Summary of Major Accounting Policies (Policies) | 12 Months Ended |
Aug. 31, 2014 |
Summary of Major Accounting Policies [Abstract] | ' |
Basis of Presentation | ' |
Basis of Presentation |
The consolidated financial statements include the accounts of the Company and its subsidiaries. All intercompany transactions have been eliminated.  The consolidated financial statements are prepared in accordance with accounting principles generally accepted in the United States of America and include amounts based on management's prudent judgments and estimates. Actual results may differ from these estimates. |
|
The Company's 45% proportionate share of earnings in the Alliance Boots GmbH (Alliance Boots) equity method investment is included in consolidated net earnings.  The Company reports its share of equity earnings in Alliance Boots within the operating section in the Consolidated Statements of Earnings because operations of Alliance Boots are integral to Walgreens. The companies share common board of director members, recognize purchasing synergies through Walgreens Boots Alliance Development GmbH, a 50/50 joint venture, as well as engage in intercompany sales transactions on select front-end merchandise. Because of the three-month lag and the timing of the closing of this investment, only the ten months of August through May's results of operations are reflected in the equity earnings in Alliance Boots included in the Company's reported net earnings for year ended August 31, 2013 compared to twelve months operating results for June through May in the current fiscal year. |
|
The Company directly owns a 50% interest in Walgreens Boots Alliance Development GmbH and indirectly owns an additional ownership interest through its 45% ownership in Alliance Boots, representing a direct and indirect economic interest of 72.5%. The financial results of the Walgreens Boots Alliance Development GmbH joint venture are fully consolidated into the Company's consolidated financial statements and reported without a lag. As the joint venture is included within the Company's operating results, Alliance Boots proportionate share of Walgreens Boots Alliance Development GmbH earnings is removed from equity earnings and presented as a component of noncontrolling interests. |
Cash and Cash Equivalents | ' |
Cash and Cash Equivalents |
Cash and cash equivalents include cash on hand and all highly liquid investments with an original maturity of three months or less. Credit and debit card receivables from banks, which generally settle within two business days, of $229 million and $160 million were included in cash and cash equivalents at August 31, 2014 and 2013, respectively. At August 31, 2014 and 2013, the Company had $1.9 billion and $1.6 billion, respectively, in money market funds, all of which was included in cash and cash equivalents. |
|
The Company's cash management policy provides for controlled disbursement.  As a result, the Company had outstanding checks in excess of funds on deposit at certain banks. These amounts, which were $267 million at August 31, 2014, and $274 million at August 31, 2013, are included in trade accounts payable in the accompanying Consolidated Balance Sheets. |
Allowance for Doubtful Accounts | ' |
Allowance for Doubtful Accounts |
The provision for bad debt is based on both historical write-off percentages and specifically identified receivables. Activity in the allowance for doubtful accounts was as follows (in millions): |
|
| | 2014 | | | 2013 | | | 2012 | |
Balance at beginning of year | | $ | 154 | | | $ | 99 | | | $ | 101 | |
Bad debt provision | | | 86 | | | | 124 | | | | 107 | |
Write-offs | | | (67 | ) | | | (69 | ) | | | (109 | ) |
Balance at end of year | | $ | 173 | | | $ | 154 | | | $ | 99 | |
Inventories | ' |
Inventories |
Inventories are valued on a lower of last-in, first-out (LIFO) cost or market basis. At August 31, 2014 and 2013, inventories would have been greater by $2.3 billion and $2.1 billion, respectively, if they had been valued on a lower of first-in, first-out (FIFO) cost or market basis. As a result of declining inventory levels, the fiscal 2014, 2013 and 2012 LIFO provisions were reduced by LIFO liquidations of $187 million, $194 million and $268 million, respectively. Inventory includes product costs, inbound freight, warehousing costs and vendor allowances not classified as a reduction of advertising expense. |
|
Equity Method Investments |
Equity Method Investments | ' |
The Company uses the equity method to account for investments in companies 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 companies 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, representation on the board of directors, participation in policy-making decisions and material intercompany transactions. |
|
The Company purchases inventory from Alliance Boots in the ordinary course of business. These related party inventory purchases, which began in fiscal 2013, were not material in fiscal 2014 or 2013. |
