Walgreens 2015 Annual Report Download - page 100

as applicable, each such guarantee would automatically terminate, and Walgreens’ obligations thereunder would
be unconditionally released and discharged, if (i) the aggregate outstanding principal amount of Capital Markets
Indebtedness, including the Existing Notes, and Commercial Bank Indebtedness (as each such capitalized term is
defined in the Term Loan Agreement or Revolving Credit Agreement, as applicable), in each case, of Walgreens
is less than $2.0 billion and (ii) Walgreens does not guarantee any Capital Markets Indebtedness or Commercial
Bank Indebtedness, in each case, of Walgreens Boots Alliance. On August 10, 2015, as a result of completing the
redemption of certain of the Walgreens notes described above and the release of the guarantees of the Walgreens
Boots Alliance notes described above, such guarantees of the Term Loan Agreement and Revolving Credit
Agreement automatically terminated, without penalty to Walgreens or Walgreens Boots Alliance and the
obligations of Walgreens thereunder were unconditionally released and discharged.
On December 19, 2014, Walgreens Boots Alliance and Walgreens entered into a Revolving Credit Agreement
(the “364-Day Credit Agreement”) with the lenders party thereto. The 364-Day Credit Agreement is a 364-day
unsecured, multicurrency revolving facility. The aggregate commitment of all lenders under the 364-Day Credit
Agreement is $750 million. The Company pays a facility fee to the financing banks to keep this line of credit
active. On July 9, 2015, Walgreens Boots Alliance amended the 364-Day Credit Agreement to remove
Walgreens as a borrower thereunder, eliminate Walgreens’ guarantee of all obligations of Walgreens Boots
Alliance thereunder and make certain conforming changes to effectuate those modifications, including
modifications and deletions of certain definitions and cross-references. At August 31, 2015, there were no
borrowings against the 364-Day Credit Agreement.
The Term Loan Agreement, Revolving Credit Agreement and the 364-Day Revolving Credit Agreement each
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 to 1.00, as well as other customary restrictive covenants. At August 31, 2015,
we were in compliance with all such covenants.
11. Financial Instruments
The Company uses derivative instruments to manage its exposure to interest rate and foreign currency exchange
risks. As a result of the Second Step Transaction, the Company acquired all the derivative instruments held by
Alliance Boots at their acquisition date fair values.
The notional amounts, fair value and balance sheet presentation of derivative instruments outstanding as of
August 31, 2015, excluding warrants which are presented separately in this footnote, were as follows (in
millions):
Notional(1) Fair Value
Location in Consolidated
Balance Sheets
Derivatives designated as fair value hedges:
Interest rate swaps $ 250 $ 2 Other non-current assets
Derivatives not designated as hedges:
Foreign currency forwards 1,205 34 Other current assets
Foreign currency forwards 495 9 Other current liabilities
Basis swap 1 — Other current assets
(1) Amounts are presented in U.S. dollar equivalents.
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