Document and Entity Information
Document and Entity Information | 6 Months Ended |
Jun. 30, 2017shares | |
Document and Entity Information | |
Entity Registrant Name | ABBOTT LABORATORIES |
Entity Central Index Key | 1,800 |
Document Type | 10-Q |
Document Period End Date | Jun. 30, 2017 |
Amendment Flag | false |
Current Fiscal Year End Date | --12-31 |
Entity Current Reporting Status | Yes |
Entity Filer Category | Large Accelerated Filer |
Entity Common Stock, Shares Outstanding | 1,737,443,264 |
Document Fiscal Year Focus | 2,017 |
Document Fiscal Period Focus | Q2 |
Condensed Consolidated Statemen
Condensed Consolidated Statement of Earnings - USD ($) shares in Thousands, $ in Millions | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2017 | Jun. 30, 2016 | Jun. 30, 2017 | Jun. 30, 2016 | |
Condensed Consolidated Statement of Earnings | ||||
Net sales | $ 6,637 | $ 5,333 | $ 12,972 | $ 10,218 |
Cost of products sold, excluding amortization of intangible assets | 3,173 | 2,287 | 6,217 | 4,427 |
Amortization of intangible assets | 392 | 145 | 914 | 289 |
Research and development | 513 | 348 | 1,060 | 727 |
Selling, general and administrative | 2,132 | 1,737 | 4,556 | 3,435 |
Total operating cost and expenses | 6,210 | 4,517 | 12,747 | 8,878 |
Operating earnings | 427 | 816 | 225 | 1,340 |
Interest expense | 214 | 103 | 440 | 161 |
Interest (income) | (31) | (20) | (53) | (53) |
Net foreign exchange loss (gain) | (12) | 10 | (28) | 488 |
Other expense (income), net | (39) | 8 | (1,165) | 27 |
Earnings from continuing operations before taxes | 295 | 715 | 1,031 | 717 |
Taxes on earnings from continuing operations | 25 | 116 | 375 | 62 |
Earnings from continuing operations | 270 | 599 | 656 | 655 |
Earnings from discontinued operations, net of tax | 13 | 16 | 46 | 260 |
Gain on sale of discontinued operations, net of tax | 16 | |||
Net earnings from discontinued operations, net of tax | 13 | 16 | 46 | 276 |
Net Earnings | $ 283 | $ 615 | $ 702 | $ 931 |
Basic Earnings Per Common Share -- | ||||
Continuing operations (in dollars per share) | $ 0.15 | $ 0.40 | $ 0.37 | $ 0.44 |
Discontinued operations (in dollars per share) | 0.01 | 0.01 | 0.03 | 0.19 |
Net earnings (in dollars per share) | 0.16 | 0.41 | 0.40 | 0.63 |
Diluted Earnings Per Common Share -- | ||||
Continuing operations (in dollars per share) | 0.15 | 0.40 | 0.37 | 0.44 |
Discontinued operations (in dollars per share) | 0.01 | 0.01 | 0.03 | 0.19 |
Net earnings (in dollars per share) | 0.16 | 0.41 | 0.40 | 0.63 |
Cash Dividends Declared Per Common Share | $ 0.265 | $ 0.26 | $ 0.53 | $ 0.52 |
Average Number of Common Shares Outstanding Used for Basic Earnings Per Common Share (in shares) | 1,740,524 | 1,474,504 | 1,734,008 | 1,476,161 |
Dilutive Common Stock Options (in shares) | 8,359 | 5,988 | 8,099 | 6,165 |
Average Number of Common Shares Outstanding Plus Dilutive Common Stock Options (in shares) | 1,748,883 | 1,480,492 | 1,742,107 | 1,482,326 |
Outstanding Common Stock Options Having No Dilutive Effect (in shares) | 5,258 | 5,673 | 5,258 | 5,673 |
Condensed Consolidated Stateme3
Condensed Consolidated Statement of Comprehensive Income - USD ($) $ in Millions | 3 Months Ended | 6 Months Ended | |||
Jun. 30, 2017 | Jun. 30, 2016 | Jun. 30, 2017 | Jun. 30, 2016 | Dec. 31, 2016 | |
Condensed Consolidated Statement of Comprehensive Income | |||||
Net Earnings | $ 283 | $ 615 | $ 702 | $ 931 | |
Foreign currency translation gain (loss) adjustments | 288 | (104) | 821 | 317 | |
Net actuarial gains (losses) and amortization of net actuarial (losses) and prior service (cost) and credits, net of taxes of $11 and $23 in 2017 and $(12) and $(3) in 2016 | 29 | (47) | 63 | (29) | |
Unrealized gains (losses) on marketable equity securities, net of taxes of $7 and $60 in 2017 and nil in 2016 | 2 | (213) | 82 | (756) | |
Net (losses) for derivative instruments designated as cash flow hedges and other, net of taxes of $(15) and $(39) in 2017 and $(2) and $(24) in 2016 | (37) | (8) | (102) | (97) | |
Other comprehensive income (loss) | 282 | (372) | 864 | (565) | |
Comprehensive Income | 565 | $ 243 | 1,566 | $ 366 | |
Supplemental Accumulated Other Comprehensive Income (Loss) Information, net of tax: | |||||
Cumulative foreign currency translation (loss) adjustments | (3,996) | (3,996) | $ (4,959) | ||
Net actuarial (losses) and prior service cost and credits | (2,215) | (2,215) | (2,284) | ||
Cumulative unrealized gains (losses) on marketable equity securities | 13 | 13 | (69) | ||
Cumulative (losses) gains on derivative instruments designated as cash flow hedges and other | (52) | (52) | 49 | ||
Accumulated other comprehensive income (loss) | $ (6,250) | $ (6,250) | $ (7,263) |
Condensed Consolidated Stateme4
Condensed Consolidated Statement of Comprehensive Income (Parenthetical) - USD ($) $ in Millions | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2017 | Jun. 30, 2016 | Jun. 30, 2017 | Jun. 30, 2016 | |
Condensed Consolidated Statement of Comprehensive Income | ||||
Net actuarial gains (losses) and amortization of net actuarial (losses) and prior service (cost) and credits, net of taxes | $ 11 | $ (12) | $ 23 | $ (3) |
Unrealized gains (losses) on marketable equity securities, net of taxes | 7 | 0 | 60 | 0 |
Net gains (losses) for derivative instruments designated as cash flow hedges and other, net of taxes | $ (15) | $ (2) | $ (39) | $ (24) |
Condensed Consolidated Balance
Condensed Consolidated Balance Sheet - USD ($) $ in Millions | Jun. 30, 2017 | Dec. 31, 2016 |
Current Assets: | ||
Cash and cash equivalents | $ 9,675 | $ 18,620 |
Short-term investments | 160 | 155 |
Trade receivables, less allowances of $265 in 2017 and $250 in 2016 | 4,633 | 3,248 |
Inventories: | ||
Finished products | 2,355 | 1,624 |
Work in process | 450 | 294 |
Materials | 798 | 516 |
Total inventories | 3,603 | 2,434 |
Prepaid expenses and other receivables | 1,912 | 1,806 |
Current assets held for disposition | 513 | |
Total Current Assets | 19,983 | 26,776 |
Investments | 1,545 | 2,947 |
Property and equipment, at Cost: | ||
Property and equipment, at cost | 14,476 | 12,366 |
Less: accumulated depreciation and amortization | 7,190 | 6,661 |
Net property and equipment | 7,286 | 5,705 |
Intangible assets, net of amortization | 18,653 | 4,539 |
Goodwill | 22,132 | 7,683 |
Deferred income taxes and other assets | 1,552 | 2,263 |
Non-current assets held for disposition | 2,753 | |
Total Assets | 71,151 | 52,666 |
Current Liabilities: | ||
Short-term borrowings | 218 | 1,322 |
Trade accounts payable | 1,667 | 1,178 |
Salaries, wages and commissions | 905 | 752 |
Other accrued liabilities | 3,357 | 2,581 |
Dividends payable | 461 | 391 |
Income taxes payable | 192 | 188 |
Current portion of long-term debt | 3 | 3 |
Current liabilities held for disposition | 245 | |
Total Current Liabilities | 6,803 | 6,660 |
Long-term debt | 23,810 | 20,681 |
Post-employment obligations, deferred income taxes and other long-term liabilities | 8,750 | 4,549 |
Non-current liabilities held for disposition | 59 | |
Commitments and Contingencies | ||
Shareholders' Investment: | ||
Preferred shares, one dollar par value Authorized - 1,000,000 shares, none issued | ||
Common shares, without par value Authorized - 2,400,000,000 shares Issued at stated capital amount - Shares: 2017: 1,962,732,172; 2016: 1,707,475,455 | 23,012 | 13,027 |
Common shares held in treasury, at cost - Shares: 2017: 225,288,908; 2016: 234,606,250 | (10,362) | (10,791) |
Earnings employed in the business | 25,202 | 25,565 |
Accumulated other comprehensive income (loss) | (6,250) | (7,263) |
Total Abbott Shareholders' Investment | 31,602 | 20,538 |
Noncontrolling Interests in Subsidiaries | 186 | 179 |
Total Shareholders' Investment | 31,788 | 20,717 |
Total Liabilities and Shareholders' Investment | $ 71,151 | $ 52,666 |
Condensed Consolidated Balance6
Condensed Consolidated Balance Sheet (Parenthetical) - USD ($) $ in Millions | Jun. 30, 2017 | Dec. 31, 2016 |
Condensed Consolidated Balance Sheet | ||
Trade receivables, allowances (in dollars) | $ 265 | $ 250 |
Preferred shares, par value (in dollars per share) | $ 1 | $ 1 |
Preferred shares, Authorized shares | 1,000,000 | 1,000,000 |
Preferred shares, issued shares | 0 | 0 |
Common shares, Authorized shares | 2,400,000,000 | 2,400,000,000 |
Common shares, Issued shares | 1,962,732,172 | 1,707,475,455 |
Common shares held in treasury, shares | 225,288,908 | 234,606,250 |
Condensed Consolidated Stateme7
Condensed Consolidated Statement of Cash Flows - USD ($) $ in Millions | 6 Months Ended | |
Jun. 30, 2017 | Jun. 30, 2016 | |
Cash Flow From (Used in) Operating Activities: | ||
Net earnings | $ 702 | $ 931 |
Adjustments to reconcile net earnings to net cash from operating activities - | ||
Depreciation | 508 | 405 |
Amortization of intangible assets | 914 | 289 |
Share-based compensation | 263 | 214 |
Impact of currency devaluation | 477 | |
Amortization of inventory step-up | 822 | |
Gain on sale of businesses | (1,151) | (25) |
Trade receivables | (56) | (150) |
Inventories | (127) | (149) |
Other, net | 50 | (1,176) |
Net Cash From Operating Activities | 1,925 | 816 |
Cash Flow From (Used in) Investing Activities: | ||
Acquisitions of property and equipment | (527) | (490) |
Acquisitions of businesses and technologies, net of cash acquired | (13,027) | (7) |
Proceeds from business dispositions | 5,471 | 25 |
Proceeds from the sale of Mylan N.V. shares | 1,924 | |
Sales (purchases) of other investment securities, net | (28) | (800) |
Other | 27 | 28 |
Net Cash (Used in) Investing Activities | (6,160) | (1,244) |
Cash Flow From (Used in) Financing Activities: | ||
Net (repayments of) short-term debt and other | (1,429) | (285) |
Repayments of long-term debt | (2,507) | (10) |
Payment of debt issuance costs | (132) | |
Payment of contingent consideration | (13) | (25) |
Purchases of common shares | (98) | (520) |
Proceeds from stock options exercised | 186 | 130 |
Dividends paid | (922) | (769) |
Net Cash (Used in) Financing Activities | (4,783) | (1,611) |
Effect of exchange rate changes on cash and cash equivalents | 73 | (384) |
Net Decrease in Cash and Cash Equivalents | (8,945) | (2,423) |
Cash and Cash Equivalents, Beginning of Year | 18,620 | 5,001 |
Cash and Cash Equivalents, End of Period | $ 9,675 | $ 2,578 |
Basis of Presentation
Basis of Presentation | 6 Months Ended |
Jun. 30, 2017 | |
Basis of Presentation | |
Basis of Presentation | Note 1 — Basis of Presentation The accompanying unaudited, condensed consolidated financial statements have been prepared pursuant to rules and regulations of the Securities and Exchange Commission and, therefore, do not include all information and footnote disclosures normally included in audited financial statements. However, in the opinion of management, all adjustments (which include only normal adjustments) necessary to present fairly the results of operations, financial position and cash flows have been made. It is suggested that these statements be read in conjunction with the financial statements included in Abbott’s Annual Report on Form 10-K for the year ended December 31, 2016. The consolidated financial statements include the accounts of the parent company and subsidiaries, after elimination of intercompany transactions. In March 2016, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) 2016-09, Improvements to Employee Share-Based Payment Accounting . ASU 2016-09 modifies several aspects of the accounting for share-based payment transactions, including the accounting for income taxes and classification on the statement of cash flows. Abbott adopted the standard in the first quarter of 2017 and the following changes were made to the presentation of Abbott’s financial statements: · All excess tax benefits or tax deficiencies are now recognized as income tax benefit or expense as applicable. Previously, Abbott recorded the benefits to Shareholders’ Investment. The tax benefit recorded in Abbott’s Condensed Consolidated Statement of Earnings for the second quarter and first six months of 2017 were $25 million and $63 million, respectively. The standard does not permit retrospective presentation of this benefit in prior years. · The tax benefit or deficiency is required to be classified as an operating activity in the statement of cash flows. Previously, it was required to be classified within financing activities. Abbott has adopted this standard on a prospective basis and has not revised the classification of the excess tax benefit in the prior year’s Condensed Consolidated Statement of Cash Flows. |
Discontinued Operations
Discontinued Operations | 6 Months Ended |
Jun. 30, 2017 | |
Discontinued Operations | |
