FORM 10-K
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| ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 | ||||
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| TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
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For the fiscal year ended December 31, | Commission file number 1-2189 |
Abbott Laboratories
An Illinois Corporation |
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Securities Registered Pursuant to Section 12(b) of the Act:
Title of Each Class | Trading Symbol(s) | Name of Each Exchange on Which Registered | ||||||
Common Shares, Without Par Value | ABT |
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Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.
Yes |
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Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or 15(d) of the Act.
Yes |
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Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
Yes |
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Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).
Yes |
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Large Accelerated Filer |
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If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
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x
Yes |
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The aggregate market value of the 1,730,623,501 1,698,507,928shares of voting stock held by nonaffiliates of the registrant, computed by reference to the closing price as reported on the New York Stock Exchange, as of the last business day of Abbott Laboratories’ most recently completed second fiscal quarter (June 30, 2021)2023), was $200,631,182,471.$185,171,334,310. Abbott has no non-voting common equity. Number of common shares outstanding as of January 31, 2022: 1,763,482,267
2024: 1,735,184,289
15, 2024.
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Item 1C. | 15 | |||||||
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*As used throughout the text of this report on Form 10-K, the term “Abbott” refers to Abbott Laboratories, an Illinois corporation, or Abbott Laboratories and its consolidated subsidiaries, as the context requires.
Diagnostic Products
Competition for nutritional products in the segment is generally from other diversified consumer and health care manufacturers. Competitive factors include consumer advertising, formulation, packaging, scientific innovation, price, retail distribution, and availability of product forms. A significant aspect of competition is the search for ingredient innovations. The introduction of new products by competitors, changes in medical practices and procedures, and regulatory changes can result in product obsolescence. In addition, private label and local manufacturers’ products may increase competitive pressure.
•rhythm management products, including Assurity MRI® and Endurity MRI® pacemaker systems, and Aveir® single-chamber (VR and AR) and Aveir® dual chamber (DR) leadless pacemaker systems; Ellipse®, Fortify Assura®, and Gallant® implantable cardioverter defibrillators and Gallant and Quadra Assura MP® implantable cardioverter defibrillator with cardiac resynchronization therapy and MultiPoint™ Pacing technology; and Confirm Rx®, Jot Dx® and Assert-IQ® implantable cardiac monitors; •electrophysiology products, including the TactiFlex® and TactiCath® families of ablation catheters, and FlexAbility® irrigated ablation catheters; EnSite® family of cardiac mapping systems; Agilis® NxT and Swartz™ introducer catheters; the Advisor® HD Grid mapping catheter; and ViewFlex® family of intracardiac echocardiography catheters; •heart failure related products, including the HeartMate® left ventricular assist device family; the CardioMEMS® HF System pulmonary artery sensor, a heart failure monitoring system; the CentriMag® System, an acute mechanical circulatory support system; and patient self-testing products and services; •vascular products, including the XIENCE® family of drug-eluting coronary stent systems developed on the Multi-Link Vision® platform; StarClose SE®, Perclose ProGlide® and Perclose ProStyle® vessel closure devices, TREK® coronary balloon dilatation products, Hi-Torque Balance Middleweight Universal II® guidewires, Supera® Peripheral Stent System, a peripheral vascular stent system; Acculink®/Accunet® and Xact®/Emboshield NAV6®, carotid stent systems; the OPTIS® integrated systems with Ultreon™ 1.0 and 2.0 Software, compatible with the Dragonfly OPTIS® and OpStar® imaging catheters and PressureWire® fractional flow reserve measurement systems; the JETi® peripheral thrombectomy systems for clot removal; and Diamondback 360® coronary and peripheral orbital atherectomy systems; •structural heart products, including MitraClip®, a mitral valve transcatheter edge-to-edge repair system; TriClip®, a tricuspid valve transcatheter edge-to-edge repair system; Epic®, a surgical family of aortic valve and mitral valve replacement devices; Portico® and Navitor® transcatheter aortic heart valves; Regent™ and Masters Series® mechanical heart valves; Amplatzer® PFO occluders; Amplatzer Amulet® occluder devices; and the Tendyne® transcatheter mitral valve replacement system; •continuous glucose and blood glucose monitoring systems under the FreeStyle® brand such as the FreeStyle Libre® system, including sensors, data management decision software, test strips, and accessories for people with diabetes; and •neuromodulation products, including spinal cord stimulators Proclaim® Plus and Proclaim® XR recharge-free implantable pulse generators (IPG) and rechargeable Eterna® IPG, each with BurstDR® stimulation, and Proclaim® DRG IPG, a neurostimulation device designed for dorsal root ganglion therapy, for the treatment of chronic pain disorders; and the Infinity® Deep Brain Stimulation System with directional lead technology for the treatment of movement disorders. 3 |
These products are subject to competition in technological innovation, price, convenience of use, service, product performance, long-term supply contracts, and product potential for overall cost-effectiveness and productivity gains. Some products in this segment can be subject to rapid product obsolescence or regulatory changes. Although Abbott has benefited from technological advantages of certain of its current products, these advantages may be reduced or eliminated as competitors introduce new products.
3
INFORMATION WITH RESPECT TO ABBOTT’S BUSINESS IN GENERAL
Factors and in the "Financial Review” section in Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations.
2024.
Health and Safety
The health, safety and wellness
4
Abbott takes a holistic approach to employee well-being. Abbott’s global wellness programs are designed to meet the unique needs of employees across businesses and geographies and offer a wide range of programs, including supporting the mental, financial and physical health of employees and their families. For example, for over 20 years, Abbott has annually offered Exercise Across Abbott, which is a four-week physical wellness program that encourages employees to team up with colleagues and track how many minutes they exercise each day. Over 21,000 Abbott employees across 73 countries took part in 2021.
During the COVID-19 pandemic, Abbott has taken aggressive steps to limit exposure and enhance the safety of facilities for its employees, including providing and requiring the use of personal protective equipment and at many facilities, providing vaccinations, providing and requiring onsite COVID-19 testing, and implementing social distancing. In some locations, employees also have received free over-the-counter COVID-19 tests for at-home use.
Talent Management
employees.
Regulation
The development, manufacture, marketing, sale, promotion, and distribution of Abbott’s products are subject to comprehensive government regulation by the U.S. Food and Drug Administration (FDA) and similar international regulatory agencies. Government regulation by various international, supranational, federal and state agencies addresses (among other matters) the development and approval to market Abbott’s products, as well as the inspection of, and controls over, research and laboratory procedures, clinical investigations, product approvals and manufacturing, labeling, packaging, supply chains, marketing and promotion, pricing and reimbursement, sampling, distribution, quality control, post-market surveillance, record keeping, storage, and disposal practices. In addition, Abbott’s clinical laboratories and associated testing services are subject to comprehensive government regulation, including registration, certification, and licensure, by federal, state, and local agencies, such as the Centers for Medicare & Medicaid Services, the Drug Enforcement Administration, the Substance Abuse and Mental Health Services Administration, and their respective foreign counterparts. Certain of these agencies require our clinical laboratories to meet quality assurance, quality control, and personnel standards and undergo inspections.
monitor further regulatory actions from relevant U.S. government agencies and assess potential impacts on pandemic-related government policies and product authorizations.
Access to human health care products continues to be a subject of investigation and action by governmental agencies, legislative bodies, and private organizations in many countries. A major focus is cost containment. Efforts to reduce health care costs are also being made in the private sector, notably by health care payors and providers, which have instituted various cost reduction and containment measures. Abbott expects that insurers and providers will continue attempts to reduce the cost or utilization of health care products. Many countries control the price of health care products directly or indirectly, through reimbursement, payment, pricing, or coverage limitations. Budgetary pressures on health care payors may also heighten the scope and severity of pricing pressures on Abbott’s products for the foreseeable future. In the United States, the federal government regularly evaluates reimbursement for medical devices, diagnostics, supplies, and other products, as well as the procedures in which these products may be used. The government follows a diagnosis-related group (DRG) payment system for certain institutional services provided under Medicare or Medicaid and has implemented a prospective payment system (PPS) for services delivered in hospital outpatient, nursing home, and home health settings. DRG and PPS entitle a health care facility to a fixed reimbursement based on the diagnosis and/or procedure rather than actual costs incurred in patient treatment, thereby increasing the incentive for the facility to limit or control expenditures for many health care products. Other payment methodology changes have been proposed and implemented from time to time. For example, Medicare implemented a competitive bidding system for certain durable medical equipment (including diabetes products), enteral nutrition products, and supplies. Additionally, the Protecting Access to Medicare Act established a new payment system for clinical laboratory tests in 2018.
Governmental cost containment efforts also affect Abbott’s nutritional products business. In the United States, for example, under regulations governing the federally funded Special Supplemental Nutrition Program for Women, Infants, and Children, all states must have a cost containment program for infant formula. As a result, through competitive bidding states obtain rebates from manufacturers of infant formula whose products are used in the program.
INTERNET INFORMATION
9
Abbott’s research and development efforts may not succeed in developing commercially successful products and technologies, which may cause Abbott’s revenue and profitability to decline.
10
Legal and Regulatory Risks
Abbott
processes, and consequences for non-compliance could have a material adverse effect on Abbott's revenues, profitability, cash flows, and financial condition.
For information on Abbott’s voluntary recall in February 2022 of certain powder infant formula products manufactured at its facility in Sturgis, Michigan, the manufacturing stoppage at such facility, and the consent decree that Abbott entered into with the FDA on May 16, 2022, see the discussion in the “Financial Review” section in Item 7, Management’s Discussion and Analysis of Financial Condition and Results of Operations, of this report.
a material adverse effect on Abbott's revenues, profitability, and financial condition.
products.
11
Significant safety concerns could arise for Abbott’s products, which could have a material adverse effect on Abbott’s revenues and financial condition.
Abbott is subject to risks related to public health crises, such as widespread outbreaks of infectious diseases like the COVID-19 pandemic.
As a global healthcare company, public health crises, such as the widespread outbreaks of infectious diseases like the COVID-19 pandemic, may negatively impact Abbott's operations. Health concerns and significant changes in political or economic conditions caused by such outbreaks can cause significant reductions in demand for certain products, increased difficulty in serving customers, disrupt manufacturing and supply chains, and negatively affect Abbott’s operations as well as the operations of its suppliers, distributors and other third-party partners. Furthermore, such widespread outbreaks may impact the broader economies of affected countries, including negatively impacting economic growth, the proper functioning of financial and capital markets, foreign currency exchange rates, and interest rates.
To date, the COVID-19 pandemic has affected Abbott's diversified health care business in various ways, with some businesses performing at the levels required to successfully meet new demands, other having faced challenges during periods when the number of COVID-19 cases significantly increased, and still others being relatively less impacted by the pandemic.
With regard to COVID-19 diagnostic testing, the FDA issued Emergency Use Authorizations (EUAs) for several COVID-19 related products in 2020 and 2021, including Abbott diagnostic tests. EUAs are authorized for the duration of the COVID-19 public health emergency unless sooner terminated or revoked. Abbott is actively pursuing the FDA’s customary regulatory approval process for various COVID-19 diagnostic tests which has uncertainty as discussed in “Abbott is subject to numerous governmental regulations and it can be costly to comply with these regulations and to develop compliant products and processes.” in “Legal and Regulatory Risks” under “Item 1A. Risk Factors.” Further, the demand for COVID-19 tests has been, and Abbott expects it to continue to be, highly volatile, primarily driven by the emergence and severity of new variants, which are unpredictable.
