Document and Entity Information
Document and Entity Information | 9 Months Ended |
Sep. 30, 2018shares | |
Document and Entity Information | |
Entity Registrant Name | ABBOTT LABORATORIES |
Entity Central Index Key | 1,800 |
Document Type | 10-Q |
Current Fiscal Year End Date | --12-31 |
Document Fiscal Year Focus | 2,018 |
Document Fiscal Period Focus | Q3 |
Document Period End Date | Sep. 30, 2018 |
Amendment Flag | false |
Entity Current Reporting Status | Yes |
Entity Filer Category | Large Accelerated Filer |
Entity Small Business | false |
Entity Emerging Growth Company | false |
Entity Common Stock, Shares Outstanding | 1,756,333,032 |
Condensed Consolidated Statemen
Condensed Consolidated Statement of Earnings - USD ($) shares in Thousands, $ in Millions | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2018 | Sep. 30, 2017 | Sep. 30, 2018 | Sep. 30, 2017 | |
Condensed Consolidated Statement of Earnings | ||||
Net sales | $ 7,656 | $ 6,829 | $ 22,813 | $ 19,801 |
Cost of products sold, excluding amortization of intangible assets | 3,166 | 2,876 | 9,515 | 9,127 |
Amortization of intangible assets | 544 | 501 | 1,690 | 1,415 |
Research and development | 574 | 568 | 1,738 | 1,641 |
Selling, general and administrative | 2,377 | 2,115 | 7,385 | 6,705 |
Total operating cost and expenses | 6,661 | 6,060 | 20,328 | 18,888 |
Operating earnings | 995 | 769 | 2,485 | 913 |
Interest expense | 203 | 218 | 640 | 658 |
Interest (income) | (22) | (36) | (71) | (89) |
Net foreign exchange (gain) loss | 11 | (6) | 2 | (34) |
Net loss on extinguishment of debt | 67 | 81 | ||
Other (income) expense, net | 18 | (33) | (93) | (1,279) |
Earnings from continuing operations before taxes | 718 | 626 | 1,926 | 1,657 |
Taxes on earnings from continuing operations | 166 | 65 | 247 | 440 |
Earnings from continuing operations | 552 | 561 | 1,679 | 1,217 |
Earnings from discontinued operations, net of tax | 11 | 42 | 35 | 88 |
Net Earnings | $ 563 | $ 603 | $ 1,714 | $ 1,305 |
Basic Earnings Per Common Share | ||||
Continuing operations (in dollars per share) | $ 0.31 | $ 0.32 | $ 0.95 | $ 0.70 |
Discontinued operations (in dollars per share) | 0.01 | 0.02 | 0.02 | 0.05 |
Net earnings (in dollars per share) | 0.32 | 0.34 | 0.97 | 0.75 |
Diluted Earnings Per Common Share | ||||
Continuing operations (in dollars per share) | 0.31 | 0.32 | 0.94 | 0.69 |
Discontinued operations (in dollars per share) | 0.01 | 0.02 | 0.02 | 0.05 |
Net earnings (in dollars per share) | 0.32 | 0.34 | 0.96 | 0.74 |
Cash Dividends Declared Per Common Share (in dollars per share) | $ 0.28 | $ 0.265 | $ 0.84 | $ 0.795 |
Average Number of Common Shares Outstanding Used for Basic Earnings Per Common Share (in shares) | 1,759,585 | 1,743,757 | 1,757,018 | 1,737,310 |
Dilutive Common Stock Options (in shares) | 12,095 | 10,399 | 11,692 | 8,866 |
Average Number of Common Shares Outstanding Plus Dilutive Common Stock Options (in shares) | 1,771,680 | 1,754,156 | 1,768,710 | 1,746,176 |
Outstanding Common Stock Options Having No Dilutive Effect (in shares) | 44 | 282 | 44 | 282 |
Condensed Consolidated Statem_2
Condensed Consolidated Statement of Comprehensive Income - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | |||
Sep. 30, 2018 | Sep. 30, 2017 | Sep. 30, 2018 | Sep. 30, 2017 | Dec. 31, 2017 | |
Condensed Consolidated Statement of Comprehensive Income | |||||
Net Earnings | $ 563 | $ 603 | $ 1,714 | $ 1,305 | |
Foreign currency translation gain (loss) adjustments | (153) | 285 | (1,179) | 1,106 | |
Net actuarial gains (losses) and amortization of net actuarial (losses) and prior service (cost) and credits, net of taxes of $16 and $48 in 2018 and $11 and $34 in 2017 | 22 | 23 | 106 | 86 | |
Unrealized gains (losses) on marketable equity securities, net of taxes of $2 and $62 in 2017 | (136) | (54) | |||
Net gains (losses) for derivative instruments designated as cash flow hedges and other, net of taxes of $16 and $44 in 2018 and $(10) and $(49) in 2017 | 35 | (38) | 121 | (140) | |
Other comprehensive income (loss) | (96) | 134 | (952) | 998 | |
Comprehensive Income (Loss) | 467 | $ 737 | 762 | $ 2,303 | |
Supplemental Accumulated Other Comprehensive Income (Loss) Information, net of tax: | |||||
Cumulative foreign currency translation (loss) adjustments | (4,631) | (4,631) | $ (3,452) | ||
Net actuarial (losses) and prior service (costs) and credits | (2,415) | (2,415) | (2,521) | ||
Cumulative unrealized gains (losses) on marketable equity securities | (5) | ||||
Cumulative gains (losses) on derivative instruments designated as cash flow hedges and other | 37 | 37 | (84) | ||
Accumulated other comprehensive income (loss) | $ (7,009) | $ (7,009) | $ (6,062) |
Condensed Consolidated Statem_3
Condensed Consolidated Statement of Comprehensive Income (Parenthetical) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2018 | Sep. 30, 2017 | Sep. 30, 2018 | Sep. 30, 2017 | |
Condensed Consolidated Statement of Comprehensive Income | ||||
Net actuarial gains (losses) and amortization of net actuarial (losses) and prior service (cost) and credits, taxes | $ 16 | $ 11 | $ 48 | $ 34 |
Unrealized gains (losses) on marketable equity securities, taxes | 2 | 62 | ||
Net gains (losses) for derivative instruments designated as cash flow hedges and other, taxes | $ 16 | $ (10) | $ 44 | $ (49) |
Condensed Consolidated Balance
Condensed Consolidated Balance Sheet - USD ($) $ in Millions | Sep. 30, 2018 | Dec. 31, 2017 |
Current Assets: | ||
Cash and cash equivalents | $ 7,369 | $ 9,407 |
Short-term investments | 181 | 203 |
Trade receivables, less allowances of $326 in 2018 and $294 in 2017 | 5,271 | 5,249 |
Inventories: | ||
Finished products | 2,340 | 2,339 |
Work in process | 561 | 472 |
Materials | 880 | 790 |
Total inventories | 3,781 | 3,601 |
Prepaid expenses and other receivables | 1,582 | 1,667 |
Current assets held for disposition | 12 | 20 |
Total Current Assets | 18,196 | 20,147 |
Investments | 971 | 883 |
Property and equipment, at cost | 15,520 | 15,265 |
Less: accumulated depreciation and amortization | 8,072 | 7,658 |
Net property and equipment | 7,448 | 7,607 |
Intangible assets, net of amortization | 19,477 | 21,473 |
Goodwill | 23,416 | 24,020 |
Deferred income taxes and other assets | 2,110 | 1,944 |
Non-current assets held for disposition | 19 | 176 |
Total Assets | 71,637 | 76,250 |
Current Liabilities: | ||
Short-term borrowings | 211 | 206 |
Trade accounts payable | 2,730 | 2,402 |
Salaries, wages and commissions | 1,241 | 1,187 |
Other accrued liabilities | 3,807 | 3,811 |
Dividends payable | 493 | 489 |
Income taxes payable | 231 | 309 |
Current portion of long-term debt | 4,063 | 508 |
Total Current Liabilities | 12,776 | 8,912 |
Long-term debt | 19,284 | 27,210 |
Post-employment obligations, deferred income taxes and other long-term liabilities | 8,679 | 9,030 |
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: 2018: 1,970,590,472; 2017: 1,965,908,188 | 23,428 | 23,206 |
Common shares held in treasury, at cost - Shares: 2018: 214,257,440; 2017: 222,305,719 | (9,858) | (10,225) |
Earnings employed in the business | 24,144 | 23,978 |
Accumulated other comprehensive income (loss) | (7,009) | (6,062) |
Total Abbott Shareholders' Investment | 30,705 | 30,897 |
Noncontrolling Interests in Subsidiaries | 193 | 201 |
Total Shareholders' Investment | 30,898 | 31,098 |
Total Liabilities and Shareholders' Investment | $ 71,637 | $ 76,250 |
Condensed Consolidated Balanc_2
Condensed Consolidated Balance Sheet (Parenthetical) - USD ($) $ in Millions | Sep. 30, 2018 | Dec. 31, 2017 |
Condensed Consolidated Balance Sheet | ||
Trade receivables, allowances (in dollars) | $ 326 | $ 294 |
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 | 1,970,590,472 | 1,965,908,188 |
Common shares held in treasury, shares | 214,257,440 | 222,305,719 |
Condensed Consolidated Statem_4
Condensed Consolidated Statement of Cash Flows - USD ($) $ in Millions | 9 Months Ended | |
Sep. 30, 2018 | Sep. 30, 2017 | |
Cash Flow From (Used in) Operating Activities: | ||
Net earnings | $ 1,714 | $ 1,305 |
Adjustments to reconcile net earnings to net cash from operating activities - | ||
Depreciation | 825 | 763 |
Amortization of intangible assets | 1,690 | 1,415 |
Share-based compensation | 396 | 338 |
Amortization of inventory step-up | 32 | 840 |
Gain on sale of businesses | (1,163) | |
Trade receivables | (280) | (169) |
Inventories | (450) | 39 |
Other, net | 608 | 562 |
Net Cash From Operating Activities | 4,535 | 3,930 |
Cash Flow From (Used in) Investing Activities: | ||
Acquisitions of property and equipment | (927) | (790) |
Acquisitions of businesses and technologies, net of cash acquired | (13,027) | |
Proceeds from business dispositions | 48 | 5,442 |
Proceeds from the sale of Mylan N.V. shares | 1,977 | |
Sales (purchases) of other investment securities, net | (23) | (98) |
Other | 42 | 30 |
Net Cash (Used in) Investing Activities | (860) | (6,466) |
Cash Flow From (Used in) Financing Activities: | ||
Net borrowings (repayments) of short-term debt and other | 22 | (1,424) |
Proceeds from issuance of long-term debt | 4,011 | |
Repayments of long-term debt | (8,279) | (2,508) |
Payment of debt issuance costs | (8) | |
Payment of contingent consideration | (13) | |
Purchases of common shares | (134) | (106) |
Proceeds from stock options exercised | 244 | 275 |
Dividends paid | (1,479) | (1,385) |
Net Cash (Used in) Financing Activities | (5,615) | (5,169) |
Effect of exchange rate changes on cash and cash equivalents | (98) | 97 |
Net Decrease in Cash and Cash Equivalents | (2,038) | (7,608) |
Cash and Cash Equivalents, Beginning of Year | 9,407 | 18,620 |
Cash and Cash Equivalents, End of Period | $ 7,369 | $ 11,012 |
Basis of Presentation
Basis of Presentation | 9 Months Ended |
Sep. 30, 2018 | |
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, 2017. The condensed consolidated financial statements include the accounts of the parent company and subsidiaries, after elimination of intercompany transactions. |
New Accounting Standards
New Accounting Standards | 9 Months Ended |
Sep. 30, 2018 | |
New Accounting Standards | |
New Accounting Standards | Note 2 — New Accounting Standards Recently Adopted Accounting Standards In March 2017, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) 2017-07, Compensation – Retirement Benefits (Topic 715): Improving the Presentation of Net Periodic Pension Cost and Net Periodic Postretirement Benefit Cost which changes the financial statement presentation requirements for pension and other postretirement benefit expense. While service cost continues to be reported in the same financial statement line items as other current employee compensation costs, the ASU requires all other components of pension and other postretirement benefit expense to be presented separately from service cost, and outside any subtotal of income from operations. Abbott adopted the standard in the first quarter of 2018 and the Condensed Consolidated Statement of Earnings was retrospectively adjusted, resulting in the reclassification of approximately $120 million of income from Operating earnings to Other (income) expense, net in the first nine months of 2017. In November 2016, the FASB issued ASU 2016-18, Statement of Cash Flows: Restricted Cash , which requires that restricted cash be included with cash and cash equivalents when reconciling the beginning and end-of-period total amounts shown on the statement of cash flows. Abbott adopted this standard beginning in the first quarter of 2018, and applied the guidance retrospectively to all periods presented. Abbott did not have any restricted cash balances in the periods presented except for $75 million of restricted cash acquired as part of the Alere Inc. acquisition in October 2017. The restrictions on this cash were eliminated prior to the end of 2017. In October 2016, the FASB issued ASU 2016-16, Income Taxes (Topic 740): Intra-Entity Transfers of Assets Other Than Inventory , which requires the recognition of the income tax effects of intercompany sales and transfers of assets, other than inventory, in the period in which the transfer occurs. Abbott adopted the standard on January 1, 2018, using a modified retrospective approach and recorded a cumulative catch-up adjustment to Earnings employed in the business in the Condensed Consolidated Balance Sheet that was not significant. In August 2016, the FASB issued ASU 2016-15, Statement of Cash Flows: Classification of Certain Cash Receipts and Cash Payments , which clarifies how companies should present and classify certain cash receipts and cash payments in the statement of cash flows. The ASU became effective for Abbott in the first quarter of 2018 and did not have a material impact to the Company’s Condensed Consolidated Statement of Cash Flows. In January 2016, the FASB issued ASU 2016-01, Financial Instruments – Recognition and Measurement of Financial Assets and Financial Liabilities , which provides new guidance for the recognition, measurement, presentation, and disclosure of financial assets and liabilities. Abbott adopted the standard on January 1, 2018. Under the new standard, changes in the fair value of equity investments with readily determinable fair values are recorded in Other (income) expense, net within the Condensed Consolidated Statement of Earnings. Previously, such fair value changes were recorded in other comprehensive income. Abbott has elected the measurement alternative allowed by ASU 2016-01 for its equity investments without readily determinable fair values. These investments are measured at cost, less any impairment, plus or minus any changes resulting from observable price changes in orderly transactions for an identical or similar investment of the same issuer. Changes in the measurement of these investments are being recorded in Other (income) expense, net within the Condensed Consolidated Statement of Earnings. As part of the adoption, the cumulative-effect adjustment to Earnings employed in the business in the Condensed Consolidated Balance Sheet for net unrealized losses on equity investments that were recorded in Accumulated other comprehensive income (loss) as of December 31, 2017 was not significant. In May 2014, the FASB issued ASU 2014-09, Revenue from Contracts with Customers , which provides a single comprehensive model for accounting for revenue from contracts with customers and supersedes nearly all previously existing revenue recognition guidance. The core principle of the ASU is that an entity should recognize revenue when it transfers promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. Abbott adopted the new standard as of January 1, 2018, using the modified retrospective approach method. Under this method, entities recognize the cumulative effect of applying the new standard at the date of initial application with no restatement of comparative periods presented. The cumulative effect of applying the new standard resulted in an increase to Earnings employed in the business in the Condensed Consolidated Balance Sheet of $23 million which was recorded on January 1, 2018. The new standard has been applied only to those contracts that were not completed as of January 1, 2018. The impact of adopting ASU 2014-09 was not significant to individual financial statement line items in the Condensed Consolidated Balance Sheet and Condensed Consolidated Statement of Earnings. Recent Accounting Standards Not Yet Adopted In February 2018, the FASB issued ASU 2018-02, Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income , which allows companies to reclassify stranded tax effects resulting from the 2017 Tax Cuts and Jobs Act, from accumulated other comprehensive income to retained earnings. The standard becomes effective for Abbott beginning in the first quarter of 2019 and early adoption is permitted. Abbott is currently evaluating the effect that the new guidance will have on its consolidated financial statements. In August 2017, the FASB issued ASU 2017-12, Targeted Improvements to Accounting for Hedging Activities , which makes changes to the designation and measurement guidance for qualifying hedging relationships and the presentation of hedge results. The standard becomes effective for Abbott beginning in the first quarter of 2019 and early adoption is permitted. Abbott is currently evaluating the effect that the new guidance will have on its consolidated financial statements. In February 2016, the FASB issued ASU 2016-02, Leases , which requires lessees to recognize assets and liabilities for most leases on the balance sheet. The standard becomes effective for Abbott beginning in the first quarter of 2019 and early adoption is permitted. Abbott will elect the transition method that allows the company to apply the standard at its adoption date rather than the beginning of the earliest comparative period presented in the financial statements. Abbott is currently evaluating the effect that the new guidance will have on its consolidated financial statements. |
