QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
(State or Other Jurisdiction of Incorporation or Organization) | (I.R.S. Employer Identification No.) | ||||
(Address of principal executive offices) | (Zip Code) |
Title of each class | Trading Symbol(s) | Name of each exchange on which registered | ||||||
Accelerated filer ☐ | |||||
Non-accelerated filer ☐ | Smaller reporting company | ||||
Emerging growth company |
Item 1. | ||||||||||||||
a) | ||||||||||||||
b) | ||||||||||||||
c) | ||||||||||||||
d) | ||||||||||||||
e) | ||||||||||||||
f) | ||||||||||||||
Item 2. | ||||||||||||||
a) | ||||||||||||||
b) | ||||||||||||||
c) | ||||||||||||||
d) | ||||||||||||||
e) | ||||||||||||||
f) | ||||||||||||||
g) | ||||||||||||||
h) | ||||||||||||||
i) | ||||||||||||||
j) | ||||||||||||||
k) | ||||||||||||||
Item 3. | ||||||||||||||
Item 4. |
Item 1. | |||||||||||
Item 1A. | |||||||||||
Item 2. | |||||||||||
Item 5. | |||||||||||
Item 6. |
WBA Q3 2022 Form 10-Q | 2 |
May 31, 2022 | August 31, 2021 | ||||||||||
Assets | |||||||||||
Current assets: | |||||||||||
Cash and cash equivalents | $ | $ | |||||||||
Marketable securities | |||||||||||
Accounts receivable, net | |||||||||||
Inventories | |||||||||||
Other current assets | |||||||||||
Total current assets | |||||||||||
Non-current assets: | |||||||||||
Property, plant and equipment, net | |||||||||||
Operating lease right-of-use assets | |||||||||||
Goodwill | |||||||||||
Intangible assets, net | |||||||||||
Equity method investments (see Note 6) | |||||||||||
Other non-current assets | |||||||||||
Total non-current assets | |||||||||||
Total assets | $ | $ | |||||||||
Liabilities, redeemable non-controlling interest and equity | |||||||||||
Current liabilities: | |||||||||||
Short-term debt | $ | $ | |||||||||
Trade accounts payable (see Note 17) | |||||||||||
Operating lease obligations | |||||||||||
Accrued expenses and other liabilities | |||||||||||
Income taxes | |||||||||||
Total current liabilities | |||||||||||
Non-current liabilities: | |||||||||||
Long-term debt | |||||||||||
Operating lease obligations | |||||||||||
Deferred income taxes | |||||||||||
Other non-current liabilities | |||||||||||
Total non-current liabilities | |||||||||||
Commitments and contingencies (see Note 11) | |||||||||||
Total liabilities | |||||||||||
Redeemable non-controlling interest | |||||||||||
Equity: | |||||||||||
Preferred stock $ | |||||||||||
Common stock $ | |||||||||||
Paid-in capital | |||||||||||
Retained earnings | |||||||||||
Accumulated other comprehensive loss | ( | ( | |||||||||
Treasury stock, at cost; | ( | ( | |||||||||
Total Walgreens Boots Alliance, Inc. shareholders’ equity | |||||||||||
Non-controlling interests | |||||||||||
Total equity | |||||||||||
Total liabilities, redeemable non-controlling interest and equity | $ | $ |
WBA Q3 2022 Form 10-Q | 3 |
Three months ended May 31, 2022 | ||||||||||||||||||||||||||
Equity attributable to Walgreens Boots Alliance, Inc. | ||||||||||||||||||||||||||
Common stock shares | Common stock amount | Treasury stock amount | Paid-in capital | Accumulated other comprehensive income (loss) | Retained earnings | Non-controlling interests | Total equity | |||||||||||||||||||
February 28, 2022 | $ | $ | ( | $ | $ | ( | $ | $ | $ | |||||||||||||||||
Net earnings | — | — | — | — | — | ( | ||||||||||||||||||||
Other comprehensive (loss) income, net of tax | — | — | — | — | ( | — | ( | ( | ||||||||||||||||||
Dividends declared and distributions | — | — | — | — | — | ( | ( | ( | ||||||||||||||||||
Employee stock purchase and option plans | — | ( | — | — | — | |||||||||||||||||||||
Stock-based compensation | — | — | — | — | — | |||||||||||||||||||||
Acquisition of non-controlling interests | — | — | — | — | — | — | ( | ( | ||||||||||||||||||
Redeemable non-controlling interests redemption price adjustments and other | — | — | — | — | — | |||||||||||||||||||||
May 31, 2022 | $ | $ | ( | $ | $ | ( | $ | $ | $ |
Nine months ended May 31, 2022 | ||||||||||||||||||||||||||
Equity attributable to Walgreens Boots Alliance, Inc. | ||||||||||||||||||||||||||
Common stock shares | Common stock amount | Treasury stock amount | Paid-in capital | Accumulated other comprehensive income (loss) | Retained earnings | Non-controlling interests | Total equity | |||||||||||||||||||
August 31, 2021 | $ | $ | ( | $ | $ | ( | $ | $ | $ | |||||||||||||||||
Net earnings (loss) | — | — | — | — | — | ( | ||||||||||||||||||||
Other comprehensive (loss) income, net of tax | — | — | — | — | ( | — | ( | ( | ||||||||||||||||||
Dividends declared and distributions | — | — | — | — | — | ( | ( | ( | ||||||||||||||||||
Treasury stock purchases | ( | — | ( | — | — | — | — | ( | ||||||||||||||||||
Employee stock purchase and option plans | — | ( | — | — | — | |||||||||||||||||||||
Stock-based compensation | — | — | — | — | — | |||||||||||||||||||||
Acquisition of non-controlling interests | — | — | — | — | — | ( | ( | |||||||||||||||||||
Business combination | — | — | — | — | — | — | ||||||||||||||||||||
Redeemable non-controlling interests redemption price adjustments and other | — | — | — | ( | — | — | ( | |||||||||||||||||||
May 31, 2022 | $ | $ | ( | $ | $ | ( | $ | $ | $ |
WBA Q3 2022 Form 10-Q | 4 |
Three months ended May 31, 2021 | ||||||||||||||||||||||||||
Equity attributable to Walgreens Boots Alliance, Inc. | ||||||||||||||||||||||||||
Common stock shares | Common stock amount | Treasury stock amount | Paid-in capital | Accumulated other comprehensive income (loss) | Retained earnings | Non-controlling interests | Total equity | |||||||||||||||||||
February 28, 2021 | $ | $ | ( | $ | $ | ( | $ | $ | $ | |||||||||||||||||
Net earnings (loss) | — | — | — | — | — | ( | ||||||||||||||||||||
Other comprehensive income, net of tax | — | — | — | — | — | |||||||||||||||||||||
Dividends declared and distributions | — | — | — | — | — | ( | — | ( | ||||||||||||||||||
Employee stock purchase and option plans | — | — | — | — | ||||||||||||||||||||||
Stock-based compensation | — | — | — | — | — | — | ||||||||||||||||||||
Other | — | — | — | — | — | — | ||||||||||||||||||||
May 31, 2021 | $ | $ | ( | $ | $ | ( | $ | $ | $ |
Nine months ended May 31, 2021 | ||||||||||||||||||||||||||
Equity attributable to Walgreens Boots Alliance, Inc. | ||||||||||||||||||||||||||
Common stock shares | Common stock amount | Treasury stock amount | Paid-in capital | Accumulated other comprehensive income (loss) | Retained earnings | Non-controlling interests | Total equity | |||||||||||||||||||
August 31, 2020 | $ | $ | ( | $ | $ | ( | $ | $ | $ | |||||||||||||||||
Net earnings | — | — | — | — | — | ( | ||||||||||||||||||||
Other comprehensive income, net of tax | — | — | — | — | — | |||||||||||||||||||||
Dividends declared and distributions | — | — | — | — | — | ( | — | ( | ||||||||||||||||||
Treasury stock purchases | ( | — | ( | — | — | — | — | ( | ||||||||||||||||||
Employee stock purchase and option plans | — | ( | — | — | — | |||||||||||||||||||||
Stock-based compensation | — | — | — | — | — | — | ||||||||||||||||||||
Adoption of new accounting standards | — | — | — | — | — | ( | ( | ( | ||||||||||||||||||
Business combination | — | — | — | — | — | — | ||||||||||||||||||||
Other | — | — | — | — | — | |||||||||||||||||||||
May 31, 2021 | $ | $ | ( | $ | $ | ( | $ | $ | $ |
WBA Q3 2022 Form 10-Q | 5 |
Three months ended May 31, | Nine months ended May 31, | |||||||||||||||||||||||||
2022 | 2021 | 2022 | 2021 | |||||||||||||||||||||||
Sales | $ | $ | $ | $ | ||||||||||||||||||||||
Cost of sales | ||||||||||||||||||||||||||
Gross profit | ||||||||||||||||||||||||||
Selling, general and administrative expenses | ||||||||||||||||||||||||||
Equity earnings (loss) in AmerisourceBergen | ( | |||||||||||||||||||||||||
Operating (loss) income | ( | |||||||||||||||||||||||||
Other income | ||||||||||||||||||||||||||
Earnings before interest and tax | ||||||||||||||||||||||||||
Interest expense, net | ||||||||||||||||||||||||||
(Loss) earnings before tax | ( | |||||||||||||||||||||||||
Income tax (benefit) provision | ( | |||||||||||||||||||||||||
Post tax earnings from other equity method investments | ||||||||||||||||||||||||||
Net earnings from continuing operations | ||||||||||||||||||||||||||
Net earnings from discontinued operations | ||||||||||||||||||||||||||
Net earnings | ||||||||||||||||||||||||||
Net (loss) attributable to non-controlling interests - continuing operations | ( | ( | ( | ( | ||||||||||||||||||||||
Net earnings attributable to non-controlling interests - discontinued operations | ||||||||||||||||||||||||||
Net earnings attributable to Walgreens Boots Alliance, Inc. | $ | $ | $ | $ | ||||||||||||||||||||||
Net earnings attributable to Walgreens Boots Alliance, Inc.: | ||||||||||||||||||||||||||
Continuing operations | $ | $ | $ | $ | ||||||||||||||||||||||
Discontinued operations | ||||||||||||||||||||||||||
Total | $ | $ | $ | $ | ||||||||||||||||||||||
Basic net earnings per common share: | ||||||||||||||||||||||||||
Continuing operations | $ | $ | $ | $ | ||||||||||||||||||||||
Discontinued operations | ||||||||||||||||||||||||||
Total | $ | $ | $ | $ | ||||||||||||||||||||||
Diluted net earnings per common share: | ||||||||||||||||||||||||||
Continuing operations | $ | $ | $ | $ | ||||||||||||||||||||||
Discontinued operations | ||||||||||||||||||||||||||
Total | $ | $ | $ | $ | ||||||||||||||||||||||
Weighted average common shares outstanding: | ||||||||||||||||||||||||||
Basic | ||||||||||||||||||||||||||
Diluted |
WBA Q3 2022 Form 10-Q | 6 |
Three months ended May 31, | Nine months ended May 31, | ||||||||||||||||||||||
2022 | 2021 | 2022 | 2021 | ||||||||||||||||||||
Comprehensive (loss) income: | |||||||||||||||||||||||
Net earnings | $ | $ | $ | $ | |||||||||||||||||||
Other comprehensive (loss) income, net of tax: | |||||||||||||||||||||||
Pension/postretirement obligations | ( | ( | ( | ||||||||||||||||||||
Unrealized gain on cash flow hedges | |||||||||||||||||||||||
Net investment hedges | ( | ( | |||||||||||||||||||||
Available for sale debt securities | ( | ||||||||||||||||||||||
Share of other comprehensive (loss) income of equity method investments | ( | ( | ( | ||||||||||||||||||||
Currency translation adjustments | ( | ( | |||||||||||||||||||||
Total other comprehensive (loss) income, net | ( | ( | |||||||||||||||||||||
Total comprehensive (loss) income, net | ( | ||||||||||||||||||||||
Comprehensive loss attributable to non-controlling interests | ( | ( | ( | ( | |||||||||||||||||||
Comprehensive (loss) income attributable to Walgreens Boots Alliance, Inc. | $ | ( | $ | $ | $ |
WBA Q3 2022 Form 10-Q | 7 |
Nine months ended May 31, | |||||||||||
2022 | 2021 | ||||||||||
Cash flows from operating activities: | |||||||||||
Net earnings | $ | $ | |||||||||
Adjustments to reconcile net earnings to net cash provided by operating activities: | |||||||||||
Depreciation and amortization | |||||||||||
Deferred income taxes | ( | ( | |||||||||
Stock compensation expense | |||||||||||
Equity (earnings) loss from equity method investments | ( | ||||||||||
Loss on early extinguishment of debt | |||||||||||
Gain on previously held investment interests | ( | ||||||||||
Gain on sale of equity method investments | ( | ( | |||||||||
Impairment of equity method investments and investments in debt and equity securities | |||||||||||
Other | ( | ( | |||||||||
Changes in operating assets and liabilities: | |||||||||||
Accounts receivable, net | ( | ||||||||||
Inventories | ( | ||||||||||
Other current assets | ( | ||||||||||
Trade accounts payable | |||||||||||
Accrued expenses and other liabilities | ( | ||||||||||
Income taxes | |||||||||||
Other non-current assets and liabilities | ( | ||||||||||
Net cash provided by operating activities | |||||||||||
Cash flows from investing activities: | |||||||||||
Additions to property, plant and equipment | ( | ( | |||||||||
Proceeds from sale-leaseback transactions | |||||||||||
Proceeds from sale of other assets | |||||||||||
Business, investment and asset acquisitions, net of cash acquired | ( | ( | |||||||||
Other | ( | ||||||||||
Net cash used for investing activities | ( | ( | |||||||||
Cash flows from financing activities: | |||||||||||
Net change in short-term debt with maturities of 3 months or less | ( | ||||||||||
Proceeds from debt | |||||||||||
Payments of debt | ( | ( | |||||||||
Acquisition of non-controlling interests | ( | ||||||||||
Stock purchases | ( | ( | |||||||||
Proceeds related to employee stock plans, net | |||||||||||
Cash dividends paid | ( | ( | |||||||||
Early debt extinguishment | ( | ( | |||||||||
Other | ( | ||||||||||
Net cash provided by (used for) financing activities | ( | ||||||||||
Effect of exchange rate changes on cash, cash equivalents, marketable securities and restricted cash | ( | ( | |||||||||
Changes in cash, cash equivalents, marketable securities and restricted cash: | |||||||||||
Net increase in cash, cash equivalents, marketable securities and restricted cash | |||||||||||
Cash, cash equivalents, marketable securities and restricted cash at beginning of period | |||||||||||
Cash, cash equivalents, marketable securities and restricted cash at end of period | $ | $ |
WBA Q3 2022 Form 10-Q | 8 |
WBA Q3 2022 Form 10-Q | 9 |
Three months ended May 31, 2021 | Nine months ended May 31, 2021 | |||||||||||||
Sales | $ | $ | ||||||||||||
Cost of sales | ||||||||||||||
Gross profit | ||||||||||||||
Selling, general and administrative expense | ||||||||||||||
Operating income from discontinued operations | ||||||||||||||
Other expense | ( | ( | ||||||||||||
Interest expense, net | ( | ( | ||||||||||||
Earnings before income tax – discontinued operations | ||||||||||||||
Income tax provision | ||||||||||||||
Post tax earnings from other equity method investments | ||||||||||||||
Net earnings from discontinued operations | $ | $ |
Three months ended May 31, 2021 | Nine months ended May 31, 2021 | ||||||||||
Sales | $ | $ |
Nine months ended May 31, 2021 | |||||
Cash used for operating activities - discontinued operations | $ | ( | |||
Cash used for investing activities - discontinued operations | $ | ( |
WBA Q3 2022 Form 10-Q | 10 |
Purchase Price Allocation: | ||||||||
Total purchase price | $ | |||||||
Less: purchase price for issuance of new preferred units at fair value 1 | ( | |||||||
Net consideration | ||||||||
Fair value of share-based compensation awards attributable to pre-combination services 2 | ||||||||
Fair value of previously held equity and debt | ||||||||
Fair value of non-controlling interest | ||||||||
Total | $ | |||||||
Identifiable assets acquired and liabilities assumed: | ||||||||
Tangible assets 1 | $ | |||||||
Intangible assets | ||||||||
Liabilities | ( | |||||||
Total identifiable net assets | $ | |||||||
Goodwill | $ |
WBA Q3 2022 Form 10-Q | 11 |
Purchase Price Allocation: | ||||||||
Cash consideration | $ | |||||||
Fair value of share-based compensation awards attributable to pre-combination services | ||||||||
Fair value of previously held equity interests | ||||||||
Fair value of non-controlling interests | ||||||||
Total | $ | |||||||
Identifiable assets acquired and liabilities assumed: | ||||||||
Tangible assets | $ | |||||||
Intangible assets | ||||||||
Liabilities | ( | |||||||
Total identifiable net assets | $ | |||||||
Goodwill | $ |
WBA Q3 2022 Form 10-Q | 12 |
Three months ended May 31, 2022 | United States | International | Corporate and Other | Walgreens Boots Alliance, Inc. | |||||||||||||||||||
Lease obligations and other real estate costs | $ | $ | $ | $ | |||||||||||||||||||
Asset impairments | |||||||||||||||||||||||
Employee severance and business transition costs | |||||||||||||||||||||||
Information technology transformation and other exit costs | |||||||||||||||||||||||
Total pre-tax exit and disposal charges | $ | $ | $ | $ |
WBA Q3 2022 Form 10-Q | 13 |
Nine months ended May 31, 2022 | United States | International | Corporate and Other | Walgreens Boots Alliance, Inc. | |||||||||||||||||||
Lease obligations and other real estate costs | $ | $ | $ | $ | |||||||||||||||||||
Asset impairments | |||||||||||||||||||||||
Employee severance and business transition costs | |||||||||||||||||||||||
Information technology transformation and other exit costs | |||||||||||||||||||||||
Total pre-tax exit and disposal charges | $ | $ | $ | $ |
Three months ended May 31, 2021 | United States | International | Corporate and Other | Walgreens Boots Alliance, Inc. | |||||||||||||||||||
Lease obligations and other real estate costs | $ | $ | $ | $ | |||||||||||||||||||
Asset impairments | |||||||||||||||||||||||
Employee severance and business transition costs | ( | ( | |||||||||||||||||||||
Information technology transformation and other exit costs | |||||||||||||||||||||||
Total pre-tax exit and disposal charges | $ | $ | $ | $ |
Nine months ended May 31, 2021 | United States | International | Corporate and Other | Walgreens Boots Alliance, Inc. | |||||||||||||||||||
Lease obligations and other real estate costs | $ | $ | $ | $ | |||||||||||||||||||
Asset impairments | |||||||||||||||||||||||
Employee severance and business transition costs | |||||||||||||||||||||||
Information technology transformation and other exit costs | |||||||||||||||||||||||
Total pre-tax exit and disposal charges | $ | $ | $ | $ |
Lease obligations and other real estate costs | Asset Impairments | Employee severance and business transition costs | Information technology transformation and other exit costs | Total | ||||||||||||||||||||||||||||
Balance at August 31, 2021 | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||
Costs | ||||||||||||||||||||||||||||||||
Payments | ( | ( | ( | ( | ||||||||||||||||||||||||||||
Other | ( | ( | ( | ( | ||||||||||||||||||||||||||||
Balance at May 31, 2022 | $ | $ | $ | $ | $ |
WBA Q3 2022 Form 10-Q | 14 |
Balance sheet supplemental information: | May 31, 2022 | August 31, 2021 | ||||||||||||
Operating leases: | ||||||||||||||
Operating lease right-of-use assets | $ | $ | ||||||||||||
Operating lease obligations - current | ||||||||||||||
Operating lease obligations - non-current | ||||||||||||||
Total operating lease obligations | $ | $ | ||||||||||||
Finance leases: | ||||||||||||||
Right-of-use assets included in: | ||||||||||||||
$ | $ | |||||||||||||
Lease obligations included in: | ||||||||||||||
Total finance lease obligations | $ | $ |
Three months ended May 31, | Nine months ended May 31, | |||||||||||||||||||||||||
Statement of Earnings supplemental information: | 2022 | 2021 | 2022 | 2021 | ||||||||||||||||||||||
Operating lease cost | ||||||||||||||||||||||||||
Fixed | $ | $ | $ | $ | ||||||||||||||||||||||
Variable 1 | ||||||||||||||||||||||||||
Finance lease cost | ||||||||||||||||||||||||||
Amortization | $ | $ | $ | $ | ||||||||||||||||||||||
Interest | ||||||||||||||||||||||||||
Sublease income | $ | $ | $ | $ | ||||||||||||||||||||||
Impairment of right-of-use assets | ||||||||||||||||||||||||||
Gain on sale-leaseback 2 |
WBA Q3 2022 Form 10-Q | 15 |
Nine months ended May 31, | ||||||||||||||
Other supplemental information: | 2022 | 2021 | ||||||||||||
Cash paid for amounts included in the measurement of lease obligations: | ||||||||||||||
Operating cash outflows from operating leases | $ | $ | ||||||||||||
Operating cash outflows from finance leases | ||||||||||||||
Financing cash outflows from finance leases | ||||||||||||||
Total | $ | $ | ||||||||||||
Right-of-use assets obtained in exchange for new lease obligations: | ||||||||||||||
Operating leases | $ | $ | ||||||||||||
Finance leases | ||||||||||||||
Total | $ | $ |
Weighted average terms and discount rates: | May 31, 2022 | August 31, 2021 | ||||||||||||
Weighted average remaining lease term in years: | ||||||||||||||
Operating leases | ||||||||||||||
Finance leases | ||||||||||||||
Weighted average discount rate: | ||||||||||||||
Operating leases | % | % | ||||||||||||
Finance leases | % | % |
Future lease payments: | ||||||||||||||
Fiscal year | Finance lease | Operating lease | ||||||||||||
2022 (Remaining period) | $ | $ | ||||||||||||
