Segment Information

6 Months Ended

Jun. 30, 2014

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.

VascularProducts — Worldwide sales of coronary, endovascular, structural heart, vessel closure and other medical device products.

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

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				Six Months				Three Months						Six Months
	Ended June 30				Ended June 30				Ended June 30						Ended June 30
(in millions)	2014		2013		2014		2013		2014			2013			2014			2013
Established Pharmaceutical Products	$	1,216	$	1,218	$	2,367	$	2,450	$	245		$	258		$	475		$	543
Nutritional Products	1,731		1,704		3,362		3,404		302			313			585			655
Diagnostic Products	1,189		1,135		2,306		2,223		279			242			501			503
Vascular Products	765		751		1,503		1,492		303			221			524			408
Total Reportable Segments	4,901		4,808		9,538		9,569		1,129			1,034			2,085			2,109
Other	650		638		1,257		1,255
Net Sales	$	5,551	$	5,446	$	10,795	$	10,824
Corporate functions and benefit plans costs									(103		)	(127		)	(161		)	(247		)
Non-reportable segments									105			99			168			187
Net interest expense									(20		)	(23		)	(43		)	(49		)
Share-based compensation (a)									(49		)	(52		)	(168		)	(177		)
Amortization of intangible assets									(161		)	(197		)	(335		)	(396		)
Other, net (b)									(164		)	(133		)	(386		)	(272		)
Consolidated Earnings from Continuing Operations Before Taxes									$	737		$	601		$	1,160		$	1,155

(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) The increase in expense from 2013 to 2014 primarily reflects higher charges for cost reduction initiatives.