Expert answer:accounting financial comparisons between Walgreens
Expert answer:Hello, I need help answering questions on this excel sheet regarding accounting financial comparisons between Walgreens and CVS.
acg2021_group_project_fall17___walgreens_final__blank_1___1_.xlsx
walgreens_boots_alliance_inc._2015_annual_report.pdf
cvs_2015_annual_report.pdf
walgreens_boots_alliance_inc._2014_annual_report.pdf
Unformatted Attachment Preview
Annual Report 2015
Board of Directors
As at 14 October 2015
FROM LEFT TO RIGHT
Nancy M. Schlichting
CEO, Henry Ford Health System
William C. Foote
Former Chairman and CEO, USG
Corporation
David J. Brailer, MD
Chairman, Health Evolution Partners
Janice M. Babiak
Former Managing Partner, Ernst
& Young LLP
James A. Skinner
Executive Chairman, Walgreens Boots
Alliance, Inc.
Dominic Murphy
Partner, Kohlberg Kravis Roberts
& Co. LLP
John A. Lederer
Former President and Chief Executive
Officer, US Foods
Stefano Pessina
Executive Vice Chairman and Chief
Executive Officer, Walgreens Boots
Alliance, Inc.
Leonard D. Schaeffer
Judge Robert Maclay Widney Chair
and Professor, University of Southern
California
Ginger L. Graham
President and CEO, Two Trees Consulting
Barry Rosenstein
Managing Partner, JANA Partners LLC
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
È ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the fiscal year ended August 31, 2015
‘ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the Transition Period From
to
Commission file number 001-36759
WALGREENS
BOOTS ALLIANCE, INC.
(Exact name of registrant as specified in its charter)
Delaware
47-1758322
(State of incorporation)
(I.R.S. Employer
Identification No.)
108 Wilmot Road, Deerfield, Illinois
60015
(Address of principal executive offices)
(Zip Code)
Registrant’s telephone number, including area code: (847) 315-2500
Securities registered pursuant to Section 12(b) of the Act:
Title of each class
Name of each exchange on which registered
Common Stock ($.01 Par Value)
The NASDAQ Stock Market LLC
2.875% Notes due 2020
New York Stock Exchange
3.600% Notes due 2025
New York Stock Exchange
2.125% Notes due 2026
New York Stock Exchange
Securities registered pursuant to Section 12(g) of the Act: None
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities
Act. Yes È No ‘
Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the
Act. Yes ‘ No È
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the
Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to
file such reports) and (2) has been subject to such filing requirements for the past 90 days. Yes È No ‘
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every
Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter)
during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such
files). Yes È No ‘
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and
will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by
reference in Part III of this Form 10-K or any amendment to this Form 10-K. ‘
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer or a
smaller reporting company. See definition of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in
Rule 12b-2 of the Exchange Act. (Check one):
Large accelerated filer È
Accelerated filer
‘
Non-accelerated filer ‘
Smaller reporting company ‘
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange
Act). Yes ‘ No È
As of February 28, 2015, the aggregate market value of Walgreens Boots Alliance, Inc. common stock held by non-affiliates
(based upon the closing transaction price on such date) was approximately $71.6 billion. As of September 30, 2015, there
were 1,088,793,571 shares of Walgreens Boots Alliance, Inc. common stock outstanding.
DOCUMENTS INCORPORATED BY REFERENCE
Portions of the definitive proxy statement for our Annual Meeting of Stockholders planned to be held on January 27, 2016 are
incorporated by reference into Part III of this Form 10-K as indicated herein.
Walgreens Boots Alliance, Inc.
Annual Report on Form 10-K
Table of Contents
Part I
Page
Item 1.
Item 1A.
Item 1B.
Item 2.
Item 3.
Item 4.
Business
Risk Factors
Unresolved Staff Comments
Properties
Legal Proceedings
Mine Safety Disclosures
Executive Officers of the Registrant
1
9
29
30
30
31
31
Part II
Item 5.
Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of
Equity Securities
Item 6. Selected Financial Data
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations
Item 7A. Qualitative and Quantitative Disclosures about Market Risk
Item 8. Financial Statements and Supplementary Data
Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure
Item 9A. Controls and Procedures
Item 9B. Other Information
34
35
36
59
61
123
123
124
Part III
Item 10. Directors, Executive Officers and Corporate Governance
Item 11. Executive Compensation
Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder
Matters
Item 13. Certain Relationships and Related Transactions and Director Independence
Item 14. Principal Accounting Fees and Services
125
125
125
125
125
Part IV
Item 15. Exhibits and Financial Statement Schedules
Signatures
126
140
On December 31, 2014, Walgreens Boots Alliance, Inc. became the successor of Walgreen Co. (“Walgreens”)
pursuant to a merger to effect a reorganization of Walgreens into a holding company structure (the
“Reorganization”), with Walgreens Boots Alliance, Inc. becoming the parent holding company.
References in this Annual Report on Form 10-K (this “Form 10-K”) to the “Company,” “we,” “us” or “our” refer
to Walgreens Boots Alliance, Inc. and its subsidiaries from and after the effective time of the Reorganization on
December 31, 2014 and, prior to that time, to the predecessor registrant Walgreens and its subsidiaries, and in
each case do not include unconsolidated partially-owned entities, except as otherwise indicated or the context
otherwise requires. Our fiscal year ends on August 31, and references herein to “fiscal 2015” refer to our fiscal
year ended August 31, 2015.
This Form 10-K includes forward-looking statements made pursuant to the safe harbor provisions of the Private
Securities Litigation Reform Act of 1995. See “Cautionary Note Regarding Forward-Looking Statements” in
“Management’s Discussion and Analysis of Financial Condition and Results of Operations” in Part II, Item 7
below.
All trademarks, trade names and service marks used herein are the property of their respective owners.
PART I
Item 1. Business
Overview
Walgreens Boots Alliance, Inc., a Delaware corporation (“Walgreens Boots Alliance”), is the first global,
pharmacy-led health and wellbeing enterprise with net sales of $103.4 billion in the fiscal year ended August 31,
2015. Our purpose is to help people across the world lead healthier and happier lives.
Together with our equity method investments:
•
we are a global leader in pharmacy-led health and wellbeing retail, with more than 13,100 stores in 11
countries;
•
we are one of the largest global pharmaceutical wholesale and distribution networks, with more than
350 distribution centers delivering to more than 200,000 pharmacies, doctors, health centers and
hospitals each year in 19 countries;
•
we are one of the world’s largest purchasers of prescription drugs and other health and wellbeing
products; and
•
we employ more than 370,000 employees, of which more than 100,000 are healthcare providers such
as pharmacists, pharmacy technicians, nurse practitioners and other health related professionals.
Our portfolio of retail and business global brands includes Walgreens, Duane Reade, Boots and Alliance
Healthcare, as well as increasingly global health and beauty product brands, including No7, Botanics, Liz Earle
and Soap & Glory. Our global brands portfolio is enhanced by our in-house new product research and
development and manufacturing capabilities. We seek to further drive innovative ways to address global health
and wellness challenges. We believe we are well positioned to expand customer offerings in existing markets and
become a health and wellbeing partner of choice in emerging markets.
Walgreens Boots Alliance was incorporated in Delaware in 2014 and, as described below, is the successor of
Walgreen Co., an Illinois corporation (“Walgreens”), which was formed in 1909 as a successor to a business
founded in 1901. Our principal executive offices are located at 108 Wilmot Road, Deerfield, Illinois 60015. Our
common stock trades on the NASDAQ Stock Market under the symbol “WBA”.
Recent Transactions
On August 2, 2012, Walgreens acquired a 45% equity interest in Alliance Boots GmbH (“Alliance Boots”) along
with a call option to acquire the remaining 55% equity interest in Alliance Boots (the “First Step Transaction”) in
exchange for $4.025 billion in cash and approximately 83.4 million shares of Walgreens common stock.
On December 31, 2014, Walgreens Boots Alliance became the successor of Walgreens pursuant to a merger to
effect a reorganization of Walgreens into a holding company structure (the “Reorganization”), with Walgreens
Boots Alliance becoming the parent holding company. Pursuant to the Reorganization, Walgreens became a
wholly-owned subsidiary of Walgreens Boots Alliance, which was formed for the purposes of the
Reorganization, and each issued and outstanding share of Walgreens common stock was converted into one share
of Walgreens Boots Alliance common stock. Also on December 31, 2014, following the completion of the
Reorganization, Walgreens Boots Alliance completed the acquisition pursuant to the call option of the remaining
55% of Alliance Boots that Walgreens did not previously own (the “Second Step Transaction”) in exchange for
£3.133 billion ($4.874 billion) in cash and 144.3 million shares of Walgreens Boots Alliance common stock.