2023 | ||||||||||||||
2024 | ||||||||||||||
2025 | ||||||||||||||
2026 | ||||||||||||||
2027 | ||||||||||||||
Later | ||||||||||||||
Total undiscounted minimum lease payments | $ | $ | ||||||||||||
Less: Present value discount | ( | ( | ||||||||||||
Lease liability | $ | $ |
WBA Q3 2022 Form 10-Q | 16 |
May 31, 2022 | August 31, 2021 | ||||||||||||||||||||||
Carrying value | Ownership percentage | Carrying value | Ownership percentage | ||||||||||||||||||||
AmerisourceBergen | $ | $ | |||||||||||||||||||||
Others | |||||||||||||||||||||||
Total | $ | $ |
WBA Q3 2022 Form 10-Q | 17 |
Three months ended May 31, | Nine months ended May 31, | ||||||||||||||||||||||
2022 | 2021 | 2022 | 2021 | ||||||||||||||||||||
Sales | $ | $ | $ | $ | |||||||||||||||||||
Gross Profit | |||||||||||||||||||||||
Net earnings (loss) | ( | ||||||||||||||||||||||
Share of earnings (loss) from equity method investments | ( |
WBA Q3 2022 Form 10-Q | 18 |
Goodwill roll forward: | United States | International | Walgreens Health | Walgreens Boots Alliance, Inc. | |||||||||||||||||||
August 31, 2021 | $ | $ | $ | $ | |||||||||||||||||||
Acquisitions | |||||||||||||||||||||||
Currency translation adjustments | ( | ( | |||||||||||||||||||||
May 31, 2022 | $ | $ | $ | $ |
WBA Q3 2022 Form 10-Q | 19 |
Intangible assets | May 31, 2022 | August 31, 2021 | |||||||||
Gross amortizable intangible assets | |||||||||||
Customer relationships and loyalty card holders 1 | $ | $ | |||||||||
Primary care provider network | |||||||||||
Trade names and trademarks | |||||||||||
Developed technology 2 | |||||||||||
Purchasing and payor contracts | |||||||||||
Others 2 | |||||||||||
Total gross amortizable intangible assets | $ | $ | |||||||||
Accumulated amortization | |||||||||||
Customer relationships and loyalty card holders 1 | $ | $ | |||||||||
Primary care provider network | |||||||||||
Trade names and trademarks | |||||||||||
Developed technology 2 | |||||||||||
Purchasing and payor contracts | |||||||||||
Others 2 | |||||||||||
Total accumulated amortization | |||||||||||
Total amortizable intangible assets, net | $ | $ | |||||||||
Indefinite-lived intangible assets | |||||||||||
Trade names and trademarks | $ | $ | |||||||||
Pharmacy licenses | |||||||||||
Total indefinite-lived intangible assets | $ | $ | |||||||||
Total intangible assets, net | $ | $ |
2022 (Remaining period) | 2023 | 2024 | 2025 | 2026 | 2027 | ||||||||||||||||||||||||||||||
Estimated annual amortization expense | $ | $ | $ | $ | $ | $ |
WBA Q3 2022 Form 10-Q | 20 |
May 31, 2022 | August 31, 2021 | ||||||||||
Short-term debt | |||||||||||
Credit facilities | |||||||||||
Unsecured credit facility due 2023 | |||||||||||
$ | |||||||||||
$ | |||||||||||
Other 3 | |||||||||||
Total short-term debt | $ | $ | |||||||||
Long-term debt | |||||||||||
Credit facilities | |||||||||||
Unsecured credit facility due 2023 | $ | $ | |||||||||
Unsecured credit facility due 2024 | |||||||||||
$ | |||||||||||
$ | |||||||||||
$ | |||||||||||
$ | |||||||||||
£ | |||||||||||
€ | |||||||||||
$ | |||||||||||
Other 3 | |||||||||||
Total long-term debt, less current portion | $ | $ |
WBA Q3 2022 Form 10-Q | 21 |
WBA Q3 2022 Form 10-Q | 22 |
May 31, 2022 | Notional | Fair Value | Location in Consolidated Condensed Balance Sheets | ||||||||||||||
Derivatives designated as hedges: | |||||||||||||||||
Foreign currency forwards | $ | $ | Other current assets | ||||||||||||||
Cross currency interest rate swaps | Other current assets | ||||||||||||||||
Cross currency interest rate swaps | Other non-current assets | ||||||||||||||||
Foreign currency forwards | Other non-current assets | ||||||||||||||||
Foreign currency forwards | Other current liabilities | ||||||||||||||||
Derivatives not designated as hedges: | |||||||||||||||||
Foreign currency forwards | $ | $ | Other current assets | ||||||||||||||
Total return swap | Other current assets | ||||||||||||||||
Foreign currency forwards | Other current liabilities | ||||||||||||||||
WBA Q3 2022 Form 10-Q | 23 |
August 31, 2021 | Notional | Fair Value | Location in Consolidated Condensed Balance Sheets | ||||||||||||||
Derivatives designated as hedges: | |||||||||||||||||
Foreign currency forwards | $ | $ | Other current assets | ||||||||||||||
Cross currency interest rate swaps | Other non-current assets | ||||||||||||||||
Foreign currency forwards | Other non-current assets | ||||||||||||||||
Foreign currency forwards | Other current liabilities | ||||||||||||||||
Cross currency interest rate swaps | Other current liabilities | ||||||||||||||||
Cross currency interest rate swaps | Other non-current liabilities | ||||||||||||||||
Foreign currency forwards | Other non-current liabilities | ||||||||||||||||
Derivatives not designated as hedges: | |||||||||||||||||
Foreign currency forwards | $ | $ | Other current assets | ||||||||||||||
Total return swap | Other current assets | ||||||||||||||||
Foreign currency forwards | Other current liabilities | ||||||||||||||||
Total return swap | Other current liabilities |
Three months ended May 31, | Nine months ended May 31, | ||||||||||||||||||||||||||||
Location in Consolidated Condensed Statements of Earnings | 2022 | 2021 | 2022 | 2021 | |||||||||||||||||||||||||
Foreign currency forwards | Selling, general and administrative expenses 1 | $ | $ | ( | $ | $ | ( | ||||||||||||||||||||||
Total return swap | Selling, general and administrative expenses | ( | ( | ||||||||||||||||||||||||||
Foreign currency forwards | Other income 1 | ( | ( | ||||||||||||||||||||||||||
WBA Q3 2022 Form 10-Q | 24 |
May 31, 2022 | Level 1 | Level 2 | Level 3 | ||||||||||||||||||||
Assets: | |||||||||||||||||||||||
Money market funds 1 | $ | $ | $ | $ | |||||||||||||||||||
Foreign currency forwards 2 | |||||||||||||||||||||||
Cross currency interest rate swaps 3 | |||||||||||||||||||||||
Total return swaps | |||||||||||||||||||||||
Investments in equity securities 4 | |||||||||||||||||||||||
Liabilities: | |||||||||||||||||||||||
Foreign currency forwards 2 | $ | $ | $ | $ | |||||||||||||||||||
August 31, 2021 | Level 1 | Level 2 | Level 3 | ||||||||||||||||||||
Assets: | |||||||||||||||||||||||
Money market funds 1 | $ | $ | $ | $ | |||||||||||||||||||
Investments in debt securities 5 | |||||||||||||||||||||||
Foreign currency forwards 2 | |||||||||||||||||||||||
Cross currency interest rate swaps 3 | |||||||||||||||||||||||
Total return swaps | |||||||||||||||||||||||
Investments in equity securities 4 | |||||||||||||||||||||||
Liabilities: | |||||||||||||||||||||||
Cross currency interest rate swaps 3 | $ | $ | $ | $ | |||||||||||||||||||
Foreign currency forwards 2 |
WBA Q3 2022 Form 10-Q | 25 |
WBA Q3 2022 Form 10-Q | 26 |
WBA Q3 2022 Form 10-Q | 27 |
WBA Q3 2022 Form 10-Q | 28 |
Three months ended May 31, | Nine months ended May 31, | ||||||||||||||||||||||||||||
Location in Consolidated Condensed Statements of Earnings | 2022 | 2021 | 2022 | 2021 | |||||||||||||||||||||||||
Service costs | Selling, general and administrative expenses | $ | $ | $ | $ | ||||||||||||||||||||||||
Interest costs | Other income | ||||||||||||||||||||||||||||
Expected returns on plan assets/other | Other income | ( | ( | ( | ( | ||||||||||||||||||||||||
Total net periodic pension income | $ | ( | $ | ( | $ | ( | $ | ( |
WBA Q3 2022 Form 10-Q | 29 |
Pension/ post-retirement obligations | Unrealized gain (loss) on cash flow hedges | Net investment hedges | Share of OCI of equity method investments | Cumulative currency translation adjustments | Total | ||||||||||||||||||||||||||||||
Balance at February 28, 2022 | $ | ( | $ | ( | $ | ( | $ | ( | $ | ( | $ | ( | |||||||||||||||||||||||
Other comprehensive income (loss) before reclassification adjustments | ( | ( | ( | ||||||||||||||||||||||||||||||||
Amounts reclassified from AOCI | ( | ||||||||||||||||||||||||||||||||||
Tax benefit (provision) | ( | ( | ( | ||||||||||||||||||||||||||||||||
Net change in other comprehensive (loss) income | ( | ( | ( | ( | |||||||||||||||||||||||||||||||
Balance at May 31, 2022 | $ | ( | $ | ( | $ | $ | ( | $ | ( | $ | ( |
Pension/ post- retirement obligations | Unrealized gain (loss) on cash flow hedges | Net investment hedges | Unrealized gain on available for sale securities | Share of OCI of equity method investments | Cumulative currency translation adjustments | Total | |||||||||||||||||||||||||||||||||||
Balance at August 31, 2021 | $ | ( | $ | ( | $ | ( | $ | $ | ( | $ | ( | $ | ( | ||||||||||||||||||||||||||||
Other comprehensive income (loss) before reclassification adjustments | ( | ( | ( | ||||||||||||||||||||||||||||||||||||||
Amounts reclassified from AOCI | ( | ( | ( | ||||||||||||||||||||||||||||||||||||||
Other | ( | ( | |||||||||||||||||||||||||||||||||||||||
Tax benefit (provision) | ( | ( | |||||||||||||||||||||||||||||||||||||||
Net change in other comprehensive (loss) income | ( | ( | ( | ( | ( | ||||||||||||||||||||||||||||||||||||
Balance at May 31, 2022 | $ | ( | $ | ( | $ | $ | $ | ( | $ | ( | $ | ( |
WBA Q3 2022 Form 10-Q | 30 |
Pension/ post- retirement obligations | Unrealized gain (loss) on cash flow hedges | Net investment hedges | Unrealized gain on available for sale securities | Share of OCI of equity method investments | Cumulative currency translation adjustments | Total | |||||||||||||||||||||||||||||||||||
Balance at February 28, 2021 | $ | ( | $ | ( | $ | ( | $ | $ | $ | ( | $ | ( | |||||||||||||||||||||||||||||
Other comprehensive income (loss) before reclassification adjustments | ( | ( | |||||||||||||||||||||||||||||||||||||||
Amounts reclassified from AOCI | ( | ||||||||||||||||||||||||||||||||||||||||
Tax benefit (provision) | ( | ( | ( | ||||||||||||||||||||||||||||||||||||||
Net change in other comprehensive (loss) income | ( | ( | ( | ||||||||||||||||||||||||||||||||||||||
Balance at May 31, 2021 | $ | ( | $ | ( | $ | ( | $ | $ | $ | ( | $ | ( |
Pension/ post- retirement obligations | Unrealized gain (loss) on cash flow hedges | Net investment hedges | Unrealized gain on available for sale securities | Share of OCI of equity method investments | Cumulative currency translation adjustments | Total | |||||||||||||||||||||||||||||||||||
Balance at August 31, 2020 | $ | ( | $ | ( | $ | ( | $ | $ | ( | $ | ( | $ | ( | ||||||||||||||||||||||||||||
Other comprehensive income (loss) before reclassification adjustments | ( | ||||||||||||||||||||||||||||||||||||||||
Amounts reclassified from AOCI | ( | ||||||||||||||||||||||||||||||||||||||||
Tax benefit (provision) | ( | ( | ( | ||||||||||||||||||||||||||||||||||||||
Net change in other comprehensive income (loss) | ( | ||||||||||||||||||||||||||||||||||||||||
Balance at May 31, 2021 | $ | ( | $ | ( | $ | ( | $ | $ | $ | ( | $ | ( |
WBA Q3 2022 Form 10-Q | 31 |
Three months ended May 31, | Nine months ended May 31, | ||||||||||||||||||||||
2022 | 2021 | 2022 | 2021 | ||||||||||||||||||||
Sales: | |||||||||||||||||||||||
United States | $ | $ | $ | $ | |||||||||||||||||||
International | |||||||||||||||||||||||
Walgreens Health | |||||||||||||||||||||||
Corporate and Other 1 | |||||||||||||||||||||||
Walgreens Boots Alliance, Inc. | $ | $ | $ | $ | |||||||||||||||||||
Adjusted operating income: | |||||||||||||||||||||||
United States | $ | $ | $ | $ | |||||||||||||||||||
International | |||||||||||||||||||||||
Walgreens Health | ( | ( | ( | ( | |||||||||||||||||||
Corporate and Other | ( | ( | ( | ( | |||||||||||||||||||
Walgreens Boots Alliance, Inc. | $ | $ | $ | $ | |||||||||||||||||||
WBA Q3 2022 Form 10-Q | 32 |
Three months ended May 31, | Nine months ended May 31, | ||||||||||||||||||||||
2022 | 2021 | 2022 | 2021 | ||||||||||||||||||||
Adjusted operating income | $ | $ | $ | $ | |||||||||||||||||||
Adjustments to equity earnings (loss) in AmerisourceBergen | ( | ( | ( | ( | |||||||||||||||||||
Transformational cost management | ( | ( | ( | ( | |||||||||||||||||||
Acquisition-related amortization | ( | ( | ( | ( | |||||||||||||||||||
Certain legal and regulatory accruals and settlements | ( | ( | ( | ||||||||||||||||||||
LIFO provision | ( | ( | ( | ( | |||||||||||||||||||
Acquisition-related costs | ( | ( | ( | ( | |||||||||||||||||||
Operating (loss) income | $ | ( | $ | $ | $ |
Three months ended May 31, | Nine months ended May 31, | |||||||||||||||||||||||||
2022 | 2021 | 2022 | 2021 | |||||||||||||||||||||||
United States | ||||||||||||||||||||||||||
Pharmacy | $ | $ | $ | $ | ||||||||||||||||||||||
Retail | ||||||||||||||||||||||||||
Total | ||||||||||||||||||||||||||
International | ||||||||||||||||||||||||||
Pharmacy | ||||||||||||||||||||||||||
Retail | ||||||||||||||||||||||||||
Wholesale | ||||||||||||||||||||||||||
Total | ||||||||||||||||||||||||||
Walgreens Health | ||||||||||||||||||||||||||
Corporate and Other 1 | ||||||||||||||||||||||||||
Walgreens Boots Alliance, Inc. | $ | $ | $ | $ |
WBA Q3 2022 Form 10-Q | 33 |
Three months ended May 31, | Nine months ended May 31, | ||||||||||||||||||||||
2022 | 2021 | 2022 | 2021 | ||||||||||||||||||||
Purchases, net | $ | $ | $ | $ |
May 31, 2022 | August 31, 2021 | ||||||||||
Trade accounts payable, net of Trade accounts receivable | $ | $ |
WBA Q3 2022 Form 10-Q | 34 |
Three months ended May 31, | Nine months ended May 31, | ||||||||||||||||||||||
2022 | 2021 | 2022 | 2021 | ||||||||||||||||||||
Depreciation expense | $ | $ | $ | $ | |||||||||||||||||||
Intangible asset and other amortization | |||||||||||||||||||||||
Total depreciation and amortization expense | $ | $ | $ | $ |
WBA Q3 2022 Form 10-Q | 35 |
May 31, 2022 | August 31, 2021 | ||||||||||
Cash and cash equivalents | $ | $ | |||||||||
Marketable securities | |||||||||||
Restricted cash (included in other current assets) | |||||||||||
Cash, cash equivalents, marketable securities and restricted cash | $ | $ |
Redeemable non-controlling interest roll forward: | Three months ended May 31, 2022 | Nine months ended May 31, 2022 | |||||||||
Opening balance | $ | $ | |||||||||
Recognition upon acquisition of subsidiary 1 | |||||||||||
Acquisition of non-controlling interests 2 | ( | ||||||||||
Redemption price adjustments 3 | ( | ||||||||||
Net loss attributable to redeemable non-controlling interest | ( | ( | |||||||||
Currency translation adjustments and other | ( | ( | |||||||||
Balance at May 31, 2022 | $ | $ | |||||||||
Quarter ended | 2022 | 2021 | ||||||||||||
November | $ | $ | ||||||||||||
February | $ | $ | ||||||||||||
May | $ | $ | ||||||||||||
Total | $ | $ |
WBA Q3 2022 Form 10-Q | 36 |
WBA Q3 2022 Form 10-Q | 37 |
WBA Q3 2022 Form 10-Q | 38 |
WBA Q3 2022 Form 10-Q | 39 |
WBA Q3 2022 Form 10-Q | 40 |
WBA Q3 2022 Form 10-Q | 41 |
Transformational Cost Management Program Activities | Range of Charges | ||||
Lease obligations and other real estate costs 1 | $1,250 to $1,350 million | ||||
Asset impairments 2 | $525 to $575 million | ||||
Employee severance and business transition costs | $1,150 to $1,200 million | ||||
Information technology transformation and other exit costs | $400 to $450 million | ||||
Total cumulative pre-tax exit and disposal charges | $3.3 to $3.6 billion | ||||
Other IT transformation costs | $275 to $325 million | ||||
Total estimated pre-tax costs | $3.6 to $3.9 billion |
Three months ended May 31, 2022 | United States | International | Corporate and Other | Walgreens Boots Alliance, Inc. | |||||||||||||||||||
Lease obligations and other real estate costs | $ | 16 | $ | 3 | $ | — | $ | 18 | |||||||||||||||
Asset impairments | 48 | 14 | — | 61 | |||||||||||||||||||
Employee severance and business transition costs | 53 | 22 | 11 | 86 | |||||||||||||||||||
Information technology transformation and other exit costs | 1 | 6 | — | 7 | |||||||||||||||||||
Total pre-tax exit and disposal charges | $ | 117 | $ | 45 | $ | 11 | $ | 173 | |||||||||||||||
Other IT transformation costs | 10 | 2 | — | 11 | |||||||||||||||||||
Total pre-tax costs | $ | 127 | $ | 47 | $ | 11 | $ | 185 |
Nine months ended May 31, 2022 | United States | International | Corporate and Other | Walgreens Boots Alliance, Inc. | |||||||||||||||||||
Lease obligations and other real estate costs | $ | 107 | $ | 6 | $ | — | $ | 113 | |||||||||||||||
Asset impairments | 64 | 42 | — | 105 | |||||||||||||||||||
Employee severance and business transition costs | 110 | 32 | 25 | 166 | |||||||||||||||||||
Information technology transformation and other exit costs | 3 | 18 | — | 20 | |||||||||||||||||||
Total pre-tax exit and disposal charges | $ | 283 | $ | 97 | $ | 25 | $ | 404 | |||||||||||||||
Other IT transformation costs | 36 | 17 | — | 53 | |||||||||||||||||||
Total pre-tax costs | $ | 319 | $ | 114 | $ | 25 | $ | 458 |
WBA Q3 2022 Form 10-Q | 42 |
Three months ended May 31, 2021 | United States | International | Corporate and Other | Walgreens Boots Alliance, Inc. | |||||||||||||||||||
Lease obligations and other real estate costs | $ | 15 | $ | 6 | $ | — | $ | 21 | |||||||||||||||
Asset impairments | 5 | 9 | — | 14 | |||||||||||||||||||
Employee severance and business transition costs | (19) | 2 | 14 | (2) | |||||||||||||||||||
Information technology transformation and other exit costs | 1 | 10 | — | 11 | |||||||||||||||||||
Total pre-tax exit and disposal charges | $ | 2 | $ | 27 | $ | 14 | $ | 44 | |||||||||||||||
Other IT transformation costs | 10 | 6 | — | 16 | |||||||||||||||||||
Total pre-tax costs | $ | 13 | $ | 33 | $ | 14 | $ | 60 |
Nine months ended May 31, 2021 | United States | International | Corporate and Other | Walgreens Boots Alliance, Inc. | |||||||||||||||||||
Lease obligations and other real estate costs | $ | 56 | $ | 6 | $ | — | $ | 62 | |||||||||||||||
Asset impairments | 9 | 10 | — | 19 | |||||||||||||||||||
Employee severance and business transition costs | 92 | 36 | 44 | 172 | |||||||||||||||||||
Information technology transformation and other exit costs | 14 | 11 | 1 | 26 | |||||||||||||||||||
Total pre-tax exit and disposal charges | $ | 172 | $ | 63 | $ | 44 | $ | 279 | |||||||||||||||
Other IT transformation costs | 42 | 17 | — | 59 | |||||||||||||||||||
Total pre-tax costs | $ | 213 | $ | 80 | $ | 44 | $ | 338 |
WBA Q3 2022 Form 10-Q | 43 |
(in millions, except per share amounts) | |||||||||||||||||||||||
Three months ended May 31, | Nine months ended May 31, | ||||||||||||||||||||||
2022 | 2021 | 2022 | 2021 | ||||||||||||||||||||
Sales | $ | 32,597 | $ | 34,030 | $ | 100,254 | $ | 98,247 | |||||||||||||||
Gross profit | 6,572 | 7,153 | 21,855 | 20,564 | |||||||||||||||||||
Selling, general and administrative expenses | 7,019 | 6,116 | 19,975 | 17,936 | |||||||||||||||||||
Equity earnings (loss) in AmerisourceBergen | 127 | 97 | 330 | (1,196) | |||||||||||||||||||
Operating (loss) income | (320) | 1,134 | 2,209 | 1,432 | |||||||||||||||||||
Adjusted operating income (Non-GAAP measure) 1 | 955 | 1,459 | 4,389 | 3,881 | |||||||||||||||||||
Earnings before interest and tax | 90 | 1,294 | 5,038 | 1,905 | |||||||||||||||||||
Net earnings attributable to Walgreens Boots Alliance, Inc. - continuing operations (GAAP) | 289 | 1,105 | 4,752 | 1,636 | |||||||||||||||||||
Adjusted net earnings attributable to Walgreens Boots Alliance, Inc. - continuing operations (Non-GAAP measure) 1 | 834 | 1,194 | 3,667 | 3,237 | |||||||||||||||||||
Diluted net earnings per common share - continuing operations (GAAP) | 0.33 | 1.27 | 5.49 | 1.89 | |||||||||||||||||||
Adjusted diluted net earnings per common share - continuing operations (Non-GAAP measure) 1 | 0.96 | 1.38 | 4.23 | 3.74 |
Percentage increases (decreases) | |||||||||||||||||||||||
Three months ended May 31, | Nine months ended May 31, | ||||||||||||||||||||||
2022 | 2021 | 2022 | 2021 | ||||||||||||||||||||
Sales | (4.2) | 12.1 | 2.0 | 7.2 | |||||||||||||||||||
Gross profit | (8.1) | 20.0 | 6.3 | 4.1 | |||||||||||||||||||
Selling, general and administrative expenses | 14.8 | (22.4) | 11.4 | (8.8) | |||||||||||||||||||
Operating (loss) income | (128.2) | NM | 54.3 | NM | |||||||||||||||||||
Adjusted operating income (Non-GAAP measure) 1 | (34.6) | 82.9 | 13.1 | 4.2 | |||||||||||||||||||
Earnings before interest and income tax provision | (93.0) | NM | 164.5 | NM | |||||||||||||||||||
