Segment Information

9 Months Ended

Sep. 30, 2015

Segment Information

Segment Information

Note 13 — 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 and alternate-care testing sites.  For segment reporting purposes, the Core Laboratories Diagnostics, Molecular Diagnostics, Point of Care and Ibis diagnostic divisions are aggregated and reported as the Diagnostic Products segment.

Vascular Products — Worldwide sales of coronary, endovascular, structural heart, vessel closure and other medical device products. For segment reporting purposes, the Vascular and Electrophysiology Products divisions are aggregated and reported as the Vascular Products segment.

Non-reportable segments include the Diabetes Care and Medical Optics segments.

On February 27, 2015, Abbott completed the sale of its developed markets branded generics pharmaceuticals business to Mylan.  This business was previously included in the Established Pharmaceutical Products segment for the first nine months of 2014; therefore, the 2014 segment information below has been adjusted to reflect the classification of the developed markets branded generics pharmaceuticals business as part of discontinued operations in the Condensed Consolidated Statement of Earnings.

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 are 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 Sept. 30				Ended Sept. 30				Ended Sept. 30						Ended Sept. 30
(in millions)	2015		2014		2015		2014		2015			2014			2015			2014
Established Pharmaceutical Products	$	961	$	771	$	2,835	$	2,196	$	177		$	160		$	516		$	441
Nutritional Products	1,789		1,787		5,175		5,149		459			369			1,198			954
Diagnostic Products	1,156		1,180		3,426		3,486		307			310			887			810
Vascular Products	672		730		2,092		2,232		239			280			803			804
Total Reportable Segments	4,578		4,468		13,528		13,063		1,182			1,119			3,404			3,009
Other	572		611		1,689		1,828
Net Sales	$	5,150	$	5,079	$	15,217	$	14,891
Corporate functions and benefit plans costs									(109		)	(76		)	(330		)	(237		)
Non-reportable segments									76			124			193			297
Net interest expense									(16		)	(17		)	(49		)	(54		)
Share-based compensation (a)									(43		)	(39		)	(248		)	(203		)
Amortization of intangible assets									(151		)	(132		)	(458		)	(392		)
Other, net (b)									(225		)	(264		)	(159		)	(706		)
Consolidated Earnings from Continuing Operations Before Taxes									$	714		$	715		$	2,353		$	1,714

(a) Approximately 40 to 45 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, 2015 includes a gain on the sale of a portion of Abbott’s position in Mylan N.V. stock and a decrease in the fair value of contingent consideration related to a business acquisition, which was partially offset by charges associated with cost reduction initiatives.