounting pronouncements and changes in accounting principles | The impact to the Company's opening Consolidated Balance Sheets as of September 1, 2019 was as follows (in millions):
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Acquisitions (Tables) |
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Business Combinations [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of identifiable assets acquired and liabilities assumed | The following table summarizes the consideration paid and the amounts of identified assets acquired and liabilities assumed for purchase of 1,932 stores as of the fiscal year ended August 31, 2019.
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Schedule of identified definite and indefinite-lived assets | The identified definite-lived intangible assets were as follows:
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Schedule of pro forma information | The unaudited pro forma information has been prepared for comparative purposes only and is not intended to be indicative of what the Company’s results would have been had the purchases occurred at the beginning of the periods presented or results which may occur in the future.
1Impacted by store closures due to the Store Optimization Program. Actual sales from acquired Rite Aid stores for the fiscal year ended 2018 included in the Consolidated Statement of Earnings are as follows:
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Exit and disposal activities (Tables) |
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Restructuring and Related Activities [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Restructuring costs and reserves | Costs related to exit and disposal activities under the Transformational Cost Management Program for the fiscal year ended August 31, 2020 and 2019 were as follows (in millions):
1Includes $166 million of impairments relating to operating lease right-of-use and finance lease assets. Refer to note 4, leases for additional information. 2Primarily includes write down of leasehold improvements, certain software and inventory.
1Primarily includes write down of leasehold improvements, certain software and inventory. Costs related to the Store Optimization Program for the twelve months ended August 31, 2020, 2019 and 2018 were as follows (in millions):
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Schedule of restructuring reserve by type of cost | The changes in liabilities and assets related to the exit and disposal activities under Transformational Cost Management Program include the following (in millions):
1Includes $166 million of impairments relating to operating lease right-of-use and finance lease assets. Refer to note 4, leases for additional information. 2Represents liability for facility closings and related lease termination charges recorded as an offset to right-of-use assets upon the adoption of ASC 842. Refer to note 1, summary of major accounting policies and note 4, leases for additional information. The changes in liabilities related to the Store Optimization Program for the fiscal years ended August 31, 2020 and 2019 include the following (in millions):
1Primarily represents unfavorable lease liabilities from acquired Rite Aid stores. 2Includes write down of operating lease right-of-use assets and inventory. 3Represents liability for facility closings and related lease termination charges recorded as an offset to right-of-use assets upon the adoption of ASC 842. Refer to note 1, summary of major accounting policies and note 4, leases for additional information.
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Leases (Tables) |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Aug. 31, 2020 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Leases [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of supplemental balance sheet information | Supplemental balance sheet information related to leases were as follows (in millions):
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Schedule of supplemental income statement information | Supplemental income statement information related to leases were as follows (in millions):
1Includes real estate property taxes, common area maintenance, insurance and rental payments based on sales volume. 2For the fiscal year August 31, 2020, total impairments include $177 million to Transformational Cost Management and Store Optimization programs. See note 3, exit and disposal activities. 3Recorded within selling, general and administrative expenses. Other supplemental information were as follows (in millions):
Average lease term and discount rate as of August 31, 2020 were as follows:
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Schedule of future lease payments under operating leases | The aggregate future lease payments for operating and finance leases as of August 31, 2020 were as follows (in millions):
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Schedule of future lease payments under finance leases | The aggregate future lease payments for operating and finance leases as of August 31, 2020 were as follows (in millions):
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Schedule of liability for facility closings and related lease termination charges | The changes in liability for facility closings and related lease termination charges include the following (in millions):
1Primarily unfavorable lease liabilities from acquired Rite Aid stores.
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Schedule of rent expense | Rental expense prior to the adoption of ASC 842 Leases, which includes common area maintenance, insurance and taxes, where appropriate, was as follows (in millions):
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Equity method investments (Tables) |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Aug. 31, 2020 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Equity Method Investments and Joint Ventures [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Equity method investment | Equity method investments as of August 31, 2020 and 2019 were as follows (in millions, except percentages):
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Summarized financial information of equity method investees | Summarized financial information for the Company’s equity method investments in aggregate is as follows: Balance sheet (in millions)
Statements of earnings (in millions)
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Goodwill and other intangible assets (Tables) |
12 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Aug. 31, 2020 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Goodwill and Intangible Assets Disclosure [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of goodwill | Changes in the carrying amount of goodwill by reportable segment consist of the following activity (in millions):
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Schedule of finite-lived intangible assets by major class | The carrying amount and accumulated amortization of intangible assets consists of the following (in millions):
1Includes purchased prescription files. 2Transferred favorable lease interest to right-of-use assets upon adoption of ASC 842. Refer to note 1, summary of major accounting policies for additional information.
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Schedule of finite-lived intangible assets, future amortization expense | Estimated future annual amortization expense for the next five fiscal years for intangible assets recorded at August 31, 2020 is as follows (in millions):
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Debt (Tables) |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Aug. 31, 2020 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Debt Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Short-term borrowings | Debt consists of the following (all amounts are presented in millions of U.S. dollars and debt issuances are denominated in U.S. dollars, unless otherwise noted):
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Long-term debt |
1Notes are unsubordinated debt obligations of Walgreens Boots Alliance and rank equally in right of payment with all other unsecured and unsubordinated indebtedness of Walgreens Boots Alliance from time to time outstanding. On September 17, 2020, the Company provided notice to the trustee and the holders of its 2.875% notes due 2020 issued by the Company on November 20, 2014 that it will redeem in full the £400 million aggregate principal amount outstanding of the notes on October 20, 2020. 2Other short-term debt represents a mix of fixed and variable rate debt with various maturities and working capital facilities denominated in various currencies. 3Notes are senior debt obligations of Walgreen Co. and rank equally with all other unsecured and unsubordinated indebtedness of Walgreen Co. On December 31, 2014, Walgreens Boots Alliance fully and unconditionally guaranteed the outstanding notes on an unsecured and unsubordinated basis. The guarantee, for so long as it is in place, is an unsecured, unsubordinated debt obligation of Walgreens Boots Alliance and will rank equally in right of payment with all other unsecured and unsubordinated indebtedness of Walgreens Boots Alliance. 4Other long-term debt represents a mix of fixed and variable rate debt in various currencies with various maturities.