Net earnings attributable to Walgreens Boots Alliance, Inc. - continuing operations (GAAP) | (73.8) | NM | 190.5 | NM | |||||||||||||||||||
Adjusted net earnings attributable to Walgreens Boots Alliance, Inc. - continuing operations (Non-GAAP measure) 1 | (30.2) | 93.1 | 13.3 | 8.4 | |||||||||||||||||||
Diluted net earnings per common share - continuing operations (GAAP) | (73.8) | NM | 190.6 | NM | |||||||||||||||||||
Adjusted diluted net earnings per common share - continuing operations (Non-GAAP measure) 1 | (30.0) | 95.1 | 13.3 | 10.7 |
WBA Q3 2022 Form 10-Q | 44 |
Percent to sales | |||||||||||||||||||||||
Three months ended May 31, | Nine months ended May 31, | ||||||||||||||||||||||
2022 | 2021 | 2022 | 2021 | ||||||||||||||||||||
Gross margin | 20.2 | 21.0 | 21.8 | 20.9 | |||||||||||||||||||
Selling, general and administrative expenses | 21.5 | 18.0 | 19.9 | 18.3 |
WBA Q3 2022 Form 10-Q | 45 |
WBA Q3 2022 Form 10-Q | 46 |
FINANCIAL PERFORMANCE | (in millions, except location amounts) | ||||||||||||||||||||||
Three months ended May 31, | Nine months ended May 31, | ||||||||||||||||||||||
2022 | 2021 | 2022 | 2021 | ||||||||||||||||||||
Sales | $ | 26,695 | $ | 28,743 | $ | 82,394 | $ | 83,250 | |||||||||||||||
Gross profit | 5,499 | 6,093 | 18,332 | 17,434 | |||||||||||||||||||
Selling, general and administrative expenses | 5,716 | 4,971 | 16,006 | 14,695 | |||||||||||||||||||
Equity earnings (loss) in AmerisourceBergen | 127 | 97 | 330 | (1,196) | |||||||||||||||||||
Operating (loss) income | (90) | 1,219 | 2,656 | 1,543 | |||||||||||||||||||
Adjusted operating income (Non-GAAP measure)1 | 966 | 1,471 | 4,243 | 3,789 | |||||||||||||||||||
Number of prescriptions 2 | 201.5 | 214.1 | 622.8 | 613.9 | |||||||||||||||||||
30-day equivalent prescriptions 2,3 | 304.3 | 312.1 | 918.1 | 898.1 | |||||||||||||||||||
Number of locations at period end | 8,904 | 8,992 | 8,904 | 8,992 |
Percentage increases (decreases) | |||||||||||||||||||||||
Three months ended May 31, | Nine months ended May 31, | ||||||||||||||||||||||
2022 | 2021 | 2022 | 2021 | ||||||||||||||||||||
Sales | (7.1) | 5.1 | (1.0) | 3.1 | |||||||||||||||||||
Gross profit | (9.8) | 15.5 | 5.2 | 3.7 | |||||||||||||||||||
Selling, general and administrative expenses | 15.0 | (0.4) | 8.9 | 0.7 | |||||||||||||||||||
Operating (loss) income | NM | 130.8 | 72.1 | (38.4) | |||||||||||||||||||
Adjusted operating income (Non-GAAP measure) 1 | (34.4) | 50.3 | 12.0 | 2.3 | |||||||||||||||||||
Comparable sales 4 | 1.8 | 6.4 | 6.3 | 4.1 | |||||||||||||||||||
Pharmacy sales | (9.7) | 6.3 | (4.0) | 5.1 | |||||||||||||||||||
Comparable pharmacy sales 4 | 2.0 | 8.4 | 5.3 | 6.0 | |||||||||||||||||||
Retail sales | 1.0 | 1.4 | 8.4 | (2.6) | |||||||||||||||||||
Comparable retail sales 4 | 1.4 | 1.7 | 8.8 | (0.5) | |||||||||||||||||||
Comparable number of prescriptions 2,4 | (5.3) | 9.8 | 2.0 | — | |||||||||||||||||||
Comparable 30-day equivalent prescriptions 2,3,4 | (1.8) | 9.8 | 2.9 | 3.8 |
Percent to sales | |||||||||||||||||||||||
Three months ended May 31, | Nine months ended May 31, | ||||||||||||||||||||||
2022 | 2021 | 2022 | 2021 | ||||||||||||||||||||
Gross margin | 20.6 | 21.2 | 22.2 | 20.9 | |||||||||||||||||||
Selling, general and administrative expenses | 21.4 | 17.3 | 19.4 | 17.7 |
WBA Q3 2022 Form 10-Q | 47 |
WBA Q3 2022 Form 10-Q | 48 |
WBA Q3 2022 Form 10-Q | 49 |
FINANCIAL PERFORMANCE | (in millions, except location amounts) | ||||||||||||||||||||||
Three months ended May 31, | Nine months ended May 31, | ||||||||||||||||||||||
2022 | 2021 | 2022 | 2021 | ||||||||||||||||||||
Sales | $ | 5,305 | $ | 5,288 | $ | 16,686 | $ | 14,998 | |||||||||||||||
Gross profit | 1,095 | 1,060 | 3,508 | 3,130 | |||||||||||||||||||
Selling, general and administrative expenses | 995 | 1,025 | 3,182 | 2,949 | |||||||||||||||||||
Operating income | 100 | 36 | 326 | 181 | |||||||||||||||||||
Adjusted operating income (Non-GAAP measure) 1 | 174 | 94 | 563 | 326 | |||||||||||||||||||
Number of retail locations at period end | 4,021 | 4,062 | 4,021 | 4,062 |
WBA Q3 2022 Form 10-Q | 50 |
Percentage increases (decreases) | |||||||||||||||||||||||
Three months ended May 31, | Nine months ended May 31, | ||||||||||||||||||||||
2022 | 2021 | 2022 | 2021 | ||||||||||||||||||||
Sales | 0.3 | 75.8 | 11.3 | 37.9 | |||||||||||||||||||
Gross profit | 3.2 | 55.0 | 12.1 | 6.6 | |||||||||||||||||||
Selling, general and administrative expenses | (2.9) | (63.9) | 7.9 | (39.8) | |||||||||||||||||||
Operating income | 177.1 | NM | 80.6 | NM | |||||||||||||||||||
Adjusted operating income (Non-GAAP measure) 1 | 85.8 | NM | 72.8 | 109.7 | |||||||||||||||||||
Comparable sales in constant currency 2 | 12.6 | 21.0 | 12.7 | 0.7 | |||||||||||||||||||
Pharmacy sales | (5.9) | 15.2 | 3.0 | 5.2 | |||||||||||||||||||
Comparable pharmacy sales in constant currency 2 | 1.5 | 6.0 | 5.0 | 4.8 | |||||||||||||||||||
Retail sales | 11.2 | 55.9 | 14.6 | (0.1) | |||||||||||||||||||
Comparable retail sales in constant currency 2 | 20.1 | 35.7 | 17.6 | (1.9) |
Percent to sales | |||||||||||||||||||||||
Three months ended May 31, | Nine months ended May 31, | ||||||||||||||||||||||
2022 | 2021 | 2022 | 2021 | ||||||||||||||||||||
Gross margin | 20.6 | 20.1 | 21.0 | 20.9 | |||||||||||||||||||
Selling, general and administrative expenses | 18.8 | 19.4 | 19.1 | 19.7 |
WBA Q3 2022 Form 10-Q | 51 |
WBA Q3 2022 Form 10-Q | 52 |
WBA Q3 2022 Form 10-Q | 53 |
FINANCIAL PERFORMANCE | (in millions, except payor, location and clinic amounts) | ||||||||||||||||||||||
Three months ended May 31, | Nine months ended May 31, | ||||||||||||||||||||||
2022 | 2021 | 2022 | 2021 | ||||||||||||||||||||
Sales | $ | 596 | $ | — | $ | 1,173 | $ | — | |||||||||||||||
Gross (loss) profit | (21) | — | 15 | — | |||||||||||||||||||
Selling, general and administrative expenses | 213 | 17 | 505 | 31 | |||||||||||||||||||
Operating loss | (234) | (17) | (491) | (31) | |||||||||||||||||||
Adjusted operating loss (Non-GAAP measure) 1 | (129) | (17) | (218) | (31) | |||||||||||||||||||
Number of payor/provider partnerships at period end | 3 | — | 3 | — | |||||||||||||||||||
Number of locations with Walgreens Health Corners at period end | 55 | — | 55 | — | |||||||||||||||||||
Number of co-located VillageMD clinics at period end | 120 | 25 | 120 | 25 | |||||||||||||||||||
Number of total VillageMD clinics at period end 2 | 315 | 218 | 315 | 218 |
WBA Q3 2022 Form 10-Q | 54 |
WBA Q3 2022 Form 10-Q | 55 |
(in millions) | ||||||||||||||||||||||||||||||||
Three months ended May 31, 2022 | ||||||||||||||||||||||||||||||||
United States | International | Walgreens Health | Corporate and Other | Walgreens Boots Alliance, Inc. | ||||||||||||||||||||||||||||
Operating (loss) income (GAAP) | $ | (90) | $ | 100 | $ | (234) | $ | (95) | $ | (320) | ||||||||||||||||||||||
Certain legal and regulatory accruals and settlements | 734 | — | — | — | 734 | |||||||||||||||||||||||||||
Acquisition-related amortization | 79 | 16 | 106 | — | 201 | |||||||||||||||||||||||||||
Transformational cost management | 127 | 47 | — | 11 | 185 | |||||||||||||||||||||||||||
Adjustments to equity earnings (loss) in AmerisourceBergen | $ | 60 | $ | — | $ | — | $ | — | $ | 60 | ||||||||||||||||||||||
Acquisition-related costs | $ | 1 | $ | 11 | $ | — | $ | 28 | $ | 40 | ||||||||||||||||||||||
LIFO provision | 55 | — | — | — | 55 | |||||||||||||||||||||||||||
Adjusted operating income (loss) (Non-GAAP measure) | $ | 966 | $ | 174 | $ | (129) | $ | (56) | $ | 955 |
(in millions) | ||||||||||||||||||||||||||||||||
Three months ended May 31, 2021 | ||||||||||||||||||||||||||||||||
United States | International | Walgreens Health | Corporate and Other | Walgreens Boots Alliance, Inc. | ||||||||||||||||||||||||||||
Operating income (loss) (GAAP) | $ | 1,219 | $ | 36 | $ | (17) | $ | (103) | $ | 1,134 | ||||||||||||||||||||||
Acquisition-related amortization | 138 | 20 | — | — | 158 | |||||||||||||||||||||||||||
Transformational cost management | 12 | 33 | — | 14 | 60 | |||||||||||||||||||||||||||
Adjustments to equity earnings (loss) in AmerisourceBergen | 48 | — | — | — | 48 | |||||||||||||||||||||||||||
Acquisition-related costs | 3 | 5 | — | 1 | 9 | |||||||||||||||||||||||||||
LIFO provision | 51 | — | — | — | 51 | |||||||||||||||||||||||||||
Adjusted operating income (loss) (Non-GAAP measure) | $ | 1,471 | $ | 94 | $ | (17) | $ | (88) | $ | 1,459 |
WBA Q3 2022 Form 10-Q | 56 |
(in millions) | ||||||||||||||||||||||||||||||||
Nine months ended May 31, 2022 | ||||||||||||||||||||||||||||||||
United States | International | Walgreens Health | Corporate and Other | Walgreens Boots Alliance, Inc. | ||||||||||||||||||||||||||||
Operating income (loss) (GAAP) | $ | 2,656 | $ | 326 | $ | (491) | $ | (283) | $ | 2,209 | ||||||||||||||||||||||
Certain legal and regulatory accruals and settlements | 734 | — | — | — | 734 | |||||||||||||||||||||||||||
Acquisition-related amortization | 317 | 50 | 249 | — | 616 | |||||||||||||||||||||||||||
Transformational cost management | 319 | 114 | — | 25 | 458 | |||||||||||||||||||||||||||
Adjustments to equity earnings (loss) in AmerisourceBergen | 155 | — | — | — | 155 | |||||||||||||||||||||||||||
Acquisition-related costs | (2) | 73 | 24 | 60 | 155 | |||||||||||||||||||||||||||
LIFO provision | 64 | — | — | — | 64 | |||||||||||||||||||||||||||
Adjusted operating income (loss) (Non-GAAP measure) | $ | 4,243 | $ | 563 | $ | (218) | $ | (198) | $ | 4,389 |
(in millions) | ||||||||||||||||||||||||||||||||
Nine months ended May 31, 2021 | ||||||||||||||||||||||||||||||||
United States | International | Walgreens Health | Corporate and Other | Walgreens Boots Alliance, Inc. | ||||||||||||||||||||||||||||
Operating income (loss) (GAAP) | $ | 1,543 | $ | 181 | $ | (31) | $ | (261) | $ | 1,432 | ||||||||||||||||||||||
Certain legal and regulatory accruals and settlements | 60 | — | — | — | 60 | |||||||||||||||||||||||||||
Acquisition-related amortization | 311 | 56 | — | — | 367 | |||||||||||||||||||||||||||
Transformational cost management | 213 | 80 | — | 44 | 338 | |||||||||||||||||||||||||||
Adjustments to equity earnings (loss) in AmerisourceBergen | 1,575 | — | — | — | 1,575 | |||||||||||||||||||||||||||
Acquisition-related costs | 2 | 8 | — | 14 | 25 | |||||||||||||||||||||||||||
LIFO provision | 85 | — | — | — | 85 | |||||||||||||||||||||||||||
Adjusted operating income (loss) (Non-GAAP measure) | $ | 3,789 | $ | 326 | $ | (31) | $ | (202) | $ | 3,881 |
WBA Q3 2022 Form 10-Q | 57 |
(in millions) | ||||||||||||||||||||||||||
Three months ended May 31, | Nine months ended May 31, | |||||||||||||||||||||||||
2022 | 2021 | 2022 | 2021 | |||||||||||||||||||||||
Net earnings from continuing operations (GAAP) | $ | 289 | $ | 1,105 | $ | 4,752 | $ | 1,636 | ||||||||||||||||||
Adjustments to operating (loss) income: | ||||||||||||||||||||||||||
Certain legal and regulatory accruals and settlements 1 | 734 | — | 734 | 60 | ||||||||||||||||||||||
Acquisition-related amortization 2 | 201 | 158 | 616 | 367 | ||||||||||||||||||||||
Transformational cost management 3 | 185 | 60 | 458 | 338 | ||||||||||||||||||||||
Adjustments to equity earnings in AmerisourceBergen4 | 60 | 48 | 155 | 1,575 | ||||||||||||||||||||||
Acquisition-related costs5 | 40 | 9 | 155 | 25 | ||||||||||||||||||||||
LIFO provision 6 | 55 | 51 | 64 | 85 | ||||||||||||||||||||||
Total adjustments to operating (loss) income | 1,275 | 325 | 2,181 | 2,449 | ||||||||||||||||||||||
Adjustments to other income: | ||||||||||||||||||||||||||
Impairment of equity method investment and investment in equity securities 7 | — | — | 190 | — | ||||||||||||||||||||||
Adjustment to gain on disposal of discontinued operations 8 | — | — | 38 | — | ||||||||||||||||||||||
Net investment hedging loss 9 | — | 5 | 1 | 6 | ||||||||||||||||||||||
Gain on sale of equity method investment 10 | (421) | (98) | (421) | (290) | ||||||||||||||||||||||
Gain on previously held investments 11 | — | — | (2,576) | — | ||||||||||||||||||||||
Total adjustments to other income | (421) | (94) | (2,768) | (284) | ||||||||||||||||||||||
Adjustments to interest expense, net: | ||||||||||||||||||||||||||
Early debt extinguishment 12 | 4 | 419 | 4 | 419 | ||||||||||||||||||||||
Total adjustments to interest expense, net | 4 | 419 | 4 | 419 | ||||||||||||||||||||||
Adjustments to income tax (benefit) provision: | ||||||||||||||||||||||||||
Equity method non-cash tax 13 | 25 | 17 | 55 | (309) | ||||||||||||||||||||||
Tax impact of adjustments 13 | (331) | 10 | (466) | (104) | ||||||||||||||||||||||
Total adjustments to income tax (benefit) provision | (306) | 27 | (411) | (412) | ||||||||||||||||||||||
Adjustments to post tax earnings in other equity method investments: | ||||||||||||||||||||||||||
Adjustments to equity earnings in other equity method investments 14 | 24 | (557) | 49 | (520) | ||||||||||||||||||||||
Total adjustments to post tax earnings from other equity method investments | 24 | (557) | 49 | (520) | ||||||||||||||||||||||
Adjustments to net loss attributable to non-controlling interests: | ||||||||||||||||||||||||||
LIFO provision 6 | — | (1) | — | (7) | ||||||||||||||||||||||
Early debt extinguishment 12 | (1) | — | (1) | — | ||||||||||||||||||||||
Transformational cost management 3 | — | — | (1) | 2 | ||||||||||||||||||||||
Acquisition-related costs 5 | 2 | — | (18) | — | ||||||||||||||||||||||
Acquisition-related amortization 2 | (31) | (30) | (119) | (46) | ||||||||||||||||||||||
Total adjustments to net loss attributable to non-controlling interests | (31) | (30) | (140) | (50) | ||||||||||||||||||||||
Adjusted net earnings attributable to Continuing Operations (Non-GAAP measure) | $ | 834 | $ | 1,194 | $ | 3,667 | $ | 3,237 |
WBA Q3 2022 Form 10-Q | 58 |
Net earnings attributable to Walgreens Boots Alliance, Inc. - discontinued operations (GAAP) | — | 92 | — | 279 | ||||||||||||||||||||||
Acquisition-related costs 5 | — | 39 | — | 49 | ||||||||||||||||||||||
Acquisition-related amortization 2 | — | — | — | 28 | ||||||||||||||||||||||
Transformational cost management 3 | — | (8) | — | 1 | ||||||||||||||||||||||
Tax impact of adjustments 13 | — | (5) | — | (15) | ||||||||||||||||||||||
Total adjustments to net earnings attributable to Walgreens Boots Alliance, Inc. - discontinued operations | $ | — | $ | 26 | $ | — | $ | 62 | ||||||||||||||||||
Adjusted net earnings attributable to Walgreens Boots Alliance, Inc. - discontinued operations (Non-GAAP measure) | $ | — | $ | 119 | $ | — | $ | 342 | ||||||||||||||||||
Adjusted net earnings attributable to Walgreens Boots Alliance, Inc. (Non-GAAP measure) | $ | 834 | $ | 1,313 | $ | 3,667 | $ | 3,579 | ||||||||||||||||||
Diluted net earnings per common share - continuing operations (GAAP) | $ | 0.33 | $ | 1.27 | $ | 5.49 | $ | 1.89 | ||||||||||||||||||
Adjustments to operating (loss) income | 1.47 | 0.38 | 2.52 | 2.83 | ||||||||||||||||||||||
Adjustments to other income | (0.49) | (0.11) | (3.20) | (0.33) | ||||||||||||||||||||||
Adjustments to interest expense, net | 0.01 | 0.48 | 0.01 | 0.48 | ||||||||||||||||||||||
Adjustments to income tax (benefit) provision | (0.35) | 0.03 | (0.47) | (0.48) | ||||||||||||||||||||||
Adjustments to post tax earnings from other equity method investments 14 | 0.03 | (0.64) | 0.06 | (0.60) | ||||||||||||||||||||||
Adjustments to net loss attributable to non-controlling interests | (0.04) | (0.03) | (0.16) | (0.06) | ||||||||||||||||||||||
Adjusted diluted net earnings per common share - continuing operations (Non-GAAP measure) | $ | 0.96 | $ | 1.38 | $ | 4.23 | $ | 3.74 | ||||||||||||||||||
Diluted net earnings per common share - discontinued operations (GAAP) | $ | — | $ | 0.11 | $ | — | $ | 0.32 | ||||||||||||||||||
Total adjustments to net earnings attributable to Walgreens Boots Alliance, Inc. – discontinued operations | — | 0.03 | — | 0.07 | ||||||||||||||||||||||
Adjusted diluted net earnings per common share - discontinued operations (Non-GAAP measure) | $ | — | $ | 0.14 | $ | — | $ | 0.39 | ||||||||||||||||||
Adjusted diluted net earnings per common share (Non-GAAP measure) | $ | 0.96 | $ | 1.51 | $ | 4.23 | $ | 4.13 | ||||||||||||||||||
Weighted average common shares outstanding, diluted (in millions) | 865.3 | 867.0 | 866.0 | 866.2 |
1 | Certain legal and regulatory accruals and settlements relate to significant charges associated with certain legal proceedings, including legal defense costs. During the three months ended May 31, 2022, the Company recorded a $683 million charge related to a settlement agreement with the State of Florida to resolve all claims related to the distribution and dispensing of prescription opioid medications across the Company’s pharmacies in the State of Florida. The Company excludes these charges when evaluating operating performance because it does not incur such charges on a predictable basis and exclusion of such charges enables more consistent evaluation of the Company’s operating performance. These charges are recorded within selling, general and administrative expenses. |
WBA Q3 2022 Form 10-Q | 59 |
2 | Acquisition-related amortization includes amortization of acquisition-related intangible assets, inventory valuation adjustments and stock-based compensation fair valuation adjustments. Amortization of acquisition-related intangible assets includes amortization of intangible assets such as customer relationships, trade names, trademarks and contract intangibles. Intangible asset amortization excluded from the related non-GAAP measure represents the entire amount recorded within the Company’s GAAP financial statements. The revenue generated by the associated intangible assets has not been excluded from the related non-GAAP measures. Amortization expense, unlike the related revenue, is not affected by operations of any particular period unless an intangible asset becomes impaired, or the estimated useful life of an intangible asset is revised. These charges are primarily recorded within selling, general and administrative expenses. Business combination accounting principles require us to measure acquired inventory at fair value. The fair value of the inventory reflects cost of acquired inventory and a portion of the expected profit margin. The acquisition-related inventory valuation adjustments excludes the expected profit margin component from cost of sales recorded under the business combination accounting principles. Stock based compensation fair valuation adjustment reflects difference between the fair value based remeasurement of awards under purchase accounting and the grant date fair valuation. Post-acquisition compensation expense recognized in excess of the original grant date fair value of acquiree awards are excluded from the related non-GAAP measures as these arise from acquisition-related accounting requirements or agreements, and are not reflective of normal operating activities. | ||||
3 | Transformational Cost Management Program charges are costs associated with a formal restructuring plan. These charges are primarily recorded within selling, general and administrative expenses. These costs do not reflect current operating performance and are impacted by the timing of restructuring activity. | ||||
4 | Adjustments to equity earnings (loss) in AmerisourceBergen consist of the Company’s proportionate share of non-GAAP adjustments reported by AmerisourceBergen consistent with the Company’s non-GAAP measures. The Company recognized equity losses in AmerisourceBergen of $1,373 million during the three months ended November 30, 2020. These equity losses are primarily due to AmerisourceBergen's recognition of $5.6 billion, net of tax, charges related to its ongoing opioid litigation in its financial statements for the three months period ended September 30, 2020. | ||||