In addition, the COVID-19 pandemic has contributed to global supply chain disruptions, which has adversely impacted the cost and availability of certain raw materials, supplies, and services. While Abbott has taken actions to offset some of these inflationary pressures in its supply chain, Abbott may not be able to completely offset all the increases in its operational costs. Further, Abbott has experienced, and may continue to experience, availability issues with some services and materials used in its products. To date, Abbott has been able to manage these challenges without significant supply disruption or shortage for services, raw materials and supplies, however, no assurance can be given that these efforts will continue to be successful. Significant disruptions or shortages may result in Abbott’s inability to meet customer demand for certain of its products.
Due to the unpredictability of the duration and impact of the current COVID-19 pandemic, the extent to which the COVID-19 pandemic will have a material effect on Abbott’s business, financial condition or results of operations is uncertain. A more detailed discussion on the impact of the COVID-19 pandemic on Abbott’s business is contained in the “Financial Review” section in Item 7, Management’s Discussion and Analysis of Financial Condition and Results of Operations of this report.
12
Abbott is subject to cost containment efforts that could cause a reduction in future revenues and operating income.
products and technological advances.
13
•changes in or interpretations of laws and regulations, including changes in accounting standards, taxation requirements, product approval standards, product labeling standards, source and use laws, and environmental laws;
•changes in Abbott’s business units and investments and changes in the relative and absolute contribution of each to earnings and cash flow resulting from evolving business strategies, and changing product mix;
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Established Pharmaceutical Products |
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Nutritional Products | 14 | ||||||||
Worldwide Total | 90 |
15
In July 2023, Abbott was found to have a license to certain of DexCom’s patents in Abbott’s breach of contract suit.
In November 2023, the U.S. Patent and Trademark Office found some of DexCom’s asserted patent claims invalid. Throughout 2023, Abbott and DexCom filed additional patent infringement actions in the U.S., Germany, the U.K., Spain, and the Unified Patent Court. DexCom’s first U.S. patent infringement trial on its remaining claims is scheduled for March 2025. Abbott’s first U.S. patent infringement trial against DexCom is scheduled for March 2024.
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INFORMATION ABOUT OUR EXECUTIVE OFFICERS
58
John M. Capek, 60
2015
Elected Corporate Officer — 2006.
Lisa D. Earnhardt, 52
and Group President, Medical Devices.
62
17
John F. Ginascol, 63
2019 to present — Executive Vice President, Core Diagnostics.
2008 to 2019 — Vice President, Nutrition, Supply Chain.
Elected Corporate Officer — 2008.
Joseph Manning, 53
2021 to present — Executive Vice President, Nutritional Products.
2017 to 2021 — Senior Vice President, International Nutrition.
2015 to 2017 — Vice President, Nutrition, Asia Pacific.
Elected Corporate Officer — 2015.
Mary K. Moreland, 55
57
45
2014 to 2017 — Senior Vice President, Established Pharmaceuticals, Latin America.
55
Gregory A. Ahlberg, 55
2020
2017 to 2020 —Vice President, Diagnostics, Commercial Operations, Europe, Middle East and Africa.
2012 to 2017 — Divisional Vice President, USA, Abbott Diagnostics Division.
Elected Corporate Officer — 2017.
Christopher J. Calamari, 51Finance a
2021 to present — Senior Vice President, U.S. Nutrition.
2017 to 2021 — Vice President, Pediatric Nutrition.
2014 to 2017 — Divisional Vice President and General Manager, Pediatric Nutrition.
Elected Corporate Officer — 2017.
18
Michael D. Dale, 62
2019 to present — Senior Vice President, Structural Heart.
2017 to 2019 — Vice President, Structural Heart.
2016 to 2017 — Divisional Vice President and General Manager, Structural Heart.
2014 to 2016 — President and Chief Executive Officer, GI Dynamics, Inc. (a medical device company focused on developing gastrointestinal therapies).
Elected Corporate Officer — 2017.
Sammy Karam, 60
2019 to present — Senior Vice President, Established Pharmaceuticals, Emerging Markets.
2014 to 2019 — Divisional Vice President, Global Marketing Commercial Execution, Established Pharmaceuticals.
Elected Corporate Officer — 2019.
Fernando Mateus, 47
2021 to present — Senior Vice President, International Nutrition.
2018 to 2021 — Divisional Vice President, EURISA, Abbott International Nutrition.
2016 to 2018 — Chief Executive Officer, Exeltis USA, Inc. (a subsidiary of Exeltis, a women’s health company focused on respiratory, dermatology, and endocrinology).
Elected Corporate Officer — 2021.
Louis H. Morrone, 45
2021 to present — Senior Vice President, Rapid Diagnostics.
2017 to 2021 — Vice President, Transfusion Medicine.
2015 to 2017 — Divisional Vice President and General Manager, Transfusion Medicine, ADD.
Elected Corporate Officer — 2017.
Michael J. Pederson, 60
2021 to present — Senior Vice President, Electrophysiology
2019 to 2021 — Senior Vice President, Electrophysiology and Heart Failure.
2017 to 2019 — Senior Vice President, Cardiac Arrhythmias and Heart Failure.
2015 to 2017 — Divisional Vice President and General Manager, Abbott Electrophysiology.
Elected Corporate Officer — 2017.
Julie L. Tyler, 52
2021 to present — Senior Vice President, Abbott Vascular.
April 2021 to July 2021 — Divisional Vice President, U.S. Commercial, ADC.
2019 to 2021 — Divisional Vice President, Global Marketing, AVD.
2017 to 2019 — Divisional Vice President, U.S. Sales and Marketing Endovascular, AVD.
Elected Corporate Officer — 2021.
19
Jared L. Watkin, 54
2015 to present — Senior Vice President, Diabetes Care.
Elected Corporate Officer — 2015.
Alejandro D. Wellisch, 47
2017 to present — Senior Vice President, Established Pharmaceuticals, Latin America.
2014 to 2017 — General Manager, Argentina, Bolivia, Paraguay and Uruguay, Established Pharmaceuticals.
Elected Corporate Officer — 2017.
Randel W. Woodgrift, 60
2019 to present — Senior Vice President, CRM.
2017 to 2019 — Vice President, Global Operations, Cardiovascular and Neuromodulation.
2015 to 2017 — Vice President, Operations and R&D, Abbott Vascular.
Elected Corporate Officer — 2015.
Philip P. Boudreau, 49
2020 to present2023 — Vice President, Finance andand Controller.
2012
Rapid Diagnostics.
2021
2024.
In 2001, the
2023.
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| (c) Total Number of |
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| | (a) Total Number | | | | | Shares (or Units) | | Approximate Dollar Value) of |
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| | of Shares | | (b) Average Price | | Purchased as Part of | | Shares (or Units) that May |
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| | (or Units) | | Paid per Share | | Publicly Announced | | Yet Be Purchased Under the |
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Period | | Purchased | | (or Unit) | | Plans or Programs | | Plans or Programs |
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October 1, 2021 — October 31, 2021 |
| 1,767,000 | (1) | $ | 127.811 |
| 1,750,000 | | $ | 1,686,728,997 | (2) |
November 1, 2021 — November 30, 2021 |
| 4,750,000 | (1) | $ | 127.486 |
| 4,750,000 | | $ | 1,081,169,672 | (2) |
December 1, 2021 — December 31, 2021 |
| 135 | (1) | $ | 141.000 |
| 0 | | $ | 6,081,169,672 | (2) |
Total |
| 6,517,135 | (1) | $ | 127.575 |
| 6,500,000 | | $ | 6,081,169,672 | (2) |
Period | (a) Total Number of Shares (or Units) Purchased | (b) Average Price Paid per Share (or Unit) | (c) Total Number of Shares (or Units) Purchased as Part of Publicly Announced Plans or Programs | (d) Maximum Number (or Approximate Dollar Value) of Shares (or Units) that May Yet Be Purchased Under the Plans or Programs | |||||||||||||||||||||||||
October 1, 2023 — October 31, 2023 | — | (1) | $ | — | — | $ | 1,709,092,863 | (2) | |||||||||||||||||||||
November 1, 2023 — November 30, 2023 | — | (1) | $ | — | — | $ | 1,709,092,863 | (2) | |||||||||||||||||||||
December 1, 2023 — December 31, 2023 | 2,772,057 | (1) | $ | 108.223 | 2,772,057 | $ | 1,409,092,884 | (2) | |||||||||||||||||||||
Total | 2,772,057 | (1) | $ | 108.223 | 2,772,057 | $ | 1,409,092,884 | (2) |
(2)On December 10, 2021, Abbott announced that its board of directors authorized the repurchase of up to $5 billion of Abbott common shares, from time to time.
In
Abbott’s Diagnostics segment experienced the most significant change in sales from 20192020 to 20212023 as a result of the COVID-19 pandemic. In 2020(The Diagnostics segment includes the Rapid Diagnostics, Core Laboratory Diagnostics, Molecular Diagnostics and 2021, Abbott mobilizedPoint of Care Diagnostics businesses.) After mobilizing its teams across multiple fronts to developin 2020 and launch various2021, Abbott developed and launched multiple types of new diagnostic tests for COVID-19.
In March 2020, Rapid Diagnostics launched a molecular test to detect COVID-19 on its ID NOW® rapid point-of-care platformCOVID-19. Tests were launched in the U.S. pursuant to an Emergency Use AuthorizationAuthorizations (EUA). In August 2020, Abbott launched its BinaxNOW® COVID-19 Ag Card test, a portable, lateral flow rapid test to detect COVID-19 and in countries outside of the U.S. pursuant to an EUACE Marks.
Outside the U.S., in September 2020, Rapid Diagnostics launched its Panbio® rapid antigen test to detect COVID-19 pursuant to a CE Mark. In October 2020, Abbott received approval by the World Health Organization for emergency use listing for the Panbio antigen test. In January 2021, Abbott received CE Mark for two new uses of its Panbio rapid antigen test: asymptomatic testing and self-swabbing under the supervision of a healthcare worker. In June 2021, Abbott announced that it had received CE Mark for its over-the-counter Panbio COVID-19 Antigen Self-Test for individuals with or without symptoms.
In 2020, Molecular Diagnostics developed and launched molecular tests to detect COVID-19 using polymerase chain reaction (PCR) methods on its m2000® RealTime lab-based platform and its Alinity® m system pursuant to EUAs in the U.S. and CE Marks. Molecular Diagnostics also developed and launched its multiplex molecular test on its Alinity m system to detect COVID-19, influenza A, influenza B, and respiratory syncytial virus (RSV) in one test. This multiplex molecular test was launched pursuant to a CE Mark in December 2020 and an EUA in the U.S. in March 2021.
In 2020 and 2021, Core Laboratory Diagnostics developed and launched various lab-based serology blood tests on its ARCHITECT® i1000SR® and ARCHITECT i2000SR® laboratory instruments and on its Alinity i system for the detection of an antibody to determine if someone was previously infected with the virus. The tests were launched under EUAs in the U.S. and CE Marks.
In 2020 and 2021, 2022, respectively.
is expected to continue to be unpredictable in 2024.
22
The extent of the impact and the timing of a recovery in the number of procedures and routine testing in a particular country or geographic region depended upon the progression of COVID-19 cases in that country or region as well as the actions taken by the government in that country related to COVID-19. In 2020, the recovery in procedures and routine testing volumes in China began in March 2020. In other parts of the world, such as the U.S. and Europe, volumes improved across Abbott’s hospital-based businesses as the second quarter progressed and the improvement continued in the third quarter. However, in the fourth quarter of 2020, the improving trends in the demand for procedures and routine testing flattened or were negatively impacted depending upon the business and the region as many countries, including the U.S., experienced an increasewith changes in the number of COVID-19 cases and hospitalizations.