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Future maturities of long-term debt | At August 31, 2020, the future maturities of short-term and long-term debt, excluding debt discounts and issuance costs and finance lease obligations (see note 4, leases, for the future lease payments), consisted of the following (in millions):
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Financial instruments (Tables) |
12 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Aug. 31, 2020 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Derivative Instruments and Hedging Activities Disclosure [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Notional amounts of derivative instruments outstanding | The notional amounts and fair value of derivative instruments outstanding were as follows (in millions):
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Gains and losses due to changes in fair value recognized in earnings | These derivative instruments are economic hedges of foreign currency risks. The Company also utilizes total return swaps to economically hedge variability in compensation charges related to certain deferred compensation obligations. The income and (expense) due to changes in fair value of these derivative instruments were recognized in earnings as follows (in millions):
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Fair value measurements (Tables) |
12 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Aug. 31, 2020 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Fair Value Disclosures [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Assets and liabilities measured at fair value on a recurring basis | Assets and liabilities measured at fair value on a recurring basis were as follows (in millions):
1Money market funds are valued at the closing price reported by the fund sponsor. 2Fair values of quoted investments are based on current bid prices as of August 31, 2020 and 2019. 3The fair value of forward currency contracts is estimated by discounting the difference between the contractual forward price and the current available forward price for the residual maturity of the contract using observable market rates. 4The fair value of interest rate swaps and cross currency interest rate swaps is calculated by discounting the estimated future cash flows based on the applicable observable yield curves. See note 8, financial instruments, for additional information.
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Income taxes (Tables) |
12 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Aug. 31, 2020 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Income Tax Disclosure [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of income before income tax, domestic and foreign | The components of earnings before income tax provision were (in millions):
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Provisions for income taxes | The provision for income taxes consists of the following (in millions):
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Difference between the statutory federal income tax rate and the effective tax rate | The difference between the statutory federal income tax rate and the effective tax rate is as follows:
1Net of changes in related tax attributes.
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Deferred tax assets and liabilities included in the consolidated balance sheet | The deferred tax assets and liabilities included in the Consolidated Balance Sheets consist of the following (in millions):
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Reconciliation of the total amounts of unrecognized tax benefits | The following table provides a reconciliation of the total amounts of unrecognized tax benefits (in millions):
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Retirement benefits (Tables) |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Aug. 31, 2020 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Retirement Benefits [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of defined benefit plans using fair value hierarchy | The following tables present classes of defined benefit pension plan assets by fair value hierarchy (in millions):
1Equity securities, which mainly comprise of investments in commingled funds, are valued based on quoted prices and are primarily exchange-traded. Securities for which official close or last trade pricing on an active exchange is available are classified as Level 1 investments. If closing prices are not available, or the investments are in a commingled fund, securities are valued at the last quoted bid price and typically are categorized as Level 2 investments. 2Debt securities: government bonds comprise of fixed interest and index linked bonds issued by central governments and are valued based on quotes received from independent pricing services or from dealers who make markets in such securities. Pricing services utilize pricing which considers readily available inputs such as the yield or price of bonds of comparable quality, coupon, maturity and type, as well as dealer-supplied prices. 3Debt securities: corporate bonds comprise bonds issued by corporations in both segregated and commingled funds and are valued using recently executed transactions, or quoted market prices for similar assets and liabilities in active markets, or for identical assets and liabilities in markets that are not active. If there have been no market transactions in a particular fixed income security, its fair value is calculated by pricing models that benchmark the security against other securities with actual market prices. 4Real estate comprise of investments in certain property funds which are valued based on the underlying properties. These properties are valued using a number of standard industry techniques such as cost, discounted cash flows, independent appraisals and market based comparable data. Real estate investments are categorized as Level 3 investments. Changes in Level 3 investments during fiscal 2020 were driven by actual return on plan assets still held at August 31, 2020 and purchases during the year. 5Other investments mainly comprise of net receivable (payable) amounts for unsettled transactions, cash and cash equivalents, derivatives and direct private placements. Cash is categorized as a Level 1 investment and cash in commingled funds is categorized as Level 2 investments. Amounts receivable (payable) are categorized as level 2 investments. Cash equivalents are valued using observable yield curves, discounting and interest rates and are categorized as Level 2 investments. Derivatives which are exchange-traded and for which market quotations are readily available are valued at the last reported sale price or official closing price as reported by an independent pricing service on the primary market, or exchange on which they are traded, and are categorized as Level 1 investments. Over-the-counter derivatives typically are valued by independent pricing services and are categorized as Level 2 investments. Direct private placements are typically bonds valued by reference to comparable bonds and are categorized as Level 3 investments. Changes in Level 3 investments during fiscal 2020 were primarily driven by purchases during the year.
