Goodwill and other intangible assets

6 Months Ended

Feb. 28, 2021

Goodwill and Intangible Assets Disclosure [Abstract]

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.

Based on the analysis completed during fiscal 2020, 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%. The fair values of the indefinite-lived trade name intangibles within the Boots reporting unit exceeded their carrying value amounts ranging from approximately 4% to approximately 31%, except for certain Boots trade name assets impaired during the three months ended May 31, 2020 and pharmacy licenses impairment during the year end August 31, 2019. As of February 28, 2021, the carrying values of goodwill were $1.1 billion and $0.4 billion for the Boots reporting unit and Other international reporting unit, respectively. As of February 28, 2021, the carrying value of the indefinite-lived intangibles within the Boots reporting unit was $7.6 billion.

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.

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 the Boots and Other international reporting units.

Changes in the carrying amount of goodwill by reportable segment consist of the following (in millions):


Goodwill rollforward:	United States		International		Walgreens Boots Alliance, Inc.
August 31, 2020	$	10,553	$	1,460	$	12,013
Acquisitions	394		12		406

Currency translation adjustments	—		51		51
February 28, 2021	$	10,947	$	1,521	$	12,468

The carrying amount and accumulated amortization of intangible assets consist of the following (in millions):


Intangible assets	February 28, 2021		August 31, 2020
Gross amortizable intangible assets
Customer relationships and loyalty card holders1	$	3,570	$	3,502
Trade names and trademarks	364		348
Purchasing and payer contracts	337		337
Non-compete agreements and others	62		60
Total gross amortizable intangible assets	$	4,333	$	4,247

Accumulated amortization
Customer relationships and loyalty card holders1	$	1,234	$	1,089
Trade names and trademarks	215		196
Purchasing and payer contracts	125		95
Non-compete agreements and others	27		26
Total accumulated amortization	1,601		1,406
Total amortizable intangible assets, net	$	2,732	$	2,841

Indefinite-lived intangible assets
Trade names and trademarks	$	5,626	$	5,203
Pharmacy licenses	2,127		2,028
Total indefinite-lived intangible assets	$	7,753	$	7,231

Total intangible assets, net	$	10,486	$	10,072

1Includes purchased prescription files.

Amortization expense for intangible assets was $114 million and $208 million for the three and six months ended February 28, 2021, respectively, and $98 million and $197 million for the three and six months ended February 29, 2020, respectively.

Estimated future annual amortization expense for the next five fiscal years for intangible assets recorded at February 28, 2021 is as follows (in millions):


	2022		2023		2024		2025		2026
Estimated annual amortization expense	$	419	$	308	$	290	$	257	$	239