Walgreens 2014 Annual Report Download - page 55

August 2014, the Board of Directors approved the 2014 share repurchase program, which replaces the 2012
repurchase program and allows for the purchase of up to $3.0 billion of the Company’s common stock prior to its
expiration on August 31, 2016. Activity related to these programs was as follows (in millions):
Fiscal Year Ended
2014 2013 2012
2012 stock repurchase program $— $— $1,151
2014 stock repurchase program — — —
$— $— $1,151
We determine the timing and amount of repurchases from time to time based on our assessment of various
factors including prevailing market conditions, alternate uses of capital, liquidity, the economic environment and
other factors. The timing and amount of these purchases may change at any time and from time to time. The
Company has repurchased and may from time to time in the future repurchase shares on the open market through
Rule 10b5-1 plans, which enable a company to repurchase shares at times when it otherwise might be precluded
from doing so under insider trading laws.
We have periodically borrowed under our commercial paper program during the current fiscal year, and may
increase our commercial paper borrowings in future periods. We had average daily short-term borrowings of $4
million of commercial paper outstanding at a weighted average interest rate of 0.23% for fiscal 2014. We had no
commercial paper outstanding at August 31, 2014. In connection with our commercial paper program, we
maintain two unsecured backup syndicated lines of credit that total $1.35 billion. The first $500 million facility
expires on July 20, 2015, and allows for the issuance of up to $250 million in letters of credit. The second $850
million facility expires on July 23, 2017, and allows for the issuance of up to $200 million in letters of credit. The
issuance of letters of credit under either of these facilities reduces available borrowings. Our ability to access
these facilities is subject to our compliance with the terms and conditions of the credit facility, including
financial covenants. The covenants require us to maintain certain financial ratios related to minimum net worth
and priority debt, along with limitations on the sale of assets and purchases of investments. At August 31, 2014,
we were in compliance with all such covenants. The Company pays a facility fee to the financing banks to keep
these lines of credit active. At August 31, 2014, there were no letters of credit issued against these facilities and
we currently do not anticipate any future letters of credit to be issued against these facilities. We currently expect
to amend or replace these facilities in connection with the pending Alliance Boots second step transaction and
related financing.
As of October 20, 2014, our credit ratings were:
Rating Agency Long-Term Debt Rating
Commercial
Paper Rating Outlook
Moody’s Baa2 P-2 Stable
Standard & Poor’s BBB A-2 Stable
In assessing our credit strength, both Moody’s and Standard & Poor’s consider our business model, capital
structure, financial policies and financial performance as well as the financial performance and level of
outstanding debt of Alliance Boots. Our credit ratings impact our borrowing costs, access to capital markets and
operating lease costs. The rating agency ratings are not recommendations to buy, sell or hold our debt securities
or commercial paper. Each rating may be subject to revision or withdrawal at any time by the assigning rating
organization and should be evaluated independently of any other rating.
On August 5, 2014, we entered into an amendment to the purchase and option agreement, which among other
things, accelerated the option period to the period beginning August 5, 2014 and ending February 5,
2015. Pursuant to the amendment, we exercised the call option on August 5, 2014 and are obligated to make a
cash payment of £3.133 billion (equivalent to approximately $5.2 billion based on exchange rates as of
August 31, 2014) and issue approximately 144.3 million shares of common stock, with the amount and form of
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