|
The underlying net assets of the Company's equity method investment in Alliance Boots include goodwill and indefinite-lived intangible assets. These assets are evaluated for impairment annually or more frequently if an event occurs or circumstances change that would more likely than not reduce the fair value of a reporting unit below its carrying value.  Based on the Company's evaluation as of August 31, 2014, the fair value of one Alliance Boots pharmaceutical wholesale reporting unit did not exceed its carrying amount by a significant amount. Goodwill allocated to this reporting unit by Alliance Boots as of May 31, 2014 was £255 million, £115 million based on the Company's 45% ownership percentage (approximately $193 million using May 31, 2014 exchange rates). The Company utilizes a three-month lag in reporting its share of equity income in Alliance Boots, including this reporting unit. The Company will continue to monitor this reporting unit in accordance with Accounting Standards Codification 350, Intangibles - Goodwill and Other. |
Property and Equipment | ' |
Property and Equipment |
Depreciation is provided on a straight-line basis over the estimated useful lives of owned assets. Leasehold improvements and leased properties under capital leases are amortized over the estimated useful life of the property or over the term of the lease, whichever is shorter. Estimated useful lives range from 10 to 39 years for land improvements, buildings and building improvements; and 2 to 13 years for equipment. Major repairs, which extend the useful life of an asset, are capitalized; routine maintenance and repairs are charged against earnings. The majority of the business uses the composite method of depreciation for equipment. Therefore, gains and losses on retirement or other disposition of such assets are included in earnings only when an operating location is closed, completely remodeled or impaired. Fully depreciated property and equipment are removed from the cost and related accumulated depreciation and amortization accounts. Property and equipment consists of (in millions): |
|
| | 2014 | | | 2013 | | | | | |
Land and land improvements | | | | | | | | | | |
Owned locations | | $ | 3,059 | | | $ | 3,203 | | | | | |
Distribution centers | | | 93 | | | | 97 | | | | | |
Other locations | | | 266 | | | | 219 | | | | | |
Buildings and building improvements | | | | | | | | | | | | |
Owned locations | | | 3,927 | | | | 3,805 | | | | | |
Leased locations (leasehold improvements only) | | | 2,041 | | | | 1,811 | | | | | |
Distribution centers | | | 582 | | | | 620 | | | | | |
Other locations | | | 351 | | | | 351 | | | | | |
Equipment | | | | | | | | | | | | |
Locations | | | 5,454 | | | | 5,334 | | | | | |
Distribution centers | | | 1,170 | | | | 1,190 | | | | | |
Other locations | | | 935 | | | | 755 | | | | | |
Capitalized system development costs | | | 688 | | | | 581 | | | | | |
Capital lease properties | | | 530 | | | | 215 | | | | | |
| | | 19,096 | | | | 18,181 | | | | | |
Less: accumulated depreciation and amortization | | | 6,839 | | | | 6,043 | | | | | |
| | $ | 12,257 | | | $ | 12,138 | | | | | |
|
Depreciation expense for property and equipment was $923 million in fiscal 2014, $894 million in fiscal 2013 and $841 million in fiscal 2012. |
|
The Company capitalizes application stage development costs for significant internally developed software projects, such as upgrades to the store point-of-sale system. These costs are amortized over a five-year period. Amortization expense was $111 million in fiscal 2014, $100 million in fiscal 2013 and $70 million in fiscal 2012. Unamortized costs at August 31, 2014 and August 31, 2013, were $410 million and $374 million, respectively. |
|
Goodwill and Other Intangible Assets | ' |
Goodwill and Other Intangible Assets |
Goodwill represents the excess of the purchase price over the fair value of assets acquired and liabilities assumed. The Company accounts for goodwill and intangibles under ASC Topic 350, Intangibles – Goodwill and Other, which does not permit amortization, but requires the Company to test goodwill and other indefinite-lived assets for impairment annually or whenever events or circumstances indicate impairment may exist. |
Impaired Assets and Liabilities for Store Closings | ' |
Impaired Assets and Liabilities for Store Closings |
The Company tests long-lived assets for impairment whenever events or circumstances indicate that a certain asset may be impaired. Store locations that have been open at least five years are reviewed for impairment indicators at least annually. Once identified, the amount of the impairment is computed by comparing the carrying value of the assets to the fair value, which is based on the discounted estimated future cash flows. Impairment charges included in selling, general and administrative expenses were $167 million in fiscal 2014, primarily resulting from the Company's store optimization plan. Impairment charges recognized in fiscal 2013 and 2012 were $30 million and $27 million respectively. |