Prior to the completion of the Second Step Transaction, we accounted for our 45% investment in Alliance Boots
using the equity method of accounting. Investments accounted for under the equity method are recorded initially
at cost and subsequently adjusted for our share of the net income or loss and cash contributions and distributions
to or from these entities. Net income reported by Alliance Boots during this period was translated from British
Pounds Sterling at the average rate for the period. Upon completion of the Second Step Transaction, Alliance
Boots became a consolidated subsidiary and ceased being accounted for under the equity method. For financial
reporting and accounting purposes, Walgreens Boots Alliance was the acquirer of Alliance Boots. The
consolidated financial statements (and other data, such as prescriptions filled) reflect the results of operations and
financial position of Walgreens and its subsidiaries for periods prior to December 31, 2014 and of Walgreens
Boots Alliance and its subsidiaries for periods as of and after the closing of the Reorganization on December 31,
2014. For additional information, see “Management’s Discussion and Analysis of Financial Condition and
Results of Operations” (“MD&A”) in Part II, Item 7 below and Note 6, Equity Method Investments, to the
Consolidated Financial Statements included in Part II, Item 8 below.
On March 19, 2013, Walgreens, Alliance Boots and AmerisourceBergen Corporation (“AmerisourceBergen”)
announced various agreements and arrangements, including a ten-year pharmaceutical distribution agreement
between Walgreens and AmerisourceBergen pursuant to which branded and generic pharmaceutical products are
sourced from AmerisourceBergen in the U.S.; an agreement which provides AmerisourceBergen the ability to
access generics and related pharmaceutical products through Walgreens Boots Alliance Development GmbH
(“WBAD”), a global sourcing enterprise formed by Walgreens and Alliance Boots; and agreements and
arrangements pursuant to which we have the right, but not the obligation, to purchase a minority equity position
in AmerisourceBergen and gain associated representation on AmerisourceBergen’s board of directors in certain
circumstances. Please refer to our Form 8-K filed on March 20, 2013 for more detailed information regarding
these agreements and arrangements. As of August 31, 2015, we owned approximately 5.2% of the outstanding
common shares of AmerisourceBergen and had designated one member of AmerisourceBergen’s board of
directors.
In addition, we have undertaken a number of additional acquisitions, divestitures, and strategic initiatives in
recent years designed to grow our businesses and enhance our competitive position. These initiatives are
described in MD&A in Part II, Item 7 below and Note 4, Restructuring, Note 6, Equity Method Investments and
Note 8, Acquisitions to the Consolidated Financial Statements included in Part II, Item 8 below.
Pending Transaction
On October 27, 2015, the Company entered into an Agreement and Plan of Merger with Rite Aid Corporation
(“Rite Aid”) and Victoria Merger Sub, Inc., a wholly-owned subsidiary of the Company (the “Merger
Agreement”), pursuant to which the Company agreed, subject to the terms and conditions thereof, to acquire Rite
Aid, a drugstore chain in the United States with 4,561 stores in 31 states and the District of Columbia as of
August 29, 2015. The transaction is expected to close in the second half of calendar 2016, subject to Rite Aid
stockholder approval, regulatory approvals and other customary closing conditions. For more information, see
“Management’s Discussion and Analysis of Financial Condition and Results of Operations” in Part II, Item 7
below and Note 21, Subsequent Event, to our Consolidated Financial Statements in Part II, Item 8 below.
Industry Overview
The global retail pharmacy and pharmaceutical wholesale industries are highly competitive and have been
experiencing consolidation in recent years. Prescription drugs play a significant role in healthcare and constitute
a first line of treatment for many medical conditions. We believe the long-term outlook for prescription drug
utilization is strong due, in part, to aging populations, increases in life expectancy, increases in the availability
and utilization of generic drugs, the continued development of innovative drugs that improve quality of life and
control healthcare costs, and increases in the number of persons with insurance coverage for prescription drugs,
including, in the United States, the expansion of healthcare insurance coverage under the Patient Protection and
Affordable Care Act (the “ACA”) and “baby boomers” increasingly becoming eligible for the federally funded
Medicare Part D prescription program. Wholesalers in the pharmaceutical distribution business function as a vital
link between drug manufacturers and pharmacies and healthcare providers in supplying pharmaceuticals to
patients.