Revenue
Revenue | 9 Months Ended |
Sep. 30, 2018 | |
Revenue | |
Revenue | Note 3 — Revenue Abbott’s revenues are derived primarily from the sale of a broad line of health care products under short-term receivable arrangements. Patent protection and licenses, technological and performance features, and inclusion of Abbott’s products under a contract most impact which products are sold; price controls, competition and rebates most impact the net selling prices of products; and foreign currency translation impacts the measurement of net sales and costs. Abbott's products are generally sold directly to retailers, wholesalers, distributors, hospitals, health care facilities, laboratories, physicians' offices and government agencies throughout the world. Abbott has four reportable segments: Established Pharmaceutical Products, Diagnostic Products, Nutritional Products, and Cardiovascular and Neuromodulation Products. Diabetes Care is a non-reportable segment and is included in Other in the following table. The following tables provide detail by sales category: Three Months Ended September 30, 2018 Three Months Ended September 30, 2017 (in millions) U.S. Int’l Total U.S. Int’l Total Established Pharmaceutical Products — Key Emerging Markets $ — $ 866 $ 866 $ — $ 885 $ 885 Other — 293 293 — 286 286 Total — 1,159 1,159 — 1,171 1,171 Nutritionals — Pediatric Nutritionals 459 580 1,039 436 539 975 Adult Nutritionals 315 484 799 323 470 793 Total 774 1,064 1,838 759 1,009 1,768 Diagnostics — Core Laboratory 249 837 1,086 230 803 1,033 Molecular 37 84 121 37 78 115 Point of Care 106 30 136 102 29 131 Rapid Diagnostics 274 207 481 — — — Total 666 1,158 1,824 369 910 1,279 Cardiovascular and Neuromodulation — Rhythm Management 252 256 508 250 261 511 Electrophysiology 189 217 406 147 195 342 Heart Failure 111 41 152 131 39 170 Vascular 284 436 720 292 432 724 Structural Heart 126 179 305 109 160 269 Neuromodulation 172 40 212 164 44 208 Total 1,134 1,169 2,303 1,093 1,131 2,224 Other 133 399 532 92 295 387 Total $ 2,707 $ 4,949 $ 7,656 $ 2,313 $ 4,516 $ 6,829 Nine Months Ended September 30, 2018 Nine Months Ended September 30, 2017 (in millions) U.S. Int’l Total U.S. Int’l Total Established Pharmaceutical Products — Key Emerging Markets $ — $ 2,525 $ 2,525 $ — $ 2,413 $ 2,413 Other — 807 807 — 729 729 Total — 3,332 3,332 — 3,142 3,142 Nutritionals — Pediatric Nutritionals 1,376 1,708 3,084 1,327 1,562 2,889 Adult Nutritionals 937 1,431 2,368 935 1,317 2,252 Total 2,313 3,139 5,452 2,262 2,879 5,141 Diagnostics — Core Laboratory 725 2,508 3,233 678 2,286 2,964 Molecular 114 247 361 123 218 341 Point of Care 324 92 416 324 81 405 Rapid Diagnostics 855 669 1,524 — — — Total 2,018 3,516 5,534 1,125 2,585 3,710 Cardiovascular and Neuromodulation — Rhythm Management 778 808 1,586 783 791 1,574 Electrophysiology 564 661 1,225 446 555 1,001 Heart Failure 342 126 468 363 108 471 Vascular 854 1,355 2,209 891 1,267 2,158 Structural Heart 353 560 913 320 473 793 Neuromodulation 513 133 646 461 129 590 Total 3,404 3,643 7,047 3,264 3,323 6,587 Other 349 1,099 1,448 346 875 1,221 Total $ 8,084 $ 14,729 $ 22,813 $ 6,997 $ 12,804 $ 19,801 Abbott recognizes revenue from product sales upon the transfer of control, which is generally upon shipment or delivery, depending on the delivery terms set forth in the customer contract. For maintenance agreements that provide service beyond Abbott’s standard warranty and other service agreements, revenue is recognized ratably over the contract term. A time-based measure of progress appropriately reflects the transfer of services to the customer. Payment terms between Abbott and its customers vary by the type of customer, country of sale, and the products or services offered. The term between invoicing and the payment due date is not significant. Management exercises judgment in estimating variable consideration. Provisions for discounts, rebates and sales incentives to customers, and returns and other adjustments are provided for in the period the related sales are recorded. Sales incentives to customers are not material. Historical data is readily available and reliable, and is used for estimating the amount of the reduction in gross sales. Abbott provides rebates to government agencies, wholesalers, group purchasing organizations and other private entities. Rebate amounts are usually based upon the volume of purchases using contractual or statutory prices for a product. Factors used in the rebate calculations include the identification of which products have been sold subject to a rebate, which customer or government agency price terms apply, and the estimated lag time between sale and payment of a rebate. Using historical trends, adjusted for current changes, Abbott estimates the amount of the rebate that will be paid, and records the liability as a reduction of gross sales when Abbott records its sale of the product. Settlement of the rebate generally occurs from one to six months after sale. Abbott regularly analyzes the historical rebate trends and makes adjustments to reserves for changes in trends and terms of rebate programs. Historically, adjustments to prior years' rebate accruals have not been material to net income. Other allowances charged against gross sales include cash discounts and returns, which are not significant. Cash discounts are known within 15 to 30 days of sale, and therefore can be reliably estimated. Returns can be reliably estimated because Abbott's historical returns are low, and because sales return terms and other sales terms have remained relatively unchanged for several periods. Product warranties are also not significant. Abbott also applies judgment in determining the timing of revenue recognition related to contracts that include multiple performance obligations. The total transaction price of the contract is allocated to each performance obligation in an amount based on the estimated relative standalone selling prices of the promised goods or services underlying each performance obligation. For goods or services for which observable standalone selling prices are not available, Abbott uses an expected cost plus a margin approach to estimate the standalone selling price of each performance obligation. Remaining Performance Obligations As of September 30, 2018, the estimated revenue expected to be recognized in the future related to performance obligations that are unsatisfied (or partially unsatisfied) was approximately $2.8 billion in the Diagnostics segment and approximately $330 million in the Cardiovascular and Neuromodulation segment. Abbott expects to recognize revenue on approximately 60% of these remaining performance obligations over the next 24 months, approximately 15% over the subsequent 12 months and the remainder thereafter. These performance obligations primarily reflect the future sale of reagents/consumables in contracts with minimum purchase obligations, extended warranty or service obligations related to previously sold equipment, and remote monitoring services related to previously implanted devices. Abbott has applied the practical expedient described in Accounting Standards Codification (ASC) 606-10-50-14 and has not included remaining performance obligations related to contracts with original expected durations of one year or less in the amounts above. Assets Recognized for Costs to Obtain a Contract with a Customer Abbott has applied the practical expedient in ASC 340-40-25-4 and records as an expense the incremental costs of obtaining contracts with customers in the period of occurrence when the amortization period of the asset that Abbott otherwise would have recognized is one year or less. Upfront commission fees paid to sales personnel as a result of obtaining or renewing contracts with customers are incremental to obtaining the contract. Abbott capitalizes these amounts as contract costs. Capitalized commission fees are amortized based on the contract duration to which the assets relate which ranges from two to ten years. The amounts as of September 30, 2018, were not significant. Additionally, the cost of transmitters provided to customers that use Abbott’s remote monitoring service with respect to certain medical devices are capitalized as contract costs. Capitalized transmitter costs are amortized based on the timing of the transfer of services to which the assets relate, which typically ranges from eight to ten years. The amounts as of September 30, 2018, were not significant. Other Contract Assets and Liabilities Abbott discloses Trade receivables separately in the Condensed Consolidated Balance Sheet at their net realizable value. Contract assets primarily relate to Abbott’s conditional right to consideration for work completed but not billed at the reporting date. Contract assets at the beginning and end of the period, as well as the changes in the balance, were not significant. Contract liabilities primarily relate to payments received from customers in advance of performance under the contract. Abbott’s contract liabilities arise primarily in the Cardiovascular and Neuromodulation reportable segment when payment is received upfront for various multi-period extended service arrangements. Changes in the contract liabilities during the period are as follows: (in millions) Contract Liabilities Balance at January 1, 2018 $ 198 Unearned revenue from cash received during the period 209 Revenue recognized that was included in contract liability balance at beginning of period (155) Balance at September 30, 2018 $ 252 |
Discontinued Operations
Discontinued Operations | 9 Months Ended |
Sep. 30, 2018 | |
Discontinued Operations | |
Discontinued Operations | Note 4 — Discontinued Operations 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 $35 million and $88 million in the first nine months of 2018 and 2017, respectively, 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 Held for Disposition
Assets Held for Disposition | 9 Months Ended |
Sep. 30, 2018 | |
Assets Held for Disposition | |
Assets Held for Disposition | Note 5 — Assets Held for Disposition As discussed in Note 8 - Business Acquisitions, in conjunction with the acquisition of Alere Inc. (Alere), Abbott sold the 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 legal transfer of certain assets and liabilities related to these businesses did not occur at the close of the sale to Quidel due to, among other factors, the time required to transfer marketing authorizations and other regulatory requirements in various countries. Under the terms of the sale agreement with Abbott, Quidel is subject to the risks and entitled to the benefits generated by these operations and assets. The assets presented as held for disposition in the Condensed Consolidated Balance Sheet as of September 30, 2018 and December 31, 2017, primarily relate to the businesses sold to Quidel. The decrease in net assets held for disposition primarily represents the completion of the transfer of certain assets and liabilities to Quidel. September 30, December 31, (in millions) 2018 2017 Trade receivables, net $ 9 $ 12 Total inventories 3 8 Current assets held for disposition 12 20 Net property and equipment — 56 Intangible assets, net of amortization — 18 Goodwill 19 102 Non-current assets held for disposition 19 176 Total assets held for disposition $ 31 $ 196 |
Supplemental Financial Informat
Supplemental Financial Information | 9 Months Ended |
Sep. 30, 2018 | |
Supplemental Financial Information | |
