Walgreens 2015 Annual Report Download - page 84

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fiscal 2015, 2014 and 2013, the Company recorded charges of $252 million, $177 million and $43 million,
respectively, for facilities that were closed or relocated under long-term leases, including stores closed through
the Company’s store optimization plan and Cost Transformation Program. These charges are reported in selling,
general and administrative expenses in the Consolidated Statements of Earnings.
The changes in reserve for facility closings and related lease termination charges include the following (in
millions):
Year Ended August 31,
2015 2014
Balance – beginning of period $257 $123
Provision for present value of non-cancellable lease payments on closed facilities 231 171
Assumptions about future sublease income, terminations and changes in interest rates (6) (8)
Interest accretion 27 14
Liability assumed through acquisition of Alliance Boots 13 —
Cash payments, net of sublease income (76) (43)
Balance – end of period $446 $257
The Company remains secondarily liable on 71 leases. The maximum potential undiscounted future payments are
$351 million at August 31, 2015. Lease option dates vary, with some extending to 2039.
Rental expense, which includes common area maintenance, insurance and taxes, where appropriate, was as
follows (in millions):
2015 2014 2013
Minimum rentals $3,176 $2,687 $2,644
Contingent rentals 38 5 6
Less: Sublease rental income (46) (22) (22)
$3,168 $2,670 $2,628
6. Equity Method Investments
Alliance Boots became a consolidated subsidiary and ceased being accounted for under the equity method upon
completion of the Second Step Transaction on December 31, 2014. Equity method investments as of August 31,
2015 and 2014 were as follows (in millions, except percentages):
2015 2014
Carrying
Value
Ownership
Percentage
Carrying
Value
Ownership
Percentage
Alliance Boots $ NA 100% $7,336 45%
Other 1,242 12% – 50% 74 30% – 50%
Total $1,242 $7,410
NA Not applicable
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