|
The Company also provides for future costs related to closed locations.  The liability is based on the present value of future rent obligations and other related costs (net of estimated sublease rent) to the first lease option date.  The reserve for store closings including $137 million from locations closed under the Company's optimization plan, was $257 million as of August 31, 2014 compared to $123 million as of August 31 2013. See Note 2 for additional disclosure regarding the Company's reserve for future costs related to closed locations. |
Financial Instruments | ' |
Financial Instruments |
The Company had $151 million and $197 million of outstanding letters of credit at August 31, 2014 and 2013, respectively, which guarantee the purchase of foreign goods, and additional outstanding letters of credit of $259 million and $263 million at August 31, 2014 and 2013, respectively, which guarantee payments of insurance claims. The insurance claim letters of credit are annually renewable and will remain in place until the insurance claims are paid in full. Letters of credit of $9 million and $4 million were outstanding at August 31, 2014, and August 31, 2013, respectively, to guarantee performance of construction contracts. The Company pays a facility fee to the financing bank to keep these letters of credit active. The Company had real estate development purchase commitments of $169 million and $185 million at August 31, 2014 and 2013, respectively. |
|
The Company uses interest rate swaps to manage its interest rate exposure associated with some of its fixed-rate borrowings. At August 31, 2014, the Company had $1 billion of fixed-rate debt swapped to floating designated as fair value hedges. The Company also manages its interest rate exposure associated with its anticipated debt issuance. In fiscal 2014, the Company entered into a series of forward starting interest rate swap transactions locking in the then current three-month LIBOR interest rate on $1.5 billion of anticipated debt issuance. These forward starting swap transactions are designated as cash flow hedges. The Company's fair value and cash flow hedges are accounted for according to ASC Topic 815, Derivatives and Hedging, and measured at fair value in accordance with ASC Topic 820, Fair Value Measurement and Disclosures. See Notes 10 and 11 for additional disclosure regarding financial instruments. |
Revenue Recognition | ' |
Revenue Recognition |
The Company recognizes revenue at the time the customer takes possession of the merchandise. Customer returns are immaterial. Sales taxes are not included in revenue. |
Gift Cards | ' |
Gift Cards |
The Company sells Walgreens gift cards to retail store customers and through its website. The Company does not charge administrative fees on unused gift cards and most gift cards do not have an expiration date. Income from gift cards is recognized when (1) the gift card is redeemed by the customer; or (2) the likelihood of the gift card being redeemed by the customer is remote (gift card breakage) and there is no legal obligation to remit the value of unredeemed gift cards to the relevant jurisdictions. The Company's gift card breakage rate is determined based upon historical redemption patterns. Gift card breakage income, which is included in selling, general and administrative expenses, was not significant in fiscal 2014, 2013 or 2012. |
Loyalty Program | ' |
Loyalty Program |
The Company's rewards program, Balance® Rewards, is accrued as a charge to cost of sales at the time a point is earned. Points are funded internally and through vendor participation, and are credited to cost of sales at the time a vendor-sponsored point is earned. Breakage is recorded as points expire as a result of a member's inactivity or if the points remain unredeemed after three years. Breakage income, which is reported in cost of sales, was not significant in fiscal 2014 or 2013. |
Cost of Sales | ' |
Cost of Sales |
Cost of sales is derived based upon point-of-sale scanning information with an estimate for shrinkage and is adjusted based on periodic inventories. In addition to product costs, cost of sales includes warehousing costs, purchasing costs, freight costs, cash discounts and vendor allowances. |
Vendor Allowances | ' |
Vendor Allowances |
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. Those 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. |
Selling, General and Administrative Expenses | ' |
Selling, General and Administrative Expenses |
Selling, general and administrative expenses mainly consist of store salaries, occupancy costs, and expenses directly related to stores. In addition, other costs included are headquarters' expenses, advertising costs (net of advertising revenue) and insurance. |
