AbbVie 2014 Annual Report Download - page 26

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AbbVie may acquire other businesses, license rights to technologies or products, form alliances, or
dispose of assets, which could cause it to incur significant expenses and could negatively affect
profitability.
AbbVie may pursue acquisitions, technology licensing arrangements, and strategic alliances, or dispose
of some of its assets, as part of its business strategy. AbbVie may not complete these transactions in a
timely manner, on a cost-effective basis, or at all, and may not realize the expected benefits. If AbbVie is
successful in making an acquisition, the products and technologies that are acquired may not be successful
or may require significantly greater resources and investments than originally anticipated. AbbVie may not
be able to integrate acquisitions successfully into its existing business and could incur or assume significant
debt and unknown or contingent liabilities. AbbVie could also experience negative effects on its reported
results of operations from acquisition or disposition-related charges, amortization of expenses related to
intangibles and charges for impairment of long-term assets. These effects could cause a deterioration of
AbbVie’s credit rating and result in increased borrowing costs and interest expense.
Additionally, changes in AbbVie’s structure, operations, revenues, costs, or efficiency resulting from
major transactions such as acquisitions, divestitures, mergers, alliances, restructurings or other strategic
initiatives, may result in greater than expected costs, may take longer than expected to complete or
encounter other difficulties, including the need for regulatory approval where appropriate.
AbbVie is dependent on wholesale distributors for distribution of its products in the United States
and, accordingly, its results of operations could be adversely affected if they encounter financial
difficulties.
In 2014, three wholesale distributors—AmerisourceBergen Corporation, Cardinal Health, Inc. and
McKesson Corporation—accounted for substantially all of AbbVie’s sales in the United States. If one of its
significant wholesale distributors encounters financial or other difficulties, such distributor may decrease the
amount of business that it does with AbbVie, and AbbVie may be unable to collect all the amounts that
the distributor owes it on a timely basis or at all, which could negatively impact AbbVie’s business and
results of operations.
AbbVie has debt obligations that could adversely affect its business and its ability to meet its
obligations.
The amount of debt that AbbVie has incurred and intends to incur could have important consequences
to AbbVie and its investors. These consequences include, among other things, requiring a portion of
AbbVie’s cash flow from operations to make interest payments on this debt and reducing the cash flow
available to fund capital expenditures and other corporate purposes and to grow AbbVie’s business. To the
extent that AbbVie incurs additional indebtedness, these risks could increase. In addition, AbbVie’s cash
flow from operations may not be sufficient to repay all of the outstanding debt as it becomes due, and
AbbVie may not be able to borrow money, sell assets, or otherwise raise funds on acceptable terms, or at
all, to refinance its debt.
AbbVie may need additional financing in the future to meet its capital needs or to make
opportunistic acquisitions, and such financing may not be available on favorable terms, if at all.
AbbVie may need to seek additional financing for its general corporate purposes. For example, it may
need to increase its investment in research and development activities or need funds to make acquisitions.
AbbVie may be unable to obtain any desired additional financing on terms favorable to it, if at all. If
AbbVie loses its investment grade credit rating or adequate funds are not available on acceptable terms,
AbbVie may be unable to fund its expansion, successfully develop or enhance products, or respond to
competitive pressures, any of which could negatively affect AbbVie’s business. If AbbVie raises additional
funds by issuing debt or entering into credit facilities, it may be subject to limitations on its operations due
to restrictive covenants. Failure to comply with these covenants could adversely affect AbbVie’s business.
20 2014 Form 10-K