5 | Acquisition-related costs are transaction and integration costs associated with certain merger, acquisition and divestitures related activities. These costs include charges incurred related to certain mergers, acquisition and divestitures related activities recorded in operating income, for example, costs related to integration efforts for successful merger, acquisition and divestitures activities. Examples of such costs include deal costs, severance and stock compensation. These charges are primarily recorded within selling, general and administrative expenses. These costs are significantly impacted by the timing and complexity of the underlying merger, acquisition and divestitures related activities and do not reflect the Company’s current operating performance. | ||||
6 | The Company’s United States segment inventory is accounted for using the last-in-first-out (“LIFO”) method. This adjustment represents the impact on cost of sales as if the United States segment inventory is accounted for using first-in first-out (“FIFO”) method. The LIFO provision is affected by changes in inventory quantities, product mix, and manufacturer pricing practices, which may be impacted by market and other external influences. Therefore, the Company cannot control the amounts recognized or timing of these items. | ||||
7 | Impairment of equity method investment and investment in equity securities includes impairment of certain investments. The Company excludes these charges when evaluating operating performance because these do not relate to the ordinary course of the Company’s business and it does not incur such charges on a predictable basis. Exclusion of such charges enables more consistent evaluation of the Company’s operating performance. These charges are recorded within Other income. | ||||
8 | During the three months ended February 28, 2022, the Company finalized the working capital adjustments with AmerisourceBergen related to the sale of the Alliance Healthcare business, resulting in a $38 million charge recorded to Other income in the Consolidated Condensed Statement of Earnings. | ||||
9 | Gain or loss on certain derivative instruments used as economic hedges of the Company’s net investments in foreign subsidiaries. These charges are recorded within Other income. We do not believe this volatility related to mark-to-market adjustment on the underlying derivative instruments reflects the Company’s operational performance. | ||||
10 | Includes significant gains on the sale of equity method investments. During the three months ended May 31, 2022, the Company recorded a gain of $424 million in Other income due to a partial sale of its equity method investment in AmerisourceBergen. During the three months and nine months ended May 31, 2021, the Company recorded gains of $98 million and $290 million, respectively, in Other income due to a partial sale of its equity method investment in Option Care Health. | ||||
11 | Includes significant gains on business combinations due to the remeasurement of previously held minority equity interests and debt securities to fair value. During the three months ended November 30, 2021, the Company recorded such pre-tax gains of $2.2 billion and $402 million for VillageMD and Shields, respectively. | ||||
12 | During the three months ended May 31, 2022, the Company incurred a $4 million loss in connection with the early extinguishment of debt related to the integration of Shields. In the three months ended May 31, 2021, the Company incurred a $419 million loss related to the Company's cash tender offers to partially purchase and retire $3.3 billion of long-term U.S. denominated notes. The Company excludes these charges as related activities do not reflect the Company’s ongoing financial performance. |
WBA Q3 2022 Form 10-Q | 60 |
13 | Adjustments to income tax provision (benefit) include adjustments to the GAAP basis tax provision (benefit) commensurate with non-GAAP adjustments and certain discrete tax items including U.S. tax law changes and equity method non-cash tax. These charges are recorded within income tax provision (benefit). | ||||
14 | Adjustments to post tax earnings from other equity method investments consist of the proportionate share of certain equity method investees’ non-cash items or unusual or infrequent items consistent with the Company’s non-GAAP adjustments. These charges are recorded within post tax earnings from other equity method investments. Although the Company may have shareholder rights and board representation commensurate with its ownership interests in these equity method investees, adjustments relating to equity method investments are not intended to imply that the Company has direct control over their operations and resulting revenue and expenses. Moreover, these non-GAAP financial measures have limitations in that they do not reflect all revenue and expenses of these equity method investees. In the three months ended May 31, 2021, due to partial sales of ownership interests in Option Care Health, our then equity method investee HC Group Holdings lost the ability to control Option Care Health and, therefore, deconsolidated Option Care Health in its financial statements. As a result of this deconsolidation, HC Group Holdings recognized a gain of $1.2 billion and the Company recorded its share of equity earnings in HC Group Holdings of $576 million during the three months ended May 31, 2021. |
WBA Q3 2022 Form 10-Q | 61 |
WBA Q3 2022 Form 10-Q | 62 |
Nine months ended May 31, | ||||||||||||||
2022 | 2021 | |||||||||||||
United States | $ | 865 | $ | 745 | ||||||||||
International | 219 | 162 | ||||||||||||
Walgreens Health | 156 | 28 | ||||||||||||
Discontinued operations | — | 67 | ||||||||||||
Total | $ | 1,241 | $ | 1,001 |
WBA Q3 2022 Form 10-Q | 63 |
Rating agency | Long-term debt rating | Commercial paper rating | Outlook | ||||||||
Moody’s | Baa2 | P-2 | Negative | ||||||||
Standard & Poor’s | BBB | A-2 | Stable |
WBA Q3 2022 Form 10-Q | 64 |
WBA Q3 2022 Form 10-Q | 65 |
WBA Q3 2022 Form 10-Q | 66 |
Issuer purchases of equity securities | ||||||||||||||||||||||||||
Period | Total number of shares purchased by month | Average price paid per share | Total number of shares purchased by month as part of publicly announced repurchase programs1 | Approximate dollar value of shares that may yet be purchased under the plans or program 1 | ||||||||||||||||||||||
03/01/22 - 03/31/22 | — | $ | — | — | $ | 2,003,419,960 | ||||||||||||||||||||
04/01/22 - 04/30/22 | — | — | — | 2,003,419,960 | ||||||||||||||||||||||
05/01/22 - 05/31/22 | — | — | — | 2,003,419,960 | ||||||||||||||||||||||
— | — |
WBA Q3 2022 Form 10-Q | 67 |
Exhibit No. | Description | SEC Document Reference | ||||||||||||
Amended and Restated Certificate of Incorporation of Walgreens Boots Alliance, Inc. | Incorporated by reference to Exhibit 3.1 to Walgreens Boots Alliance, Inc.’s Current Report on Form 8-K12B (File No. 1-36759) filed with the SEC on December 31, 2014. | |||||||||||||
Amended and Restated Bylaws of Walgreens Boots Alliance, Inc. | Incorporated by reference to Exhibit 3.1 to Walgreens Boots Alliance, Inc.’s Current Report on Form 8-K (File No. 1-36759) filed with the SEC on June 10, 2016. | |||||||||||||
5-Year Revolving Credit Facility, dated as of June 17, 2022, by and among Walgreens Boots Alliance, Inc., the Designated Borrowers from time to time party thereto, the Lenders and L/C Issuers from time to time party thereto and Wells Fargo Bank, National Association, as Administrative Agent. | Incorporated by reference to Exhibit 10.1 to Walgreens Boots Alliance, Inc.’s Current Report on Form 8-K (File No. 1-36759) filed with the SEC on June 21, 2022. | |||||||||||||
18-Month Revolving Credit Facility, dated as of June 17, 2022, by and among Walgreens Boots Alliance, Inc., the Designated Borrowers from time to time party thereto, the Lenders from time to time party thereto and Wells Fargo Bank, National Association, as Administrative Agent. | Incorporated by reference to Exhibit 10.2 to Walgreens Boots Alliance, Inc.’s Current Report on Form 8-K (File No. 1-36759) filed with the SEC on June 21, 2022. | |||||||||||||
Certification of the Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. | Filed herewith. | |||||||||||||
Certification of the Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. | Filed herewith. | |||||||||||||
Certification of the Chief Executive Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, 18 U.S.C. Section 1350. | Furnished herewith. | |||||||||||||
Certification of the Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, 18 U.S.C. Section 1350. | Furnished herewith. | |||||||||||||
101.INS | Inline XBRL Instance Document (The following financial information from this Quarterly Report on Form 10-Q for the quarter ended May 31, 2022 formatted in Inline XBRL (Extensive Business Reporting Language) includes: (i) the Consolidated Condensed Balance Sheets; (ii) the Consolidated Condensed Statements of Equity; (iii) the Consolidated Condensed Statements of Earnings; (iv) the Consolidated Condensed Statements of Comprehensive Income; (v) the Consolidated Condensed Statements of Cash Flows; and (vi) Notes Financial Statements). | Filed herewith. | ||||||||||||
101.SCH | Inline XBRL Taxonomy Extension Schema Document | Filed herewith. | ||||||||||||
101.CAL | Inline XBRL Taxonomy Extension Calculation Linkbase Document | Filed herewith. | ||||||||||||
101.DEF | Inline XBRL Taxonomy Extension Definition Linkbase Document | Filed herewith. | ||||||||||||
101.LAB | Inline XBRL Taxonomy Extension Label Linkbase Document | Filed herewith. | ||||||||||||
101.PRE | Inline XBRL Taxonomy Extension Presentation Linkbase Document | Filed herewith. | ||||||||||||
104 | Cover Page Interactive Data File (formatted as Inline XBRL document and included in Exhibit 101) | Filed herewith. |
WBA Q3 2022 Form 10-Q | 68 |
Walgreens Boots Alliance, Inc. | |||||
(Registrant) | |||||
Dated: June 30, 2022 | /s/ James Kehoe | ||||
James Kehoe | |||||
Executive Vice President and Global Chief Financial Officer | |||||
Principal Financial Officer | |||||
Dated: June 30, 2022 | /s/ Manmohan Mahajan | ||||
Manmohan Mahajan | |||||
Senior Vice President, Global Controller and Chief Accounting Officer | |||||
Principal Accounting Officer |
WBA Q3 2022 Form 10-Q | 69 |
/s/ | Rosalind G. Brewer | Chief Executive Officer | Date: June 30, 2022 | |||||||||||
Rosalind G. Brewer |
/s/ | James Kehoe | Global Chief Financial Officer | Date: June 30, 2022 | |||||||||||
James Kehoe |
CONSOLIDATED CONDENSED BALANCE SHEETS (Parenthetical) - $ / shares |
May 31, 2022 |
Aug. 31, 2021 |
---|---|---|
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) | 308,256,967 | 307,139,982 |
CONSOLIDATED CONDENSED STATEMENTS OF COMPREHENSIVE INCOME - USD ($) $ in Millions |
3 Months Ended | 9 Months Ended | ||
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May 31, 2022 |
May 31, 2021 |
May 31, 2022 |
May 31, 2021 |
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Comprehensive (loss) income: | ||||
Net earnings | $ 229 | $ 1,173 | $ 4,566 | $ 1,899 |
Other comprehensive (loss) income, net of tax: | ||||
Pension/postretirement obligations | (4) | (1) | (17) | 8 |
Unrealized gain on cash flow hedges | 4 | 8 | 6 | 21 |
Net investment hedges | 135 | (23) | 159 | (79) |
Available for sale debt securities | 0 | 5 | (96) | 5 |
Share of other comprehensive (loss) income of equity method investments | (17) | (4) | (143) | 16 |
Currency translation adjustments | (535) | 146 | (545) | 636 |
Total other comprehensive (loss) income, net | (416) | 131 | (637) | 607 |
Total comprehensive (loss) income, net | (187) | 1,304 | 3,929 | 2,506 |
Comprehensive loss attributable to non-controlling interests | (79) | (19) | (206) | (1) |
Comprehensive (loss) income attributable to Walgreens Boots Alliance, Inc. | $ (108) | $ 1,323 | $ 4,135 | $ 2,506 |
Accounting policies |
9 Months Ended |
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May 31, 2022 | |
Accounting Policies [Abstract] | |
Accounting policies | Note 1. 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 (“SEC”) 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. However, 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, 2021, as amended by Form 10-K/A for the fiscal year ended August 31, 2021 filed on November 24, 2021. The preparation of financial statements in accordance with GAAP requires management to use judgment in the application of accounting policies, including making estimates and assumptions. The Company bases its estimates on the information available at the time, its experiences and various other assumptions believed to be reasonable under the circumstances, including estimates of the impact of COVID-19. The extent to which COVID-19 impacts the Company’s business and financial results will depend on numerous factors discussed throughout this Quarterly Report on Form 10-Q including, but not limited to, the severity and duration of COVID-19, the extent to which it will impact our customers, team members, suppliers, vendors, business partners and distribution channels. The Company assessed certain accounting matters that require consideration of estimates and assumptions in context with the information reasonably available to the Company and the unknown future impacts of COVID-19 as of May 31, 2022 and through the date of this report. The accounting matters assessed included, but were not limited to, the Company’s carrying value of goodwill, intangible and other long-lived assets, including operating lease right-of-use assets. The Company’s future assessment of the magnitude and duration of COVID-19, as well as other factors, could result in material impacts to the Company’s consolidated financial statements in future reporting periods. Adjustments may be made in subsequent periods to reflect more current estimates and assumptions about matters that are inherently uncertain. Actual results may differ. In the opinion of management, the unaudited Consolidated Condensed Financial Statements for the interim periods presented include all adjustments necessary to present a fair statement of the results for such interim periods. The impact of COVID-19, the influence of certain holidays, seasonality, foreign currency rates, changes in vendor, payor and customer relationships and terms, strategic transactions including acquisitions, dispositions, 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. On June 1, 2021, the Company completed the sale of the majority of the Company's Alliance Healthcare business as well as a portion of the Company’s retail pharmacy international businesses in Europe (“Disposal Group”) to AmerisourceBergen Corporation (“AmerisourceBergen”). The Disposal Group met the criteria to be reported as discontinued operations. Therefore, the operating results of the Disposal Group are reported as discontinued operations for all prior periods. Effective as of the first quarter of fiscal year 2022, the Company is aligned into three reportable segments: United States, International and Walgreens Health. Unless otherwise specified, disclosures in these Consolidated Condensed Financial Statements reflect continuing operations only. See Note 2. Discontinued operations and Note 15. Segment reporting for further information. Certain amounts in the Consolidated Condensed Financial Statements and associated notes may not add due to rounding. Percentages have been calculated using unrounded amounts for all periods presented. Note 18. New accounting pronouncements Adoption of new accounting pronouncements Receivables - nonrefundable fees and others In October 2020, the FASB issued ASU 2020-08, Codification Improvements to Subtopic 310-20, Receivables—Nonrefundable Fees and Other. This ASU clarifies the accounting for the amortization period for certain purchased callable debt securities held at a premium by giving consideration to securities which have multiple call dates. The Company adopted the new standard effective September 1, 2021, and the adoption did not have any impact on the Company’s results of operations, cash flows or financial position. Investments — equity securities; Investments — equity method and joint ventures; Derivatives and hedging In January 2020, the FASB issued ASU 2020-01, Investments—Equity Securities (Topic 321), Investments—Equity Method and Joint Ventures (Topic 323), and Derivatives and Hedging (Topic 815). The amendments in this ASU clarify the interaction between the accounting for investments in equity securities, investment in equity method and certain derivatives instruments. The ASU is expected to reduce diversity in practice and increase comparability of the accounting for these interactions. The Company adopted the new standard effective September 1, 2021, and the adoption did not have any impact on the Company’s results of operations, cash flows or financial position. Income taxes - simplifying the accounting for income taxes In December 2019, the FASB issued ASU 2019-12: Simplifying the Accounting for Income Taxes (Topic 740), which removes certain exceptions to the general principles in Topic 740 and improves consistent application of and simplifies GAAP for other areas of Topic 740 by clarifying and amending existing guidance. The Company adopted the new standard effective September 1, 2021, and the adoption did not have any impact on the Company’s results of operations, cash flows or financial position. Effects of reference rate reform on financial reporting In March 2020, the FASB issued ASU 2020-04, Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting. This ASU provides optional expedient and exceptions for applying generally accepted accounting principles to contracts, hedging relationships, and other transactions affected by reference rate reform if certain criteria are met. In response to the concerns about structural risks of interbank offered rates (“IBORs”) and, particularly, the risk of cessation of the London Interbank Offered Rate (“LIBOR”), regulators in several jurisdictions around the world have undertaken reference rate reform initiatives to identify alternative reference rates that are more observable, or transaction based and less susceptible to manipulation. The ASU provides companies with optional guidance to ease the potential accounting burden associated with transitioning away from reference rates that are expected to be discontinued. In January 2021, the FASB issued ASU 2021-01, which adds implementation guidance to the above ASU to clarify certain optional expedients in Topic 848. The Company adopted the new standard effective September 1, 2021, and the adoption did not have a material impact on the Company’s results of operations, cash flows or financial position. New accounting pronouncements not yet adopted Acquired contract assets and contract liabilities in a business combination In October 2021, the FASB issued ASU 2021-08, Business Combinations (Topic 805) - Accounting for Contract Assets and Contract Liabilities from Contracts with Customers. This ASU requires an entity to recognize and measure contract assets and contract liabilities acquired in a business combination in accordance with Topic 606 (Revenue from Contracts with Customers). This ASU is expected to reduce diversity in practice and increase comparability for both the recognition and measurement of acquired revenue contracts with customers at the date of and after a business combination. This ASU is effective for fiscal years beginning after December 15, 2022 (fiscal year 2024). The Company is evaluating the effect of adopting this new accounting guidance. Disclosures by business entities about government assistance In November 2021, the FASB issued ASU 2021-10, Government Assistance (Topic 832) – Disclosures by Business Entities about Government Assistance. This ASU requires disclosures that are expected to increase the transparency of transactions with a government accounted for by applying a grant or contribution accounting model by analogy, including (1) the types of transactions, (2) the accounting for those transactions, and (3) the effect of those transactions on an entity’s financial statements. This ASU is effective for annual periods beginning after December 15, 2021 (fiscal year 2023). The Company is evaluating the effect of adopting this new accounting guidance.