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Components of net periodic benefit costs | Components of net periodic pension costs for the defined benefit pension plans (in millions):
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Accumulated and projected benefit obligations | Change in benefit obligations for the defined benefit pension plans (in millions):
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Changes in fair value of plan assets | Change in plan assets for the defined benefit pension plans (in millions):
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Amounts recognized in balance sheet | Amounts recognized in the Consolidated Balance Sheets (in millions):
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Pre-tax amounts recognized in accumulated other comprehensive (income) loss | Cumulative pre-tax amounts recognized in accumulated other comprehensive (income) loss (in millions):
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Amounts in accumulated other comprehensive income (loss) to be recognized over next fiscal year | The projected benefit obligation, accumulated benefit obligation and fair value of plan assets for all pension plans, including accumulated benefit obligations in excess of plan assets, at August 31 were as follows (in millions):
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Estimated future benefit payments | Estimated future benefit payments for the next 10 years from defined benefit pension plans to participants are as follows (in millions):
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Schedule of assumptions used | The assumptions used in accounting for the defined benefit pension plans were as follows:
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Accumulated other comprehensive income (loss) (Tables) |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Aug. 31, 2020 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Accumulated Other Comprehensive Income (Loss), Net of Tax [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Components of accumulated other comprehensive income (loss) | The following is a summary of net changes in accumulated other comprehensive income by component and net of tax for fiscal 2020, 2019 and 2018 (in millions):
1Includes amendment to U.S. postretirement healthcare plan resulting in a curtailment gain. See note 13, retirement benefits. 2Previously disclosed as Unrealized gain (loss) on cash flow hedges.
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Segment reporting (Tables) |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Aug. 31, 2020 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Segment Reporting [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Reconciliation of revenue from segments to consolidated | The following table reflects results of operations of the Company's reportable segments (in millions):
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Reconciliation of operating profit (loss) from segments to consolidated | The following table reconciles adjusted operating income to operating income (in millions):
1Eliminations relate to intersegment sales between the Pharmaceutical Wholesale and the Retail Pharmacy International segments. 2The Company adopted Topic 715 as of September 1, 2018 (fiscal 2019) on a retrospective basis. The impact on our previously reported net periodic costs as a result of the retrospective adoption of this standard results in a reclassification from selling, general and administrative expenses to other income (expense) of $125 million for the fiscal year ended August 31, 2018. 3Excludes 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, which has been presented as "Impairment of goodwill and intangible asset" line. 4Store damage and inventory losses as a result of looting in the U.S., net of insurance recoveries.
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Geographic data for net sales | Geographic data for sales is as follows (in millions):
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Geographic data for long-lived assets | Geographic data for long-lived assets, defined as property, plant and equipment, is as follows (in millions):
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Sales (Tables) |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Aug. 31, 2020 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Revenue from Contract with Customer [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Disaggregation of Revenue | The following table summarizes the Company’s sales by segment and by major source (in millions):
1Eliminations relate to intersegment sales between the Pharmaceutical Wholesale and the Retail Pharmacy International segments.
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Related parties (Tables) |
12 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Aug. 31, 2020 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Related Party Transactions [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of related party transactions | Related party transactions with AmerisourceBergen (in millions):
