Document and Entity Information
Document and Entity Information | 9 Months Ended |
May 31, 2019shares | |
Document and Entity Information [Abstract] | |
Entity Registrant Name | Walgreens Boots Alliance, Inc. |
Entity Central Index Key | 0001618921 |
Current Fiscal Year End Date | --08-31 |
Entity Small Business | false |
Entity Emerging Growth Company | false |
Entity Current Reporting Status | Yes |
Entity Shell Company | false |
Entity Filer Category | Large Accelerated Filer |
Entity Common Stock, Shares Outstanding (in shares) | 903,143,463 |
Document Fiscal Year Focus | 2019 |
Document Fiscal Period Focus | Q3 |
Document Type | 10-Q |
Amendment Flag | false |
Document Period End Date | May 31, 2019 |
CONSOLIDATED CONDENSED BALANCE
CONSOLIDATED CONDENSED BALANCE SHEETS - USD ($) $ in Millions | May 31, 2019 | Aug. 31, 2018 |
Current assets: | ||
Cash and cash equivalents | $ 839 | $ 785 |
Accounts receivable, net | 7,239 | 6,573 |
Inventories | 9,874 | 9,565 |
Other current assets | 1,070 | 923 |
Total current assets | 19,021 | 17,846 |
Non-current assets: | ||
Property, plant and equipment, net | 13,717 | 13,911 |
Goodwill | 16,717 | 16,914 |
Intangible assets, net | 11,325 | 11,783 |
Equity method investments (see note 5) | 6,673 | 6,610 |
Other non-current assets | 1,133 | 1,060 |
Total non-current assets | 49,565 | 50,278 |
Total assets | 68,586 | 68,124 |
Current liabilities: | ||
Short-term debt | 5,483 | 1,966 |
Trade accounts payable (see note 16) | 14,130 | 13,566 |
Accrued expenses and other liabilities | 5,185 | 5,862 |
Income taxes | 263 | 273 |
Total current liabilities | 25,060 | 21,667 |
Non-current liabilities: | ||
Long-term debt | 12,127 | 12,431 |
Deferred income taxes | 1,860 | 1,815 |
Other non-current liabilities | 4,768 | 5,522 |
Total non-current liabilities | 18,754 | 19,768 |
Commitments and contingencies (see note 10) | ||
Equity: | ||
Preferred stock $.01 par value; authorized 32 million shares, none issued | 0 | 0 |
Common stock $.01 par value; authorized 3.2 billion shares; issued 1,172,513,618 at May 31, 2019 and August 31, 2018 | 12 | 12 |
Paid-in capital | 10,605 | 10,493 |
Retained earnings | 35,547 | 33,551 |
Accumulated other comprehensive loss | (3,393) | (3,002) |
Treasury stock, at cost; 269,370,155 shares at May 31, 2019 and 220,380,200 at August 31, 2018 | (18,638) | (15,047) |
Total Walgreens Boots Alliance, Inc. shareholders’ equity | 24,133 | 26,007 |
Noncontrolling interests | 638 | 682 |
Total equity | 24,771 | 26,689 |
Total liabilities and equity | $ 68,586 | $ 68,124 |
CONSOLIDATED CONDENSED BALANC_2
CONSOLIDATED CONDENSED BALANCE SHEETS (Parenthetical) - $ / shares | May 31, 2019 | Aug. 31, 2018 |
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) | 269,370,155 | 220,380,200 |
CONSOLIDATED CONDENSED STATEMEN
CONSOLIDATED CONDENSED STATEMENTS OF EQUITY - USD ($) $ in Millions | Total | Common stock shares | Treasury stock amount | Paid-in capital | Accumulated other comprehensive income (loss) | Retained earnings | Noncontrolling interests |
Beginning Balance at Aug. 31, 2017 | $ 28,274 | $ 12 | $ (9,971) | $ 10,339 | $ (3,051) | $ 30,137 | $ 808 |
Beginning Balance (in shares) at Aug. 31, 2017 | 1,023,849,070 | ||||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||||
Net earnings (loss) | 3,517 | 3,512 | 5 | ||||
Other comprehensive income (loss), net of tax | 266 | 259 | 7 | ||||
Dividends declared | (1,275) | (1,189) | (86) | ||||
Treasury stock purchases | (2,525) | (2,525) | |||||
Treasury stock purchases (in shares) | (34,499,913) | ||||||
Employee stock purchase and option plans | 118 | 108 | 10 | ||||
Employee stock purchase and option plans (in shares) | 3,062,665 | ||||||
Stock-based compensation | 91 | 91 | |||||
Noncontrolling interests contribution | 4 | 4 | |||||
Ending Balance at May. 31, 2018 | 28,470 | $ 12 | (12,388) | 10,444 | (2,792) | 32,460 | 734 |
Ending Balance (in shares) at May. 31, 2018 | 992,411,822 | ||||||
Beginning Balance at Feb. 28, 2018 | 28,178 | $ 12 | (12,415) | 10,408 | (2,163) | 31,513 | 823 |
Beginning Balance (in shares) at Feb. 28, 2018 | 991,665,577 | ||||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||||
Net earnings (loss) | 1,346 | 1,342 | 4 | ||||
Other comprehensive income (loss), net of tax | (642) | (629) | (13) | ||||
Dividends declared | (475) | (395) | (80) | ||||
Employee stock purchase and option plans | 35 | 27 | 8 | ||||
Employee stock purchase and option plans (in shares) | 746,245 | ||||||
Stock-based compensation | 28 | 28 | |||||
Noncontrolling interests contribution | 0 | ||||||
Ending Balance at May. 31, 2018 | 28,470 | $ 12 | (12,388) | 10,444 | (2,792) | 32,460 | 734 |
Ending Balance (in shares) at May. 31, 2018 | 992,411,822 | ||||||
Beginning Balance at Aug. 31, 2018 | 26,689 | $ 12 | (15,047) | 10,493 | (3,002) | 33,551 | 682 |
Beginning Balance (in shares) at Aug. 31, 2018 | 952,133,418 | ||||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||||
Net earnings (loss) | 3,275 | 3,305 | (29) | ||||
Other comprehensive income (loss), net of tax | (399) | (393) | (6) | ||||
Dividends declared | (1,222) | (1,219) | (3) | ||||
Treasury stock purchases | (3,726) | (3,726) | |||||
Treasury stock purchases (in shares) | (53,491,968) | ||||||
Employee stock purchase and option plans | 156 | 135 | 21 | ||||
Employee stock purchase and option plans (in shares) | 4,502,013 | ||||||
Stock-based compensation | 87 | 87 | |||||
Other | (2) | 4 | (6) | ||||
Ending Balance at May. 31, 2019 | 24,771 | $ 12 | (18,638) | 10,605 | (3,393) | 35,547 | 638 |
Ending Balance (in shares) at May. 31, 2019 | 903,143,463 | ||||||
Beginning Balance at Feb. 28, 2019 | 25,413 | $ 12 | (18,036) | 10,571 | (2,705) | 34,928 | 643 |
Beginning Balance (in shares) at Feb. 28, 2019 | 914,176,442 | ||||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||||
Net earnings (loss) | 1,037 | 1,025 | 12 | ||||
Other comprehensive income (loss), net of tax | (696) | (683) | (13) | ||||
Dividends declared | (399) | (399) | |||||
Treasury stock purchases | (612) | (612) | |||||
Treasury stock purchases (in shares) | (11,394,049) | ||||||
Employee stock purchase and option plans | 18 | 11 | 7 | ||||
Employee stock purchase and option plans (in shares) | 361,070 | ||||||
Stock-based compensation | 24 | 24 | |||||
Other | (13) | 3 | (6) | (6) | (4) | ||
Ending Balance at May. 31, 2019 | $ 24,771 | $ 12 | $ (18,638) | $ 10,605 | $ (3,393) | $ 35,547 | $ 638 |
Ending Balance (in shares) at May. 31, 2019 | 903,143,463 |
CONSOLIDATED CONDENSED STATEM_2
CONSOLIDATED CONDENSED STATEMENTS OF EARNINGS - USD ($) shares in Millions, $ in Millions | 3 Months Ended | 9 Months Ended | ||
May 31, 2019 | May 31, 2018 | May 31, 2019 | May 31, 2018 | |
Income Statement [Abstract] | ||||
Sales | $ 34,591 | $ 34,334 | $ 102,912 | $ 98,095 |
Cost of sales | 27,138 | 26,554 | 80,063 | 74,878 |
Gross profit | 7,453 | 7,780 | 22,849 | 23,217 |
Selling, general and administrative expenses | 6,235 | 6,235 | 18,834 | 18,466 |
Equity earnings (loss) in AmerisourceBergen | (16) | 52 | 105 | 142 |
Operating income | 1,203 | 1,597 | 4,120 | 4,893 |
Other income (expense) | 182 | 0 | 227 | (122) |
Earnings before interest and income tax provision | 1,385 | 1,597 | 4,347 | 4,771 |
Interest expense, net | 187 | 157 | 529 | 457 |
Earnings before income tax provision | 1,198 | 1,440 | 3,819 | 4,314 |
Income tax provision | 156 | 109 | 562 | 839 |
Post tax earnings (loss) from other equity method investments | (5) | 15 | 19 | 42 |
Net earnings | 1,037 | 1,346 | 3,275 | 3,517 |
Net earnings (loss) attributable to noncontrolling interests | 12 | 4 | (29) | 5 |
Net earnings attributable to Walgreens Boots Alliance, Inc. | $ 1,025 | $ 1,342 | $ 3,305 | $ 3,512 |
Net earnings per common share: | ||||
Basic (in dollars per share) | $ 1.13 | $ 1.35 | $ 3.56 | $ 3.52 |
Diluted (in dollars per share) | $ 1.13 | $ 1.35 | $ 3.55 | $ 3.51 |
Weighted average common shares outstanding: | ||||
Basic (in shares) | 909.9 | 992.1 | 928.8 | 996.4 |
Diluted (in shares) | 911.2 | 995.3 | 931.1 | 1,000.6 |
CONSOLIDATED CONDENSED STATEM_3
CONSOLIDATED CONDENSED STATEMENTS OF COMPREHENSIVE INCOME - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | ||
May 31, 2019 | May 31, 2018 | May 31, 2019 | May 31, 2018 | |
Comprehensive Income: | ||||
Net earnings | $ 1,037 | $ 1,346 | $ 3,275 | $ 3,517 |
Other comprehensive income (loss), net of tax: | ||||
Pension/postretirement obligations | (2) | (2) | (8) | (4) |
Unrealized gain (loss) on hedges | 44 | 1 | 33 | 2 |
Share of other comprehensive income (loss) of equity method investments | 1 | 11 | (1) | 13 |
Currency translation adjustments | (745) | (652) | (422) | 255 |
Total other comprehensive income (loss) | (702) | (642) | (399) | 266 |
Total comprehensive income | 335 | 704 | 2,877 | 3,783 |
Comprehensive income (loss) attributable to noncontrolling interests | (1) | (9) | (35) | 12 |
Comprehensive income attributable to Walgreens Boots Alliance, Inc. | $ 336 | $ 713 | $ 2,912 | $ 3,771 |
CONSOLIDATED CONDENSED STATEM_4
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS - USD ($) $ in Millions | 9 Months Ended | |
May 31, 2019 | May 31, 2018 | |
Cash flows from operating activities: | ||
Net earnings | $ 3,275 | $ 3,517 |
Adjustments to reconcile net earnings to net cash provided by operating activities: | ||
Depreciation and amortization | 1,512 | 1,300 |
Deferred income taxes | 109 | (382) |
Stock compensation expense | 87 | 91 |
Equity (earnings) from equity method investments | (124) | (184) |
Other | 42 | 266 |
Changes in operating assets and liabilities: | ||
Accounts receivable, net | (730) | (762) |
Inventories | (354) | 230 |
Other current assets | (80) | (4) |
Trade accounts payable | 662 | 675 |
Accrued expenses and other liabilities | (642) | 16 |
Income taxes | (372) | 793 |
Other non-current assets and liabilities | (171) | (110) |
Net cash provided by operating activities | 3,215 | 5,446 |
Cash flows from investing activities: | ||
Additions to property, plant and equipment | (1,246) | (983) |
Proceeds from sale of other assets | 95 | 221 |
Business, investment and asset acquisitions, net of cash acquired | (467) | (4,220) |
Other | 51 | (129) |
Net cash used for investing activities | (1,569) | (5,111) |
Cash flows from financing activities: | ||
Net change in short-term debt with maturities of 3 months or less | 299 | 596 |
Proceeds from debt | 10,291 | 5,043 |
Payments of debt | (7,332) | (3,507) |
Stock purchases | (3,726) | (2,525) |
Proceeds related to employee stock plans | 156 | 118 |
Cash dividends paid | (1,244) | (1,291) |
Other | (17) | (217) |
Net cash used for financing activities | (1,573) | (1,783) |
Effect of exchange rate changes on cash, cash equivalents and restricted cash | (12) | 27 |
Changes in cash, cash equivalents and restricted cash: | ||
Net increase (decrease) in cash, cash equivalents and restricted cash | 62 | (1,422) |
Cash, cash equivalents and restricted cash at beginning of period | 975 | 3,496 |
Cash, cash equivalents and restricted cash at end of period | $ 1,038 | $ 2,074 |
Accounting policies
Accounting policies | 9 Months Ended |
May 31, 2019 | |
Accounting Policies [Abstract] | |
Accounting policies | Accounting policies Basis of presentation The Consolidated Condensed Financial Statements of Walgreens Boots Alliance, Inc. (“Walgreens Boots Alliance” or the “Company”) included herein have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission regarding interim financial reporting. The Consolidated Condensed 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 Consolidated Condensed Financial Statements included herein are unaudited. Certain information and footnote disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles in the United States (“GAAP”) have been condensed or omitted pursuant to such rules and regulations, although the Company believes that the disclosures are adequate to make the information presented not misleading. These unaudited Consolidated Condensed Financial Statements should be read in conjunction with the audited financial statements and the notes thereto included in the Walgreens Boots Alliance Annual Report on Form 10-K for the fiscal year ended August 31, 2018 . In the opinion of management, the unaudited Consolidated Condensed Financial Statements for the interim periods presented include all adjustments (consisting only of normal recurring adjustments) necessary to present a fair statement of the results for such interim periods. 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 Condensed Financial Statements and associated notes may not add due to rounding. All percentages have been calculated using unrounded amounts for the three and nine months ended May 31, 2019 . |
Acquisitions
Acquisitions | 9 Months Ended |
May 31, 2019 | |
Business Combinations [Abstract] | |
Acquisitions | Acquisitions Acquisition of certain Rite Aid Corporation ( “ Rite Aid ” ) assets On September 19, 2017, the Company announced that it had secured regulatory clearance for an amended and restated asset purchase agreement to purchase 1,932 stores, three distribution centers and related inventory from Rite Aid for $4.375 billion in cash and other consideration. The purchases of these stores have been accounted for as business combinations and occurred in waves during fiscal 2018. The Company purchased 1,932 stores for total cash consideration of $4.2 billion for the fiscal year ended August 31, 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 three months ended May 31, 2019 , the Company did not record any measurement period adjustments. 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 May 31, 2019 (in millions): 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 The identified definite-lived intangible assets were as follows: Definite-lived intangible assets Weighted-average useful life (in years) Amount (in millions) Customer relationships 12 $ 1,800 Favorable lease interests 10 219 Trade names 2 20 Total $ 2,039 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 are based on the market compensation for such services and appropriate discount rate, as relevant, that market participants would consider when estimating fair values. 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 condensed pro forma consolidated sales for the three and nine months ended May 31, 2018 and gives effect to the acquisition of all 1,932 stores acquired under the amended and restated asset purchase agreement as if such had been acquired on September 1, 2017. Pro forma net earnings of the Company for the three and nine months ended May 31, 2018 , 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 disclosures. The unaudited condensed 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. Three months ended May 31, Nine months ended May 31, (in millions) 2018 2018 Sales $ 34,366 $ 102,059 The Company acquired the first distribution center and related inventory for cash consideration of $ 61 million during the nine months ended May 31, 2019 . The transition of the remaining two distribution centers and related inventory remains subject to closing conditions set forth in the amended and restated asset purchase agreement. Other acquisitions The Company acquired certain prescription files and related pharmacy inventory from Fred’s Inc. for the aggregate purchase price of $ 177 million during the nine months ended May 31, 2019 . |
Exit and disposal activities
Exit and disposal activities | 9 Months Ended |
May 31, 2019 | |
Restructuring and Related Activities [Abstract] | |
Exit and disposal activities | Exit and disposal activities Transformational Cost Management Program On December 20, 2018, the Company announced a multi-faceted program (the “Transformational Cost Management Program”), which includes divisional optimization initiatives, global smart spending, global smart organization and digitalization of the enterprise to transform long-term capabilities. Divisional optimization within each of our segments include activities such as optimization of stores, distribution centers and offices and efficient supply chain. Additionally, the Company has initiated global smart spending and smart organization programs and digitalization, initially focused on the Company’s Retail Pharmacy USA division, its retail business in the UK and its global functions. Actions under the Transformational Cost Management Program announced on December 20, 2018 are expected to be complete by fiscal 2022. As of the date of this report, the Company is not able to make a determination of the total estimated charge or range of charges that may be incurred for each major type of cost nor the future cash expenditures or charges, including non-cash impairment charges, it may incur. Costs related to the Transformational Cost Management Program, which were primarily recorded within selling, general and administrative expenses were as follows (in millions): Three months ended May 31, 2019 Retail Pharmacy USA Retail Pharmacy International Pharmaceutical Wholesale Walgreens Boots Alliance, Inc. Employee severance and other exit costs $ 7 $ 5 $ 11 $ 24 Asset impairments 1 5 16 11 32 Total costs $ 13 $ 21 $ 22 $ 56 Nine months ended May 31, 2019 Retail Pharmacy USA Retail Pharmacy International Pharmaceutical Wholesale Walgreens Boots Alliance, Inc. Employee severance and other exit costs $ 24 $ 39 $ 22 $ 86 Asset impairments 1 5 48 96 149 Total costs $ 29 $ 88 $ 119 $ 235 1 Primarily includes write down of certain software and inventory. The changes in liabilities related to the Transformational Cost Management Program include the following (in millions): Employee severance and other exit costs Asset impairments Total Balance at August 31, 2018 $ — $ — $ — Costs 86 149 235 Payments (57 ) — (57 ) Other - non cash — (149 ) (149 ) Balance at May 31, 2019 $ 28 $ — $ 28 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. As of the date of this report, the Company expects to close approximately 750 stores. The actions under the Store Optimization Program commenced in March 2018 and are expected to be complete by end of fiscal 2020. The Company currently estimates that it will recognize cumulative pre-tax charges to its GAAP financial results of approximately $350 million , including costs associated with lease obligations and other real estate costs and employee severance and other exit costs. The Company expects to incur pre-tax charges of approximately $160 million for lease obligations and other real estate costs and approximately $190 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. Since approval of the Store Optimization Program, the Company has recognized cumulative pre-tax charges to its financial results in accordance with GAAP totaling $200 million , which were primarily recorded within selling, general and administrative expenses. These charges included $64 million related to lease obligations and other real estate costs and $136 million in employee severance and other exit costs. Costs related to the Store Optimization Program were as follows (in millions): Three months ended May 31, 2019 Nine months ended May 31, 2019 Lease obligations and other real estate costs $ 44 $ 45 Employee severance and other exit costs 5 54 Total costs $ 49 $ 99 The changes in liabilities related to the Store Optimization Program include the following (in millions): Lease obligations and other real estate costs Employee severance and other exit costs Total Balance at August 31, 2018 $ 308 $ 21 $ 329 Costs 45 54 99 Payments (125 ) (69 ) (194 ) Other - non cash 1 104 — 104 Balance at May 31, 2019 $ 332 $ 6 $ 338 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 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. 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, 2018 $ 414 $ 7 $ 421 Payments (67 ) (3 ) (70 ) Other - non cash 51 — 51 Balance at May 31, 2019 $ 399 $ 4 $ 403 |