While routine diagnostic testing andin various geographic regions. Across Abbott’s cardiovascular and neuromodulation businesses, procedure volumes were negatively impacted earlyduring the pandemic by surges of COVID-19 in 2021 by elevatedvarious geographies as well as intermittent COVID-19 case rates,lockdown restrictions and healthcare staffing challenges. Despite such challenges, overall volumesvolume trends improved over the course of the year until the latter part of 2021 when demand softened in several geographies with the emergence of another variant.
cardiovascular businesses and in routine diagnostic testing in 2022 and that growth continued in 2023. While Abbott’s branded generic pharmaceuticals business was also negatively affected by the pandemic in 2020 as COVID-19 spread across emerging market countries, in the second and third quarters of 2020, volumes recovered and grew in 2021.over the 2021 to 2023 period. Abbott’s nutritional and diabetes care businesses were the least affected by the pandemic as is further discussed below.
Abbott is continually monitoring the effects of the pandemic on its operations. Throughout the pandemic, Abbott has continued to ensure that its operations throughout the world are aligned with the specific governmental orders and guidelines affecting each location. Abbott has taken aggressive steps to limit exposure to COVID-19 and enhance the safety of facilities for its employees.
The demand for COVID-19 tests has been highly volatile. Abbott expects this volatility to continue as the possible emergence and severity of new variants are unpredictable. Due to the unpredictability of the duration and impact of the COVID-19 pandemic, the extent to which the pandemic will have a material effect on Abbott’s business, financial condition or results of operations is uncertain.
pandemic.
In 2021,initiatives.
Care, Electrophysiology, Heart Failure, and Structural Heart. The 2023 increase was also driven by growth in Neuromodulation sales.
23
In 2021,2023, key product approvals in the Medical Devices segment included:
tests.
In 2021, operating earnings for the Diagnosticsfourth quarter of 2023, Abbott received FDA approval of its new laboratory automation system, GLP systems Track™, to help laboratories optimize the performance and safety of diagnostics testing.
In Abbott’s worldwide nutritional products business, sales over the last three years were positively impacted by numerous new product introductions, including the roll-outs of human milk oligosaccharide, or HMO, inU.S. infant formula that leveraged Abbott’s strong brands. Sales overbusiness following the last two years were also positively impacted by consumers’ interestvoluntary recall of certain products in nutrients that help support their immune systems.the prior year. In 2022, pediatric nutrition sales decreased 16.6 percent as a result of the voluntary recall and manufacturing stoppage discussed above, as well as challenging market dynamics in China. In December 2022, Abbott initiated steps to exit its pediatric nutrition business in China. Excluding the impact of foreign exchange, total adult nutrition sales increased 12.88.8 percent in 20212023 and 10.34.8 percent in 2020,2022, led by the continued growth of Abbott's Ensure
The increase in 2023 reflects the favorable effects of higher sales and a continued focus on gross margin improvement initiatives, partially offset by higher commodity and other costs.
initiatives and higher sales, partially offset by inflation on various product inputs.
24
In 2022,2024, Abbott will focus on continuing to meet the demand for COVID-19 tests and will continue to invest in product development areas that provide the opportunity for strong sustainable growth over the next several years. In its diagnostics business, AbbottAbbott's focus will continue to focus oninclude driving market adoption and geographic expansion ofsales growth from its Alinity suite of diagnostics instruments.instruments and its portfolio of rapid diagnostic testing systems. In the Medical Devices segment,medical devices business, Abbott will focus on growing recently launched new products and expanding its market position across the various businesses. In its nutritionalsnutritional business, Abbott will continue to focus on driving growth globally and further enhancing its portfolio with the introduction of science-based products and line extensions of its science-based products.extensions. In the established pharmaceuticals business, Abbott will continue to focus on growing its business with the depth and breadth of its portfolio in emerging markets.
25
Income Taxes —Abbott operates in numerous countries where its income tax returns are subject to audits and adjustments. Because Abbott operates globally, the nature of the audit items is often very complex, and the objectives of the government auditors can result in a tax on the same income in more than one country. Abbott employs internal and external tax professionals to minimize audit adjustment amounts where possible. In accordance with the accounting rules relating to the measurement of tax contingencies, in order to recognize an uncertain tax benefit, the taxpayer must be more likely than not of sustaining the position, and the measurement of the benefit is calculated as the largest amount that is more than 50 percent likely to be realized upon resolution of the benefit. Application of these rules requires a significant amount of judgment. In the U.S., Abbott’s federal income tax returns through 2016 are settled.were settled as of December 31, 2023. Undistributed foreign earnings remain indefinitely reinvested in foreign operations. Determining the amount of unrecognized deferred tax liability related to any remaining undistributed foreign earnings not subject to the transition tax and additional outside basis difference in its foreign entities is not practicable.
2021.
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| | | | Components of % Change | ||||
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| % Change |
| Price |
| Volume |
| Exchange |
Total Net Sales |
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2021 vs. 2020 |
| 24.5 |
| (1.5) |
| 24.4 |
| 1.6 |
2020 vs. 2019 |
| 8.5 |
| (0.4) |
| 10.2 |
| (1.3) |
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Total U.S. |
| |
| |
| |
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2021 vs. 2020 |
| 27.8 |
| (1.9) |
| 29.7 |
| — |
2020 vs. 2019 |
| 14.2 |
| (1.1) |
| 15.3 |
| — |
| | | | | | | | |
Total International |
| |
| |
| |
| |
2021 vs. 2020 |
| 22.5 |
| (1.3) |
| 21.2 |
| 2.6 |
2020 vs. 2019 |
| 5.3 |
| 0.1 |
| 7.2 |
| (2.0) |
| | | | | | | | |
Established Pharmaceutical Products Segment |
| |
| |
| |
| |
2021 vs. 2020 |
| 9.6 |
| 4.2 |
| 6.2 |
| (0.8) |
2020 vs. 2019 |
| (4.1) |
| 2.7 |
| (0.8) |
| (6.0) |
| | | | | | | | |
Nutritional Products Segment |
| |
| |
| |
| |
2021 vs. 2020 |
| 8.5 |
| 1.0 |
| 6.7 |
| 0.8 |
2020 vs. 2019 |
| 3.2 |
| 0.8 |
| 3.9 |
| (1.5) |
| | | | | | | | |
Diagnostic Products Segment |
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| |
| |
| |
2021 vs. 2020 |
| 44.8 |
| (6.2) |
| 48.9 |
| 2.1 |
2020 vs. 2019 |
| 40.1 |
| (0.8) |
| 41.4 |
| (0.5) |
| | | | | | | | |
Medical Devices Segment |
| |
| |
| |
| |
2021 vs. 2020 |
| 21.9 |
| (0.9) |
| 20.3 |
| 2.5 |
2020 vs. 2019 |
| (3.7) |
| (1.9) |
| (1.9) |
| 0.1 |
Components of % Change | |||||||||||||||||||||||
Total % Change | Price | Volume | Exchange | ||||||||||||||||||||
Total Net Sales | |||||||||||||||||||||||
2023 vs. 2022 | (8.1) | 2.6 | (8.7) | (2.0) | |||||||||||||||||||
2022 vs. 2021 | 1.3 | (0.3) | 6.7 | (5.1) | |||||||||||||||||||
Total U.S. | |||||||||||||||||||||||
2023 vs. 2022 | (14.8) | 1.1 | (15.9) | — | |||||||||||||||||||
2022 vs. 2021 | 9.0 | (0.6) | 9.6 | — | |||||||||||||||||||
Total International | |||||||||||||||||||||||
2023 vs. 2022 | (3.3) | 3.7 | (3.5) | (3.5) | |||||||||||||||||||
2022 vs. 2021 | (3.5) | — | 4.7 | (8.2) | |||||||||||||||||||
Established Pharmaceutical Products Segment | |||||||||||||||||||||||
2023 vs. 2022 | 3.1 | 6.0 | 4.9 | (7.8) | |||||||||||||||||||
2022 vs. 2021 | 4.1 | 3.7 | 6.9 | (6.5) | |||||||||||||||||||
Nutritional Products Segment | |||||||||||||||||||||||
2023 vs. 2022 | 9.3 | 11.4 | 0.2 | (2.3) | |||||||||||||||||||
2022 vs. 2021 | (10.1) | 7.4 | (13.6) | (3.9) | |||||||||||||||||||
Diagnostic Products Segment | |||||||||||||||||||||||
2023 vs. 2022 | (39.4) | (0.9) | (37.3) | (1.2) | |||||||||||||||||||
2022 vs. 2021 | 6.0 | (5.5) | 15.9 | (4.4) | |||||||||||||||||||
Medical Devices Segment | |||||||||||||||||||||||
2023 vs. 2022 | 14.1 | 1.0 | 14.1 | (1.0) | |||||||||||||||||||
2022 vs. 2021 | 2.2 | (0.2) | 8.3 | (5.9) |
The increasedecrease in Total Net Salestotal net sales in 20212023 reflects volume growth across all ofthe decline in demand for Abbott’s rapid diagnostic tests to detect COVID-19, partially offset by higher sales in the Medical Devices, Established Pharmaceutical Products and Nutritional Products segments. In 2021, Abbott’s COVID-19 testing-related sales totaled approximately $1.6 billion in 2023, $8.4 billion in 2022 and $7.7 billion led by combined sales of approximately $6.6 billion related to Abbott’s BinaxNOW, Panbio, and ID NOW rapid testing platforms. In 2021, excludingin 2021. Excluding the impact of COVID-19 testing-related sales, Abbott’s total net sales increased 15.2 percent.9.2 percent in 2023. Excluding the impacts of COVID-19 testing-related sales and foreign exchange, Abbott’s total net sales increased 11.7 percent. Abbott’s net sales in 20212023 were unfavorably impacted by changes in foreign exchange rates as the relatively stronger U.S. dollar decreased total international sales by 3.5 percent and total sales by 2.0 percent.