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Supplementary financial information (Tables) |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Supplementary Financial Information [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Summary of quarterly results | Summary of Quarterly Results (Unaudited) (in millions, except per share amounts)
|
Summary of major accounting policies - reconciliation of cash, cash equivalents and restricted cash (Details) - USD ($) $ in Millions |
Aug. 31, 2020 |
Aug. 31, 2019 |
Aug. 31, 2018 |
Aug. 31, 2017 |
---|---|---|---|---|
Accounting Policies [Abstract] | ||||
Cash and cash equivalents | $ 516 | $ 1,023 | ||
Restricted cash (included in other current assets) | 230 | 184 | ||
Cash, cash equivalents and restricted cash | $ 746 | $ 1,207 | $ 975 | $ 3,496 |
Acquisitions - narrative (Details) $ in Millions |
12 Months Ended | ||
---|---|---|---|
Aug. 31, 2020
USD ($)
distribution_center
|
Aug. 31, 2019
USD ($)
|
Aug. 31, 2018
USD ($)
store
|
|
Business Acquisition [Line Items] | |||
Goodwill | $ 15,268 | $ 16,560 | $ 16,914 |
Rite Aid Corporation | |||
Business Acquisition [Line Items] | |||
Number of distribution centers expected to be acquired | distribution_center | 3 | ||
Number of stores acquired | store | 1,932 | ||
Consideration | $ 4,157 | ||
Goodwill | 1,331 | ||
Rite Aid Corporation - Second And Third Distribution Center | |||
Business Acquisition [Line Items] | |||
Number of distribution centers acquired | distribution_center | 2 | ||
Payments to acquire business | $ 91 | ||
Rite Aid Corporation - First Distribution Center | |||
Business Acquisition [Line Items] | |||
Payments to acquire business | 61 | ||
Retail Pharmacy USA | |||
Business Acquisition [Line Items] | |||
Payments to acquire business | $ 258 | $ 304 |
Acquisitions - summary of identified assets acquired and liabilities assumed (Details) - USD ($) $ in Millions |
12 Months Ended | ||
---|---|---|---|
Aug. 31, 2019 |
Aug. 31, 2020 |
Aug. 31, 2018 |
|
Identifiable assets acquired and liabilities assumed | |||
Goodwill | $ 16,560 | $ 15,268 | $ 16,914 |
Rite Aid Corporation | |||
Business Acquisition [Line Items] | |||
Consideration | 4,330 | ||
Identifiable assets acquired and liabilities assumed | |||
Inventories | 1,171 | ||
Property, plant and equipment | 490 | ||
Intangible assets | 2,039 | ||
Accrued expenses and other liabilities | (55) | ||
Deferred income taxes | 291 | ||
Other non-current liabilities | (937) | ||
Total identifiable net assets | 2,999 | ||
Goodwill | $ 1,331 |
Acquisitions - identified definite-lived intangible assets (Details) - Rite Aid Corporation $ in Millions |
12 Months Ended |
---|---|
Aug. 31, 2019
USD ($)
| |
Business Acquisition [Line Items] | |
Amount | $ 2,039 |
Customer relationships | |
Business Acquisition [Line Items] | |
Weighted-average useful life | 12 years |
Amount | $ 1,800 |
Favorable lease interests | |
Business Acquisition [Line Items] | |
Weighted-average useful life | 10 years |
Amount | $ 219 |
Trade names | |
Business Acquisition [Line Items] | |
Weighted-average useful life | 2 years |
Amount | $ 20 |
Acquisitions - pro forma results (Details) $ in Millions |
12 Months Ended |
---|---|
Aug. 31, 2018
USD ($)
| |
Rite Aid Corporation | |
Business Acquisition [Line Items] | |
Sales | $ 135,503 |
Acquisitions - actual results (Details) $ in Millions |
12 Months Ended |
---|---|
Aug. 31, 2018
USD ($)
| |
Rite Aid Corporation | |
Business Acquisition [Line Items] | |
Sales | $ 5,112 |
Leases - narrative (Details) - USD ($) $ in Millions |
12 Months Ended | |
---|---|---|
Aug. 31, 2020 |
Aug. 31, 2019 |
|
Lessee, Lease, Description [Line Items] | ||
Term of renewal contract | 5 years | |
Charges related to facilities that were closed or relocated | $ 185 | $ 129 |
Minimum | ||
Lessee, Lease, Description [Line Items] | ||
Term of lease | 15 years | |
Maximum | ||
Lessee, Lease, Description [Line Items] | ||
Term of lease | 25 years |
Leases - supplemental balance sheet information (Details) - USD ($) $ in Millions |
Aug. 31, 2020 |
Sep. 01, 2019 |
Aug. 31, 2019 |
---|---|---|---|
Operating Leases: | |||
Operating lease right-of-use asset | $ 21,724 | $ 22,000 | $ 0 |
Operating lease obligation - current | 2,426 | 0 | |
Operating lease obligation - non-current | 21,973 | $ 0 | |
Total operating lease obligations | 24,399 | $ 24,000 | |
Finance Leases: | |||
Property, plant and equipment, net | 769 | ||
Lease obligations included in: | |||
Accrued expenses and other liabilities | 34 | ||
Other non-current liabilities | 1,020 | ||
Total finance lease obligations | $ 1,054 | ||
Finance Lease, Right-of-Use Asset, Statement of Financial Position [Extensible List] | us-gaap:PropertyPlantAndEquipmentAndFinanceLeaseRightOfUseAssetAfterAccumulatedDepreciationAndAmortization | ||
Finance Lease, Liability, Current, Statement of Financial Position [Extensible List] | us-gaap:AccruedLiabilitiesCurrent | ||
