Walgreens 2013 Annual Report Download - page 46

44 2013 Walgreens Annual Report
The Company provides certain health insurance benefits for retired employees who
meet eligibility requirements, including age, years of service and date of hire. The costs
of these benefits are accrued over the service life of the employee. In fiscal 2012,
the Company amended its prescription drug program for certain Medicare-eligible
retirees to a group-based Company-sponsored Medicare Part D program, or employer
group waiver program, effective January 1, 2013. The Company’s postretirement
health benefit plan is not funded.
Components of net periodic benefit costs (In millions):
2013 2012 2011
Service cost $ 9 $ 13 $ 15
Interest cost 14 22 22
Amortization of actuarial loss 12 8 14
Amortization of prior service cost (22) (10) (10)
Total postretirement benefit cost $ 13 $ 33 $ 41
Change in benefit obligation (In millions):
2013 2012
Benefit obligation at September 1 $ 342 $ 407
Service cost 9 13
Interest cost 14 22
Amendments — (139)
Actuarial (gain) loss (1) 52
Benefit payments (20) (18)
Participants’ contributions 6 5
Benefit obligation at August 31 $ 350 $ 342
Change in plan assets (In millions):
2013 2012
Plan assets at fair value at September 1 $ — $ —
Participants’ contributions 6 5
Employer contributions 14 13
Benefits paid (20) (18)
Plan assets at fair value at August 31 $ — $ —
Funded status (In millions):
2013 2012
Funded status $ (350) $ (342)
Unrecognized actuarial gain — —
Unrecognized prior service cost — —
Accrued benefit cost at August 31 $ (350) $ (342)
Amounts recognized in the Consolidated Balance Sheets (In millions):
2013 2012
Current liabilities (present value of expected
2014 net benefit payments) $ (10) $ (10)
Non-current liabilities (340) (332)
Net liability recognized at August 31 $ (350) $ (342)
Amounts recognized in accumulated other comprehensive (income) loss
(In millions) :
2013 2012
Prior service credit $ (228) $ (250)
Net actuarial loss 148 161
Amounts expected to be recognized as components of net periodic costs
for fiscal year 2014 (In millions):
2014
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 5.20% for 2013 and 4.15% for 2012. The discount
rate assumption used to determine net periodic benefit cost was 4.15%,
5.40% and 4.95% for fiscal years ending 2013, 2012 and 2011, respectively.
The consumer price index assumption used to compute the postretirement
benefit obligation was 2.00% for 2013 and 2012.
Future benefit costs were estimated assuming medical costs would increase at a
7.00% 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 $ (1) $ 1
Effect on postretirement obligation (1) 5
Estimated future federal subsidies are immaterial for all periods presented.
Future benefit payments are as follows (In millions) :
Estimated Future Benefit Payments
2014 $ 10
2015 12
2016 13
2017 15
2018 17
2019–2023 111
16. Supplementary Financial Information
Significant non-cash transactions in fiscal 2013 include $77 million related to the
initial valuation of the AmerisourceBergen warrants. Significant non-cash
transactions in fiscal 2012 include $2,981 million in stock issuance relating to
the investment in Alliance Boots, and a $53 million decrease in the retiree medical
liability. Significant non-cash transactions in fiscal 2011 include $116 million in
accrued liabilities related to the purchase of property and equipment, and a
$62 million increase in the retiree medical benefit liability.
Included in the Consolidated Balance Sheets captions are the following assets
and liabilities (In millions):
2013 2012
Accounts receivable –
Accounts receivable $ 2,786 $ 2,266
Allowance for doubtful accounts (see Note 1) (154) (99)
$ 2,632 $ 2,167
Other non-current assets –
Intangible assets, net (see Note 7) $ 1,307 $ 1,286
Other 652 211
$ 1,959 $ 1,497
Accrued expenses and other liabilities –
Accrued salaries $ 928 $ 772
Taxes other than income taxes 420 454
Insurance 285 268
Profit sharing 239 166
Other 1,705 1,359
$ 3,577 $ 3,019
Other non-current liabilities –
Postretirement healthcare benefits $ 340 $ 332
Accrued rent 382 347
Insurance 403 408
Other 942 799
$ 2,067 $ 1,886
Notes to Consolidated Financial Statements (continued)