Walgreens 2015 Annual Report Download - page 12

Working capital practices
Effective inventory management is important to our operations. We use various inventory management
techniques, including demand forecasting and planning and various forms of replenishment management. Our
working capital needs typically are greater in the months leading up to the winter holiday season. We generally
finance our inventory and expansion needs with internally generated funds and short-term borrowings. For
additional information, see the Liquidity and Capital Resources section in MD&A in Part II, Item 7 below.
Customers
We sell to numerous retail and wholesale customers. No customer or payer accounted for ten percent or more of
our consolidated net sales in fiscal 2015. One third party payer, OptumRx, accounted for approximately 12.3% of
our Retail Pharmacy USA division’s fiscal 2015 total sales. One customer in our Retail Pharmacy International
division, NHS England, accounted for approximately 20.0% of the division’s fiscal 2015 total sales.
Regulation
In the countries in which we do business, we are subject to national, state and local laws, regulations, and
administrative practices concerning retail and wholesale pharmacy operations, including regulations relating to
our participation in Medicare, Medicaid and other publicly financed health benefit plans; regulations prohibiting
kickbacks, beneficiary inducement and the submission of false claims; the Health Insurance Portability and
Accountability Act (“HIPAA”); the ACA; licensure and registration requirements concerning the operation of
pharmacies and the practice of pharmacy; 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 foreign, state and local governmental authorities
concerning the operation of our businesses. We are also subject to laws and regulations relating to licensing, tax,
foreign trade, intellectual property, privacy and data protection, currency, political and other business restrictions.
We are also governed by national, state and local laws of general applicability in the countries in which we do
business, including laws regulating matters of working conditions, health and safety and equal employment
opportunity. In connection with the operation of our businesses, 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. Environmental protection requirements did not have a
material effect on our results of operations or capital expenditures in fiscal 2015.
Competitive conditions
The industries in which we operate are highly competitive. As a leader in the retail pharmacy industry and as a
retailer of general merchandise, we compete with various local, regional, national and global retailers, including
chain and independent pharmacies, mail order prescription providers, grocery stores, convenience stores, mass
merchants, online and omni-channel pharmacies and retailers, warehouse clubs, dollar stores and other discount
merchandisers. Our pharmaceutical wholesale business competes with other pharmaceutical wholesalers as well
as alternative supply sources such as importers and manufacturers who supply directly to pharmacies. We
compete primarily on the basis of service, convenience, variety and price. Our geographic dispersion helps
mitigate the impact of temporary, localized economic and competitive conditions in individual markets. See
“Properties” in Part I, Item 2 below for further information regarding our geographic dispersion.
Employees
As of August 31, 2015, we employed approximately 360,000 persons, approximately 115,000 of whom were
part-time employees working less than 30 hours per week. The foregoing does not include employees of
unconsolidated partially-owned entities.
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