Finance Lease, Liability, Noncurrent, Statement of Financial Position [Extensible List] | us-gaap:OtherLiabilitiesNoncurrent |
Leases - components of lease cost (Details) $ in Millions |
12 Months Ended |
---|---|
Aug. 31, 2020
USD ($)
| |
Operating lease cost | |
Fixed | $ 3,332 |
Variable | 761 |
Finance lease cost | |
Amortization | 40 |
Interest | 56 |
Sublease income | 76 |
Impairment of right-of-use assets | 214 |
Impairment of finance lease assets | 24 |
Gains on sale-leaseback transactions | 308 |
Transformational Cost Management and Store Optimization Programs | Lease obligations and other real estate costs | |
Finance lease cost | |
Total impairments | $ 177 |
Leases - supplemental cash flow information (Details) $ in Millions |
12 Months Ended |
---|---|
Aug. 31, 2020
USD ($)
| |
Cash paid for amounts included in the measurement of lease obligations | |
Operating cash flows from operating leases | $ 3,315 |
Operating cash flows from finance leases | 48 |
Financing cash flows from finance leases | 51 |
Total | 3,414 |
Right-of-use assets obtained in exchange for new lease obligations: | |
Operating leases | 2,494 |
Finance leases | 65 |
Total | $ 2,559 |
Leases - average lease terms and discounts (Details) |
Aug. 31, 2020 |
---|---|
Weighted average remaining lease term in years: | |
Operating leases | 10 years 8 months 12 days |
Finance leases | 20 years 8 months 12 days |
Weighted average discount rate | |
Operating leases | 4.95% |
Finance leases | 5.39% |
Leases - future lease payments for operating and finance leases (Details) - USD ($) $ in Millions |
Aug. 31, 2020 |
Sep. 01, 2019 |
---|---|---|
Finance lease | ||
2021 | $ 96 | |
2022 | 94 | |
2023 | 93 | |
2024 | 93 | |
2025 | 91 | |
Later | 1,230 | |
Total undiscounted minimum lease payments | 1,697 | |
Less: Present value discount | (643) | |
Lease liability | 1,054 | |
Operating lease | ||
2021 | 3,529 | |
2022 | 3,374 | |
2023 | 3,210 | |
2024 | 3,049 | |
2025 | 2,868 | |
Later | 15,559 | |
Total undiscounted minimum lease payments | 31,589 | |
Less: Present value discount | (7,190) | |
Operating lease liability | $ 24,399 | $ 24,000 |
Leases - Schedule of liability for facility closings and related lease termination charges (Details) $ in Millions |
12 Months Ended |
---|---|
Aug. 31, 2019
USD ($)
| |
Leases [Abstract] | |
Balance at beginning of period | $ 964 |
Provision for present value of non-cancelable lease payments on closed facilities | 90 |
Changes in assumptions | 56 |
Accretion expense | 39 |
Other - non cash | 160 |
Cash payments, net of sublease income | (316) |
Balance at end of period | $ 993 |
Leases - Schedule of rent expense (Details) - USD ($) $ in Millions |
12 Months Ended | |
---|---|---|
Aug. 31, 2019 |
Aug. 31, 2018 |
|
Leases [Abstract] | ||
Minimum rentals | $ 3,622 | $ 3,447 |
Contingent rentals | 74 | 68 |
Less: sublease rental income | (66) | (67) |
Total rental expense | $ 3,631 | $ 3,448 |
Equity method investments - carrying value (Details) - USD ($) $ in Millions |
Aug. 31, 2020 |
Aug. 31, 2019 |
---|---|---|
Schedule of Equity Method Investments [Line Items] | ||
Carrying value | $ 7,338 | $ 6,851 |
AmerisourceBergen | ||
Schedule of Equity Method Investments [Line Items] | ||
Carrying value | $ 5,446 | $ 5,211 |
Ownership percentage | 28.00% | 27.00% |
Others | ||
Schedule of Equity Method Investments [Line Items] | ||
Carrying value | $ 1,892 | $ 1,640 |
Others | Minimum | ||
Schedule of Equity Method Investments [Line Items] | ||
Ownership percentage | 8.00% | 8.00% |
Others | Maximum | ||
Schedule of Equity Method Investments [Line Items] | ||
Ownership percentage | 50.00% | 50.00% |
Equity method investments - summarized financial information of equity method investees (Details) - USD ($) $ in Millions |
3 Months Ended | 12 Months Ended | ||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|
Aug. 31, 2020 |
May 31, 2020 |
Feb. 29, 2020 |
Nov. 30, 2019 |
Aug. 31, 2019 |
May 31, 2019 |
Feb. 28, 2019 |
Nov. 30, 2018 |
Aug. 31, 2020 |
Aug. 31, 2019 |
Aug. 31, 2018 |
Aug. 31, 2017 |
|
Statement of Financial Position [Abstract] | ||||||||||||
Current assets | $ 18,073 | $ 18,700 | $ 18,073 | $ 18,700 | ||||||||
Non-current assets | 69,101 | 48,899 | 69,101 | 48,899 | ||||||||
Current liabilities | 27,070 | 25,769 | 27,070 | 25,769 | ||||||||
Non-current liabilities | 38,968 | 17,678 | 38,968 | 17,678 | ||||||||
Shareholders' equity | 21,136 | 24,152 | 21,136 | 24,152 | $ 26,689 | $ 28,274 | ||||||
Noncontrolling interests | 498 | 641 | 498 | 641 | ||||||||
Income Statement [Abstract] | ||||||||||||
Sales | 34,746 | $ 34,631 | $ 35,820 | $ 34,339 | 33,954 | $ 34,591 | $ 34,528 | $ 33,793 | 139,537 | 136,866 | 131,537 | |
Gross profit | 6,803 | $ 6,438 | $ 7,513 | $ 7,263 | 7,228 | $ 7,453 | $ 7,754 | $ 7,641 | 28,017 | 30,076 | 30,792 | |
Net earnings | 424 | 3,962 | 5,031 | |||||||||
Share of earnings from equity method investments | 382 | 187 | 245 | |||||||||
Equity Method Investment | ||||||||||||
Statement of Financial Position [Abstract] | ||||||||||||
Current assets | 40,038 | 36,523 | 40,038 | 36,523 | ||||||||
