Walgreens 2012 Annual Report Download - page 42

Notes to Consolidated Financial Statements (continued)
40 2012 Walgreens Annual Report
Components of net periodic benefit costs (In millions):
2012 2011 2010
Service cost $ 13 $ 15 $ 11
Interest cost 22 22 20
Amortization of actuarial loss 8 14 7
Amortization of prior service cost (10) (10) (10)
Total postretirement benefit cost $ 33 $ 41 $ 28
Change in benefit obligation (In millions) :
2012 2011
Benefit obligation at September 1 $ 407 $ 441
Service cost 13 15
Interest cost 22 22
Amendments (139) —
Actuarial (gain) loss 52 (57)
Benefit payments (18) (18)
Participants’ contributions 5 4
Benefit obligation at August 31 $ 342 $ 407
Change in plan assets (In millions) :
2012 2011
Plan assets at fair value at September 1 $ — $ —
Plan participants’ contributions 5 4
Employer contributions 13 14
Benefits paid (18) (18)
Plan assets at fair value at August 31 $ — $ —
Funded status (In millions) :
2012 2011
Funded status $ (342) $ (407)
Unrecognized actuarial gain — —
Unrecognized prior service cost — —
Accrued benefit cost at August 31 $ (342) $ (407)
Amounts recognized in the Consolidated Balance Sheets (In millions):
2012 2011
Current liabilities (present value of expected
2013 net benefit payments) $ (10) $ (11)
Non-current liabilities (332) (396)
Net liability recognized at August 31 $ (342) $ (407)
Amounts recognized in accumulated other comprehensive (income) loss
(In millions) :
2012 2011
Prior service credit $ (250) $ (121)
Net actuarial loss 161 117
Amounts expected to be recognized as components of net periodic costs
for fiscal year 2013 (In millions) :
2013
Prior service credit $ (22)
Net actuarial loss 11
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 4.15% for 2012 and 5.40% for 2011. The discount rate assumption
used to determine net periodic benefit cost was 5.40%, 4.95% and 6.15% for
fiscal years ending 2012, 2011 and 2010, respectively. The consumer price index
assumption used to compute the postretirement benefit obligation was 2.00%
for 2012 and 2011.
Future benefit costs were estimated assuming medical costs would increase at
a 7.25% annual rate, gradually decreasing to 5.25% over the next ten 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 $ (1) $ 2
Effect on postretirement obligation (2) 12
Estimated future benefit payments and federal subsidy are as follows (In millions) :
Estimated Estimated
Future Benefit Federal
Payments Subsidy
2013 $ 10 $ —
2014 12 —
2015 13 —
2016 15 —
2017 16 —
2018–2022 107 1
15. Supplementary Financial Information
Non-cash transactions in fiscal 2012 include $2,981 million in stock issuance
relating to the investment in Alliance Boots, a $53 million decrease in the retiree
medical liability and a $58 million increase in the liability for dividends declared.
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) :
2012 2011
Accounts receivable –
Accounts receivable $ 2,266 $ 2,598
Allowance for doubtful accounts (99) (101)
$ 2,167 $ 2,497
Other non-current assets –
Intangible assets, net (see Note 6) $ 1,286 $ 1,212
Other 211 377
$ 1,497 $ 1,589
Accrued expenses and other liabilities –
Accrued salaries $ 772 $ 856
Taxes other than income taxes 454 489
Insurance 268 230
Profit sharing 166 253
Other 1,359 1,247
$ 3,019 $ 3,075
Other non-current liabilities –
Postretirement healthcare benefits $ 332 $ 396
Accrued rent 347 418
Insurance 408 346
Other 799 625
$ 1,886 $ 1,785