AbbVie 2013 Annual Report Download - page 27

transition services agreements, AbbVie may not be able to operate its business at comparable
costs, and its profitability may decline;
• Prior to the separation, AbbVie was able to use Abbott’s size and purchasing power in procuring
various goods and services and shared economies of scope and scale in costs, employees, vendor
relationships and customer relationships. 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;
• 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.
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 been 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. Certain of these
agreements provide for the performance of services by each company for the benefit of the other for a
period of time after AbbVie’s separation from Abbott. AbbVie relies on Abbott to satisfy its
performance and payment obligations under these agreements. If Abbott is unable to satisfy its
obligations under these agreements, including its indemnification obligations, AbbVie could incur
operational difficulties or losses.
23