AbbVie 2012 Annual Report Download - page 32

agreements with Abbott, these arrangements may not fully capture the benefits AbbVie
previously enjoyed as a result of being integrated with Abbott and may result in AbbVie paying
higher charges than in the past for these services. As a separate, independent company, AbbVie
may be unable to obtain goods and services at the prices and terms obtained prior to the
separation, which could decrease AbbVie’s overall profitability. As a separate, independent
company, AbbVie also may not be as successful in negotiating favorable tax treatments and
credits with governmental entities. This could have an adverse effect on AbbVie’s results of
operations and financial condition;
• Generally, AbbVie’s working capital requirements and capital for its general corporate purposes,
including acquisitions, research and development and capital expenditures, were historically
satisfied as part of the corporate-wide cash management policies of Abbott. As a result of the
separation, AbbVie may need to obtain additional financing from banks, through public offerings
or private placements of debt or equity securities, strategic relationships or other arrangements;
and
• The cost of capital for AbbVie’s business may be higher than Abbott’s cost of capital prior to
the separation.
Other significant changes may occur in AbbVie’s cost structure, management, financing and
business operations as a result of operating as a company separate from Abbott. For additional
information about the past financial performance of AbbVie’s business and the basis of presentation of
the financial statements of AbbVie’s business, see Item 7, ‘‘Management’s Discussion and Analysis of
Financial Condition and Results of Operations’’ and Item 8, ‘‘Financial Statements and Supplementary
Data.’’
As AbbVie builds its information technology infrastructure and transitions its data to its own systems, AbbVie
could incur substantial additional costs and experience temporary business interruptions.
AbbVie expects to install and implement information technology infrastructure to support its
critical business functions, including accounting and reporting, manufacturing process control, customer
service, inventory control and distribution. AbbVie may incur temporary interruptions in business
operations if it cannot transition effectively from Abbott’s existing transactional and operational
systems, data centers and the transition services that support these functions as AbbVie replaces these
systems. AbbVie may not be successful in implementing its new systems and transitioning its data, and
it may incur substantially higher costs for implementation than currently anticipated. AbbVie’s failure
to avoid operational interruptions as it implements the new systems and replaces Abbott’s information
technology services, or its failure to implement the new systems and replace Abbott’s services
successfully, could disrupt its business, adversely affect its ability to collect receivables from customers,
and have a material adverse effect on its profitability. In addition, if AbbVie is unable to replicate or
transition certain systems, its ability to comply with regulatory requirements could be impaired.
Abbott may fail to perform under various transaction agreements that have or will be executed as part of the
separation or AbbVie may fail to have necessary systems and services in place when certain of the transaction
agreements expire.
In connection with the separation, AbbVie and Abbott entered into a separation and distribution
agreement and various other agreements, including transition services agreements, a tax sharing
agreement, international commercial operations agreements, finished goods supply agreements, contract
manufacturing agreements, an employee matters agreement, a special products master agreement, an
information technology agreement, and a transitional trademark license agreement. These agreements
are discussed in greater detail in Item 13, ‘‘Certain Relationships and Related Transactions, and
Director Independence.’’ Certain of these agreements provide for the performance of services by each
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