Discontinued Operations | Note 2 — Discontinued Operations On February 27, 2015, Abbott completed the sale of its developed markets branded generics pharmaceuticals business to Mylan Inc. (Mylan) for 110 million shares (or approximately 22%) of a newly formed entity (Mylan N.V.) that combined Mylan’s existing business and Abbott’s developed markets branded generics pharmaceuticals business. Mylan N.V. is publicly traded. The shareholder agreement with Mylan N.V. includes voting and other restrictions that prevent Abbott from exercising significant influence over the operating and financial policies of Mylan N.V. In April 2015, Abbott sold 40.25 million of the 110 million ordinary shares of Mylan N.V. As a result of this sale, Abbott’s ownership interest in Mylan N.V. decreased to approximately 14%. In March 2017, Abbott sold 44 million ordinary shares of Mylan N.V. and received $1.685 billion in proceeds. In June 2017, Abbott sold an additional 6 million ordinary shares of Mylan N.V. and received $239 million in proceeds. Abbott recorded an immaterial pre-tax gain in the first six months of 2017, which was recognized in the Other expense (income), net line of the Condensed Consolidated Statement of Earnings. As a result of these share sales, Abbott’s ownership interest in Mylan N.V. decreased from approximately 14% to approximately 3.7%. On February 10, 2015, Abbott completed the sale of its animal health business to Zoetis Inc. Abbott received cash proceeds of $230 million and reported an after-tax gain on the sale of approximately $130 million in the first quarter of 2015. In the first quarter of 2016, Abbott received an additional $25 million of proceeds related to the expiration of a holdback agreement associated with the sale of this business and reported an after-tax gain on the sale of discontinued operations of $16 million. On January 1, 2013, Abbott completed the separation of AbbVie Inc. (AbbVie), which was formed to hold Abbott’s research-based proprietary pharmaceuticals business. Abbott has retained all liabilities for all U.S. federal and foreign income taxes on income prior to the separation, as well as certain non-income related taxes attributable to AbbVie’s business prior to the separation. AbbVie generally will be liable for all other taxes attributable to its business. Earnings from discontinued operations, net of tax of $46 million and $260 million in the first six months of 2017 and 2016 were driven primarily by the recognition of net tax benefits as a result of the resolution of various tax positions related to AbbVie’s operations for years prior to the separation. |
Assets and Liabilities Held for
Assets and Liabilities Held for Disposition | 6 Months Ended |
Jun. 30, 2017 | |
Assets and Liabilities Held for Disposition | |
Assets and Liabilities Held for Disposition | Note 3 — Assets and Liabilities Held for Disposition In September 2016, Abbott announced that it entered into a definitive agreement to sell Abbott Medical Optics (AMO), its vision care business, to Johnson & Johnson for $4.325 billion in cash, subject to customary purchase price adjustments for cash, debt and working capital. The decision to sell AMO reflects Abbott’s proactive shaping of its portfolio in line with its strategic priorities. In February 2017, Abbott completed the sale of AMO to Johnson & Johnson and recognized a pre-tax gain of $1.151 billion, which was reported in the Other expense (income), net line of the Condensed Consolidated Statement of Earnings in the first six months of 2017. Abbott recorded an after-tax gain of $721 million in the first six months of 2017 related to the sale of AMO. The operating results of AMO up to the date of sale continued to be included in Earnings from Continuing Operations as they did not qualify for reporting as discontinued operations. For the three months ended June 30, 2017 and 2016, the AMO earnings before taxes included in Abbott’s consolidated earnings were nil and $13 million, respectively. For the first six months ended June 30, 2017 and 2016, the AMO losses before taxes included in Abbott’s consolidated earnings were $18 million and $44 million, respectively. The following assets and liabilities of this business were reported as held for disposition in Abbott’s Condensed Consolidated Balance Sheet as of December 31, 2016: (in millions) December 31, Trade receivables, net $ Total inventories Prepaid expenses and other current assets Current assets held for disposition Net property and equipment Intangible assets, net of amortization Goodwill Deferred income taxes and other assets Non-current assets held for disposition Total assets held for disposition $ Trade accounts payable $ Salaries, wages, commissions and other accrued liabilities Current liabilities held for disposition Post-employment obligations, deferred income taxes and other long-term liabilities Total liabilities held for disposition $ |
Supplemental Financial Informat
Supplemental Financial Information | 6 Months Ended |
Jun. 30, 2017 | |
Supplemental Financial Information | |
Supplemental Financial Information | Note 4 — Supplemental Financial Information Shares of unvested restricted stock that contain non-forfeitable rights to dividends are treated as participating securities and are included in the computation of earnings per share under the two-class method. Under the two-class method, net earnings are allocated between common shares and participating securities. Earnings from Continuing Operations allocated to common shares for the three months ended June 30, 2017 and 2016 were $269 million and $597 million, respectively and for the six months ended June 30, 2017 and 2016 were $653 million and $652 million, respectively. Net earnings allocated to common shares for the three months ended June 30, 2017 and 2016 were $281 million and $612 million, respectively, and for the six months ended June 30, 2017 and 2016 were $698 million and $927 million, respectively. The Other, net line in Net cash from operating activities in the Condensed Consolidated Statement of Cash Flows for the first six months of 2017 and 2016 includes the effects of contributions to defined benefit plans of $321 million and $524 million, respectively, and to the post-employment medical and dental benefit plans of $11 million and $9 million, respectively. The first six months of 2017 also includes the impact of approximately $430 million of tax expense related to business dispositions, which has not yet been paid, and is taxed at a discrete tax rate. The first six months of 2016 included the non-cash impact of approximately $410 million of net tax benefits primarily associated with the resolution of various tax positions from prior years, as well as cash taxes paid of approximately $140 million related to the disposition of businesses. The foreign currency loss related to Venezuela in the first six months of 2016 reduced Abbott’s cash by approximately $410 million and is shown on the Effect of exchange rate changes on cash and cash equivalents line within the Condensed Consolidated Statement of Cash Flows. Since January 2010, Venezuela has been designated as a highly inflationary economy under U.S. GAAP. In 2014 and 2015, the government of Venezuela operated multiple mechanisms to exchange bolivars into U.S. dollars. These mechanisms included the CENCOEX, SICAD, and SIMADI rates, which stood at 6.3, 13.5, and approximately 200, respectively, at December 31, 2015. In 2015, Abbott continued to use the CENCOEX rate of 6.3 Venezuelan bolivars to the U.S. dollar to report the results, financial position, and cash flows related to its operations in Venezuela since Abbott continued to qualify for this exchange rate to pay for the import of various products into Venezuela. On February 17, 2016, the Venezuelan government announced that the three-tier exchange rate system would be reduced to two rates renamed the DIPRO and DICOM rates. The DIPRO rate is the official rate for food and medicine imports and was adjusted from 6.3 to 10 bolivars per U.S. dollar. The DICOM rate is a floating market rate published daily by the Venezuelan central bank, which at the end of the first quarter of 2016 was approximately 263 bolivars per U.S. dollar. As a result of decreasing government approvals to convert bolivars to U.S. dollars to pay for intercompany accounts, as well as the accelerating deterioration of economic conditions in the country, Abbott concluded that it was appropriate to move to the DICOM rate at the end of the first quarter of 2016. As a result, Abbott recorded a foreign currency exchange loss of $477 million in the first quarter of 2016 to revalue its net monetary assets in Venezuela. Abbott is continuing to use the DICOM rate to report the results of operations and to remeasure net monetary assets for Venezuela at the end of each quarter. As of June 30, 2017, Abbott’s Venezuelan operations represented approximately 0.01% of Abbott’s consolidated assets and any additional foreign currency losses related to Venezuela are not expected to be material. The components of long-term investments as of June 30, 2017 and December 31, 2016 are as follows: Long-term Investments June 30, December 31, (in millions) 2017 2016 Equity securities $ $ Other Total $ $ As discussed in Note 2, in the first six months of 2017, Abbott sold 50 million ordinary shares of Mylan N.V., thereby reducing Abbott’s investment in equity securities by approximately $1.9 billion. Abbott’s equity securities as of June 30, 2017, include approximately $348 million of investments in mutual funds that are held in a rabbi trust and were acquired as part of the St. Jude Medical, Inc. (St. Jude Medical) business acquisition. These investments, which are specifically designated as available for the purpose of paying benefits under a deferred compensation plan, are not available for general corporate purposes and are subject to creditor claims in the event of insolvency. |
Changes in Accumulated Other Co
Changes in Accumulated Other Comprehensive Income (Loss) | 6 Months Ended |
Jun. 30, 2017 | |
Changes in Accumulated Other Comprehensive Income (Loss) | |
Changes in Accumulated Other Comprehensive Income (Loss) | Note 5 — Changes in Accumulated Other Comprehensive Income (Loss) The changes in accumulated other comprehensive income (loss), net of income taxes, are as follows: Three Months Ended June 30 Cumulative Gains Cumulative (Losses) on Net Actuarial Unrealized Gains Derivative Cumulative Foreign Losses and Prior (Losses) on Instruments Currency Translation Service Costs and Marketable Equity Designated as Adjustments Credits Securities Cash Flow Hedges (in millions) 2017 2016 2017 2016 2017 2016 2017 2016 Balance at March 31 $ ) $ ) $ ) $ ) $ $ ) $ ) $ ) Other comprehensive income (loss) before reclassifications ) — ) ) ) Amounts reclassified from accumulated other comprehensive income — — — — ) Net current period comprehensive income (loss) ) ) ) ) ) Balance at June 30 $ ) $ ) $ ) $ ) $ $ ) $ ) $ ) Six Months Ended June 30 Cumulative Foreign Net Actuarial Cumulative Cumulative Gains (in millions) 2017 2016 2017 2016 2017 2016 2017 2016 Balance at December 31, 2016 and 2015 $ ) $ ) $ ) $ ) $ ) $ $ $ Impact of business dispositions — — — — — Other comprehensive income (loss) before reclassifications — ) ) ) ) Amounts reclassified from accumulated other comprehensive income — — ) — ) Net current period comprehensive income (loss) ) ) ) ) Balance at June 30 $ ) $ ) $ ) $ ) $ $ ) $ ) $ ) Reclassified amounts for foreign currency translation are recorded in the Condensed Consolidated Statement of Earnings as Net foreign exchange loss (gain); gains (losses) on marketable equity securities as Other expense (income), net and cash flow hedges as Cost of products sold. Net actuarial losses and prior service cost are included as a component of net periodic benefit plan costs; see Note 13 for additional details. |
Business Acquisitions
Business Acquisitions | 6 Months Ended |
Jun. 30, 2017 | |
Business Acquisitions | |