Supplemental Financial Information | Note 6 — 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 September 30, 2018 and 2017 were $548 million and $558 million, respectively and for the nine months ended September 30, 2018 and 2017 were $1.669 billion and $1.211 billion, respectively. Net earnings allocated to common shares for the three months ended September 30, 2018 and 2017 were $560 million and $601 million, respectively, and for the nine months ended September 30, 2018 and 2017 were $1.704 billion and $1.299 billion, respectively. Other, net in Net cash from operating activities in the Condensed Consolidated Statement of Cash Flows for the first nine months of 2018 includes the favorable impact of improvements in working capital management, as well as the effect of non-cash charges related to the impairment of certain assets and the accrual of certain debt extinguishment costs. The first nine months of 2017 includes the effects of contributions to defined benefit plans of $335 million. The first nine months of 2017 also includes the impact of improved working capital management and approximately $435 million of tax expense related to business dispositions. In February 2017, Abbott completed the sale of Abbott Medical Optics (AMO) to Johnson & Johnson and recognized a pre-tax gain of $1.163 billion, which is reported in Other (income) expense, net within the Condensed Consolidated Statement of Earnings in the first nine months of 2017. Abbott recorded an after-tax gain of $728 million in the first nine months of 2017 related to the sale of AMO. The operating results of AMO up through 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 first nine months ended September 30, 2017, the AMO losses before taxes included in Abbott's consolidated earnings were $18 million. In the first nine months of 2017, Abbott sold 51 million ordinary shares of Mylan N.V. received upon the sale of its developed markets branded generics pharmaceuticals business to Mylan Inc. Abbott received $1.977 billion in proceeds from the sale of these shares. Abbott recorded an immaterial pre-tax gain in the first nine months of 2017, which was recognized in the Other (income) expense, net line of the Condensed Consolidated Statement of Earnings. The components of long-term investments as of September 30, 2018 and December 31, 2017 are as follows: Long-term Investments September 30, December 31, (in millions) 2018 2017 Equity securities $ 934 $ 797 Other 37 86 Total $ 971 $ 883 Abbott's equity securities as of September 30, 2018, include approximately $350 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. Abbott also holds certain investments as of September 30, 2018 with a carrying value of approximately $355 million that are accounted for under the equity method of accounting and other equity investments with a carrying value of approximately $220 million that do not have a readily determinable fair value. The $220 million carrying value includes an unrealized gain of approximately $50 million on an investment. The gain was recorded in the second quarter of 2018 and relates to an observable price change for a similar investment of the same issuer. |
Changes in Accumulated Other Co
Changes in Accumulated Other Comprehensive Income (Loss) | 9 Months Ended |
Sep. 30, 2018 | |
Changes in Accumulated Other Comprehensive Income (Loss) | |
Changes in Accumulated Other Comprehensive Income (Loss) | Note 7 — 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 September 30 Cumulative Gains Cumulative (Losses) on Net Actuarial Unrealized Gains Derivative Cumulative Foreign (Losses) and Prior (Losses) on Instruments Currency Translation Service (Costs) Marketable Equity Designated as Adjustments and Credits Securities Cash Flow Hedges (in millions) 2018 2017 2018 2017 2018 2017 2018 2017 Balance at June 30 $ (4,478) $ (3,996) $ (2,437) $ (2,215) $ — $ 13 $ 2 $ (52) Other comprehensive income (loss) before reclassifications (153) 285 — — — (136) 10 (44) Amounts reclassified from accumulated other comprehensive income — — 22 23 — — 25 6 Net current period comprehensive income (loss) (153) 285 22 23 — (136) 35 (38) Balance at September 30 $ (4,631) $ (3,711) $ (2,415) $ (2,192) $ — $ (123) $ 37 $ (90) Nine Months Ended September 30 Cumulative Gains Cumulative (Losses) on Net Actuarial Unrealized Gains Derivative Cumulative Foreign (Losses) and Prior (Losses) on Instruments Currency Translation Service (Costs) Marketable Equity Designated as Adjustments and Credits Securities Cash Flow Hedges (in millions) 2018 2017 2018 2017 2018 2017 2018 2017 Balance at December 31, 2017 and 2016 $ (3,452) $ (4,959) $ (2,521) $ (2,284) $ (5) $ (69) $ (84) $ 49 Reclassified to Earnings employed in the business for adoption of ASU 2016-01 — — — — 5 — — — Impact of business dispositions — 142 — 6 — — — 1 Other comprehensive income (loss) before reclassifications (1,179) 1,106 — — — 47 38 (151) Amounts reclassified from accumulated other comprehensive income — — 106 86 — (101) 83 11 Net current period comprehensive income (loss) (1,179) 1,106 106 86 — (54) 121 (140) Balance at September 30 $ (4,631) $ (3,711) $ (2,415) $ (2,192) $ — $ (123) $ 37 $ (90) Reclassified amounts for foreign currency translation are recorded in the Condensed Consolidated Statement of Earnings as Net foreign exchange (gain) loss; gains (losses) on marketable equity securities as Other (income) expense, 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 15 for additional details. |
Business Acquisitions
Business Acquisitions | 9 Months Ended |
Sep. 30, 2018 | |
Business Acquisitions | |
Business Acquisitions | Note 8 — 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 acquisition 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 business competes in nearly every area of the cardiovascular device 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. In 2016, Abbott and St. Jude Medical agreed to sell certain businesses to Terumo Corporation (Terumo) 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 October 3, 2017, Abbott acquired Alere, a diagnostic device and service provider, for $51.00 per common share in cash, which equated to a purchase price of approximately $4.5 billion. As part of the acquisition, Abbott tendered for Alere's preferred shares for a total value of approximately $0.7 billion. In addition, approximately $3.0 billion of Alere's debt was assumed and subsequently repaid. The acquisition establishes Abbott as a leader in point of care testing, expands Abbott’s global diagnostics presence and provides access to new products, channels and geographies. Abbott utilized a combination of cash on hand and debt to fund the acquisition. The final allocation of the fair value of the Alere acquisition is shown in the table below: (in billions) Acquired intangible assets, non-deductible $ 3.5 Goodwill, non-deductible 3.7 Acquired net tangible assets 1.0 Deferred income taxes recorded at acquisition (0.4) Net debt (2.6) Preferred stock (0.7) Total allocation of fair value $ 4.5 The goodwill is primarily attributable to expected synergies from combining operations, as well as intangible assets that do not qualify for separate recognition. The goodwill is identifiable to the Diagnostic Products reportable segment. The approximate value of the acquired tangible assets is $430 million of trade accounts receivable, $425 million of inventory, $225 million of other current assets, $540 million of property and equipment, and $210 million of other long-term assets. The approximate value of the acquired tangible liabilities is $675 million of trade accounts payable and other current liabilities and $145 million of other non-current liabilities. In the third quarter of 2017, Alere entered into agreements 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. The transactions with Quidel reflect a total purchase price of $400 million payable at the close of the transaction, $240 million payable in six annual installments beginning approximately six months after the close of the transaction, and contingent consideration with a maximum value of $40 million. In the third quarter of 2017, Alere entered into an agreement with Siemens Diagnostics Holding II B.V. (Siemens) to sell its subsidiary, Epocal Inc., for approximately $200 million payable at the close of the transaction. Alere agreed to divest these businesses in connection with the review by the Federal Trade Commission and the European Commission of Abbott's agreement to acquire Alere. The sale to Quidel closed on October 6, 2017, and the sale to Siemens closed on October 31, 2017. No gain or loss on these sales was recorded in the Condensed Consolidated Statement of Earnings. 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 was 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 equaled at least a majority of the Preferred Stock issued and outstanding at the expiration of the tender offer. The tender offer expired on October 3, 2017. All conditions to the offer were satisfied and Abbott accepted for payment the 1.748 million shares of Preferred Stock that were validly tendered (and not properly withdrawn). The remaining shares were cashed out for an amount equal to the $400.00 per share liquidation preference of such shares, plus accrued but unpaid dividends, without interest. Payment for all of the shares of Preferred Stock was made in the fourth quarter of 2017. |
Goodwill and Intangible Assets
Goodwill and Intangible Assets | 9 Months Ended |
Sep. 30, 2018 | |
Goodwill and Intangible Assets | |
Goodwill and Intangible Assets | Note 9 — Goodwill and Intangible Assets The total amount of goodwill reported was $23.4 billion at September 30, 2018 and $24.0 billion at December 31, 2017. The amounts reported at September 30, 2018 and December 31, 2017 exclude goodwill reported in non-current assets held for disposition. Foreign currency translation adjustments decreased goodwill by approximately $277 million in the first nine months of 2018. Purchase price accounting adjustments associated with the Alere acquisition decreased goodwill by $326 million in the first nine months of 2018. The amount of goodwill related to reportable segments at September 30, 2018 was $3.1 billion for the Established Pharmaceutical Products segment, $286 million for the Nutritional Products segment, $3.7 billion for the Diagnostic Products segment, and $15.4 billion for the Cardiovascular and Neuromodulation Products segment. There was no reduction of goodwill relating to impairments in the first nine months of 2018. The gross amount of amortizable intangible assets, primarily product rights and technology was $25.7 billion as of September 30, 2018 and $25.6 billion as of December 31, 2017, and accumulated amortization was $9.8 billion as of September 30, 2018 and $8.1 billion as of December 31, 2017. Purchase price allocation adjustments increased intangible assets by $280 million and foreign currency translation adjustments decreased intangible assets by $225 million during the first nine months of 2018. The September 30, 2018 and December 31, 2017 amounts exclude net intangible assets reported in non-current assets held for disposition. Abbott’s estimated annual amortization expense for intangible assets is approximately $2.4 billion in 2018, $2.3 billion in 2019, $2.1 billion in 2020, $2.0 billion in 2021 and $2.0 billion in 2022. Amortizable intangible assets are amortized over 2 to 20 years (weighted average 12 years). Indefinite-lived intangible assets, which relate to in-process research and development acquired in a business combination, were approximately $3.6 billion and $3.9 billion as of September 30, 2018 and December 31, 2017, respectively. The decrease in indefinite-lived intangible assets during the first nine months of 2018 primarily relates to purchase price allocation adjustments associated with the Alere acquisition. |
Restructuring Plans
Restructuring Plans | 9 Months Ended |
Sep. 30, 2018 | |
Restructuring Plans | |
Restructuring Plans | Note 10 — Restructuring Plans In 2017 and 2018, Abbott management approved restructuring plans as part of the integration of the acquisition of St. Jude Medical into the Cardiovascular and Neuromodulation segment and Alere into the Diagnostics segment, in order to leverage economies of scale and reduce costs. In the first nine months of 2018, charges of $45 million, including one-time employee termination benefits were recognized, of which $4 million is recorded in Cost of products sold, $10 million is recorded in Research and development and $31 million as Selling, general and administrative expense. The following summarizes the activity for the first nine months of 2018 related to these actions and the status of the related accrual as of September 30, 2018: (in millions) Accrued balance at December 31, 2017 $ 68 Restructuring charges recorded in 2018 45 Payments and other adjustments (58) Accrued balance at September 30, 2018 $ 55 From 2014 to 2018, Abbott management approved plans to streamline operations in order to reduce costs and improve efficiencies in various Abbott businesses including the nutritional, established pharmaceuticals and vascular businesses. In the first nine months of 2018, charges of $18 million were recognized, of which $8 million is recorded in Cost of products sold, $1 million is recorded in Research and development and $9 million as Selling, general and administrative expense. The following summarizes the activity for the first nine months of 2018 related to these restructuring actions and the status of the related accrual as of September 30, 2018: (in millions) Accrued balance at December 31, 2017 $ 141 Restructuring charges recorded in 2018 18 Payments and other adjustments (72) Accrued balance at September 30, 2018 $ 87 |
Incentive Stock Programs
Incentive Stock Programs | 9 Months Ended |
Sep. 30, 2018 | |
Incentive Stock Programs | |
Incentive Stock Programs | Note 11 — Incentive Stock Programs In the first nine months of 2018, Abbott granted 5,760,221 stock options, 871,331 restricted stock awards and 7,995,581 restricted stock units under its incentive stock programs. At September 30, 2018, approximately 144 million shares were reserved for future grants. Information regarding the number of options outstanding and exercisable at September 30, 2018 is as follows: Outstanding Exercisable Number of shares 33,984,922 21,496,161 Weighted average remaining life ( years ) 6.5 5.5 Weighted average exercise price $ 41.88 $ 38.04 Aggregate intrinsic value ( in millions ) $ 1,070 $ 759 The total unrecognized share-based compensation cost at September 30, 2018 amounted to approximately $439 million which is expected to be recognized over the next three years. |
Debt and Lines of Credit
Debt and Lines of Credit | 9 Months Ended |
Sep. 30, 2018 | |
Debt and Lines of Credit | |
Debt and Lines of Credit | Note 12 — Debt and Lines of Credit On January 5, 2018, Abbott paid off its $2.8 billion 5-year term loan and the remaining $1.150 billion balance under its revolving credit agreement. On February 16, 2018, the board of directors authorized the early redemption of up to $5 billion of outstanding long-term notes. Redemptions under this authorization include the following: $0.947 billion principal amount of its 5.125% Notes due 2019 – redeemed on March 22, 2018 $1.055 billion of the $2.850 billion principal amount of its 2.35% Notes due 2019 – redeemed on March 22, 2018 $1.300 billion of the $1.795 billion outstanding principal amount of its 2.35% Notes due 2019 – redeemed on June 22, 2018 $0.495 billion outstanding principal amount of its 2.35% Notes due 2019 – redeemed on September 28, 2018 $1.2 billion of the $5 billion authorization remains available. Abbott incurred a net charge of $14 million related to the March 22, 2018 early repayment of debt. On September 17, 2018, Abbott repaid upon maturity the $500 million aggregate principal amount outstanding of the 2.00% Senior Notes due 2018. On September 27, 2018, Abbott’s wholly owned subsidiary, Abbott Ireland Financing DAC, completed a euro debt offering of €3.420 billion of long-term debt consisting of €1.140 billion of non-interest bearing Senior Notes due 2020 at 99.727% of par value; €1.140 billion of 0.875% Senior Notes due 2023 at 99.912% of par value; and €1.140 billion of 1.5% Senior Notes due 2026 at 99.723% of par value. The proceeds equated to approximately $4 billion. The notes are guaranteed by Abbott . On October 28, 2018, Abbott redeemed $750 million principal amount of its 2.00% Notes due 2020; $597 million principal amount of its 4.125% Notes due 2020; $900 million principal amount of its 3.25% Notes due 2023; $450 million principal amount of its 3.4% Notes due 2023; and $1.300 billion principal amount of its 3.75% Notes due 2026. These amounts are in addition to the $5 billion authorization discussed above. Abbott incurred a net charge of $67 million in the third quarter of 2018 related to the early repayment of this debt. |