27
A comparison of significant product and product group sales is as follows.years ended December 31. Percent changes are versus the prior year and are based on unrounded numbers.
| | | | | | | | | | | | | |
| | | | | | |
| Total |
| Impact of |
| Total Change | |
|
| 2021 |
| 2020 |
| Change |
| Exchange |
| Excl. Exchange | | ||
(dollars in millions) | | | | | | | | | | | | | |
Total Established Pharmaceuticals — |
| |
| | | |
|
|
|
|
|
| |
Key Emerging Markets | | $ | 3,539 | | $ | 3,209 |
| 10 | % | (2) | % | 12 | % |
Other | |
| 1,179 | | | 1,094 |
| 8 |
| 2 |
| 6 | |
| | | | | | | | | | | | | |
Nutritionals — | |
| | | | |
| |
| |
| | |
International Pediatric Nutritionals | |
| 2,106 | | | 2,140 |
| (2) |
| 1 |
| (3) | |
U.S. Pediatric Nutritionals | |
| 2,192 | | | 1,987 |
| 10 |
| — |
| 10 | |
International Adult Nutritionals | |
| 2,632 | | | 2,228 |
| 18 |
| 1 |
| 17 | |
U.S. Adult Nutritionals | |
| 1,364 | | | 1,292 |
| 6 |
| — |
| 6 | |
| | | | | | | | | | | | | |
Diagnostics — | |
| | | | |
| |
| |
| | |
Core Laboratory | |
| 5,128 | | | 4,475 |
| 15 |
| 3 |
| 12 | |
Molecular | |
| 1,427 | | | 1,438 |
| (1) |
| 2 |
| (3) | |
Point of Care | |
| 536 | | | 516 |
| 4 |
| 1 |
| 3 | |
Rapid Diagnostics | |
| 8,553 | | | 4,376 |
| 95 |
| 2 |
| 93 | |
| | | | | | | | | | | | | |
Medical Devices — | |
| | | | |
| |
| |
| | |
Rhythm Management | |
| 2,198 | | | 1,914 |
| 15 |
| 2 |
| 13 | |
Electrophysiology | |
| 1,907 | | | 1,578 |
| 21 |
| 2 |
| 19 | |
Heart Failure | |
| 889 | | | 740 |
| 20 |
| 1 |
| 19 | |
Vascular | |
| 2,654 | | | 2,339 |
| 14 |
| 3 |
| 11 | |
Structural Heart | |
| 1,610 | | | 1,247 |
| 29 |
| 2 |
| 27 | |
Neuromodulation | | | 781 | | | 702 | | 11 | | 1 | | 10 | |
Diabetes Care | | | 4,328 | | | 3,267 | | 33 | | 4 | | 29 | |
2023 2022 Total
ChangeImpact of
ExchangeTotal Change
Excl. Exchange(dollars in millions) Total Established Pharmaceuticals — Key Emerging Markets $ 3,807 $ 3,766 1.1 % (9.2) % 10.3 % Other 1,259 1,146 9.8 (3.0) 12.8 Nutritionals — International Pediatric Nutritionals 1,957 1,919 2.0 (3.2) 5.2 U.S. Pediatric Nutritionals 1,977 1,562 26.6 — 26.6 International Adult Nutritionals 2,784 2,621 6.2 (4.2) 10.4 U.S. Adult Nutritionals 1,436 1,357 5.8 — 5.8 Diagnostics — Core Laboratory 5,159 4,888 5.5 (2.9) 8.4 Molecular 574 995 (42.3) (0.7) (41.6) Point of Care 565 525 7.5 (0.2) 7.7 Rapid Diagnostics 3,690 10,061 (63.3) (0.4) (62.9) Medical Devices — Rhythm Management 2,255 2,119 6.5 (1.0) 7.5 Electrophysiology 2,195 1,927 13.9 (2.0) 15.9 Heart Failure 1,161 1,035 12.1 0.1 12.0 Vascular 2,681 2,483 8.0 (1.3) 9.3 Structural Heart 1,944 1,712 13.6 (0.7) 14.3 Neuromodulation 890 770 15.5 (0.9) 16.4 Diabetes Care 5,761 4,756 21.1 (0.8) 21.9
2022 | 2021 | Total Change | Impact of Exchange | Total Change Excl. Exchange | |||||||||||||||||||||||||
(dollars in millions) | |||||||||||||||||||||||||||||
Total Established Pharmaceuticals — | |||||||||||||||||||||||||||||
Key Emerging Markets | $ | 3,766 | $ | 3,565 | 5.6 | % | (6.5) | % | 12.1 | % | |||||||||||||||||||
Other | 1,146 | 1,153 | (0.6) | (6.7) | 6.1 | ||||||||||||||||||||||||
Nutritionals — | |||||||||||||||||||||||||||||
International Pediatric Nutritionals | 1,919 | 2,106 | (8.9) | (5.0) | (3.9) | ||||||||||||||||||||||||
U.S. Pediatric Nutritionals | 1,562 | 2,192 | (28.7) | — | (28.7) | ||||||||||||||||||||||||
International Adult Nutritionals | 2,621 | 2,632 | (0.4) | (8.0) | 7.6 | ||||||||||||||||||||||||
U.S. Adult Nutritionals | 1,357 | 1,364 | (0.5) | — | (0.5) | ||||||||||||||||||||||||
Diagnostics — | |||||||||||||||||||||||||||||
Core Laboratory | 4,888 | 5,128 | (4.7) | (6.6) | 1.9 | ||||||||||||||||||||||||
Molecular | 995 | 1,427 | (30.3) | (2.9) | (27.4) | ||||||||||||||||||||||||
Point of Care | 525 | 536 | (2.1) | (1.5) | (0.6) | ||||||||||||||||||||||||
Rapid Diagnostics | 10,061 | 8,435 | 19.3 | (3.5) | 22.8 | ||||||||||||||||||||||||
Medical Devices — | |||||||||||||||||||||||||||||
Rhythm Management | 2,119 | 2,198 | (3.6) | (5.1) | 1.5 | ||||||||||||||||||||||||
Electrophysiology | 1,927 | 1,907 | 1.1 | (6.2) | 7.3 | ||||||||||||||||||||||||
Heart Failure | 1,035 | 1,007 | 2.8 | (2.1) | 4.9 | ||||||||||||||||||||||||
Vascular | 2,483 | 2,654 | (6.4) | (5.4) | (1.0) | ||||||||||||||||||||||||
Structural Heart | 1,712 | 1,610 | 6.3 | (6.7) | 13.0 | ||||||||||||||||||||||||
Neuromodulation | 770 | 781 | (1.4) | (2.3) | 0.9 | ||||||||||||||||||||||||
Diabetes Care | 4,756 | 4,328 | 9.9 | (7.5) | 17.4 |
Notes: | The Acelis Connected Health business was internally transferred from Diagnostic Products to Medical Devices on January 1, 2023. As a result, $115 million of sales in 2022 and $118 million of sales in 2021 were moved from Diagnostic Products to Medical Devices. | ||||
In order to compute results excluding the impact of exchange rates, current year U.S. dollar sales are multiplied or divided, as appropriate, by the current year average foreign exchange rates and then those amounts are multiplied or divided, as appropriate, by the prior year average foreign exchange rates. |
| | | | | | | | | | | | | |
| | | | | | | | Total | | Impact of | | Total Change |
|
|
| 2020 |
| 2019 |
| Change |
| Exchange |
| Excl. Exchange |
| ||
(dollars in millions) | | | | | | | | | | | | | |
Total Established Pharmaceuticals — |
| |
| | | |
|
|
|
|
|
| |
Key Emerging Markets | | $ | 3,209 | | $ | 3,392 |
| (5) | % | (8) | % | 3 | % |
Other | |
| 1,094 | | | 1,094 |
| — |
| 1 |
| (1) | |
| | | | | | | | | | | | | |
Nutritionals — | |
| | | | |
| |
| |
| | |
International Pediatric Nutritionals | |
| 2,140 | | | 2,282 |
| (6) |
| (2) |
| (4) | |
U.S. Pediatric Nutritionals | |
| 1,987 | | | 1,879 |
| 6 |
| — |
| 6 | |
International Adult Nutritionals | |
| 2,228 | | | 2,017 |
| 11 |
| (3) |
| 14 | |
U.S. Adult Nutritionals | |
| 1,292 | | | 1,231 |
| 5 |
| — |
| 5 | |
| | | | | | | | | | | | | |
Diagnostics — | |
| | | | |
| |
| |
| | |
Core Laboratory | |
| 4,475 | | | 4,656 |
| (4) |
| (1) |
| (3) | |
Molecular | |
| 1,438 | | | 442 |
| 225 |
| (1) |
| 226 | |
Point of Care | |
| 516 | | | 561 |
| (8) |
| — |
| (8) | |
Rapid Diagnostics | |
| 4,376 | | | 2,054 |
| 113 |
| 1 |
| 112 | |
| | | | | | | | | | | | | |
Medical Devices — | |
| | | | |
| |
| |
| | |
Rhythm Management | |
| 1,914 | | | 2,144 |
| (11) |
| — |
| (11) | |
Electrophysiology | |
| 1,578 | | | 1,721 |
| (8) |
| 1 |
| (9) | |
Heart Failure | |
| 740 | | | 769 |
| (4) |
| — |
| (4) | |
Vascular | |
| 2,339 | | | 2,850 |
| (18) |
| — |
| (18) | |
Structural Heart | |
| 1,247 | | | 1,400 |
| (11) |
| — |
| (11) | |
Neuromodulation | | | 702 | | | 831 | | (16) | | — | | (16) | |
Diabetes Care | | | 3,267 | | | 2,524 | | 29 | | — | | 29 | |
In order to compute results excluding the impact of exchange rates, current year U.S. dollar sales are multiplied or divided, as appropriate, by the current year average foreign exchange rates and then those amounts are multiplied or divided, as appropriate, by the prior year average foreign exchange rates.
Total Established Pharmaceutical Products sales increased 10.410.9 percent in 20212023 and 1.910.6 percent in 2020,2022, excluding the unfavorable impact of foreign exchange. TheExcluding the effect of foreign exchange, sales in Key Emerging Markets for Established Pharmaceutical Products segment is focused onincreased 10.3 percent in 2023 and 12.1 percent in 2022, led by growth in several key emerging markets countriesand across several therapeutic areas,including India, Russia, Chinacardiometabolic, central nervous system/pain management and Brazil. respiratory. Other Emerging Markets, excluding the effect of foreign exchange, increased by 12.8 percent in 2023and 6.1 percent in 2022.
Total Nutritional Products sales increased 7.711.6 percent in 20212023 compared to a 6.2 percent decrease in 2022. In U.S. Pediatric Nutritional sales, the 26.6 percent increase in 2023 reflects progress in recovering market share in 2023 following the voluntary recall of certain infant formula products in the first quarter of 2022, as well as the unfavorable 2022 impact of the recall, partially offset by a decrease in 2023 Pedialyte
Glucerna
® product sales. In 2022, the growth of the Ensure brand was offset by lower sales of other products and the impact of temporarily utilizing liquid manufacturing capacity to manufacture infant formula. In 2023 and 2022, International Adult Nutritionals sales,29
In the Diagnostics segment, Core Laboratoryin 2022, driven by changes in demand for COVID-19 tests. Rapid Diagnostics sales increased 12.4decreased 62.9 percent in 20212023 and decreased 2.8increased 22.8 percent in 2020,2022, excluding the effect of foreign exchange. The decrease in 2023 reflects lower demand for COVID-19 tests across Abbott’s rapid testing platforms. Rapid Diagnostics COVID-19 testing-related saleswere $1.5 billion in 2023, $7.9 billion in 2022 and $6.6 billion in 2021.
In Molecular Diagnostics, 2023 sales decreased 2.9 percent and increased 225.7 percent in 2021 and 2020, respectively, excluding the effect of foreign exchange. In 2021, the decrease was due towere impacted by lower demand for Abbott’s laboratory-based molecular tests for COVID-19 on its m2000 platform, partially offset by growthrespiratory testing compared to significantly higher-than-usual demand in the base business from the continued roll-out of the Alinity m platform.2022. In 2020, the increase reflects higher volumes due to demand for Abbott’s laboratory-based molecular tests for COVID-19. Abbott received U.S. FDA approval in March 2020 for its Alinity m molecular diagnostics system. Molecular Diagnostics COVID-19 testing-related sales were $891 million and $1.0 billion in 2021 and 2020, respectively. In 2021,2022, Molecular Diagnostics sales increased 29.29.0 percent, excluding COVID-19 testing-related sales, and increased 27.013.8 percent, excluding the impact of foreign exchange and COVID-19 testing-related sales.