Non-current assets | 18,313 | 15,710 | 18,313 | 15,710 | ||||||||
Current liabilities | 38,779 | 35,857 | 38,779 | 35,857 | ||||||||
Non-current liabilities | 10,628 | 9,633 | 10,628 | 9,633 | ||||||||
Shareholders' equity | 8,944 | 6,743 | 8,944 | 6,743 | ||||||||
Noncontrolling interests | $ 387 | $ 411 | 387 | 411 | ||||||||
Income Statement [Abstract] | ||||||||||||
Sales | 210,306 | 197,237 | 179,887 | |||||||||
Gross profit | 8,896 | 7,516 | 6,875 | |||||||||
Net earnings | $ 1,647 | $ 1,037 | $ 1,315 |
Goodwill and other intangible assets - schedule of goodwill (Details) - USD ($) $ in Millions |
12 Months Ended | |
---|---|---|
Aug. 31, 2020 |
Aug. 31, 2019 |
|
Goodwill [Roll Forward] | ||
Beginning balance | $ 16,560 | $ 16,914 |
Acquisitions | 62 | 8 |
Impairment | (1,675) | |
Dispositions | (9) | |
Currency translation adjustments | 321 | (353) |
Ending balance | 15,268 | 16,560 |
Reportable Segments | Retail Pharmacy USA | ||
Goodwill [Roll Forward] | ||
Beginning balance | 10,491 | 10,483 |
Acquisitions | 62 | 8 |
Impairment | 0 | |
Dispositions | 0 | |
Currency translation adjustments | 0 | 0 |
Ending balance | 10,553 | 10,491 |
Reportable Segments | Retail Pharmacy International | ||
Goodwill [Roll Forward] | ||
Beginning balance | 3,179 | 3,370 |
Acquisitions | 0 | 0 |
Impairment | (1,675) | |
Dispositions | (9) | |
Currency translation adjustments | 90 | (182) |
Ending balance | 1,593 | 3,179 |
Reportable Segments | Pharmaceutical Wholesale | ||
Goodwill [Roll Forward] | ||
Beginning balance | 2,890 | 3,061 |
Acquisitions | 0 | 0 |
Impairment | 0 | |
Dispositions | 0 | |
Currency translation adjustments | 231 | (171) |
Ending balance | $ 3,122 | $ 2,890 |
Goodwill and other intangible assets - schedule of finite-lived intangible assets, future amortization expense (Details) $ in Millions |
Aug. 31, 2020
USD ($)
|
---|---|
Estimated annual intangible assets amortization expense [Abstract] | |
2021 | $ 445 |
2022 | 426 |
2023 | 391 |
2024 | 371 |
2025 | $ 336 |
Debt - short-term borrowings (Details) |
Aug. 31, 2020
USD ($)
|
Aug. 31, 2020
GBP (£)
|
Aug. 31, 2019
USD ($)
|
---|---|---|---|
Short-Term Borrowings [Abstract] | |||
Total short-term debt | $ 3,538,000,000 | $ 5,738,000,000 | |
2.700% Unsecured Notes Due 2019 | |||
Short-Term Borrowings [Abstract] | |||
Face amount | $ 8,000,000,000 | ||
Stated interest rate (as a percent) | 2.70% | 2.70% | |
Total short-term debt | $ 0 | 1,250,000,000 | |
2.875% Unsecured Pound Sterling Notes Due 2020 | |||
Short-Term Borrowings [Abstract] | |||
Face amount | £ | £ 700,000,000 | ||
Stated interest rate (as a percent) | 2.875% | 2.875% | |
Total short-term debt | $ 533,000,000 | 0 | |
Other | |||
Short-Term Borrowings [Abstract] | |||
Total short-term debt | 418,000,000 | 464,000,000 | |
Commercial Paper | |||
Short-Term Borrowings [Abstract] | |||
Total short-term debt | 1,517,000,000 | 2,400,000,000 | |
Credit facilities | |||
Short-Term Borrowings [Abstract] | |||
Total short-term debt | $ 1,071,000,000 | $ 1,624,000,000 |
Debt - long-term debt by future maturity (Details) $ in Millions |
Aug. 31, 2020
USD ($)
|
---|---|
Long Term Debt by Future Maturity [Abstract] | |
2021 | $ 3,545 |
2022 | 1,250 |
2023 | 1,200 |
2024 | 0 |
2025 | 2,005 |
Later | 7,816 |
Total estimated future maturities | $ 15,816 |
Financial instruments - warrants (Details) - Derivatives not designated as hedges: - USD ($) $ in Millions |
12 Months Ended | ||
---|---|---|---|
Aug. 31, 2020 |
Aug. 31, 2019 |
Aug. 31, 2018 |
|
Foreign currency forwards | Selling, general and administrative expense | |||
Warrants [Abstract] | |||
Gains (losses) due to changes in fair value of derivative instruments | $ (63) | $ 139 | $ 17 |
Foreign currency forwards | Other income (expense) | |||
Warrants [Abstract] | |||
Gains (losses) due to changes in fair value of derivative instruments | 11 | (18) | 22 |
Total return swap | Selling, general and administrative expense | |||
Warrants [Abstract] | |||
Gains (losses) due to changes in fair value of derivative instruments | $ 24 | $ 0 | $ 0 |
Commitments and contingencies (Details) $ in Millions |
Jan. 22, 2019
USD ($)
|
---|---|
Commitments and Contingencies Disclosure [Abstract] | |
Payments for legal settlements | $ 209 |
Income taxes - components of earnings before income tax provision (Details) - USD ($) $ in Millions |
12 Months Ended | ||
---|---|---|---|
Aug. 31, 2020 |
Aug. 31, 2019 |
Aug. 31, 2018 |
|
Income Tax Disclosure [Abstract] | |||
U.S. | $ 759 | $ 1,898 | $ 3,292 |
Non–U.S. | (16) | 2,629 | 2,683 |
Earnings before income tax provision | $ 743 | $ 4,527 | $ 5,975 |
Income taxes - provision for income taxes (Details) - USD ($) $ in Millions |
12 Months Ended | ||
---|---|---|---|
Aug. 31, 2020 |
Aug. 31, 2019 |
Aug. 31, 2018 |
|
Current provision | |||
Federal | $ 150 | $ 201 | $ 866 |
State | 49 | 46 | 103 |
Non–U.S. | 204 | 241 | 353 |
Total current provisions for income taxes | 403 | 488 | 1,322 |
Deferred provision | |||
Federal – tax law change | 0 | 0 | (648) |
