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Exit and disposal activities
12 Months Ended
Aug. 31, 2018
Restructuring and Related Activities [Abstract]  
Exit and disposal activities
Exit and disposal activities
Store Optimization Program
On October 24, 2017, the Company’s Board of Directors approved a plan to implement a program (the “Store Optimization Program”) as part of an initiative 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 actions under the Store Optimization Program commenced in March 2018 and are expected to take place over an 18 month period.

The Company currently estimates that it will recognize cumulative pre-tax charges to its GAAP financial results of approximately $450 million, including costs associated with lease obligations and other real estate costs, employee severance and other exit costs. The Company expects to incur pre-tax charges of approximately $270 million for lease obligations and other real estate costs and approximately $180 million for employee severance and other exit costs. The Company estimates that substantially all of these cumulative pre-tax charges will result in cash expenditures.

Costs related to the Store Optimization Program, which were primarily recorded in selling, general and administrative expenses for the Company's Retail Pharmacy USA segment included in the fiscal year ended August 31, 2018, are as follows (in millions):
Fiscal year ended August 31, 2018
 
Lease obligations and other real estate costs
$
19

Employee severance and other exit costs
81

Total costs
$
100



The changes in liabilities related to the Store Optimization Program for the fiscal year ended August 31, 2018 include the following (in millions):
 
Lease obligations and other real estate costs
 
Employee severance and other exit costs
 
Total
Balance at August 31, 2017
$

 
$

 
$

Costs
19

 
81

 
100

Payments
(18
)
 
(60
)
 
(78
)
Other - non cash1
307

 

 
307

Balance at August 31, 2018
$
308

 
$
21

 
$
329


1 
Primarily represents unfavorable lease liabilities from acquired Rite Aid stores.

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 U.S.; 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.

The changes in liabilities related to the Cost Transformation Program include the following (in millions):
 
Real estate
costs
 
Severance and
other business
transition and
exit costs
 
Total
Balance at August 31, 2017
$
521

 
$
79

 
$
600

Payments
(139
)
 
(68
)
 
(207
)
Other - non cash
32

 
(3
)
 
29

Currency translation adjustments

 
(1
)
 
(1
)
Balance at August 31, 2018
$
414

 
$
7

 
$
421


Total costs by segment, which were primarily recorded in selling, general and administrative expenses included in the fiscal year ended August 31, 2017 and August 31, 2016, are as follows (in millions):
Fiscal year ended 2017
Retail Pharmacy USA
 
Retail Pharmacy International
 
Pharmaceutical Wholesale
 
Walgreens Boots Alliance, Inc.
Asset impairments
$
272

 
$
21

 
$
2

 
$
295

Real estate costs
372

 

 

 
372

Severance and other business transition and exit costs
87

 
46

 
35

 
168

Total costs
$
731

 
$
67

 
$
37

 
$
835

Fiscal year ended 2016
Retail Pharmacy USA
 
Retail Pharmacy International
 
Pharmaceutical Wholesale
 
Walgreens Boots Alliance, Inc.
Asset impairments
$
215

 
$
10

 
$

 
$
225

Real estate costs
89

 
1

 
1

 
91

Severance and other business transition and exit costs
70

 
18

 
20

 
108

Total costs
$
374

 
$
29

 
$
21

 
$
424