In Rapid Diagnostics, sales increased 93.3 percent and 112.3 percent in 2021 and 2020, respectively, excluding
Intotal Medical Devices sales increased 19.4 percent and decreased 3.8grew 15.1 percent in 20212023 and 2020, respectively, excluding the effect of foreign exchange. In 2021, the increase was driven8.0 percent in 2022, led by double-digit growth across all divisions, led byin 2023 in Diabetes Care, Structural Heart, Heart Failure, Neuromodulation and Electrophysiology. In 2020, double-digit growth inHigher Diabetes Care was more than offset by decreases in Abbott’s cardiovascular and neuromodulation businesses due to the impact of COVID-19 and lower vascular sales in China in the fourth quarter of 2020 as a result of a new national tender program.
The 2021 and 2020 growth in Diabetes Care revenue waswere driven by continued growth of FreeStyle Libre
While
Abbott has periodically sold product rights to non-strategic products and has recorded the related gains in net sales in accordance with Abbott’s revenue recognition policies as discussed in Note 1 to the consolidated financial statements. Related net sales were not significant in 2021, 2020 and 2019.
Item 1A. Risk Factors.
30
Operating Earnings
supply chain costs across Abbott's businesses, including inflation, commodities and distribution expenses.
foreign exchange.
Restructurings
On May 27,these restructuring plans.
In the second half of 2021, as the Delta and Omicron variants of COVID-19 spread and the number of new COVID-19 cases increased significantly, particularly in the U.S., demand for rapid COVID-19 tests increased significantly. As a result, in the second half of 2021, Abbott sold approximately $181 million of inventory that was previously estimated to have no net realizable value under the second quarter restructuring action. In addition, the estimate of other exit costs was reduced by a net $58 million as Abbott fulfilled its purchase obligations under certain contracts for which a liability was recorded in the second quarter or Abbott settled with the counterparty in the second half of 2021. As of December 31, 2021, the accrued liabilities remaining in the Consolidated Balance Sheet related to these actions total $23 million and primarily represent severance obligations.
From 2017 to 2021, Abbott management approved restructuring plans as part of the integration of the acquisitions of St. Jude Medical, Inc. (St. Jude Medical) into the Medical Devices segment, and Alere Inc. (Alere) into the Diagnostic Products segment, in order to leverage economies of scale and reduce costs. As of December 31, 2018, the accrued balance associated with these actions was $41 million. From 2019 to 2021, Abbott recorded employee-related severance and other charges totaling approximately $95 million, comprised of $10 million in 2021, $13 million in 2020, and $72 million in 2019. Approximately $31 million waswere recorded in Cost of products sold approximately $5 million was recorded in Research and development, and approximately $59 million was recorded in Selling, general and administrative expense over the last three years. As of December 31, 2021, the accrued liabilities remaining in the Consolidated Balance Sheet related to these actions total $9 million.
From 2017 to 2020, 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. As of December 31, 2018, the accrued balance associated with these actions was $70 million. From 2019 to 2020, Abbott recorded employee-related severance and other charges totaling approximately $102 million, comprised of $36totaled $441 million in 2020 and $66 million in 2019. Approximately $22 million was recorded in Cost of products sold, approximately $30 million was recorded in Research and development, and approximately $50 million was recorded in Selling, general and administrative expense over the two years. As of December 31, 2021, the accrued liabilities remaining in the Consolidated Balance Sheet related to these actions total $24 million.
31
In 2021, Abbott management approved plans to streamline operations in order to reduce costs and improve efficiencies in various Abbott businesses including the diagnostics,its diagnostic, established pharmaceuticalspharmaceutical, nutritional, and nutritionalmedical device businesses. Abbott recorded employee-relatedemployee related severance and other charges of approximately $68 million. Approximatelymillion of which approximately $16 million was recorded in Cost of products sold, approximately $4 million was recorded in Research and development and approximately $48 million was recorded in Selling, general and administrative expense. As of December 31, 2021, the accrued liabilities remaining in the Consolidated Balance Sheet related to these actions total $61 million and primarily represent severance obligations.
expenses.
Debt Extinguishment Costs
On December 19, 2019, Abbott redeemed the $2.850 billion principal amount of its 2.9% Notes due 2021. Abbott incurred a charge of $63 millionhedge contracts related to the early repayment of thiscertain fixed-rate debt.
2021.
The income tax rates
In 2021, taxes on earnings from continuing operations include approximately $22 million, $43 million and $145 million in excess tax benefits associated with share-based compensation in 2023, 2022 and approximately $55 million of net tax benefits as a result of the resolution of various tax positions related to prior years.
In 2020, taxes on earnings from continuing operations include the recognition of approximately $170 million of tax benefits associated with the impairment of certain assets, approximately $140 million of net tax benefits as2021, respectively. As a result of the resolution of various tax positions related to prior years, and approximately $100 million in excess tax benefits associated with share-based compensation. In 2020, taxes on earnings from continuing operationsin 2023, 2022 and 2021 also include a $26approximately $80 million increase to the transition tax liability associated with the 2017 Tax Cuts and Jobs Act (TCJA). The $26$20 million increase to the transition tax liability was the result of the resolution of various tax positions related to prior years. This adjustment increased the cumulative net tax expense related to the TCJA to $1.53 billion. As of December 31, 2021, the remaining balance of Abbott’s transition tax obligation is approximately $794 million, which will be paid over the next five years as allowed by the TCJA. Earnings from discontinued operations, net of tax, in 2020 reflect the recognition of $24and $55 million of net tax benefits, primarily as a result of the resolution of various tax positions related to prior years. In 2019, taxes on earnings from continuing operations included approximately $100 million in excess tax benefits associated with share-based compensation, an $86 million reduction of the transition tax and $68 million of tax expense resulting from tax legislation enacted in the fourth quarter of 2019 in India. The $86 million reduction to the transition tax liability was the result of the issuance of final transition tax regulations by the U.S. Department of Treasury in 2019.
respectively.
32
Research and Development Process
33
In the EU, medical devices are also categorized into different classes and the regulatory process, which had been governed by the European Medical Device Directive and the Active Implantable Medical Device Directive, varies by class. In the second quarter of 2017, the EU adopted the new Medical Devices Regulation (MDR) which replaced the existing directives in the EU for medical devices and imposes additional premarket and post-market regulatory requirements on manufacturers of such products. The MDR applies to manufacturers as of May 26, 2021 after a four-yearwith extended transition period.periods lasting as long as December 31, 2028 depending on the risk classification of the device in the regulation. Each product must bear a CE mark to show compliance with the MDR.
following areas:
34
•Vascular – Development of next-generation technologies for use in coronary and peripheral vascular procedures.
taxes.
35
Debt and Capital
In 2020, financing activities related to the issuance and repayment of long-term debt included the following:
In 2019, Abbott committed to reducing its debt levels which had increased as part of the acquisitions of St. Jude Medical and Alere in 2017. On February 24, 2019, Abbott redeemed the $500 million outstanding principal amount of its 2.80% Notes due 2020.
In September 2019, the board of directors authorized the early redemption of up to $5 billion of outstanding long-term notes. This bond redemption authorization superseded the board’s previous authorization under which $700 million had not yet been redeemed. On December 19, 2019, Abbott redeemed the $2.850 billion outstanding principal amount of its 2.90% Notes due 2021. Of the $5 billion authorization, $2.15 billion remains available as of December 31, 2021.
On November 19, 2019, Abbott’s wholly owned subsidiary, Abbott Ireland Financing DAC, completed a euro debt offering of €1.180 billion of long-term debt. The proceeds equated to approximately $1.3 billion. The Notes are guaranteed by Abbott. On November 21, 2019, Abbott borrowed ¥59.8 billion under a 5-year term loan and designated the yen-denominated loan as a hedge of its net investment in certain foreign subsidiaries. The term loan bears interest at TIBOR plus a fixed spread, and the interest rate is reset quarterly. The proceeds equated to approximately $550 million.
In total, these 2019 transactions resulted in the repayment of approximately of $1.6 billion of debt, net of borrowings.
In September 2014, the board of directors authorized the repurchase of up to $3 billion of Abbott’s common shares from time to time. Under the program authorized in 2014, Abbott repurchased 48.5 million shares at a cost of $2.205 billion from 2015 through 2018, 6.3 million shares at a cost of $525 million in 2019 and 1.6 million shares at a cost of $173 million in 2020 for a total of approximately $2.9 billion. In October 2019, the board of directors authorized the repurchase of up to $3 billion of Abbott’s common shares from time to time. This authorization was in addition to the unused portion of a previous share repurchase program that was authorized in 2014. In 2021, Abbott repurchased 16.6 million of its common shares for $2.016 billion, which fully utilized the authorization remaining under the 2014 share repurchase program and a portion of the 2019 authorization. In December 2021, the board of directors authorized the repurchase of up to $5 billion of Abbott’s common shares from time to time. The newThis authorization iswas in addition to the $1.081 billion unused portion of the share repurchase program authorized in 2019.
2019 that was unused as of December 31, 2021. In 2022, Abbott repurchased 32.3 million of its common shares for $3.65 billion which fully utilized the authorization remaining under the 2019 share repurchase program and a portion of the 2021
36
Working Capital
cash generated from operations.
37
In June 2016,November 2023, the FASB issued ASU 2016-13, Financial Instruments – Credit Losses2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures, which changesexpands the methodologybreadth and frequency of required segment disclosures. The guidance is required to be usedapplied retrospectively to measure credit losses for certain financial instruments and financial assets, including trade receivables. The new methodology requires the recognition of an allowance that reflects the current estimate of credit losses expected to be incurred over the life ofall periods presented in the financial asset.statements. The standard becomes effective for Abbott adoptedfor full year 2024 reporting and for interim periods beginning in the first quarter of 2025. Abbott is currently evaluating the impact of this new standard on its consolidated financial statements.
its consolidated financial statements.
38
Abbott enters into foreign currency forward exchange contracts to manage its exposure to foreign currency denominated intercompany loans and trade payables and third-party trade payables and receivables. The contracts are marked-to-market, and resulting gains or losses are reflected in income and are generally offset by losses or gains on the foreign currency exposure being managed. At December 31, 20212023 and 2020,2022, Abbott held $12.2$13.8 billion and $11.0$12.0 billion of notional values, respectively, of such contracts, which mature in the nextwithin 13 months.