Financial Instruments, Derivati
Financial Instruments, Derivatives and Fair Value Measures | 9 Months Ended |
Sep. 30, 2018 | |
Financial Instruments, Derivatives and Fair Value Measures | |
Financial Instruments, Derivatives and Fair Value Measures | Note 13 — 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 $3.6 billion at September 30, 2018 and $3.3 billion at December 31, 2017 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 September 30, 2018 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 2018 and 2017. 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, 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 September 30, 2018 and December 31, 2017, Abbott held the gross notional amount of $15.6 billion and $20.1 billion, respectively, of such foreign currency forward exchange contracts. Abbott is a party to interest rate hedge contracts totaling approximately $4.0 billion at September 30, 2018 and December 31, 2017 to manage its exposure to changes in the fair value of fixed-rate debt.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 2018 and 2017. The following table summarizes the amounts and location of certain derivative financial instruments as of September 30, 2018 and December 31, 2017: Fair Value - Assets Fair Value - Liabilities Sept. 30, Dec. 31, Sept. 30, Dec. 31, (in millions) 2018 2017 Balance Sheet Caption 2018 2017 Balance Sheet Caption Interest rate swaps designated as fair value hedges $ — $ — Deferred income taxes and other assets $ 272 $ 93 Post-employment obligations, deferred income taxes and other long-term liabilities Foreign currency forward exchange contracts: Hedging instruments 61 21 Prepaid expenses and other receivables 19 106 Other accrued liabilities Others not designated as hedges 69 117 Prepaid expenses and other receivables 77 99 Other accrued liabilities $ 130 $ 138 $ 368 $ 298 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 nine months ended September 30, 2018 and 2017. The amount of hedge ineffectiveness was not significant in 2018 and 2017 for these hedges. Gain (loss) Recognized in Other Income (expense) and Gain (loss) Comprehensive Income (loss) Reclassified into Income Three Months Nine Months Three Months Nine Months Ended Sept. 30 Ended Sept. 30 Ended Sept. 30 Ended Sept. 30 Income Statement (in millions) 2018 2017 2018 2017 2018 2017 2018 2017 Caption Foreign currency forward exchange contracts designated as cash flow hedges $ 18 $ (57) $ 45 $ (202) $ (37) $ (7) $ (120) $ (14) Cost of products sold Debt designated as a hedge of net investment in a foreign subsidiary — — — (25) 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 (42) (1) (179) 13 Interest expense Losses of $10 million and gains of $26 million were recognized in the three months ended September 30, 2018 and 2017, respectively, related to foreign currency forward exchange contracts not designated as a hedge. Losses of $60 million and losses of $16 million were recognized in the nine months ended September 30, 2018 and 2017, 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 (gain) loss 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 September 30, 2018 and December 31, 2017 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. September 30, 2018 December 31, 2017 Carrying Fair Carrying Fair (in millions) Value Value Value Value Investment Securities: Equity securities $ 934 $ 934 $ 797 $ 797 Other 37 37 86 86 Total Long-term Debt (23,347) (24,013) (27,718) (29,018) Foreign Currency Forward Exchange Contracts: Receivable position 130 130 138 138 (Payable) position (96) (96) (205) (205) Interest Rate Hedge Contracts: (Payable) position (272) (272) (93) (93) 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 Quoted Significant Prices in Other Significant Outstanding Active Observable Unobservable (in millions) Balances Markets Inputs Inputs September 30, 2018: Equity securities $ 363 $ 363 $ — $ — Foreign currency forward exchange contracts 130 — 130 — Total Assets $ 493 $ 363 $ 130 $ — Fair value of hedged long-term debt $ 3,730 $ — $ 3,730 $ — Interest rate swap derivative financial instruments 272 — 272 — Foreign currency forward exchange contracts 96 — 96 — Contingent consideration related to business combinations 71 — — 71 Total Liabilities $ 4,169 $ — $ 4,098 $ 71 December 31, 2017: Equity securities $ 374 $ 374 $ — $ — Foreign currency forward exchange contracts 138 — 138 — Total Assets $ 512 $ 374 $ 138 $ — Fair value of hedged long-term debt $ 3,898 $ — $ 3,898 $ — Interest rate swap derivative financial instruments 93 — 93 — Foreign currency forward exchange contracts 205 — 205 — Contingent consideration related to business combinations 120 — — 120 Total Liabilities $ 4,316 $ — $ 4,196 $ 120 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. |
Litigation and Environmental Ma
Litigation and Environmental Matters | 9 Months Ended |
Sep. 30, 2018 | |
Litigation and Environmental Matters | |
Litigation and Environmental Matters | Note 14 — 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 $125 million to $165 million. The recorded accrual balance at September 30, 2018 for these proceedings and exposures was approximately $145 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 | 9 Months Ended |
Sep. 30, 2018 | |
Post-Employment Benefits | |
Post-Employment Benefits | Note 15 — 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 nine months ended September 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 Nine Months Three Months Nine Months Ended September 30 Ended September 30 Ended September 30 Ended September 30 (in millions) 2018 2017 2018 2017 2018 2017 2018 2017 Service cost - benefits earned during the period $ 76 $ 71 $ 221 $ 213 $ 7 $ 6 $ 20 $ 19 Interest cost on projected benefit obligations 77 72 232 215 12 12 36 34 Expected return on plan assets (169) (154) (511) (459) (9) (9) (25) (25) Net amortization of: Actuarial loss, net 51 41 154 123 8 6 25 18 Prior service cost (credit) — — 1 — (11) (11) (34) (34) Net cost - continuing operations $ 35 $ 30 $ 97 $ 92 $ 7 $ 4 $ 22 $ 12 In the first quarter of 2018, Abbott adopted ASU 2017-07 which requires all components of pension and other postretirement benefit expense except service cost to be presented outside any subtotal of income from operations. These amounts are now classified as non-operating (income) loss. Abbott’s Condensed Consolidated Statement of Earnings was retrospectively adjusted, resulting in the reclassification of approximately $40 million and $120 million of income from the Operating earnings line to the Other (income) expense, net line in the third quarter and first nine months of 2017 , respectively. In the first nine 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 nine months of 2018 and 2017, $71 million and $335 million, respectively, were contributed to defined benefit plans and $11 million was contributed to the post-employment medical and dental benefit plans in each year. |
Taxes on Earnings
Taxes on Earnings | 9 Months Ended |
Sep. 30, 2018 | |
Taxes on Earnings | |
Taxes on Earnings | Note 16 — 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 nine months of 2018, taxes on earnings from continuing operations include approximately $80 million in excess tax benefits associated with share-based compensation. Earnings from discontinued operations, net of tax, in the first nine months of 2018 reflect the recognition of $40 million of net tax benefits primarily as a result of the resolution of various tax positions related to prior years which decreased the gross amount of unrecognized tax benefits by $47 million. In the first nine months of 2017, taxes on earnings from continuing operations include $435 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 $88 million for the first nine 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. 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 $500 million and $700 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 through 2013 are settled except for the federal income tax returns of the former Alere consolidated group which are settled through 2014. The Tax Cuts and Jobs Act (“TCJA”) was enacted in the U.S. on December 22, 2017. The TCJA reduces the U.S. federal corporate tax rate from 35% to 21%, requires companies to pay a one-time transition tax on earnings of certain foreign subsidiaries that were previously tax deferred and creates new taxes on certain foreign sourced earnings. In the fourth quarter of 2017, Abbott recorded an estimate of net tax expense of $1.46 billion for the impact of the TCJA, which was included in Taxes on Earnings from Continuing Operations in the Consolidated Statement of Earnings. The estimate was provisional and included a charge of approximately $2.89 billion for the transition tax, partially offset by a net benefit of approximately $1.42 billion for the remeasurement of deferred tax assets and liabilities and a net benefit of approximately $10 million related to certain other impacts of the TCJA. In the first nine months of 2018, Abbott recorded a $53 million adjustment to the provisional transition tax liability for revisions to previously recorded federal estimates and associated effects related to state tax. This adjustment increases the estimate of net tax expense for the impact of TCJA to $1.513 billion. Given the significant complexity of the TCJA, Abbott will continue to evaluate and analyze the impact of this legislation. The $1.513 billion estimate is provisional and is based on Abbott’s latest analysis of the TCJA and may be materially adjusted in future periods due to among other things, additional analysis performed by Abbott and additional guidance that may be issued by the U.S. Department of Treasury, the Securities and Exchange Commission, or the Financial Accounting Standards Board. |
Segment Information
Segment Information | 9 Months Ended |
Sep. 30, 2018 | |
Segment Information | |
Segment Information | Note 17 — 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. 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, physician offices and alternate-care testing sites. For segment reporting purposes, the Core Laboratories Diagnostics, Rapid Diagnostics, Molecular Diagnostics and Point of Care Diagnostics divisions are aggregated and reported as the Diagnostic Products segment. Cardiovascular and Neuromodulation Products — Worldwide sales of cardiac rhythm management, electrophysiology, heart failure, vascular, structural heart and neuromodulation products. For segment reporting purposes, the Cardiac Arrhythmias & Heart Failure, Vascular, Neuromodulation and Structural Heart divisions are aggregated and reported as the Cardiovascular and Neuromodulation segment. 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. 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 Nine Months Three Months Nine Months Ended September 30 Ended September 30 Ended September 30 Ended September 30 (in millions) 2018 2017 2018 2017 2018 2017 2018 2017 Established Pharmaceutical Products $ 1,159 $ 1,171 $ 3,332 $ 3,142 $ 289 $ 271 $ 664 $ 591 Nutritional Products 1,838 1,768 5,452 5,141 435 403 1,224 1,146 Diagnostic Products 1,824 1,279 5,534 3,710 443 353 1,375 975 Cardiovascular and Neuromodulation Products 2,303 2,224 7,047 6,587 730 682 2,215 1,990 Total Reportable Segments 7,124 6,442 21,365 18,580 1,897 1,709 5,478 4,702 Other 532 387 1,448 1,221 Net Sales $ 7,656 $ 6,829 $ 22,813 $ 19,801 Corporate functions and benefit plans costs (143) (129) (435) (326) Non-reportable segments 148 89 365 209 Net interest expense (181) (182) (569) (569) Share-based compensation (a) (83) (75) (396) (338) Amortization of intangible assets (544) (501) (1,690) (1,415) Other, net (b) (376) (285) (827) (606) Earnings from continuing operations before taxes $ 718 $ 626 $ 1,926 $ 1,657 (a) 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. (b) Other, net for the nine months ended September 30, 2018 includes inventory step-up amortization. Other, net for the three and nine months ended September 30, 2018, includes restructuring charges and integration costs associated with the acquisitions of St. Jude Medical and Alere. Other, net for the nine months ended September 30, 2017, includes the gain on the sale of the AMO business. Other, net for the three and nine months ended September 30, 2017, includes inventory step-up amortization, restructuring charges and integration costs associated with the acquisition of St. Jude Medical. |
New Accounting Standards (Polic
New Accounting Standards (Policies) | 9 Months Ended |
Sep. 30, 2018 | |
New Accounting Standards | |