Advertising Costs | ' |
Advertising Costs |
Advertising costs, which are reduced by the portion funded by vendors, are expensed as incurred. Net advertising expenses, which are included in selling, general and administrative expenses, were $265 million in fiscal 2014, $286 million in fiscal 2013 and $291 million in fiscal 2012. Included in net advertising expenses were vendor advertising allowances of $256 million in fiscal 2014, $240 million in fiscal 2013 and $239 million in fiscal 2012. |
Insurance Policy | ' |
Insurance |
The Company obtains insurance coverage for catastrophic exposures as well as those risks required by law to be insured. It is the Company's policy to retain a significant portion of certain losses related to workers' compensation, property, comprehensive general, pharmacist and vehicle liability. Liabilities for these losses are recorded based upon the Company's estimates for claims incurred and are not discounted. The provisions are estimated in part by considering historical claims experience, demographic factors and other actuarial assumptions. |
Available-for-Sale Investments | ' |
Available-for-Sale Investments |
The Company, Alliance Boots and AmerisourceBergen Corporation (AmerisourceBergen) entered into a Framework Agreement dated as of March 18, 2013, pursuant to which Walgreens and Alliance Boots together were granted the right to purchase a minority equity position in AmerisourceBergen, beginning with the right, but not the obligation, to purchase up to 19,859,795 shares of AmerisourceBergen common stock (approximately 7 percent of the then fully diluted equity of AmerisourceBergen, assuming the exercise in full of the warrants described below) in open market transactions. As of August 31, 2014, the Company held 11.5 million shares of AmerisourceBergen common stock which are classified as available-for-sale. See Note 6 for additional disclosure regarding the Company's available-for-sale investments. |
Warrants | ' |
Warrants |
The Company and Alliance Boots were each issued (a) a warrant to purchase shares of AmerisourceBergen common stock exercisable during a six-month period beginning in March 2016, and (b) a warrant to purchase shares of AmerisourceBergen common stock exercisable during a six-month period beginning in March 2017. The Company's warrants are valued at the date of issuance and the end of the period using a Monte Carlo simulation. Key assumptions used in the valuation include risk-free interest rates using constant maturity treasury rates; the dividend yield for AmerisourceBergen's common stock; AmerisourceBergen's common stock price at the valuation date; AmerisourceBergen's equity volatility; the number of shares of AmerisourceBergen's common stock outstanding; the number of employee stock options and the exercise price; and the details specific to the warrants. The fair value of the Company's warrants on March 18, 2013, the date of issuance, was $77 million. The Company recorded the fair value of its warrants as a non-current asset with a corresponding deferred credit in its Consolidated Balance Sheets. The deferred credit attributable to the warrants will be amortized over the life of the warrants. The fair value of the Company's warrants at August 31, 2014 and 2013 was $553 million and $188 million, respectively, resulting in the Company recording other income of $366 million and $111 million within its Consolidated Statements of Earnings. The increase in the fair value of the warrants was primarily attributable to the increase in the price of AmerisourceBergen's common stock. In addition, the Company recorded $19 million and $9 million in fiscal 2014 and 2013, respectively, of other income relating to the amortization of the deferred credit. See Note 10 for additional disclosure regarding the Company's warrants. |
Preopening Expense Policy | ' |
Pre-Opening Expenses |
Non-capital expenditures incurred prior to the opening of a new or remodeled store are expensed as incurred. |
Stock-Based Compensation Plans | ' |
Stock-Based Compensation Plans |
In accordance with ASC Topic 718, Compensation – Stock Compensation, the Company recognizes compensation expense on a straight-line basis over the employee's vesting period or to the employee's retirement eligible date, if earlier. Total stock-based compensation expense for fiscal 2014, 2013 and 2012 was $114 million, $104 million and $99 million, respectively. The recognized tax benefit was $31 million, $30 million and $9 million for fiscal 2014, 2013 and 2012, respectively. Unrecognized compensation cost related to non-vested awards at August 31, 2014, was $188 million. This cost is expected to be recognized over a weighted average of three years. See Note 14 for more information on the Company's stock-based compensation plans. See Note 14 for more information on the Company's stock-based compensation plans. |