Operating leases
Operating leases | 9 Months Ended |
May 31, 2019 | |
Leases [Abstract] | |
Operating leases | Operating leases During the three and nine months ended May 31, 2019 , the Company recorded charges of $53 million and $95 million for facilities that were closed or relocated. This compares to $21 million and $88 million for the three and nine months ended May 31, 2018 . These charges are reported in selling, general and administrative expenses in the Consolidated Condensed Statements of Earnings. The changes in reserve for facility closings and related lease termination charges include the following (in millions): For the nine months ended May 31, 2019 For the twelve months ended August 31, 2018 Balance at beginning of period $ 964 $ 718 Provision for present value of non-cancellable lease payments on closed facilities 11 52 Changes in assumptions 54 19 Accretion expense 30 58 Other - non cash 1 124 338 Cash payments, net of sublease income (240 ) (221 ) Balance at end of period $ 943 $ 964 1 Represents unfavorable lease liabilities from acquired Rite Aid stores. |
Equity method investments
Equity method investments | 9 Months Ended |
May 31, 2019 | |
Equity Method Investments and Joint Ventures [Abstract] | |
Equity method investments | Equity method investments Equity method investments as of May 31, 2019 and August 31, 2018 , were as follows (in millions, except percentages): May 31, 2019 August 31, 2018 Carrying value Ownership percentage Carrying value Ownership percentage AmerisourceBergen $ 5,175 27% $ 5,138 26% Others 1,498 8% - 50% 1,472 8% - 50% Total $ 6,673 $ 6,610 AmerisourceBergen Corporation (“AmerisourceBergen”) investment As of May 31, 2019 and August 31, 2018 , the Company owned 56,854,867 AmerisourceBergen common shares, representing approximately 27% and 26% of the outstanding AmerisourceBergen common stock, respectively. 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 Condensed Statements of Earnings. The Level 1 fair market value of the Company’s equity investment in AmerisourceBergen common stock at May 31, 2019 was $4.4 billion . As of May 31, 2019 , 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 and Nanjing Pharmaceutical Corporation Limited, the Company’s pharmaceutical wholesale investments in China; Sinopharm Holding GuoDa Drugstores Co., Ltd., the Company's retail pharmacy investment in China and Option Care Inc., the Company's investment in the United States. The Company reported $5 million of post-tax equity losses and $15 million of post-tax equity earnings from other equity method investments, including equity method investments classified as operating, for the three months ended May 31, 2019 and 2018 , respectively. The Company reported $19 million and $42 million of post-tax equity earnings from other equity method investments for the nine months ended May 31, 2019 and 2018 , respectively. |
Goodwill and other intangible a
Goodwill and other intangible assets | 9 Months Ended |
May 31, 2019 | |
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, 2019 , the Company completed quantitative impairment analysis for goodwill and certain indefinite-lived intangible assets related to the two reporting units within the Retail Pharmacy International division, Boots and Other international. Based on this analysis, the fair value of the Boots reporting unit is in excess of its carrying value by approximately 9% and the fair value of the Pharmacy licenses is in excess of its carrying value by 5% . The Company will continue to monitor industry trends, market trends and the impact it may have on the Boots reporting unit. The determination of the fair value of the reporting units requires us to make significant estimates and assumptions. Although we believe our 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 could have a significant impact on either the fair value of the reporting units, the amount of any goodwill impairment charge, or both. Our indefinite-lived intangible assets fair values are estimated using the relief from royalty method and excess earnings method of the income approach. These estimates can be affected by a number of factors including, but not limited to, general economic conditions, availability of market information as well as our profitability. Changes in the carrying amount of goodwill by reportable segment consist of the following (in millions): Retail Pharmacy USA Retail Pharmacy International Pharmaceutical Wholesale Walgreens Boots Alliance, Inc. Balance at August 31, 2018 $ 10,483 $ 3,370 $ 3,061 $ 16,914 Acquisitions 8 — — 8 Disposals — (8 ) — (8 ) Currency translation adjustments — (104 ) (93 ) (197 ) Balance at May 31, 2019 $ 10,491 $ 3,258 $ 2,968 $ 16,717 The carrying amount and accumulated amortization of intangible assets consist of the following (in millions): May 31, 2019 August 31, 2018 Gross amortizable intangible assets Customer relationships and loyalty card holders $ 4,329 $ 4,235 Favorable lease interests and non-compete agreements 661 680 Trade names and trademarks 545 489 Purchasing and payer contracts 382 390 Total gross amortizable intangible assets 5,917 5,794 Accumulated amortization Customer relationships and loyalty card holders $ 1,194 $ 997 Favorable lease interests and non-compete agreements 396 359 Trade names and trademarks 247 206 Purchasing and payer contracts 93 78 Total accumulated amortization 1,930 1,640 Total amortizable intangible assets, net $ 3,987 $ 4,154 Indefinite-lived intangible assets Trade names and trademarks $ 5,326 $ 5,557 Pharmacy licenses 2,012 2,072 Total indefinite-lived intangible assets $ 7,338 $ 7,629 Total intangible assets, net $ 11,325 $ 11,783 Amortization expense for intangible assets was $142 million and $415 million for the three and nine months ended May 31, 2019 , respectively, and $146 million and $363 million for the three and nine months ended May 31, 2018 , respectively. Estimated future annual amortization expense for the next five fiscal years for intangible assets recorded at May 31, 2019 is as follows (in millions): 2020 2021 2022 2023 2024 Estimated annual amortization expense $ 481 $ 432 $ 412 $ 377 $ 356 |
Debt
Debt | 9 Months Ended |
May 31, 2019 | |
Debt Disclosure [Abstract] | |
Debt | Debt 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): May 31, 2019 August 31, 2018 Short-term debt 1 Commercial paper $ 2,820 $ 430 Credit facilities 2 948 999 $8 billion note issuance 3,4 2.700% unsecured notes due 2019 1,249 — $1 billion note issuance 5 5.250% unsecured notes due 2019 6 — 249 Other 7 465 288 Total short-term debt $ 5,483 $ 1,966 Long-term debt 1 $6 billion note issuance 3,4 3.450% unsecured notes due 2026 $ 1,889 $ 1,888 4.650% unsecured notes due 2046 591 590 $8 billion note issuance 3,4 2.700% unsecured notes due 2019 — 1,248 3.300% unsecured notes due 2021 1,246 1,245 3.800% unsecured notes due 2024 1,991 1,990 4.500% unsecured notes due 2034 495 495 4.800% unsecured notes due 2044 1,492 1,492 £700 million note issuance 3,4 2.875% unsecured Pound sterling notes due 2020 503 517 3.600% unsecured Pound sterling notes due 2025 376 387 €750 million note issuance 3,4 2.125% unsecured Euro notes due 2026 833 868 $4 billion note issuance 3,5 3.100% unsecured notes due 2022 1,197 1,196 4.400% unsecured notes due 2042 493 492 Credit facilities 2 996 — Other 8 25 23 Total long-term debt, less current portion $ 12,127 $ 12,431 1 Carrying values are presented net of unamortized discount and debt issuance costs, where applicable, and foreign currency denominated debt has been translated using the spot rates at May 31, 2019 and August 31, 2018 , respectively. 2 Credit facilities include debt outstanding under the various credit facilities described in more detail below. 3 The $6 billion , $8 billion , £0.7 billion , €0.75 billion and $4 billion note issuances as of May 31, 2019 had fair values and carrying values of $2.5 billion and $2.5 billion , $6.4 billion and $6.5 billion , $0.9 billion and $0.9 billion , $0.9 billion and $0.8 billion and $1.7 billion and $1.7 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 May 31, 2019 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 May 31, 2019 . 4 Notes 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. 5 Notes 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. 6 Includes interest rate swap fair market value adjustments. See note 9 , fair value measurements , for additional fair value disclosures. 7 Other short-term debt represents a mix of fixed and variable rate debt with various maturities and working capital facilities denominated in various currencies. 8 Other long-term debt represents a mix of fixed and variable rate debt in various currencies with various maturities. January 2019 364-Day Revolving Credit Agreement On January 18, 2019, the Company entered into a $2.0 billion 364-day revolving credit agreement (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. As of May 31, 2019 , there were $0.2 billion of 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. The December 2018 Revolving Credit Agreement is a senior unsecured revolving credit facility with a facility termination date of the earlier of (a) 18 months following January 28, 2019, the date of the effectiveness of the commitments pursuant to the December 2018 Revolving Credit Agreement, subject to extension thereof pursuant to the December 2018 Revolving Credit Agreement and (b) the date of termination in whole of the aggregate amount of the commitments pursuant to the December 2018 Revolving Credit Agreement. As of May 31, 2019 , there were no borrowings outstanding under the December 2018 Revolving Credit Agreement. December 2018 Term Loan Credit Agreement On December 5, 2018, Walgreens Boots Alliance entered into a $1.0 billion term loan credit agreement (the “December 2018 Term Loan Credit Agreement”) with the lenders from time to time party thereto. The December 2018 Term Loan Credit Agreement is a senior unsecured term loan facility with a facility termination date of the earlier of (a) January 29, 2021 and (b) the date of acceleration of all term loans pursuant to the December 2018 Term Loan Credit Agreement. As of May 31, 2019 , there were $1.0 billion of borrowings outstanding under the December 2018 Term Loan Credit Agreement. November 2018 Credit Agreement On November 30, 2018, the Company entered into a credit agreement (as amended, the “November 2018 Credit Agreement”) with the lenders from time to time party thereto and, on March 25, 2019, the Company entered into an amendment to such credit agreement reflecting certain changes to the borrowing notice provisions thereto. The November 2018 Credit Agreement includes a $500 million senior unsecured revolving credit facility and a $500 million senior unsecured term loan facility. The facility termination date is, with respect to the revolving credit facility, the earlier of (a) May 30, 2020 and (b) the date of termination in whole of the aggregate amount of the revolving commitments pursuant to the November 2018 Credit Agreement and, with respect to the term loan facility, the earlier of (a) May 30, 2020 and (b) the date of acceleration of all term loans pursuant to the November 2018 Credit Agreement. As of May 31, 2019 , there were $0.8 billion of borrowings outstanding under the 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 the 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 May 31, 2019 , there were no borrowings outstanding under the August 2018 Revolving Credit Agreement. August 2017 Credit Agreements On August 24, 2017, the Company entered into a $1.0 billion revolving credit agreement with the lenders from time to time party thereto (the “August 2017 Revolving Credit Agreement”) and a $1.0 billion term loan credit agreement with Sumitomo Mitsui Banking Corporation (the “2017 Term Loan Credit Agreement”). On November 30, 2018, in connection with the entrance into the November 2018 Credit Agreement, the Company terminated the 2017 Term Loan Credit Agreement in accordance with its terms and as of such date paid all amounts due in connection therewith. On January 31, 2019, the August 2017 Revolving Credit Agreement matured and the Company paid all amounts due in connection therewith. February 2017 Revolving Credit Agreement On February 1, 2017, the Company entered into a $1.0 billion revolving credit facility (as amended, the “February 2017 Revolving Credit Agreement”) with the lenders from time to time party thereto and, on August 1, 2017, the Company entered into an amendment agreement thereto. On January 31, 2019, the February 2017 Revolving Credit Agreement matured and the Company paid all amounts due in connection therewith. Debt covenants Each of the Company’s credit facilities 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 $2.6 billion and $1.4 billion at a weighted average interest rate of 3.08% and 2.00% for the nine months ended May 31, 2019 and 2018 , respectively. Interest Interest paid was $570 million and $450 million for the nine months ended May 31, 2019 and 2018 , respectively. |
Financial instruments
Financial instruments | 9 Months Ended |
May 31, 2019 | |
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 notional amounts and fair value of derivative instruments outstanding were as follows (in millions): May 31, 2019 Notional Fair value Location in Consolidated Condensed Balance Sheets Derivatives designated as hedges: Foreign currency forwards $ 37 $ 1 Other current assets Cross currency interest rate swaps 800 39 Other non-current assets Derivatives not designated as hedges: Foreign currency forwards 3,105 107 Other current assets Foreign currency forwards 658 3 Accrued expenses and other liabilities August 31, 2018 Notional Fair value Location in Consolidated Condensed Balance Sheets Derivatives designated as hedges: Interest rate swaps $ 250 $ 1 Accrued expenses and other liabilities Foreign currency forwards 15 — Other current assets Derivatives not designated as hedges: Foreign currency forwards 3,273 52 Other current assets Foreign currency forwards 825 4 Accrued expenses and other liabilities 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 Company utilizes foreign currency forward contracts and other foreign currency derivatives to hedge significant committed and highly probable future transactions and cash flows denominated in currencies other than the functional currency of the Company or its subsidiaries. The Company uses interest rate swaps from time to time to manage the interest rate exposure associated with some of its fixed-rate debt and designates them as fair value hedges. From time to time, the Company uses forward starting interest rate swaps to hedge its interest rate exposure of some of its anticipated debt issuances. Net investment hedges The Company uses cross currency interest rate swaps as hedges of 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). 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 income and (expense) due to changes in fair value of these derivative instruments were as follows (in millions): Three months ended Nine months ended Location in Consolidated Condensed Statements of Earnings 2019 2018 2019 2018 Foreign currency forwards Selling, general and administrative expenses $ 140 $ 108 $ 80 $ (75 ) Foreign currency forwards Other income (expense) (8 ) 3 (10 ) 36 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 Condensed Balance Sheets. |
Fair value measurements
Fair value measurements | 9 Months Ended |
May 31, 2019 | |
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): May 31, 2019 Level 1 Level 2 Level 3 Assets : Money market funds 1 $ 177 $ 177 $ — $ — Investments in equity securities 2 4 4 — — Foreign currency forwards 3 108 — 108 — Cross currency interest rate swaps 4 39 — 39 — Liabilities : Foreign currency forwards 3 3 — 3 — Cross currency interest rate swaps 4 — — — — August 31, 2018 Level 1 Level 2 Level 3 Assets : Money market funds 1 $ 227 $ 227 $ — $ — Available-for-sale investments 2 1 1 — — Foreign currency forwards 3 52 — 52 — Liabilities : Interest rate swaps 4 1 — 1 — Foreign currency forwards 3 4 — 4 — 1 Money market funds are valued at the closing price reported by the fund sponsor. 2 Fair value of quoted investments are based on current bid prices as of May 31, 2019 and August 31, 2018 . 3 The 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. 4 The 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 for the three and nine months ended May 31, 2019 . 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. Unless otherwise noted, the fair value for all notes was determined based upon quoted market prices and therefore categorized as Level 1. 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. |
Commitments and contingencies
Commitments and contingencies | 9 Months Ended |
May 31, 2019 | |