-2-
The global retail pharmacy industry relies significantly on private and governmental third party payers. Many
private organizations throughout the healthcare industry, including pharmacy benefit management (“PBM”)
companies and health insurance companies, have consolidated in recent years to create larger healthcare
enterprises with greater bargaining power. Third party payers, including the Medicare Part D plans and the statesponsored Medicaid and related managed care Medicaid agencies in the United States, can change eligibility
requirements or reduce certain reimbursement rates. In addition, in many European countries, the government
provides or subsidizes healthcare to consumers and regulates pharmaceutical prices, patient eligibility, and
reimbursement levels to control costs for the government-sponsored healthcare system. Changes in law or
regulation also can impact reimbursement rates and terms. For example, the ACA seeks to reduce federal
spending by altering the Medicaid reimbursement formula (“AMP”) for multi-source drugs, and when
implemented, is expected to reduce Medicaid reimbursements. State Medicaid programs are also expected to
continue to seek reductions in reimbursements independent of AMP. When third party payers or governmental
authorities take actions that restrict eligibility or reduce prices or reimbursement rates, sales and margins in the
retail pharmacy industry could be reduced, which would adversely affect industry profitability. In some cases,
these possible adverse effects may be partially or entirely offset by controlling inventory costs and other
expenses, dispensing more higher margin generics, finding new revenue streams through pharmacy services or
other offerings and/or dispensing a greater volume of prescriptions.
Generic prescription drugs have continued to help lower overall costs for customers and third party payers. We
expect the utilization of generic pharmaceuticals to continue to increase. In general, in the United States, generic
versions of drugs generate lower total sales dollars per prescription, but higher gross profit margins and gross
profit dollars, as compared with patent-protected brand name drugs. The positive impact on retail pharmacy gross
profit margins and gross profit dollars can be significant in the first several months after a generic version of a
drug is first allowed to compete with the branded version, which is generally referred to as a “generic
conversion”. In any given year, the number of major brand name drugs that undergo a conversion from branded
to generic status can vary and the timing of generic conversions can be difficult to predict, which can have a
significant impact on retail pharmacy sales, gross profit margins and gross profit dollars.
We expect that market demand, government regulation, third-party reimbursement policies, government
contracting requirements and other pressures will continue to cause the industries in which we compete to
evolve. Pharmacists are on the frontlines of the healthcare delivery system, and we believe rising healthcare costs
and the limited supply of primary care physicians present new opportunities for pharmacists and retail
pharmacies to play an even greater role in driving positive outcomes for patients and payers through expanded
service offerings such as immunizations and other preventive care, healthcare clinics, pharmacist-led medication
therapy management and chronic condition management.
Segments
Prior to December 31, 2014, Walgreens’ operations were reported within one reportable segment. Following the
completion of the Reorganization and the Second Step Transaction, we organized our operations to reflect our
new structure. Our operations are now organized into three divisions, which are also our reportable segments:
•
Retail Pharmacy USA;
•
Retail Pharmacy International; and
•
Pharmaceutical Wholesale.
For fiscal 2015, our segment total sales were: Retail Pharmacy USA, $81.0 billion; Retail Pharmacy
International, $8.8 billion; and Pharmaceutical Wholesale, $15.3 billion. Due to the timing of completion of the
Second Step Transaction, Retail Pharmacy International and Pharmaceutical Wholesale total sales reflect
operations for the last eight months of our fiscal year. Additional information relating to our segments is included
in MD&A in Part II, Item 7 below and in Note 19, Segment Reporting to our Consolidated Financial Statements
included in Part II, Item 8 below, which information is incorporated here …
Purchase answer to see full
attachment
How it works
- Paste your instructions in the instructions box. You can also attach an instructions file
- Select the writer category, deadline, education level and review the instructions
- Make a payment for the order to be assignment to a writer
- Download the paper after the writer uploads it
Will the writer plagiarize my essay?
You will get a plagiarism-free paper and you can get an originality report upon request.
Is this service safe?
All the personal information is confidential and we have 100% safe payment methods. We also guarantee good grades