Walgreens 2015 Annual Report Download - page 64

Download and view the complete annual report

Please find page 64 of the 2015 Walgreens annual report below. You can navigate through the pages in the report by either clicking on the pages listed below, or by using the keyword search tool below to find specific information within the annual report.

Page out of 148

  • 1
  • 2
  • 3
  • 4
  • 5
  • 6
  • 7
  • 8
  • 9
  • 10
  • 11
  • 12
  • 13
  • 14
  • 15
  • 16
  • 17
  • 18
  • 19
  • 20
  • 21
  • 22
  • 23
  • 24
  • 25
  • 26
  • 27
  • 28
  • 29
  • 30
  • 31
  • 32
  • 33
  • 34
  • 35
  • 36
  • 37
  • 38
  • 39
  • 40
  • 41
  • 42
  • 43
  • 44
  • 45
  • 46
  • 47
  • 48
  • 49
  • 50
  • 51
  • 52
  • 53
  • 54
  • 55
  • 56
  • 57
  • 58
  • 59
  • 60
  • 61
  • 62
  • 63
  • 64
  • 65
  • 66
  • 67
  • 68
  • 69
  • 70
  • 71
  • 72
  • 73
  • 74
  • 75
  • 76
  • 77
  • 78
  • 79
  • 80
  • 81
  • 82
  • 83
  • 84
  • 85
  • 86
  • 87
  • 88
  • 89
  • 90
  • 91
  • 92
  • 93
  • 94
  • 95
  • 96
  • 97
  • 98
  • 99
  • 100
  • 101
  • 102
  • 103
  • 104
  • 105
  • 106
  • 107
  • 108
  • 109
  • 110
  • 111
  • 112
  • 113
  • 114
  • 115
  • 116
  • 117
  • 118
  • 119
  • 120
  • 121
  • 122
  • 123
  • 124
  • 125
  • 126
  • 127
  • 128
  • 129
  • 130
  • 131
  • 132
  • 133
  • 134
  • 135
  • 136
  • 137
  • 138
  • 139
  • 140
  • 141
  • 142
  • 143
  • 144
  • 145
  • 146
  • 147
  • 148

exposed to the translation of foreign currency earnings to the U.S. dollar. We enter into foreign currency forward
contracts to hedge against the effect of exchange rate fluctuations on non-functional currency cash flows of
certain entities denominated in foreign currencies. These transactions are almost exclusively less than 12 months
in maturity. In addition, we enter into foreign currency forward contracts that are not designated in hedging
relationships to offset, in part, the impacts of certain intercompany activities (primarily associated with
intercompany financing transactions). As circumstances warrant, we also use basis swaps as hedging instruments
to hedge portions of our net investments in foreign operations. The foreign currency derivative instruments are
sensitive to changes in exchange rates. A 1% increase or decrease in exchange rates would increase or decrease
our pre-tax income by approximately $3 million due to changes in the value of foreign currency instruments.
Excluded from the computation were anticipated transactions, foreign currency trade payables and receivables,
and net investments in foreign subsidiaries, which the abovementioned instruments are intended to partially
hedge.
Equity Price Risk
Changes in AmerisourceBergen common stock price and equity volatility may have a significant impact on the
value of the warrants to acquire AmerisourceBergen common stock described in Note 11, Financial Instruments
to our Consolidated Financial Statements in Part II, Item 8 of this Form 10-K. As of August 31, 2015, a one
dollar change in AmerisourceBergen’s common stock would, holding other factors constant, increase or decrease
the fair value of the Company’s warrants by $45 million. Additionally, the Company holds an investment in
AmerisourceBergen common stock. As of August 31, 2015, a one dollar change in AmerisourceBergen common
stock would increase or decrease the fair value of the Company’s investment by $11 million.
-60-