In November 2019,
| | | | | | | | | | | | | | | | |
| | 2021 | | 2020 | ||||||||||||
|
| | |
| Weighted |
| Fair and |
| | |
| Weighted |
| Fair and | ||
| | | | | Average | | Carrying Value | | | | | Average | | Carrying Value | ||
| | Contract | | Exchange | | Receivable/ | | Contract | | Exchange | | Receivable/ | ||||
(dollars in millions) | | Amount | | Rate | | (Payable) | | Amount | | Rate | | (Payable) | ||||
Primarily U.S. dollars to be exchanged for the following currencies: |
| |
|
|
|
| |
|
| |
|
|
|
| |
|
Euro | | $ | 8,698 |
| 1.1360 | | $ | 90 | | $ | 7,781 |
| 1.1821 | | $ | (91) |
Chinese Yuan | |
| 2,148 |
| 6.5744 | |
| (35) | |
| 2,401 |
| 6.4900 | |
| (99) |
Japanese Yen | |
| 1,497 |
| 111.7260 | |
| 31 | |
| 1,589 |
| 105.3861 | |
| (20) |
All other currencies | |
| 8,426 |
| n/a | |
| 109 | |
| 7,369 |
| n/a | |
| (198) |
Total | | $ | 20,769 |
| | | $ | 195 | | $ | 19,140 |
|
| | $ | (408) |
39
2023 | 2022 | |||||||||||||||||||||||||||||||||||||
(dollars in millions) | Contract Amount | Weighted Average Exchange Rate | Fair and Carrying Value Receivable/ (Payable) | Contract Amount | Weighted Average Exchange Rate | Fair and Carrying Value Receivable/ (Payable) | ||||||||||||||||||||||||||||||||
Primarily U.S. dollars to be exchanged for the following currencies: | ||||||||||||||||||||||||||||||||||||||
Euro | $ | 9,221 | 1.0865 | $ | (35) | $ | 7,656 | 1.0664 | $ | 92 | ||||||||||||||||||||||||||||
Chinese Yuan | 2,115 | 7.0785 | 3 | 2,264 | 6.8825 | 12 | ||||||||||||||||||||||||||||||||
Japanese Yen | 1,635 | 138.2288 | 24 | 1,797 | 133.0344 | (7) | ||||||||||||||||||||||||||||||||
All other currencies | 8,189 | n/a | (54) | 8,029 | n/a | 89 | ||||||||||||||||||||||||||||||||
Total | $ | 21,160 | $ | (62) | $ | 19,746 | $ | 186 |
| |||||||
| |||||||
| |||||||
| |||||||
| |||||||
| |||||||
| |||||||
| |||||||
Report of Independent Registered Public Accounting Firm (PCAOB ID: 42) |
| ||||||
|
40
| | | | | | | | | |
| | Year Ended December 31 | |||||||
|
| 2021 |
| 2020 |
| 2019 | |||
Net Sales | | $ | 43,075 | | $ | 34,608 | | $ | 31,904 |
Cost of products sold, excluding amortization of intangible assets | |
| 18,537 | |
| 15,003 | |
| 13,231 |
Amortization of intangible assets | |
| 2,047 | |
| 2,132 | |
| 1,936 |
Research and development | |
| 2,742 | |
| 2,420 | |
| 2,440 |
Selling, general and administrative | |
| 11,324 | |
| 9,696 | |
| 9,765 |
Total Operating Cost and Expenses | |
| 34,650 | |
| 29,251 | |
| 27,372 |
Operating Earnings | |
| 8,425 | |
| 5,357 | |
| 4,532 |
Interest expense | |
| 533 | |
| 546 | |
| 670 |
Interest income | |
| (43) | |
| (46) | |
| (94) |
Net foreign exchange (gain) loss | |
| 1 | |
| (8) | |
| 7 |
Debt extinguishment costs | | | — | | | — | | | 63 |
Other (income) expense, net | |
| (277) | |
| (103) | |
| (191) |
Earnings from Continuing Operations Before Taxes | |
| 8,211 | |
| 4,968 | |
| 4,077 |
Taxes on Earnings from Continuing Operations | |
| 1,140 | |
| 497 | |
| 390 |
| | | | | | | | | |
Earnings from Continuing Operations | |
| 7,071 | |
| 4,471 | |
| 3,687 |
| | | | | | | | | |
Net Earnings from Discontinued Operations, net of taxes | | | — | | | 24 | | | — |
| | | | | | | | | |
Net Earnings | | $ | 7,071 | | $ | 4,495 | | $ | 3,687 |
| | | | | | | | | |
Basic Earnings Per Common Share -- | | | | | | | | | |
Continuing Operations | | $ | 3.97 | | $ | 2.51 | | $ | 2.07 |
Discontinued Operations | |
| — | |
| 0.01 | |
| — |
Net Earnings | | $ | 3.97 | | $ | 2.52 | | $ | 2.07 |
| | | | | | | | | |
Diluted Earnings Per Common Share -- | | | | | | | | | |
Continuing Operations | | $ | 3.94 | | $ | 2.49 | | $ | 2.06 |
Discontinued Operations | |
| — | |
| 0.01 | |
| — |
Net Earnings | | $ | 3.94 | | $ | 2.50 | | $ | 2.06 |
| | | | | | | | | |
Average Number of Common Shares Outstanding Used for Basic Earnings Per Common Share | |
| 1,775 | |
| 1,773 | |
| 1,768 |
Dilutive Common Stock Options | |
| 14 | |
| 13 | |
| 13 |
Average Number of Common Shares Outstanding Plus Dilutive Common Stock Options | |
| 1,789 | |
| 1,786 | |
| 1,781 |
Outstanding Common Stock Options Having No Dilutive Effect | | | — | |
| 9 | |
| 61 |
Year Ended December 31 | |||||||||||||||||
2023 | 2022 | 2021 | |||||||||||||||
Net Sales | $ | 40,109 | $ | 43,653 | $ | 43,075 | |||||||||||
Cost of products sold, excluding amortization of intangible assets | 17,975 | 19,142 | 18,537 | ||||||||||||||
Amortization of intangible assets | 1,966 | 2,013 | 2,047 | ||||||||||||||
Research and development | 2,741 | 2,888 | 2,742 | ||||||||||||||
Selling, general and administrative | 10,949 | 11,248 | 11,324 | ||||||||||||||
Total Operating Cost and Expenses | 33,631 | 35,291 | 34,650 | ||||||||||||||
Operating Earnings | 6,478 | 8,362 | 8,425 | ||||||||||||||
Interest expense | 637 | 558 | 533 | ||||||||||||||
Interest income | (385) | (183) | (43) | ||||||||||||||
Net foreign exchange (gain) loss | 41 | 2 | 1 | ||||||||||||||
Other (income) expense, net | (479) | (321) | (277) | ||||||||||||||
Earnings before Taxes | 6,664 | 8,306 | 8,211 | ||||||||||||||
Taxes on Earnings | 941 | 1,373 | 1,140 | ||||||||||||||
Net Earnings | $ | 5,723 | $ | 6,933 | $ | 7,071 | |||||||||||
Basic Earnings Per Common Share | $ | 3.28 | $ | 3.94 | $ | 3.97 | |||||||||||
Diluted Earnings Per Common Share | $ | 3.26 | $ | 3.91 | $ | 3.94 | |||||||||||
Average Number of Common Shares Outstanding Used for Basic Earnings Per Common Share | 1,740 | 1,753 | 1,775 | ||||||||||||||
Dilutive Common Stock Options | 9 | 11 | 14 | ||||||||||||||
Average Number of Common Shares Outstanding Plus Dilutive Common Stock Options | 1,749 | 1,764 | 1,789 | ||||||||||||||
Outstanding Common Stock Options Having No Dilutive Effect | 5 | 3 | — |
41
| | | | | | | | | |
| | Year Ended December 31 | |||||||
|
| 2021 |
| 2020 |
| 2019 | |||
Net Earnings | | $ | 7,071 | | $ | 4,495 | | $ | 3,687 |
Foreign currency translation gain (loss) adjustments | |
| (980) | |
| 65 | |
| (12) |
Net actuarial gains (losses) and prior service cost and credits and amortization of net actuarial losses and prior service cost and credits, net of taxes of $340 in 2021, $(79) in 2020 and $(238) in 2019 | |
| 1,201 | |
| (331) | |
| (814) |
Net gains (losses) on derivative instruments designated as cash flow hedges, net of taxes of $63 in 2021, $(87) in 2020 and $(17) in 2019 | |
| 351 | |
| (215) | |
| (53) |
Other Comprehensive Income (Loss) | |
| 572 | |
| (481) | |
| (879) |
Comprehensive Income | | $ | 7,643 | | $ | 4,014 | | $ | 2,808 |
| | | | | | | | | |
Supplemental Accumulated Other Comprehensive Income (Loss) Information, net of tax as of December 31: | | | | | | | | | |
Cumulative foreign currency translation (loss) adjustments | | $ | (5,839) | | $ | (4,859) | | $ | (4,924) |
Net actuarial (losses) and prior service (cost) and credits | |
| (2,670) | |
| (3,871) | |
| (3,540) |
Cumulative gains (losses) on derivative instruments designated as cash flow hedges | |
| 135 | |
| (216) | |
| (1) |
Accumulated other comprehensive income (loss) | | $ | (8,374) | | $ | (8,946) | | $ | (8,465) |
Year Ended December 31 | |||||||||||||||||
2023 | 2022 | 2021 | |||||||||||||||
Net Earnings | $ | 5,723 | $ | 6,933 | $ | 7,071 | |||||||||||
Foreign currency translation gain (loss) adjustments | 229 | (894) | (980) | ||||||||||||||
Net actuarial gains (losses) and prior service cost and credits and amortization of net actuarial losses and prior service cost and credits, net of taxes of $31 in 2023, $330 in 2022 and $340 in 2021 | 117 | 1,177 | 1,201 | ||||||||||||||
Net gains (losses) on derivative instruments designated as cash flow hedges, net of taxes of $(66) in 2023, $11 in 2022 and $63 in 2021 | (134) | 40 | 351 | ||||||||||||||
Other Comprehensive Income (Loss) | 212 | 323 | 572 | ||||||||||||||
Comprehensive Income | $ | 5,935 | $ | 7,256 | $ | 7,643 | |||||||||||
Supplemental Accumulated Other Comprehensive Income (Loss) Information, net of tax as of December 31: | |||||||||||||||||
Cumulative foreign currency translation (loss) adjustments | $ | (6,504) | $ | (6,733) | $ | (5,839) | |||||||||||
Net actuarial (losses) and prior service (cost) and credits | (1,376) | (1,493) | (2,670) | ||||||||||||||
Cumulative gains (losses) on derivative instruments designated as cash flow hedges | 41 | 175 | 135 | ||||||||||||||
Accumulated other comprehensive income (loss) | $ | (7,839) | $ | (8,051) | $ | (8,374) |
42
| | | | | | | | | |
| | Year Ended December 31 | |||||||
|
| 2021 |
| 2020 |
| 2019 | |||
Cash Flow From (Used in) Operating Activities: | | | | | | | | | |
Net earnings | | $ | 7,071 | | $ | 4,495 | | $ | 3,687 |
Adjustments to reconcile earnings to net cash from operating activities — | | | | | | | | | |
Depreciation | |
| 1,491 | |
| 1,195 | |
| 1,078 |
Amortization of intangible assets | |
| 2,047 | |
| 2,132 | |
| 1,936 |
Share-based compensation | |
| 640 | |
| 546 | |
| 519 |
Investing and financing losses, net | | | 55 | | | 425 | | | 184 |
Loss on extinguishment of debt | | | — | | | — | | | 63 |
Trade receivables | |
| (383) | |
| (924) | |
| (275) |
Inventories | |
| (456) | |
| (493) | |
| (593) |
Prepaid expenses and other assets | | | (312) | | | (627) | | | (138) |
Trade accounts payable and other liabilities | | | 1,288 | | | 1,766 | | | 220 |
Income taxes | | | (908) | | | (614) | | | (545) |
Net Cash From Operating Activities | | | 10,533 | | | 7,901 | | | 6,136 |
| | | | | | | | | |
Cash Flow From (Used in) Investing Activities: | | | | | | | | | |
Acquisitions of property and equipment | |