Interest Expense | ' |
Interest Expense |
The Company capitalized $6 million, $7 million and $9 million of interest expense as part of significant construction projects during fiscal 2014, 2013 and 2012, respectively. Interest paid, which is net of capitalized interest, was $161 million in fiscal 2014, $158 million in fiscal 2013 and $108 million in fiscal 2012. |
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 bases. 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 Company's provision for income taxes, an annual effective income tax rate based on full-year income, permanent differences between book and tax income, and statutory income tax rates are used. The effective income tax rate also reflects the Company's assessment of the ultimate outcome of tax audits in addition to any foreign-based income deemed to be taxable in the United States. Discrete events such as audit settlements or 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 and 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 its 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. The Company's liability for unrecognized tax benefits, including accrued penalties and interest, is included in other long-term liabilities on the Consolidated Balance Sheets and in income tax expense in the Consolidated Statements of Earnings. |
|
Earnings Per Share |
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 3,510,395, 12,316,949 and 32,593,870 in fiscal 2014, 2013 and 2012, respectively. |
New Accounting Pronouncements | ' |
New Accounting Pronouncements |
In May 2014, the Financial Accounting Standards Board (FASB) issued ASU 2014-09, Revenue from Contracts with Customers, as a new Topic, ASC Topic 606. The new revenue recognition standard provides a five-step analysis of transactions to determine when and how revenue is recognized. The core principle is that a company should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. This ASU is effective for annual periods beginning after December 15, 2016 (fiscal 2018) and shall be applied retrospectively to each period presented or as a cumulative-effect adjustment as of the date of adoption. 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 results of operations, cash flows or financial position. |
|
In April 2014, the FASB issued ASU 2014-08, Reporting Discontinued Operations and Disclosures of Disposals of Components of an Entity.  This ASU raises the threshold for a disposal to qualify as discontinued operations and requires new disclosures for individually material disposal transactions that do not meet the definition of a discontinued operation. Under the new standard, companies report discontinued operations when they have a disposal that represents a strategic shift that has or will have a major impact on operations or financial results. This update will be applied prospectively and is effective for annual periods, and interim periods within those years, beginning after December 15, 2014 (fiscal 2016). Early adoption is permitted provided the disposal was not previously disclosed. This update will not have a material impact on the Company's reported results of operations and financial position. This ASU is non-cash in nature and will not affect the Company's cash position. |
|
In May 2013, the FASB reissued an exposure draft on lease accounting that would require entities to recognize assets and liabilities arising from lease contracts on the balance sheet.  The proposed exposure draft states that lessees and lessors should apply a "right-of-use model" in accounting for all leases.  Under the proposed model, lessees would recognize an asset for the right to use the leased asset, and a liability for the obligation to make rental payments over the lease term. When measuring the asset and liability, variable lease payments are excluded, whereas renewal options that provide a significant economic incentive upon renewal would be included.  The accounting by a lessor would reflect its retained exposure to the risks or benefits of the underlying leased asset.  A lessor would recognize an asset representing its right to receive lease payments based on the expected term of the lease.  The lease expense from real estate based leases would continue to be recorded under a straight-line approach, but other leases not related to real estate would be expensed using an effective interest method that would accelerate lease expense. A final standard is currently expected to be issued in calendar 2014 and would be effective no earlier than annual reporting periods beginning on January 1, 2017 (fiscal 2018 for the Company).  The proposed standard, as currently drafted, would have a material impact on the Company's financial position and the impact on the Company's reported results of operations is being evaluated.  The impact of this exposure draft is non-cash in nature and would not affect the Company's cash position. |