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, 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. 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. 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. The results of legal proceedings are often uncertain and difficult to predict, and the costs incurred in litigation can be substantial, regardless of the outcome. With respect to litigation and other legal proceedings where the Company has determined that a 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. 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. The action asserts claims for breach of fiduciary duty, waste and unjust enrichment. On April 10, 2015, the defendants filed a motion to dismiss. On May 18, 2015, the case was stayed in light of a securities class action that was filed on April 10, 2015. After a ruling issued on September 30, 2016 in the securities class action, which is described below, on November 3, 2016, the Court entered a stipulation and order extending the stay until the resolution of the securities case. 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. 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. On June 16, 2015, the Court entered an order appointing a lead plaintiff. Pursuant to the Court’s order, lead plaintiff filed a consolidated class action complaint on August 17, 2015, and defendants moved to dismiss the complaint on October 16, 2015. On September 30, 2016, the Court issued an order granting in part and denying in part defendants’ motion to dismiss. Defendants filed their answer to the complaint on November 4, 2016 and filed an amended answer on January 16, 2017. Plaintiff filed its motion for class certification on April 21, 2017. The Court granted plaintiffs’ motion on March 29, 2018 and merits discovery is proceeding. On December 19, 2018, plaintiffs filed a first amended complaint and defendants moved to dismiss the new complaint on February 19, 2019. The motion has been fully briefed. As of the date of this report, the Company was aware of two previously disclosed putative class action lawsuits filed by purported Rite Aid stockholders against Walgreens Boots Alliance and certain of its officers regarding the transactions contemplated by the original merger agreement between the Company and Rite Aid (prior to its amendment on January 29, 2017) (such transactions, the “Rite Aid Transactions”). One of the Rite Aid actions was filed in the State of Pennsylvania in the Court of Common Pleas of Cumberland County (the “Pennsylvania action”) and primarily alleged that Walgreens Boots Alliance and one of its subsidiaries aided and abetted certain alleged breaches of fiduciary duty by the board of directors of Rite Aid in connection with the Rite Aid Transactions. This action was terminated by the court for lack of prosecution in December 2018. The other action was filed in the United States District Court for the Middle District of Pennsylvania (the “federal action”) and alleges, among other things, that the Company and certain of its officers made false or misleading statements regarding the Rite Aid Transactions. The court denied the Company’s motion to dismiss the federal action. 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), is pending in the U.S. District Court for the Northern District of Ohio. The Company is named as a defendant in a subset of the cases included in this multidistrict litigation. The Company also has been named as a defendant in numerous lawsuits brought in state courts relating to opioid matters. The relief sought by various plaintiffs is compensatory and punitive damages, as well as injunctive relief. Additionally, the Company has received from the Attorney Generals of several states subpoenas, civil investigative demands and/or other requests concerning opioid matters. On September 28, 2018, the Company announced that it had reached an agreement with the SEC to fully resolve an investigation into certain forward-looking financial goals and related disclosures by Walgreens. The disclosures at issue were made prior to the strategic combination with Alliance Boots and the merger pursuant to which Walgreens Boots Alliance became the parent holding company on December 31, 2014. The settlement does not involve any of the Company’s current officers or executives, nor does it allege intentional or reckless conduct by the Company. In agreeing to the settlement, the Company neither admitted nor denied the SEC’s allegations. Pursuant to the agreement with the SEC, the Company consented to the SEC’s issuance of an administrative order, and the Company paid a $34.5 million penalty, which was fully reserved for in the Company’s Consolidated Financial Statements as of August 31, 2018. 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 $209.2 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. |
Income taxes
Income taxes | 9 Months Ended |
May 31, 2019 | |
Income Tax Disclosure [Abstract] | |
Income taxes | Income taxes The effective tax rate for the three and nine months ended May 31, 2019 was 13.0% and 14.7% respectively, compared to 7.6% and 19.4% for the three and nine months ended May 31, 2018 , respectively. The increase in the effective tax rate for the three months ended May 31, 2019 was primarily due to net discrete tax benefits in the prior year as a result of the U.S. tax law changes. The decrease in the effective tax rate for the nine months ended May 31, 2019 was primarily due to the net discrete tax expense in the prior year as a result of the U.S. tax law changes. Income taxes paid for the nine months ended May 31, 2019 were $824 million , compared to $428 million for the nine months ended May 31, 2018 . On June 21, 2019, the Internal Revenue Service issued final regulations relating to the global intangible low-taxed income (“GILTI”) and foreign tax credit provisions of the U.S. tax law changes enacted in December 2017. The Company is evaluating any potential impact on its financial statements. |
Retirement benefits
Retirement benefits | 9 Months Ended |
May 31, 2019 | |
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. Components of net periodic pension costs for the defined benefit pension plans (in millions): Three months ended Nine months ended Location in Consolidated Condensed Statements of Earnings 2019 2018 2019 2018 Service costs Selling, general and administrative expenses $ 2 $ 2 $ 4 $ 5 Interest costs Other expense 1 49 50 148 146 Expected returns on plan assets/other Other income 1 (61 ) (54 ) (186 ) (158 ) Total net periodic pension costs (income) $ (10 ) $ (2 ) $ (34 ) $ (7 ) 1 Shown as Other income (expense) on Consolidated Condensed Statements of Earnings. The Company made cash contributions to its defined benefit pension plans of $28 million for the nine months ended May 31, 2019 , which primarily related to committed funded payments. The Company plans to contribute an additional $6 million to its defined benefit pension plans in fiscal 2019 . 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 $58 million and $183 million for the three and nine months ended May 31, 2019 compared to an expense of $53 million and $164 million in the three and nine months ended May 31, 2018 . 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 for the three and nine months ended May 31, 2019 was $32 million and $96 million compared to a cost of $33 million and $94 million in the three and nine months ended May 31, 2018 . |
Accumulated other comprehensive
Accumulated other comprehensive income (loss) | 9 Months Ended |
May 31, 2019 | |
Accumulated Other Comprehensive Income (Loss), Net of Tax [Abstract] | |
Accumulated other comprehensive income (loss) | Accumulated other comprehensive income (loss) The following is a summary of net changes in accumulated other comprehensive income (loss) ("AOCI") by component and net of tax for the three and nine months ended May 31, 2019 and May 31, 2018 (in millions): Pension/ post- Unrealized Share of AOCI of Cumulative Total Balance at February 28, 2019 $ 95 $ (40 ) $ 2 $ (2,762 ) $ (2,705 ) Other comprehensive income (loss) before reclassification adjustments 1 56 1 (733 ) (675 ) Amounts reclassified from AOCI (4 ) 1 — — (2 ) Tax benefit (provision) 1 (14 ) — 1 (12 ) Net change in other comprehensive (2 ) 44 1 (732 ) (689 ) Balance at May 31, 2019 $ 93 $ 4 $ 4 $ (3,493 ) $ (3,393 ) Pension/ post- Unrealized Share of AOCI of Cumulative Total Balance at August 31, 2018 $ 101 $ (30 ) $ 3 $ (3,076 ) $ (3,002 ) Other comprehensive income (loss) before reclassification adjustments 1 40 (1 ) (415 ) (376 ) Amounts reclassified from AOCI (12 ) 4 — — (8 ) Other — — — — — Tax benefit (provision) 3 (10 ) — (1 ) (8 ) Net change in other comprehensive (8 ) 33 (1 ) (416 ) (393 ) Balance at May 31, 2019 $ 93 $ 4 $ 4 $ (3,493 ) $ (3,393 ) Pension/ post- Unrealized Share of AOCI of Cumulative Total Balance at February 28, 2018 $ (141 ) $ (32 ) $ — $ (1,990 ) $ (2,163 ) Other comprehensive income (loss) before reclassification adjustments — — 3 (647 ) (644 ) Amounts reclassified from AOCI (2 ) 1 11 8 18 Tax benefit (provision) — — (3 ) — (3 ) Net change in other comprehensive (2 ) 1 11 (639 ) (629 ) Balance at May 31, 2018 $ (143 ) $ (31 ) $ 11 $ (2,629 ) $ (2,792 ) Pension/ post- Unrealized Share of AOCI of Cumulative Total Balance at August 31, 2017 $ (139 ) $ (33 ) $ (2 ) $ (2,877 ) $ (3,051 ) Other comprehensive income (loss) before reclassification adjustments (1 ) — 7 240 246 Amounts reclassified from AOCI (5 ) 3 11 8 17 Tax benefit (provision) 2 (1 ) (5 ) — (4 ) Net change in other comprehensive (4 ) 2 13 248 259 Balance at May 31, 2018 $ (143 ) $ (31 ) $ 11 $ (2,629 ) $ (2,792 ) |
Segment reporting
Segment reporting | 9 Months Ended |
May 31, 2019 | |
Segment Reporting [Abstract] | |
Segment reporting | Segment reporting The Company has aligned its operations into three reportable segments: Retail Pharmacy USA; Retail Pharmacy International; and Pharmaceutical Wholesale. The operating segments have been identified based on the financial data utilized by the Company’s Chief Executive Officer (the chief operating decision maker) to assess segment performance and allocate resources among the Company’s operating segments, which have been aggregated as described below. The chief operating decision maker uses adjusted operating income to assess segment profitability. The chief operating decision maker does not use total assets by segment to make decisions regarding resources, therefore the total asset disclosure by segment has not been included. Retail Pharmacy USA The Retail Pharmacy USA segment consists of the Walgreens business, which includes the operation of retail drugstores, convenient care clinics and mail and central specialty pharmacy services. Sales for the segment are principally derived from the sale of prescription drugs and a wide assortment of retail products, including health and wellness, beauty and personal care and consumables and general merchandise. Retail Pharmacy International The Retail Pharmacy International segment consists of pharmacy-led health and beauty retail businesses and optical practices. These businesses include Boots branded stores in the United Kingdom, Thailand, Norway, the Republic of Ireland and the Netherlands, Benavides in Mexico and Ahumada in Chile. Sales for the segment are principally derived from the sale of prescription drugs and health and wellness, beauty and personal care and other consumer products. Pharmaceutical Wholesale The Pharmaceutical Wholesale segment consists of the Alliance Healthcare pharmaceutical wholesaling and distribution businesses and an equity method investment in AmerisourceBergen. Wholesale operations are located in the United Kingdom, Germany, France, Turkey, Spain, the Netherlands, Egypt, Norway, Romania, Czech Republic and Lithuania. Sales for the segment are principally derived from wholesaling and distribution of a comprehensive offering of brand-name pharmaceuticals (including specialty pharmaceutical products) and generic pharmaceuticals, health and beauty products, home healthcare supplies and equipment and related services to pharmacies and other healthcare providers. The results of operations for each reportable segment include procurement benefits and an allocation of corporate-related overhead costs. The following table reflects results of operations and reconciles adjusted operating income to operating income for the Company's reportable segments (in millions): Retail Pharmacy USA Retail Pharmacy International Pharmaceutical Wholesale Eliminations 1 Walgreens Boots Alliance, Inc. Three months ended May 31, 2019 Sales $ 26,513 $ 2,776 $ 5,865 $ (563 ) $ 34,591 Adjusted operating income $ 1,286 $ 165 $ 265 $ 1 $ 1,717 Acquisition-related amortization (127 ) Transformational cost management (86 ) Acquisition-related costs (80 ) Adjustments to equity earnings in AmerisourceBergen (137 ) Store optimization (49 ) LIFO provision (29 ) Certain legal and regulatory accruals and settlements (7 ) Operating income $ 1,203 Three months ended May 31, 2018 Sales $ 25,917 $ 2,995 $ 5,965 $ (543 ) $ 34,334 Adjusted operating income 3 $ 1,492 $ 193 $ 258 $ — $ 1,943 Acquisition-related amortization (131 ) Acquisition-related costs (57 ) Adjustments to equity earnings in AmerisourceBergen (60 ) Store optimization (24 ) LIFO provision (69 ) Certain legal and regulatory accruals and settlements 2 (5 ) Operating income 3 $ 1,597 Retail Pharmacy USA Retail Pharmacy International Pharmaceutical Wholesale Eliminations 1 Walgreens Boots Alliance, Inc. Nine months ended May 31, 2019 Sales $ 78,491 $ 8,759 $ 17,311 $ (1,649 ) $ 102,912 Adjusted operating income $ 4,119 $ 553 $ 710 $ 1 $ 5,384 Acquisition-related amortization (373 ) Transformational cost management (265 ) Acquisition-related costs (228 ) Adjustments to equity earnings in AmerisourceBergen (191 ) Store optimization (99 ) LIFO provision (77 ) Certain legal and regulatory accruals and settlements (31 ) Operating income $ 4,120 Nine months ended May 31, 2018 Sales $ 72,884 $ 9,395 $ 17,438 $ (1,622 ) $ 98,095 Adjusted operating income 3 $ 4,520 $ 674 $ 714 $ 1 $ 5,909 Acquisition-related amortization (329 ) Acquisition-related costs (173 ) Adjustments to equity earnings in AmerisourceBergen (136 ) Store optimization (24 ) LIFO provision (166 ) Certain legal and regulatory accruals and settlements 2 (120 ) Asset recovery 15 Hurricane-related costs (83 ) Operating income 3 $ 4,893 1 Eliminations relate to intersegment sales between the Pharmaceutical Wholesale and the Retail Pharmacy International segments. 2 As previously disclosed, beginning in the quarter ended August 31, 2018, management reviewed and refined its practice to include all charges related to the matters included in certain legal and regulatory accruals and settlements. In order to present non-GAAP measures on a consistent basis for fiscal year 2018, the Company included adjustments in the quarter ended August 31, 2018 of $14 million , $50 million and $5 million which were previously accrued in the Company’s financial statements for the quarters ended November 30, 2017, February 28, 2018 and May 31, 2018, respectively. These additional adjustments impact the comparability of such results to the results reported in prior and future quarters. 3 The Company adopted new accounting guidance in Accounting Standards Update 2017-07 as of September 1, 2018 (fiscal 2019) on a retrospective basis for the Consolidated Condensed Statements of Earnings presentation. See note 17 , new accounting pronouncements , for further information. |
Sales
Sales | 9 Months Ended |
May 31, 2019 | |
Revenue from Contract with Customer [Abstract] | |
Sales | Sales The following table summarizes the Company’s sales by segment and by major source (in millions): Three months ended May 31, Nine months ended May 31, 2019 2018 2019 2018 Retail Pharmacy USA Pharmacy $ 19,585 $ 18,790 $ 57,624 $ 52,258 Retail 6,928 7,127 20,867 20,626 Total 26,513 25,917 78,491 72,884 Retail Pharmacy International Pharmacy 1,047 1,111 3,096 3,316 Retail 1,730 1,884 5,662 6,079 Total 2,776 2,995 8,759 9,395 Pharmaceutical Wholesale 5,865 5,965 17,311 17,438 Eliminations 1 (563 ) (543 ) (1,649 ) (1,622 ) Walgreens Boots Alliance, Inc. $ 34,591 $ 34,334 $ 102,912 $ 98,095 1 Eliminations 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 18 , supplemental information , for further information on receivables from contracts with customers. |
Related parties
Related parties | 9 Months Ended |
May 31, 2019 | |
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): Three months ended Nine months ended 2019 2018 2019 2018 Purchases, net $ 14,684 $ 15,830 $ 43,070 $ 39,566 May 31, 2019 August 31, 2018 Trade accounts payable, net $ 6,520 $ 6,274 |
New accounting pronouncements
New accounting pronouncements | 9 Months Ended |
May 31, 2019 | |
New Accounting Pronouncements and Changes in Accounting Principles [Abstract] | |
New accounting pronouncements | New accounting pronouncements Adoption of new accounting pronouncements Presentation of net periodic pension cost and net periodic postretirement benefit cost In March 2017, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update ("ASU") 2017-07, Compensation - Retirement Benefits (Topic 715): Improving the Presentation of Net Periodic Pension Cost and Net Periodic Postretirement Benefit Cost. This ASU requires an employer to report the service cost component of net periodic pension cost and net periodic postretirement benefit cost in the same line item in the statement of earnings as other compensation costs arising from services rendered by the related employees during the period. All other net cost components are required to be presented in the statement of earnings separately from the service cost component and outside a subtotal of income from operations. Additionally, the line item used in the statement of earnings to present the other net cost components must be disclosed in the notes to the financial statements. The Company adopted this new accounting guidance as of September 1, 2018 (fiscal 2019) on a retrospective basis and the adoption did not have a material impact on the Company's results of operations, cash flows or financial position. 