Federal – excluding tax law change | (83) | 151 | 304 |
State | 2 | 4 | 78 |
Non–U.S. – tax law change | 139 | 0 | 0 |
Non–U.S. – excluding tax law change | (101) | (55) | (58) |
Total non-current provisions for income taxes | (43) | 100 | (324) |
Income tax provision | $ 360 | $ 588 | $ 998 |
Income taxes - reconciliation to effective tax rate (Details) |
12 Months Ended | ||
---|---|---|---|
Aug. 31, 2020 |
Aug. 31, 2019 |
Aug. 31, 2018 |
|
Income Tax Disclosure [Abstract] | |||
Federal statutory rate | 21.00% | 21.00% | 25.70% |
State income taxes, net of federal benefit | 5.30% | 0.90% | 2.30% |
Foreign income taxed at non-U.S. rates | (12.00%) | (2.10%) | (12.20%) |
Non-taxable income | (28.50%) | (3.50%) | (5.20%) |
Non-deductible expenses | 5.90% | 0.50% | 2.10% |
Transition tax | 0.00% | 0.00% | 12.40% |
Tax law changes | 18.80% | (0.40%) | (10.90%) |
Change in valuation allowance | 1.20% | 1.90% | 8.70% |
Goodwill impairment | 43.50% | 0.00% | 0.00% |
Tax credits | (9.80%) | (4.80%) | (6.90%) |
Other | 3.10% | (0.50%) | 0.70% |
Effective income tax rate | 48.50% | 13.00% | 16.70% |
Income taxes - deferred tax assets and liabilities (Details) - USD ($) $ in Millions |
Aug. 31, 2020 |
Aug. 31, 2019 |
---|---|---|
Deferred tax assets: | ||
Compensation and benefits | $ 177 | $ 133 |
Postretirement benefits | 105 | 0 |
Insurance | 98 | 90 |
Accrued rent & lease obligations | 5,187 | 219 |
Allowance for doubtful accounts | 12 | 13 |
Tax attributes | 6,909 | 6,687 |
Stock compensation | 47 | 45 |
Deferred income | 18 | 115 |
Other | 80 | 78 |
Subtotal deferred tax assets | 12,633 | 7,380 |
Less: valuation allowance | 6,608 | 6,638 |
Total deferred tax assets | 6,025 | 742 |
Deferred tax liabilities: | ||
Accelerated depreciation | 722 | 475 |
Inventory | 344 | 394 |
Intangible assets | 1,274 | 1,116 |
Equity method investment | 548 | 481 |
Lease right-of-use asset | 4,589 | 0 |
Total deferred tax liabilities | 7,477 | 2,466 |
Net deferred tax liabilities | $ 1,452 | $ 1,724 |
Income taxes - unrecognized tax benefits (Details) - USD ($) $ in Millions |
12 Months Ended | ||
---|---|---|---|
Aug. 31, 2020 |
Aug. 31, 2019 |
Aug. 31, 2018 |
|
Reconciliation of Unrecognized Tax Benefits | |||
Balance at beginning of year | $ 455 | $ 456 | $ 409 |
Gross increases related to tax positions in a prior period | 60 | 33 | 123 |
Gross decreases related to tax positions in a prior period | (23) | (53) | (15) |
Gross increases related to tax positions in the current period | 9 | 26 | 29 |
Settlements with taxing authorities | (4) | (2) | (87) |
Lapse of statute of limitations | (3) | (5) | (3) |
Balance at end of year | $ 494 | $ 455 | $ 456 |
Stock compensation plans (Details) - USD ($) $ in Millions |
12 Months Ended | ||
---|---|---|---|
Aug. 31, 2020 |
Aug. 31, 2019 |
Aug. 31, 2018 |
|
Share-based Payment Arrangement [Abstract] | |||
Total stock-based compensation expense | $ 137 | $ 119 | $ 130 |
Unrecognized compensation cost related to non-vested awards | $ 188 | ||
Compensation cost not yet recognized period for recognition | 3 years |
Retirement benefits - additional information (Details) - USD ($) $ in Millions |
3 Months Ended | 12 Months Ended | ||
---|---|---|---|---|
Aug. 31, 2018 |
Aug. 31, 2020 |
Aug. 31, 2019 |
Aug. 31, 2018 |
|
Defined Benefit Plan Disclosure [Line Items] | ||||
Defined benefit pension plan, investments holding percentage | 75.00% | 85.00% | ||
Cash contributions to defined benefit pension plans | $ 39.0 | |||
United States | ||||
Defined Benefit Plan Disclosure [Line Items] | ||||
Profit sharing provision expense | 227.0 | $ 239.0 | $ 217.0 | |
Contributions to profit sharing | 226.0 | 234.0 | 366.0 | |
Foreign Plan | ||||
Defined Benefit Plan Disclosure [Line Items] | ||||
Cost recognized in the consolidated condensed statements of earnings | 119.0 | 124.0 | $ 142.0 | |
Postretirement Health Benefit Plan | ||||
Defined Benefit Plan Disclosure [Line Items] | ||||
Reduction in benefit plan obligation | $ 201.0 | |||
Curtailment gain | $ 112.0 | |||
Defined benefit plan obligation | 182.0 | $ 161.0 | ||
Expected benefit to be paid net of estimated federal subsidy during fiscal year 2021 | $ 10.6 |
Retirement benefits - components of net periodic pension costs (Details) - Pension Plan - USD ($) $ in Millions |
12 Months Ended | ||
---|---|---|---|
Aug. 31, 2020 |
Aug. 31, 2019 |
Aug. 31, 2018 |
|
Defined Benefit Plans and Other Postretirement Benefit Plans Table Text Block [Line Items] | |||
Service costs | $ 5 | $ 4 | $ 5 |
Interest costs | 143 | 196 | 193 |
Expected returns on plan assets/other | (285) | (246) | (209) |
Total net periodic pension (income) cost | $ (137) | $ (46) | $ (11) |
Retirement benefits - changes in benefit obligations (Details) - Pension Plan - USD ($) $ in Millions |
12 Months Ended | ||
---|---|---|---|
Aug. 31, 2020 |
Aug. 31, 2019 |
Aug. 31, 2018 |
|
Change in benefit obligation [Roll Forward] | |||
Benefit obligation at beginning of year | $ 8,834 | $ 8,293 | |
Service costs | 5 | 4 | $ 5 |
Interest costs | 143 | 196 | 193 |
