Walgreens 2014 Annual Report Download - page 29

There are a number of additional business risks that could adversely affect our financial results.
Many other factors could adversely affect our financial results, including:
• If we are unsuccessful in establishing effective advertising, marketing and promotional programs, our
sales or sales margins could be negatively affected.
• Our success depends on our continued ability to attract and retain store and management and
professional personnel, and the loss of key personnel could have an adverse effect on the results of our
operations, financial condition or cash flow.
• Natural disasters, severe weather conditions, terrorist activities, global political and economic
developments, war, health epidemics or pandemics or the prospect of these events can impact our store
operations or damage our facilities in affected areas or have an adverse impact on consumer confidence
levels and spending in our stores.
• The long-term effects of climate change on general economic conditions and the pharmacy industry in
particular are unclear, and changes in the supply, demand or available sources of energy and the
regulatory and other costs associated with energy production and delivery may affect the availability or
cost of goods and services, including natural resources, necessary to run our business.
• The products we sell are sourced from a wide variety of domestic and international vendors, and any
future inability to find qualified vendors and access products in a timely and efficient manner could
adversely impact our business.
Additional Risks Related to our Alliance Boots Investment and the Second Step Transaction
The following risks relate to our existing investment in Alliance Boots and/or the pending second step
transaction, regardless of whether or not the Reorganization is completed.
The anticipated strategic and financial benefits of our transaction with Alliance Boots may not be realized.
Walgreens and Alliance Boots entered into the Purchase and Option Agreement, and Walgreens exercised the call
option pursuant to the Purchase and Option Agreement, with the expectation that the transactions contemplated
thereby would result in various benefits, including, among other things, procurement cost savings and operating
efficiencies, revenue synergies, innovation, sharing of best practices and a strengthened market position that may
serve as a platform for future growth. The processes and initiatives needed to achieve these potential benefits are
complex, costly and time consuming, and we have not previously completed a transaction comparable in size or
scope. Many of the expenses that will be incurred, by their nature, are difficult to estimate accurately at the present
time. Achieving the expected benefits of the Alliance Boots transaction, including the second step transaction, is
subject to a number of significant challenges and uncertainties, including, without limitation, whether unique
corporate cultures will work collaboratively in an efficient and effective manner, the coordination of geographically
separate organizations, the possibility of faulty assumptions underlying expectations regarding potential synergies
and the integration process, unforeseen expenses or delays, and competitive factors in the marketplace. We could
also encounter unforeseen transaction and integration-related costs or other circumstances such as unforeseen
liabilities or other issues existing or arising with respect to the business of Alliance Boots or otherwise resulting
from the transaction. Many of these potential circumstances are outside of our control and any of them could result
in increased costs, decreased revenue, decreased synergies and the diversion of management time and attention. If
we are unable to achieve our objectives within the anticipated time frame, or at all, the expected benefits may not be
realized fully or at all, or may take longer to realize than expected, which could have a material adverse impact on
our business, financial condition and results of operations and the price of our common stock.
Our August 2012 investment in Alliance Boots significantly increased, and the proposed second step
transaction would significantly further increase, our exposure to the risks of operating internationally.
Prior to the first step transaction, substantially all of our operations were conducted within the United States and
its territories. The first step transaction significantly increased the importance of international business to our
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