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Discontinued operations |
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Discontinued Operations and Disposal Groups [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Discontinued operations | Note 2. Discontinued operations On June 1, 2021, the Company completed the sale of Alliance Healthcare, for total consideration of $6.9 billion, which included cash consideration of $6.7 billion, subject to net working capital and net cash adjustments, and 2 million shares of AmerisourceBergen common stock. As of August 31, 2021, Other current assets included a $98 million receivable for purchase price consideration due from AmerisourceBergen that was subject to change upon the finalization of net working capital adjustments. During the three months ended February 28, 2022, the Company reduced the receivable by $38 million with a corresponding charge in Other income within the Consolidated Condensed Statements of Earnings upon finalizing these adjustments with AmerisourceBergen. The operating results of the Disposal Group are reported as discontinued operations as the disposition reflected a strategic shift that had a major effect on the Company’s operations and financial results. Results of discontinued operations for prior periods were as follows (in millions):
Sales in prior periods from the Disposal Group to the Company's continuing operations are not eliminated and aggregate to (in millions):
Cash flows from operating and investing activities for discontinued operations in prior periods are (in millions):
See Note 17. Related parties, to the Consolidated Condensed Financial Statements for more information on the Company's transactions and continuing involvement with AmerisourceBergen.
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Acquisitions and other investments |
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Acquisitions and other investments | Note 3. Acquisitions and other investments VillageMD On November 24, 2021, the Company completed the acquisition of Village Practice Management Company, LLC (“VillageMD”). Pursuant to the terms and subject to the conditions set forth in the Unit Purchase Agreement, the Company purchased additional outstanding equity interests of VillageMD, increasing the Company’s total beneficial ownership in VillageMD’s outstanding equity interests from approximately 30% to approximately 63%, on a fully diluted basis, for a purchase price of $5.2 billion. The total purchase price comprises cash consideration of $4.0 billion and a promissory note of $1.2 billion. The cash consideration of $4.0 billion consisted of $2.9 billion paid to existing shareholders, including $1.9 billion paid to existing shareholders as part of the fully subscribed tender offer concluded on December 28, 2021, and $1.1 billion paid in exchange for new preferred units issued by VillageMD. Subject to notice being served, the Company has an option to prepay, and VillageMD has an option to require redemption of, the promissory note at any time. The promissory note is eliminated in consolidation within the Consolidated Condensed Balance Sheets. The Company accounted for this acquisition as a business combination resulting in consolidation of VillageMD within the Walgreens Health segment in its financial statements. A non-controlling interest was recognized at fair value. During the three and nine months ended May 31, 2022, the Company recorded certain measurement period adjustments based on additional information primarily to certain assets and liabilities which did not have a material impact on goodwill. As of May 31, 2022, the Company had not completed the analysis to assign fair values to all tangible and intangible assets acquired. As such, the preliminary purchase price allocation will be subject to further refinement and may change. These changes may relate to finalization of the fair value of the purchase consideration and the allocation of purchase consideration to all tangible and intangible assets acquired and identified. As a result of this acquisition, in the three months ended November 30, 2021, the Company recognized a pre-tax gain in Other income in the Consolidated Condensed Statements of Earnings of $1,597 million related to the fair valuation of the Company’s previously held minority equity interest. The Company also recorded a pre-tax gain of $577 million in Other income in the Consolidated Condensed Statements of Earnings related to the conversion to equity of the Company’s previously held investment in convertible debt securities of VillageMD, reclassified from within Accumulated other comprehensive income in the Consolidated Condensed Balance Sheets. The following table summarizes the consideration for the acquisition and the preliminary amounts of identified assets acquired and liabilities assumed at the date of the transaction (in millions):
1.Comprises cash consideration of $1.1 billion and a promissory note of $1.2 billion. This consideration was provided in exchange for the issuance of new preferred units by VillageMD. VillageMD’s tangible assets acquired exclude this $1.1 billion of cash and $1.2 billion promissory note receivable. 2.Primarily related to vested share-based compensation awards. The goodwill represents anticipated future growth and expansion opportunities into new markets. Pro forma sales and net earnings of the Company, assuming the acquisition had occurred at the beginning of each period presented, would not be materially different from the results reported. Shields acquisition On October 29, 2021, the Company completed the acquisition of Shields Health Solutions Parent, LLC (“Shields”). Pursuant to the terms and subject to the conditions set forth in the Securities Purchase Agreement, the Company purchased additional outstanding equity interests of Shields, increasing the Company’s total beneficial ownership in Shields’ outstanding equity interests from 25% to approximately 70%, for cash consideration of $969 million. The Company accounted for this acquisition as a business combination resulting in consolidation of Shields within the Walgreens Health segment in its financial statements. A non-controlling interest was recognized at fair value. Under the terms of the transaction agreements, the Company has an option to acquire the remaining equity interests of Shields in the future. Shields’ other equity holders will also have an option to require the Company to purchase the remaining equity interests. Considering the contractual terms related to the non-controlling interest, it is classified as redeemable non-controlling interest in the Consolidated Condensed Balance Sheets. As of May 31, 2022, the Company had not completed the analysis to assign fair values to all tangible and intangible assets acquired. As such, the preliminary purchase price allocation will be subject to further refinement and may result in changes. These changes may relate to finalization of the fair value of the purchase consideration and the allocation of purchase consideration to all tangible and intangible assets acquired and identified. As a result of this acquisition, in the three months ended November 30, 2021, the Company remeasured its previously held minority equity interest in Shields at fair value resulting in a pre-tax gain of $402 million recognized in Other income in the Consolidated Condensed Statements of Earnings. The following table summarizes the consideration for the acquisition and the preliminary amounts of identified assets acquired and liabilities assumed at the date of the transaction (in millions):
The goodwill represents anticipated future growth and expansion opportunities into new healthcare offerings. Pro forma sales and net earnings of the Company, assuming the acquisition had occurred at the beginning of each period presented, would not be materially different from the results reported. See Note 15. Segment reporting and Note 16. Sales for further information. Other acquisitions and investments The Company acquired certain prescription files and related pharmacy inventory primarily in the U.S. for the aggregate purchase price of $36 million and $153 million during the three and nine months ended May 31, 2022, respectively, and $19 million and $85 million during the three and nine months ended May 31, 2021, respectively.
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Exit and disposal activities |
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Restructuring and Related Activities [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Exit and disposal activities | Note 4. Exit and disposal activities Transformational Cost Management Program On December 20, 2018, the Company announced a transformational cost management program that was expected to deliver in excess of $2.0 billion of annual cost savings by fiscal year 2022 (the “Transformational Cost Management Program”). The Company achieved this goal at the end of fiscal year 2021. On October 12, 2021, the Company expanded and extended the Transformational Cost Management Program through the end of fiscal 2024 and increased its annual cost savings target to $3.3 billion by the end of fiscal 2024. During the three months ended May 31, 2022, the Company increased its annual cost savings target from $3.3 billion to $3.5 billion by the end of fiscal 2024. The Company is currently on track to achieve the savings target. The Transformational Cost Management Program, which is multi-faceted and includes divisional optimization initiatives, global smart spending, global smart organization and the transformation of the Company’s information technology (IT) capabilities, is designed to help the Company achieve increased cost efficiencies. To date, the Company has taken actions across all aspects of the Transformational Cost Management Program which focus on the United States and International reportable segments along with the Company’s global functions. Divisional optimization within the Company’s segments includes activities such as optimization of stores. As a result of the expanded program, the Company plans to reduce its presence by up to 150 Boots stores in the UK and up to 150 stores in the United States over the next three years which are incremental to the previously planned reductions of approximately 200 Boots stores in the UK and approximately 250 stores in the U.S. The Company currently estimates that the Transformational Cost Management Program will result in cumulative pre-tax charges to its GAAP financial results of approximately $3.6 billion to $3.9 billion, of which $3.3 billion to $3.6 billion are expected to be recorded as exit and disposal activities. In addition to these impacts, as a result of the actions related to store closures taken under the Transformational Cost Management Program, the Company recorded $508 million of transition adjustments to decrease retained earnings due to the adoption of the new lease accounting standard (Topic 842) that became effective on September 1, 2019. From the inception of the Transformational Cost Management Program to May 31, 2022, the Company has recognized cumulative pre-tax charges to its financial results in accordance with GAAP of $1.7 billion, which were primarily recorded within selling, general and administrative expenses. These charges included $467 million related to lease obligations and other real estate costs, $357 million in asset impairments, $679 million in employee severance and business transition costs and $183 million of information technology transformation and other exit costs. Costs related to exit and disposal activities under the Transformational Cost Management Program for the three and nine months ended May 31, 2022 and 2021 were as follows (in millions):
The changes in liabilities and assets related to the exit and disposal activities under Transformational Cost Management Program include the following (in millions):
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Leases |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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May 31, 2022 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Leases [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Leases | Note 5. Leases The Company leases certain retail stores, clinics, warehouses, distribution centers, office space, land, and equipment. For the majority of leases in the U.S., the initial lease term is typically 15 to 25 years, followed by additional terms containing renewal options typically at five-year intervals, and may include rent escalation clauses. Non-U.S. leases are typically for shorter terms and may include cancellation clauses or renewal options. Lease commencement is the date the Company has the right to control the property. The Company recognizes operating lease rent expense on a straight-line basis over the term of the lease. In addition to minimum fixed rentals, some leases provide for contingent rentals based upon a portion of sales. Supplemental Balance sheet information related to leases were as follows (in millions):
Supplemental Statement of Earnings information related to leases were as follows (in millions):
1Includes real estate property taxes, common area maintenance, insurance and rental payments based on sales volume. 2Recorded within selling, general and administrative expenses. Other supplemental information related to leases were as follows (in millions):
Weighted average lease terms and discount rates for real estate leases were as follows:
The aggregate future lease payments for operating and finance leases as of May 31, 2022 were as follows (in millions):
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Leases | Note 5. Leases The Company leases certain retail stores, clinics, warehouses, distribution centers, office space, land, and equipment. For the majority of leases in the U.S., the initial lease term is typically 15 to 25 years, followed by additional terms containing renewal options typically at five-year intervals, and may include rent escalation clauses. Non-U.S. leases are typically for shorter terms and may include cancellation clauses or renewal options. Lease commencement is the date the Company has the right to control the property. The Company recognizes operating lease rent expense on a straight-line basis over the term of the lease. In addition to minimum fixed rentals, some leases provide for contingent rentals based upon a portion of sales. Supplemental Balance sheet information related to leases were as follows (in millions):
Supplemental Statement of Earnings information related to leases were as follows (in millions):
1Includes real estate property taxes, common area maintenance, insurance and rental payments based on sales volume. 2Recorded within selling, general and administrative expenses. Other supplemental information related to leases were as follows (in millions):
Weighted average lease terms and discount rates for real estate leases were as follows:
The aggregate future lease payments for operating and finance leases as of May 31, 2022 were as follows (in millions):
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Equity method investments |
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Equity Method Investments and Joint Ventures [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Equity method investments | Note 6. Equity method investments Equity method investments were as follows (in millions, except percentages):
AmerisourceBergen investment On May 11, 2022, the Company sold 6.0 million shares of AmerisourceBergen common stock pursuant to Rule 144 at a price of $150 per share for a total consideration of $900 million, decreasing the Company's ownership of AmerisourceBergen’s common stock from 58,854,867 shares, held at August 31, 2021 to 52,854,867 shares held as of May 31, 2022. The transaction resulted in the Company recording a pre-tax gain of $424 million in Other income in the Consolidated Condensed Statements of Earnings, including a $25 million loss reclassified from within Accumulated other comprehensive income in the Consolidated Condensed Balance Sheets. As of May 31, 2022, the Company holds approximately 25.2% of AmerisourceBergen outstanding common stock, based on the share count publicly reported by AmerisourceBergen in its most recent Quarterly Report on Form 10-Q. The Company accounts for its equity investment in AmerisourceBergen using the equity method of accounting, with the net earnings (loss) attributable to the Company’s investment being classified in Operating income within the United States 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 (loss) from AmerisourceBergen are reported as a separate line in the Consolidated Condensed Statements of Earnings. During the nine months ended May 31, 2022 and 2021, the Company recognized equity income of $330 million and equity losses of $1.2 billion in AmerisourceBergen, respectively. The equity losses for the period ended May 31, 2021 were primarily due to AmerisourceBergen's recognition of a loss of $5.6 billion, net of tax, related to its ongoing opioid litigation in its financial statements for the three months ended September 30, 2020. The Level 1 fair market value of the Company’s equity investment in AmerisourceBergen common stock at May 31, 2022 and August 31, 2021 was $8.2 billion and $7.2 billion, respectively. As of May 31, 2022 the carrying value of the Company’s investment in AmerisourceBergen exceeded its proportionate share of the net assets of AmerisourceBergen by $3.8 billion. This premium of $3.8 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 primarily include its U.S. investments in Option Care Health, through its subsidiary HC Group Holdings I, LLC, and BrightSpring Health Services, and the Company’s investments in China in Sinopharm Medicine Holding Guoda Drugstores Co., Ltd, Guangzhou Pharmaceuticals Corporation, and Nanjing Pharmaceutical Company Limited. The Company recorded $5 million and $575 million of post-tax equity earnings from other equity method investments for the three months ended May 31, 2022 and 2021, respectively. The Company recorded $29 million and $604 million of post-tax equity earnings from other equity method investments for the nine months ended May 31, 2022 and 2021, respectively. During the three months ended February 28, 2022, the Company recognized an other-than-temporary impairment of $124 million related to an equity method investment in China. The impairment was derived using Level 3 inputs, including financial projections and market multiples of comparable companies. During the three months ended November 30, 2021, the Company acquired majority equity interests in VillageMD and Shields. The Company accounted for these acquisitions as business combinations resulting in the remeasurement of its previously held minority equity interests and convertible debt securities at fair value resulting in pre-tax gains of $2.2 billion and $402 million for VillageMD and Shields, respectively, recognized in Other income in the Consolidated Condensed Statements of Earnings. As a result of these transactions, the Company now consolidates VillageMD and Shields within the Walgreens Health segment in its financial statements. During the three and nine months ended May 31, 2021, the Company recorded gains of $98 million and $290 million, respectively, in Other income due to the partial sale of ownership interest in Option Care Health by the Company's then equity method investee HC Group Holdings I, LLC. During the three months ended May 31, 2021, as a result of these sales HC Group Holdings I, LLC lost the ability to control Option Care Health and, therefore, deconsolidated Option Care Health in its financial statements. As a result of this deconsolidation, HC Group Holdings I, LLC recognized a gain of $1.2 billion and the Company recorded its share of equity earnings in HC Group Holdings I, LLC of $576 million in Post-tax earnings from other equity method investments. Summarized financial information Summarized financial information for the Company’s equity method investments in aggregate is as follows: Statements of earnings (loss) (in millions)
The summarized financial information for equity method investments has been included on an aggregated basis for all investments as reported for the three and nine months ended May 31, 2022 and 2021, respectively.
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Goodwill and other intangible assets |
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Goodwill and Intangible Assets Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Goodwill and other intangible assets | Note 7. 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. Based on the analysis completed as of the June 1, 2021 valuation date, the fair values of the Company’s reporting units exceeded their carrying amounts ranging from approximately 18% to approximately 195%. The Boots reporting unit's fair value was in excess of its carrying value by approximately 18%, compared to a nominal amount as of June 1, 2020. The Other international reporting unit's fair value was in excess of its carrying value by approximately 29%. As of May 31, 2022 and August 31, 2021, the carrying value of goodwill for the Boots reporting unit was $956 million and $1.1 billion, respectively. As of May 31, 2022 and August 31, 2021, the carrying value of goodwill for the Other international reporting unit was $372 million and $381 million, respectively. As of June 1, 2021, the fair values of indefinite-lived intangibles within the Boots reporting unit exceeded their carrying value amounts ranging from approximately 5% to approximately 27%. As of May 31, 2022 and August 31, 2021, the carrying value of the indefinite-lived intangibles within the Boots reporting unit was $6.7 billion and $7.3 billion, respectively. The determination of the fair value of the reporting units requires the Company to make significant estimates and assumptions with respect to the business and financial performance of the Company’s reporting units, as well as how such performance may be impacted by COVID-19. Although the Company believes its estimates of fair value are reasonable, actual financial results could differ from those estimates due to the inherent uncertainty involved in making such estimates. Changes in assumptions concerning future financial results or other underlying assumptions, including the impact of COVID-19, could have a significant impact on either the fair value of the reporting units and indefinite-lived intangibles, the amount of any goodwill and indefinite-lived intangible impairment charges, or both. These estimates can be affected by a number of factors including, but not limited to, the impact of COVID-19, its severity, duration and its impact on global economies, general economic conditions, as well as our profitability. The Company will continue to monitor these potential impacts, including the impact of COVID-19 and economic, industry and market trends, and the impact these may have on the Boots and Other international reporting units. Changes in the carrying amount of goodwill by reportable segment consist of the following (in millions):
The carrying amount and accumulated amortization of intangible assets consist of the following (in millions):
1Includes purchased prescription files. 2Includes certain reclassifications to conform to the current period presentation. Amortization expense for intangible assets was $148 million and $488 million for the three and nine months ended May 31, 2022, respectively, and $156 million and $363 million for the three and nine months ended May 31, 2021, respectively. Estimated future annual amortization expense for the next five fiscal years for intangible assets recorded at May 31, 2022 is as follows (in millions):
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Debt |
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Debt Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Debt | Note 8. Debt Debt carrying values are presented net of unamortized discount and debt issuance costs, where applicable, and foreign currency denominated debt is translated using the spot rates as of the balance sheet date. Debt consists of the following (all amounts are presented in millions of U.S. dollars and debt issuances are denominated in U.S. dollars, unless otherwise noted):
1Notes are unsubordinated debt obligations of the Company and rank equally in right of payment with all other unsecured and unsubordinated indebtedness of the Company from time to time outstanding. 2On September 18, 2021, the Company redeemed in full the $1.25 billion aggregate principal amount outstanding of its 3.300% unsecured notes due 2021 issued by the Company on November 18, 2014. 3Other debt represents a mix of fixed and variable rate debt with various maturities and working capital facilities denominated in various currencies. 4Notes are senior debt obligations of Walgreen Co. and rank equally with all other unsecured and unsubordinated indebtedness of Walgreen Co. On December 31, 2014, the Company 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 the Company and will rank equally in right of payment with all other unsecured and unsubordinated indebtedness of the Company. On June 3, 2022, a notice of redemption was given to holders of the 3.100% notes due 2022. As a result, on July 5, 2022, the notes with aggregate principal amount of $731 million will be redeemed in full. See Note 20. Subsequent events for further information. $850 million Note issuance On November 17, 2021, the Company issued, in an underwritten public offering, $850 million of 0.95% notes due 2023. The notes contain a call option which allows for the notes to be repaid, in full or in part at 100% of the principal amount of the notes to be redeemed, in each case plus accrued and unpaid interest. Credit facilities November 15, 2021, Delayed Draw Term Loan On November 15, 2021, the Company entered into a $5.0 billion senior unsecured multi-tranche delayed draw term loan credit facility, (the “November 2021 DDTL”) consisting of (i) a 364-day senior unsecured delayed draw term loan facility in an aggregate principal amount of $2.0 billion (the“364-day loan”), (ii) a two-year senior unsecured delayed draw term loan facility in an aggregate principal amount of $2.0 billion (the “two-year loan”) and (iii) a three-year senior unsecured delayed draw term loan facility in an aggregate principal amount of $1.0 billion (the “three-year loan”). An aggregate amount of $3.0 billion or more of the November 2021 DDTL is for the purpose of funding the consideration due in respect of the purchase of an increased equity stake in VillageMD, and paying fees and expenses related to the foregoing, and the remainder can be used for general corporate purposes. The maturity date on the 364-day loan, the two-year loan and the three-year loan is, in each case, the earlier of the date that is 364 days, two years and three years from the date of the first drawing under each facility and February 14, 2023, February 15, 2024 and February 15, 2025 respectively. As of May 31, 2022, there were $5 billion in borrowings outstanding under the November 2021 DDTL. Borrowings under the November 2021 DDTL bear interest at a fluctuating rate per annum equal to, at the Company’s option, the alternate base rate, eurocurrency rate or, from and after the date that daily Secured Overnight Financing Rate (“SOFR”) becomes available under the November 2021 DDTL, the daily SOFR rate, in each case, plus an applicable margin. For the 364-day tranche, the applicable margin is (i) prior to the six month anniversary of the Margin Trigger Date, as defined in the November 2021 DDTL (the “Margin Trigger Date”), 0.70% in the case of eurocurrency rate loans and daily SOFR loans, and 0.00% in the case of alternate base rate loans and (ii) on and after the six month anniversary of the Margin Trigger Date, 0.75% in the case of eurocurrency rate loans and daily SOFR loans, and 0.00% in the case of alternate base rate loans. For the 2-year and 3-year tranche, the applicable margin is 0.85% and 1.00%, respectively, in the case of eurocurrency rate loans and daily SOFR loans, and 0.00% in the case of alternate base rate loans. December 23, 2020, Revolving Credit Agreement On December 23, 2020, the Company entered into a $1.25 billion senior unsecured 364-day revolving credit facility and a $2.25 billion senior unsecured 18-month revolving credit facility, with a swing line subfacility commitment amount of $350 million, with designated borrowers from time to time party thereto and lenders from time to time party thereto (the “2020 Revolving Credit Agreement”). The 364-day facility’s termination date is the earlier of (i) 364 days from December 23, 2020, the effective date (subject to the extension thereof pursuant to the 2020 Revolving Credit Agreement) and (ii) the date of termination in whole of the aggregate amount of the revolving commitments under the 364-day facility pursuant to the 2020 Revolving Credit Agreement. The 18-month facility’s termination date is the earlier of (i) 18 months from the effective date (subject to the extension thereof pursuant to the 2020 Revolving Credit Agreement) and (ii) the date of termination in whole of the aggregate amount of the revolving commitments under the 18-Month Facility pursuant to the 2020 Revolving Credit Agreement. As of May 31, 2022, commitments under the 364-day facility had expired and there were no borrowings outstanding under the 18-month revolving credit facility. On June 17, 2022, the Company terminated the 2020 Revolving Credit Agreement. See Note 20. Subsequent events for further information. 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 aggregate commitment in the amount of $3.5 billion, with a letter of credit subfacility commitment amount of $500 million. The facility termination date is the earlier of (a) August 29, 2023, subject to extension thereof pursuant to the August 2018 Revolving Credit Agreement, and (b) the date of termination in whole of the aggregate amount of the revolving commitments pursuant to the August 2018 Revolving Credit Agreement. As of May 31, 2022, there were no borrowings outstanding under the August 2018 Revolving Credit Agreement. On June 17, 2022, the Company terminated the August 2018 Revolving Credit Agreement. See Note 20. Subsequent events for further information. Debt covenants Each of the Company’s credit facilities described above contain a covenant to maintain, as of the last day of each fiscal quarter, a ratio of consolidated debt to total capitalization not to exceed 0.60:1.00, subject to increase in certain circumstances set forth in the applicable credit agreement. The credit facilities also contain various other customary covenants. As of May 31, 2022, the Company was in compliance with all such applicable 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 U.S. commercial paper outstanding of $1.2 billion and $2.3 billion at a weighted average interest rate of 0.55% and 0.47% for the nine months ended May 31, 2022 and 2021, respectively. A subsidiary of the Company had average daily commercial paper outstanding, which was issued under the Joint HM Treasury and Bank of England's COVID Corporate Financing Facility commercial paper program, of £300 million, or approximately $418 million at a weighted average interest rate of 0.43% for the six months ended February 28, 2021. The subsidiary of the Company repaid the commercial paper issued under the Joint HM Treasury and Bank of England's COVID Corporate Financing Facility commercial paper program on May 14, 2021. Interest Interest paid by the Company was $336 million and $889 million for the nine months ended May 31, 2022 and 2021, respectively. Interest paid for the nine months ended May 31, 2022 and 2021 included charges on early extinguishment of debt of $4 million and $387 million, respectively.