Recently Adopted Accounting Standards | Recently Adopted Accounting Standards In March 2017, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) 2017-07, Compensation – Retirement Benefits (Topic 715): Improving the Presentation of Net Periodic Pension Cost and Net Periodic Postretirement Benefit Cost which changes the financial statement presentation requirements for pension and other postretirement benefit expense. While service cost continues to be reported in the same financial statement line items as other current employee compensation costs, the ASU requires all other components of pension and other postretirement benefit expense to be presented separately from service cost, and outside any subtotal of income from operations. Abbott adopted the standard in the first quarter of 2018 and the Condensed Consolidated Statement of Earnings was retrospectively adjusted, resulting in the reclassification of approximately $120 million of income from Operating earnings to Other (income) expense, net in the first nine months of 2017. In November 2016, the FASB issued ASU 2016-18, Statement of Cash Flows: Restricted Cash , which requires that restricted cash be included with cash and cash equivalents when reconciling the beginning and end-of-period total amounts shown on the statement of cash flows. Abbott adopted this standard beginning in the first quarter of 2018, and applied the guidance retrospectively to all periods presented. Abbott did not have any restricted cash balances in the periods presented except for $75 million of restricted cash acquired as part of the Alere Inc. acquisition in October 2017. The restrictions on this cash were eliminated prior to the end of 2017. In October 2016, the FASB issued ASU 2016-16, Income Taxes (Topic 740): Intra-Entity Transfers of Assets Other Than Inventory , which requires the recognition of the income tax effects of intercompany sales and transfers of assets, other than inventory, in the period in which the transfer occurs. Abbott adopted the standard on January 1, 2018, using a modified retrospective approach and recorded a cumulative catch-up adjustment to Earnings employed in the business in the Condensed Consolidated Balance Sheet that was not significant. In August 2016, the FASB issued ASU 2016-15, Statement of Cash Flows: Classification of Certain Cash Receipts and Cash Payments , which clarifies how companies should present and classify certain cash receipts and cash payments in the statement of cash flows. The ASU became effective for Abbott in the first quarter of 2018 and did not have a material impact to the Company’s Condensed Consolidated Statement of Cash Flows. In January 2016, the FASB issued ASU 2016-01, Financial Instruments – Recognition and Measurement of Financial Assets and Financial Liabilities , which provides new guidance for the recognition, measurement, presentation, and disclosure of financial assets and liabilities. Abbott adopted the standard on January 1, 2018. Under the new standard, changes in the fair value of equity investments with readily determinable fair values are recorded in Other (income) expense, net within the Condensed Consolidated Statement of Earnings. Previously, such fair value changes were recorded in other comprehensive income. Abbott has elected the measurement alternative allowed by ASU 2016-01 for its equity investments without readily determinable fair values. These investments are measured at cost, less any impairment, plus or minus any changes resulting from observable price changes in orderly transactions for an identical or similar investment of the same issuer. Changes in the measurement of these investments are being recorded in Other (income) expense, net within the Condensed Consolidated Statement of Earnings. As part of the adoption, the cumulative-effect adjustment to Earnings employed in the business in the Condensed Consolidated Balance Sheet for net unrealized losses on equity investments that were recorded in Accumulated other comprehensive income (loss) as of December 31, 2017 was not significant. In May 2014, the FASB issued ASU 2014-09, Revenue from Contracts with Customers , which provides a single comprehensive model for accounting for revenue from contracts with customers and supersedes nearly all previously existing revenue recognition guidance. The core principle of the ASU is that an entity should recognize revenue when it transfers promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. Abbott adopted the new standard as of January 1, 2018, using the modified retrospective approach method. Under this method, entities recognize the cumulative effect of applying the new standard at the date of initial application with no restatement of comparative periods presented. The cumulative effect of applying the new standard resulted in an increase to Earnings employed in the business in the Condensed Consolidated Balance Sheet of $23 million which was recorded on January 1, 2018. The new standard has been applied only to those contracts that were not completed as of January 1, 2018. The impact of adopting ASU 2014-09 was not significant to individual financial statement line items in the Condensed Consolidated Balance Sheet and Condensed Consolidated Statement of Earnings. |
Recent Accounting Standards Not Yet Adopted | Recent Accounting Standards Not Yet Adopted In February 2018, the FASB issued ASU 2018-02, Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income , which allows companies to reclassify stranded tax effects resulting from the 2017 Tax Cuts and Jobs Act, from accumulated other comprehensive income to retained earnings. The standard becomes effective for Abbott beginning in the first quarter of 2019 and early adoption is permitted. Abbott is currently evaluating the effect that the new guidance will have on its consolidated financial statements. In August 2017, the FASB issued ASU 2017-12, Targeted Improvements to Accounting for Hedging Activities , which makes changes to the designation and measurement guidance for qualifying hedging relationships and the presentation of hedge results. The standard becomes effective for Abbott beginning in the first quarter of 2019 and early adoption is permitted. Abbott is currently evaluating the effect that the new guidance will have on its consolidated financial statements. In February 2016, the FASB issued ASU 2016-02, Leases , which requires lessees to recognize assets and liabilities for most leases on the balance sheet. The standard becomes effective for Abbott beginning in the first quarter of 2019 and early adoption is permitted. Abbott will elect the transition method that allows the company to apply the standard at its adoption date rather than the beginning of the earliest comparative period presented in the financial statements. Abbott is currently evaluating the effect that the new guidance will have on its consolidated financial statements. |
Revenue (Tables)
Revenue (Tables) | 9 Months Ended |
Sep. 30, 2018 | |
Revenue | |
Schedule of reportable segment included under sales category | Three Months Ended September 30, 2018 Three Months Ended September 30, 2017 (in millions) U.S. Int’l Total U.S. Int’l Total Established Pharmaceutical Products — Key Emerging Markets $ — $ 866 $ 866 $ — $ 885 $ 885 Other — 293 293 — 286 286 Total — 1,159 1,159 — 1,171 1,171 Nutritionals — Pediatric Nutritionals 459 580 1,039 436 539 975 Adult Nutritionals 315 484 799 323 470 793 Total 774 1,064 1,838 759 1,009 1,768 Diagnostics — Core Laboratory 249 837 1,086 230 803 1,033 Molecular 37 84 121 37 78 115 Point of Care 106 30 136 102 29 131 Rapid Diagnostics 274 207 481 — — — Total 666 1,158 1,824 369 910 1,279 Cardiovascular and Neuromodulation — Rhythm Management 252 256 508 250 261 511 Electrophysiology 189 217 406 147 195 342 Heart Failure 111 41 152 131 39 170 Vascular 284 436 720 292 432 724 Structural Heart 126 179 305 109 160 269 Neuromodulation 172 40 212 164 44 208 Total 1,134 1,169 2,303 1,093 1,131 2,224 Other 133 399 532 92 295 387 Total $ 2,707 $ 4,949 $ 7,656 $ 2,313 $ 4,516 $ 6,829 Nine Months Ended September 30, 2018 Nine Months Ended September 30, 2017 (in millions) U.S. Int’l Total U.S. Int’l Total Established Pharmaceutical Products — Key Emerging Markets $ — $ 2,525 $ 2,525 $ — $ 2,413 $ 2,413 Other — 807 807 — 729 729 Total — 3,332 3,332 — 3,142 3,142 Nutritionals — Pediatric Nutritionals 1,376 1,708 3,084 1,327 1,562 2,889 Adult Nutritionals 937 1,431 2,368 935 1,317 2,252 Total 2,313 3,139 5,452 2,262 2,879 5,141 Diagnostics — Core Laboratory 725 2,508 3,233 678 2,286 2,964 Molecular 114 247 361 123 218 341 Point of Care 324 92 416 324 81 405 Rapid Diagnostics 855 669 1,524 — — — Total 2,018 3,516 5,534 1,125 2,585 3,710 Cardiovascular and Neuromodulation — Rhythm Management 778 808 1,586 783 791 1,574 Electrophysiology 564 661 1,225 446 555 1,001 Heart Failure 342 126 468 363 108 471 Vascular 854 1,355 2,209 891 1,267 2,158 Structural Heart 353 560 913 320 473 793 Neuromodulation 513 133 646 461 129 590 Total 3,404 3,643 7,047 3,264 3,323 6,587 Other 349 1,099 1,448 346 875 1,221 Total $ 8,084 $ 14,729 $ 22,813 $ 6,997 $ 12,804 $ 19,801 |
Schedule of changes in contract liabilities | (in millions) Contract Liabilities Balance at January 1, 2018 $ 198 Unearned revenue from cash received during the period 209 Revenue recognized that was included in contract liability balance at beginning of period (155) Balance at September 30, 2018 $ 252 |
Assets Held for Disposition (Ta
Assets Held for Disposition (Tables) | 9 Months Ended |
Sep. 30, 2018 | |
Assets Held for Disposition | |
Summary of assets held for disposition | September 30, December 31, (in millions) 2018 2017 Trade receivables, net $ 9 $ 12 Total inventories 3 8 Current assets held for disposition 12 20 Net property and equipment — 56 Intangible assets, net of amortization — 18 Goodwill 19 102 Non-current assets held for disposition 19 176 Total assets held for disposition $ 31 $ 196 |
Supplemental Financial Inform_2
Supplemental Financial Information (Tables) | 9 Months Ended |
Sep. 30, 2018 | |
Supplemental Financial Information | |
Schedule of long-term investments | Long-term Investments September 30, December 31, (in millions) 2018 2017 Equity securities $ 934 $ 797 Other 37 86 Total $ 971 $ 883 |
Changes in Accumulated Other _2
Changes in Accumulated Other Comprehensive Income (Loss) (Tables) | 9 Months Ended |
Sep. 30, 2018 | |
Changes in Accumulated Other Comprehensive Income (Loss) | |
Schedule of changes in accumulated other comprehensive income (loss), net of taxes | Three Months Ended September 30 Cumulative Gains Cumulative (Losses) on Net Actuarial Unrealized Gains Derivative Cumulative Foreign (Losses) and Prior (Losses) on Instruments Currency Translation Service (Costs) Marketable Equity Designated as Adjustments and Credits Securities Cash Flow Hedges (in millions) 2018 2017 2018 2017 2018 2017 2018 2017 Balance at June 30 $ (4,478) $ (3,996) $ (2,437) $ (2,215) $ — $ 13 $ 2 $ (52) Other comprehensive income (loss) before reclassifications (153) 285 — — — (136) 10 (44) Amounts reclassified from accumulated other comprehensive income — — 22 23 — — 25 6 Net current period comprehensive income (loss) (153) 285 22 23 — (136) 35 (38) Balance at September 30 $ (4,631) $ (3,711) $ (2,415) $ (2,192) $ — $ (123) $ 37 $ (90) Nine Months Ended September 30 Cumulative Gains Cumulative (Losses) on Net Actuarial Unrealized Gains Derivative Cumulative Foreign (Losses) and Prior (Losses) on Instruments Currency Translation Service (Costs) Marketable Equity Designated as Adjustments and Credits Securities Cash Flow Hedges (in millions) 2018 2017 2018 2017 2018 2017 2018 2017 Balance at December 31, 2017 and 2016 $ (3,452) $ (4,959) $ (2,521) $ (2,284) $ (5) $ (69) $ (84) $ 49 Reclassified to Earnings employed in the business for adoption of ASU 2016-01 — — — — 5 — — — Impact of business dispositions — 142 — 6 — — — 1 Other comprehensive income (loss) before reclassifications (1,179) 1,106 — — — 47 38 (151) Amounts reclassified from accumulated other comprehensive income — — 106 86 — (101) 83 11 Net current period comprehensive income (loss) (1,179) 1,106 106 86 — (54) 121 (140) Balance at September 30 $ (4,631) $ (3,711) $ (2,415) $ (2,192) $ — $ (123) $ 37 $ (90) |
Business Acquisitions (Tables)
Business Acquisitions (Tables) | 9 Months Ended |
Sep. 30, 2018 | |
Alere Inc | |
Business Acquisitions | |
Schedule of allocation of fair value of the acquisition | (in billions) Acquired intangible assets, non-deductible $ 3.5 Goodwill, non-deductible 3.7 Acquired net tangible assets 1.0 Deferred income taxes recorded at acquisition (0.4) Net debt (2.6) Preferred stock (0.7) Total allocation of fair value $ 4.5 |
Restructuring Plans (Tables)
Restructuring Plans (Tables) | 9 Months Ended |
Sep. 30, 2018 | |
Restructuring Plan in 2017 and 2018, St Jude and Alere Integrations | |
Restructuring costs | |
Summary of restructuring activity | (in millions) Accrued balance at December 31, 2017 $ 68 Restructuring charges recorded in 2018 45 Payments and other adjustments (58) Accrued balance at September 30, 2018 $ 55 |
Restructuring Plan from 2014 to 2018 | |
Restructuring costs | |
Summary of restructuring activity | (in millions) Accrued balance at December 31, 2017 $ 141 Restructuring charges recorded in 2018 18 Payments and other adjustments (72) Accrued balance at September 30, 2018 $ 87 |
Incentive Stock Programs (Table
Incentive Stock Programs (Tables) | 9 Months Ended |
Sep. 30, 2018 | |
Incentive Stock Programs | |
Schedule of stock options outstanding and exercisable | Outstanding Exercisable Number of shares 33,984,922 21,496,161 Weighted average remaining life ( years ) 6.5 5.5 Weighted average exercise price $ 41.88 $ 38.04 Aggregate intrinsic value ( in millions ) $ 1,070 $ 759 |
Financial Instruments, Deriva_2
Financial Instruments, Derivatives and Fair Value Measures (Tables) | 9 Months Ended |
Sep. 30, 2018 | |
Financial Instruments, Derivatives and Fair Value Measures | |
Summary of the amounts and location of certain derivative financial instruments | Fair Value - Assets Fair Value - Liabilities Sept. 30, Dec. 31, Sept. 30, Dec. 31, (in millions) 2018 2017 Balance Sheet Caption 2018 2017 Balance Sheet Caption Interest rate swaps designated as fair value hedges $ — $ — Deferred income taxes and other assets $ 272 $ 93 Post-employment obligations, deferred income taxes and other long-term liabilities Foreign currency forward exchange contracts: Hedging instruments 61 21 Prepaid expenses and other receivables 19 106 Other accrued liabilities Others not designated as hedges 69 117 Prepaid expenses and other receivables 77 99 Other accrued liabilities $ 130 $ 138 $ 368 $ 298 |
Schedule of derivatives gain (loss) in OCI and earnings | Gain (loss) Recognized in Other Income (expense) and Gain (loss) Comprehensive Income (loss) Reclassified into Income Three Months Nine Months Three Months Nine Months Ended Sept. 30 Ended Sept. 30 Ended Sept. 30 Ended Sept. 30 Income Statement (in millions) 2018 2017 2018 2017 2018 2017 2018 2017 Caption Foreign currency forward exchange contracts designated as cash flow hedges $ 18 $ (57) $ 45 $ (202) $ (37) $ (7) $ (120) $ (14) Cost of products sold Debt designated as a hedge of net investment in a foreign subsidiary — — — (25) 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 (42) (1) (179) 13 Interest expense |
Schedule of carrying values and fair values of certain financial instruments | September 30, 2018 December 31, 2017 Carrying Fair Carrying Fair (in millions) Value Value Value Value Investment Securities: Equity securities $ 934 $ 934 $ 797 $ 797 Other 37 37 86 86 Total Long-term Debt (23,347) (24,013) (27,718) (29,018) Foreign Currency Forward Exchange Contracts: Receivable position 130 130 138 138 (Payable) position (96) (96) (205) (205) Interest Rate Hedge Contracts: (Payable) position (272) (272) (93) (93) |