| (1,885) | |
| (2,177) | |
| (1,638) |
Acquisitions of businesses and technologies, net of cash acquired | |
| (187) | |
| (42) | |
| (170) |
Proceeds from business dispositions | | | 134 | | | 58 | | | 48 |
Purchases of investment securities | | | (173) | | | (83) | | | (103) |
Proceeds from sales of investment securities | | | 77 | | | 10 | | | 21 |
Other | |
| 26 | |
| 19 | |
| 27 |
Net Cash From (Used in) Investing Activities | |
| (2,008) | |
| (2,215) | |
| (1,815) |
| | | | | | | | | |
Cash Flow From (Used in) Financing Activities: | | | | | | | | | |
Proceeds from issuance of (repayments of) short-term debt, net and other | | | (204) | | | 2 | | | — |
Proceeds from issuance of long-term debt and debt with maturities over 3 months | | | 4 | | | 1,281 | | | 1,842 |
Repayments of long-term debt and debt with maturities over 3 months | |
| (48) | |
| (1,333) | |
| (3,441) |
Purchases of common shares | |
| (2,299) | |
| (403) | |
| (718) |
Proceeds from stock options exercised | |
| 255 | |
| 245 | |
| 298 |
Dividends paid | |
| (3,202) | |
| (2,560) | |
| (2,270) |
Other | | | — | | | (11) | | | — |
Net Cash From (Used in) Financing Activities | |
| (5,494) | |
| (2,779) | |
| (4,289) |
| | | | | | | | | |
Effect of exchange rate changes on cash and cash equivalents | |
| (70) | |
| 71 | |
| (16) |
Net Increase (Decrease) in Cash and Cash Equivalents | |
| 2,961 | |
| 2,978 | |
| 16 |
Cash and Cash Equivalents, Beginning of Year | |
| 6,838 | |
| 3,860 | |
| 3,844 |
Cash and Cash Equivalents, End of Year | | $ | 9,799 | | $ | 6,838 | | $ | 3,860 |
| | | | | | | | | |
Supplemental Cash Flow Information: | | | | | | | | | |
Income taxes paid | | $ | 1,941 | | $ | 970 | | $ | 930 |
Interest paid | |
| 544 | |
| 549 | |
| 677 |
Year Ended December 31 | |||||||||||||||||
2023 | 2022 | 2021 | |||||||||||||||
Cash Flow From (Used in) Operating Activities: | |||||||||||||||||
Net earnings | $ | 5,723 | $ | 6,933 | $ | 7,071 | |||||||||||
Adjustments to reconcile earnings to net cash from operating activities — | |||||||||||||||||
Depreciation | 1,277 | 1,254 | 1,491 | ||||||||||||||
Amortization of intangible assets | 1,966 | 2,013 | 2,047 | ||||||||||||||
Share-based compensation | 644 | 685 | 640 | ||||||||||||||
Investing and financing losses, net | 126 | 215 | 55 | ||||||||||||||
Trade receivables | (356) | (68) | (383) | ||||||||||||||
Inventories | (232) | (1,413) | (456) | ||||||||||||||
Prepaid expenses and other assets | (542) | (75) | (312) | ||||||||||||||
Trade accounts payable and other liabilities | (760) | 420 | 1,288 | ||||||||||||||
Income taxes | (585) | (383) | (908) | ||||||||||||||
Net Cash From Operating Activities | 7,261 | 9,581 | 10,533 | ||||||||||||||
Cash Flow From (Used in) Investing Activities: | |||||||||||||||||
Acquisitions of property and equipment | (2,202) | (1,777) | (1,885) | ||||||||||||||
Acquisitions of businesses and technologies, net of cash acquired | (877) | — | (187) | ||||||||||||||
Proceeds from business dispositions | 40 | 48 | 134 | ||||||||||||||
Purchases of investment securities | (159) | (185) | (173) | ||||||||||||||
Proceeds from sales of investment securities | 43 | 152 | 77 | ||||||||||||||
Other | 22 | 22 | 26 | ||||||||||||||
Net Cash From (Used in) Investing Activities | (3,133) | (1,740) | (2,008) | ||||||||||||||
Cash Flow From (Used in) Financing Activities: | |||||||||||||||||
Proceeds from issuance of (repayments of) short-term debt, net and other | 21 | 47 | (204) | ||||||||||||||
Proceeds from issuance of long-term debt and debt with maturities over 3 months | 2 | 7 | 4 | ||||||||||||||
Repayments of long-term debt and debt with maturities over 3 months | (2,498) | (753) | (48) | ||||||||||||||
Purchases of common shares | (1,227) | (3,795) | (2,299) | ||||||||||||||
Proceeds from stock options exercised | 167 | 167 | 255 | ||||||||||||||
Dividends paid | (3,556) | (3,309) | (3,202) | ||||||||||||||
Net Cash From (Used in) Financing Activities | (7,091) | (7,636) | (5,494) | ||||||||||||||
Effect of exchange rate changes on cash and cash equivalents | (23) | (122) | (70) | ||||||||||||||
Net Increase (Decrease) in Cash and Cash Equivalents | (2,986) | 83 | 2,961 | ||||||||||||||
Cash and Cash Equivalents, Beginning of Year | 9,882 | 9,799 | 6,838 | ||||||||||||||
Cash and Cash Equivalents, End of Year | $ | 6,896 | $ | 9,882 | $ | 9,799 | |||||||||||
Supplemental Cash Flow Information: | |||||||||||||||||
Income taxes paid | $ | 1,475 | $ | 1,864 | $ | 1,941 | |||||||||||
Interest paid | 662 | 563 | 544 |
43
| | | | | | |
| | December 31 | ||||
|
| 2021 |
| 2020 | ||
Assets | | | | | | |
Current assets: | | | | | | |
Cash and cash equivalents | | $ | 9,799 | | $ | 6,838 |
Investments, primarily bank time deposits and U.S. treasury bills | |
| 450 | |
| 310 |
Trade receivables, less allowances of - 2021: $519; 2020: $460 | |
| 6,487 | |
| 6,414 |
Inventories: | | | | | | |
Finished products | |
| 3,081 | |
| 3,030 |
Work in process | |
| 694 | |
| 712 |
Materials | |
| 1,382 | |
| 1,270 |
Total inventories | |
| 5,157 | |
| 5,012 |
Other prepaid expenses and receivables | |
| 2,346 | |
| 1,867 |
Total current assets | |
| 24,239 | |
| 20,441 |
Investments | |
| 816 | |
| 821 |
Property and equipment, at cost: | | | | | | |
Land | |
| 525 | |
| 538 |
Buildings | |
| 4,007 | |
| 4,014 |
Equipment | |
| 13,528 | |
| 12,884 |
Construction in progress | |
| 1,304 | |
| 1,357 |
| |
| 19,364 | |
| 18,793 |
Less: accumulated depreciation and amortization | |
| 10,405 | |
| 9,764 |
Net property and equipment | |
| 8,959 | |
| 9,029 |
Intangible assets, net of amortization | |
| 12,739 | |
| 14,784 |
Goodwill | |
| 23,231 | |
| 23,744 |
Deferred income taxes and other assets | |
| 5,212 | |
| 3,729 |
| | $ | 75,196 | | $ | 72,548 |
44
December 31 | |||||||||||
2023 | 2022 | ||||||||||
Assets | |||||||||||
Current assets: | |||||||||||
Cash and cash equivalents | $ | 6,896 | $ | 9,882 | |||||||
Investments, primarily bank time deposits and U.S. treasury bills | 383 | 288 | |||||||||
Trade receivables, less allowances of — 2023: $444; 2022: $500 | 6,565 | 6,218 | |||||||||
Inventories: | |||||||||||
Finished products | 3,946 | 3,805 | |||||||||
Work in process | 807 | 680 | |||||||||
Materials | 1,817 | 1,688 | |||||||||
Total inventories | 6,570 | 6,173 | |||||||||
Other prepaid expenses and receivables | 2,256 | 2,663 | |||||||||
Total current assets | 22,670 | 25,224 | |||||||||
Investments | 799 | 766 | |||||||||
Property and equipment, at cost: | |||||||||||
Land | 529 | 511 | |||||||||
Buildings | 4,161 | 4,053 | |||||||||
Equipment | 15,179 | 14,164 | |||||||||
Construction in progress | 2,064 | 1,484 | |||||||||
21,933 | 20,212 | ||||||||||
Less: accumulated depreciation and amortization | 11,779 | 11,050 | |||||||||
Net property and equipment | 10,154 | 9,162 | |||||||||
Intangible assets, net of amortization | 8,815 | 10,454 | |||||||||
Goodwill | 23,679 | 22,799 | |||||||||
Deferred income taxes and other assets | 7,097 | 6,033 | |||||||||
$ | 73,214 | $ | 74,438 |
Abbott Laboratories and Subsidiaries
| | | | | | |
| | December 31 | ||||
|
| 2021 |
| 2020 | ||
Liabilities and Shareholders’ Investment | | | | | | |
Current liabilities: |
| | |
| | |
Short-term borrowings | | $ | — | | $ | 213 |
Trade accounts payable | |
| 4,408 | |
| 3,946 |
Salaries, wages and commissions | |
| 1,625 | |
| 1,416 |
Other accrued liabilities | |
| 5,181 | |
| 5,165 |
Dividends payable | |
| 831 | |
| 798 |
Income taxes payable | |
| 306 | |
| 362 |
Current portion of long-term debt | |
| 754 | |
| 7 |
Total current liabilities | |
| 13,105 | |
| 11,907 |
Long-term debt | |
| 17,296 | |
| 18,527 |
Post-employment obligations and other long-term liabilities | |
| 8,771 | |
| 9,111 |
Commitments and contingencies | | | | | | |
Shareholders’ investment: | | | | | | |
Preferred shares, 1 dollar par value Authorized — 1,000,000 shares, NaN issued | |
| — | |
| — |
Common shares, without par value Authorized — 2,400,000,000 shares | |
| 24,470 | |
| 24,145 |
Common shares held in treasury, at cost — Shares: 2021: 221,191,228; 2020: 209,926,622 | |
| (11,822) | |
| (10,042) |
Earnings employed in the business | |
| 31,528 | |
| 27,627 |
Accumulated other comprehensive income (loss) | |
| (8,374) | |
| (8,946) |
Total Abbott Shareholders’ Investment | |
| 35,802 | |
| 32,784 |
Noncontrolling interests in subsidiaries | |
| 222 | |
| 219 |
Total Shareholders’ Investment | |
| 36,024 | |
| 33,003 |
| | $ | 75,196 | | $ | 72,548 |
December 31 | |||||||||||
2023 | 2022 | ||||||||||
Liabilities and Shareholders’ Investment | |||||||||||
Current liabilities: | |||||||||||
Trade accounts payable | $ | 4,295 | $ | 4,607 | |||||||
Salaries, wages and commissions | 1,597 | 1,556 | |||||||||
Other accrued liabilities | 5,422 | 5,845 | |||||||||
Dividends payable | 955 | 887 | |||||||||
Income taxes payable | 492 | 343 | |||||||||
Current portion of long-term debt | 1,080 | 2,251 | |||||||||
Total current liabilities | 13,841 | 15,489 | |||||||||
Long-term debt | 13,599 | 14,522 | |||||||||
Post-employment obligations and other long-term liabilities | 6,947 | 7,522 | |||||||||
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: 2023: 1,987,883,852; 2022: 1,986,519,278 | 24,869 | 24,709 | |||||||||
Common shares held in treasury, at cost — Shares: 2023: 253,807,494; 2022: 248,724,257 | (15,981) | (15,229) | |||||||||
Earnings employed in the business | 37,554 | 35,257 | |||||||||
Accumulated other comprehensive income (loss) | (7,839) | (8,051) | |||||||||
