Walgreens 2015 Annual Report Download - page 26

and administrative sanctions for violations of these laws and regulations. We are also governed by foreign,
national and state laws of general applicability, including laws regulating matters of working conditions, health
and safety and equal employment opportunity. In addition, we could have significant exposure if we are found to
have infringed another party’s intellectual property rights.
Changes in laws, regulations and policies and the related interpretations may alter the landscape in which we do
business and may affect our costs of doing business. The impact of new laws, regulations and policies generally
cannot be predicted, and changes in applicable laws, regulations and policies may require extensive system and
operational changes, be difficult to implement, increase our operating costs and require significant capital
expenditures. Untimely compliance or noncompliance with applicable laws and regulations could result in the
imposition of civil and criminal penalties that could adversely affect the continued operation of our businesses,
including: suspension of payments from government programs; loss of required government certifications; loss
of authorizations to participate in or exclusion from government programs, including the Medicare and Medicaid
programs in the United States; loss of licenses; and significant fines or monetary penalties. Any failure to comply
with applicable regulatory requirements in the United States or in any of the countries in which we operate could
result in significant legal and financial exposure, damage our reputation, and have a material adverse effect on
our business operations, financial condition and results of operations.
We could be adversely affected by product liability, product recall or personal injury issues.
We could be adversely impacted by the supply of defective products, including the infiltration of counterfeit
products into the supply chain, errors in re-labelling of products, product tampering, product recall and
contamination or product mishandling issues. Through our pharmacies, we are also exposed to risks relating to
the services we provide. Errors in the dispensing and packaging of pharmaceuticals could lead to serious injury
or death. Product liability or personal injury claims may be asserted against us with respect to any of the products
or pharmaceuticals we sell or services we provide. Our healthcare clinics also increase our exposure to
professional liability claims related to medical care. Should a product or other liability issue arise, the coverage
limits under our insurance programs and the indemnification amounts available to us may not be adequate to
protect us against claims. We also may not be able to maintain this insurance on acceptable terms in the future.
Damage to our reputation in the event of a product liability or personal injury issue or judgment against us or a
product recall could have a material adverse effect on our business operations, financial condition and results of
operations.
We have significant outstanding debt; our debt and associated payment obligations could significantly
increase in the future if we incur additional debt and do not retire existing debt.
We have outstanding debt and other financial obligations and significant unused borrowing capacity. As of
August 31, 2015, we had approximately $14.4 billion of outstanding indebtedness, including short-term
borrowings. Our debt level and related debt service obligations could have negative consequences, including:
• requiring us to dedicate significant cash flow from operations to the payment of principal, interest and
other amounts payable on our debt, which would reduce the funds we have available for other
purposes, such as working capital, capital expenditures, acquisitions, share repurchases and dividends;
• making it more difficult or expensive for us to obtain any necessary future financing for working
capital, capital expenditures, debt service requirements, debt refinancing, acquisitions or other
purposes;
• reducing our flexibility in planning for or reacting to changes in our industry and market conditions;
• making us more vulnerable in the event of a downturn in our business operations; and
• exposing us to interest rate risk given that a portion of our debt obligations is at variable interest rates.
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