Schedule of assets and liabilities measured at fair value on a recurring basis | Basis of Fair Value Measurement Quoted Significant Prices in Other Significant Outstanding Active Observable Unobservable (in millions) Balances Markets Inputs Inputs September 30, 2018: Equity securities $ 363 $ 363 $ — $ — Foreign currency forward exchange contracts 130 — 130 — Total Assets $ 493 $ 363 $ 130 $ — Fair value of hedged long-term debt $ 3,730 $ — $ 3,730 $ — Interest rate swap derivative financial instruments 272 — 272 — Foreign currency forward exchange contracts 96 — 96 — Contingent consideration related to business combinations 71 — — 71 Total Liabilities $ 4,169 $ — $ 4,098 $ 71 December 31, 2017: Equity securities $ 374 $ 374 $ — $ — Foreign currency forward exchange contracts 138 — 138 — Total Assets $ 512 $ 374 $ 138 $ — Fair value of hedged long-term debt $ 3,898 $ — $ 3,898 $ — Interest rate swap derivative financial instruments 93 — 93 — Foreign currency forward exchange contracts 205 — 205 — Contingent consideration related to business combinations 120 — — 120 Total Liabilities $ 4,316 $ — $ 4,196 $ 120 |
Post-Employment Benefits (Table
Post-Employment Benefits (Tables) | 9 Months Ended |
Sep. 30, 2018 | |
Post-Employment Benefits | |
Schedule of 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 Nine Months Three Months Nine Months Ended September 30 Ended September 30 Ended September 30 Ended September 30 (in millions) 2018 2017 2018 2017 2018 2017 2018 2017 Service cost - benefits earned during the period $ 76 $ 71 $ 221 $ 213 $ 7 $ 6 $ 20 $ 19 Interest cost on projected benefit obligations 77 72 232 215 12 12 36 34 Expected return on plan assets (169) (154) (511) (459) (9) (9) (25) (25) Net amortization of: Actuarial loss, net 51 41 154 123 8 6 25 18 Prior service cost (credit) — — 1 — (11) (11) (34) (34) Net cost - continuing operations $ 35 $ 30 $ 97 $ 92 $ 7 $ 4 $ 22 $ 12 |
Segment Information (Tables)
Segment Information (Tables) | 9 Months Ended |
Sep. 30, 2018 | |
Segment Information | |
Schedule of segment information - net sales and operating earnings | Net Sales to External Customers Operating Earnings Three Months Nine Months Three Months Nine Months Ended September 30 Ended September 30 Ended September 30 Ended September 30 (in millions) 2018 2017 2018 2017 2018 2017 2018 2017 Established Pharmaceutical Products $ 1,159 $ 1,171 $ 3,332 $ 3,142 $ 289 $ 271 $ 664 $ 591 Nutritional Products 1,838 1,768 5,452 5,141 435 403 1,224 1,146 Diagnostic Products 1,824 1,279 5,534 3,710 443 353 1,375 975 Cardiovascular and Neuromodulation Products 2,303 2,224 7,047 6,587 730 682 2,215 1,990 Total Reportable Segments 7,124 6,442 21,365 18,580 1,897 1,709 5,478 4,702 Other 532 387 1,448 1,221 Net Sales $ 7,656 $ 6,829 $ 22,813 $ 19,801 Corporate functions and benefit plans costs (143) (129) (435) (326) Non-reportable segments 148 89 365 209 Net interest expense (181) (182) (569) (569) Share-based compensation (a) (83) (75) (396) (338) Amortization of intangible assets (544) (501) (1,690) (1,415) Other, net (b) (376) (285) (827) (606) Earnings from continuing operations before taxes $ 718 $ 626 $ 1,926 $ 1,657 (a) 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. (b) Other, net for the nine months ended September 30, 2018 includes inventory step-up amortization. Other, net for the three and nine months ended September 30, 2018, includes restructuring charges and integration costs associated with the acquisitions of St. Jude Medical and Alere. Other, net for the nine months ended September 30, 2017, includes the gain on the sale of the AMO business. Other, net for the three and nine months ended September 30, 2017, includes inventory step-up amortization, restructuring charges and integration costs associated with the acquisition of St. Jude Medical. |
New Accounting Standards (Detai
New Accounting Standards (Details) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | |||||
Sep. 30, 2018 | Sep. 30, 2017 | Sep. 30, 2018 | Sep. 30, 2017 | Jan. 01, 2018 | Dec. 31, 2017 | Oct. 31, 2017 | |
Recently Adopted Accounting Standards | |||||||
Operating Earnings | $ 995 | $ 769 | $ 2,485 | $ 913 | |||
Other (income) expense, net | (18) | 33 | 93 | 1,279 | |||
Retained earnings | $ 24,144 | $ 24,144 | $ 23,978 | ||||
ASU 2017-07 | |||||||
Recently Adopted Accounting Standards | |||||||
Operating Earnings | (40) | (120) | |||||
Other (income) expense, net | $ 40 | $ 120 | |||||
Alere Inc | ASU 2016-18 | |||||||
Recently Adopted Accounting Standards | |||||||
Restricted cash acquired | $ 75 | ||||||
Cumulative Effect | ASU 2014-09 | |||||||
Recently Adopted Accounting Standards | |||||||
Retained earnings | $ 23 |
Revenue (Details)
Revenue (Details) $ in Millions | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2018USD ($) | Sep. 30, 2017USD ($) | Sep. 30, 2018USD ($)segment | Sep. 30, 2017USD ($) | |
Revenue | ||||
Number of reportable segments | segment | 4 | |||
Net sales | $ 7,656 | $ 6,829 | $ 22,813 | $ 19,801 |
Minimum [Member] | ||||
Revenue | ||||
Settlement of rebate after sale | 1 month | |||
Period cash discounts are known after sale | 15 days | |||
Maximum [Member] | ||||
Revenue | ||||
Settlement of rebate after sale | 6 months | |||
Period cash discounts are known after sale | 30 days | |||
U.S. | ||||
Revenue | ||||
Net sales | 2,707 | 2,313 | $ 8,084 | 6,997 |
Int'l | ||||
Revenue | ||||
Net sales | 4,949 | 4,516 | 14,729 | 12,804 |
Established Pharmaceutical Products | ||||
Revenue | ||||
Net sales | 1,159 | 1,171 | 3,332 | 3,142 |
Established Pharmaceutical Products | Int'l | ||||
Revenue | ||||
Net sales | 1,159 | 1,171 | 3,332 | 3,142 |
Nutritional Products | ||||
Revenue | ||||
Net sales | 1,838 | 1,768 | 5,452 | 5,141 |
Nutritional Products | U.S. | ||||
Revenue | ||||
Net sales | 774 | 759 | 2,313 | 2,262 |
Nutritional Products | Int'l | ||||
Revenue | ||||
Net sales | 1,064 | 1,009 | 3,139 | 2,879 |
Diagnostic Products | ||||
Revenue | ||||
Net sales | 1,824 | 1,279 | 5,534 | 3,710 |
Diagnostic Products | U.S. | ||||
Revenue | ||||
Net sales | 666 | 369 | 2,018 | 1,125 |
Diagnostic Products | Int'l | ||||
Revenue | ||||
Net sales | 1,158 | 910 | 3,516 | 2,585 |
Cardiovascular and Neuromodulation Products | ||||
Revenue | ||||
Net sales | 2,303 | 2,224 | 7,047 | 6,587 |
Cardiovascular and Neuromodulation Products | U.S. | ||||
Revenue | ||||
Net sales | 1,134 | 1,093 | 3,404 | 3,264 |
Cardiovascular and Neuromodulation Products | Int'l | ||||
Revenue | ||||
Net sales | 1,169 | 1,131 | 3,643 | 3,323 |
Other | ||||
Revenue | ||||
Net sales | 532 | 387 | 1,448 | 1,221 |
Other | U.S. | ||||
Revenue | ||||
Net sales | 133 | 92 | 349 | 346 |
Other | Int'l | ||||
Revenue | ||||
Net sales | 399 | 295 | 1,099 | 875 |
Key Emerging Markets | Established Pharmaceutical Products | ||||
Revenue | ||||
Net sales | 866 | 885 | 2,525 | 2,413 |
Key Emerging Markets | Established Pharmaceutical Products | Int'l | ||||
Revenue | ||||
Net sales | 866 | 885 | 2,525 | 2,413 |
Other | Established Pharmaceutical Products | ||||
Revenue | ||||
Net sales | 293 | 286 | 807 | 729 |
Other | Established Pharmaceutical Products | Int'l | ||||
Revenue | ||||
Net sales | 293 | 286 | 807 | 729 |
Pediatric Nutritionals | Nutritional Products | ||||
Revenue | ||||
Net sales | 1,039 | 975 | 3,084 | 2,889 |
Pediatric Nutritionals | Nutritional Products | U.S. | ||||
Revenue | ||||
Net sales | 459 | 436 | 1,376 | 1,327 |
Pediatric Nutritionals | Nutritional Products | Int'l | ||||
Revenue | ||||
Net sales | 580 | 539 | 1,708 | 1,562 |
Adult Nutritionals | Nutritional Products | ||||
Revenue | ||||
Net sales | 799 | 793 | 2,368 | 2,252 |
Adult Nutritionals | Nutritional Products | U.S. | ||||
Revenue | ||||
Net sales | 315 | 323 | 937 | 935 |
Adult Nutritionals | Nutritional Products | Int'l | ||||
Revenue | ||||
Net sales | 484 | 470 | 1,431 | 1,317 |
Core Laboratory | Diagnostic Products | ||||
Revenue | ||||
Net sales | 1,086 | 1,033 | 3,233 | 2,964 |
Core Laboratory | Diagnostic Products | U.S. | ||||
Revenue | ||||
Net sales | 249 | 230 | 725 | 678 |
Core Laboratory | Diagnostic Products | Int'l | ||||
Revenue | ||||
Net sales | 837 | 803 | 2,508 | 2,286 |
Molecular | Diagnostic Products | ||||
Revenue | ||||
Net sales | 121 | 115 | 361 | 341 |
Molecular | Diagnostic Products | U.S. | ||||
Revenue | ||||
Net sales | 37 | 37 | 114 | 123 |
Molecular | Diagnostic Products | Int'l | ||||
Revenue | ||||
Net sales | 84 | 78 | 247 | 218 |
Point of Care | Diagnostic Products | ||||
Revenue | ||||
Net sales | 136 | 131 | 416 | 405 |
Point of Care | Diagnostic Products | U.S. | ||||
Revenue | ||||
Net sales | 106 | 102 | 324 | 324 |
Point of Care | Diagnostic Products | Int'l | ||||
Revenue | ||||
Net sales | 30 | 29 | 92 | 81 |
Rapid Diagnostics | Diagnostic Products | ||||
Revenue | ||||
Net sales | 481 | 1,524 | ||
Rapid Diagnostics | Diagnostic Products | U.S. | ||||
Revenue | ||||
Net sales | 274 | 855 | ||
Rapid Diagnostics | Diagnostic Products | Int'l | ||||
Revenue | ||||
Net sales | 207 | 669 | ||
Rhythm Management | Cardiovascular and Neuromodulation Products | ||||
Revenue | ||||
Net sales | 508 | 511 | 1,586 | 1,574 |
Rhythm Management | Cardiovascular and Neuromodulation Products | U.S. | ||||
Revenue | ||||
Net sales | 252 | 250 | 778 | 783 |
Rhythm Management | Cardiovascular and Neuromodulation Products | Int'l | ||||
Revenue | ||||
Net sales | 256 | 261 | 808 | 791 |
Electrophysiology | Cardiovascular and Neuromodulation Products | ||||
Revenue | ||||
Net sales | 406 | 342 | 1,225 | 1,001 |
Electrophysiology | Cardiovascular and Neuromodulation Products | U.S. | ||||
Revenue | ||||
Net sales | 189 | 147 | 564 | 446 |
Electrophysiology | Cardiovascular and Neuromodulation Products | Int'l | ||||
Revenue | ||||
Net sales | 217 | 195 | 661 | 555 |
Heart Failure | Cardiovascular and Neuromodulation Products | ||||
Revenue | ||||
Net sales | 152 | 170 | 468 | 471 |
Heart Failure | Cardiovascular and Neuromodulation Products | U.S. | ||||
Revenue | ||||
Net sales | 111 | 131 | 342 | 363 |
Heart Failure | Cardiovascular and Neuromodulation Products | Int'l | ||||
Revenue | ||||
Net sales | 41 | 39 | 126 | 108 |
Vascular | Cardiovascular and Neuromodulation Products | ||||
Revenue | ||||
Net sales | 720 | 724 | 2,209 | 2,158 |
Vascular | Cardiovascular and Neuromodulation Products | U.S. | ||||
Revenue | ||||
Net sales | 284 | 292 | 854 | 891 |
Vascular | Cardiovascular and Neuromodulation Products | Int'l | ||||
Revenue | ||||
Net sales | 436 | 432 | 1,355 | 1,267 |
Structural Heart | Cardiovascular and Neuromodulation Products | ||||
Revenue | ||||
Net sales | 305 | 269 | 913 | 793 |
Structural Heart | Cardiovascular and Neuromodulation Products | U.S. | ||||
Revenue | ||||
Net sales | 126 | 109 | 353 | 320 |
Structural Heart | Cardiovascular and Neuromodulation Products | Int'l | ||||
Revenue | ||||
Net sales | 179 | 160 | 560 | 473 |
Neuromodulation | Cardiovascular and Neuromodulation Products | ||||
Revenue | ||||
Net sales | 212 | 208 | 646 | 590 |
Neuromodulation | Cardiovascular and Neuromodulation Products | U.S. | ||||
Revenue | ||||
Net sales | 172 | 164 | 513 | 461 |
Neuromodulation | Cardiovascular and Neuromodulation Products | Int'l | ||||
Revenue | ||||
Net sales | $ 40 | $ 44 | $ 133 | $ 129 |
Revenue - Remaining Performance
Revenue - Remaining Performance Obligations (Details) $ in Millions | 9 Months Ended |
Sep. 30, 2018USD ($) | |
Diagnostic Products | |
Remaining Performance Obligations | |
Remaining performance obligations | $ 2,800 |
Cardiovascular and Neuromodulation Products | |
Remaining Performance Obligations | |
Remaining performance obligations | $ 330 |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2018-10-01 | |
Remaining Performance Obligations | |
Percentage of remaining performance obligation expected to be recognized in period | 60.00% |
Expected timing of satisfication period (in months) | 24 months |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2020-10-01 | |
Remaining Performance Obligations | |
Percentage of remaining performance obligation expected to be recognized in period | 15.00% |
Expected timing of satisfication period (in months) | 12 months |
Revenue - Practical Expedient (
Revenue - Practical Expedient (Details) | 9 Months Ended |
Sep. 30, 2018 | |
Revenue | |
Revenue, practical expedient, initial application and transition, completed contract, same reporting period | true |
Practical expedient in remaining performance obligations related to contracts | true |
Practical expedient in incremental costs of obtaining contracts with customers | true |
Revenue - Assets Recognized for
Revenue - Assets Recognized for Costs to Obtain a Contract with a Customer (Details) | Sep. 30, 2018 |
Capitalized commission fees | Minimum [Member] | |
Assets Recognized for Costs to Obtain a Contract with a Customer | |
Amortization period | 2 years |
Capitalized commission fees | Maximum [Member] | |
Assets Recognized for Costs to Obtain a Contract with a Customer | |
Amortization period | 10 years |
Capitalized transmitter costs | Minimum [Member] | |
Assets Recognized for Costs to Obtain a Contract with a Customer | |
Amortization period | 8 years |
Capitalized transmitter costs | Maximum [Member] | |
Assets Recognized for Costs to Obtain a Contract with a Customer | |
Amortization period | 10 years |
Revenue - Other Contract Assets
Revenue - Other Contract Assets and Liabilities (Details) $ in Millions | 9 Months Ended |
Sep. 30, 2018USD ($) | |
Contract Liabilities | |
Beginning Balance | $ 198 |
Unearned revenue from cash received during the period | 209 |
Revenue recognized that was included in contract liability balance at beginning of period | (155) |
Ending Balance | $ 252 |
Discontinued Operations - By Di
Discontinued Operations - By Disposal (Details) - USD ($) $ in Millions | 9 Months Ended | |
Sep. 30, 2018 | Sep. 30, 2017 | |
AbbVie Inc. | ||
Discontinued Operations | ||
Earnings from discontinued operations, net of tax | $ 35 | $ 88 |
Assets Held for Disposition (De
Assets Held for Disposition (Details) - USD ($) $ in Millions | Sep. 30, 2018 | Dec. 31, 2017 |
Disposals as part of acquisitions | ||
Current assets held for disposition | $ 12 | $ 20 |
Triage MeterPro cardiovascular and toxicology business | Dispositions held for sale | ||
Disposals as part of acquisitions | ||
Trade receivables, net | 9 | 12 |
Total inventories | 3 | 8 |
Current assets held for disposition | 12 | 20 |
Net property and equipment | 56 | |
Intangible assets, net of amortization | 18 | |
Goodwill | 19 | 102 |
Non-current assets held for disposition | 19 | 176 |
Total assets held for disposition | $ 31 | $ 196 |
Supplemental Financial Inform_3
Supplemental Financial Information - Income Statement (Details) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2018 | Sep. 30, 2017 | Sep. 30, 2018 | Sep. 30, 2017 | |
Supplemental Financial Information | ||||
Earnings from continuing operations allocated to common shares | $ 548 | $ 558 | $ 1,669 | $ 1,211 |
Net earnings allocated to common shares | $ 560 | $ 601 | $ 1,704 | $ 1,299 |
Supplemental Financial Inform_4
Supplemental Financial Information - Cash Flows (Details) - USD ($) $ in Millions | 9 Months Ended | |
Sep. 30, 2018 | Sep. 30, 2017 | |
AMO | Disposal Group, Disposed of by Sale, Not Discontinued Operations | ||