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Financial instruments |
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Derivative Instruments and Hedging Activities Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Financial instruments | Note 9. Financial instruments The Company uses derivative instruments to hedge its exposure to market risks, including interest rate and currency risks, arising from operating and financing risks. The Company has non-U.S. dollar denominated net investments and uses foreign currency denominated financial instruments, specifically foreign currency derivatives and foreign currency denominated debt, to hedge its foreign currency risk. The notional amounts and fair value of derivative instruments outstanding were as follows (in millions):
Net investment hedges The Company uses cross currency interest rate swaps and foreign currency forward contracts to hedge net investments in subsidiaries with non-U.S. dollar functional currencies. For qualifying net investment hedges, changes in the fair value of the derivatives are recorded in Currency translation adjustments, a component of Accumulated other comprehensive income (loss) in the Consolidated Condensed Balance Sheets. Cash flow hedges The Company uses interest rate swaps to hedge the variability in forecasted cash flows of certain floating-rate debt. For qualifying cash flow hedges, changes in the fair value of the derivatives are recorded in Unrealized gain (loss) on cash flow hedges, a component of Accumulated other comprehensive income (loss) in the Consolidated Condensed Balance Sheets, and released to the Consolidated Statements of Earnings when the hedged cash flows affect earnings. Derivatives not designated as hedges The Company enters into derivative transactions that are not designated as accounting hedges. These derivative instruments are economic hedges of foreign currency risks. The Company also utilizes total return swaps to economically hedge variability in compensation charges related to certain deferred compensation obligations. The income (expense) due to changes in fair value of these derivative instruments were recognized in earnings as follows (in millions):
1.In the nine months ended May 31, 2022, certain expenses related to derivative instruments used as economic hedges, were presented as Other income within the Consolidated Condensed Statements of Earnings, whereas these expenses were recorded within Selling, general, and administrative expenses within the Consolidated Condensed Statements of Earnings in prior periods. 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.
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Fair value measurements |
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Fair Value Disclosures [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Fair value measurements | Note 10. 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):
1.Money market funds are valued at the closing price reported by the fund sponsor. 2.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. See Note 9. Financial instruments, for additional information. 3.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 9. Financial instruments, for additional information. 4.Fair values of quoted investments are based on current bid prices as of May 31, 2022 and August 31, 2021. 5.Level 3 debt securities include investments in convertible debt securities of VillageMD which are valued on a quarterly basis using the Probability Weighted Expect Return Method with gains or losses recorded in Other comprehensive income within the Consolidated Condensed Balance Sheets. Inputs include the enterprise value, expected holding term of the investment, volatility and risk-free interest rates. There were no transfers between Levels for the three and nine months ended May 31, 2022. 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 Condensed Financial Statements. As of May 31, 2022, the carrying amounts and estimated fair values of long-term notes outstanding including the current portion were $8.4 billion and $8.1 billion, respectively. The fair values of the notes outstanding are Level 1 fair value measures and determined based on quoted market prices and translated at the May 31, 2022 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, 2022. See Note 8. Debt, for further information. The carrying values of accounts receivable and trade accounts payable approximated their respective fair values due to their short-term nature.
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Commitments and contingencies |
9 Months Ended |
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May 31, 2022 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments and contingencies | Note 11. Commitments and contingencies The Company is involved in legal proceedings arising in the normal course of its business, including litigation, arbitration and other claims, and investigations, inspections, subpoenas, audits, claims, inquiries and similar actions by governmental authorities in pharmacy, healthcare, tax and other areas. Some of these proceedings may be class actions, and some involve claims for large or indeterminate amounts, including punitive or exemplary damages, and they may remain unresolved for several years. Legal proceedings in general, and securities, class action and multi-district litigation, in particular, can be expensive and disruptive. 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 Company is subject to extensive regulation by national, state and local government agencies in the U.S. and other countries in which it operates. The Company’s business, compliance and reporting practices are subject to intensive scrutiny under applicable regulation, including review or audit by regulatory authorities. As a result, the Company regularly is the subject of government actions of the types described herein. The Company also may be named from time to time in qui tam actions initiated by private parties. In such an action, a private party purports to act on behalf of federal or state governments, alleges that false claims have been submitted for payment by the government and may receive an award if its 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 its own purporting to act on behalf of the government. The results of legal proceedings, including government investigations, are often uncertain and difficult to predict, and the costs incurred in these matters can be substantial, regardless of the outcome. In addition, as a result of governmental investigations or proceedings, the Company may be subject to damages, civil or criminal fines or penalties, or other sanctions, including the possible suspension or loss of licensure and suspension or exclusion from participation in government programs. We describe below certain proceedings against the Company in which the amount of loss could be material. We accrue for legal claims when, and to the extent that, the amount or range of probable loss can be reasonably estimated. We believe we have meritorious defenses in each of these proceedings, and we intend to defend each case vigorously, but there can be no assurance as to the ultimate outcome. With respect to litigation and other legal proceedings where the Company has determined a material loss is reasonably possible, except as otherwise disclosed, we are not able to make a reasonable estimate of the amount or range of loss that is reasonably possible above any accrued amounts in these proceedings, due to various reasons, including: we have factual and legal arguments that, if successful, will eliminate or sharply reduce the possibility of loss; we do not have sufficient information about the arguments and the evidence plaintiffs will advance with respect to their damages; some of the cases have been stayed; certain proceedings present novel and complex questions of public policy; legal and factual determinations and judicial and governmental procedure; the large number of parties involved; and the inherent uncertainties related to such litigations. Litigation Relating to 2016 Goals On December 29, 2014, a putative shareholder filed a derivative action in federal court in the Northern District of Illinois against certain current and former directors and officers of Walgreen Co. and Walgreen Co., as a nominal defendant, arising out of certain public statements the Company made regarding its former fiscal 2016 goals. (Cutler v. Wasson et al., No. 1:14-cv-10408 (N.D. Ill.)) The action asserts claims for breach of fiduciary duty, waste and unjust enrichment. On May 18, 2015, the case was stayed in light of a securities class action that was filed on April 10, 2015, described below. On November 3, 2016, the Court entered a stipulation and order extending the stay until the resolution of the securities class action. On April 10, 2015, a putative shareholder filed a securities class action in federal court in the Northern District of Illinois against Walgreen Co. and certain former officers of Walgreen Co. (Washtenaw County Employees’ Retirement System v. Walgreen Co. et al., No. 1:15-cv-3187 (N.D. Ill.)) The action asserts claims for violation of the federal securities laws arising out of certain public statements the Company made regarding its former fiscal 2016 goals. The Company’s motion to dismiss the consolidated class action complaint filed on August 17, 2015 was granted in part and denied in part on September 30, 2016. The court granted plaintiff’s motion for class certification on March 29, 2018, and plaintiff filed a first amended complaint on December 19, 2018. A motion to dismiss the first amended complaint was granted in part and denied in part on September 23, 2019. Fact discovery and expert discovery have concluded. On November 2, 2021, the Court denied plaintiffs’ motion for summary judgment and granted in part and denied in part defendants’ cross motion. On March 2, 2022 the Court granted the Company’s motion to reconsider a portion of that ruling. On June 29, 2022 the Court granted preliminary approval of a settlement in the amount of $105 million which was fully accrued at May 31, 2022. Securities Claims Relating to Rite-Aid Merger On December 11, 2017, purported Rite Aid shareholders filed an amended complaint in a putative class action lawsuit in the U.S. District Court for the Middle District of Pennsylvania (the “M.D. Pa. class action”) arising out of transactions contemplated by the merger agreement between the Company and Rite Aid. The amended complaint alleges that the Company and certain of its officers made false or misleading statements regarding the transactions. The Court denied the Company’s motion to dismiss the amended complaint on April 15, 2019. The Company filed an answer and affirmative defenses, and the Court granted plaintiffs' motion for class certification. Fact and expert discovery have concluded and summary judgement briefing is complete. In October and December 2020, two separate purported Rite Aid Shareholders filed actions in the same court opting out of the class in the M.D. Pa. class action and making nearly identical allegations as those in the M.D. Pa. class action (the “Opt-out Actions”). The Opt-out Actions have been stayed until the earlier of (a) 30 days after the entry of an order resolving any pre-trial dispositive motions in the M.D. Pa. class action, or (b) 30 days after the entry of an order of final approval of any settlement of the M.D. Pa. class action. Claims Relating to Opioid Abuse The Company is among an array of defendants in multiple actions in federal courts alleging claims generally concerning the impacts of widespread opioid abuse, which have been commenced by various plaintiffs such as counties, cities, hospitals, Indian tribes, and others. In December 2017, the U.S. Judicial Panel on Multidistrict Litigation consolidated many of these cases in a consolidated multidistrict litigation, captioned In re National Prescription Opiate Litigation (MDL No. 2804, Case No. 17-md-2804), which is pending in the U.S. District Court for the Northern District of Ohio (“N.D. Ohio”). The Company is a defendant in the following multidistrict litigation (MDL) bellwether cases: •One case remanded to the U.S. District Court for the Northern District of California (City and Cnty. of San Francisco, et al. v. Purdue Pharma L.P., et al., Case No. 3:18-cv-07591-CRB), originally scheduled for trial in October 2021, is currently ongoing. •Two cases in N.D. Ohio (Cnty. of Lake, Ohio v. Purdue Pharma L.P., et al., Case No. 18-op-45032; Cnty. of Trumbull, Ohio v. Purdue Pharma L.P., et al., Case No. 18-op-45079). In November 2021, the jury in that case returned a verdict after trial in favor of the plaintiffs as to liability, and the second trial regarding remedies took place in May 2022. The court has yet to determine how much each defendant will pay in damages. The Company is unable to predict the outcome relative to remedies or apportionment and believes it has very strong grounds for appeal. •One case remanded to the U. S. District Court for the Eastern District of Oklahoma (The Cherokee Nation v. McKesson Corp., et al., Case No. 18-CV-00056-RAW-SPS), which has since been remanded to the District Court of Sequoyah County, Oklahoma (a decision that is on appeal). •Five additional bellwether cases designated in April 2021: (1) Cobb Cnty. v. Purdue Pharma L.P., et al., Case No. 18-op-45817; (2) Durham Cnty. v. AmerisourceBergen Drug Corp., et al., Case No. 19-op-45346; (3) Montgomery Cnty. Bd. of Cnty. Commrs., et al. v. Cardinal Health, Inc., et al., Case No. 18-op-46326; (4) Board of Cnty. Commrs. of the Cnty. of Santa Fe v. Purdue Pharma L.P., et al., Case No. 18-op-45776; and (5) Cnty. of Tarrant v. Purdue Pharma L.P., et al., Case No. 18-op-45274. •Two consolidated cases in N.D. Ohio (Cnty. of Summit, Ohio, et al v. Purdue Pharma L.P., et al., Case No. 18-op-45090; Cnty. of Cuyahoga, Ohio, et al. v. Purdue Pharma L.P., Case No. 18-op-45004), previously scheduled for trial in November 2020 but postponed indefinitely. The Company also has been named as a defendant in numerous actions brought in state courts relating to opioid matters. Trial dates have been set in cases pending in state courts in the following states: •New Mexico (State of New Mexico, ex rel. Hector Balderas, Attorney General v. Purdue Pharma L.P., et al., Case No. D-101-cv-2017-02541, First Judicial District Court, Santa Fe County, New Mexico - September 2022). •West Virginia (State of West Virginia, ex rel. Patrick Morrisey, Attorney General v. Walgreens Boots Alliance, Inc., et al., Civil Action No.20-C-82 PNM, Circuit Court of Kanawha County, West Virginia, - September 2022). •Michigan (State of Michigan, ex rel. Dana Nessel, Attorney General v. Cardinal Health, Inc., et al., Case No. 19-016896-NZ, Circuit Court for Wayne County, Michigan - February 2023). •Alabama (Mobile County Board of Health, et al. v. Fisher, et al., Case No. CV-2019-902806.00, Circuit Court of Mobile County, Alabama - scheduled for trial in January 2023, but currently stayed pending a petition to the Alabama Supreme Court); (The DCH Health Care Authority, et al. v. Purdue Pharma LP, et al., Case No. CV-2019-000007.00, Circuit Court of Conecuh County, Alabama - March 2023). •Nevada (State of Nevada v. McKesson Corporation, et al., Case No. A-19-796755-B, Eighth Judicial District Court, Clark County, Nevada - April 2023). •Missouri (Jefferson County, Missouri v. Dannie E. Williams, M.D., et al., Case No. 20JE-CC00029, Twenty-Third Judicial Circuit, Jefferson County, Missouri - July 2023). Two consolidated cases in New York state court (County of Suffolk v. Purdue Pharma L.P., et al., Index No. 400001/2017; County of Nassau v. Purdue Pharma L.P., et al., Index No. 400008/2017, Supreme Court of the State of New York, Suffolk County, New York) were resolved as to the Company in June 2021. The relief sought by various plaintiffs in these matters includes compensatory, abatement, restitution and punitive damages, as well as injunctive relief. In connection with these matters, the Company has engaged an expanded number of parties regarding possible resolution. Significant uncertainties remain. Additionally, the Company has received from the U.S. Department of Justice and the Attorneys General of numerous states subpoenas, civil investigative demands, and other requests concerning opioid-related matters. The Company continues to communicate with the Department of Justice with respect to purported violations of the federal Controlled Substances Act and the federal False Claims Act in dispensing opioid prescriptions at certain Walgreens locations. On May 5, 2022, the Company announced that it had entered into a settlement agreement with the State of Florida to resolve all claims related to the distribution and dispensing of prescription opioid medications across the Company’s pharmacies in the State of Florida. This settlement agreement is not an admission of liability or wrong-doing and would resolve opioid lawsuits filed and future claims by the state and government subdivisions in the State of Florida. The estimated settlement amount of $683 million includes $620 million in remediation payments, which will be paid to the State of Florida in equal installments over 18 years, and applied by it to opioid remediation, as well as a one-time payment of $63 million for attorneys’ fees. The Company made the first annual settlement payment of $97.4 million into escrow on June 17, 2022. During the three months ended May 31, 2022, the Company recorded a $683 million liability associated with this settlement. The settlement accrual is reflected in the unaudited Consolidated Condensed Statement of Earnings within Selling, general and administrative expenses as part of the United States segment. The Company recorded $97.4 million and $585.6 million of the estimated settlement liability in Accrued expenses and other current liabilities, and Other non-current liabilities, respectively, in our Consolidated Condensed Balance Sheet.
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Income taxes |
9 Months Ended |
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May 31, 2022 | |
Income Tax Disclosure [Abstract] | |
Income taxes | Note 12. Income taxes The Company recognized a tax benefit from continuing operations for the three months ended May 31, 2022. The effective tax rate for the three months ended May 31, 2022 was not meaningful. The tax benefit is primarily driven by reduction of a valuation allowance on net deferred tax assets due to capital gains from the sale of AmerisourceBergen shares (see Note 6. Equity method investments), internal restructuring, and other anticipated gains, as well as the tax benefit related to the opioid settlement agreement with the State of Florida (see Note 11. Commitments and contingencies). The tax rate for the three months ended May 31, 2021 was an expense of 32.8% and includes a discrete tax expense on equity earnings of $576 million from HC Group Holdings. See Note 6. Equity method investments for further information. The effective tax rate from continuing operations for the nine months ended May 31, 2022 was 4.3%, compared to 7.4% for the nine months ended May 31, 2021. The tax rate for the current period includes the discrete tax effect of lower tax expense on gains from consolidation of the Company’s investment in VillageMD and Shields (see Note 3. Acquisitions and other investments), discrete tax benefits recorded for the release of valuation allowance on net deferred tax assets resulting from capital gains derived from the sale of AmerisourceBergen shares (see Note 6. Equity method investments), internal restructuring, and other anticipated gains, as well as the tax benefit related to the opioid settlement agreement with the State of Florida (see Note 11. Commitments and contingencies). The effective tax rate for the prior period reflects the discrete tax effect of equity losses in AmerisourceBergen, partially offset by the tax effect on equity earnings of HC Group Holdings. Income taxes paid for the nine months ended May 31, 2022 and 2021 were $291 million and $305 million, respectively.
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Retirement benefits |
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Retirement benefits | Note 13. 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 U.S. The principal defined benefit pension plan is the Boots Pension Plan (the “Boots Plan”), which covers certain employees in the UK. 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 (income) for the defined benefit pension plans (in millions):
The Company made cash contributions to its defined benefit pension plans of $20 million for the nine months ended May 31, 2022, which primarily related to committed payments. The Company plans to contribute an additional $21 million to its defined benefit pension plans during the remainder of fiscal year 2022. 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 $181 million for the three and nine months ended May 31, 2022, respectively, compared to an expense of $54 million and $166 million for the three and nine months ended May 31, 2021, respectively. The Company also has certain contract based defined contribution arrangements. The principal arrangement is based in the UK, to which both the Company and participating employees contribute. The Company recognized an expense of $21 million and $69 million for the three and nine months ended May 31, 2022, respectively, compared to an expense of $25 million and $77 million for the three and nine months ended May 31, 2021, respectively.
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Accumulated other comprehensive income (loss) |
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Accumulated Other Comprehensive Income (Loss), Net of Tax [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Accumulated other comprehensive income (loss) | Note 14. Accumulated other comprehensive income (loss) The following is a summary of net changes in Accumulated other comprehensive income (“AOCI”) by component and net of tax for the three and nine months ended May 31, 2022 and 2021 (in millions):
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Segment reporting |
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Segment Reporting [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Segment reporting | Note 15. Segment reporting In conjunction with the launch of its new consumer-centric healthcare strategy, in fiscal year 2022, the Company announced the creation of a new operating segment, Walgreens Health. As a result, beginning in fiscal year 2022, the Company is now aligned into three reportable segments: United States, International and Walgreens Health. The operating segments have been identified based on the financial data utilized by the Company’s Chief Executive Officer (the chief operating decision maker) to assess segment performance and allocate resources among the Company’s operating segments. The chief operating decision maker uses adjusted operating income to assess segment profitability. The chief operating decision maker does not use total assets by segment to make decisions regarding resources; therefore, the total asset disclosure by segment has not been included. United States The Company’s United States segment includes the Walgreens business which includes the operations of retail drugstores, health and wellness services, and specialty and home delivery pharmacy services, and its equity method investment in AmerisourceBergen. 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, personal care and consumables and general merchandise. International The Company’s International segment consists of pharmacy-led health and beauty retail businesses outside the U.S. and a pharmaceutical wholesaling and distribution business in Germany. Pharmacy-led health and beauty retail businesses include Boots branded stores in the UK, the Republic of Ireland and Thailand, the Benavides brand in Mexico and the Ahumada brand in Chile. Sales for these businesses are principally derived from the sale of prescription drugs and health and wellness, beauty, personal care and other consumer products. Walgreens Health The Company’s Walgreens Health segment, created at the beginning of fiscal year 2022, is a consumer-centric, technology-enabled healthcare business that engages consumers through a personalized, omni-channel experience across the care journey. Walgreens Health delivers improved health outcomes and lower costs for payors and providers by delivering care through owned and partnered assets. The Walgreens Health segment currently consists of a majority position in VillageMD, a leading, national provider of value-based primary care services; a majority position in Shields, a specialty pharmacy integrator and accelerator for hospitals; and the Walgreens Health organically-developed business that contracts with payors and providers to deliver clinical healthcare services to their members and members’ caregivers through both digital and physical channels. Selling, general and administrative costs for Walgreens Health for the three and nine months ended May 31, 2021 have been reclassified in the Consolidated Condensed Financial Statements and accompanying notes to conform to the current period presentation. The results of operations for reportable segments include procurement benefits. Corporate-related overhead costs are not allocated to reportable segments and are reported in “Corporate and Other”. The following table reflects results of operations of the Company’s reportable segments (in millions):
1.Includes certain eliminations. The following table reconciles adjusted operating income to operating (loss) income (in millions):
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Sales |
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Revenue from Contract with Customer [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Sales | Note 16. Sales The following table summarizes the Company’s sales by segment and by major source (in millions):
1Includes certain eliminations. See Note 19. Supplemental information for further information on receivables from contracts with customers.
