AbbVie 2014 Annual Report Download - page 69

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As a result, the related assets and liabilities and results of operations have been reported in AbbVie’s
consolidated financial statements as of and for the years ended December 31, 2014 and 2013. Net sales
related to these operations for the years ended December 31, 2014 and 2013 totaled approximately
$282 million and $738 million, respectively. At December 31, 2014, the assets and liabilities consisted
primarily of accounts receivable of $27 million, inventories of $16 million, other assets of $33 million and
accounts payable and other accrued liabilities of $50 million. At December 31, 2013, the assets and
liabilities consisted primarily of accounts receivable of $62 million, inventories of $190 million, other assets
of $93 million and accounts payable and other accrued liabilities of $212 million. The majority of these
operations are expected to be transferred to AbbVie by the end of 2015.
Prior to the separation on January 1, 2013, the historical financial statements of AbbVie were prepared
on a stand-alone basis and were derived from Abbott’s consolidated financial statements and accounting
records as if the former research-based pharmaceutical business of Abbott had been part of AbbVie for all
periods presented. Accordingly, AbbVie’s financial statements for periods prior to January 1, 2013 are
presented herein on a combined basis and reflect AbbVie’s financial position, results of operations and cash
flows as its business was operated as part of Abbott prior to the separation, in conformity with U.S.
generally accepted accounting principles (GAAP).
The historical combined financial statements included the allocation of certain assets and liabilities that
were historically held at the Abbott corporate level but which were specifically identifiable or allocable to
AbbVie. Prior to 2012, cash and equivalents, short-term investments and restricted funds held by Abbott
were not allocated to AbbVie unless those assets were held by an entity that was transferred to AbbVie. As
of December 31, 2012, AbbVie’s combined balance sheet reflected the direct holdings of AbbVie legal
entities. Prior to November 2012, long-term debt and short-term borrowings were not allocated to AbbVie
as none of the debt recorded by Abbott was directly attributable to or guaranteed by AbbVie. In November
2012, AbbVie issued $14.7 billion of long-term debt with maturities ranging from three to 30 years and
$1.0 billion of commercial paper, which was reflected on AbbVie’s combined balance sheet as of
December 31, 2012. All AbbVie intracompany transactions and accounts were eliminated. Prior to 2012, all
intercompany transactions between AbbVie and Abbott were considered to be effectively settled in the
historical combined financial statements at the time the transactions were recorded. As a result, the total
net effect of the settlement of these intercompany transactions was reflected in the combined statement of
cash flows for the year ended December 31, 2012 as a financing activity and in the combined balance
sheet as of December 31, 2012 as net parent company investment in AbbVie. As of December 31, 2012,
outstanding transactions between AbbVie and Abbott were reflected in the combined balance sheet outside
of net parent company investment in AbbVie Inc. As of December 31, 2014 and 2013, the aggregate
amount due from Abbott totaled $526 million and $738 million, respectively, and was primarily classified in
accounts and other receivables, net in AbbVie’s consolidated balance sheets. The aggregate amount due to
Abbott totaled $536 million and $876 million as of December 31, 2014 and 2013, respectively, and was
classified in accounts payable and accrued liabilities in AbbVie’s consolidated balance sheets.
Prior to the separation on January 1, 2013, Abbott provided AbbVie certain services, which included
administration of treasury, payroll, employee compensation and benefits, travel and meeting services, public
and investor relations, real estate services, internal audit, telecommunications, information technology,
corporate income tax and selected legal services. Some of these services continue to be provided to AbbVie
on a temporary basis after the separation pursuant to certain transition services agreements. AbbVie’s
historical combined financial statements for periods prior to January 1, 2013 reflect an allocation of
expenses related to these services. These expenses were allocated to AbbVie based on direct usage or
benefit where identifiable, with the remainder allocated on a pro rata basis of revenues, headcount, square
footage, number of transactions or other measures. AbbVie considers the expense allocation methodology
and results to be reasonable. However, the allocations may not be indicative of the actual expenses that
would have been incurred had AbbVie operated as an independent, publicly-traded company for the
2014 Form 10-K 63