Business Acquisitions | Note 6 — Business Acquisitions On January 4, 2017, Abbott completed the acquisition of St. Jude Medical, a global medical device manufacturer, for approximately $23.6 billion, including approximately $13.6 billion in cash and approximately $10 billion in Abbott common shares, which represented approximately 254 million shares of Abbott common stock, based on Abbott’s closing stock price on the acquisition date. As part of the acquisition, approximately $5.9 billion of St. Jude Medical’s debt was assumed, repaid or refinanced by Abbott. The transaction provides expanded opportunities for future growth and is an important part of the company’s ongoing effort to develop a strong, diverse portfolio of devices, diagnostics, nutritionals and branded generic pharmaceuticals. The combined company will compete in nearly every area of the cardiovascular market, as well as in the neuromodulation market. Under the terms of the agreement, for each St. Jude Medical common share, St. Jude Medical shareholders received $46.75 in cash and 0.8708 of an Abbott common share. At an Abbott stock price of $39.36, which reflects the closing price on January 4, 2017, this represented a value of approximately $81 per St. Jude Medical common share and total purchase consideration of $23.6 billion. The cash portion of the acquisition was funded through a combination of medium and long-term debt issued in November 2016 and a $2.0 billion 120-day senior unsecured bridge term loan facility which was subsequently repaid. The preliminary allocation of the fair value of the St. Jude Medical acquisition is shown in the table below. During the second quarter of 2017, measurement period adjustments to the value of the intangibles resulted in a credit of approximately $70 million to intangible amortization expense to reduce the expense recorded in the first quarter of 2017. The allocation of the fair value of the acquisition will be finalized when the valuation is completed and differences between the preliminary and final allocation could be material. (in billions) Acquired intangible assets, non-deductible $ Goodwill, non-deductible Acquired net tangible assets Deferred income taxes recorded at acquisition ) Net debt ) Total preliminary allocation of fair value $ The goodwill is primarily attributable to expected synergies from combining operations as well as intangible assets that do not qualify for separate recognition. The acquired tangible assets consist primarily of trade accounts receivable of approximately $1.2 billion, inventory of approximately $1.7 billion, other current assets of $206 million, property and equipment of approximately $1.5 billion, and other long-term assets of $475 million. The acquired tangible liabilities consist of trade accounts payable and other current liabilities of approximately $1.0 billion and other non-current liabilities of approximately $655 million. If the acquisition of St. Jude Medical had occurred at the beginning of 2016, unaudited pro forma consolidated net sales would have been approximately $13.2 billion and unaudited pro forma consolidated net loss would have been approximately $165 million for the first six months of 2016, which includes the amortization of approximately $820 million of inventory step-up and $670 million of intangibles related to St. Jude Medical. For the second quarter of 2016, unaudited pro forma consolidated net sales would have been approximately $6.9 billion and unaudited pro forma consolidated net earnings would have been approximately $250 million, which includes the amortization of approximately $430 million of inventory step-up and $340 million of intangibles related to St. Jude Medical. The unaudited pro forma information is not necessarily indicative of the consolidated results of operations that would have been realized had the St. Jude Medical acquisition been completed as of the beginning of 2016, nor is it meant to be indicative of future results of operations that the combined entity will experience. In the first six months of 2017, consolidated Abbott results include $2.9 billion of sales and a pre-tax loss of approximately $1.0 billion related to the St. Jude Medical acquisition, including approximately $670 million of intangible amortization and $820 million of inventory step-up amortization. It excludes acquisition, integration and restructuring-related costs. In 2016, Abbott and St. Jude Medical agreed to sell certain businesses to Terumo Corporation for approximately $1.12 billion. The sale included the St. Jude Medical Angio-Seal™ and Femoseal™ vascular closure and Abbott’s Vado® Steerable Sheath businesses. The sale closed on January 20, 2017 and no gain or loss was recorded in the Condensed Consolidated Statement of Earnings. On January 30, 2016, Abbott entered into a definitive agreement to acquire Alere Inc. (Alere), a diagnostic device and service provider, for $56.00 per common share in cash. On April 13, 2017, Abbott and Alere amended the terms of the agreement to reduce the purchase price to $51.00 per common share. The amended terms reduce the originally expected equity value by approximately $500 million to a new expected equity value of approximately $5.3 billion, which includes both common and preferred shares. On July 7, 2017, the Alere shareholders approved the acquisition. The acquisition is expected to close by the end of the third quarter of 2017, subject to the satisfaction of customary closing conditions, including applicable regulatory approvals. Under the amended terms of the acquisition agreement, the date by which necessary regulatory approvals must be received has been extended to September 30, 2017. The companies also agreed to dismiss their respective lawsuits. The acquisition is expected to significantly expand Abbott’s global diagnostics presence and leadership. Abbott expects to utilize a combination of cash on hand and debt to fund the acquisition. Alere’s net debt, which totaled $2.3 billion at March 31, 2017, will be assumed, refinanced or repaid by Abbott. On July 15, 2017, Alere entered into an agreement to sell its Triage MeterPro cardiovascular and toxicology business and the assets and liabilities related to its B-type Natriuretic Peptide assay business run on Beckman Coulter analyzers to Quidel Corporation (Quidel). The transactions with Quidel reflect a total purchase price of approximately $400 million and contingent consideration with a maximum value of $40 million. On July 21, 2017, Alere entered into an agreement with Siemens Diagnostics Holding II B.V. to sell its subsidiary, Epocal Inc., for approximately $200 million. These transactions are subject to the successful completion of Abbott’s acquisition of Alere and antitrust regulatory approvals. Alere is divesting these businesses in connection with the review by the Federal Trade Commission and the European Commission of Abbott’s agreement to acquire Alere. On July 17, 2017, Abbott commenced a tender offer to purchase for cash the 1.77 million outstanding shares of Alere’s Series B Convertible Perpetual Preferred Stock at a price of $402 per share, plus accrued but unpaid dividends to, but not including, the settlement date of the tender offer. This tender offer is subject to the satisfaction of certain conditions, including Abbott’s acquisition of Alere and upon there being validly tendered (and not properly withdrawn) at the expiration date of the tender offer that number of shares of Preferred Stock that equals at least a majority of the Preferred Stock issued and outstanding at the expiration of the tender offer. On July 31, 2017, Abbott entered into a term loan agreement whereby Abbott can borrow up to $2.8 billion on an unsecured basis for the acquisition of Alere. Funding of the 5-year loan is subject to the satisfaction of certain conditions related to the consummation of the Alere acquisition. Borrowings under the term loan will bear interest, at Abbott’s option, based on either a base rate or a Eurodollar rate, plus an applicable margin based on Abbott’s credit ratings. |
Goodwill and Intangible Assets
Goodwill and Intangible Assets | 6 Months Ended |
Jun. 30, 2017 | |
Goodwill and Intangible Assets | |
Goodwill and Intangible Assets | Note 7 — Goodwill and Intangible Assets The total amount of goodwill reported was $22.132 billion at June 30, 2017 and $7.683 billion at December 31, 2016. Goodwill increased by $15.1 billion during the first six months of 2017 due to the completion of the St. Jude Medical acquisition, partially offset by a decrease of $1.1 billion due to the sale of certain businesses to Terumo Corporation. Foreign currency translation adjustments increased goodwill by approximately $421 million in the first six months of 2017. The amount reported at December 31, 2016 excludes goodwill reported in non-current assets held for disposition. As part of the sale of AMO in the first six months of 2017, approximately $2.0 billion of goodwill was included as part of the net assets sold. The amount of goodwill related to reportable segments at June 30, 2017 was $3.1 billion for the Established Pharmaceutical Products segment, $286 million for the Nutritional Products segment, $417 million for the Diagnostic Products segment, and $17.3 billion for the Cardiovascular and Neuromodulation Products segment. The Cardiovascular and Neuromodulation Products segment includes the amount previously reported under Abbott’s Vascular Products segment as well as the goodwill related to the St. Jude Medical acquisition. There was no significant reduction of goodwill relating to impairments. The gross amount of amortizable intangible assets, primarily product rights and technology was $21.7 billion as of June 30, 2017 and $10.4 billion as of December 31, 2016, and accumulated amortization was $7.0 billion as of June 30, 2017 and $6.2 billion as of December 31, 2016. The gross amount of amortizable intangible assets increased by $11.3 billion during the first six months of 2017 due to the completion of the St. Jude Medical acquisition. Foreign currency translation adjustments increased intangible assets by $128 million during the first six months of 2017. The December 31, 2016 amounts exclude net intangible assets reported in non-current assets held for disposition. As part of the sale of AMO in the first six months of 2017, approximately $529 million of net intangible assets were included in the net assets sold. Indefinite-lived intangible assets, which relate to in-process research and development acquired in a business combination, were approximately $4.0 billion and $349 million as of June 30, 2017 and December 31, 2016, respectively. Indefinite-lived intangible assets increased by $3.7 billion due to the completion of the St. Jude Medical acquisition. In the first six months of 2016, Abbott recorded an impairment of a $43 million in-process research and development project related to a non-reportable segment. Abbott’s estimated annual amortization expense for intangible assets is approximately $1.9 billion in 2017, $2.1 billion in 2018, $2.0 billion in 2019, $1.8 billion in 2020 and $1.7 billion in 2021. Amortizable intangible assets are amortized over 2 to 20 years (weighted average 11 years). |
Restructuring Plans
Restructuring Plans | 6 Months Ended |
Jun. 30, 2017 | |
Restructuring Plans | |
Restructuring Plans | Note 8 — Restructuring Plans In 2017, Abbott management approved restructuring plans as part of the integration of the acquisition of St. Jude Medical into the cardiovascular and neuromodulation segment to leverage economies of scale and reduce costs. In the first six months of 2017, charges of approximately $144 million, including one-time employee termination benefits were recorded as Selling, general and administrative expense. Abbott also assumed restructuring liabilities of approximately $20 million as part of the St Jude Medical acquisition. The following summarizes the activity for the first six months of 2017 related to these actions and the status of the related accrual as of June 30, 2017: (in millions) Liabilities assumed as part of business acquisition $ Restructuring charges recorded in 2017 Payments and other adjustments ) Accrued balance at June 30, 2017 $ From 2014 to 2017, Abbott management approved plans to streamline operations in order to reduce costs and improve efficiencies in various Abbott businesses including the nutritional and established pharmaceuticals businesses. In the first six months of 2017, charges of approximately $17 million were recognized, of which approximately $4 million is recorded in Cost of products sold, approximately $7 million is recorded in Research and development and approximately $6 million as Selling, general and administrative expense. The following summarizes the activity for the first six months of 2017 related to these restructuring actions and the status of the related accrual as of June 30, 2017: (in millions) Accrued balance at December 31, 2016 $ Restructuring charges recorded in 2017 Payments and other adjustments ) Accrued balance at June 30, 2017 $ |
Incentive Stock Programs
Incentive Stock Programs | 6 Months Ended |
Jun. 30, 2017 | |
Incentive Stock Programs | |
Incentive Stock Programs | Note 9 — Incentive Stock Programs In connection with the completion of the St. Jude Medical acquisition in the first quarter of 2017, unvested St. Jude Medical stock options and restricted stock units were assumed by Abbott and converted into Abbott options and restricted stock units (as applicable) of substantially equivalent value, in accordance with the merger agreement. The number of shares underlying the converted options was 7,364,571 at a weighted average exercise price of $30.50. The number of restricted stock units converted was 2,324,500 at a weighted average grant date fair value of $37.69. In the first six months of 2017, Abbott granted 4,370,403 stock options, 546,383 restricted stock awards and 6,865,354 restricted stock units under its incentive stock programs. At June 30, 2017, approximately 170 million shares were reserved for future grants. This reserve reflects the shares authorized by Abbott’s shareholders in April 2017. Information regarding the number of options outstanding and exercisable at June 30, 2017 is as follows: Outstanding Exercisable Number of shares Weighted average remaining life ( years ) Weighted average exercise price $ $ Aggregate intrinsic value ( in millions ) $ $ The total unrecognized share-based compensation cost at June 30, 2017 amounted to approximately $393 million which is expected to be recognized over the next three years. |
Debt and Lines of Credit
Debt and Lines of Credit | 6 Months Ended |
Jun. 30, 2017 | |
Debt and Lines of Credit | |
