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Segment Information
 6 Months Ended
Jun. 30, 2016
Segment Information  
Segment Information

 

Note 13 — Segment Information

 

Abbott’s principal business is the discovery, development, manufacture and sale of a broad line of health care products.  Abbott’s products are generally sold directly to retailers, wholesalers, hospitals, health care facilities, laboratories, physicians’ offices and government agencies throughout the world.  Abbott’s reportable segments are as follows:

 

Established Pharmaceutical Products — International sales of a broad line of branded generic pharmaceutical products.

 

Nutritional Products — Worldwide sales of a broad line of adult and pediatric nutritional products.

 

Diagnostic Products — Worldwide sales of diagnostic systems and tests for blood banks, hospitals, commercial laboratories and alternate-care testing sites.  For segment reporting purposes, the Core Laboratories Diagnostics, Molecular Diagnostics, Point of Care and Ibis diagnostic divisions are aggregated and reported as the Diagnostic Products segment.

 

Vascular Products — Worldwide sales of coronary, endovascular, structural heart, vessel closure and other medical device products. For segment reporting purposes, the Vascular and Electrophysiology Products divisions are aggregated and reported as the Vascular Products segment.

 

Non-reportable segments include the Diabetes Care and Medical Optics segments.

 

Abbott’s underlying accounting records are maintained on a legal entity basis for government and public reporting requirements.  Segment disclosures are on a performance basis consistent with internal management reporting.  Intersegment transfers of inventory are recorded at standard cost and are not a measure of segment operating earnings.  The cost of some corporate functions and the cost of certain employee benefits are charged to segments at predetermined rates that approximate cost.  Remaining costs, if any, are not allocated to segments.  In addition, intangible asset amortization is not allocated to operating segments, and intangible assets and goodwill are not included in the measure of each segment’s assets.

 

The following segment information has been prepared in accordance with the internal accounting policies of Abbott, as described above, and is not presented in accordance with generally accepted accounting principles applied to the consolidated financial statements.

 

 

 

Net Sales to External Customers

 

Operating Earnings

 

 

 

Three Months

 

Six Months

 

Three Months

 

Six Months

 

 

 

Ended June 30

 

Ended June 30

 

Ended June 30

 

Ended June 30

 

(in millions)

 

2016

 

2015

 

2016

 

2015

 

2016

 

2015

 

2016

 

2015

 

Established Pharmaceutical Products

 

$
980

 

$
977

 

$
1,868

 

$
1,874

 

$
192

 

$
172

 

$
340

 

$
339

 

Nutritional Products

 
1,740

 
1,717

 
3,411

 
3,386

 
368

 
389

 
710

 
739

 

Diagnostic Products

 
1,226

 
1,177

 
2,344

 
2,270

 
288

 
304

 
555

 
580

 

Vascular Products

 
782

 
722

 
1,467

 
1,420

 
290

 
280

 
537

 
564

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total Reportable Segments

 
4,728

 
4,593

 
9,090

 
8,950

 
1,138

 
1,145

 
2,142

 
2,222

 

Other

 
605

 
577

 
1,128

 
1,117

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net Sales

 

$
5,333

 

$
5,170

 

$
10,218

 

$
10,067

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Corporate functions and benefit plans costs

 

 

 

 

 

 

 

 

 
(94

)
(104

)
(175

)
(221

)

Non-reportable segments

 

 

 

 

 

 

 

 

 
52

 
62

 
50

 
117

 

Net interest expense

 

 

 

 

 

 

 

 

 
(83

)
(17)

 
(108

)
(33

)

Share-based compensation (a)

 

 

 

 

 

 

 

 

 
(62

)
(57

)
(214

)
(205

)

Amortization of intangible assets

 

 

 

 

 

 

 

 

 
(145

)
(151

)
(289

)
(307

)

Other, net (b)

 

 

 

 

 

 

 

 

 
(91

)
108

 
(689

)
66

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Earnings from continuing operations before taxes

 

 

 

 

 

 

 

 

 

$
715

 

$
986

 

$
717

 

$
1,639

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(a)

Approximately 50 percent of the annual net cost of share-based awards will typically be recognized in the first quarter due to the timing of the granting of share-based awards.

(b)

Other, net for the six months ended June 30, 2016, includes $477 million of foreign currency loss related to operations in Venezuela. Other, net for the three months and six months ended June 30, 2015, includes a gain on the sale of a portion of Abbott’s position in Mylan stock and a decrease in the fair value of contingent consideration related to a business acquisition.