Walgreens 2015 Annual Report Download - page 98

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unsubordinated debt obligation of Walgreens Boots Alliance and will rank equally in right of payment with all
other unsecured and unsubordinated indebtedness of Walgreens Boots Alliance. Total issuance costs relating to
the notes, including underwriting discounts and fees, were $26 million. On August 10, 2015, the 1.8000% fixed
rate notes due September 15, 2017 in the aggregate principal amount of $1.0 billion were redeemed in full. The
redemption price was equal to 101.677% of the aggregate principal amount of the notes redeemed, plus accrued
interest thereon to, but excluding, the redemption date, and included a $17 million make whole premium, which
was recorded as interest expense on the Company’s Consolidated Statements of Earnings. Additionally, the
Company repaid the $750 million 1.000% fixed rate notes on their March 13, 2015 maturity date and the $550
million variable rate notes on their March 13, 2014 maturity date.
The following table details each tranche of outstanding notes as of August 31, 2015:
Notes Issued
(in millions) Maturity Date Interest Rate Interest Payment Dates
$1,200 September 15, 2022 Fixed 3.100% March 15 and September 15; commencing on March 15,
2013
500 September 15, 2042 Fixed 4.400% March 15 and September 15; commencing on March 15,
2013
$1,700
The fair value of the notes outstanding as of August 31, 2015 and August 31, 2014 was $1.6 billion and $3.4
billion (at August 31, 2014 there was $3.5 billion of issued notes outstanding), respectively. Fair value for these
notes was determined based upon quoted market prices.
Redemption Option and Change in Control
Walgreens may redeem the fixed rate notes at its option, at any time in whole, or from time to time in part, at a
redemption price equal to the greater of: (a) 100% of the principal amount of the notes being redeemed; and
(b) the sum of the present values of the remaining scheduled payments of principal and interest thereon (not
including any portion of such payments of interest accrued as of the date of redemption), discounted to the date
of redemption on a semiannual basis (assuming a 360-day year consisting of twelve 30-day months) at the
Treasury Rate (as defined in the applicable series of notes), plus 12 basis points for the notes due 2015, 22 basis
points for the notes due 2022 and 25 basis points for the notes due 2042. If a change of control triggering event
occurs, Walgreens will be required, unless it has exercised its right to redeem the notes, to offer to purchase the
notes at a purchase price equal to 101% of their principal amount, plus accrued and unpaid interest, if any, on the
notes repurchased to the date of repurchase.
$1.0 Billion Note Issuance
On January 13, 2009, Walgreens issued notes totaling $1.0 billion bearing an interest rate of 5.250% paid
semiannually in arrears on January 15 and July 15 of each year, beginning on July 15, 2009. The notes will
mature on January 15, 2019. The notes are unsecured senior debt obligations and rank equally with all other
unsecured senior indebtedness of Walgreens. On December 31, 2014, Walgreens Boots Alliance fully and
unconditionally guaranteed the outstanding notes on an unsecured and unsubordinated basis. The guarantee, for
so long as it is in place, is an unsecured, unsubordinated debt obligation of Walgreens Boots Alliance and will
rank equally in right of payment with all other unsecured and unsubordinated indebtedness of Walgreens Boots
Alliance. The notes are not convertible or exchangeable. Total issuance costs relating to this offering including
underwriting discounts and fees, were $8 million. On August 10, 2015, $750 million aggregate principal amount
of the notes were redeemed. The redemption price was equal to 111.734% of the aggregate principal amount of
the notes redeemed, plus accrued interest thereon to, but excluding, the redemption date, and included a $88
million make whole premium, which was recorded as interest expense on the Company’s Consolidated
Statements of Earnings. The partial redemption of the notes resulted in $250 million aggregate principal amount
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