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Related parties |
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Related Party Transactions [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Related parties | Note 17. 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) were as follows:
See Note 2. Discontinued operations for further information. On December 28, 2021, in accordance with the terms of the Unit Purchase Agreement, VillageMD settled the fully subscribed tender offer using cash proceeds provided by the Company. The Company purchased $1.9 billion of units in VillageMD for cash, from existing holders, including Mr. Steven Shulman, the lead director of VillageMD, who received proceeds of approximately $117 million in consideration for the tender of 287,781 units in VillageMD. See Note 3. Acquisitions and Other investments for further information. After giving effect to the tender offer, Mr. Shulman owns approximately 1.2% of outstanding equity interests of VillageMD. On January 27, 2022, pursuant to the terms and subject to the conditions set forth in the Unit Purchase Agreement, the Company appointed Mr. Shulman to the Company’s Board of Directors.
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New accounting pronouncements |
9 Months Ended |
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May 31, 2022 | |
Accounting Standards Update and Change in Accounting Principle [Abstract] | |
New accounting pronouncements | Note 1. 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 (“SEC”) 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. However, 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, 2021, as amended by Form 10-K/A for the fiscal year ended August 31, 2021 filed on November 24, 2021. The preparation of financial statements in accordance with GAAP requires management to use judgment in the application of accounting policies, including making estimates and assumptions. The Company bases its estimates on the information available at the time, its experiences and various other assumptions believed to be reasonable under the circumstances, including estimates of the impact of COVID-19. The extent to which COVID-19 impacts the Company’s business and financial results will depend on numerous factors discussed throughout this Quarterly Report on Form 10-Q including, but not limited to, the severity and duration of COVID-19, the extent to which it will impact our customers, team members, suppliers, vendors, business partners and distribution channels. The Company assessed certain accounting matters that require consideration of estimates and assumptions in context with the information reasonably available to the Company and the unknown future impacts of COVID-19 as of May 31, 2022 and through the date of this report. The accounting matters assessed included, but were not limited to, the Company’s carrying value of goodwill, intangible and other long-lived assets, including operating lease right-of-use assets. The Company’s future assessment of the magnitude and duration of COVID-19, as well as other factors, could result in material impacts to the Company’s consolidated financial statements in future reporting periods. Adjustments may be made in subsequent periods to reflect more current estimates and assumptions about matters that are inherently uncertain. Actual results may differ. In the opinion of management, the unaudited Consolidated Condensed Financial Statements for the interim periods presented include all adjustments necessary to present a fair statement of the results for such interim periods. The impact of COVID-19, the influence of certain holidays, seasonality, foreign currency rates, changes in vendor, payor and customer relationships and terms, strategic transactions including acquisitions, dispositions, 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. On June 1, 2021, the Company completed the sale of the majority of the Company's Alliance Healthcare business as well as a portion of the Company’s retail pharmacy international businesses in Europe (“Disposal Group”) to AmerisourceBergen Corporation (“AmerisourceBergen”). The Disposal Group met the criteria to be reported as discontinued operations. Therefore, the operating results of the Disposal Group are reported as discontinued operations for all prior periods. Effective as of the first quarter of fiscal year 2022, the Company is aligned into three reportable segments: United States, International and Walgreens Health. Unless otherwise specified, disclosures in these Consolidated Condensed Financial Statements reflect continuing operations only. See Note 2. Discontinued operations and Note 15. Segment reporting for further information. Certain amounts in the Consolidated Condensed Financial Statements and associated notes may not add due to rounding. Percentages have been calculated using unrounded amounts for all periods presented. Note 18. New accounting pronouncements Adoption of new accounting pronouncements Receivables - nonrefundable fees and others In October 2020, the FASB issued ASU 2020-08, Codification Improvements to Subtopic 310-20, Receivables—Nonrefundable Fees and Other. This ASU clarifies the accounting for the amortization period for certain purchased callable debt securities held at a premium by giving consideration to securities which have multiple call dates. The Company adopted the new standard effective September 1, 2021, and the adoption did not have any impact on the Company’s results of operations, cash flows or financial position. Investments — equity securities; Investments — equity method and joint ventures; Derivatives and hedging In January 2020, the FASB issued ASU 2020-01, Investments—Equity Securities (Topic 321), Investments—Equity Method and Joint Ventures (Topic 323), and Derivatives and Hedging (Topic 815). The amendments in this ASU clarify the interaction between the accounting for investments in equity securities, investment in equity method and certain derivatives instruments. The ASU is expected to reduce diversity in practice and increase comparability of the accounting for these interactions. The Company adopted the new standard effective September 1, 2021, and the adoption did not have any impact on the Company’s results of operations, cash flows or financial position. Income taxes - simplifying the accounting for income taxes In December 2019, the FASB issued ASU 2019-12: Simplifying the Accounting for Income Taxes (Topic 740), which removes certain exceptions to the general principles in Topic 740 and improves consistent application of and simplifies GAAP for other areas of Topic 740 by clarifying and amending existing guidance. The Company adopted the new standard effective September 1, 2021, and the adoption did not have any impact on the Company’s results of operations, cash flows or financial position. Effects of reference rate reform on financial reporting In March 2020, the FASB issued ASU 2020-04, Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting. This ASU provides optional expedient and exceptions for applying generally accepted accounting principles to contracts, hedging relationships, and other transactions affected by reference rate reform if certain criteria are met. In response to the concerns about structural risks of interbank offered rates (“IBORs”) and, particularly, the risk of cessation of the London Interbank Offered Rate (“LIBOR”), regulators in several jurisdictions around the world have undertaken reference rate reform initiatives to identify alternative reference rates that are more observable, or transaction based and less susceptible to manipulation. The ASU provides companies with optional guidance to ease the potential accounting burden associated with transitioning away from reference rates that are expected to be discontinued. In January 2021, the FASB issued ASU 2021-01, which adds implementation guidance to the above ASU to clarify certain optional expedients in Topic 848. The Company adopted the new standard effective September 1, 2021, and the adoption did not have a material impact on the Company’s results of operations, cash flows or financial position. New accounting pronouncements not yet adopted Acquired contract assets and contract liabilities in a business combination In October 2021, the FASB issued ASU 2021-08, Business Combinations (Topic 805) - Accounting for Contract Assets and Contract Liabilities from Contracts with Customers. This ASU requires an entity to recognize and measure contract assets and contract liabilities acquired in a business combination in accordance with Topic 606 (Revenue from Contracts with Customers). This ASU is expected to reduce diversity in practice and increase comparability for both the recognition and measurement of acquired revenue contracts with customers at the date of and after a business combination. This ASU is effective for fiscal years beginning after December 15, 2022 (fiscal year 2024). The Company is evaluating the effect of adopting this new accounting guidance. Disclosures by business entities about government assistance In November 2021, the FASB issued ASU 2021-10, Government Assistance (Topic 832) – Disclosures by Business Entities about Government Assistance. This ASU requires disclosures that are expected to increase the transparency of transactions with a government accounted for by applying a grant or contribution accounting model by analogy, including (1) the types of transactions, (2) the accounting for those transactions, and (3) the effect of those transactions on an entity’s financial statements. This ASU is effective for annual periods beginning after December 15, 2021 (fiscal year 2023). The Company is evaluating the effect of adopting this new accounting guidance.
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Supplemental information |
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Supplemental Cash Flow Elements [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Supplemental information | Note 19. 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). Trade receivables were $3.9 billion and $4.5 billion at May 31, 2022 and August 31, 2021, respectively. Other accounts receivable balances, which consist primarily of receivables from vendors and manufacturers, including receivables from AmerisourceBergen (see Note 17. Related parties), were $1.1 billion at both May 31, 2022 and August 31, 2021. Depreciation and amortization The Company has recorded the following depreciation and amortization expense in the Consolidated Condensed Statements of Earnings (in millions):
Accumulated depreciation and amortization on property, plant and equipment was $13.0 billion at May 31, 2022 and $13.1 billion at August 31, 2021. Restricted cash The Company is required to maintain cash deposits with certain banks which consist of cash deposits restricted by law and other obligations. The following represents a reconciliation of cash and cash equivalents in the Consolidated Condensed Balance Sheets to total cash, cash equivalents, marketable securities and restricted cash in the Consolidated Condensed Statements of Cash Flows (in millions):
Redeemable non-controlling interest The following is a roll forward of the redeemable non-controlling interest in the Consolidated Condensed Balance Sheets (in millions):
1.Nine months ended May 31, 2022, includes, $1.9 billion of redeemable non-controlling interest, representing the maximum purchase price to redeem non-controlling units in VillageMD for cash, and redeemable non-controlling interest in Shields. 2.Nine months ended May 31, 2022, includes, $1.9 billion paid to existing shareholders of VillageMD as part of the fully subscribed tender offer and the acquisition of the remaining 30% non-controlling equity interest in the pharmaceutical wholesale business in Germany. 3.Remeasurement of non-controlling interests, probable of redemption but not currently redeemable, to their redemption value, is recorded to Paid in capital in the Consolidated Condensed Balance Sheets. See Note 3. Acquisitions and other investments for further information. 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 17.4 million and 17.2 million weighted outstanding options to purchase common shares that were anti-dilutive and excluded from the earnings per share calculation for the three and nine months ending May 31, 2022, compared to 15.9 million and 17.1 million for the three and nine months ending May 31, 2021, respectively. Cash dividends declared per common share Cash dividends per common share declared were as follows:
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Subsequent events |
9 Months Ended |
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May 31, 2022 | |
Subsequent Events [Abstract] | |
Subsequent events | Note 20. Subsequent events On June 17, 2022, the Company entered into a five-year $3.5 billion revolving credit agreement and an eighteen-month $1.5 billion revolving credit agreement with certain lenders and Wells Fargo Bank, National Association, as administrative agent. Borrowings under the credit agreements shall be denominated in U.S. dollars, Sterling, Euros, Yen or any other currency as specified in the credit agreements and will bear interest at a fluctuating rate per annum equal to a benchmark rate applicable to the currency composing such borrowing plus an applicable margin based on the rating of the Company’s corporate debt obligations. Voluntary prepayments of the loans and voluntary reductions of the unutilized portion of the commitments under these credit agreements is permissible, without penalty, subject to certain conditions pertaining to minimum notice and minimum reduction amounts. Simultaneously, with the entry into the credit agreements, the Company terminated the Revolving Credit Agreements dated December 23, 2020 and August 29, 2018. All outstanding obligations under those credit agreements have been paid and satisfied in full. On June 3, 2022, pursuant to the terms of the Indenture, dated as of July 17, 2008, between Walgreen Co. and Computershare Trust Company, N.A., as successor to Wells Fargo Bank, National Association, as trustee (the “Trustee”), a notice of redemption was given to holders of the 3.100% notes due 2022 (the “notes”) issued by the Company on September 13, 2012. As a result, on July 5, 2022 (the “redemption date”), the notes with aggregate principal amount of $731 million will be redeemed in full. The redemption price of the notes will be calculated as set forth in the Notice of Full Redemption delivered to noteholders on June 3, 2022. This report does not constitute a notice of redemption under the indenture.
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Accounting policies (Policies) |
9 Months Ended |
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May 31, 2022 | |
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 (“SEC”) 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. However, 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, 2021, as amended by Form 10-K/A for the fiscal year ended August 31, 2021 filed on November 24, 2021. The preparation of financial statements in accordance with GAAP requires management to use judgment in the application of accounting policies, including making estimates and assumptions. The Company bases its estimates on the information available at the time, its experiences and various other assumptions believed to be reasonable under the circumstances, including estimates of the impact of COVID-19. The extent to which COVID-19 impacts the Company’s business and financial results will depend on numerous factors discussed throughout this Quarterly Report on Form 10-Q including, but not limited to, the severity and duration of COVID-19, the extent to which it will impact our customers, team members, suppliers, vendors, business partners and distribution channels. The Company assessed certain accounting matters that require consideration of estimates and assumptions in context with the information reasonably available to the Company and the unknown future impacts of COVID-19 as of May 31, 2022 and through the date of this report. The accounting matters assessed included, but were not limited to, the Company’s carrying value of goodwill, intangible and other long-lived assets, including operating lease right-of-use assets. The Company’s future assessment of the magnitude and duration of COVID-19, as well as other factors, could result in material impacts to the Company’s consolidated financial statements in future reporting periods. Adjustments may be made in subsequent periods to reflect more current estimates and assumptions about matters that are inherently uncertain. Actual results may differ. In the opinion of management, the unaudited Consolidated Condensed Financial Statements for the interim periods presented include all adjustments necessary to present a fair statement of the results for such interim periods. The impact of COVID-19, the influence of certain holidays, seasonality, foreign currency rates, changes in vendor, payor and customer relationships and terms, strategic transactions including acquisitions, dispositions, 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. On June 1, 2021, the Company completed the sale of the majority of the Company's Alliance Healthcare business as well as a portion of the Company’s retail pharmacy international businesses in Europe (“Disposal Group”) to AmerisourceBergen Corporation (“AmerisourceBergen”). The Disposal Group met the criteria to be reported as discontinued operations. Therefore, the operating results of the Disposal Group are reported as discontinued operations for all prior periods. Effective as of the first quarter of fiscal year 2022, the Company is aligned into three reportable segments: United States, International and Walgreens Health. Unless otherwise specified, disclosures in these Consolidated Condensed Financial Statements reflect continuing operations only. See Note 2. Discontinued operations and Note 15. Segment reporting for further information. Certain amounts in the Consolidated Condensed Financial Statements and associated notes may not add due to rounding. Percentages have been calculated using unrounded amounts for all periods presented.
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Adoption of new accounting pronouncements; New accounting pronouncements not yet adopted | Adoption of new accounting pronouncements Receivables - nonrefundable fees and others In October 2020, the FASB issued ASU 2020-08, Codification Improvements to Subtopic 310-20, Receivables—Nonrefundable Fees and Other. This ASU clarifies the accounting for the amortization period for certain purchased callable debt securities held at a premium by giving consideration to securities which have multiple call dates. The Company adopted the new standard effective September 1, 2021, and the adoption did not have any impact on the Company’s results of operations, cash flows or financial position. Investments — equity securities; Investments — equity method and joint ventures; Derivatives and hedging In January 2020, the FASB issued ASU 2020-01, Investments—Equity Securities (Topic 321), Investments—Equity Method and Joint Ventures (Topic 323), and Derivatives and Hedging (Topic 815). The amendments in this ASU clarify the interaction between the accounting for investments in equity securities, investment in equity method and certain derivatives instruments. The ASU is expected to reduce diversity in practice and increase comparability of the accounting for these interactions. The Company adopted the new standard effective September 1, 2021, and the adoption did not have any impact on the Company’s results of operations, cash flows or financial position. Income taxes - simplifying the accounting for income taxes In December 2019, the FASB issued ASU 2019-12: Simplifying the Accounting for Income Taxes (Topic 740), which removes certain exceptions to the general principles in Topic 740 and improves consistent application of and simplifies GAAP for other areas of Topic 740 by clarifying and amending existing guidance. The Company adopted the new standard effective September 1, 2021, and the adoption did not have any impact on the Company’s results of operations, cash flows or financial position. Effects of reference rate reform on financial reporting In March 2020, the FASB issued ASU 2020-04, Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting. This ASU provides optional expedient and exceptions for applying generally accepted accounting principles to contracts, hedging relationships, and other transactions affected by reference rate reform if certain criteria are met. In response to the concerns about structural risks of interbank offered rates (“IBORs”) and, particularly, the risk of cessation of the London Interbank Offered Rate (“LIBOR”), regulators in several jurisdictions around the world have undertaken reference rate reform initiatives to identify alternative reference rates that are more observable, or transaction based and less susceptible to manipulation. The ASU provides companies with optional guidance to ease the potential accounting burden associated with transitioning away from reference rates that are expected to be discontinued. In January 2021, the FASB issued ASU 2021-01, which adds implementation guidance to the above ASU to clarify certain optional expedients in Topic 848. The Company adopted the new standard effective September 1, 2021, and the adoption did not have a material impact on the Company’s results of operations, cash flows or financial position. New accounting pronouncements not yet adopted Acquired contract assets and contract liabilities in a business combination In October 2021, the FASB issued ASU 2021-08, Business Combinations (Topic 805) - Accounting for Contract Assets and Contract Liabilities from Contracts with Customers. This ASU requires an entity to recognize and measure contract assets and contract liabilities acquired in a business combination in accordance with Topic 606 (Revenue from Contracts with Customers). This ASU is expected to reduce diversity in practice and increase comparability for both the recognition and measurement of acquired revenue contracts with customers at the date of and after a business combination. This ASU is effective for fiscal years beginning after December 15, 2022 (fiscal year 2024). The Company is evaluating the effect of adopting this new accounting guidance. Disclosures by business entities about government assistance In November 2021, the FASB issued ASU 2021-10, Government Assistance (Topic 832) – Disclosures by Business Entities about Government Assistance. This ASU requires disclosures that are expected to increase the transparency of transactions with a government accounted for by applying a grant or contribution accounting model by analogy, including (1) the types of transactions, (2) the accounting for those transactions, and (3) the effect of those transactions on an entity’s financial statements. This ASU is effective for annual periods beginning after December 15, 2021 (fiscal year 2023). The Company is evaluating the effect of adopting this new accounting guidance.
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Discontinued operations (Tables) |
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Discontinued Operations and Disposal Groups [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedules of Discontinued Operations | Results of discontinued operations for prior periods were as follows (in millions):
Sales in prior periods from the Disposal Group to the Company's continuing operations are not eliminated and aggregate to (in millions):
Cash flows from operating and investing activities for discontinued operations in prior periods are (in millions):
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Acquisitions and other investments (Tables) |
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Business Combination and Asset Acquisition [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Identifiable Assets Acquired and Liabilities Assumed | The following table summarizes the consideration for the acquisition and the preliminary amounts of identified assets acquired and liabilities assumed at the date of the transaction (in millions):
1.Comprises cash consideration of $1.1 billion and a promissory note of $1.2 billion. This consideration was provided in exchange for the issuance of new preferred units by VillageMD. VillageMD’s tangible assets acquired exclude this $1.1 billion of cash and $1.2 billion promissory note receivable. 2.Primarily related to vested share-based compensation awards. The following table summarizes the consideration for the acquisition and the preliminary amounts of identified assets acquired and liabilities assumed at the date of the transaction (in millions):
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Exit and disposal activities (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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May 31, 2022 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Restructuring and Related Activities [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Restructuring and Related Costs | Costs related to exit and disposal activities under the Transformational Cost Management Program for the three and nine months ended May 31, 2022 and 2021 were as follows (in millions):
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Change in Restructuring Liabilities | The changes in liabilities and assets related to the exit and disposal activities under Transformational Cost Management Program include the following (in millions):
|
Leases (Tables) |
9 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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May 31, 2022 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Leases [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Supplemental Balance Sheet Information | Supplemental Balance sheet information related to leases were as follows (in millions):
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Schedule of Supplemental Income Statement and Other Information | Supplemental Statement of Earnings information related to leases were as follows (in millions):
1Includes real estate property taxes, common area maintenance, insurance and rental payments based on sales volume. 2Recorded within selling, general and administrative expenses. Other supplemental information related to leases were as follows (in millions):
Weighted average lease terms and discount rates for real estate leases were as follows:
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Schedule of Aggregate Future Lease Payments Under Operating Leases | The aggregate future lease payments for operating and finance leases as of May 31, 2022 were as follows (in millions):
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Schedule of Aggregate Future Lease Payments Under Finance Leases | The aggregate future lease payments for operating and finance leases as of May 31, 2022 were as follows (in millions):
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Equity method investments (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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May 31, 2022 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Equity Method Investments and Joint Ventures [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Equity Method Investments | Equity method investments were as follows (in millions, except percentages):
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Summarized Financial Information of Equity Method Investments | Summarized financial information for the Company’s equity method investments in aggregate is as follows:Statements of earnings (loss) (in millions)
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Goodwill and other intangible assets (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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May 31, 2022 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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):
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Schedule of Finite-Lived Intangible Assets by Major Class | The carrying amount and accumulated amortization of intangible assets consist of the following (in millions):
1Includes purchased prescription files. 2Includes certain reclassifications to conform to the current period presentation.
