Walgreens 2015 Annual Report Download - page 90

Of the remaining preliminary goodwill, $3.9 billion was allocated to the Retail Pharmacy International segment
and $3.6 billion was allocated to the Pharmaceutical Wholesale segment. The allocation of the goodwill to the
individual reporting units within the respective segments has not been completed. Substantially all of the
goodwill recognized is not expected to be deductible for income tax purposes.
The Company incurred legal and other professional services costs related to the Second Step Transaction, which
were included in selling, general and administrative expenses, of $87 million in fiscal 2015.
The preliminary fair value of the assets acquired includes inventory having an estimated fair value of $3.7
billion. This fair value includes a $107 million fair value adjustment to capitalize the estimated profit in acquired
finished goods inventory as of the date of the Second Step Transaction, which was expensed to cost of sales over
the first inventory turn.
The following table presents supplemental unaudited condensed pro forma consolidated information for 2015 and
2014 as if the Second Step Transaction had occurred on September 1, 2013, the first day of the Company’s fiscal
2014. As described in Note 3, Change in Accounting Policy, the information has been presented without a lag.
The unaudited condensed pro forma information reflect certain adjustments related to past operating performance
and acquisition accounting adjustments, such as increased amortization expense based on the fair valuation of
assets acquired, the impact of acquisition financing, transaction costs and the related income tax effects. The
unaudited condensed pro forma information does not include any anticipated synergies which may be achievable
subsequent to the date of the Second Step Transaction. The unaudited condensed pro forma information also
excludes certain non-recurring items such as the gain on Walgreens previously held 45% investment in Alliance
Boots and other transaction related costs. Accordingly, the unaudited condensed pro forma information has been
prepared for comparative purposes only and is not intended to be indicative of what the Company’s results would
have been had the Second Step Transaction occurred at the beginning of the periods presented or the results
which may occur in the future.
Year Ended August 31,
2015 2014
(in millions, except per share amounts)
Net sales $116,491 $113,896
Net earnings 4,278 3,884
Net earnings per common share:
Basic $ 4.10 $ 3.54
Diluted 4.06 3.50
Actual results from Alliance Boots operations included in the Consolidated Statements of Earnings since
December 31, 2014, the date of the Second Step Transaction, are as follows (in millions, except per share
amounts):
Year Ended
August 31,
2015
(in millions, except per share amounts)
Net sales $22,470
Net earnings 853
Net earnings per common share:
Basic $ 0.82
Diluted 0.81
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