Debt and Lines of Credit | Note 10 — Debt and Lines of Credit In the first six months of 2017, as part of the acquisition of St. Jude Medical, Abbott’s long-term debt increased due to the assumption of outstanding debt previously issued by St. Jude Medical. Abbott exchanged certain St. Jude Medical debt obligations with an aggregate principal amount of approximately $2.9 billion for debt issued by Abbott which consists of: Principal Amount 2.00% Senior Notes due 2018 $473.8 million 2.80% Senior Notes due 2020 $483.7 million 3.25% Senior Notes due 2023 $818.4 million 3.875% Senior Notes due 2025 $490.7 million 4.75% Senior Notes due 2043 $639.1 million Following this exchange, approximately $194.2 million of existing St. Jude Medical notes remain outstanding across the five series of existing notes which have the same coupons and maturities as those listed above. There were no significant costs associated with the exchange of debt. In addition, during the first six months of 2017, Abbott assumed and subsequently repaid the following St. Jude Medical debt obligations: Term loan due 2020 $2.3 billion Yen-denominated notes due 2017 and 2020 $179 million Yen-denominated credit facilities $55 million Commercial paper borrowings $220 million On January 4, 2017, as part of funding the cash portion of the St. Jude Medical acquisition, Abbott borrowed $2.0 billion under a 120-day senior unsecured bridge term loan facility. This facility was repaid during the first six months of 2017. During the first six months of 2017, Abbott issued 364-day yen-denominated debt, of which $195 million was outstanding at June 30, 2017. Abbott also paid off a $479 million yen-denominated short-term debt. In February 2016, Abbott obtained a commitment for a 364-day senior unsecured bridge term loan facility for an amount not to exceed $9 billion in conjunction with its pending acquisition of Alere. This commitment, which was automatically extended for up to 90 days on January 29, 2017, expired on April 30, 2017 and was not renewed since Abbott does not need this bridge facility to finance the Alere acquisition. The fees associated with the bridge facilities were recognized in interest expense. On July 31, 2017, Abbott entered into a term loan agreement whereby Abbott can borrow up to $2.8 billion on an unsecured basis for the acquisition of Alere. Funding of the 5-year loan is subject to the satisfaction of certain conditions related to the consummation of the Alere acquisition. Borrowings under the term loan will bear interest, at Abbott’s option, based on either a base rate or a Eurodollar rate, plus an applicable margin based on Abbott’s credit ratings. |
Financial Instruments, Derivati
Financial Instruments, Derivatives and Fair Value Measures | 6 Months Ended |
Jun. 30, 2017 | |
Financial Instruments, Derivatives and Fair Value Measures | |
Financial Instruments, Derivatives and Fair Value Measures | Note 11 — Financial Instruments, Derivatives and Fair Value Measures Certain Abbott foreign subsidiaries enter into foreign currency forward exchange contracts to manage exposures to changes in foreign exchange rates for anticipated intercompany purchases by those subsidiaries whose functional currencies are not the U.S. dollar. These contracts, with gross notional amounts totaling $2.8 billion at June 30, 2017 and $2.6 billion at December 31, 2016 are designated as cash flow hedges of the variability of the cash flows due to changes in foreign exchange rates and are recorded at fair value. Accumulated gains and losses as of June 30, 2017 will be included in Cost of products sold at the time the products are sold, generally through the next twelve to eighteen months. The amount of hedge ineffectiveness was not significant in 2017 and 2016. Abbott enters into foreign currency forward exchange contracts to manage currency exposures for foreign currency denominated third-party trade payables and receivables, and for intercompany loans and trade accounts payable where the receivable or payable is denominated in a currency other than the functional currency of the entity. For intercompany loans, the contracts require Abbott to sell or buy foreign currencies, primarily European currencies including the British pound, in exchange for primarily U.S. dollars and other European currencies. For intercompany and trade payables and receivables, the currency exposures are primarily the U.S. dollar and European currencies. At June 30, 2017 and December 31, 2016, Abbott held the gross notional amount of $14.3 billion and $14.9 billion, respectively, of such foreign currency forward exchange contracts. In March 2017, Abbott repaid its $479 million foreign denominated short-term debt which was designated as a hedge of the net investment in a foreign subsidiary. At December 31, 2016, the value of this short-term debt was $454 million and changes in the fair value of the debt up through the date of repayment due to changes in exchange rates were recorded in Accumulated other comprehensive income (loss), net of tax. Abbott is a party to interest rate hedge contracts totaling approximately $4.0 billion at June 30, 2017 and $5.5 billion at December 31, 2016 to manage its exposure to changes in the fair value of fixed-rate debt. In the second quarter of 2017, Abbott unwound approximately $1.5 billion in interest rate swaps relating to the 2.00% Note due in 2020 and the 2.55% Note due in 2022. The proceeds received were not significant. These contracts are designated as fair value hedges of the variability of the fair value of fixed-rate debt due to changes in the long-term benchmark interest rates. The effect of the hedge is to change a fixed-rate interest obligation to a variable rate for that portion of the debt. Abbott records the contracts at fair value and adjusts the carrying amount of the fixed-rate debt by an offsetting amount. The amount of hedge ineffectiveness was not significant in 2017 and 2016. The following table summarizes the amounts and location of certain derivative financial instruments as of June 30, 2017 and December 31, 2016: Fair Value - Assets Fair Value - Liabilities (in millions) June 30, Dec. 31, Balance Sheet Caption June 30, Dec. 31, Balance Sheet Caption Interest rate swaps designated as fair value hedges $ $ Deferred income taxes and other assets $ $ Post-employment obligations, deferred income taxes and other long-term liabilities Foreign currency forward exchange contracts: Hedging instruments Prepaid expenses and other receivables Other accrued liabilities Others not designated as hedges Prepaid expenses and other receivables Other accrued liabilities Debt designated as a hedge of net investment in a foreign subsidiary — — n/a — Short-term borrowings $ $ $ $ The following table summarizes the activity for foreign currency forward exchange contracts designated as cash flow hedges, debt designated as a hedge of net investment in a foreign subsidiary and certain other derivative financial instruments, as well as the amounts and location of income (expense) and gain (loss) reclassified into income for the three months and six months ended June 30, 2017 and 2016. The amount of hedge ineffectiveness was not significant in 2017 and 2016 for these hedges. Gain (loss) Recognized in Other Income (expense) and Gain (loss) Three Months Six Months Three Months Six Months Income Statement (in millions) 2017 2016 2017 2016 2017 2016 2017 2016 Caption Foreign currency forward exchange contracts designated as cash flow hedges $ ) $ $ ) $ ) $ ) $ $ ) $ Cost of products sold Debt designated as a hedge of net investment in a foreign subsidiary — ) ) ) n/a n/a n/a n/a n/a Interest rate swaps designated as fair value hedges n/a n/a n/a n/a Interest expense Losses of $51 million and gains of $20 million were recognized in the three months ended June 30, 2017 and 2016, respectively, related to foreign currency forward exchange contracts not designated as a hedge. Losses of $42 million and gains of $18 million were recognized in the six months ended June 30, 2017 and 2016, respectively, related to foreign currency forward exchange contracts not designated as a hedge. These amounts are reported in the Condensed Consolidated Statement of Earnings on the Net foreign exchange loss (gain) line. The interest rate swaps are designated as fair value hedges of the variability of the fair value of fixed-rate debt due to changes in the long-term benchmark interest rates. The hedged debt is marked to market, offsetting the effect of marking the interest rate swaps to market. The carrying values and fair values of certain financial instruments as of June 30, 2017 and December 31, 2016 are shown in the following table. The carrying values of all other financial instruments approximate their estimated fair values. The counterparties to financial instruments consist of select major international financial institutions. Abbott does not expect any losses from nonperformance by these counterparties. June 30, 2017 December 31, 2016 (in millions) Carrying Fair Carrying Fair Investment Securities: Equity securities $ $ $ $ Other Total Long-term Debt ) ) ) ) Foreign Currency Forward Exchange Contracts: Receivable position (Payable) position ) ) ) ) Interest Rate Hedge Contracts: Receivable position (Payable) position ) ) ) ) The fair value of the debt was determined based on significant other observable inputs, including current interest rates. The following table summarizes the bases used to measure certain assets and liabilities at fair value on a recurring basis in the balance sheet: Basis of Fair Value Measurement (in millions) Outstanding Quoted Significant Significant June 30, 2017: Equity securities $ $ $ — $ — Interest rate swap derivative financial instruments — — Foreign currency forward exchange contracts — — Total Assets $ $ $ $ — Fair value of hedged long-term debt $ $ — $ $ — Foreign currency forward exchange contracts — — Interest rate swap derivative financial instruments — — Contingent consideration related to business combinations — — Total Liabilities $ $ — $ $ December 31, 2016: Equity securities $ $ $ — $ — Interest rate swap derivative financial instruments — — Foreign currency forward exchange contracts — — Total Assets $ $ $ $ — Fair value of hedged long-term debt $ $ — $ $ — Interest rate swap derivative financial instruments — — Foreign currency forward exchange contracts — — Contingent consideration related to business combinations — — Total Liabilities $ $ — $ $ Equity securities are principally comprised of Mylan N.V. ordinary shares. The fair value of the Mylan equity securities was determined based on the value of the publicly-traded ordinary shares. In the first six months of 2017, Abbott sold 50 million ordinary shares of Mylan N.V which had a value of $1.9 billion. As a result of this sale, Abbott’s ownership interest in Mylan N.V. decreased from approximately 14% to approximately 3.7%. The fair value of debt was determined based on the face value of the debt adjusted for the fair value of the interest rate swaps, which is based on a discounted cash flow analysis. The fair value of foreign currency forward exchange contracts is determined using a market approach, which utilizes values for comparable derivative instruments. The fair value of the contingent consideration was determined based on an independent appraisal adjusted for the time value of money and other changes in fair value. In the first six months of 2017, the increase in the fair value of the contingent consideration was due to the assumption of St. Jude Medical’s contingent consideration obligations. |
Litigation and Environmental Ma
Litigation and Environmental Matters | 6 Months Ended |
Jun. 30, 2017 | |
Litigation and Environmental Matters | |
Litigation and Environmental Matters | Note 12 — Litigation and Environmental Matters Abbott has been identified as a potentially responsible party for investigation and cleanup costs at a number of locations in the United States and Puerto Rico under federal and state remediation laws and is investigating potential contamination at a number of company-owned locations. Abbott has recorded an estimated cleanup cost for each site for which management believes Abbott has a probable loss exposure. No individual site cleanup exposure is expected to exceed $4 million, and the aggregate cleanup exposure is not expected to exceed $10 million. Abbott is involved in various claims and legal proceedings, and Abbott estimates the range of possible loss for its legal proceedings and environmental exposures to be from approximately $40 million to $45 million. The recorded accrual balance at June 30, 2017 for these proceedings and exposures was approximately $45 million. This accrual represents management’s best estimate of probable loss, as defined by FASB ASC No. 450, “Contingencies.” Within the next year, legal proceedings may occur that may result in a change in the estimated loss accrued by Abbott. While it is not feasible to predict the outcome of all such proceedings and exposures with certainty, management believes that their ultimate disposition should not have a material adverse effect on Abbott’s financial position, cash flows, or results of operations. |
Post-Employment Benefits
Post-Employment Benefits | 6 Months Ended |
Jun. 30, 2017 | |
Post-Employment Benefits | |
