Walgreens 2014 Annual Report Download - page 14

patents, have registered numerous trademarks, and have filed applications for the registration of a number of our
other trademarks and service marks in various jurisdictions. We hold assorted business licenses (such as
pharmacy, occupational, liquor and cigarette) having various lives within multiple legal jurisdictions, which are
necessary for the normal operation of our business.
Seasonal variations in business
Our business is seasonal in nature, with the second fiscal quarter generating a higher proportion of front-end sales
and earnings than other periods. Both prescription and non-prescription drug sales are affected by the timing and
severity of the cough, cold and flu season. See the section captioned “Summary of Quarterly Results
(Unaudited)” in Part II, Item 8 of this Form 10-K.
Working capital practices
The Company generally finances its inventory and expansion needs with internally generated funds. See
“Management’s Discussion and Analysis of Financial Condition and Results of Operations” in Part II, Item 7 of
this Form 10-K.
Customers
The Company sells to numerous customers including various managed care organizations within both the private
and public sectors. No customer accounted for ten percent or more of the Company’s consolidated net sales in
fiscal 2014.
Government contracts
The Company fills prescriptions for many state Medicaid public assistance plans. Revenues from all such plans
were approximately 4.9% of total sales in fiscal 2014.
Regulation
Our business is subject to federal, state and local laws, regulations, and administrative practices concerning the
provision of and payment for health care services, including, without limitation: federal, state and local licensure
and registration requirements concerning the operation of pharmacies and the practice of pharmacy; Medicare,
Medicaid and other publicly financed health benefit plan regulations prohibiting kickbacks, beneficiary
inducement and the submission of false claims; the Health Insurance Portability and Accountability Act
(HIPAA); the Patient Protection and Affordable Care Act (ACA); and regulations of the U.S. Food and Drug
Administration, the U.S. Federal Trade Commission, the U.S. Drug Enforcement Administration and the U.S.
Consumer Product Safety Commission, as well as regulations promulgated by comparable state agencies
concerning the sale, advertisement and promotion of the products we sell.
We are also governed by federal and state laws of general applicability, including laws regulating matters of
working conditions, health and safety and equal employment opportunity. In connection with the operation of our
stores, distribution centers and other sites, we are subject to laws and regulations relating to the protection of the
environment and health and safety matters, including those governing exposure to, and the management and
disposal of, hazardous substances. Federal, state and local environmental protection requirements did not have a
material effect on capital expenditures, earnings or the competitive position of the Company in fiscal 2014. In
addition, as we increase our activities in markets outside the United States, we are, and expect to be, subject to an
increasing number of foreign laws and regulations, including retail and wholesale pharmacy, licensing, tax,
foreign trade, intellectual property, privacy and data protection, currency, political and other business restrictions
and requirements and local laws and regulations.
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