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Schedule of Future Amortization Expense | Estimated future annual amortization expense for the next five fiscal years for intangible assets recorded at May 31, 2022 is as follows (in millions):
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Debt (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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May 31, 2022 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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):
1Notes are unsubordinated debt obligations of the Company and rank equally in right of payment with all other unsecured and unsubordinated indebtedness of the Company from time to time outstanding. 2On September 18, 2021, the Company redeemed in full the $1.25 billion aggregate principal amount outstanding of its 3.300% unsecured notes due 2021 issued by the Company on November 18, 2014. 3Other debt represents a mix of fixed and variable rate debt with various maturities and working capital facilities denominated in various currencies. 4Notes are senior debt obligations of Walgreen Co. and rank equally with all other unsecured and unsubordinated indebtedness of Walgreen Co. On December 31, 2014, the Company 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 the Company and will rank equally in right of payment with all other unsecured and unsubordinated indebtedness of the Company. On June 3, 2022, a notice of redemption was given to holders of the 3.100% notes due 2022. As a result, on July 5, 2022, the notes with aggregate principal amount of $731 million will be redeemed in full. See Note 20. Subsequent events for further information.
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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):
1Notes are unsubordinated debt obligations of the Company and rank equally in right of payment with all other unsecured and unsubordinated indebtedness of the Company from time to time outstanding. 2On September 18, 2021, the Company redeemed in full the $1.25 billion aggregate principal amount outstanding of its 3.300% unsecured notes due 2021 issued by the Company on November 18, 2014. 3Other debt represents a mix of fixed and variable rate debt with various maturities and working capital facilities denominated in various currencies. 4Notes are senior debt obligations of Walgreen Co. and rank equally with all other unsecured and unsubordinated indebtedness of Walgreen Co. On December 31, 2014, the Company 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 the Company and will rank equally in right of payment with all other unsecured and unsubordinated indebtedness of the Company. On June 3, 2022, a notice of redemption was given to holders of the 3.100% notes due 2022. As a result, on July 5, 2022, the notes with aggregate principal amount of $731 million will be redeemed in full. See Note 20. Subsequent events for further information.
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Financial instruments (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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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):
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Gains and (Losses) due to Changes in Fair Value Recognized in Earnings | The income (expense) due to changes in fair value of these derivative instruments were recognized in earnings as follows (in millions):
1.In the nine months ended May 31, 2022, certain expenses related to derivative instruments used as economic hedges, were presented as Other income within the Consolidated Condensed Statements of Earnings, whereas these expenses were recorded within Selling, general, and administrative expenses within the Consolidated Condensed Statements of Earnings in prior periods.
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Fair value measurements (Tables) |
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Fair Value Disclosures [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of 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):
1.Money market funds are valued at the closing price reported by the fund sponsor. 2.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. See Note 9. Financial instruments, for additional information. 3.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 9. Financial instruments, for additional information. 4.Fair values of quoted investments are based on current bid prices as of May 31, 2022 and August 31, 2021. 5.Level 3 debt securities include investments in convertible debt securities of VillageMD which are valued on a quarterly basis using the Probability Weighted Expect Return Method with gains or losses recorded in Other comprehensive income within the Consolidated Condensed Balance Sheets. Inputs include the enterprise value, expected holding term of the investment, volatility and risk-free interest rates.
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Retirement benefits (Tables) |
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Retirement Benefits [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Components of Net Periodic Benefit Costs (Income) | Components of net periodic pension costs (income) for the defined benefit pension plans (in millions):
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Accumulated other comprehensive income (loss) (Tables) |
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May 31, 2022 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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 (“AOCI”) by component and net of tax for the three and nine months ended May 31, 2022 and 2021 (in millions):
|
Segment reporting (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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May 31, 2022 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Segment Reporting [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Reconciliation of Operating Income (Loss) from Segments to Consolidated | The following table reflects results of operations of the Company’s reportable segments (in millions):
1.Includes certain eliminations. The following table reconciles adjusted operating income to operating (loss) income (in millions):
|
Sales (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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May 31, 2022 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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):
1Includes certain eliminations.
|
Related parties (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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May 31, 2022 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Related Party Transactions [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Related Party Transactions | Related party transactions with AmerisourceBergen (in millions) were as follows:
|
Supplemental information (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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May 31, 2022 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Supplemental Cash Flow Elements [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):
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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, marketable securities and restricted cash in the Consolidated Condensed Statements of Cash Flows (in millions):
|
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Schedule of Cash, Cash Equivalents, Marketable Securities and Restricted Cash | The following represents a reconciliation of cash and cash equivalents in the Consolidated Condensed Balance Sheets to total cash, cash equivalents, marketable securities and restricted cash in the Consolidated Condensed Statements of Cash Flows (in millions):
|
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Schedule of Redeemable Noncontrolling Interest | The following is a roll forward of the redeemable non-controlling interest in the Consolidated Condensed Balance Sheets (in millions):
1.Nine months ended May 31, 2022, includes, $1.9 billion of redeemable non-controlling interest, representing the maximum purchase price to redeem non-controlling units in VillageMD for cash, and redeemable non-controlling interest in Shields. 2.Nine months ended May 31, 2022, includes, $1.9 billion paid to existing shareholders of VillageMD as part of the fully subscribed tender offer and the acquisition of the remaining 30% non-controlling equity interest in the pharmaceutical wholesale business in Germany. 3.Remeasurement of non-controlling interests, probable of redemption but not currently redeemable, to their redemption value, is recorded to Paid in capital in the Consolidated Condensed Balance Sheets.
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Schedule of Dividends Payable | Cash dividends per common share declared were as follows:
|
Accounting policies (Details) |
9 Months Ended |
---|---|
May 31, 2022
segment
| |
Accounting Policies [Abstract] | |
Number of reportable segments | 3 |
Discontinued operations - Narrative (Details) - Discontinued Operations, Disposed of by Sale - Alliance Healthcare - USD ($) shares in Millions, $ in Millions |
3 Months Ended | ||
---|---|---|---|
Jun. 01, 2021 |
Feb. 28, 2022 |
Aug. 31, 2021 |
|
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items] | |||
Consideration from disposal | $ 6,900 | ||
Cash received from disposal | $ 6,700 | ||
Shares issued as part of disposal (in shares) | 2 | ||
Receivable for purchase price consideration | $ 98 | ||
Working capital adjustments to receivable for purchase price consideration | $ 38 |
Exit and disposal activities - Restructuring Reserve Activity (Details) - Transformational Cost Management Program $ in Millions |
9 Months Ended |
---|---|
May 31, 2022
USD ($)
| |
Restructuring Reserve [Roll Forward] | |
Beginning balance | $ 114 |
Costs | 404 |
Payments | (229) |
Other | (161) |
Ending balance | 129 |
Lease obligations and other real estate costs | |
Restructuring Reserve [Roll Forward] | |
Beginning balance | 17 |
Costs | 113 |
Payments | (60) |
Other | (52) |
Ending balance | 18 |
Asset Impairments | |
Restructuring Reserve [Roll Forward] | |
Beginning balance | 0 |
Costs | 105 |
Payments | 0 |
Other | (105) |
Ending balance | 0 |
Employee severance and business transition costs | |
Restructuring Reserve [Roll Forward] | |
Beginning balance | 77 |
Costs | 166 |
Payments | (145) |
Other | (6) |
Ending balance | 92 |
Information technology transformation and other exit costs | |
Restructuring Reserve [Roll Forward] | |
Beginning balance | 20 |
Costs | 20 |
Payments | (24) |
Other | 2 |
Ending balance | $ 20 |
Leases - Narrative (Details) |
May 31, 2022 |
---|---|
Lessee, Lease, Description [Line Items] | |
Term of renewal contract | 5 years |
Minimum | |
Lessee, Lease, Description [Line Items] | |
Term of lease | 15 years |
Maximum | |
Lessee, Lease, Description [Line Items] | |
Term of lease | 25 years |
Leases - Supplemental Income Statement Information (Details) - USD ($) $ in Millions |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
May 31, 2022 |
May 31, 2021 |
May 31, 2022 |
May 31, 2021 |
|
Operating lease cost | ||||
Fixed | $ 811 | $ 807 | $ 2,431 | $ 2,406 |
Variable | 198 | 157 | 600 | 477 |
Finance lease cost | ||||
Amortization | 11 | 11 | 33 | 33 |
Interest | 13 | 13 | 38 | 39 |
Sublease income | 24 | 21 | 76 | 62 |
Impairment of right-of-use assets | 11 | 8 | 82 | 23 |
Gain on sale-leaseback | $ 175 | $ 85 | $ 410 | $ 273 |
Leases - Other Supplemental Information (Details) - USD ($) $ in Millions |
9 Months Ended | |
---|---|---|
May 31, 2022 |
May 31, 2021 |
|
Cash paid for amounts included in the measurement of lease obligations: | ||
Operating cash outflows from operating leases | $ 2,515 | $ 2,562 |
Operating cash outflows from finance leases | 35 | 36 |
Financing cash outflows from finance leases | 32 | 31 |
Total | 2,582 | 2,629 |
Right-of-use assets obtained in exchange for new lease obligations: | ||
Operating leases | 1,380 | 2,011 |
Finance leases | 11 | 0 |
Total | $ 1,391 | $ 2,011 |
Leases - Average Lease Terms And Discounts (Details) |
May 31, 2022 |
Aug. 31, 2021 |
---|---|---|
Weighted average remaining lease term in years: | ||
Operating leases | 10 years | 10 years 3 months 18 days |
Finance leases | 19 years 2 months 12 days | 20 years 2 months 12 days |
Weighted average discount rate: | ||
Operating leases | 4.77% | 4.77% |
Finance leases | 5.18% | 5.18% |
Leases - Future Lease Payments for Operating and Finance Leases (Details) - USD ($) $ in Millions |
May 31, 2022 |
Aug. 31, 2021 |
---|---|---|
Finance lease | ||
2022 (Remaining period) | $ 22 | |
2023 | 88 | |
2024 | 88 | |
2025 | 87 | |
2026 | 87 | |
2027 | 87 | |
Later | 1,052 | |
Total undiscounted minimum lease payments | 1,510 | |
Less: Present value discount | (554) | |
Lease liability | 956 | $ 1,010 |
Operating lease | ||
2022 (Remaining period) | 867 | |
2023 | 3,399 | |
2024 | 3,295 | |
2025 | 3,185 | |
2026 | 3,081 | |
2027 | 2,977 | |
Later | 13,412 | |
Total undiscounted minimum lease payments | 30,216 | |
Less: Present value discount | (6,396) | |
Lease liability | $ 23,820 | $ 24,412 |
Equity method investments - Schedule of Equity Method Investments (Details) - USD ($) $ in Millions |
May 31, 2022 |
Aug. 31, 2021 |
---|---|---|
Schedule of Equity Method Investments [Line Items] | ||
Carrying value of equity method investments | $ 5,777 | $ 6,987 |
AmerisourceBergen | ||
Schedule of Equity Method Investments [Line Items] | ||
Carrying value of equity method investments | $ 3,965 | $ 4,407 |
Ownership percentage | 25.20% | 28.00% |
Others | ||
Schedule of Equity Method Investments [Line Items] | ||
Carrying value of equity method investments | $ 1,811 | $ 2,580 |
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 of equity method investments | $ 5,777 | $ 6,987 |
Equity method investments - Summarized Financial Information of Equity Method Investments (Details) - USD ($) $ in Millions |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
May 31, 2022 |
May 31, 2021 |
May 31, 2022 |
May 31, 2021 |
|
Income Statement [Abstract] | ||||
Sales | $ 32,597 | $ 34,030 | $ 100,254 | $ 98,247 |
Gross profit | 6,572 | 7,153 | 21,855 | 20,564 |
Net earnings (loss) | 229 | 1,173 | 4,566 | 1,899 |
Share of earnings (loss) from equity method investments | 132 | 672 | 359 | (591) |
Equity Method Investment | ||||
Income Statement [Abstract] | ||||
Sales | 65,085 | 55,890 | 200,628 | 171,417 |
Gross profit | 3,308 | 2,558 | 10,117 | 7,647 |
Net earnings (loss) | $ 602 | $ 489 | $ 1,474 | $ (3,841) |
Goodwill and other intangible assets - Schedule of Goodwill (Details) $ in Millions |
9 Months Ended |
---|---|
May 31, 2022
USD ($)
| |
Goodwill [Roll Forward] | |
Goodwill, beginning balance | $ 12,421 |
Acquisitions | 9,586 |
Currency translation adjustments | (106) |
Goodwill, ending balance | 21,901 |
Reportable Segments | United States | |
Goodwill [Roll Forward] | |
Goodwill, beginning balance | 10,947 |
Acquisitions | 0 |
Currency translation adjustments | 0 |
Goodwill, ending balance | 10,947 |
Reportable Segments | International | |
Goodwill [Roll Forward] | |
Goodwill, beginning balance | 1,474 |
Acquisitions | 0 |
Currency translation adjustments | (106) |
Goodwill, ending balance | 1,368 |
Reportable Segments | Walgreens Health | |
Goodwill [Roll Forward] | |
Goodwill, beginning balance | 0 |
Acquisitions | 9,586 |
Currency translation adjustments | 0 |
Goodwill, ending balance | $ 9,586 |
Goodwill and other intangible assets - Schedule of Finite-Lived Intangible Assets, Future Amortization Expense (Details) $ in Millions |
May 31, 2022
USD ($)
|
---|---|
Estimated annual intangible assets amortization expense [Abstract] | |
2022 (Remaining period) | $ 151 |
2023 | 571 |
2024 | 551 |
2025 | 518 |
2026 | 497 |
2027 | $ 434 |
Income taxes (Details) - USD ($) $ in Millions |
3 Months Ended | 9 Months Ended | |
---|---|---|---|
May 31, 2021 |
May 31, 2022 |
May 31, 2021 |
|
Income Tax Examination [Line Items] | |||
Effective tax rate | 32.80% | 4.30% | 7.40% |
Equity earnings | $ 359 | $ (577) | |
Income taxes paid | $ 291 | $ 305 | |
Option Care Health | |||
Income Tax Examination [Line Items] | |||
Equity earnings | $ 576 |
Retirement benefits (Details) - USD ($) $ in Millions |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
May 31, 2022 |
May 31, 2021 |
May 31, 2022 |
May 31, 2021 |
|
Components of net periodic benefit costs [Abstract] | ||||
Total net periodic pension income | $ (32) | $ (48) | $ (97) | $ (140) |
Employer cash contributions to defined benefit pension plans | 20 | |||
Expected employer cash contributions to defined benefit plan in current fiscal year | 21 | 21 | ||
Selling, general and administrative expenses | ||||
Components of net periodic benefit costs [Abstract] | ||||
Service costs | 1 | 2 | 4 | 4 |
Other income (expense) | ||||
Components of net periodic benefit costs [Abstract] | ||||
Interest costs | 37 | 36 | 115 | 104 |
Expected returns on plan assets/other | (70) | (85) | (216) | (248) |
United States | ||||
Components of net periodic benefit costs [Abstract] | ||||
Profit sharing provision expense | 58 | 54 | 181 | 166 |
Foreign Plan | ||||
Components of net periodic benefit costs [Abstract] | ||||
Cost recognized in the consolidated condensed statements of earnings | $ 21 | $ 25 | $ 69 | $ 77 |
Related parties - Schedule of Related Parties (Details) - USD ($) $ in Millions |
3 Months Ended | 9 Months Ended | |||
---|---|---|---|---|---|
May 31, 2022 |
May 31, 2021 |
May 31, 2022 |
May 31, 2021 |
Aug. 31, 2021 |
|
Related Party Transactions [Abstract] | |||||
Purchases, net | $ 15,439 | $ 15,947 | $ 46,293 | $ 46,449 | |
Trade accounts payable, net of Trade accounts receivable | $ 7,322 | $ 7,322 | $ 6,589 |
Related parties - Narrative (Details) - USD ($) $ in Millions |
Dec. 28, 2021 |
Nov. 24, 2021 |
---|---|---|
Affiliated Entity | Steve Shulman | VillageMD | ||
Related Party Transaction [Line Items] | ||
Percentage of outstanding shares owned | 1.20% | |
VillageMD | ||
Related Party Transaction [Line Items] | ||
Value of purchase tender offer | $ 1,900 | |
VillageMD | Affiliated Entity | ||
Related Party Transaction [Line Items] | ||
Value of purchase tender offer | $ 1,900 | |
Payments for stock consideration | $ 117 | |
Number of shares tendered (in shares) | 287,781 |
Supplemental information - Narrative (Details) - USD ($) shares in Millions, $ in Millions |
3 Months Ended | 9 Months Ended | ||||
---|---|---|---|---|---|---|
May 31, 2022 |
May 31, 2021 |
May 31, 2022 |
May 31, 2021 |
Feb. 28, 2022 |
Aug. 31, 2021 |
|
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||||||
Accounts receivable from related party | $ 1,100 | $ 1,100 | ||||
Accumulated depreciation and amortization on property, plant, and equipment | 13,000 | 13,000 | $ 13,100 | |||
Redeemable non-controlling interest | $ 775 | $ 775 | $ 812 | 319 | ||
Antidilutive securities excluded from EPS calculations (in shares) | 17.4 | 15.9 | 17.2 | 17.1 | ||
Trade Accounts Receivable | ||||||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||||||
Receivables | $ 3,900 | $ 3,900 | $ 4,500 |
Supplemental information - Depreciation and Amortization Expense (Details) - USD ($) $ in Millions |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
May 31, 2022 |
May 31, 2021 |
May 31, 2022 |
May 31, 2021 |
|
Supplemental Cash Flow Elements [Abstract] | ||||
Depreciation expense | $ 331 | $ 352 | $ 1,014 | $ 1,042 |
Intangible asset and other amortization | 148 | 156 | 488 | 363 |
Total depreciation and amortization expense | $ 478 | $ 507 | $ 1,502 | $ 1,404 |
Supplemental information - Summary of Cash, Cash Equivalents, Marketable Securities and Restricted Cash (Details) - USD ($) $ in Millions |
May 31, 2022 |
Aug. 31, 2021 |
May 31, 2021 |
Aug. 31, 2020 |
---|---|---|---|---|
Supplemental Cash Flow Elements [Abstract] | ||||
Cash and cash equivalents | $ 2,285 | $ 559 | ||
Marketable securities | 2,173 | 634 | ||
Restricted cash (included in other current assets) | 82 | 77 | ||
Cash, cash equivalents, marketable securities and restricted cash | $ 4,541 | $ 1,270 | $ 1,803 | $ 746 |
Supplemental information - Schedule of Redeemable Non-controlling Interest (Details) - USD ($) $ in Millions |
3 Months Ended | 9 Months Ended | |||
---|---|---|---|---|---|
May 31, 2022 |
May 31, 2022 |
Jan. 31, 2022 |
Nov. 24, 2021 |
Nov. 23, 2021 |
|
Increase (Decrease) in Temporary Equity [Roll Forward] | |||||
Beginning balance | $ 812 | $ 319 | |||
Recognition upon acquisition of subsidiary | 0 | 2,489 | |||
Acquisition of non-controlling interests | 0 | (2,047) | |||
Redemption price adjustments | (22) | ||||
Redemption price adjustments | 68 | ||||
Net loss attributable to redeemable noncontrolling interest | (12) | (45) | |||
Currency translation adjustments and other | (3) | (9) | |||
Ending balance | $ 775 | 775 | |||
VillageMD | |||||
Conversion of Stock [Line Items] | |||||
Acquisition of additional interest in subsidiary | $ 1,900 | ||||
Outstanding equity interest percentage | 63.00% | 30.00% | |||
McKesson Corporation | |||||
Conversion of Stock [Line Items] | |||||
Outstanding equity interest percentage | 30.00% |
Supplemental information - Summary of Dividends per Share (Details) - $ / shares |
3 Months Ended | 9 Months Ended | ||||||
---|---|---|---|---|---|---|---|---|
May 31, 2022 |
Feb. 28, 2022 |
Nov. 30, 2021 |
May 31, 2021 |
Feb. 28, 2021 |
Nov. 30, 2020 |
May 31, 2022 |
May 31, 2021 |
|
Cash and Cash Equivalents [Abstract] | ||||||||
Cash dividends declared (in dollars per share) | $ 0.4775 | $ 0.4775 | $ 0.4775 | $ 0.4675 | $ 0.4675 | $ 0.4675 | $ 1.4325 | $ 1.4025 |
Subsequent events (Details) - USD ($) |
Jun. 17, 2022 |
Jul. 05, 2022 |
Jun. 03, 2022 |
Aug. 31, 2021 |
---|---|---|---|---|
3.100% Unsecured Notes due 2022 | Unsecured Notes | ||||
Subsequent Event [Line Items] | ||||
Stated interest rate | 3.10% | |||
Subsequent Event | 2022 Revolving Credit Agreement, Five-Year Facility | Unsecured credit facility | ||||
Subsequent Event [Line Items] | ||||
Debt term | 5 years | |||
Maximum borrowing capacity | $ 3,500,000,000 | |||
Subsequent Event | 2022 Revolving Credit Agreement, Eighteen-Month Facility | Unsecured credit facility | ||||
Subsequent Event [Line Items] | ||||
Debt term | 18 months | |||
Maximum borrowing capacity | $ 1,500,000,000 | |||
Subsequent Event | 3.100% Unsecured Notes due 2022 | Unsecured Notes | ||||
Subsequent Event [Line Items] | ||||
Stated interest rate | 3.10% | |||
Subsequent Event | 3.100% Unsecured Notes due 2022 | Unsecured Notes | Forecast | ||||
Subsequent Event [Line Items] | ||||
Debt redeemed | $ 731,000,000 |
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