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 , $73 million and $(69) million for the fiscal years ended August 31, 2018, 2017 and 2016, respectively. The updated accounting policy for pension and postretirement benefits is as follows: Pension and postretirement benefits The Company has various defined benefit pension plans, which cover some of its non-U.S. employees. The Company also has a postretirement healthcare plan, which 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). See note 12, retirement benefits, for further information. The following is a reconciliation of the effect of the reclassification of all other net cost components (excluding service cost component) of net pension cost and net postretirement benefit cost from selling, general and administrative expenses to other income (expense) in the Company’s Consolidated Condensed Statements of Earnings (in millions): As reported Adjustments As revised Three months ended May 31, 2018 Selling, general and administrative expenses $ 6,231 $ 4 $ 6,235 Operating income 1,601 (4 ) 1,597 Other income (expense) (4 ) 4 — As reported Adjustments As revised Nine months ended May 31, 2018 Selling, general and administrative expenses $ 18,456 $ 10 $ 18,466 Operating income 4,903 (10 ) 4,893 Other income (expense) (132 ) 10 (122 ) Restricted cash In November 2016, the FASB issued ASU 2016-18, Statement of Cash Flows (Topic 230): Restricted Cash. This ASU requires that a statement of cash flows explain the change during the period in the total of cash, cash equivalents, and amounts generally described as restricted cash or restricted cash equivalents. Therefore, amounts generally described as restricted cash and restricted cash equivalents should be included with cash and cash equivalents when reconciling the beginning-of-period and end-of-period total amounts shown on the Statement of Cash Flows. The Company adopted this new accounting guidance as of September 1, 2018 (fiscal 2019) on a full retrospective basis and the adoption did not have a material impact on the Company’s Statement of Cash Flows. The following is a reconciliation of the effect on the relevant line items on the Consolidated Condensed Statements of Cash Flows for the nine months ended May 31, 2018 as a result of adopting this new accounting guidance (in millions): As reported Adjustments As revised Nine months ended May 31, 2018 Trade accounts payable $ 627 $ 48 $ 675 Accrued expenses and other liabilities 10 6 16 Other non-current assets and liabilities (117 ) 7 (110 ) Net cash provided by operating activities 5,385 61 5,446 Effect of exchange rate changes on cash, cash equivalents and restricted cash 26 1 27 Net increase (decrease) in cash, cash equivalents and restricted cash (1,483 ) 61 (1,422 ) Cash, cash equivalents and restricted cash at beginning of period 3,301 195 3,496 Cash, cash equivalents and restricted cash at end of period $ 1,818 $ 256 $ 2,074 Tax accounting for intra-entity asset transfers In October 2016, the FASB issued ASU 2016-16, Income Taxes (Topic 740): Intra-Entity Transfers of Assets Other Than Inventory. This ASU prohibits the recognition of current and deferred income taxes for an intra-entity asset transfer until the asset has been sold to an outside party. In addition, interpretations of this guidance have developed in practice for transfers of certain intangible and tangible assets. This prohibition on recognition is an exception to the principle of comprehensive recognition of current and deferred income taxes. To more faithfully represent the economics of intra-entity asset transfers, the amendments in this ASU require that entities recognize the income tax consequences of an intra-entity transfer of an asset other than inventory when the transfer occurs. This ASU does not change the pre-tax effects of an intra-entity asset transfer under Topic 810, Consolidation, or for an intra-entity transfer of inventory. The Company adopted this new accounting guidance as of September 1, 2018 (fiscal 2019) on a modified retrospective basis and the adoption did not have a material impact on the Company's results of operations. Classification of certain cash receipts and cash payments In August 2016, the FASB issued ASU 2016-15, Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments. This ASU addresses the classification of certain specific cash flow issues including debt prepayment or extinguishment costs, settlement of certain debt instruments, contingent consideration payments made after a business combination, proceeds from the settlement of certain insurance claims, and distributions received from equity method investees. The Company adopted this new accounting guidance as of September 1, 2018 (fiscal 2019) and adoption did not have a material impact on the Company’s Statement of Cash Flows. Revenue recognition on contracts with customers In May 2014, the FASB issued ASU 2014-09, Revenue from Contracts with Customers (Topic 606). Subsequently, the FASB issued additional ASUs, which further clarify this guidance. This ASU provides a single principles-based revenue recognition model with 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. The Company adopted this new accounting guidance on September 1, 2018 (fiscal 2019) using the modified retrospective transition approach for all contracts and the adoption did not have a material impact on the Company’s results of operations. The adoption mainly resulted in changes to recognition of revenues related to loyalty programs and gift card breakage. Prior to adoption, the Company used the cost approach to account for loyalty programs. Upon adoption, the Company uses the deferred revenue approach. Prior to adoption, gift card breakage was primarily recognized at point of sale. Upon adoption, all gift card breakage is recognized based on the redemption pattern. The changes in accounting for loyalty programs and gift card breakage resulted in a cumulative transition adjustment of $98 million in retained earnings. See note 15, sales, for additional disclosures. The updated accounting policy for revenue recognition and loyalty programs are as follows: Revenue recognition 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. Returns are estimated using expected returns. Loyalty programs and gift card 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 program 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. Classification and measurement of financial instruments In January 2016, the FASB issued ASU 2016-01, Financial Instruments - Overall (Subtopic 825-10): Recognition and Measurement of Financial Assets and Financial Liabilities. Subsequently, the FASB issued additional ASUs, which further clarify this guidance. This ASU requires equity investments (except those under the equity method of accounting or those that result in the consolidation of an investee) to be measured at fair value with changes in fair value recognized in net income. However, an entity may choose to measure equity investments that do not have readily determinable fair values at cost less impairment, if any, and changes resulting from observable price changes in orderly transactions for the identical or a similar investment of the same issuer. This simplifies the impairment assessment of equity investments previous held at cost. Separate presentation of financial assets and liabilities by measurement category is required. The Company adopted this new accounting guidance as of September 1, 2018 (fiscal 2019) and adoption did not have a material impact on the Company’s results of operations, cash flows or financial position. The new guidance was applied on a modified retrospective basis, with the exception of the amendments related to the measurement alternative for equity investments without readily determinable fair values, which was applied on a prospective basis. New accounting pronouncements not yet adopted 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. 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. Financial instruments - hedging and derivatives In October 2018, the FASB issued 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. This ASU is effective for fiscal years beginning after December 15, 2018 (fiscal 2020), and interim periods within those fiscal years, with early adoption permitted. The new guidance must be applied on a prospective basis. 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. 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. This ASU 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). 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 amendments in this ASU can be applied either retrospectively or prospectively to all implementation costs incurred after 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 financial position or results of operations. 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 2022) and must be applied on a full 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 and disclosures. Fair value measurement In August 2018, the FASB issued ASU 2018-13, Fair Value Measurement (Topic 820). This 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. 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. This ASU is effective for annual periods beginning after December 15, 2018 (fiscal 2020), and interim periods within those years. 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. 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”) that 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. This ASU is effective for fiscal years beginning after December 15, 2018 (fiscal 2020), and interim periods within those fiscal years, with early adoption permitted. The new guidance must be applied either on a prospective basis in the period of adoption or retrospectively to each period in which the effect of the change in the U.S. federal corporate income tax rate are recognized. 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. Leases In February 2016, the FASB issued ASU 2016-02, Leases (Topic 842), 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. The lease liability is initially measured at the present value of the future lease payments and the asset is based on the liability, subject to certain adjustments. 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. The new guidance is effective for fiscal years beginning after December 15, 2018 (fiscal 2020), and interim periods within those fiscal years. In transition, lessees are required to recognize and measure leases at the beginning of the earliest period presented (fiscal 2018) using a modified retrospective approach which includes a number of optional practical expedients that entities may elect to apply. In July 2018, a new ASU was issued to provide relief to the companies from restating the comparative period. Pursuant to this ASU, WBA will not restate comparative periods presented in the Company’s financial statements in the period of adoption. The Company will adopt this ASU and related amendments on September 1, 2019 (fiscal 2020). The Company continues to plan for adoption and implementation of this ASU, including implementing a new global lease accounting system, evaluating practical expedient and accounting policy elections and assessing the overall financial statement impact. This ASU will have a material impact on the Company’s financial position. The impact on the Company’s results of operations is being evaluated. The impact of this ASU is non-cash in nature and will not affect the Company’s cash flows. |
Supplemental information
Supplemental information | 9 Months Ended |
May 31, 2019 | |
Balance Sheet Related Disclosures [Abstract] | |
Supplemental information | Supplemental information 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 providers (e.g., pharmacy benefit managers, insurance companies and governmental agencies), clients and members. Trade receivables were $5.9 billion and $5.4 billion at May 31, 2019 and August 31, 2018 , respectively. Other accounts receivable balances, which consist primarily of receivables from vendors and manufacturers, including receivables from AmerisourceBergen (see note 16, related parties), were $1.3 billion and $1.2 billion at May 31, 2019 and August 31, 2018 , respectively. Depreciation and amortization The Company has recorded the following depreciation and amortization expense in the Consolidated Condensed Statements of Earnings (in millions): Three months ended Nine months ended 2019 2018 2019 2018 Depreciation expense $ 379 $ 358 $ 1,096 $ 1,040 Intangible asset and other amortization 142 84 415 260 Total depreciation and amortization expense $ 522 $ 442 $ 1,512 $ 1,300 Accumulated depreciation and amortization on property, plant and equipment was $ 11.2 billion at May 31, 2019 and $ 10.5 billion at August 31, 2018 . 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. As of May 31, 2019 and August 31, 2018 , the amount of such restricted cash was $199 million and $190 million , respectively, and is reported in other current assets on the Consolidated Condensed Balance Sheets. The following represents a reconciliation of cash and cash equivalents in the Consolidated Condensed Balance Sheets to total cash, cash equivalents and restricted cash in the Consolidated Condensed Statements of Cash Flows as of May 31, 2019 and August 31, 2018 (in millions): May 31, 2019 August 31, 2018 Cash and cash equivalents $ 839 $ 785 Restricted cash (included in other current assets) 199 190 Cash, cash equivalents and restricted cash $ 1,038 $ 975 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. There were 17.0 million outstanding options to purchase common shares that were anti-dilutive and excluded from the third quarter earnings per share calculation as of May 31, 2019 compared to 12.1 million as of May 31, 2018 . Cash dividends declared per common share Cash dividends per common share declared during the nine months ended fiscal 2019 and the nine months ended fiscal 2018 were as follows: Quarter ended 2019 2018 November $ 0.440 $ 0.400 February 0.440 0.400 May 0.440 0.400 $ 1.320 $ 1.200 |
Accounting policies (Policies)
Accounting policies (Policies) | 9 Months Ended |
May 31, 2019 | |
Accounting Policies [Abstract] | |
Basis of Presentation | Basis of presentation The Consolidated Condensed Financial Statements of Walgreens Boots Alliance, Inc. (“Walgreens Boots Alliance” or the “Company”) included herein have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission regarding interim financial reporting. The Consolidated Condensed 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 Consolidated Condensed Financial Statements included herein are unaudited. Certain information and footnote disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles in the United States (“GAAP”) have been condensed or omitted pursuant to such rules and regulations, although the Company believes that the disclosures are adequate to make the information presented not misleading. These unaudited Consolidated Condensed Financial Statements should be read in conjunction with the audited financial statements and the notes thereto included in the Walgreens Boots Alliance Annual Report on Form 10-K for the fiscal year ended August 31, 2018 . In the opinion of management, the unaudited Consolidated Condensed Financial Statements for the interim periods presented include all adjustments (consisting only of normal recurring adjustments) necessary to present a fair statement of the results for such interim periods. 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 Condensed Financial Statements and associated notes may not add due to rounding. All percentages have been calculated using unrounded amounts for the three and nine months ended May 31, 2019 . |
New Accounting Pronouncements | Adoption of new accounting pronouncements Presentation of net periodic pension cost and net periodic postretirement benefit cost In March 2017, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update ("ASU") 2017-07, Compensation - Retirement Benefits (Topic 715): Improving the Presentation of Net Periodic Pension Cost and Net Periodic Postretirement Benefit Cost. This ASU requires an employer to report the service cost component of net periodic pension cost and net periodic postretirement benefit cost in the same line item in the statement of earnings as other compensation costs arising from services rendered by the related employees during the period. All other net cost components are required to be presented in the statement of earnings separately from the service cost component and outside a subtotal of income from operations. Additionally, the line item used in the statement of earnings to present the other net cost components must be disclosed in the notes to the financial statements. The Company adopted this new accounting guidance as of September 1, 2018 (fiscal 2019) on a retrospective basis and the adoption did not have a material impact on the Company's results of operations, cash flows or financial position. 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 , $73 million and $(69) million for the fiscal years ended August 31, 2018, 2017 and 2016, respectively. The updated accounting policy for pension and postretirement benefits is as follows: Pension and postretirement benefits The Company has various defined benefit pension plans, which cover some of its non-U.S. employees. The Company also has a postretirement healthcare plan, which 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). See note 12, retirement benefits, for further information. The following is a reconciliation of the effect of the reclassification of all other net cost components (excluding service cost component) of net pension cost and net postretirement benefit cost from selling, general and administrative expenses to other income (expense) in the Company’s Consolidated Condensed Statements of Earnings (in millions): As reported Adjustments As revised Three months ended May 31, 2018 Selling, general and administrative expenses $ 6,231 $ 4 $ 6,235 Operating income 1,601 (4 ) 1,597 Other income (expense) (4 ) 4 — As reported Adjustments As revised Nine months ended May 31, 2018 Selling, general and administrative expenses $ 18,456 $ 10 $ 18,466 Operating income 4,903 (10 ) 4,893 Other income (expense) (132 ) 10 (122 ) Restricted cash In November 2016, the FASB issued ASU 2016-18, Statement of Cash Flows (Topic 230): Restricted Cash. This ASU requires that a statement of cash flows explain the change during the period in the total of cash, cash equivalents, and amounts generally described as restricted cash or restricted cash equivalents. Therefore, amounts generally described as restricted cash and restricted cash equivalents should be included with cash and cash equivalents when reconciling the beginning-of-period and end-of-period total amounts shown on the Statement of Cash Flows. The Company adopted this new accounting guidance as of September 1, 2018 (fiscal 2019) on a full retrospective basis and the adoption did not have a material impact on the Company’s Statement of Cash Flows. The following is a reconciliation of the effect on the relevant line items on the Consolidated Condensed Statements of Cash Flows for the nine months ended May 31, 2018 as a result of adopting this new accounting guidance (in millions): As reported Adjustments As revised Nine months ended May 31, 2018 Trade accounts payable $ 627 $ 48 $ 675 Accrued expenses and other liabilities 10 6 16 Other non-current assets and liabilities (117 ) 7 (110 ) Net cash provided by operating activities 5,385 61 5,446 Effect of exchange rate changes on cash, cash equivalents and restricted cash 26 1 27 Net increase (decrease) in cash, cash equivalents and restricted cash (1,483 ) 61 (1,422 ) Cash, cash equivalents and restricted cash at beginning of period 3,301 195 3,496 Cash, cash equivalents and restricted cash at end of period $ 1,818 $ 256 $ 2,074 Tax accounting for intra-entity asset transfers In October 2016, the FASB issued ASU 2016-16, Income Taxes (Topic 740): Intra-Entity Transfers of Assets Other Than Inventory. This ASU prohibits the recognition of current and deferred income taxes for an intra-entity asset transfer until the asset has been sold to an outside party. In addition, interpretations of this guidance have developed in practice for transfers of certain intangible and tangible assets. This prohibition on recognition is an exception to the principle of comprehensive recognition of current and deferred income taxes. To more faithfully represent the economics of intra-entity asset transfers, the amendments in this ASU require that entities recognize the income tax consequences of an intra-entity transfer of an asset other