Walgreens 2015 Annual Report Download - page 76

Impaired Assets and Liabilities for Store Closings
The Company tests long-lived assets for impairment whenever events or circumstances indicate that a certain
asset may be impaired. Once identified, the amount of the impairment is computed by comparing the carrying
value of the assets to the fair value, which is based on the discounted estimated future cash flows. Impairment
charges included in selling, general and administrative expenses were $386 million in fiscal 2015, primarily
related to the Company’s Cost Transformation Program (as defined below). Impairment charges recognized in
fiscal 2014 and 2013 were $167 million and $30 million, respectively.
The Company also provides for future costs related to closed locations. The liability is based on the present value
of future rent obligations and other related costs (net of estimated sublease rent) to the first lease option date. The
reserve for store closings, including $219 million from locations closed under the Company’s restructuring
actions, was $446 million as of August 31, 2015 and $257 million as of August 31, 2014. See Note 5, Leases for
additional disclosure regarding the Company’s reserve for future costs related to closed locations.
Pension and Postretirement Benefits
The Company has various defined benefit pension plans that cover some of its foreign employees. The Company
also has postretirement healthcare plans that cover qualifying domestic employees. Eligibility and the level of
benefits for these plans vary depending participants’ status, date of hire and or length of service. Pension and
postretirement expenses and valuations are dependent on assumptions used by third party actuaries in calculating
those amounts. These assumptions include discount rates, healthcare cost trends, long-term return on plan assets,
retirement rates, mortality rates and other factors. See Note 16, Retirement Benefits, for additional disclosure
regarding the Company’s pension and postretirement benefits.
The Company funds its pension plans in accordance with applicable regulations.
Noncontrolling Interests
The Company accounts for its less than 100% interest in consolidated subsidiaries in accordance with ASC Topic
810, Consolidation, and accordingly, the Company presents noncontrolling interests as a component of equity on
its Consolidated Balance Sheets and reports the noncontrolling interest net earnings or loss as Net earnings
attributable to noncontrolling interests in the Consolidated Statements of Earnings.
Currency
Assets and liabilities of non-U.S. dollar functional currency operations are translated into U.S. dollars at end-of-
period exchange rates while revenues, expenses and cash flows are translated at average monthly exchange rates
over the period. Equity is translated at historical exchange rates and the resulting cumulative translation
adjustments are included as a component of accumulated other comprehensive income (loss) in the Consolidated
Balance Sheets.
For U.S. dollar functional currency operations, foreign currency assets and liabilities are remeasured into U.S.
dollars at end-of-period exchange rates, except for nonmonetary balance sheet amounts, which are remeasured
from historical exchange rates. Revenues and expenses are recorded at average monthly exchange rates over the
period, except for those expenses related to nonmonetary balance sheet amounts, which are remeasured from
historical exchange rates. Gains or losses from foreign currency remeasurement and transactions are included in
selling, general and administrative expenses within the Consolidated Statements of Earnings. For all periods
presented, there were no material operational gains or losses from foreign currency transactions.
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