AbbVie 2013 Annual Report Download - page 67

been reported in AbbVie’s consolidated financial statements as of and for the year ended
December 31, 2013. Net sales related to these operations for the year ended December 31, 2013
totaled approximately $738 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 2014.
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 statements of cash flows for the years ended December 31,
2012 and 2011 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, 2013 and 2012, the aggregate amount due from Abbott
totaled $738 million and $696 million, respectively, and was classified in accounts and other receivables,
net. The aggregate amount due to Abbott totaled $876 million and $923 million as of December 31,
2013 and 2012, respectively, and was classified in accounts payable and accrued liabilities.
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 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 for all periods presented. 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 periods presented. These allocations totaled $838 million and $801 million for the
years ended December 31, 2012 and 2011.
Prior to the separation on January 1, 2013, AbbVie employees participated in various benefits and
stock-based compensation programs maintained by Abbott. A portion of the cost of those programs was
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