than inventory when the transfer occurs. This ASU does not change the pre-tax effects of an intra-entity asset transfer under Topic 810, Consolidation, or for an intra-entity transfer of inventory. The Company adopted this new accounting guidance as of September 1, 2018 (fiscal 2019) on a modified retrospective basis and the adoption did not have a material impact on the Company's results of operations. Classification of certain cash receipts and cash payments In August 2016, the FASB issued ASU 2016-15, Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments. This ASU addresses the classification of certain specific cash flow issues including debt prepayment or extinguishment costs, settlement of certain debt instruments, contingent consideration payments made after a business combination, proceeds from the settlement of certain insurance claims, and distributions received from equity method investees. The Company adopted this new accounting guidance as of September 1, 2018 (fiscal 2019) and adoption did not have a material impact on the Company’s Statement of Cash Flows. Revenue recognition on contracts with customers In May 2014, the FASB issued ASU 2014-09, Revenue from Contracts with Customers (Topic 606). Subsequently, the FASB issued additional ASUs, which further clarify this guidance. This ASU provides a single principles-based revenue recognition model with 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. The Company adopted this new accounting guidance on September 1, 2018 (fiscal 2019) using the modified retrospective transition approach for all contracts and the adoption did not have a material impact on the Company’s results of operations. The adoption mainly resulted in changes to recognition of revenues related to loyalty programs and gift card breakage. Prior to adoption, the Company used the cost approach to account for loyalty programs. Upon adoption, the Company uses the deferred revenue approach. Prior to adoption, gift card breakage was primarily recognized at point of sale. Upon adoption, all gift card breakage is recognized based on the redemption pattern. The changes in accounting for loyalty programs and gift card breakage resulted in a cumulative transition adjustment of $98 million in retained earnings. See note 15, sales, for additional disclosures. The updated accounting policy for revenue recognition and loyalty programs are as follows: Revenue recognition 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. Returns are estimated using expected returns. Loyalty programs and gift card 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 program 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. Classification and measurement of financial instruments In January 2016, the FASB issued ASU 2016-01, Financial Instruments - Overall (Subtopic 825-10): Recognition and Measurement of Financial Assets and Financial Liabilities. Subsequently, the FASB issued additional ASUs, which further clarify this guidance. This ASU requires equity investments (except those under the equity method of accounting or those that result in the consolidation of an investee) to be measured at fair value with changes in fair value recognized in net income. However, an entity may choose to measure equity investments that do not have readily determinable fair values at cost less impairment, if any, and changes resulting from observable price changes in orderly transactions for the identical or a similar investment of the same issuer. This simplifies the impairment assessment of equity investments previous held at cost. Separate presentation of financial assets and liabilities by measurement category is required. The Company adopted this new accounting guidance as of September 1, 2018 (fiscal 2019) and adoption did not have a material impact on the Company’s results of operations, cash flows or financial position. The new guidance was applied on a modified retrospective basis, with the exception of the amendments related to the measurement alternative for equity investments without readily determinable fair values, which was applied on a prospective basis. New accounting pronouncements not yet adopted 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. 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. Financial instruments - hedging and derivatives In October 2018, the FASB issued 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. This ASU is effective for fiscal years beginning after December 15, 2018 (fiscal 2020), and interim periods within those fiscal years, with early adoption permitted. The new guidance must be applied on a prospective basis. 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. 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. This ASU 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). 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 amendments in this ASU can be applied either retrospectively or prospectively to all implementation costs incurred after 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 financial position or results of operations. 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 2022) and must be applied on a full 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 and disclosures. Fair value measurement In August 2018, the FASB issued ASU 2018-13, Fair Value Measurement (Topic 820). This 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. 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. This ASU is effective for annual periods beginning after December 15, 2018 (fiscal 2020), and interim periods within those years. 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. 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”) that 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. This ASU is effective for fiscal years beginning after December 15, 2018 (fiscal 2020), and interim periods within those fiscal years, with early adoption permitted. The new guidance must be applied either on a prospective basis in the period of adoption or retrospectively to each period in which the effect of the change in the U.S. federal corporate income tax rate are recognized. 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. Leases In February 2016, the FASB issued ASU 2016-02, Leases (Topic 842), 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. The lease liability is initially measured at the present value of the future lease payments and the asset is based on the liability, subject to certain adjustments. 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. The new guidance is effective for fiscal years beginning after December 15, 2018 (fiscal 2020), and interim periods within those fiscal years. In transition, lessees are required to recognize and measure leases at the beginning of the earliest period presented (fiscal 2018) using a modified retrospective approach which includes a number of optional practical expedients that entities may elect to apply. In July 2018, a new ASU was issued to provide relief to the companies from restating the comparative period. Pursuant to this ASU, WBA will not restate comparative periods presented in the Company’s financial statements in the period of adoption. The Company will adopt this ASU and related amendments on September 1, 2019 (fiscal 2020). The Company continues to plan for adoption and implementation of this ASU, including implementing a new global lease accounting system, evaluating practical expedient and accounting policy elections and assessing the overall financial statement impact. This ASU will have a material impact on the Company’s financial position. The impact on the Company’s results of operations is being evaluated. The impact of this ASU is non-cash in nature and will not affect the Company’s cash flows. |
Acquisitions (Tables)
Acquisitions (Tables) | 9 Months Ended |
May 31, 2019 | |
Business Combinations [Abstract] | |
Schedule of Consideration for the Acquisition | 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 May 31, 2019 (in millions): 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 |
Schedule of Definite Lived Intangible Assets | The identified definite-lived intangible assets were as follows: Definite-lived intangible assets Weighted-average useful life (in years) Amount (in millions) Customer relationships 12 $ 1,800 Favorable lease interests 10 219 Trade names 2 20 Total $ 2,039 |
Schedule of Pro Forma Information | The following table presents supplemental unaudited condensed pro forma consolidated sales for the three and nine months ended May 31, 2018 and gives effect to the acquisition of all 1,932 stores acquired under the amended and restated asset purchase agreement as if such had been acquired on September 1, 2017. Pro forma net earnings of the Company for the three and nine months ended May 31, 2018 , 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 disclosures. The unaudited condensed 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. Three months ended May 31, Nine months ended May 31, (in millions) 2018 2018 Sales $ 34,366 $ 102,059 |
Exit and disposal activities (T
Exit and disposal activities (Tables) | 9 Months Ended |
May 31, 2019 | |
Restructuring and Related Activities [Abstract] | |
Restructuring and Related Costs | Costs related to the Store Optimization Program were as follows (in millions): Three months ended May 31, 2019 Nine months ended May 31, 2019 Lease obligations and other real estate costs $ 44 $ 45 Employee severance and other exit costs 5 54 Total costs $ 49 $ 99 Costs related to the Transformational Cost Management Program, which were primarily recorded within selling, general and administrative expenses were as follows (in millions): Three months ended May 31, 2019 Retail Pharmacy USA Retail Pharmacy International Pharmaceutical Wholesale Walgreens Boots Alliance, Inc. Employee severance and other exit costs $ 7 $ 5 $ 11 $ 24 Asset impairments 1 5 16 11 32 Total costs $ 13 $ 21 $ 22 $ 56 Nine months ended May 31, 2019 Retail Pharmacy USA Retail Pharmacy International Pharmaceutical Wholesale Walgreens Boots Alliance, Inc. Employee severance and other exit costs $ 24 $ 39 $ 22 $ 86 Asset impairments 1 5 48 96 149 Total costs $ 29 $ 88 $ 119 $ 235 1 Primarily includes write down of certain software and inventory. The changes in liabilities related to the Transformational Cost Management Program include the following (in millions): Employee severance and other exit costs Asset impairments Total Balance at August 31, 2018 $ — $ — $ — Costs 86 149 235 Payments (57 ) — (57 ) Other - non cash — (149 ) (149 ) Balance at May 31, 2019 $ 28 $ — $ 28 |
Accrued Expenses Related to Cost Transformation | The changes in liabilities related to the Store Optimization Program include the following (in millions): Lease obligations and other real estate costs Employee severance and other exit costs Total Balance at August 31, 2018 $ 308 $ 21 $ 329 Costs 45 54 99 Payments (125 ) (69 ) (194 ) Other - non cash 1 104 — 104 Balance at May 31, 2019 $ 332 $ 6 $ 338 1 Primarily represents unfavorable lease liabilities from acquired Rite Aid stores. 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, 2018 $ 414 $ 7 $ 421 Payments (67 ) (3 ) (70 ) Other - non cash 51 — 51 Balance at May 31, 2019 $ 399 $ 4 $ 403 |
Operating leases (Tables)
Operating leases (Tables) | 9 Months Ended |
May 31, 2019 | |
Leases [Abstract] | |
Reserve for Facility Closings and Related Lease Termination Charges | The changes in reserve for facility closings and related lease termination charges include the following (in millions): For the nine months ended May 31, 2019 For the twelve months ended August 31, 2018 Balance at beginning of period $ 964 $ 718 Provision for present value of non-cancellable lease payments on closed facilities 11 52 Changes in assumptions 54 19 Accretion expense 30 58 Other - non cash 1 124 338 Cash payments, net of sublease income (240 ) (221 ) Balance at end of period $ 943 $ 964 1 Represents unfavorable lease liabilities from acquired Rite Aid stores. |
Equity method investments (Tabl
Equity method investments (Tables) | 9 Months Ended |
May 31, 2019 | |
Equity Method Investments and Joint Ventures [Abstract] | |
Equity Method Investments | Equity method investments as of May 31, 2019 and August 31, 2018 , were as follows (in millions, except percentages): May 31, 2019 August 31, 2018 Carrying value Ownership percentage Carrying value Ownership percentage AmerisourceBergen $ 5,175 27% $ 5,138 26% Others 1,498 8% - 50% 1,472 8% - 50% Total $ 6,673 $ 6,610 |
Goodwill and other intangible_2
Goodwill and other intangible assets (Tables) | 9 Months Ended |
May 31, 2019 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Schedule of Goodwill | Changes in the carrying amount of goodwill by reportable segment consist of the following (in millions): Retail Pharmacy USA Retail Pharmacy International Pharmaceutical Wholesale Walgreens Boots Alliance, Inc. Balance at August 31, 2018 $ 10,483 $ 3,370 $ 3,061 $ 16,914 Acquisitions 8 — — 8 Disposals — (8 ) — (8 ) Currency translation adjustments — (104 ) (93 ) (197 ) Balance at May 31, 2019 $ 10,491 $ 3,258 $ 2,968 $ 16,717 |
Schedule of Finite-Lived Intangible Assets by Major Class | The carrying amount and accumulated amortization of intangible assets consist of the following (in millions): May 31, 2019 August 31, 2018 Gross amortizable intangible assets Customer relationships and loyalty card holders $ 4,329 $ 4,235 Favorable lease interests and non-compete agreements 661 680 Trade names and trademarks 545 489 Purchasing and payer contracts 382 390 Total gross amortizable intangible assets 5,917 5,794 Accumulated amortization Customer relationships and loyalty card holders $ 1,194 $ 997 Favorable lease interests and non-compete agreements 396 359 Trade names and trademarks 247 206 Purchasing and payer contracts 93 78 Total accumulated amortization 1,930 1,640 Total amortizable intangible assets, net $ 3,987 $ 4,154 Indefinite-lived intangible assets Trade names and trademarks $ 5,326 $ 5,557 Pharmacy licenses 2,012 2,072 Total indefinite-lived intangible assets $ 7,338 $ 7,629 Total intangible assets, net $ 11,325 $ 11,783 |
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 May 31, 2019 is as follows (in millions): 2020 2021 2022 2023 2024 Estimated annual amortization expense $ 481 $ 432 $ 412 $ 377 $ 356 |
Debt (Tables)
Debt (Tables) | 9 Months Ended |
May 31, 2019 | |
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): May 31, 2019 August 31, 2018 Short-term debt 1 Commercial paper $ 2,820 $ 430 Credit facilities 2 948 999 $8 billion note issuance 3,4 2.700% unsecured notes due 2019 1,249 — $1 billion note issuance 5 5.250% unsecured notes due 2019 6 — 249 Other 7 465 288 Total short-term debt $ 5,483 $ 1,966 Long-term debt 1 $6 billion note issuance 3,4 3.450% unsecured notes due 2026 $ 1,889 $ 1,888 4.650% unsecured notes due 2046 591 590 $8 billion note issuance 3,4 2.700% unsecured notes due 2019 — 1,248 3.300% unsecured notes due 2021 1,246 1,245 3.800% unsecured notes due 2024 1,991 1,990 4.500% unsecured notes due 2034 495 495 4.800% unsecured notes due 2044 1,492 1,492 £700 million note issuance 3,4 2.875% unsecured Pound sterling notes due 2020 503 517 3.600% unsecured Pound sterling notes due 2025 376 387 €750 million note issuance 3,4 2.125% unsecured Euro notes due 2026 833 868 $4 billion note issuance 3,5 3.100% unsecured notes due 2022 1,197 1,196 4.400% unsecured notes due 2042 493 492 Credit facilities 2 996 — Other 8 25 23 Total long-term debt, less current portion $ 12,127 $ 12,431 1 Carrying values are presented net of unamortized discount and debt issuance costs, where applicable, and foreign currency denominated debt has been translated using the spot rates at May 31, 2019 and August 31, 2018 , respectively. 2 Credit facilities include debt outstanding under the various credit facilities described in more detail below. 3 The $6 billion , $8 billion , £0.7 billion , €0.75 billion and $4 billion note issuances as of May 31, 2019 had fair values and carrying values of $2.5 billion and $2.5 billion , $6.4 billion and $6.5 billion , $0.9 billion and $0.9 billion , $0.9 billion and $0.8 billion and $1.7 billion and $1.7 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 May 31, 2019 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 May 31, 2019 . 4 Notes 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. 5 Notes 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. 6 Includes interest rate swap fair market value adjustments. See note 9 , fair value measurements , for additional fair value disclosures. 7 Other short-term debt represents a mix of fixed and variable rate debt with various maturities and working capital facilities denominated in various currencies. 8 Other long-term debt represents a mix of fixed and variable rate debt in various currencies with various maturities. |
Long-Term Debt | 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): May 31, 2019 August 31, 2018 Short-term debt 1 Commercial paper $ 2,820 $ 430 Credit facilities 2 948 999 $8 billion note issuance 3,4 2.700% unsecured notes due 2019 1,249 — $1 billion note issuance 5 5.250% unsecured notes due 2019 6 — 249 Other 7 465 288 Total short-term debt $ 5,483 $ 1,966 Long-term debt 1 $6 billion note issuance 3,4 3.450% unsecured notes due 2026 $ 1,889 $ 1,888 4.650% unsecured notes due 2046 591 590 $8 billion note issuance 3,4 2.700% unsecured notes due 2019 — 1,248 3.300% unsecured notes due 2021 1,246 1,245 3.800% unsecured notes due 2024 1,991 1,990 4.500% unsecured notes due 2034 495 495 4.800% unsecured notes due 2044 1,492 1,492 £700 million note issuance 3,4 2.875% unsecured Pound sterling notes due 2020 503 517 3.600% unsecured Pound sterling notes due 2025 376 387 €750 million note issuance 3,4 2.125% unsecured Euro notes due 2026 833 868 $4 billion note issuance 3,5 3.100% unsecured notes due 2022 1,197 1,196 4.400% unsecured notes due 2042 493 492 Credit facilities 2 996 — Other 8 25 23 Total long-term debt, less current portion $ 12,127 $ 12,431 1 Carrying values are presented net of unamortized discount and debt issuance costs, where applicable, and foreign currency denominated debt has been translated using the spot rates at May 31, 2019 and August 31, 2018 , respectively. 2 Credit facilities include debt outstanding under the various credit facilities described in more detail below. 3 The $6 billion , $8 billion , £0.7 billion , €0.75 billion and $4 billion note issuances as of May 31, 2019 had fair values and carrying values of $2.5 billion and $2.5 billion , $6.4 billion and $6.5 billion , $0.9 billion and $0.9 billion , $0.9 billion and $0.8 billion and $1.7 billion and $1.7 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 May 31, 2019 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 May 31, 2019 . 4 Notes 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. 5 Notes 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. 6 Includes interest rate swap fair market value adjustments. See note 9 , fair value measurements , for additional fair value disclosures. 7 Other short-term debt represents a mix of fixed and variable rate debt with various maturities and working capital facilities denominated in various currencies. 8 Other long-term debt represents a mix of fixed and variable rate debt in various currencies with various maturities. |