Post-Employment Benefits | Note 13 — Post-Employment Benefits Retirement plans consist of defined benefit, defined contribution, and medical and dental plans. Net cost recognized in continuing operations for the three months and six months ended June 30 for Abbott’s major defined benefit plans and post-employment medical and dental benefit plans is as follows: Defined Benefit Plans Medical and Dental Plans Three Months Six Months Three Months Six Months Ended June 30 Ended June 30 Ended June 30 Ended June 30 (in millions) 2017 2016 2017 2016 2017 2016 2017 2016 Service cost - benefits earned during the period $ $ $ $ $ $ $ $ Interest cost on projected benefit obligations Expected return on plan assets ) ) ) ) ) ) ) ) Net amortization of: Actuarial loss, net Prior service cost (credit) — — — — ) ) ) ) Net cost - continuing operations $ $ $ $ $ $ — $ $ In the first six months of 2017, Abbott recognized a $10 million curtailment gain related to the disposition of AMO. Abbott funds its domestic defined benefit plans according to IRS funding limitations. International pension plans are funded according to similar regulations. In the first six months of 2017 and 2016, $321 million and $524 million, respectively, were contributed to defined benefit plans and $11 million and $9 million, respectively, were contributed to the post-employment medical and dental benefit plans. |
Taxes on Earnings
Taxes on Earnings | 6 Months Ended |
Jun. 30, 2017 | |
Taxes on Earnings | |
Taxes on Earnings | Note 14 — Taxes on Earnings Taxes on earnings from continuing operations reflect the estimated annual effective rates and include charges for interest and penalties. In the first six months of 2017, taxes on earnings from continuing operations include $430 million of tax expense related to the gain on the sale of the AMO business, which is taxed at a discrete tax rate. Earnings from discontinued operations, net of tax, of $46 million for the first six months of 2017 primarily reflects the recognition of net tax benefits as a result of the resolution of various tax positions related to prior years. In the first six months of 2016, taxes on earnings from continuing operations includes the impact of a net tax benefit of approximately $145 million as a result of the resolution of various tax positions from prior years, partially offset by the unfavorable impact of non-deductible foreign exchange losses related to Venezuela. Earnings from discontinued operations, net of tax, in the first six months of 2016 reflects the recognition of $266 million of net tax benefits primarily as a result of the resolution of various tax positions related to prior years. The conclusion of these tax matters decreased the gross amount of unrecognized tax benefits by approximately $444 million. Tax authorities in various jurisdictions regularly review Abbott’s income tax filings. Abbott believes that it is reasonably possible that the recorded amount of gross unrecognized tax benefits may decrease between $200 million and $350 million, including cash adjustments, within the next twelve months as a result of concluding various domestic and international tax matters. In the U.S., Abbott’s federal income tax returns are settled through 2013 and St. Jude Medical’s federal income tax returns are settled through 2013 except for one item. |
Segment Information
Segment Information | 6 Months Ended |
Jun. 30, 2017 | |
Segment Information | |
Segment Information | Note 15 — 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. On January 4, 2017, Abbott completed the acquisition of St. Jude Medical. Beginning with the first quarter of 2017, Abbott’s cardiovascular and neuromodulation business includes the results of its historical Vascular Products segment and the results of the businesses acquired from St. Jude Medical from the date of acquisition. 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. Cardiovascular and Neuromodulation Products — Worldwide sales of rhythm management, electrophysiology, heart failure, vascular, structural heart and neuromodulation products. Non-reportable segments include AMO through the date of sale and Diabetes Care. 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. As a result of the acquisition of St. Jude Medical, the total assets of the Cardiovascular and Neuromodulation segment increased from $1.425 billion at December 31, 2016 to $5.250 billion at June 30, 2017. 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) 2017 2016 2017 2016 2017 2016 2017 2016 Established Pharmaceutical Products $ $ $ $ $ $ $ $ Nutritional Products Diagnostic Products Cardiovascular and Neuromodulation Products (a) Total Reportable Segments Other Net Sales $ $ $ $ Corporate functions and benefit plans costs ) ) ) ) Non-reportable segments Net interest expense ) ) ) ) Share-based compensation (b) ) ) ) ) Amortization of intangible assets ) ) ) ) Other, net (c) ) ) ) ) Earnings from continuing operations before taxes $ $ $ $ (a) Operating earnings for the first six months of 2017 include certain costs previously reflected in corporate functions during the first three months of 2017. (b) 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. (c) Other, net for the six months ended June 30, 2017, includes the gain on the sale of the AMO business. Other, net for the three and six months ended June 30, 2017, includes inventory step-up amortization, restructuring charges and integration costs associated with the acquisition of St. Jude Medical. Other, net for the six months ended June 30, 2016, includes the $477 million foreign currency loss related to operations in Venezuela and the $43 million impairment of an in-process research and development project related to a non-reportable segment. |
Assets and Liabilities Held f23
Assets and Liabilities Held for Disposition (Tables) | 6 Months Ended |
Jun. 30, 2017 | |
Assets and Liabilities Held for Disposition | |
Summary of assets and liabilities held for disposition | (in millions) December 31, Trade receivables, net $ Total inventories Prepaid expenses and other current assets Current assets held for disposition Net property and equipment Intangible assets, net of amortization Goodwill Deferred income taxes and other assets Non-current assets held for disposition Total assets held for disposition $ Trade accounts payable $ Salaries, wages, commissions and other accrued liabilities Current liabilities held for disposition Post-employment obligations, deferred income taxes and other long-term liabilities Total liabilities held for disposition $ |
Supplemental Financial Inform24
Supplemental Financial Information (Tables) | 6 Months Ended |
Jun. 30, 2017 | |
Supplemental Financial Information | |
Components of long-term investments | Long-term Investments June 30, December 31, (in millions) 2017 2016 Equity securities $ $ Other Total $ $ |
Changes in Accumulated Other 25
Changes in Accumulated Other Comprehensive Income (Loss) (Tables) | 6 Months Ended |
Jun. 30, 2017 | |
Changes in Accumulated Other Comprehensive Income (Loss) | |
Schedule of changes in accumulated other comprehensive income (loss), net of income taxes | Three Months Ended June 30 Cumulative Gains Cumulative (Losses) on Net Actuarial Unrealized Gains Derivative Cumulative Foreign Losses and Prior (Losses) on Instruments Currency Translation Service Costs and Marketable Equity Designated as Adjustments Credits Securities Cash Flow Hedges (in millions) 2017 2016 2017 2016 2017 2016 2017 2016 Balance at March 31 $ ) $ ) $ ) $ ) $ $ ) $ ) $ ) Other comprehensive income (loss) before reclassifications ) — ) ) ) Amounts reclassified from accumulated other comprehensive income — — — — ) Net current period comprehensive income (loss) ) ) ) ) ) Balance at June 30 $ ) $ ) $ ) $ ) $ $ ) $ ) $ ) Six Months Ended June 30 Cumulative Foreign Net Actuarial Cumulative Cumulative Gains (in millions) 2017 2016 2017 2016 2017 2016 2017 2016 Balance at December 31, 2016 and 2015 $ ) $ ) $ ) $ ) $ ) $ $ $ Impact of business dispositions — — — — — Other comprehensive income (loss) before reclassifications — ) ) ) ) Amounts reclassified from accumulated other comprehensive income — — ) — ) Net current period comprehensive income (loss) ) ) ) ) Balance at June 30 $ ) $ ) $ ) $ ) $ $ ) $ ) $ ) |
Business Acquisitions (Tables)
Business Acquisitions (Tables) | 6 Months Ended |
Jun. 30, 2017 | |
Business Acquisitions | |
Schedule of allocation of fair value of the acquisition | (in billions) Acquired intangible assets, non-deductible $ Goodwill, non-deductible Acquired net tangible assets Deferred income taxes recorded at acquisition ) Net debt ) Total preliminary allocation of fair value $ |
Restructuring Plans (Tables)
Restructuring Plans (Tables) | 6 Months Ended |
Jun. 30, 2017 | |
Restructuring Plan 2017 | |
Restructuring costs | |
Summary of restructuring activity | The following summarizes the activity for the first six months of 2017 related to these actions and the status of the related accrual as of June 30, 2017: (in millions) Liabilities assumed as part of business acquisition $ Restructuring charges recorded in 2017 Payments and other adjustments ) Accrued balance at June 30, 2017 $ |
Restructuring Plan from 2014 to 2017 | |
Restructuring costs | |
Summary of restructuring activity | The following summarizes the activity for the first six months of 2017 related to these restructuring actions and the status of the related accrual as of June 30, 2017: (in millions) Accrued balance at December 31, 2016 $ Restructuring charges recorded in 2017 Payments and other adjustments ) Accrued balance at June 30, 2017 $ |
Incentive Stock Programs (Table
Incentive Stock Programs (Tables) | 6 Months Ended |
Jun. 30, 2017 | |
Incentive Stock Programs | |
Schedule of stock options outstanding and exercisable | Information regarding the number of options outstanding and exercisable at June 30, 2017 is as follows: Outstanding Exercisable Number of shares Weighted average remaining life ( years ) Weighted average exercise price $ $ Aggregate intrinsic value ( in millions ) $ $ |
Debt and Lines of Credit (Table
Debt and Lines of Credit (Tables) | 6 Months Ended |
Jun. 30, 2017 | |
Debt and Lines of Credit | |
Schedule of debt assumed and exchanged | Principal Amount 2.00% Senior Notes due 2018 $473.8 million 2.80% Senior Notes due 2020 $483.7 million 3.25% Senior Notes due 2023 $818.4 million 3.875% Senior Notes due 2025 $490.7 million 4.75% Senior Notes due 2043 $639.1 million |
Schedule of debt assumed and subsequently repaid | Term loan due 2020 $2.3 billion Yen-denominated notes due 2017 and 2020 $179 million Yen-denominated credit facilities $55 million Commercial paper borrowings $220 million |
Financial Instruments, Deriva30
Financial Instruments, Derivatives and Fair Value Measures (Tables) | 6 Months Ended |
Jun. 30, 2017 | |
Financial Instruments, Derivatives and Fair Value Measures | |
Summary of the amounts and location of certain derivative financial instruments | Fair Value - Assets Fair Value - Liabilities (in millions) June 30, Dec. 31, Balance Sheet Caption June 30, Dec. 31, Balance Sheet Caption Interest rate swaps designated as fair value hedges $ $ Deferred income taxes and other assets $ $ Post-employment obligations, deferred income taxes and other long-term liabilities Foreign currency forward exchange contracts: Hedging instruments Prepaid expenses and other receivables Other accrued liabilities Others not designated as hedges Prepaid expenses and other receivables Other accrued liabilities Debt designated as a hedge of net investment in a foreign subsidiary — — n/a — Short-term borrowings $ $ $ $ |
Schedule of derivatives gain (loss) in OCI and earnings | Gain (loss) Recognized in Other Income (expense) and Gain (loss) Three Months Six Months Three Months Six Months Income Statement (in millions) 2017 2016 2017 2016 2017 2016 2017 2016 Caption Foreign currency forward exchange contracts designated as cash flow hedges $ ) $ $ ) $ ) $ ) $ $ ) $ Cost of products sold Debt designated as a hedge of net investment in a foreign subsidiary — ) ) ) n/a n/a n/a n/a n/a Interest rate swaps designated as fair value hedges n/a n/a n/a n/a Interest expense |
Schedule of carrying values and fair values of certain financial instruments | June 30, 2017 December 31, 2016 (in millions) Carrying Fair Carrying Fair Investment Securities: Equity securities $ $ $ $ Other Total Long-term Debt ) ) ) ) Foreign Currency Forward Exchange Contracts: Receivable position (Payable) position ) ) ) ) Interest Rate Hedge Contracts: Receivable position (Payable) position ) ) ) ) |
Schedule of assets and liabilities measured at fair value on a recurring basis | Basis of Fair Value Measurement (in millions) Outstanding Quoted Significant Significant June 30, 2017: Equity securities $ $ $ — $ — Interest rate swap derivative financial instruments — — Foreign currency forward exchange contracts — — Total Assets $ $ $ $ — Fair value of hedged long-term debt $ $ — $ $ — Foreign currency forward exchange contracts — — Interest rate swap derivative financial instruments — — Contingent consideration related to business combinations — — Total Liabilities $ $ — $ $ December 31, 2016: Equity securities $ $ $ — $ — Interest rate swap derivative financial instruments — — Foreign currency forward exchange contracts — — Total Assets $ $ $ $ — Fair value of hedged long-term debt $ $ — $ $ — Interest rate swap derivative financial instruments — — Foreign currency forward exchange contracts — — Contingent consideration related to business combinations — — Total Liabilities $ $ — $ $ |