Cash flow disclosures | ||
Tax expense (benefit) on gain or loss on sale of business | $ 435 | |
Defined Benefit Plans | ||
Cash flow disclosures | ||
Company contributions | $ 71 | $ 335 |
Supplemental Financial Inform_5
Supplemental Financial Information - Other income and expense (Details) - USD ($) shares in Millions, $ in Millions | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2018 | Sep. 30, 2017 | Sep. 30, 2018 | Sep. 30, 2017 | |
Disclosures | ||||
Earnings (losses) before taxes | $ 718 | $ 626 | $ 1,926 | $ 1,657 |
Proceeds from the sale of Mylan N.V. shares | $ 1,977 | |||
Developed markets branded generics pharmaceuticals business | Equity securities | Mylan N. V. (Investee) | ||||
Disclosures | ||||
Number of shares in investment sold | 51 | |||
Proceeds from the sale of Mylan N.V. shares | $ 1,977 | |||
AMO | Dispositions held for sale | ||||
Disclosures | ||||
After tax gain | 728 | |||
Earnings (losses) before taxes | (18) | |||
AMO | Dispositions held for sale | Other (income) expense, net | ||||
Disclosures | ||||
Pre-tax gain on sale of disposal group | $ 1,163 |
Supplemental Financial Inform_6
Supplemental Financial Information - Investments (Details) - USD ($) $ in Millions | 9 Months Ended | |
Sep. 30, 2018 | Dec. 31, 2017 | |
Investments | ||
Long-term Investments | $ 971 | $ 883 |
Equity method investments carrying value | 355 | |
Equity method investments fair value not determinable | 220 | |
Unrealized gain on Investment | 50 | |
Equity securities | ||
Investments | ||
Long-term Investments | 934 | 797 |
Equity securities | St Jude Medical | ||
Investments | ||
Securities in mutual funds held in a rabbi trust | 350 | |
Other | ||
Investments | ||
Long-term Investments | $ 37 | $ 86 |
Changes in Accumulated Other _3
Changes in Accumulated Other Comprehensive Income (Loss) (Details) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2018 | Sep. 30, 2017 | Sep. 30, 2018 | Sep. 30, 2017 | |
Changes in accumulated other comprehensive income (loss), net of income taxes | ||||
Beginning of the period | $ 30,897 | |||
Other comprehensive income (loss) | $ (96) | $ 134 | (952) | $ 998 |
End of the period | 30,705 | 30,705 | ||
Cumulative Foreign Currency Translation Adjustments | ||||
Changes in accumulated other comprehensive income (loss), net of income taxes | ||||
Beginning of the period | (4,478) | (3,996) | (3,452) | (4,959) |
Impact of business dispositions | 142 | |||
Other comprehensive income (loss) before reclassifications | (153) | 285 | (1,179) | 1,106 |
Other comprehensive income (loss) | (153) | 285 | (1,179) | 1,106 |
End of the period | (4,631) | (3,711) | (4,631) | (3,711) |
Net Actuarial (Losses) and Prior Service (Costs) and Credits | ||||
Changes in accumulated other comprehensive income (loss), net of income taxes | ||||
Beginning of the period | (2,437) | (2,215) | (2,521) | (2,284) |
Impact of business dispositions | 6 | |||
Amounts reclassified from accumulated other comprehensive income | 22 | 23 | 106 | 86 |
Other comprehensive income (loss) | 22 | 23 | 106 | 86 |
End of the period | (2,415) | (2,192) | (2,415) | (2,192) |
Cumulative Unrealized Gains (Losses) on Marketable Equity Securities | ||||
Changes in accumulated other comprehensive income (loss), net of income taxes | ||||
Beginning of the period | 13 | (5) | (69) | |
Other comprehensive income (loss) before reclassifications | (136) | 47 | ||
Amounts reclassified from accumulated other comprehensive income | (101) | |||
Other comprehensive income (loss) | (136) | (54) | ||
End of the period | (123) | (123) | ||
Cumulative Gains (Losses) on Derivative Instruments Designated as Cash Flow Hedges | ||||
Changes in accumulated other comprehensive income (loss), net of income taxes | ||||
Beginning of the period | 2 | (52) | (84) | 49 |
Impact of business dispositions | 1 | |||
Other comprehensive income (loss) before reclassifications | 10 | (44) | 38 | (151) |
Amounts reclassified from accumulated other comprehensive income | 25 | 6 | 83 | 11 |
Other comprehensive income (loss) | 35 | (38) | 121 | (140) |
End of the period | $ 37 | $ (90) | 37 | $ (90) |
ASU 2016-01 | Cumulative Unrealized Gains (Losses) on Marketable Equity Securities | ||||
Changes in accumulated other comprehensive income (loss), net of income taxes | ||||
Reclassified to Earnings employed in the business for adoption of ASU 2016-01 | $ 5 |
Business Acquisitions - St. Jud
Business Acquisitions - St. Jude (Details) - USD ($) $ / shares in Units, $ in Millions | Jan. 20, 2017 | Jan. 04, 2017 | Sep. 30, 2017 | Dec. 31, 2016 |
Disposals as part of acquisitions | ||||
Gain or loss on sale | $ 1,163 | |||
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 and subsequently 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 | |||
Stock price (in dollars per share) | $ 39.36 | |||
Expected value per common share (in dollars per share) | $ 81 | |||
St. Jude Medical Angio-Seal and Femoseal vascular closure and Abbott's Vado Steerable Sheath businesses | Disposal Group, Disposed of by Sale, Not Discontinued Operations | ||||
Disposals as part of acquisitions | ||||
Proceeds from business disposition | $ 1,120 | |||
Gain or loss on sale | $ 0 | |||
120-day senior unsecured bridge term loan | St Jude Medical | ||||
Business acquisitions | ||||
Proceeds from bridge loan | $ 2,000 | |||
Maturity period | 120 days |
Business Acquisitions - Alere I
Business Acquisitions - Alere Inc. (Details) $ / shares in Units, $ in Millions | Oct. 31, 2017USD ($) | Oct. 03, 2017USD ($)$ / shares | Sep. 30, 2017USD ($)installment | Sep. 30, 2018USD ($) | Dec. 31, 2017USD ($) |
Allocation of the fair value | |||||
Goodwill, non-deductible | $ 23,416 | $ 24,020 | |||
Disposals as part of acquisitions | |||||
Gain or loss on sale | $ 1,163 | ||||
Alere Inc | |||||
Business acquisitions | |||||
Share price of shares received in acquisition per agreement (in dollars per share) | $ / shares | $ 51 | ||||
Issue of equity for business acquisition | $ 4,500 | ||||
Debt assumed and subsequently repaid or refinanced | 3,000 | ||||
Allocation of the fair value | |||||
Acquired intangible assets, non-deductible | 3,500 | ||||
Goodwill, non-deductible | 3,700 | ||||
Acquired net tangible assets | 1,000 | ||||
Deferred income taxes recorded at acquisition | (400) | ||||
Net debt | (2,600) | ||||
Preferred stock | (700) | ||||
Total allocation of fair value | 4,500 | ||||
Trade accounts receivable | 430 | ||||
Inventory | 425 | ||||
Other current assets | 225 | ||||
Property and equipment | 540 | ||||
Other long-term assets | 210 | ||||
Trade accounts payable and other current liabilities | 675 | ||||
Other non-current liabilities | $ 145 | ||||
Disposal Group, held for disposition | Alere Inc | |||||
Disposals as part of acquisitions | |||||
Gain or loss on sale | $ 0 | ||||
Triage MeterPro Business | Disposal Group, held for disposition | Alere Inc | |||||
Disposals as part of acquisitions | |||||
Sale consideration | 400 | ||||
Sale consideration receivable in annual installments | $ 240 | ||||
Number of installments | installment | 6 | ||||
Triage MeterPro Business | Disposal Group, held for disposition | Alere Inc | Maximum [Member] | |||||
Disposals as part of acquisitions | |||||
Contingent consideration asset | $ 40 | ||||
Epocal Inc. | Disposal Group, held for disposition | Alere Inc | |||||
Disposals as part of acquisitions | |||||
Sale consideration | $ 200 |
Business Acquisitions - Alere P
Business Acquisitions - Alere Preferred Stock Tender Offer (Details) - Convertible Perpetual Preferred Stock, Series B - Alere Inc - $ / shares shares in Thousands | Oct. 03, 2017 | Jul. 17, 2017 | Dec. 31, 2017 |
Acquisitions - other disclosures | |||
Number of shares of stock to be acquired for cash per a tender offer (in shares) | 1,770 | ||
Price of shares to be acquired for cash per a tender offer (n dollars per share) | $ 402 | ||
Number of shares accepted for payment per tender offer (in shares) | 1,748 | ||
Remaining liquidation preference share (in dollars per share) | $ 400 |
Goodwill and Intangible Assets
Goodwill and Intangible Assets (Details) - USD ($) $ in Millions | 9 Months Ended | |
Sep. 30, 2018 | Dec. 31, 2017 | |
Goodwill and Intangible Assets | ||
Goodwill | $ 23,416 | $ 24,020 |
Decrease in goodwill due to foreign currency translation adjustments | 277 | |
Decrease in goodwill due to purchase price accounting adjustments | 326 | |
Amount of reduction of goodwill relating to impairments | 0 | |
Established Pharmaceutical Products | ||
Goodwill and Intangible Assets | ||
Goodwill | 3,100 | |
Nutritional Products | ||
Goodwill and Intangible Assets | ||
Goodwill | 286 | |
Diagnostic Products | ||
Goodwill and Intangible Assets | ||
Goodwill | 3,700 | |
Cardiovascular and Neuromodulation Products | ||
Goodwill and Intangible Assets | ||
Goodwill | $ 15,400 |
Goodwill and Intangible Asset_2
Goodwill and Intangible Assets - Intangible Assets (Details) - USD ($) $ in Millions | 9 Months Ended | |
Sep. 30, 2018 | Dec. 31, 2017 | |
Goodwill and Intangible Assets | ||
Gross amount of amortizable intangible assets | $ 25,700 | $ 25,600 |
Accumulated amortization of intangible assets | 9,800 | 8,100 |
Increase in intangible assets due to purchase price allocation adjustments | 280 | |
Decrease in intangible assets due to foreign currency translation adjustments | 225 | |
Estimated annual amortization expense, intangible assets, 2018 | 2,400 | |
Estimated annual amortization expense, intangible assets, 2019 | 2,300 | |
Estimated annual amortization expense, intangible assets, 2020 | 2,100 | |
Estimated annual amortization expense, intangible assets, 2021 | 2,000 | |
Estimated annual amortization expense, intangible assets, 2022 | 2,000 | |
Indefinite-lived intangible assets related to in-process research and development acquired in a business combination | $ 3,600 | $ 3,900 |
Minimum [Member] | ||
Goodwill and Intangible Assets | ||
Amortization period of intangible assets | 2 years | |
Maximum [Member] | ||
Goodwill and Intangible Assets | ||
Amortization period of intangible assets | 20 years | |
Weighted Average [Member] | ||
Goodwill and Intangible Assets | ||
Amortization period of intangible assets | 12 years |
Restructuring Plans (Details)
Restructuring Plans (Details) $ in Millions | 9 Months Ended |
Sep. 30, 2018USD ($) | |
Restructuring Plan in 2017 and 2018, St Jude and Alere Integrations | |
Restructuring reserve activity | |
Accrued balance at beginning of the period | $ 68 |
Restructuring charges | 45 |
Payments and other adjustments | (58) |
Accrued balance at end of the period | 55 |
Restructuring Plan from 2014 to 2018 | |
Restructuring reserve activity | |
Accrued balance at beginning of the period | 141 |
Restructuring charges | 18 |
Payments and other adjustments | (72) |
Accrued balance at end of the period | 87 |
Cost of products sold | Restructuring Plan in 2017 and 2018, St Jude and Alere Integrations | |
Restructuring reserve activity | |
Restructuring charges | 4 |
Cost of products sold | Restructuring Plan from 2014 to 2018 | |
Restructuring reserve activity | |
Restructuring charges | 8 |
Research and development | Restructuring Plan in 2017 and 2018, St Jude and Alere Integrations | |
Restructuring reserve activity | |
Restructuring charges | 10 |
Research and development | Restructuring Plan from 2014 to 2018 | |
Restructuring reserve activity | |
Restructuring charges | 1 |
Selling, general and administrative expense | Restructuring Plan in 2017 and 2018, St Jude and Alere Integrations | |
Restructuring reserve activity | |
Restructuring charges | 31 |
Selling, general and administrative expense | Restructuring Plan from 2014 to 2018 | |
Restructuring reserve activity | |
Restructuring charges | $ 9 |
Incentive Stock Programs - Gene
Incentive Stock Programs - General (Details) | 9 Months Ended |
Sep. 30, 2018shares | |
Share-based Compensation Arrangement by Share-based Payment Award | |
Incentive stock programs, shares reserved for future grants | 144,000,000 |
Stock options | |
Share-based Compensation Arrangement by Share-based Payment Award | |
Stock options granted during the period (in shares) | 5,760,221 |
Restricted stock awards | |
Share-based Compensation Arrangement by Share-based Payment Award | |
Grants in period, restricted stock (in shares) | 871,331 |
Restricted stock units | |
Share-based Compensation Arrangement by Share-based Payment Award | |
Awards and units granted during period (in shares) | 7,995,581 |
Incentive Stock Programs - Opti
Incentive Stock Programs - Options Activity (Details) $ / shares in Units, $ in Millions | 9 Months Ended |
Sep. 30, 2018USD ($)$ / sharesshares | |
Share-based Compensation Arrangement by Share-based Payment Award | |
Total unrecognized compensation cost | $ 439 |
Total unrecognized compensation cost, recognition period | 3 years |
Stock options | |
Share-based Compensation Arrangement by Share-based Payment Award | |
Stock options outstanding, number of shares | shares | 33,984,922 |
Stock options outstanding, weighted-average remaining life | 6 years 6 months |
Stock options outstanding, weighted-average exercise price (in dollars per share) | $ / shares | $ 41.88 |
Aggregate intrinsic value of options outstanding | $ 1,070 |
Exercisable options, number of shares | shares | 21,496,161 |
Exercisable options, weighted-average remaining life | 5 years 6 months |
Exercisable options, weighted-average exercise price (in dollars per share) | $ / shares | $ 38.04 |
Aggregate intrinsic value of options exercisable | $ 759 |
Debt and Lines of Credit (Detai
Debt and Lines of Credit (Details) € in Millions, $ in Millions | Oct. 28, 2018USD ($) | Sep. 28, 2018USD ($) | Sep. 27, 2018USD ($) | Sep. 17, 2018USD ($) | Jun. 22, 2018USD ($) | Mar. 22, 2018USD ($) | Jan. 05, 2018USD ($) | Sep. 30, 2018USD ($) | Sep. 30, 2018USD ($) | Sep. 27, 2018EUR (€) | Feb. 16, 2018USD ($) |
Debt and Lines of Credit | |||||||||||
Long-terms authorized for redemption | $ 5,000 | ||||||||||
Authorization available for redemption of debt | $ 1,200 | $ 1,200 | |||||||||
Net charge for early repayment of debt | $ 14 | $ 67 | |||||||||
Proceeds from issuance of debt | $ 4,011 | ||||||||||
5-year term loan | |||||||||||
Debt and Lines of Credit | |||||||||||
Repayments of debt | $ 2,800 | ||||||||||
Maturity period | 5 years | ||||||||||
Revolving line of credit | |||||||||||
Debt and Lines of Credit | |||||||||||
Repayments of debt | $ 1,150 | ||||||||||
2.0% Notes, due 2018 | |||||||||||
Debt and Lines of Credit | |||||||||||
Repayments of debt | $ 500 | ||||||||||
Interest rate percentage | 2.00% | ||||||||||
5.125% Notes, due 2019 | |||||||||||
Debt and Lines of Credit | |||||||||||
Repayments of debt | $ 947 | ||||||||||
Interest rate percentage | 5.125% | ||||||||||
2.35% Notes, due 2019 | |||||||||||
Debt and Lines of Credit | |||||||||||