Amendments/other | 0 | 22 | |
Net actuarial loss | 495 | 1,212 | |
Benefits paid | (333) | (363) | |
Currency translation adjustments | 805 | (530) | |
Benefit obligation at end of year | $ 9,949 | $ 8,834 | $ 8,293 |
Retirement benefits - change in plan assets (Details) - Pension Plan - USD ($) $ in Millions |
12 Months Ended | |
---|---|---|
Aug. 31, 2020 |
Aug. 31, 2019 |
|
Defined Benefit Plan, Change in Fair Value of Plan Assets [Roll Forward] | ||
Plan assets at fair value at beginning of year | $ 9,131 | $ 8,676 |
Employer contributions | 38 | 38 |
Benefits paid | (333) | (363) |
Return on assets/other | (31) | 1,333 |
Currency translation adjustments | 810 | (552) |
Plan assets at fair value at end of year | $ 9,614 | $ 9,131 |
Retirement benefits - balance sheet (Details) - Pension Plan - USD ($) $ in Millions |
Aug. 31, 2020 |
Aug. 31, 2019 |
---|---|---|
Defined Benefit Plan Disclosure [Line Items] | ||
Other non-current assets | $ 0 | $ 486 |
Accrued expenses and other liabilities | (8) | (6) |
Other non-current liabilities | (327) | (183) |
Net asset (liability) recognized at end of year | $ (335) | $ 297 |
Retirement benefits - accumulated other comprehensive income (Details) - Pension Plan - USD ($) $ in Millions |
Aug. 31, 2020 |
Aug. 31, 2019 |
---|---|---|
Defined Benefit Plan Disclosure [Line Items] | ||
Net actuarial loss | $ 858 | $ 92 |
Prior service cost | (1) | 24 |
Total | $ 857 | $ 116 |
Retirement benefits - accumulated benefit obligations in excess of plan assets (Details) - Pension Plan - USD ($) $ in Millions |
Aug. 31, 2020 |
Aug. 31, 2019 |
---|---|---|
Defined Benefit Plan Disclosure [Line Items] | ||
Projected benefit obligation | $ 9,949 | $ 8,834 |
Accumulated benefit obligation | 9,937 | 8,823 |
Fair value of plan assets | $ 9,614 | $ 9,131 |
Retirement benefits - expected future benefit payments (Details) - Pension Plan $ in Millions |
Aug. 31, 2020
USD ($)
|
---|---|
Defined Benefit Plan Disclosure [Line Items] | |
2021 | $ 289 |
2022 | 282 |
2023 | 293 |
2024 | 302 |
2025 | 318 |
2026-2030 | $ 1,774 |
Retirement benefits - assumptions (Details) - Pension Plan |
12 Months Ended | |
---|---|---|
Aug. 31, 2020 |
Aug. 31, 2019 |
|
Defined Benefit Plan, Weighted Average Assumptions Used in Calculating Benefit Obligation [Abstract] | ||
Discount rate | 1.63% | 1.80% |
Rate of compensation increase | 3.10% | 2.91% |
Weighted-average assumptions used to determine net periodic benefit cost | ||
Discount rate | 1.58% | 1.58% |
Expected long-term return on plan assets | 3.10% | 3.10% |
Rate of compensation increase | 2.91% | 2.68% |
Capital stock (Details) - USD ($) |
12 Months Ended | |||
---|---|---|---|---|
Aug. 31, 2020 |
Aug. 31, 2019 |
Aug. 31, 2018 |
Apr. 30, 2017 |
|
Equity, Class of Treasury Stock [Line Items] | ||||
Cost of stock repurchased | $ 1,589,000,000 | $ 4,160,000,000 | $ 5,228,000,000 | |
Stock repurchased during current fiscal year, value | $ 103,000,000 | $ 339,000,000 | $ 289,000,000 | |
Shares of common stock reserved for future issuances (in shares) | 16,000,000 | |||
June 2018 Stock Repurchase Program | ||||
Equity, Class of Treasury Stock [Line Items] | ||||
Share repurchase program, authorized maximum amount | $ 10,000,000,000.0 | |||
Shares repurchased during period (in shares) | 30,000,000 | 57,000,000 | ||
Cost of stock repurchased | $ 1,500,000,000 | $ 3,800,000,000 |
Related parties (Details) - USD ($) $ in Millions |
12 Months Ended | ||
---|---|---|---|
Aug. 31, 2020 |
Aug. 31, 2019 |
Aug. 31, 2018 |
|
Related Party Transactions [Abstract] | |||
Purchases, net | $ 59,569 | $ 57,429 | $ 53,161 |
Trade accounts payable, net | $ 6,390 | $ 6,484 | $ 6,274 |
Supplementary financial information - summary of quarterly results (Details) - USD ($) $ / shares in Units, $ in Millions |
3 Months Ended | 12 Months Ended | |||||||||
---|---|---|---|---|---|---|---|---|---|---|---|
Aug. 31, 2020 |
May 31, 2020 |
Feb. 29, 2020 |
Nov. 30, 2019 |
Aug. 31, 2019 |
May 31, 2019 |
Feb. 28, 2019 |
Nov. 30, 2018 |
Aug. 31, 2020 |
Aug. 31, 2019 |
Aug. 31, 2018 |
|
Supplementary Financial Information [Abstract] | |||||||||||
Sales | $ 34,746 | $ 34,631 | $ 35,820 | $ 34,339 | $ 33,954 | $ 34,591 | $ 34,528 | $ 33,793 | $ 139,537 | $ 136,866 | $ 131,537 |
Gross profit | 6,803 | 6,438 | 7,513 | 7,263 | 7,228 | 7,453 | 7,754 | 7,641 | 28,017 | 30,076 | 30,792 |
Net earnings attributable to Walgreens Boots Alliance, Inc. | $ 373 | $ (1,708) | $ 946 | $ 845 | $ 677 | $ 1,025 | $ 1,156 | $ 1,123 | $ 456 | $ 3,982 | $ 5,024 |
Net earnings per common share [Abstract] | |||||||||||
Basic (in dollars per share) | $ 0.43 | $ (1.95) | $ 1.07 | $ 0.95 | $ 0.75 | $ 1.13 | $ 1.25 | $ 1.18 | $ 0.52 | $ 4.32 | $ 5.07 |
Diluted (in dollars per share) | 0.43 | (1.95) | 1.07 | 0.95 | 0.75 | 1.13 | 1.24 | 1.18 | 0.52 | 4.31 | $ 5.05 |
Cash dividends declared per common share (in dollars per share) | $ 0.4675 | $ 0.4575 | $ 0.4575 | $ 0.4575 | $ 0.4580 | $ 0.4400 | $ 0.4400 | $ 0.4400 | $ 1.8400 | $ 1.7780 |
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