Financial instruments (Tables)
Financial instruments (Tables) | 9 Months Ended |
May 31, 2019 | |
Derivative Instruments and Hedging Activities Disclosure [Abstract] | |
Notional Amounts, Fair Value and Balance Sheet Presentation of Derivative Instruments Outstanding | The notional amounts and fair value of derivative instruments outstanding were as follows (in millions): May 31, 2019 Notional Fair value Location in Consolidated Condensed Balance Sheets Derivatives designated as hedges: Foreign currency forwards $ 37 $ 1 Other current assets Cross currency interest rate swaps 800 39 Other non-current assets Derivatives not designated as hedges: Foreign currency forwards 3,105 107 Other current assets Foreign currency forwards 658 3 Accrued expenses and other liabilities August 31, 2018 Notional Fair value Location in Consolidated Condensed Balance Sheets Derivatives designated as hedges: Interest rate swaps $ 250 $ 1 Accrued expenses and other liabilities Foreign currency forwards 15 — Other current assets Derivatives not designated as hedges: Foreign currency forwards 3,273 52 Other current assets Foreign currency forwards 825 4 Accrued expenses and other liabilities |
Gains and (Losses) due to Changes in Fair Value Recognized in Earnings | The income and (expense) due to changes in fair value of these derivative instruments were as follows (in millions): Three months ended Nine months ended Location in Consolidated Condensed Statements of Earnings 2019 2018 2019 2018 Foreign currency forwards Selling, general and administrative expenses $ 140 $ 108 $ 80 $ (75 ) Foreign currency forwards Other income (expense) (8 ) 3 (10 ) 36 |
Fair value measurements (Tables
Fair value measurements (Tables) | 9 Months Ended |
May 31, 2019 | |
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): May 31, 2019 Level 1 Level 2 Level 3 Assets : Money market funds 1 $ 177 $ 177 $ — $ — Investments in equity securities 2 4 4 — — Foreign currency forwards 3 108 — 108 — Cross currency interest rate swaps 4 39 — 39 — Liabilities : Foreign currency forwards 3 3 — 3 — Cross currency interest rate swaps 4 — — — — August 31, 2018 Level 1 Level 2 Level 3 Assets : Money market funds 1 $ 227 $ 227 $ — $ — Available-for-sale investments 2 1 1 — — Foreign currency forwards 3 52 — 52 — Liabilities : Interest rate swaps 4 1 — 1 — Foreign currency forwards 3 4 — 4 — 1 Money market funds are valued at the closing price reported by the fund sponsor. 2 Fair value of quoted investments are based on current bid prices as of May 31, 2019 and August 31, 2018 . 3 The 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. 4 The 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. |
Retirement benefits (Tables)
Retirement benefits (Tables) | 9 Months Ended |
May 31, 2019 | |
Retirement Benefits [Abstract] | |
Components of Net Periodic Benefit Cost | Components of net periodic pension costs for the defined benefit pension plans (in millions): Three months ended Nine months ended Location in Consolidated Condensed Statements of Earnings 2019 2018 2019 2018 Service costs Selling, general and administrative expenses $ 2 $ 2 $ 4 $ 5 Interest costs Other expense 1 49 50 148 146 Expected returns on plan assets/other Other income 1 (61 ) (54 ) (186 ) (158 ) Total net periodic pension costs (income) $ (10 ) $ (2 ) $ (34 ) $ (7 ) 1 Shown as Other income (expense) on Consolidated Condensed Statements of Earnings. |
Accumulated other comprehensi_2
Accumulated other comprehensive income (loss) (Tables) | 9 Months Ended |
May 31, 2019 | |
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 (loss) ("AOCI") by component and net of tax for the three and nine months ended May 31, 2019 and May 31, 2018 (in millions): Pension/ post- Unrealized Share of AOCI of Cumulative Total Balance at February 28, 2019 $ 95 $ (40 ) $ 2 $ (2,762 ) $ (2,705 ) Other comprehensive income (loss) before reclassification adjustments 1 56 1 (733 ) (675 ) Amounts reclassified from AOCI (4 ) 1 — — (2 ) Tax benefit (provision) 1 (14 ) — 1 (12 ) Net change in other comprehensive (2 ) 44 1 (732 ) (689 ) Balance at May 31, 2019 $ 93 $ 4 $ 4 $ (3,493 ) $ (3,393 ) Pension/ post- Unrealized Share of AOCI of Cumulative Total Balance at August 31, 2018 $ 101 $ (30 ) $ 3 $ (3,076 ) $ (3,002 ) Other comprehensive income (loss) before reclassification adjustments 1 40 (1 ) (415 ) (376 ) Amounts reclassified from AOCI (12 ) 4 — — (8 ) Other — — — — — Tax benefit (provision) 3 (10 ) — (1 ) (8 ) Net change in other comprehensive (8 ) 33 (1 ) (416 ) (393 ) Balance at May 31, 2019 $ 93 $ 4 $ 4 $ (3,493 ) $ (3,393 ) Pension/ post- Unrealized Share of AOCI of Cumulative Total Balance at February 28, 2018 $ (141 ) $ (32 ) $ — $ (1,990 ) $ (2,163 ) Other comprehensive income (loss) before reclassification adjustments — — 3 (647 ) (644 ) Amounts reclassified from AOCI (2 ) 1 11 8 18 Tax benefit (provision) — — (3 ) — (3 ) Net change in other comprehensive (2 ) 1 11 (639 ) (629 ) Balance at May 31, 2018 $ (143 ) $ (31 ) $ 11 $ (2,629 ) $ (2,792 ) Pension/ post- Unrealized Share of AOCI of Cumulative Total Balance at August 31, 2017 $ (139 ) $ (33 ) $ (2 ) $ (2,877 ) $ (3,051 ) Other comprehensive income (loss) before reclassification adjustments (1 ) — 7 240 246 Amounts reclassified from AOCI (5 ) 3 11 8 17 Tax benefit (provision) 2 (1 ) (5 ) — (4 ) Net change in other comprehensive (4 ) 2 13 248 259 Balance at May 31, 2018 $ (143 ) $ (31 ) $ 11 $ (2,629 ) $ (2,792 ) |
Segment reporting (Tables)
Segment reporting (Tables) | 9 Months Ended |
May 31, 2019 | |
Segment Reporting [Abstract] | |
Reconciliation of Operating Income (Loss) from Segments to Consolidated | The following table reflects results of operations and reconciles adjusted operating income to operating income for the Company's reportable segments (in millions): Retail Pharmacy USA Retail Pharmacy International Pharmaceutical Wholesale Eliminations 1 Walgreens Boots Alliance, Inc. Three months ended May 31, 2019 Sales $ 26,513 $ 2,776 $ 5,865 $ (563 ) $ 34,591 Adjusted operating income $ 1,286 $ 165 $ 265 $ 1 $ 1,717 Acquisition-related amortization (127 ) Transformational cost management (86 ) Acquisition-related costs (80 ) Adjustments to equity earnings in AmerisourceBergen (137 ) Store optimization (49 ) LIFO provision (29 ) Certain legal and regulatory accruals and settlements (7 ) Operating income $ 1,203 Three months ended May 31, 2018 Sales $ 25,917 $ 2,995 $ 5,965 $ (543 ) $ 34,334 Adjusted operating income 3 $ 1,492 $ 193 $ 258 $ — $ 1,943 Acquisition-related amortization (131 ) Acquisition-related costs (57 ) Adjustments to equity earnings in AmerisourceBergen (60 ) Store optimization (24 ) LIFO provision (69 ) Certain legal and regulatory accruals and settlements 2 (5 ) Operating income 3 $ 1,597 Retail Pharmacy USA Retail Pharmacy International Pharmaceutical Wholesale Eliminations 1 Walgreens Boots Alliance, Inc. Nine months ended May 31, 2019 Sales $ 78,491 $ 8,759 $ 17,311 $ (1,649 ) $ 102,912 Adjusted operating income $ 4,119 $ 553 $ 710 $ 1 $ 5,384 Acquisition-related amortization (373 ) Transformational cost management (265 ) Acquisition-related costs (228 ) Adjustments to equity earnings in AmerisourceBergen (191 ) Store optimization (99 ) LIFO provision (77 ) Certain legal and regulatory accruals and settlements (31 ) Operating income $ 4,120 Nine months ended May 31, 2018 Sales $ 72,884 $ 9,395 $ 17,438 $ (1,622 ) $ 98,095 Adjusted operating income 3 $ 4,520 $ 674 $ 714 $ 1 $ 5,909 Acquisition-related amortization (329 ) Acquisition-related costs (173 ) Adjustments to equity earnings in AmerisourceBergen (136 ) Store optimization (24 ) LIFO provision (166 ) Certain legal and regulatory accruals and settlements 2 (120 ) Asset recovery 15 Hurricane-related costs (83 ) Operating income 3 $ 4,893 1 Eliminations relate to intersegment sales between the Pharmaceutical Wholesale and the Retail Pharmacy International segments. 2 As previously disclosed, beginning in the quarter ended August 31, 2018, management reviewed and refined its practice to include all charges related to the matters included in certain legal and regulatory accruals and settlements. In order to present non-GAAP measures on a consistent basis for fiscal year 2018, the Company included adjustments in the quarter ended August 31, 2018 of $14 million , $50 million and $5 million which were previously accrued in the Company’s financial statements for the quarters ended November 30, 2017, February 28, 2018 and May 31, 2018, respectively. These additional adjustments impact the comparability of such results to the results reported in prior and future quarters. 3 The Company adopted new accounting guidance in Accounting Standards Update 2017-07 as of September 1, 2018 (fiscal 2019) on a retrospective basis for the Consolidated Condensed Statements of Earnings presentation. See note 17 , new accounting pronouncements , for further information. |
Sales (Tables)
Sales (Tables) | 9 Months Ended |
May 31, 2019 | |
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): Three months ended May 31, Nine months ended May 31, 2019 2018 2019 2018 Retail Pharmacy USA Pharmacy $ 19,585 $ 18,790 $ 57,624 $ 52,258 Retail 6,928 7,127 20,867 20,626 Total 26,513 25,917 78,491 72,884 Retail Pharmacy International Pharmacy 1,047 1,111 3,096 3,316 Retail 1,730 1,884 5,662 6,079 Total 2,776 2,995 8,759 9,395 Pharmaceutical Wholesale 5,865 5,965 17,311 17,438 Eliminations 1 (563 ) (543 ) (1,649 ) (1,622 ) Walgreens Boots Alliance, Inc. $ 34,591 $ 34,334 $ 102,912 $ 98,095 1 Eliminations relate to intersegment sales between the Pharmaceutical Wholesale and the Retail Pharmacy International segments. |
Related parties (Tables)
Related parties (Tables) | 9 Months Ended |
May 31, 2019 | |
Related Party Transactions [Abstract] | |
Schedule of Related Party Transactions | Related party transactions with AmerisourceBergen (in millions): Three months ended Nine months ended 2019 2018 2019 2018 Purchases, net $ 14,684 $ 15,830 $ 43,070 $ 39,566 May 31, 2019 August 31, 2018 Trade accounts payable, net $ 6,520 $ 6,274 |
New accounting pronouncements (
New accounting pronouncements (Tables) | 9 Months Ended |
May 31, 2019 | |
New Accounting Pronouncements and Changes in Accounting Principles [Abstract] | |
Schedule of New Accounting Pronouncements and Changes in Accounting Principles | The following is a reconciliation of the effect of the reclassification of all other net cost components (excluding service cost component) of net pension cost and net postretirement benefit cost from selling, general and administrative expenses to other income (expense) in the Company’s Consolidated Condensed Statements of Earnings (in millions): As reported Adjustments As revised Three months ended May 31, 2018 Selling, general and administrative expenses $ 6,231 $ 4 $ 6,235 Operating income 1,601 (4 ) 1,597 Other income (expense) (4 ) 4 — As reported Adjustments As revised Nine months ended May 31, 2018 Selling, general and administrative expenses $ 18,456 $ 10 $ 18,466 Operating income 4,903 (10 ) 4,893 Other income (expense) (132 ) 10 (122 ) The following is a reconciliation of the effect on the relevant line items on the Consolidated Condensed Statements of Cash Flows for the nine months ended May 31, 2018 as a result of adopting this new accounting guidance (in millions): As reported Adjustments As revised Nine months ended May 31, 2018 Trade accounts payable $ 627 $ 48 $ 675 Accrued expenses and other liabilities 10 6 16 Other non-current assets and liabilities (117 ) 7 (110 ) Net cash provided by operating activities 5,385 61 5,446 Effect of exchange rate changes on cash, cash equivalents and restricted cash 26 1 27 Net increase (decrease) in cash, cash equivalents and restricted cash (1,483 ) 61 (1,422 ) Cash, cash equivalents and restricted cash at beginning of period 3,301 195 3,496 Cash, cash equivalents and restricted cash at end of period $ 1,818 $ 256 $ 2,074 |
Supplemental information (Table
Supplemental information (Tables) | 9 Months Ended |
May 31, 2019 | |
Balance Sheet Related Disclosures [Abstract] | |
Schedule of Depreciation and Amortization Expense | The Company has recorded the following depreciation and amortization expense in the Consolidated Condensed Statements of Earnings (in millions): Three months ended Nine months ended 2019 2018 2019 2018 Depreciation expense $ 379 $ 358 $ 1,096 $ 1,040 Intangible asset and other amortization 142 84 415 260 Total depreciation and amortization expense $ 522 $ 442 $ 1,512 $ 1,300 |
Schedule of Cash and Cash Equivalents | The following represents a reconciliation of cash and cash equivalents in the Consolidated Condensed Balance Sheets to total cash, cash equivalents and restricted cash in the Consolidated Condensed Statements of Cash Flows as of May 31, 2019 and August 31, 2018 (in millions): May 31, 2019 August 31, 2018 Cash and cash equivalents $ 839 $ 785 Restricted cash (included in other current assets) 199 190 Cash, cash equivalents and restricted cash $ 1,038 $ 975 |
Restrictions on Cash and Cash Equivalents | The following represents a reconciliation of cash and cash equivalents in the Consolidated Condensed Balance Sheets to total cash, cash equivalents and restricted cash in the Consolidated Condensed Statements of Cash Flows as of May 31, 2019 and August 31, 2018 (in millions): May 31, 2019 August 31, 2018 Cash and cash equivalents $ 839 $ 785 Restricted cash (included in other current assets) 199 190 Cash, cash equivalents and restricted cash $ 1,038 $ 975 |
Schedule of Dividends Payable | Cash dividends per common share declared during the nine months ended fiscal 2019 and the nine months ended fiscal 2018 were as follows: Quarter ended 2019 2018 November $ 0.440 $ 0.400 February 0.440 0.400 May 0.440 0.400 $ 1.320 $ 1.200 |
Acquisitions - Narrative (Deta
Acquisitions - Narrative (Details) $ in Millions | Sep. 19, 2017USD ($)distribution_centerstore | May 31, 2019USD ($)distribution_centerstore | Aug. 31, 2018USD ($)store |
Business Acquisition [Line Items] | |||
Goodwill | $ 16,717 | $ 16,914 | |
Rite Aid corporation | |||
Business Acquisition [Line Items] | |||
Number of locations acquired | store | 1,932 | 1,932 | 1,932 |
Number of distribution centers expected to be acquired | distribution_center | 3 | 2 | |
Consideration to be transferred | $ 4,375 | ||
Cash consideration | $ 4,157 | $ 4,200 | |
Goodwill | 1,331 | ||
Rite Aid corporation - first distribution center | |||
Business Acquisition [Line Items] | |||
Payments to acquire businesses, gross | 61 | ||
Fred, Inc | |||
Business Acquisition [Line Items] | |||
Consideration transferred to acquire assets | $ 177 |
Acquisitions - Schedule of con
Acquisitions - Schedule of consideration (Details) - USD ($) $ in Millions | 9 Months Ended | |
May 31, 2019 | Aug. 31, 2018 | |
Identifiable assets acquired and liabilities assumed | ||
Goodwill | $ 16,717 | $ 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 - Intangible Asse
Acquisitions - Intangible Assets (Details) - Rite Aid corporation $ in Millions | 9 Months Ended |
May 31, 2019USD ($) | |
Business Acquisition [Line Items] | |
Finite-lived intangibles | $ 2,039 |
Customer relationships | |
Business Acquisition [Line Items] | |
Weighted-average useful life (in years) | 12 years |
Finite-lived intangibles | $ 1,800 |
Favorable lease interests | |
Business Acquisition [Line Items] | |
Weighted-average useful life (in years) | 10 years |
Finite-lived intangibles | $ 219 |
Trade names | |
Business Acquisition [Line Items] | |
Weighted-average useful life (in years) | 2 years |
Finite-lived intangibles | $ 20 |
Acquisitions - Pro Forma (Deta
Acquisitions - Pro Forma (Details) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended |
May 31, 2018 | May 31, 2018 | |
Rite Aid corporation | ||
Business Acquisition [Line Items] | ||
Sales | $ 34,366 | $ 102,059 |
Exit and disposal activities -
Exit and disposal activities - Restructuring costs and reserves (Details) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | 19 Months Ended |
May 31, 2019 | May 31, 2019 | May 31, 2019 | |
Transformational cost management program | |||
Restructuring Cost and Reserve [Line Items] | |||
Restructuring costs | $ 56 | $ 235 | |
Transformational cost management program | Severance and other business transition and exit costs | |||
Restructuring Cost and Reserve [Line Items] | |||
Restructuring costs | 24 | 86 | |
Transformational cost management program | Asset impairments | |||
Restructuring Cost and Reserve [Line Items] | |||
Restructuring costs | 32 | 149 | |
Transformational cost management program | Retail Pharmacy USA | |||
Restructuring Cost and Reserve [Line Items] | |||
Restructuring costs | 13 | 29 | |
Transformational cost management program | Retail Pharmacy USA | Severance and other business transition and exit costs | |||
Restructuring Cost and Reserve [Line Items] | |||
Restructuring costs | 7 | 24 | |
Transformational cost management program | Retail Pharmacy USA | Asset impairments | |||
Restructuring Cost and Reserve [Line Items] | |||
Restructuring costs | 5 | 5 | |
Transformational cost management program | Retail Pharmacy International | |||
Restructuring Cost and Reserve [Line Items] | |||
Restructuring costs | 21 | 88 | |
Transformational cost management program | Retail Pharmacy International | Severance and other business transition and exit costs | |||
Restructuring Cost and Reserve [Line Items] | |||
Restructuring costs | 5 | 39 | |
Transformational cost management program | Retail Pharmacy International | Asset impairments | |||
Restructuring Cost and Reserve [Line Items] | |||
Restructuring costs | 16 | 48 | |
Transformational cost management program | Pharmaceutical Wholesale | |||
Restructuring Cost and Reserve [Line Items] | |||
Restructuring costs | 22 | 119 | |
Transformational cost management program | Pharmaceutical Wholesale | Severance and other business transition and exit costs | |||
Restructuring Cost and Reserve [Line Items] | |||
Restructuring costs | 11 | 22 | |
Transformational cost management program | Pharmaceutical Wholesale | Asset impairments | |||
Restructuring Cost and Reserve [Line Items] | |||
Restructuring costs | 11 | 96 | |
Store optimization program | |||
Restructuring Cost and Reserve [Line Items] | |||
Restructuring costs | 49 | 99 | $ 200 |
Store optimization program | Severance and other business transition and exit costs | |||