Post-Employment Benefits (Table
Post-Employment Benefits (Tables) | 6 Months Ended |
Jun. 30, 2017 | |
Post-Employment Benefits | |
The components of the net periodic benefit cost for the entity's major defined benefit plans and post-employment medical and dental benefit plans | Defined Benefit Plans Medical and Dental Plans Three Months Six Months Three Months Six Months Ended June 30 Ended June 30 Ended June 30 Ended June 30 (in millions) 2017 2016 2017 2016 2017 2016 2017 2016 Service cost - benefits earned during the period $ $ $ $ $ $ $ $ Interest cost on projected benefit obligations Expected return on plan assets ) ) ) ) ) ) ) ) Net amortization of: Actuarial loss, net Prior service cost (credit) — — — — ) ) ) ) Net cost - continuing operations $ $ $ $ $ $ — $ $ |
Segment Information (Tables)
Segment Information (Tables) | 6 Months Ended |
Jun. 30, 2017 | |
Segment Information | |
Schedule of segment information - net sales and operating earnings | 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) 2017 2016 2017 2016 2017 2016 2017 2016 Established Pharmaceutical Products $ $ $ $ $ $ $ $ Nutritional Products Diagnostic Products Cardiovascular and Neuromodulation Products (a) Total Reportable Segments Other Net Sales $ $ $ $ Corporate functions and benefit plans costs ) ) ) ) Non-reportable segments Net interest expense ) ) ) ) Share-based compensation (b) ) ) ) ) Amortization of intangible assets ) ) ) ) Other, net (c) ) ) ) ) Earnings from continuing operations before taxes $ $ $ $ (a) Operating earnings for the first six months of 2017 include certain costs previously reflected in corporate functions during the first three months of 2017. (b) 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. (c) Other, net for the six months ended June 30, 2017, includes the gain on the sale of the AMO business. Other, net for the three and six months ended June 30, 2017, includes inventory step-up amortization, restructuring charges and integration costs associated with the acquisition of St. Jude Medical. Other, net for the six months ended June 30, 2016, includes the $477 million foreign currency loss related to operations in Venezuela and the $43 million impairment of an in-process research and development project related to a non-reportable segment. |
Basis of Presentation - (Detail
Basis of Presentation - (Details) - USD ($) $ in Millions | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2017 | Jun. 30, 2016 | Jun. 30, 2017 | Jun. 30, 2016 | |
Tax benefit | $ (25) | $ (116) | $ (375) | $ (62) |
Accounting Standards Update 2016-09 | ||||
Tax benefit | $ 25 | $ 63 |
Discontinued Operations (Detail
Discontinued Operations (Details) - USD ($) shares in Thousands, $ in Millions | Feb. 27, 2015 | Jun. 30, 2017 | Mar. 31, 2017 | Apr. 30, 2015 | Jun. 30, 2017 | Jun. 30, 2016 | Mar. 31, 2016 | Mar. 31, 2015 | Jun. 30, 2017 | Jun. 30, 2016 | Dec. 31, 2016 |
Discontinued Operations | |||||||||||
Proceeds from the sale of Mylan N.V. shares | $ 1,924 | ||||||||||
After tax Gain | $ 16 | ||||||||||
Earnings from discontinued operations, net of tax | $ 13 | $ 16 | 46 | 260 | |||||||
Animal health business | |||||||||||
Discontinued Operations | |||||||||||
Proceeds from the disposition of business | $ 25 | $ 230 | |||||||||
After tax Gain | $ 16 | $ 130 | |||||||||
AbbVie Inc. | |||||||||||
Discontinued Operations | |||||||||||
Earnings from discontinued operations, net of tax | $ 46 | $ 260 | |||||||||
Mylan NV | |||||||||||
Discontinued Operations | |||||||||||
Number of shares in investment sold | 6,000 | 44,000 | 40,250 | 50,000 | |||||||
Proceeds from the sale of Mylan N.V. shares | $ 239 | $ 1,685 | $ 1,900 | ||||||||
Ownership interest (as a percent) | 3.70% | 14.00% | 3.70% | 3.70% | 14.00% | ||||||
Mylan NV | Mylan | Developed markets branded generics pharmaceuticals business | |||||||||||
Discontinued Operations | |||||||||||
Number of shares received for sale of business | 110,000 | ||||||||||
Percentage of shares received for sale of business | 22.00% |
Assets and Liabilities Held f35
Assets and Liabilities Held for Disposition (Details) - USD ($) $ in Millions | 3 Months Ended | 6 Months Ended | ||||
Jun. 30, 2017 | Jun. 30, 2016 | Jun. 30, 2017 | Jun. 30, 2016 | Dec. 31, 2016 | Sep. 30, 2016 | |
Disclosures | ||||||
Earnings (losses) before taxes | $ 295 | $ 715 | $ 1,031 | $ 717 | ||
Disposals as part of acquisitions | ||||||
Current assets held for disposition | $ 513 | |||||
Non-current assets held for disposition | 2,753 | |||||
Current liabilities held for disposition | 245 | |||||
Post-employment obligations, deferred income taxes and other long-term liabilities | 59 | |||||
AMO | Dispositions held for sale | ||||||
Disclosures | ||||||
Sale consideration | $ 4,325 | |||||
After tax gain on sale of disposal group | 721 | |||||
Earnings (losses) before taxes | $ 0 | $ 13 | (18) | $ (44) | ||
Disposals as part of acquisitions | ||||||
Trade receivables, net | 222 | |||||
Total inventories | 240 | |||||
Prepaid expenses and other current assets | 51 | |||||
Current assets held for disposition | 513 | |||||
Net property and equipment | 247 | |||||
Intangible assets, net of amortization | 529 | |||||
Goodwill | 1,966 | |||||
Deferred income taxes and other assets | 11 | |||||
Non-current assets held for disposition | 2,753 | |||||
Total assets held for disposition | 3,266 | |||||
Trade accounts payable | 71 | |||||
Salaries, wages, commissions and other accrued liabilities | 174 | |||||
Current liabilities held for disposition | 245 | |||||
Post-employment obligations, deferred income taxes and other long-term liabilities | 59 | |||||
Total liabilities held for disposition | $ 304 | |||||
AMO | Dispositions held for sale | Other expense (income), net | ||||||
Disclosures | ||||||
Pre-tax gain on sale of disposal group | $ 1,151 |
Supplemental Financial Inform36
Supplemental Financial Information - Income Statement (Details) - USD ($) $ in Millions | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2017 | Jun. 30, 2016 | Jun. 30, 2017 | Jun. 30, 2016 | |
Supplemental Financial Information | ||||
Earnings from continuing operations allocated to common shares | $ 269 | $ 597 | $ 653 | $ 652 |
Net earnings allocated to common shares | $ 281 | $ 612 | $ 698 | $ 927 |
Supplemental Financial Inform37
Supplemental Financial Information - Cash Flows (Details) - USD ($) $ in Millions | 6 Months Ended | |
Jun. 30, 2017 | Jun. 30, 2016 | |
Cash flow disclosures | ||
Tax expense (benefit) on gain or loss on sale of business | $ 430 | |
Tax expense (benefit) from resolution of various tax positions related to prior years | $ (410) | |
Taxes paid related to disposal group | 140 | |
Cash impact from foreign currency loss | 73 | (384) |
Venezuela | ||
Cash flow disclosures | ||
Cash impact from foreign currency loss | (410) | |
Defined Benefit Plans | ||
Cash flow disclosures | ||
Company contributions | 321 | 524 |
Medical and Dental Plans | ||
Cash flow disclosures | ||
Company contributions | $ 11 | $ 9 |
Supplemental Financial Inform38
Supplemental Financial Information - Foreign currency (Details) $ in Millions | 3 Months Ended | 6 Months Ended | ||||
Mar. 31, 2016USD ($) | Jun. 30, 2016USD ($) | Jun. 30, 2017 | Feb. 17, 2016 | Feb. 16, 2016 | Dec. 31, 2015 | |
Foreign currency disclosures | ||||||
Foreign currency exchange loss on remeasurement | $ 477 | |||||
Venezuela | ||||||
Foreign currency disclosures | ||||||
Foreign currency exchange loss on remeasurement | $ 477 | $ 477 | ||||
Abbott's total net assets from Venezuelan operations (as a percent) | 0.01% | |||||
CENCOEX | ||||||
Foreign currency disclosures | ||||||
Official rate to U.S. dollar | 6.3 | |||||
SICAD | ||||||
Foreign currency disclosures | ||||||
Official rate to U.S. dollar | 13.5 | |||||
SIMADI | ||||||
Foreign currency disclosures | ||||||
Official rate to U.S. dollar | 200 | |||||
DIPRO | ||||||
Foreign currency disclosures | ||||||
Official rate to U.S. dollar | 10 | 6.3 | ||||
DICOM | ||||||
Foreign currency disclosures | ||||||
Official rate to U.S. dollar | 263 | |||||
Venezuelan bolivars | ||||||
Foreign currency disclosures | ||||||
Official rate to U.S. dollar | 6.3 |
Supplemental Financial Inform39
Supplemental Financial Information - Investments (Details) - USD ($) shares in Thousands, $ in Millions | 1 Months Ended | 6 Months Ended | |||
Jun. 30, 2017 | Mar. 31, 2017 | Apr. 30, 2015 | Jun. 30, 2017 | Dec. 31, 2016 | |
Investments | |||||
Long-term Investments | $ 1,545 | $ 1,545 | $ 2,947 | ||
Proceeds from the sale of Mylan N.V. shares | $ 1,924 | ||||
Mylan NV | |||||
Investments | |||||
Number of shares in investment sold | 6,000 | 44,000 | 40,250 | 50,000 | |
Proceeds from the sale of Mylan N.V. shares | $ 239 | $ 1,685 | $ 1,900 | ||
Equity securities | |||||
Investments | |||||
Long-term Investments | 1,482 | 1,482 | 2,906 | ||
Equity securities | St Jude Medical | |||||
Investments | |||||
Securities in mutual funds held in a rabbi trust | 348 | $ 348 | |||
Equity securities | Mylan NV | |||||
Investments | |||||
Number of shares in investment sold | 50,000 | ||||
Proceeds from the sale of Mylan N.V. shares | $ 1,900 | ||||
Other | |||||
Investments | |||||
Long-term Investments | $ 63 | $ 63 | $ 41 |
Changes in Accumulated Other 40
Changes in Accumulated Other Comprehensive Income (Loss) (Details) - USD ($) $ in Millions | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2017 | Jun. 30, 2016 | Jun. 30, 2017 | Jun. 30, 2016 | |
Changes in accumulated other comprehensive income (loss), net of income taxes | ||||
Beginning of Period | $ 20,538 | |||
Other comprehensive income (loss) | $ 282 | $ (372) | 864 | $ (565) |
End of Period | 31,602 | 31,602 | ||
Cumulative Foreign Currency Translation Adjustments | ||||
Changes in accumulated other comprehensive income (loss), net of income taxes | ||||
Beginning of Period | (4,284) | (4,408) | (4,959) | (4,829) |
Impact of business dispositions | 142 | |||
Other comprehensive income (loss) before reclassifications | 288 | (104) | 821 | 317 |
Other comprehensive income (loss) | 288 | (104) | 821 | 317 |
End of Period | (3,996) | (4,512) | (3,996) | (4,512) |
Net Actuarial Losses and Prior Service Costs and Credits | ||||
Changes in accumulated other comprehensive income (loss), net of income taxes | ||||
Beginning of Period | (2,244) | (1,940) | (2,284) | (1,958) |
Impact of business dispositions | 6 | |||
Other comprehensive income (loss) before reclassifications | (62) | (62) | ||
Amounts reclassified from accumulated other comprehensive income | 29 | 15 | 63 | 33 |
Other comprehensive income (loss) | 29 | (47) | 63 | (29) |
End of Period | (2,215) | (1,987) | (2,215) | (1,987) |
Cumulative Unrealized Gains (Losses) on Marketable Equity Securities | ||||
Changes in accumulated other comprehensive income (loss), net of income taxes | ||||
Beginning of Period | 11 | (478) | (69) | 65 |
Other comprehensive income (loss) before reclassifications | 2 | (213) | 183 | (756) |
Amounts reclassified from accumulated other comprehensive income | (101) | |||
Other comprehensive income (loss) | 2 | (213) | 82 | (756) |
End of Period | 13 | (691) | 13 | (691) |
Cumulative Gains (Losses) on Derivative Instruments Designated as Cash Flow Hedges | ||||
Changes in accumulated other comprehensive income (loss), net of income taxes | ||||
Beginning of Period | (15) | (25) | 49 | 64 |
Impact of business dispositions | 1 | |||
Other comprehensive income (loss) before reclassifications | (38) | 11 | (107) | (47) |
Amounts reclassified from accumulated other comprehensive income | 1 | (19) | 5 | (50) |
Other comprehensive income (loss) | (37) | (8) | (102) | (97) |
End of Period | $ (52) | $ (33) | $ (52) | $ (33) |
Business Acquisitions (Details)
Business Acquisitions (Details) - USD ($) $ / shares in Units, $ in Millions | Jul. 31, 2017 | Jul. 17, 2017 | Apr. 13, 2017 | Jan. 20, 2017 | Jan. 04, 2017 | Jun. 30, 2017 | Jun. 30, 2016 | Jun. 30, 2017 | Jun. 30, 2016 | Jul. 21, 2017 | Jul. 15, 2017 | Mar. 31, 2017 | Dec. 31, 2016 | Jan. 30, 2016 |
Allocation of the fair value | ||||||||||||||
Goodwill, non-deductible | $ 22,132 | $ 22,132 | $ 7,683 | |||||||||||
Disposals as part of acquisitions | ||||||||||||||
Gain or loss on sale | 1,151 | $ 25 | ||||||||||||
Alere | ||||||||||||||
Business acquisitions | ||||||||||||||
Debt, short-term and long-term | $ 2,300 | |||||||||||||
St Jude Medical | ||||||||||||||
Business acquisitions | ||||||||||||||
Total consideration for business acquisition | $ 23,600 | |||||||||||||
Cash paid for business acquisition | 13,600 | |||||||||||||
Issue of equity for business acquisition | $ 10,000 | |||||||||||||
Number of equity shares issued for business acquisition | 254,000,000 | |||||||||||||
Debt assumed, repaid, or refinanced | $ 5,900 | |||||||||||||
Share price of shares received in acquisition per agreement (in dollars per share) | $ 46.75 | |||||||||||||
Share received (in shares) | 0.8708 | |||||||||||||
Share price (in dollars per share) | $ 39.36 | |||||||||||||
Expected value per common share (in dollars per share) | $ 81 | |||||||||||||
