Walgreens 2015 Annual Report Download - page 103
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The gains and losses due to changes in fair value of the warrants recognized in earnings were as follows (in
millions):
Location in Consolidated
Statements of Earnings 2015 2014 2013
Warrants Other income (expense) $759 $366 $111
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 Balance Sheets.
12. Fair Value Measurements
The Company measures certain assets and liabilities in accordance with 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):
August 31, 2015 Level 1 Level 2 Level 3
Assets:
Restricted cash(1) $ 184 $ 184 $ — $—
Money market funds(2) 2,043 2,043 — —
Available-for-sale investments(3) 1,183 1,183 — —
Interest rate swaps(4) 2— 2—
Foreign currency forwards(5) 34 — 34 —
Warrants(6) 2,140 — 2,140 —
Liabilities:
Foreign currency forwards(5) 9— 9—
August 31, 2014 Level 1 Level 2 Level 3
Assets:
Money market funds(2) $1,879 $1,879 $ — $—
Available-for-sale investments(3) 887 887 — —
Interest rate swaps(4) 16 — 16 —
Warrants(6) 553 — 553 —
Liabilities:
Forward interest rate swaps(7) 44 — 44 —
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