Restructuring Cost and Reserve [Line Items] | |||
Restructuring costs | 5 | 54 | 136 |
Store optimization program | Lease obligations and other real estate costs | |||
Restructuring Cost and Reserve [Line Items] | |||
Restructuring costs | $ 44 | $ 45 | $ 64 |
Exit and disposal activities -
Exit and disposal activities - Narrative and Changes in Restructuring Liabilities (Details) $ in Millions | Jun. 27, 2019store | Oct. 24, 2017store | May 31, 2019USD ($) | May 31, 2019USD ($) | May 31, 2019USD ($) |
Transformational cost management program | |||||
Restructuring Reserve [Roll Forward] | |||||
Beginning Balance | $ 0 | ||||
Costs | 235 | ||||
Payments | (57) | ||||
Other - non cash | (149) | ||||
Ending Balance | $ 28 | 28 | $ 28 | ||
Restructuring costs | 56 | 235 | |||
Transformational cost management program | Severance and other business transition and exit costs | |||||
Restructuring Reserve [Roll Forward] | |||||
Beginning Balance | 0 | ||||
Costs | 86 | ||||
Payments | (57) | ||||
Other - non cash | 0 | ||||
Ending Balance | 28 | 28 | 28 | ||
Restructuring costs | 24 | 86 | |||
Transformational cost management program | Asset impairments | |||||
Restructuring Reserve [Roll Forward] | |||||
Beginning Balance | 0 | ||||
Costs | 149 | ||||
Payments | 0 | ||||
Other - non cash | (149) | ||||
Ending Balance | 0 | 0 | 0 | ||
Restructuring costs | 32 | 149 | |||
Store optimization program | |||||
Restructuring Reserve [Roll Forward] | |||||
Beginning Balance | 329 | ||||
Costs | 99 | ||||
Payments | (194) | ||||
Other - non cash | 104 | ||||
Ending Balance | 338 | 338 | 338 | ||
Number of stores expected to close | store | 600 | ||||
Expected cost | 350 | 350 | 350 | ||
Restructuring costs | 49 | 99 | 200 | ||
Store optimization program | Severance and other business transition and exit costs | |||||
Restructuring Reserve [Roll Forward] | |||||
Beginning Balance | 21 | ||||
Costs | 54 | ||||
Payments | (69) | ||||
Other - non cash | 0 | ||||
Ending Balance | 6 | 6 | 6 | ||
Expected cost | 190 | 190 | 190 | ||
Restructuring costs | 5 | 54 | 136 | ||
Store optimization program | Lease obligations and other real estate costs | |||||
Restructuring Reserve [Roll Forward] | |||||
Beginning Balance | 308 | ||||
Costs | 45 | ||||
Payments | (125) | ||||
Other - non cash | 104 | ||||
Ending Balance | 332 | 332 | 332 | ||
Expected cost | 160 | 160 | 160 | ||
Restructuring costs | 44 | 45 | 64 | ||
Cost Transformation Program | |||||
Restructuring Reserve [Roll Forward] | |||||
Beginning Balance | 421 | ||||
Payments | (70) | ||||
Other - non cash | 51 | ||||
Ending Balance | 403 | 403 | 403 | ||
Cost Transformation Program | Severance and other business transition and exit costs | |||||
Restructuring Reserve [Roll Forward] | |||||
Beginning Balance | 7 | ||||
Payments | (3) | ||||
Other - non cash | 0 | ||||
Ending Balance | 4 | 4 | 4 | ||
Cost Transformation Program | Real estate costs | |||||
Restructuring Reserve [Roll Forward] | |||||
Beginning Balance | 414 | ||||
Payments | (67) | ||||
Other - non cash | 51 | ||||
Ending Balance | $ 399 | $ 399 | $ 399 | ||
Subsequent event | Store optimization program | |||||
Restructuring Reserve [Roll Forward] | |||||
Number of stores expected to close | store | 750 |
Operating leases (Details)
Operating leases (Details) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | 12 Months Ended | ||
May 31, 2019 | May 31, 2018 | May 31, 2019 | May 31, 2018 | Aug. 31, 2018 | |
Leases [Abstract] | |||||
Charges related to facilities that were closed or relocated | $ 53 | $ 21 | $ 95 | $ 88 | |
Changes in reserve for facility closings and related lease termination charges [Roll Forward] | |||||
Balance at beginning of period | 964 | $ 718 | $ 718 | ||
Provision for present value of non-cancellable lease payments on closed facilities | 11 | 52 | |||
Changes in assumptions | 54 | 19 | |||
Accretion expense | 30 | 58 | |||
Other - non cash | 124 | 338 | |||
Cash payments, net of sublease income | (240) | (221) | |||
Balance at end of period | $ 943 | $ 943 | $ 964 |
Equity method investments - Sc
Equity method investments - Schedule of Equity Method Investments (Details) - USD ($) $ in Millions | May 31, 2019 | Aug. 31, 2018 |
Schedule of Equity Method Investments [Line Items] | ||
Carrying value | $ 6,673 | $ 6,610 |
AmerisourceBergen | ||
Schedule of Equity Method Investments [Line Items] | ||
Carrying value | $ 5,175 | $ 5,138 |
Ownership percentage | 27.00% | 26.00% |
Others | ||
Schedule of Equity Method Investments [Line Items] | ||
Carrying value | $ 1,498 | $ 1,472 |
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% |
Total | ||
Schedule of Equity Method Investments [Line Items] | ||
Carrying value | $ 6,673 | $ 6,610 |
Equity method investments - Na
Equity method investments - Narrative (Details) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | |||
May 31, 2019 | May 31, 2018 | May 31, 2019 | May 31, 2018 | Aug. 31, 2018 | |
Schedule of Equity Method Investments [Line Items] | |||||
Equity earnings (losses) | $ (5) | $ 15 | $ 19 | $ 42 | |
AmerisourceBergen | |||||
Schedule of Equity Method Investments [Line Items] | |||||
Outstanding shares owned (in shares) | 56,854,867 | 56,854,867 | 56,854,867 | ||
Ownership percentage | 27.00% | 27.00% | 26.00% | ||
Period of reporting lag | 2 months | ||||
Equity investment, exceeded its proportionate share of net assets | $ 4,400 | $ 4,400 | |||
AmerisourceBergen | Level 1 | |||||
Schedule of Equity Method Investments [Line Items] | |||||
Fair market value of equity investment | 4,400 | 4,400 | |||
Other Investments | |||||
Schedule of Equity Method Investments [Line Items] | |||||
Equity earnings (losses) | $ (5) | $ 15 | $ 19 | $ 42 |
Goodwill and other intangible_3
Goodwill and other intangible assets - Narrative (Details) $ in Millions | 3 Months Ended | 9 Months Ended | ||
May 31, 2019USD ($)reporting_unit | May 31, 2018USD ($) | May 31, 2019USD ($) | May 31, 2018USD ($) | |
Finite-Lived Intangible Assets [Line Items] | ||||
Amortization expense for intangible assets | $ | $ 142 | $ 146 | $ 415 | $ 363 |
Retail Pharmacy International | ||||
Finite-Lived Intangible Assets [Line Items] | ||||
Number of reporting units | reporting_unit | 2 | |||
Boots Reporting Unit | Retail Pharmacy International | ||||
Finite-Lived Intangible Assets [Line Items] | ||||
Reporting unit, fair value in excess of carrying amount (as a percent) | 9.00% | 9.00% | ||
Pharmacy Licenses | Retail Pharmacy International | ||||
Finite-Lived Intangible Assets [Line Items] | ||||
Reporting unit, fair value in excess of carrying amount (as a percent) | 5.00% | 5.00% |
Goodwill and other intangible_4
Goodwill and other intangible assets - Schedule of Goodwill (Details) $ in Millions | 9 Months Ended |
May 31, 2019USD ($) | |
Goodwill [Roll Forward] | |
Net book value - Beginning Period | $ 16,914 |
Acquisitions | 8 |
Disposals | (8) |
Currency translation adjustments | (197) |
Net book value - Ending Period | 16,717 |
Retail Pharmacy USA | |
Goodwill [Roll Forward] | |
Net book value - Beginning Period | 10,483 |
Acquisitions | 8 |
Disposals | 0 |
Currency translation adjustments | 0 |
Net book value - Ending Period | 10,491 |
Retail Pharmacy International | |
Goodwill [Roll Forward] | |
Net book value - Beginning Period | 3,370 |
Acquisitions | 0 |
Disposals | (8) |
Currency translation adjustments | (104) |
Net book value - Ending Period | 3,258 |
Pharmaceutical Wholesale | |
Goodwill [Roll Forward] | |
Net book value - Beginning Period | 3,061 |
Acquisitions | 0 |
Disposals | 0 |
Currency translation adjustments | (93) |
Net book value - Ending Period | $ 2,968 |
Goodwill and other intangible_5
Goodwill and other intangible assets - Schedule of Finite-Lived Intangible Assets by Major Class (Details) - USD ($) $ in Millions | May 31, 2019 | Aug. 31, 2018 |
Finite-Lived Intangible Assets [Line Items] | ||
Gross amortizable intangible assets | $ 5,917 | $ 5,794 |
Accumulated amortization | 1,930 | 1,640 |
Total amortizable intangible assets, net | 3,987 | 4,154 |
Indefinite-lived intangible assets | 7,338 | 7,629 |
Total intangible assets, net | 11,325 | 11,783 |
Trade names and trademarks | ||
Finite-Lived Intangible Assets [Line Items] | ||
Indefinite-lived intangible assets | 5,326 | 5,557 |
Pharmacy licenses | ||
Finite-Lived Intangible Assets [Line Items] | ||
Indefinite-lived intangible assets | 2,012 | 2,072 |
Customer relationships and loyalty card holders | ||
Finite-Lived Intangible Assets [Line Items] | ||
Gross amortizable intangible assets | 4,329 | 4,235 |
Accumulated amortization | 1,194 | 997 |
Favorable lease interests and non-compete agreements | ||
Finite-Lived Intangible Assets [Line Items] | ||
Gross amortizable intangible assets | 661 | 680 |
Accumulated amortization | 396 | 359 |
Trade names and trademarks | ||
Finite-Lived Intangible Assets [Line Items] | ||
Gross amortizable intangible assets | 545 | 489 |
Accumulated amortization | 247 | 206 |
Purchasing and payer contracts | ||
Finite-Lived Intangible Assets [Line Items] | ||
Gross amortizable intangible assets | 382 | 390 |
Accumulated amortization | $ 93 | $ 78 |
Goodwill and other intangible_6
Goodwill and other intangible assets - Schedule of Finite-Lived Intangible Assets, Future Amortization Expense (Details) $ in Millions | May 31, 2019USD ($) |
Estimated annual intangible assets amortization expense [Abstract] | |
2020 | $ 481 |
2021 | 432 |
2022 | 412 |
2023 | 377 |
2024 | $ 356 |
Debt - Short and Long-Term Deb
Debt - Short and Long-Term Debt (Details) - USD ($) $ in Millions | 9 Months Ended | |
May 31, 2019 | Aug. 31, 2018 | |
Debt Instrument [Line Items] | ||
Total short-term debt | $ 5,483 | $ 1,966 |
Credit facilities | 996 | 0 |
Other | 25 | 23 |
Total long-term debt, less current portion | 12,127 | 12,431 |
Other short term debt | ||
Debt Instrument [Line Items] | ||
Total short-term debt | 465 | 288 |
Unsecured notes | 2.700% unsecured notes due 2019 | ||
Debt Instrument [Line Items] | ||
Carrying value of notes, net of unamortized discount and interest rate swap FMV adjustment | $ 0 | 1,248 |
Stated interest rate | 2.70% | |
Maturity year | 2019 | |
Unsecured notes | 3.450% unsecured notes due 2026 | ||
Debt Instrument [Line Items] | ||
Carrying value of notes, net of unamortized discount and interest rate swap FMV adjustment | $ 1,889 | 1,888 |
Stated interest rate | 3.45% | |
Maturity year | 2026 | |
Unsecured notes | 4.650% unsecured notes due 2046 | ||
Debt Instrument [Line Items] | ||
Carrying value of notes, net of unamortized discount and interest rate swap FMV adjustment | $ 591 | 590 |
Stated interest rate | 4.65% | |
Maturity year | 2046 | |
Unsecured notes | 3.300% unsecured notes due 2021 | ||
Debt Instrument [Line Items] | ||
Carrying value of notes, net of unamortized discount and interest rate swap FMV adjustment | $ 1,246 | 1,245 |
Stated interest rate | 3.30% | |
Maturity year | 2021 | |
Unsecured notes | 3.800% unsecured notes due 2024 | ||
Debt Instrument [Line Items] | ||
Carrying value of notes, net of unamortized discount and interest rate swap FMV adjustment | $ 1,991 | 1,990 |
Stated interest rate | 3.80% | |
Maturity year | 2024 | |
Unsecured notes | 4.500% unsecured notes due 2034 | ||
Debt Instrument [Line Items] | ||
Carrying value of notes, net of unamortized discount and interest rate swap FMV adjustment | $ 495 | 495 |
Stated interest rate | 4.50% | |
Maturity year | 2034 | |
Unsecured notes | 4.800% unsecured notes due 2044 | ||
Debt Instrument [Line Items] | ||
Carrying value of notes, net of unamortized discount and interest rate swap FMV adjustment | $ 1,492 | 1,492 |
Stated interest rate | 4.80% | |
Maturity year | 2044 | |
Unsecured notes | 2.875% unsecured Pound sterling notes due 2020 | ||
Debt Instrument [Line Items] | ||
Carrying value of notes, net of unamortized discount and interest rate swap FMV adjustment | $ 503 | 517 |
Stated interest rate | 2.875% | |
Maturity year | 2020 | |
Unsecured notes | 3.600% unsecured Pound sterling notes due 2025 | ||
Debt Instrument [Line Items] | ||
Carrying value of notes, net of unamortized discount and interest rate swap FMV adjustment | $ 376 | 387 |
Stated interest rate | 3.60% | |
Maturity year | 2025 | |
Unsecured notes | 2.125% unsecured Euro notes due 2026 | ||
Debt Instrument [Line Items] | ||
Carrying value of notes, net of unamortized discount and interest rate swap FMV adjustment | $ 833 | 868 |
Stated interest rate | 2.125% | |
Maturity year | 2026 | |
Unsecured notes | 3.100% unsecured notes due 2022 | ||
Debt Instrument [Line Items] | ||
Carrying value of notes, net of unamortized discount and interest rate swap FMV adjustment | $ 1,197 | 1,196 |
Stated interest rate | 3.10% | |
Maturity year | 2022 | |
Unsecured notes | 4.400% unsecured notes due 2042 | ||
Debt Instrument [Line Items] | ||
Carrying value of notes, net of unamortized discount and interest rate swap FMV adjustment | $ 493 | 492 |
Stated interest rate | 4.40% | |
Maturity year | 2042 | |
Commercial paper | ||
Debt Instrument [Line Items] | ||
Total short-term debt | $ 2,820 | 430 |
Credit facilities | ||
Debt Instrument [Line Items] | ||
Total short-term debt | 948 | 999 |
Notes payable | 2.700% unsecured notes due 2019 | ||
Debt Instrument [Line Items] | ||
Total short-term debt | $ 1,249 | 0 |
Stated interest rate | 2.70% | |
Maturity year | 2019 | |
Notes payable | 5.250% unsecured notes due 2019 | ||
Debt Instrument [Line Items] | ||
Total short-term debt | $ 0 | $ 249 |
Stated interest rate | 5.25% | |
Maturity year | 2019 |
Debt - Note Issuances (Details
Debt - Note Issuances (Details) - May 31, 2019 | USD ($) | EUR (€) | GBP (£) |
Total $6.0 billion debt issuance | |||
Debt Instrument [Line Items] | |||
Face amount | $ 6,000,000,000 | ||
Fair value of the notes | 2,500,000,000 | ||
Carrying value of the notes | 2,500,000,000 | ||
Total $8.0 billion debt issuance | |||
Debt Instrument [Line Items] | |||
Face amount | 8,000,000,000 | ||
Fair value of the notes | 6,400,000,000 | ||
Carrying value of the notes | 6,500,000,000 | ||
Total 700 million pounds debt issuance | |||
Debt Instrument [Line Items] | |||
Face amount | ÂŁ | ÂŁ 700,000,000 | ||
Fair value of the notes | 900,000,000 | ||
Carrying value of the notes | 900,000,000 | ||
Total 750 million euros debt issuance | |||
Debt Instrument [Line Items] | |||
Face amount | € | € 750,000,000 | ||
Fair value of the notes | 900,000,000 | ||
Carrying value of the notes | 800,000,000 | ||
Total $4.0 billion debt issuance | |||
Debt Instrument [Line Items] | |||
Face amount | 4,000,000,000 | ||
Fair value of the notes | 1,700,000,000 | ||
Carrying value of the notes | $ 1,700,000,000 |
Debt - Narrative (Details)
Debt - Narrative (Details) | 9 Months Ended | ||||||||
May 31, 2019USD ($) | May 31, 2018USD ($) | Jan. 18, 2019USD ($) | Dec. 21, 2018USD ($) | Dec. 05, 2018USD ($) | Nov. 30, 2018USD ($) | Aug. 29, 2018USD ($) | Aug. 24, 2017USD ($) | Feb. 01, 2017USD ($) | |
Line of Credit Facility [Line Items] | |||||||||
Interest paid | $ 570,000,000 | $ 450,000,000 | |||||||
Revolving credit facility | January 2019 364-day revolving credit agreement | |||||||||
Line of Credit Facility [Line Items] | |||||||||
Maximum borrowing capacity | $ 2,000,000,000 | ||||||||
Borrowing outstanding | 200,000,000 | ||||||||
Revolving credit facility | December 2018 revolving credit agreement | |||||||||
Line of Credit Facility [Line Items] | |||||||||
Maximum borrowing capacity | $ 1,000,000,000 | ||||||||
Borrowing outstanding | 0 | ||||||||
Revolving credit facility | August 2018 revolving credit agreement | |||||||||
Line of Credit Facility [Line Items] | |||||||||
Borrowing outstanding | 0 | ||||||||
Face amount | $ 3,500,000,000 | ||||||||
Term loan | December 2018 term loan credit agreement | |||||||||
Line of Credit Facility [Line Items] | |||||||||
Face amount | $ 1,000,000,000 | ||||||||
Long-term debt outstanding | $ 1,000,000,000 | ||||||||
Letter of credit | August 2018 revolving credit agreement | |||||||||
Line of Credit Facility [Line Items] | |||||||||
Face amount | $ 500,000,000 | ||||||||
Term loan | Maximum | |||||||||
Line of Credit Facility [Line Items] | |||||||||
Debt to total capitalization ratio | 0.60 | ||||||||
Line of credit | November 2018 credit agreement | |||||||||
Line of Credit Facility [Line Items] | |||||||||
Borrowing outstanding | $ 800,000,000 | ||||||||
Line of credit | Revolving credit facility | November 2018 credit agreement | |||||||||
Line of Credit Facility [Line Items] | |||||||||
Maximum borrowing capacity | $ 500,000,000 | ||||||||
Line of credit | Unsecured notes | November 2018 credit agreement | |||||||||
Line of Credit Facility [Line Items] | |||||||||
Face amount | $ 500,000,000 | ||||||||
Medium-term notes | August 2017 revolving credit agreement | |||||||||
Line of Credit Facility [Line Items] | |||||||||
Maximum borrowing capacity | $ 1,000,000,000 | ||||||||
Medium-term notes | 2017 term loan agreement | |||||||||
Line of Credit Facility [Line Items] | |||||||||
Maximum borrowing capacity | $ 1,000,000,000 | ||||||||
Medium-term notes | February 2017 revolving credit agreement | |||||||||
Line of Credit Facility [Line Items] | |||||||||
Maximum borrowing capacity | $ 1,000,000,000 | ||||||||
Commercial paper | |||||||||
Line of Credit Facility [Line Items] | |||||||||
Average daily short-term borrowings | $ 2,600,000,000 | $ 1,400,000,000 | |||||||
Weighted-average interest rate | 3.08% | 2.00% |
Financial instruments (Details)
Financial instruments (Details) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | |||
May 31, 2019 | May 31, 2018 | May 31, 2019 | May 31, 2018 | Aug. 31, 2018 | |
Foreign currency forwards | Not designated as hedges | Selling, general and administrative expenses | |||||
Effect of Fair Value Hedges on Results of Operations [Abstract] | |||||
Gains and (losses) due to changes in fair value of derivative instruments | $ 140 | $ 108 | $ 80 | $ (75) | |
Foreign currency forwards | Not designated as hedges | Other income (expense) | |||||
Effect of Fair Value Hedges on Results of Operations [Abstract] | |||||
Gains and (losses) due to changes in fair value of derivative instruments | (8) | $ 3 | (10) | $ 36 | |
Other current assets | Foreign currency forwards | Designated as hedges | |||||
Derivatives, Fair Value [Line Items] | |||||
Notional | 37 | 37 | $ 15 | ||
Fair value | 1 | 1 | 0 | ||
Other current assets | Foreign currency forwards | Not designated as hedges | |||||
Derivatives, Fair Value [Line Items] | |||||
Notional | 3,105 | 3,105 | 3,273 | ||
Fair value | 107 | 107 | 52 | ||
Other non-current assets | Cross currency interest rate swaps | Designated as hedges | |||||
Derivatives, Fair Value [Line Items] | |||||
Notional | 800 | 800 | |||
Fair value | 39 | 39 | |||
Accrued expenses and other liabilities | Interest rate swaps | Designated as hedges | |||||
Derivatives, Fair Value [Line Items] | |||||
Notional | 250 | ||||
Fair value | 1 | ||||