Allocation of the fair value | ||||||||||||||
Measurement period adjustments to the value of the intangible amortization expense | $ 70 | |||||||||||||
Acquired intangible assets, non-deductible | $ 15,000 | |||||||||||||
Goodwill, non-deductible | 15,100 | |||||||||||||
Acquired net tangible assets | 3,400 | |||||||||||||
Deferred income taxes recorded at acquisition | (4,600) | |||||||||||||
Net debt | (5,300) | |||||||||||||
Total preliminary allocation of fair value | 23,600 | |||||||||||||
Trade accounts receivable | 1,200 | |||||||||||||
Inventory | 1,700 | |||||||||||||
Other current assets | 206 | |||||||||||||
Property and equipment | 1,500 | |||||||||||||
Other long-term assets | 475 | |||||||||||||
Trade accounts payable and other current liabilities | 1,000 | |||||||||||||
Other noncurrent liabilities | $ 655 | |||||||||||||
Pro forma financial information | ||||||||||||||
Pro forma consolidated net sales | $ 6,900 | 2,900 | 13,200 | |||||||||||
Pro forma pre-tax loss | 1,000 | |||||||||||||
Pro forma consolidated net loss | 250 | 165 | ||||||||||||
Amortization of inventory step-up | 430 | 820 | 820 | |||||||||||
Amortization of intangibles | $ 340 | $ 670 | $ 670 | |||||||||||
St Jude Medical | Terumo | ||||||||||||||
Disposals as part of acquisitions | ||||||||||||||
Proceeds from sale of businesses | $ 1,120 | |||||||||||||
Gain or loss on sale | $ 0 | |||||||||||||
St Jude Medical | 120-day bridge loan | ||||||||||||||
Business acquisitions | ||||||||||||||
Maturity period | 120 days | |||||||||||||
Proceeds from bridge loan | $ 2,000 | |||||||||||||
Alere | ||||||||||||||
Business acquisitions | ||||||||||||||
Issue of equity for business acquisition | $ 5,300 | |||||||||||||
Business Combination Consideration Transferred Reduced of Equity Interests Issued and Issuable on Amended Terms | $ 500 | |||||||||||||
Share price of shares received in acquisition per agreement (in dollars per share) | $ 51 | $ 56 | ||||||||||||
Maximum borrowing capacity | $ 2,800 | |||||||||||||
Maturity period | 5 years | |||||||||||||
Alere | Convertible Perpetual Preferred Stock, Series B | ||||||||||||||
Acquisitions - other disclosures | ||||||||||||||
Price of shares to be acquired for cash per a tender offer (n dollars per share) | $ 402 | |||||||||||||
Number of shares of stock to be acquired for cash per a tender offer (in shares) | 1,770,000 | |||||||||||||
Alere | Triage MeterPro Business | Disposal Group, held for disposition | ||||||||||||||
Disposals as part of acquisitions | ||||||||||||||
Sale consideration | $ 400 | |||||||||||||
Alere | Triage MeterPro Business | Disposal Group, held for disposition | Maximum | ||||||||||||||
Disposals as part of acquisitions | ||||||||||||||
Contingent consideration asset | $ 40 | |||||||||||||
Alere | Epocal Inc. | Disposal Group, held for disposition | ||||||||||||||
Disposals as part of acquisitions | ||||||||||||||
Sale consideration | $ 200 |
Goodwill and Intangible Assets
Goodwill and Intangible Assets (Details) - USD ($) $ in Millions | 6 Months Ended | |
Jun. 30, 2017 | Dec. 31, 2016 | |
Goodwill and intangible assets information | ||
Goodwill | $ 22,132 | $ 7,683 |
Foreign currency translation adjustments | 421 | |
Amount of reduction of goodwill relating to impairments | 0 | |
Established Pharmaceutical Products | ||
Goodwill and intangible assets information | ||
Goodwill | 3,100 | |
Nutritional Products | ||
Goodwill and intangible assets information | ||
Goodwill | 286 | |
Diagnostic Products | ||
Goodwill and intangible assets information | ||
Goodwill | 417 | |
Cardiovascular and Neuromodulation Products | ||
Goodwill and intangible assets information | ||
Goodwill | 17,300 | |
AMO | Dispositions held for sale | ||
Goodwill and intangible assets information | ||
Goodwill reclassified to Non-current assets held for disposition | 2,000 | |
St Jude Medical | ||
Goodwill and intangible assets information | ||
Goodwill acquired | 15,100 | |
St Jude Medical | Terumo | ||
Goodwill and intangible assets information | ||
Reductions of goodwill due to sale of certain businesses | $ 1,100 |
Goodwill and Intangible Asset43
Goodwill and Intangible Assets - Intangible Assets (Details) - USD ($) $ in Millions | 6 Months Ended | ||
Jun. 30, 2017 | Jun. 30, 2016 | Dec. 31, 2016 | |
Goodwill and Intangible Assets | |||
Gross amount of amortizable intangible assets | $ 21,700 | $ 10,400 | |
Accumulated amortization of intangible assets | 7,000 | 6,200 | |
Increase (decrease) in intangible assets due to foreign currency translation adjustment | 128 | ||
Indefinite-lived intangible assets related to in-process research and development acquired in a business combination | 4,000 | $ 349 | |
Estimated annual amortization expense, intangible assets, Full Fiscal Year 2017 | 1,900 | ||
Estimated annual amortization expense, intangible assets, 2018 | 2,100 | ||
Estimated annual amortization expense, intangible assets, 2019 | 2,000 | ||
Estimated annual amortization expense, intangible assets, 2020 | 1,800 | ||
Estimated annual amortization expense, intangible assets, 2021 | $ 1,700 | ||
Non-reportable segment | |||
Goodwill and Intangible Assets | |||
Impairment of indefinite-lived intangible assets | $ 43 | ||
Minimum | |||
Goodwill and Intangible Assets | |||
Amortization period of intangible assets | 2 years | ||
Maximum | |||
Goodwill and Intangible Assets | |||
Amortization period of intangible assets | 20 years | ||
Average | |||
Goodwill and Intangible Assets | |||
Amortization period of intangible assets | 11 years | ||
St Jude Medical | |||
Goodwill and Intangible Assets | |||
Amortizable intangible assets acquired | $ 11,300 | ||
Indefinite-lived intangible assets acquired | 3,700 | ||
Dispositions held for sale | AMO | |||
Goodwill and Intangible Assets | |||
Net intangible assets moved to Non-current assets held for disposition | $ 529 |
Restructuring Plans (Details)
Restructuring Plans (Details) $ in Millions | 6 Months Ended |
Jun. 30, 2017USD ($) | |
Restructuring Plan 2017 | |
Restructuring reserve activity | |
Liabilities assumed as part of business acquisition | $ 20 |
Restructuring charges | 144 |
Payments and other adjustments | (70) |
Accrued balance at end of period | 94 |
Restructuring Plan 2017 | Selling, general and administrative expense | |
Restructuring reserve activity | |
Restructuring charges | 144 |
Restructuring Plan from 2014 to 2017 | |
Restructuring reserve activity | |
Accrued balance at beginning of period | 66 |
Restructuring charges | 17 |
Payments and other adjustments | (22) |
Accrued balance at end of period | 61 |
Restructuring Plan from 2014 to 2017 | Cost of products sold | |
Restructuring reserve activity | |
Restructuring charges | 4 |
Restructuring Plan from 2014 to 2017 | Research and development | |
Restructuring reserve activity | |
Restructuring charges | 7 |
Restructuring Plan from 2014 to 2017 | Selling, general and administrative expense | |
Restructuring reserve activity | |
Restructuring charges | $ 6 |
Incentive Stock Programs (Detai
Incentive Stock Programs (Details) $ / shares in Units, $ in Millions | 6 Months Ended |
Jun. 30, 2017USD ($)$ / sharesshares | |
Share-based Compensation Arrangement by Share-based Payment Award | |
Incentive stock programs, shares reserved for future grants | 170,000,000 |
Total unrecognized compensation cost | $ | $ 393 |
Total unrecognized compensation cost, recognition period | 3 years |
Stock options | |
Share-based Compensation Arrangement by Share-based Payment Award | |
Stock options granted during the period (in shares) | 4,370,403 |
Stock options outstanding, number of shares | 40,577,408 |
Stock options outstanding, weighted-average remaining life | 6 years |
Stock options outstanding, weighted-average exercise price (in dollars per share) | $ / shares | $ 35.72 |
Aggregate intrinsic value of options outstanding | $ | $ 523 |
Exercisable options, number of shares | 23,873,390 |
Exercisable options, weighted-average remaining life | 4 years 8 months 12 days |
Exercisable options, weighted-average exercise price (in dollars per share) | $ / shares | $ 33.92 |
Aggregate intrinsic value of options exercisable | $ | $ 351 |
Stock options | St Jude Medical | |
Share-based Compensation Arrangement by Share-based Payment Award | |
Stock options outstanding, weighted-average exercise price (in dollars per share) | $ / shares | $ 30.50 |
Number of awards converted as part of acquisition (in shares) | 7,364,571 |
Restricted stock awards | |
Share-based Compensation Arrangement by Share-based Payment Award | |
Awards and units granted during period (in shares) | 546,383 |
Restricted stock units | |
Share-based Compensation Arrangement by Share-based Payment Award | |
Awards and units granted during period (in shares) | 6,865,354 |
Restricted stock units | St Jude Medical | |
Share-based Compensation Arrangement by Share-based Payment Award | |
Number of awards converted as part of acquisition (in shares) | 2,324,500 |
Awards and units outstanding, weighted-average grant-date fair value (in dollars per share) | $ / shares | $ 37.69 |
Debt and Lines of Credit (Detai
Debt and Lines of Credit (Details) $ in Millions | Jul. 31, 2017USD ($) | Jan. 04, 2017USD ($) | Feb. 29, 2016USD ($) | Jun. 30, 2017USD ($)NotesSeries | Dec. 31, 2016USD ($) |
Debt Instrument | |||||
Number of series of existing notes | NotesSeries | 5 | ||||
Total, net of current maturities | $ 23,810 | $ 20,681 | |||
Short-term debt outstanding | 218 | $ 1,322 | |||
Alere | |||||
Debt Instrument | |||||
Maturity period | 5 years | ||||
Maximum borrowing capacity | $ 2,800 | ||||
2.00% Senior Notes due 2018 | |||||
Debt Instrument | |||||
Debt issued - principal amount | $ 473.8 | ||||
Interest rate percentage | 2.00% | ||||
2.80% Senior Notes due 2020 | |||||
Debt Instrument | |||||
Debt issued - principal amount | $ 483.7 | ||||
Interest rate percentage | 2.80% | ||||
3.25% Senior Notes due 2023 | |||||
Debt Instrument | |||||
Debt issued - principal amount | $ 818.4 | ||||
Interest rate percentage | 3.25% | ||||
3.875% Senior Notes due 2025 | |||||
Debt Instrument | |||||
Debt issued - principal amount | $ 490.7 | ||||
Interest rate percentage | 3.875% | ||||
4.75% Senior Notes due 2043 | |||||
Debt Instrument | |||||
Debt issued - principal amount | $ 639.1 | ||||
Interest rate percentage | 4.75% | ||||
Senior Notes | |||||
Debt Instrument | |||||
Debt issued - principal amount | $ 2,900 | ||||
Debt exchange costs | 0 | ||||
Senior Notes | St Jude Medical | |||||
Debt Instrument | |||||
Debt outstanding | 194.2 | ||||
Term loan due 2020 | |||||
Debt Instrument | |||||
Repayments of debt | 2,300 | ||||
Yen-denominated notes due 2017 and 2020 | |||||
Debt Instrument | |||||
Repayments of debt | 179 | ||||
Yen-denominated credit facilities | |||||
Debt Instrument | |||||
Repayments of debt | 55 | ||||
Commercial paper borrowings | |||||
Debt Instrument | |||||
Repayments of debt | $ 220 | ||||
364-day Yen-denominated debt | |||||
Debt Instrument | |||||
Maturity period | 364 days | ||||
Short-term debt outstanding | $ 195 | ||||
Yen-denominated short-term debt | |||||
Debt Instrument | |||||
Debt paid off | 479 | ||||
364-day senior unsecured bridge term loan facility | Unfunded Loan Commitment | |||||
Debt Instrument | |||||
Maturity period | 364 days | ||||
Maximum borrowing capacity | $ 9,000 | ||||
Maximum extension period available automatically | 90 days | ||||
120-day bridge loan | St Jude Medical | |||||
Debt Instrument | |||||
Repayments of debt | $ 2,000 | ||||
Maturity period | 120 days | ||||
Proceeds from bridge loan | $ 2,000 |
Financial Instruments, Deriva47
Financial Instruments, Derivatives and Fair Value Measures - Derivative Information (Details) - USD ($) $ in Millions | 1 Months Ended | 6 Months Ended | |
Mar. 31, 2017 | Jun. 30, 2017 | Dec. 31, 2016 | |
Derivative instruments, notional amount and fair value | |||
Fair Value - Assets | $ 212 | $ 284 | |
Fair Value - Liabilities | 256 | 610 | |
Interest rate swap to 2.00% and 2.55% notes | |||
Derivative instruments, notional amount and fair value | |||
Unwounded interest rate swaps | 1,500 | ||
Designated as hedging instrument | Short-term borrowings | Net investment hedges | |||
Derivative instruments, notional amount and fair value | |||
Fair Value - Liabilities | 454 | ||
Repayment of short-term debt | $ 479 | ||
Designated as hedging instrument | Interest rate swaps | Fair value hedges | |||
Derivative instruments, notional amount and fair value | |||
Notional amount | 4,000 | 5,500 | |
Designated as hedging instrument | Interest rate swaps | Deferred income taxes and other assets | Fair value hedges | |||
Derivative instruments, notional amount and fair value | |||
Fair Value - Assets | 7 | 8 | |
Designated as hedging instrument | Interest rate swaps | Post-employment obligations, deferred income taxes and other long-term liabilities | Fair value hedges | |||
Derivative instruments, notional amount and fair value | |||
Fair Value - Liabilities | 59 | 74 | |
Designated as hedging instrument | Foreign currency forward exchange contracts | Cash flow hedges | |||
Derivative instruments, notional amount and fair value | |||
Notional amount | $ 2,800 | 2,600 | |