Repayments of debt | $ 495 | $ 1,300 | $ 1,055 | ||||||||
Interest rate percentage | 2.35% | 2.35% | 2.35% | ||||||||
Debt issued - principal amount | $ 2,850 | ||||||||||
Outstanding principal amount | $ 1,795 | ||||||||||
2.00% Notes due 2020 | |||||||||||
Debt and Lines of Credit | |||||||||||
Repayments of debt | $ 750 | ||||||||||
Interest rate percentage | 2.00% | ||||||||||
4.125% Notes due 2020 | |||||||||||
Debt and Lines of Credit | |||||||||||
Repayments of debt | $ 597 | ||||||||||
Interest rate percentage | 4.125% | ||||||||||
3.25% Notes due 2023 | |||||||||||
Debt and Lines of Credit | |||||||||||
Repayments of debt | $ 900 | ||||||||||
Interest rate percentage | 3.25% | ||||||||||
3.40% Notes, due 2023 | |||||||||||
Debt and Lines of Credit | |||||||||||
Repayments of debt | $ 450 | ||||||||||
Interest rate percentage | 3.40% | ||||||||||
3.75% Notes, due 2026 | |||||||||||
Debt and Lines of Credit | |||||||||||
Repayments of debt | $ 1,300 | ||||||||||
Interest rate percentage | 3.75% | ||||||||||
Abbott Ireland Financing DAC | |||||||||||
Debt and Lines of Credit | |||||||||||
Proceeds from issuance of debt | $ 4,000 | ||||||||||
Abbott Ireland Financing DAC | Long-term Debt | |||||||||||
Debt and Lines of Credit | |||||||||||
Debt issued - principal amount | € | € 3,420 | ||||||||||
Abbott Ireland Financing DAC | Non-interest bearing Senior Notes due 2020 | |||||||||||
Debt and Lines of Credit | |||||||||||
Debt issued - principal amount | € | € 1,140 | ||||||||||
Debt issuance price (as a percent) | 99.727 | ||||||||||
Abbott Ireland Financing DAC | 0.875% Senior Notes due 2023 | |||||||||||
Debt and Lines of Credit | |||||||||||
Interest rate percentage | 0.875% | ||||||||||
Debt issued - principal amount | € | € 1,140 | ||||||||||
Debt issuance price (as a percent) | 99.912 | ||||||||||
Abbott Ireland Financing DAC | 1.5% Senior Notes due 2026 | |||||||||||
Debt and Lines of Credit | |||||||||||
Interest rate percentage | 1.50% | ||||||||||
Debt issued - principal amount | € | € 1,140 | ||||||||||
Debt issuance price (as a percent) | 99.723 |
Financial Instruments, Deriva_3
Financial Instruments, Derivatives and Fair Value Measures - Contracts (Details) - USD ($) $ in Billions | 9 Months Ended | |
Sep. 30, 2018 | Dec. 31, 2017 | |
Designated as hedging instrument | Foreign currency forward exchange contracts | Cash flow hedges | ||
Derivative instruments, notional amount and fair value | ||
Notional amount | $ 3.6 | $ 3.3 |
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 | Interest rate swaps | Fair value hedges | ||
Derivative instruments, notional amount and fair value | ||
Notional amount | $ 4 | 4 |
Not designated as hedging instrument | Foreign currency forward exchange contracts | ||
Derivative instruments, notional amount and fair value | ||
Notional amount | $ 15.6 | $ 20.1 |
Financial Instruments, Deriva_4
Financial Instruments, Derivatives and Fair Value Measures - Location of Derivative Instruments (Details) - USD ($) $ in Millions | Sep. 30, 2018 | Dec. 31, 2017 |
Derivative instruments, notional amount and fair value | ||
Fair Value - Assets | $ 130 | $ 138 |
Fair Value - Liabilities | 368 | 298 |
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 | 272 | 93 |
Designated as hedging instrument | Foreign currency forward exchange contracts | Prepaid expenses and other receivables | ||
Derivative instruments, notional amount and fair value | ||
Fair Value - Assets | 61 | 21 |
Designated as hedging instrument | Foreign currency forward exchange contracts | Other accrued liabilities | ||
Derivative instruments, notional amount and fair value | ||
Fair Value - Liabilities | 19 | 106 |
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 | 69 | 117 |
Not designated as hedging instrument | Foreign currency forward exchange contracts | Other accrued liabilities | ||
Derivative instruments, notional amount and fair value | ||
Fair Value - Liabilities | $ 77 | $ 99 |
Financial Instruments, Deriva_5
Financial Instruments, Derivatives and Fair Value Measures - Gain or Loss (Details) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2018 | Sep. 30, 2017 | Sep. 30, 2018 | Sep. 30, 2017 | |
Interest rate swaps | Fair value hedges | Designated as hedging instrument | Interest expense | ||||
Gain (loss) on derivatives | ||||
Income (expense) and Gain (loss) Reclassified into Income | $ (42) | $ (1) | $ (179) | $ 13 |
Foreign currency forward exchange contracts | Not designated as hedging instrument | Net foreign exchange (gain) loss | ||||
Gain (loss) on derivatives | ||||
Income (expense) and Gain (loss) Reclassified into Income | (10) | 26 | (60) | (16) |
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) | 18 | (57) | 45 | (202) |
Income (expense) and Gain (loss) Reclassified into Income | $ (37) | $ (7) | $ (120) | (14) |
Debt | Net investment hedges | Designated as hedging instrument | ||||
Gain (loss) on derivatives | ||||
Gain (loss) Recognized in Other Comprehensive Income (loss) | $ (25) |
Financial Instruments, Deriva_6
Financial Instruments, Derivatives and Fair Value Measures - Carrying Value and Fair Value (Details) - USD ($) $ in Millions | Sep. 30, 2018 | Dec. 31, 2017 |
Fair value, asset and liability measures | ||
Long-term Investments | $ 971 | $ 883 |
Foreign currency forward exchange contracts, receivable position | 130 | 138 |
Foreign currency forward exchange contracts, (payable) position | (368) | (298) |
Equity securities | ||
Fair value, asset and liability measures | ||
Long-term Investments | 934 | 797 |
Carrying Value | ||
Fair value, asset and liability measures | ||
Total long-term debt | (23,347) | (27,718) |
Foreign currency forward exchange contracts, receivable position | 130 | 138 |
Foreign currency forward exchange contracts, (payable) position | (96) | (205) |
Interest rate hedge contract, (payable) position | (272) | (93) |
Carrying Value | Equity securities | ||
Fair value, asset and liability measures | ||
Long-term Investments | 934 | 797 |
Carrying Value | Other | ||
Fair value, asset and liability measures | ||
Long-term Investments | 37 | 86 |
Fair Value | ||
Fair value, asset and liability measures | ||
Total long-term debt | (24,013) | (29,018) |
Foreign currency forward exchange contracts, receivable position | 130 | 138 |
Foreign currency forward exchange contracts, (payable) position | (96) | (205) |
Interest rate hedge contract, (payable) position | (272) | (93) |
Fair Value | Equity securities | ||
Fair value, asset and liability measures | ||
Long-term Investments | 934 | 797 |
Fair Value | Other | ||
Fair value, asset and liability measures | ||
Long-term Investments | $ 37 | $ 86 |
Financial Instruments, Deriva_7
Financial Instruments, Derivatives and Fair Value Measures - Bases of Measurement (Details) - USD ($) $ in Millions | Sep. 30, 2018 | Dec. 31, 2017 |
Fair value, asset and liability measures | ||
Fair Value - Assets | $ 130 | $ 138 |
Fair Value - Liabilities | 368 | 298 |
Long-term Investments | 971 | 883 |
Recurring | ||
Fair value, asset and liability measures | ||
Equity securities | 363 | 374 |
Total Assets | 493 | 512 |
Fair value of hedged long-term debt | 3,730 | 3,898 |
Interest rate swap financial instruments, liabilities | 272 | 93 |
Contingent consideration related to business combinations | 71 | 120 |
Total Liabilities | 4,169 | 4,316 |
Recurring | Foreign currency forward exchange contracts | ||
Fair value, asset and liability measures | ||
Fair Value - Assets | 130 | 138 |
Fair Value - Liabilities | 96 | 205 |
Recurring | Quoted Prices in Active Markets | ||
Fair value, asset and liability measures | ||
Equity securities | 363 | 374 |
Total Assets | 363 | 374 |
Recurring | Significant Other Observable Inputs | ||
Fair value, asset and liability measures | ||
Total Assets | 130 | 138 |
Fair value of hedged long-term debt | 3,730 | 3,898 |
Interest rate swap financial instruments, liabilities | 272 | 93 |
Total Liabilities | 4,098 | 4,196 |
Recurring | Significant Other Observable Inputs | Foreign currency forward exchange contracts | ||
Fair value, asset and liability measures | ||
Fair Value - Assets | 130 | 138 |
Fair Value - Liabilities | 96 | 205 |
Recurring | Significant Unobservable Inputs | ||
Fair value, asset and liability measures | ||
Contingent consideration related to business combinations | 71 | 120 |
Total Liabilities | 71 | 120 |
Equity securities | ||
Fair value, asset and liability measures | ||
Long-term Investments | $ 934 | $ 797 |
Litigation and Environmental _2
Litigation and Environmental Matters (Details) $ in Millions | Sep. 30, 2018USD ($) |
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 | 145 |
Other legal proceedings and environmental exposures | Minimum [Member] | |
Loss Contingencies | |
Other legal proceedings or environmental exposure | 125 |
Other legal proceedings and environmental exposures | Maximum [Member] | |
Loss Contingencies | |
Other legal proceedings or environmental exposure | $ 165 |
Post-Employment Benefits - Gene
Post-Employment Benefits - General (Details) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2018 | Sep. 30, 2017 | Sep. 30, 2018 | Sep. 30, 2017 | |
Post-employment Obligations and Other Long-term Liabilities: | ||||
Operating Earnings | $ 995 | $ 769 | $ 2,485 | $ 913 |
Other (income) expense, net | (18) | 33 | 93 | 1,279 |
ASU 2017-07 | ||||
Post-employment Obligations and Other Long-term Liabilities: | ||||
Operating Earnings | (40) | (120) | ||
Other (income) expense, net | 40 | 120 | ||
Defined Benefit Plans | ||||
Defined benefit plan net periodic benefit cost | ||||
Service cost - benefits earned during the period | 76 | 71 | 221 | 213 |
Interest cost on projected benefit obligations | 77 | 72 | 232 | 215 |
Expected return on plan assets | (169) | (154) | (511) | (459) |
Net amortization of: | ||||
Actuarial loss, net | 51 | 41 | 154 | 123 |
Prior service cost (credit) | 1 | |||
Net cost - continuing operations | 35 | 30 | 97 | 92 |
Post-employment Obligations and Other Long-term Liabilities: | ||||
Company contributions | 71 | 335 | ||
Medical and Dental Plans | ||||
Defined benefit plan net periodic benefit cost | ||||
Service cost - benefits earned during the period | 7 | 6 | 20 | 19 |
Interest cost on projected benefit obligations | 12 | 12 | 36 | 34 |
Expected return on plan assets | (9) | (9) | (25) | (25) |
Net amortization of: | ||||
Actuarial loss, net | 8 | 6 | 25 | 18 |
Prior service cost (credit) | (11) | (11) | (34) | (34) |
Net cost - continuing operations | $ 7 | $ 4 | 22 | 12 |
Post-employment Obligations and Other Long-term Liabilities: | ||||
Company contributions | $ 11 | 11 | ||
AMO | ||||
Post-employment Obligations and Other Long-term Liabilities: | ||||
Curtailment gain related to sale of AMO | $ 10 |
Taxes on Earnings (Details)
Taxes on Earnings (Details) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | 12 Months Ended | |||
Sep. 30, 2018 | Dec. 31, 2017 | Sep. 30, 2017 | Sep. 30, 2018 | Sep. 30, 2017 | Dec. 31, 2017 | |
Taxes on Earnings | ||||||
Excess tax benefits from share based compensation | $ 80 | |||||
Earnings from discontinued operations, net of tax | $ 11 | $ 42 | $ 35 | $ 88 | ||
U.S. federal corporate tax rate (as a percent) | 21.00% | 35.00% | ||||
Provisional transition tax liability | $ 2,890 | $ 53 | ||||
Net benefit on remeasurement of deferred tax assets and liabilities | 1,420 | |||||
Net benefit from Tax cuts and jobs act, Other impacts | 10 | |||||
Taxes on Earnings from Continuing Operations | ||||||
Taxes on Earnings | ||||||
Net tax expense for the impact of Tax cuts and jobs act | $ 1,460 | 1,513 | ||||
Discontinued operations | ||||||
Taxes on Earnings | ||||||
Tax expense (benefit) from resolution of various tax positions related to prior years | (40) | |||||
Decrease in gross unrecognized tax benefits | (47) | |||||
Minimum [Member] | ||||||
Taxes on Earnings | ||||||
Decrease reasonably possible in gross unrecognized tax benefits | 500 | 500 | ||||
Maximum [Member] | ||||||
Taxes on Earnings | ||||||
Decrease reasonably possible in gross unrecognized tax benefits | $ 700 | $ 700 | ||||
Dispositions held for sale | AMO | ||||||
Taxes on Earnings | ||||||
Tax expense (benefit) on gain or loss on sale of business | $ 435 |
Segment Information (Details)
Segment Information (Details) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2018 | Sep. 30, 2017 | Sep. 30, 2018 | Sep. 30, 2017 | |
Segment Information | ||||
Net Sales to External Customers | $ 7,656 | $ 6,829 | $ 22,813 | $ 19,801 |
Operating Earnings | 995 | 769 | 2,485 | 913 |
Amortization of intangible assets | (544) | (501) | (1,690) | (1,415) |
Earnings from continuing operations before taxes | 718 | 626 | $ 1,926 | $ 1,657 |
Annual share-based awards recognized in first quarter (as a percent) | 50.00% | 50.00% | ||
Established Pharmaceutical Products | ||||
Segment Information | ||||
Net Sales to External Customers | 1,159 | 1,171 | $ 3,332 | $ 3,142 |
Nutritional Products | ||||
Segment Information | ||||
Net Sales to External Customers | 1,838 | 1,768 | 5,452 | 5,141 |
Diagnostic Products | ||||
Segment Information | ||||
Net Sales to External Customers | 1,824 | 1,279 | 5,534 | 3,710 |
Cardiovascular and Neuromodulation Products | ||||
Segment Information | ||||
Net Sales to External Customers | 2,303 | 2,224 | 7,047 | 6,587 |
Other | ||||
Segment Information | ||||
Net Sales to External Customers | 532 | 387 | 1,448 | 1,221 |
Total Reportable Segments | ||||
Segment Information | ||||
Net Sales to External Customers | 7,124 | 6,442 | 21,365 | 18,580 |
Operating Earnings | 1,897 | 1,709 | 5,478 | 4,702 |
Total Reportable Segments | Established Pharmaceutical Products | ||||
Segment Information | ||||
Net Sales to External Customers | 1,159 | 1,171 | 3,332 | 3,142 |
Operating Earnings | 289 | 271 | 664 | 591 |
Total Reportable Segments | Nutritional Products | ||||
Segment Information | ||||
Net Sales to External Customers | 1,838 | 1,768 | 5,452 | 5,141 |
Operating Earnings | 435 | 403 | 1,224 | 1,146 |
Total Reportable Segments | Diagnostic Products | ||||
Segment Information | ||||
Net Sales to External Customers | 1,824 | 1,279 | 5,534 | 3,710 |
Operating Earnings | 443 | 353 | 1,375 | 975 |
Total Reportable Segments | Cardiovascular and Neuromodulation Products | ||||
Segment Information | ||||
Net Sales to External Customers | 2,303 | 2,224 | 7,047 | 6,587 |
Operating Earnings | 730 | 682 | 2,215 | 1,990 |
Corporate functions | ||||
Segment Information | ||||
Corporate functions and benefit plans costs | (143) | (129) | (435) | (326) |
Reconciling items | ||||
Segment Information | ||||
Non-reportable segments | 148 | 89 | 365 | 209 |
Net interest expense | (181) | (182) | (569) | (569) |
Share-based compensation (a) | (83) | (75) | (396) | (338) |
Amortization of intangible assets | (544) | (501) | (1,690) | (1,415) |
Other, net (b) | $ (376) | $ (285) | $ (827) | $ (606) |