Walgreens 2011 Annual Report Download - page 40

Notes to Consolidated Financial Statements (continued)
Change in benefit obligation (In millions):
2011 2010
Benefit obligation at September 1 $ 441 $ 328
Service cost 15 11
Interest cost 22 20
Actuarial (gain) loss (57) 92
Benefit payments (18) (14)
Participants’ contributions 4 4
Benefit obligation at August 31 $ 407 $ 441
Change in plan assets (In millions):
2011 2010
Plan assets at fair value at September 1 $ — $ —
Plan participants’ contributions 4 4
Employer contributions 14 10
Benefits paid (18) (14)
Plan assets at fair value at August 31 $ — $ —
Funded status (In millions):
2011 2010
Funded status $ (407) $ (441)
Unrecognized actuarial gain — —
Unrecognized prior service cost — —
Accrued benefit cost at August 31 $ (407) $ (441)
Amounts recognized in the Consolidated Balance Sheets (In millions) :
2011 2010
Current liabilities (present value of expected
2012 net benefit payments) $ (11) $ (11)
Non-current liabilities (396) (430)
Net liability recognized at August 31 $ (407) $ (441)
Amounts recognized in accumulated other comprehensive (income) loss
(In millions) :
2011 2010
Prior service credit $ (121) $ (131)
Net actuarial loss 117 188
Amounts expected to be recognized as components of net periodic costs
for fiscal year 2012 (In millions):
2012
Prior service credit $ (10)
Net actuarial loss 8
The measurement date used to determine postretirement benefits is August 31.
The discount rate assumption used to compute the postretirement benefit obligation
at year-end was 5.40% for 2011 and 4.95% for 2010. The discount rate assumption
used to determine net periodic benefit cost was 4.95%, 6.15% and 7.50% for fiscal
years ending 2011, 2010 and 2009, respectively. The consumer price index
assumption used to compute the postretirement benefit obligation was 2.00%
for 2011 and 3.50% for 2010.
Future benefit costs were estimated assuming medical costs would increase at a
7.50% annual rate, gradually decreasing to 5.25% over the next nine years and
then remaining at a 5.25% annual growth rate thereafter. A one percentage point
change in the assumed medical cost trend rate would have the following effects
(In millions):
1% Increase 1% Decrease
Effect on service and interest cost $ 7 $ (6)
Effect on postretirement obligation 73 (59)
Estimated future benefit payments and federal subsidy (In millions) :
Estimated Estimated
Future Benefit Federal
Payments Subsidy
2012 $ 13 $ 1
2013 14 2
2014 15 2
2015 17 2
2016 19 3
2017–2021 133 21
The expected benefit to be paid net of the estimated federal subsidy during fiscal
year 2012 is $12 million.
14. Supplementary Financial Information
Non-cash transactions in fiscal 2011 include $116 million in accrued liabilities
related to the purchase of property and equipment, a $62 million increase in
the retiree medical benefit liability and a $36 million increase in the liability for
dividends declared. Non-cash transactions in fiscal 2010 include a $95 million
increase in the retiree medical benefit liability, a $29 million increase in the liability
for dividends declared and $44 million in accrued liabilities related to the purchase
of property and equipment.
Included in the Consolidated Balance Sheets captions are the following assets
and liabilities (In millions):
2011 2010
Accounts receivable –
Accounts receivable $ 2,598 $ 2,554
Allowance for doubtful accounts (101) (104)
$ 2,497 $ 2,450
Other non-current assets –
Intangible assets, net (see Note 5) $ 1,212 $ 1,114
Other 377 168
$ 1,589 $ 1,282
Accrued expenses and other liabilities –
Accrued salaries $ 856 $ 781
Taxes other than income taxes 489 419
Insurance 230 233
Profit sharing 253 197
Other 1,247 1,133
$ 3,075 $ 2,763
Other non-current liabilities –
Postretirement health care benefits $ 396 $ 430
Accrued rent 418 384
Insurance 346 330
Other 625 591
$ 1,785 $ 1,735
Page 38 2011 Walgreens Annual Report