Minimum length of time over which accumulated gains and losses will be recognized in Cost of products sold | 12 months | ||
Maximum length of time over which accumulated gains and losses will be recognized in Cost of products sold | 18 months | ||
Designated as hedging instrument | Foreign currency forward exchange contracts | Prepaid expenses and other receivables | |||
Derivative instruments, notional amount and fair value | |||
Fair Value - Assets | $ 29 | 99 | |
Designated as hedging instrument | Foreign currency forward exchange contracts | Other accrued liabilities | |||
Derivative instruments, notional amount and fair value | |||
Fair Value - Liabilities | 85 | 15 | |
Not designated as hedging instrument | Foreign currency forward exchange contracts | |||
Derivative instruments, notional amount and fair value | |||
Notional amount | 14,300 | 14,900 | |
Not designated as hedging instrument | Foreign currency forward exchange contracts | Prepaid expenses and other receivables | |||
Derivative instruments, notional amount and fair value | |||
Fair Value - Assets | 176 | 177 | |
Not designated as hedging instrument | Foreign currency forward exchange contracts | Other accrued liabilities | |||
Derivative instruments, notional amount and fair value | |||
Fair Value - Liabilities | $ 112 | $ 67 |
Financial Instruments, Deriva48
Financial Instruments, Derivatives and Fair Value Measures - Derivative Instruments, Gain (Loss) (Details) - USD ($) $ in Millions | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2017 | Jun. 30, 2016 | Jun. 30, 2017 | Jun. 30, 2016 | |
Net investment hedges | Designated as hedging instrument | ||||
Gain (loss) on derivatives | ||||
Gain (loss) Recognized in Other Comprehensive Income (loss) | $ (45) | $ (25) | $ (77) | |
Interest rate swaps | Fair value hedges | Designated as hedging instrument | Interest expense | ||||
Gain (loss) on derivatives | ||||
Income (expense) and Gain (loss) Reclassified into Income | $ 40 | 44 | 14 | 145 |
Foreign currency forward exchange contracts | Not designated as hedging instrument | Net foreign exchange loss (gain) | ||||
Gain (loss) on derivatives | ||||
Income (expense) and Gain (loss) Reclassified into Income | (51) | 20 | (42) | 18 |
Foreign currency forward exchange contracts | Cash flow hedges | Designated as hedging instrument | Cost of products sold | ||||
Gain (loss) on derivatives | ||||
Gain (loss) Recognized in Other Comprehensive Income (loss) | (54) | 7 | (145) | (51) |
Income (expense) and Gain (loss) Reclassified into Income | $ (2) | $ 23 | $ (7) | $ 54 |
Financial Instruments, Deriva49
Financial Instruments, Derivatives and Fair Value Measures - Carrying Values And Fair Values Of Certain Financial Instruments (Details) - USD ($) $ in Millions | Jun. 30, 2017 | Dec. 31, 2016 |
Fair value, asset and liability measures | ||
Investments | $ 1,545 | $ 2,947 |
Foreign currency forward exchange contracts, receivable position | 212 | 284 |
Foreign currency forward exchange contracts, (payable) position | (256) | (610) |
Equity securities | ||
Fair value, asset and liability measures | ||
Investments | 1,482 | 2,906 |
Carrying value | ||
Fair value, asset and liability measures | ||
Total long-term debt | (23,813) | (20,684) |
Foreign currency forward exchange contracts, receivable position | 205 | 276 |
Foreign currency forward exchange contracts, (payable) position | (197) | (82) |
Interest rate hedge contracts, receivable position | 7 | 8 |
Interest rate hedge contract, (payable) position | (59) | (74) |
Carrying value | Equity securities | ||
Fair value, asset and liability measures | ||
Investments | 1,482 | 2,906 |
Carrying value | Other | ||
Fair value, asset and liability measures | ||
Investments | 63 | 41 |
Fair value | ||
Fair value, asset and liability measures | ||
Total long-term debt | (25,007) | (21,147) |
Foreign currency forward exchange contracts, receivable position | 205 | 276 |
Foreign currency forward exchange contracts, (payable) position | (197) | (82) |
Interest rate hedge contracts, receivable position | 7 | 8 |
Interest rate hedge contract, (payable) position | (59) | (74) |
Fair value | Equity securities | ||
Fair value, asset and liability measures | ||
Investments | 1,482 | 2,906 |
Fair value | Other | ||
Fair value, asset and liability measures | ||
Investments | $ 63 | $ 42 |
Financial Instruments, Deriva50
Financial Instruments, Derivatives and Fair Value Measures - Assets And Liabilities At Fair Value On A Recurring Basis (Details) - USD ($) shares in Thousands, $ in Millions | 1 Months Ended | 6 Months Ended | |||
Jun. 30, 2017 | Mar. 31, 2017 | Apr. 30, 2015 | Jun. 30, 2017 | Dec. 31, 2016 | |
Fair value, asset and liability measures | |||||
Fair Value - Assets | $ 212 | $ 212 | $ 284 | ||
Fair Value - Liabilities | $ 256 | 256 | $ 610 | ||
Available-for-sale equity securities in an unrealized loss position | |||||
Proceeds from the sale of Mylan N.V. shares | $ 1,924 | ||||
Mylan NV | |||||
Available-for-sale equity securities in an unrealized loss position | |||||
Number of shares in investment sold | 6,000 | 44,000 | 40,250 | 50,000 | |
Proceeds from the sale of Mylan N.V. shares | $ 239 | $ 1,685 | $ 1,900 | ||
Ownership interest (as a percent) | 3.70% | 14.00% | 3.70% | 14.00% | |
Recurring | |||||
Fair value, asset and liability measures | |||||
Equity securities | $ 1,183 | $ 1,183 | $ 2,676 | ||
Interest rate swap derivative financial instruments, assets | 7 | 7 | 8 | ||
Total Assets | 1,395 | 1,395 | 2,960 | ||
Fair value of hedged long-term debt | 3,938 | 3,938 | 5,413 | ||
Interest rate swap financial instruments, liabilities | 197 | 197 | 74 | ||
Contingent consideration related to business combinations | 146 | 146 | 136 | ||
Total Liabilities | 4,340 | 4,340 | 5,705 | ||
Recurring | Foreign currency forward exchange contracts | |||||
Fair value, asset and liability measures | |||||
Fair Value - Assets | 205 | 205 | 276 | ||
Fair Value - Liabilities | 59 | 59 | 82 | ||
Recurring | Quoted Prices in Active Markets | |||||
Fair value, asset and liability measures | |||||
Equity securities | 1,183 | 1,183 | 2,676 | ||
Total Assets | 1,183 | 1,183 | 2,676 | ||
Recurring | Significant Other Observable Inputs | |||||
Fair value, asset and liability measures | |||||
Interest rate swap derivative financial instruments, assets | 7 | 7 | 8 | ||
Total Assets | 212 | 212 | 284 | ||
Fair value of hedged long-term debt | 3,938 | 3,938 | 5,413 | ||
Interest rate swap financial instruments, liabilities | 197 | 197 | 74 | ||
Total Liabilities | 4,194 | 4,194 | 5,569 | ||
Recurring | Significant Other Observable Inputs | Foreign currency forward exchange contracts | |||||
Fair value, asset and liability measures | |||||
Fair Value - Assets | 205 | 205 | 276 | ||
Fair Value - Liabilities | 59 | 59 | 82 | ||
Recurring | Significant Unobservable Inputs | |||||
Fair value, asset and liability measures | |||||
Contingent consideration related to business combinations | 146 | 146 | 136 | ||
Total Liabilities | $ 146 | $ 146 | $ 136 |
Litigation and Environmental 51
Litigation and Environmental Matters (Details) $ in Millions | Jun. 30, 2017USD ($) |
Loss Contingencies | |
Maximum expected cleanup exposure for individual site | $ 4 |
Maximum expected cleanup exposure in aggregate | 10 |
Other legal proceedings and environmental exposures | |
Loss Contingencies | |
Recorded reserve balance for legal proceedings and exposures | 45 |
Other legal proceedings and environmental exposures | Minimum | |
Loss Contingencies | |
Other legal proceedings or environmental exposure | 40 |
Other legal proceedings and environmental exposures | Maximum | |
Loss Contingencies | |
Other legal proceedings or environmental exposure | $ 45 |
Post-Employment Benefits - Gene
Post-Employment Benefits - General (Details) - USD ($) $ in Millions | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2017 | Jun. 30, 2016 | Jun. 30, 2017 | Jun. 30, 2016 | |
Defined Benefit Plans | ||||
Defined benefit plan net periodic benefit cost | ||||
Service cost - benefits earned during the period | $ 70 | $ 67 | $ 142 | $ 134 |
Interest cost on projected benefit obligations | 71 | 73 | 143 | 146 |
Expected return on plan assets | (153) | (143) | (305) | (284) |
Net amortization of: | ||||
Actuarial loss, net | 40 | 31 | 82 | 63 |
Net cost - continuing operations | 28 | 28 | 62 | 59 |
Post-employment Obligations and Other Long-term Liabilities: | ||||
Company contributions | 321 | 524 | ||
Medical and Dental Plans | ||||
Defined benefit plan net periodic benefit cost | ||||
Service cost - benefits earned during the period | 6 | 6 | 13 | 13 |
Interest cost on projected benefit obligations | 11 | 10 | 22 | 22 |
Expected return on plan assets | (8) | (8) | (16) | (17) |
Net amortization of: | ||||
Actuarial loss, net | 6 | 3 | 12 | 9 |
Prior service cost (credit) | (12) | $ (11) | (23) | (22) |
Net cost - continuing operations | $ 3 | 8 | 5 | |
Post-employment Obligations and Other Long-term Liabilities: | ||||
Company contributions | 11 | $ 9 | ||
AMO | ||||
Post-employment Obligations and Other Long-term Liabilities: | ||||
Curtailment gain related to disposition of AMO | $ 10 |
Taxes on Earnings (Details)
Taxes on Earnings (Details) - USD ($) $ in Millions | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2017 | Jun. 30, 2016 | Jun. 30, 2017 | Jun. 30, 2016 | |
Taxes on Earnings | ||||
Tax expense (benefit) on gain or loss on sale of business | $ 430 | |||
Earnings from discontinued operations, net of tax | $ 13 | $ 16 | 46 | $ 276 |
Tax expense (benefit) from resolution of various tax positions related to prior years | (410) | |||
Increase (decrease) in gross unrecognized tax benefits | (444) | |||
Continuing operations | ||||
Taxes on Earnings | ||||
Tax expense (benefit) from resolution of various tax positions related to prior years | (145) | |||
Discontinued operations | ||||
Taxes on Earnings | ||||
Tax expense (benefit) from resolution of various tax positions related to prior years | $ (266) | |||
Minimum | ||||
Taxes on Earnings | ||||
Decrease reasonably possible in gross unrecognized tax benefits | 200 | 200 | ||
Maximum | ||||
Taxes on Earnings | ||||
Decrease reasonably possible in gross unrecognized tax benefits | $ 350 | 350 | ||
Dispositions held for sale | Continuing operations | AMO | ||||
Taxes on Earnings | ||||
Tax expense (benefit) on gain or loss on sale of business | $ 430 |
Segment Information (Details)
Segment Information (Details) - USD ($) $ in Millions | 3 Months Ended | 6 Months Ended | ||||
Jun. 30, 2017 | Jun. 30, 2016 | Mar. 31, 2016 | Jun. 30, 2017 | Jun. 30, 2016 | Dec. 31, 2016 | |
Segment Reporting Information | ||||||
Assets | $ 71,151 | $ 71,151 | $ 52,666 | |||
Net Sales to External Customers | 6,637 | $ 5,333 | 12,972 | $ 10,218 | ||
Operating Earnings | 427 | 816 | 225 | 1,340 | ||
Amortization of intangible assets | (392) | (145) | (914) | (289) | ||
Earnings from continuing operations before taxes | 295 | 715 | $ 1,031 | 717 | ||
Annual share-based awards recognized in first quarter (as a percent) | 50.00% | |||||
Foreign currency exchange loss on remeasurement | 477 | |||||
Venezuela | ||||||
Segment Reporting Information | ||||||
Foreign currency exchange loss on remeasurement | $ 477 | 477 | ||||
Other | ||||||
Segment Reporting Information | ||||||
Net Sales to External Customers | 352 | 605 | $ 834 | 1,128 | ||
Non-reportable segment | ||||||
Segment Reporting Information | ||||||
Impairment of indefinite-lived intangible assets | 43 | |||||
Total Reportable Segments | ||||||
Segment Reporting Information | ||||||
Net Sales to External Customers | 6,285 | 4,728 | 12,138 | 9,090 | ||
Operating Earnings | 1,599 | 1,138 | 2,993 | 2,142 | ||
Total Reportable Segments | Established Pharmaceutical Products | ||||||
Segment Reporting Information | ||||||
Net Sales to External Customers | 1,021 | 980 | 1,971 | 1,868 | ||
Operating Earnings | 180 | 192 | 320 | 340 | ||
Total Reportable Segments | Nutritional Products | ||||||
Segment Reporting Information | ||||||
Net Sales to External Customers | 1,731 | 1,740 | 3,373 | 3,411 | ||
Operating Earnings | 392 | 368 | 743 | 710 | ||
Total Reportable Segments | Diagnostic Products | ||||||
Segment Reporting Information | ||||||
Net Sales to External Customers | 1,273 | 1,226 | 2,431 | 2,344 | ||
Operating Earnings | 338 | 288 | 622 | 555 | ||
Total Reportable Segments | Cardiovascular and Neuromodulation Products | ||||||
Segment Reporting Information | ||||||
Net Sales to External Customers | 2,260 | 782 | 4,363 | 1,467 | ||
Operating Earnings | 689 | 290 | 1,308 | 537 | ||
Corporate functions | ||||||
Segment Reporting Information | ||||||
Corporate functions and benefit plans costs | (104) | (94) | (197) | (175) | ||
Reconciling items | ||||||
Segment Reporting Information | ||||||
Non-reportable segments | 74 | 52 | 120 | 50 | ||
Net interest expense | (183) | (83) | (387) | (108) | ||
Share-based compensation | (92) | (62) | (263) | (214) | ||
Amortization of intangible assets | (392) | (145) | (914) | (289) | ||
Other, net | (607) | $ (91) | (321) | $ (689) | ||
St Jude Medical | Cardiovascular and Neuromodulation Products | ||||||
Segment Reporting Information | ||||||
Assets | $ 5,250 | $ 5,250 | $ 1,425 |