Accrued expenses and other liabilities | Foreign currency forwards | Not designated as hedges | |||||
Derivatives, Fair Value [Line Items] | |||||
Notional | 658 | 658 | 825 | ||
Fair value | $ 3 | $ 3 | $ 4 |
Fair value measurements (Detail
Fair value measurements (Details) - Recurring - USD ($) $ in Millions | May 31, 2019 | Aug. 31, 2018 |
Money market funds | ||
Assets [Abstract] | ||
Fair value of assets | $ 177 | $ 227 |
Investments in equity securities | ||
Assets [Abstract] | ||
Fair value of assets | 4 | |
Available-for-sale investments | ||
Assets [Abstract] | ||
Fair value of assets | 1 | |
Foreign currency forwards | ||
Assets [Abstract] | ||
Fair value of assets | 108 | 52 |
Liabilities [Abstract] | ||
Fair value of liabilities | 3 | 4 |
Cross currency interest rate swaps | ||
Assets [Abstract] | ||
Fair value of assets | 39 | |
Liabilities [Abstract] | ||
Fair value of liabilities | 0 | |
Interest rate swaps | ||
Liabilities [Abstract] | ||
Fair value of liabilities | 1 | |
Level 1 | Money market funds | ||
Assets [Abstract] | ||
Fair value of assets | 177 | 227 |
Level 1 | Investments in equity securities | ||
Assets [Abstract] | ||
Fair value of assets | 4 | |
Level 1 | Available-for-sale investments | ||
Assets [Abstract] | ||
Fair value of assets | 1 | |
Level 1 | Foreign currency forwards | ||
Assets [Abstract] | ||
Fair value of assets | 0 | 0 |
Liabilities [Abstract] | ||
Fair value of liabilities | 0 | 0 |
Level 1 | Cross currency interest rate swaps | ||
Assets [Abstract] | ||
Fair value of assets | 0 | |
Liabilities [Abstract] | ||
Fair value of liabilities | 0 | |
Level 1 | Interest rate swaps | ||
Liabilities [Abstract] | ||
Fair value of liabilities | 0 | |
Level 2 | Money market funds | ||
Assets [Abstract] | ||
Fair value of assets | 0 | 0 |
Level 2 | Investments in equity securities | ||
Assets [Abstract] | ||
Fair value of assets | 0 | |
Level 2 | Available-for-sale investments | ||
Assets [Abstract] | ||
Fair value of assets | 0 | |
Level 2 | Foreign currency forwards | ||
Assets [Abstract] | ||
Fair value of assets | 108 | 52 |
Liabilities [Abstract] | ||
Fair value of liabilities | 3 | 4 |
Level 2 | Cross currency interest rate swaps | ||
Assets [Abstract] | ||
Fair value of assets | 39 | |
Liabilities [Abstract] | ||
Fair value of liabilities | 0 | |
Level 2 | Interest rate swaps | ||
Liabilities [Abstract] | ||
Fair value of liabilities | 1 | |
Level 3 | Money market funds | ||
Assets [Abstract] | ||
Fair value of assets | 0 | 0 |
Level 3 | Investments in equity securities | ||
Assets [Abstract] | ||
Fair value of assets | 0 | |
Level 3 | Available-for-sale investments | ||
Assets [Abstract] | ||
Fair value of assets | 0 | |
Level 3 | Foreign currency forwards | ||
Assets [Abstract] | ||
Fair value of assets | 0 | 0 |
Liabilities [Abstract] | ||
Fair value of liabilities | 0 | 0 |
Level 3 | Cross currency interest rate swaps | ||
Assets [Abstract] | ||
Fair value of assets | 0 | |
Liabilities [Abstract] | ||
Fair value of liabilities | $ 0 | |
Level 3 | Interest rate swaps | ||
Liabilities [Abstract] | ||
Fair value of liabilities | $ 0 |
Commitments and contingencies (
Commitments and contingencies (Details) $ in Millions | Jan. 22, 2019USD ($) | Aug. 31, 2018USD ($) | May 31, 2019lawsuit |
Loss Contingencies [Line Items] | |||
Payments for legal settlements | $ | $ 209.2 | $ 34.5 | |
Rite Aid transactions | |||
Loss Contingencies [Line Items] | |||
Number of lawsuits filed | 2 | ||
State of Pennsylvania in the court of common pleas of Cumberland County | |||
Loss Contingencies [Line Items] | |||
Number of lawsuits filed | 1 |
Income taxes (Details)
Income taxes (Details) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | ||
May 31, 2019 | May 31, 2018 | May 31, 2019 | May 31, 2018 | |
Income Tax Disclosure [Abstract] | ||||
Effective tax rate | 13.00% | 7.60% | 14.70% | 19.40% |
Cash paid for income taxes | $ 824 | $ 428 |
Retirement benefits (Details)
Retirement benefits (Details) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | ||
May 31, 2019 | May 31, 2018 | May 31, 2019 | May 31, 2018 | |
Components of net periodic benefit costs [Abstract] | ||||
Employer cash contributions to defined benefit pension plans | $ 28 | |||
Employee expected additional contribution in current fiscal year | 6 | |||
Boots and other pension plans | ||||
Components of net periodic benefit costs [Abstract] | ||||
Total net periodic pension costs (income) | $ (10) | $ (2) | (34) | $ (7) |
Walgreen profit sharing retirement trust | ||||
Defined Contribution Plan Disclosure [Line Items] | ||||
Profit sharing provision expense | 58 | 53 | 183 | 164 |
Alliance Boots retirement savings plan | ||||
Defined Contribution Plan Disclosure [Line Items] | ||||
Cost recognized in the consolidated condensed statements of earnings | 32 | 33 | 96 | 94 |
Selling, general and administrative expenses | Boots and other pension plans | ||||
Components of net periodic benefit costs [Abstract] | ||||
Service costs | 2 | 2 | 4 | 5 |
Other income (expense) | Boots and other pension plans | ||||
Components of net periodic benefit costs [Abstract] | ||||
Interest costs | 49 | 50 | 148 | 146 |
Expected returns on plan assets/other | $ (61) | $ (54) | $ (186) | $ (158) |
Accumulated other comprehensi_3
Accumulated other comprehensive income (loss) (Details) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | ||
May 31, 2019 | May 31, 2018 | May 31, 2019 | May 31, 2018 | |
AOCI [Roll Forward] | ||||
Beginning Balance | $ 25,413 | $ 28,178 | $ 26,689 | $ 28,274 |
Total other comprehensive income (loss) | (702) | (642) | (399) | 266 |
Ending Balance | 24,771 | 28,470 | 24,771 | 28,470 |
Pension/ post- retirement obligations | ||||
AOCI [Roll Forward] | ||||
Beginning Balance | 95 | (141) | 101 | (139) |
Other comprehensive income (loss) before reclassification adjustments | 1 | 0 | 1 | (1) |
Amounts reclassified from AOCI | (4) | (2) | (12) | (5) |
Other | 0 | |||
Tax benefit (provision) | 1 | 0 | 3 | 2 |
Total other comprehensive income (loss) | (2) | (2) | (8) | (4) |
Ending Balance | 93 | (143) | 93 | (143) |
Unrealized gain (loss) on hedges | ||||
AOCI [Roll Forward] | ||||
Beginning Balance | (40) | (32) | (30) | (33) |
Other comprehensive income (loss) before reclassification adjustments | 56 | 0 | 40 | 0 |
Amounts reclassified from AOCI | 1 | 1 | 4 | 3 |
Other | 0 | |||
Tax benefit (provision) | (14) | 0 | (10) | (1) |
Total other comprehensive income (loss) | 44 | 1 | 33 | 2 |
Ending Balance | 4 | (31) | 4 | (31) |
Share of AOCI of equity method investments | ||||
AOCI [Roll Forward] | ||||
Beginning Balance | 2 | 0 | 3 | (2) |
Other comprehensive income (loss) before reclassification adjustments | 1 | 3 | (1) | 7 |
Amounts reclassified from AOCI | 0 | 11 | 0 | 11 |
Other | 0 | |||
Tax benefit (provision) | 0 | (3) | 0 | (5) |
Total other comprehensive income (loss) | 1 | 11 | (1) | 13 |
Ending Balance | 4 | 11 | 4 | 11 |
Cumulative translation adjustments | ||||
AOCI [Roll Forward] | ||||
Beginning Balance | (2,762) | (1,990) | (3,076) | (2,877) |
Other comprehensive income (loss) before reclassification adjustments | (733) | (647) | (415) | 240 |
Amounts reclassified from AOCI | 0 | 8 | 0 | 8 |
Other | 0 | |||
Tax benefit (provision) | 1 | 0 | (1) | 0 |
Total other comprehensive income (loss) | (732) | (639) | (416) | 248 |
Ending Balance | (3,493) | (2,629) | (3,493) | (2,629) |
Accumulated other comprehensive income (loss) | ||||
AOCI [Roll Forward] | ||||
Beginning Balance | (2,705) | (2,163) | (3,002) | (3,051) |
Other comprehensive income (loss) before reclassification adjustments | (675) | (644) | (376) | 246 |
Amounts reclassified from AOCI | (2) | 18 | (8) | 17 |
Other | 0 | |||
Tax benefit (provision) | (12) | (3) | (8) | (4) |
Total other comprehensive income (loss) | (689) | (629) | (393) | 259 |
Ending Balance | $ (3,393) | $ (2,792) | $ (3,393) | $ (2,792) |
Segment reporting (Details)
Segment reporting (Details) $ in Millions | 3 Months Ended | 9 Months Ended | |||
May 31, 2019USD ($) | Aug. 31, 2018USD ($) | May 31, 2018USD ($) | May 31, 2019USD ($)segment | May 31, 2018USD ($) | |
Segment Reporting Information [Line Items] | |||||
Number of reportable segments | segment | 3 | ||||
Segment Reporting Information, Operating Income (Loss) [Abstract] | |||||
Sales | $ 34,591 | $ 34,334 | $ 102,912 | $ 98,095 | |
Adjusted operating income | 1,717 | 1,943 | 5,384 | 5,909 | |
Acquisition-related amortization | (127) | (131) | (373) | (329) | |
Transformational cost management | (86) | (265) | |||
Acquisition-related costs | (80) | (57) | (228) | (173) | |
Adjustments to equity earnings in AmerisourceBergen | (137) | (60) | (191) | (136) | |
Store optimization | (49) | (24) | (99) | (24) | |
LIFO provision | (29) | (69) | (77) | (166) | |
Certain legal and regulatory accruals and settlements | (7) | (5) | (31) | (120) | |
Asset recovery | 15 | ||||
Hurricane-related costs | (83) | ||||
Operating income | 1,203 | 1,597 | 4,120 | 4,893 | |
Reportable segments | Retail Pharmacy USA | |||||
Segment Reporting Information, Operating Income (Loss) [Abstract] | |||||
Sales | 26,513 | 25,917 | 78,491 | 72,884 | |
Adjusted operating income | 1,286 | 1,492 | 4,119 | 4,520 | |
Reportable segments | Retail Pharmacy International | |||||
Segment Reporting Information, Operating Income (Loss) [Abstract] | |||||
Sales | 2,776 | 2,995 | 8,759 | 9,395 | |
Adjusted operating income | 165 | 193 | 553 | 674 | |
Reportable segments | Pharmaceutical Wholesale | |||||
Segment Reporting Information, Operating Income (Loss) [Abstract] | |||||
Sales | 5,865 | 5,965 | 17,311 | 17,438 | |
Adjusted operating income | 265 | 258 | 710 | 714 | |
Eliminations | |||||
Segment Reporting Information, Operating Income (Loss) [Abstract] | |||||
Sales | (563) | (543) | (1,649) | (1,622) | |
Adjusted operating income | $ 1 | $ 0 | $ 1 | $ 1 | |
November 30, 2017 legal and regulatory accruals and settlements | |||||
Segment Reporting Information, Operating Income (Loss) [Abstract] | |||||
Adjustments to financial statements to present non-GAAP measures | $ 14 | ||||
February 28, 2018 legal and regulatory accruals and settlements | |||||
Segment Reporting Information, Operating Income (Loss) [Abstract] | |||||
Adjustments to financial statements to present non-GAAP measures | 50 | ||||
May 31, 2018 legal and regulatory accruals and settlements | |||||
Segment Reporting Information, Operating Income (Loss) [Abstract] | |||||
Adjustments to financial statements to present non-GAAP measures | $ 5 |
Sales (Details)
Sales (Details) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | ||
May 31, 2019 | May 31, 2018 | May 31, 2019 | May 31, 2018 | |
Disaggregation of Revenue [Line Items] | ||||
Sales | $ 34,591 | $ 34,334 | $ 102,912 | $ 98,095 |
Eliminations | ||||
Disaggregation of Revenue [Line Items] | ||||
Sales | (563) | (543) | (1,649) | (1,622) |
Retail Pharmacy USA | Reportable segments | ||||
Disaggregation of Revenue [Line Items] | ||||
Sales | 26,513 | 25,917 | 78,491 | 72,884 |
Retail Pharmacy USA | Reportable segments | Pharmacy | ||||
Disaggregation of Revenue [Line Items] | ||||
Sales | 19,585 | 18,790 | 57,624 | 52,258 |
Retail Pharmacy USA | Reportable segments | Retail | ||||
Disaggregation of Revenue [Line Items] | ||||
Sales | 6,928 | 7,127 | 20,867 | 20,626 |
Retail Pharmacy International | Reportable segments | ||||
Disaggregation of Revenue [Line Items] | ||||
Sales | 2,776 | 2,995 | 8,759 | 9,395 |
Retail Pharmacy International | Reportable segments | Pharmacy | ||||
Disaggregation of Revenue [Line Items] | ||||
Sales | 1,047 | 1,111 | 3,096 | 3,316 |
Retail Pharmacy International | Reportable segments | Retail | ||||
Disaggregation of Revenue [Line Items] | ||||
Sales | 1,730 | 1,884 | 5,662 | 6,079 |
Pharmaceutical Wholesale | Reportable segments | ||||
Disaggregation of Revenue [Line Items] | ||||
Sales | $ 5,865 | $ 5,965 | $ 17,311 | $ 17,438 |
Related parties (Details)
Related parties (Details) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | |||
May 31, 2019 | May 31, 2018 | May 31, 2019 | May 31, 2018 | Aug. 31, 2018 | |
Related Party Transactions [Abstract] | |||||
Purchases, net | $ 14,684 | $ 15,830 | $ 43,070 | $ 39,566 | |
Trade accounts payable, net | $ 6,520 | $ 6,520 | $ 6,274 |
New accounting pronouncements -
New accounting pronouncements - Reconciliation of Effect of New Pension and Postretirement Benefits Accounting Guidance (Details) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | 12 Months Ended | ||||
May 31, 2019 | May 31, 2018 | May 31, 2019 | May 31, 2018 | Aug. 31, 2018 | Aug. 31, 2017 | Aug. 31, 2016 | |
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |||||||
Selling, general and administrative expenses | $ 6,235 | $ 6,235 | $ 18,834 | $ 18,466 | |||
Operating income | 1,203 | 1,597 | 4,120 | 4,893 | |||
Other income (expense) | $ 182 | 0 | $ 227 | (122) | |||
As reported | |||||||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |||||||
Selling, general and administrative expenses | 6,231 | 18,456 | |||||
Operating income | 1,601 | 4,903 | |||||
Other income (expense) | (4) | (132) | |||||
Accounting standards update 2017-07 | |||||||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |||||||
Selling, general and administrative expenses | $ (125) | $ (73) | $ 69 | ||||
Other income (expense) | $ 125 | $ 73 | $ (69) | ||||
Accounting standards update 2017-07 | Adjustments | |||||||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |||||||
Selling, general and administrative expenses | 4 | 10 | |||||
Operating income | (4) | (10) | |||||
Other income (expense) | $ 4 | $ 10 |
New accounting pronouncements_2
New accounting pronouncements - Reconciliation of Effect of New Restricted Cash Accounting Guidance (Details) - USD ($) $ in Millions | 9 Months Ended | |
May 31, 2019 | May 31, 2018 | |
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | ||
Trade accounts payable | $ 662 | $ 675 |
Accrued expenses and other liabilities | (642) | 16 |
Other non-current assets and liabilities | (171) | (110) |
Net cash provided by operating activities | 3,215 | 5,446 |
Effect of exchange rate changes on cash, cash equivalents and restricted cash | (12) | 27 |
Net increase (decrease) in cash, cash equivalents and restricted cash | 62 | (1,422) |
Cash, cash equivalents and restricted cash at beginning of period | 975 | 3,496 |
Cash, cash equivalents and restricted cash at end of period | $ 1,038 | 2,074 |
As reported | ||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | ||
Trade accounts payable | 627 | |
Accrued expenses and other liabilities | 10 | |
Other non-current assets and liabilities | (117) | |
Net cash provided by operating activities | 5,385 | |
Effect of exchange rate changes on cash, cash equivalents and restricted cash | 26 | |
Net increase (decrease) in cash, cash equivalents and restricted cash | (1,483) | |
Cash, cash equivalents and restricted cash at beginning of period | 3,301 | |
Cash, cash equivalents and restricted cash at end of period | 1,818 | |
Accounting standards update 2016-18 | Adjustments | ||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | ||
Trade accounts payable | 48 | |
Accrued expenses and other liabilities | 6 | |
Other non-current assets and liabilities | 7 | |
Net cash provided by operating activities | 61 | |
Effect of exchange rate changes on cash, cash equivalents and restricted cash | 1 | |
Net increase (decrease) in cash, cash equivalents and restricted cash | 61 | |
Cash, cash equivalents and restricted cash at beginning of period | 195 | |
Cash, cash equivalents and restricted cash at end of period | $ 256 |
New accounting pronouncements_3
New accounting pronouncements - Narrative (Details) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | 12 Months Ended | |||||
May 31, 2019 | May 31, 2018 | May 31, 2019 | May 31, 2018 | Aug. 31, 2018 | Aug. 31, 2017 | Aug. 31, 2016 | Sep. 01, 2018 | |
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | ||||||||
Selling, general and administrative expense | $ 6,235 | $ 6,235 | $ 18,834 | $ 18,466 | ||||
Other income (expense) | $ 182 | $ 0 | $ 227 | $ (122) | ||||
Cumulative effect of new accounting principle | $ (88) | |||||||
Accounting standards update 2017-07 | ||||||||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | ||||||||
Selling, general and administrative expense | $ (125) | $ (73) | $ 69 | |||||
Other income (expense) | $ 125 | $ 73 | $ (69) | |||||
Retained earnings | ||||||||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | ||||||||
Cumulative effect of new accounting principle | (88) | |||||||
Retained earnings | Accounting standards update 2014-09 | ||||||||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | ||||||||
Cumulative effect of new accounting principle | $ 98 |
Supplemental information - Narr
Supplemental information - Narrative (Details) - USD ($) shares in Millions, $ in Millions | 3 Months Ended | ||
May 31, 2019 | May 31, 2018 | Aug. 31, 2018 | |
Accounts, Notes, Loans and Financing Receivable [Line Items] | |||
Accounts receivable from related party | $ 1,300 | $ 1,200 | |
Restricted cash (included in other current assets) | $ 199 | 190 | |
Antidilutive securities excluded from EPS calculations (in shares) | 17 | 12.1 | |
Trade Accounts Receivable | |||
Accounts, Notes, Loans and Financing Receivable [Line Items] | |||
Trade receivables | $ 5,900 | $ 5,400 |
Supplemental information - Depr
Supplemental information - Depreciation and Amortization Expense (Details) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | |||
May 31, 2019 | May 31, 2018 | May 31, 2019 | May 31, 2018 | Aug. 31, 2018 | |
Balance Sheet Related Disclosures [Abstract] | |||||
Depreciation expense | $ 379 | $ 358 | $ 1,096 | $ 1,040 | |
Intangible asset and other amortization | 142 | 84 | 415 | 260 | |
Total depreciation and amortization expense | 522 | $ 442 | 1,512 | $ 1,300 | |
Accumulated depreciation and amortization on property, plant, and equipment | $ 11,200 | $ 11,200 | $ 10,500 |
Supplemental information - Summ
Supplemental information - Summary of Cash, Cash Equivalents and Restricted Cash (Details) - USD ($) $ in Millions | May 31, 2019 | Aug. 31, 2018 | May 31, 2018 | Aug. 31, 2017 |
Balance Sheet Related Disclosures [Abstract] | ||||
Cash and cash equivalents | $ 839 | $ 785 | ||
Restricted cash (included in other current assets) | 199 | 190 | ||
Cash, cash equivalents and restricted cash | $ 1,038 | $ 975 | $ 2,074 | $ 3,496 |
Supplemental information - Su_2
Supplemental information - Summary of Dividends per Share (Details) - $ / shares | 3 Months Ended | 9 Months Ended | ||||||
May 31, 2019 | Feb. 28, 2019 | Nov. 30, 2018 | May 31, 2018 | Feb. 28, 2018 | Nov. 30, 2017 | May 31, 2019 | May 31, 2018 | |
Balance Sheet Related Disclosures [Abstract] | ||||||||
Cash dividends declared (in dollars per share) | $ 0.440 | $ 0.440 | $ 0.440 | $ 0.400 | $ 0.400 | $ 0.400 | $ 1.32 | $ 1.2 |