Total Abbott Shareholders’ Investment | 38,603 | 36,686 | |||||||||
Noncontrolling interests in subsidiaries | 224 | 219 | |||||||||
Total Shareholders’ Investment | 38,827 | 36,905 | |||||||||
$ | 73,214 | $ | 74,438 |
45
| | | | | | | | | |
| | Year Ended December 31 | |||||||
|
| 2021 |
| 2020 |
| 2019 | |||
Common Shares: | | | | | | | | | |
Beginning of Year | | | | | | | | | |
Shares: 2021: 1,981,156,896; 2020: 1,976,855,085; 2019: 1,971,189,465 | | $ | 24,145 | | $ | 23,853 | | $ | 23,512 |
Issued under incentive stock programs | | | | | | | | | |
Shares: 2021: 4,116,525; 2020: 4,301,811; 2019: 5,665,620 | |
| 173 | |
| 181 | |
| 209 |
Share-based compensation | | | 642 | | | 548 | | | 521 |
Issuance of restricted stock awards | | | (490) | | | (437) | | | (389) |
End of Year | | | | | | | | | |
Shares: 2021: 1,985,273,421; 2020: 1,981,156,896; 2019: 1,976,855,085 | | $ | 24,470 | | $ | 24,145 | | $ | 23,853 |
| | | | | | | | | |
Common Shares Held in Treasury: | | | | | | | | | |
Beginning of Year | | | | | | | | | |
Shares: 2021: 209,926,622; 2020: 214,351,838; 2019: 215,570,043 | | $ | (10,042) | | $ | (10,147) | | $ | (9,962) |
Issued under incentive stock programs | | | | | | | | | |
Shares: 2021: 5,650,168; 2020: 6,290,757; 2019: 7,796,030 | |
| 271 | |
| 298 | |
| 361 |
Purchased | | | | | | | | | |
Shares: 2021: 16,914,774; 2020: 1,865,541; 2019: 6,577,825 | | | (2,051) | | | (193) | | | (546) |
End of Year | | | | | | | | | |
Shares: 2021: 221,191,228; 2020: 209,926,622; 2019: 214,351,838 | | $ | (11,822) | | $ | (10,042) | | $ | (10,147) |
| | | | | | | | | |
Earnings Employed in the Business: | | | | | | | | | |
Beginning of Year | | $ | 27,627 | | $ | 25,847 | | $ | 24,560 |
Impact of adoption of new accounting standards | | | — | | | (5) | | | — |
Net earnings | | | 7,071 | | | 4,495 | | | 3,687 |
Cash dividends declared on common shares (per share — 2021: $1.82; 2020: $1.53; 2019: $1.32) | |
| (3,235) | |
| (2,722) | |
| (2,343) |
Effect of common and treasury share transactions | |
| 65 | |
| 12 | |
| (57) |
End of Year | | $ | 31,528 | | $ | 27,627 | | $ | 25,847 |
| | | | | | | | | |
Accumulated Other Comprehensive Income (Loss): | | | | | | | | | |
Beginning of Year | | $ | (8,946) | | $ | (8,465) | | $ | (7,586) |
Other comprehensive income (loss) | |
| 572 | |
| (481) | |
| (879) |
End of Year | | $ | (8,374) | | $ | (8,946) | | $ | (8,465) |
| | | | | | | | | |
Noncontrolling Interests in Subsidiaries: | | | | | | | | | |
Beginning of Year | | $ | 219 | | $ | 213 | | $ | 198 |
Noncontrolling Interests’ share of income, business combinations, net of distributions and share repurchases | |
| 3 | |
| 6 | |
| 15 |
End of Year | | $ | 222 | | $ | 219 | | $ | 213 |
Year Ended December 31 | |||||||||||||||||
2023 | 2022 | 2021 | |||||||||||||||
Common Shares: | |||||||||||||||||
Beginning of Year | |||||||||||||||||
Shares: 2023: 1,986,519,278; 2022: 1,985,273,421; 2021: 1,981,156,896 | $ | 24,709 | $ | 24,470 | $ | 24,145 | |||||||||||
Issued under incentive stock programs | |||||||||||||||||
Shares: 2023: 1,364,574; 2022: 1,245,857; 2021: 4,116,525 | 66 | 72 | 173 | ||||||||||||||
Share-based compensation | 646 | 687 | 642 | ||||||||||||||
Issuance of restricted stock awards | (552) | (520) | (490) | ||||||||||||||
End of Year | |||||||||||||||||
Shares: 2023: 1,987,883,852; 2022: 1,986,519,278; 2021: 1,985,273,421 | $ | 24,869 | $ | 24,709 | $ | 24,470 | |||||||||||
Common Shares Held in Treasury: | |||||||||||||||||
Beginning of Year | |||||||||||||||||
Shares: 2023: 248,724,257; 2022: 221,191,228; 2021: 209,926,622 | $ | (15,229) | $ | (11,822) | $ | (10,042) | |||||||||||
Issued under incentive stock programs | |||||||||||||||||
Shares: 2023: 4,881,031; 2022: 4,980,202; 2021: 5,650,168 | 297 | 269 | 271 | ||||||||||||||
Purchased | |||||||||||||||||
Shares: 2023: 9,964,268; 2022: 32,513,231; 2021: 16,914,774 | (1,049) | (3,676) | (2,051) | ||||||||||||||
End of Year | |||||||||||||||||
Shares: 2023: 253,807,494; 2022: 248,724,257; 2021: 221,191,228 | $ | (15,981) | $ | (15,229) | $ | (11,822) | |||||||||||
Earnings Employed in the Business: | |||||||||||||||||
Beginning of Year | $ | 35,257 | $ | 31,528 | $ | 27,627 | |||||||||||
Net earnings | 5,723 | 6,933 | 7,071 | ||||||||||||||
Cash dividends declared on common shares (per share — 2023: $2.08; 2022: $1.92; 2021: $1.82) | (3,625) | (3,365) | (3,235) | ||||||||||||||
Effect of common and treasury share transactions | 199 | 161 | 65 | ||||||||||||||
End of Year | $ | 37,554 | $ | 35,257 | $ | 31,528 | |||||||||||
Accumulated Other Comprehensive Income (Loss): | |||||||||||||||||
Beginning of Year | $ | (8,051) | $ | (8,374) | $ | (8,946) | |||||||||||
Other comprehensive income (loss) | 212 | 323 | 572 | ||||||||||||||
End of Year | $ | (7,839) | $ | (8,051) | $ | (8,374) | |||||||||||
Noncontrolling Interests in Subsidiaries: | |||||||||||||||||
Beginning of Year | $ | 219 | $ | 222 | $ | 219 | |||||||||||
Noncontrolling Interests’ share of income, net of distributions and share repurchases | 5 | (3) | 3 | ||||||||||||||
End of Year | $ | 224 | $ | 219 | $ | 222 |
46
47
Note 1 — Summary of Significant Accounting Policies (Continued)
Classification | Estimated Useful Lives | |||||||
Buildings | 10 to 50 years | |||||||
Equipment | 2 to 20 years |
48
Abbott Laboratories and Subsidiaries
Notes to Consolidated Financial Statements (Continued)
Note 1 — Summary of Significant Accounting Policies (Continued)
RESEARCH AND DEVELOPMENT COSTS — Internal research and development costs are expensed as incurred. Clinical trial costs incurred by third parties are expensed as the contracted work is performed. Where contingent milestone payments are due to third parties under research and development arrangements, the milestone payment obligations are expensed when the milestone results are achieved.
have an impact on Abbott's consolidated financial statements.
Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures
, which expands the breadth and frequency of required segment disclosures. The guidance is required to be applied retrospectively to all periods presented in the financial statements. The standard becomes effective for Abbott for full year 2024 reporting and for interim periods beginning in the first quarter of 2025. Abbott is currently evaluating the impact of this new standard on its consolidated financial statements.
49
2023 | 2022 | 2021 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
(in millions) | U.S. | Int’l | Total | U.S. | Int’l | Total | U.S. | Int’l | Total | |||||||||||||||||||||||||||||||||||||||||||||||
Established Pharmaceutical Products — | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Key Emerging Markets | $ | — | $ | 3,807 | $ | 3,807 | $ | — | $ | 3,766 | $ | 3,766 | $ | — | $ | 3,565 | $ | 3,565 | ||||||||||||||||||||||||||||||||||||||
Other | — | 1,259 | 1,259 | — | 1,146 | 1,146 | — | 1,153 | 1,153 | |||||||||||||||||||||||||||||||||||||||||||||||
Total | — | 5,066 | 5,066 | — | 4,912 | 4,912 | — | 4,718 | 4,718 | |||||||||||||||||||||||||||||||||||||||||||||||
Nutritionals — | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Pediatric Nutritionals | 1,977 | 1,957 | 3,934 | 1,562 | 1,919 | 3,481 | 2,192 | 2,106 | 4,298 | |||||||||||||||||||||||||||||||||||||||||||||||
Adult Nutritionals | 1,436 | 2,784 | 4,220 | 1,357 | 2,621 | 3,978 | 1,364 | 2,632 | 3,996 | |||||||||||||||||||||||||||||||||||||||||||||||
Total | 3,413 | 4,741 | 8,154 | 2,919 | 4,540 | 7,459 | 3,556 | 4,738 | 8,294 | |||||||||||||||||||||||||||||||||||||||||||||||
Diagnostics — | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Core Laboratory | 1,243 | 3,916 | 5,159 | 1,137 | 3,751 | 4,888 | 1,145 | 3,983 | 5,128 | |||||||||||||||||||||||||||||||||||||||||||||||
Molecular | 172 | 402 | 574 | 370 | 625 | 995 | 566 | 861 | 1,427 | |||||||||||||||||||||||||||||||||||||||||||||||
Point of Care | 396 | 169 | 565 | 372 | 153 | 525 | 384 | 152 | 536 | |||||||||||||||||||||||||||||||||||||||||||||||
Rapid Diagnostics | 2,518 | 1,172 | 3,690 | 6,652 | 3,409 | 10,061 | 4,916 | 3,519 | 8,435 | |||||||||||||||||||||||||||||||||||||||||||||||
Total | 4,329 | 5,659 | 9,988 | 8,531 | 7,938 | 16,469 | 7,011 | 8,515 | 15,526 | |||||||||||||||||||||||||||||||||||||||||||||||
Medical Devices — | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Rhythm Management | 1,085 | 1,170 | 2,255 | 1,029 | 1,090 | 2,119 | 1,018 | 1,180 | 2,198 | |||||||||||||||||||||||||||||||||||||||||||||||
Electrophysiology | 1,008 | 1,187 | 2,195 | 909 | 1,018 | 1,927 | 778 | 1,129 | 1,907 | |||||||||||||||||||||||||||||||||||||||||||||||
Heart Failure | 888 | 273 | 1,161 | 809 | 226 | 1,035 | 772 | 235 | 1,007 | |||||||||||||||||||||||||||||||||||||||||||||||
Vascular | 978 | 1,703 | 2,681 | 864 | 1,619 | 2,483 | 915 | 1,739 | 2,654 | |||||||||||||||||||||||||||||||||||||||||||||||
Structural Heart | 883 | 1,061 | 1,944 | 818 | 894 | 1,712 | 730 | 880 | 1,610 | |||||||||||||||||||||||||||||||||||||||||||||||
Neuromodulation | 725 | 165 | 890 | 619 | 151 | 770 | 616 | 165 | 781 | |||||||||||||||||||||||||||||||||||||||||||||||
Diabetes Care | 2,129 | 3,632 | 5,761 | 1,633 | 3,123 | 4,756 | 1,212 | 3,116 | 4,328 | |||||||||||||||||||||||||||||||||||||||||||||||
Total | 7,696 | 9,191 | 16,887 | 6,681 | 8,121 | 14,802 | 6,041 | 8,444 | 14,485 | |||||||||||||||||||||||||||||||||||||||||||||||
Other | 14 | — | 14 | 11 | — | 11 | 34 | 18 | 52 | |||||||||||||||||||||||||||||||||||||||||||||||
Total | $ | 15,452 | $ | 24,657 | $ | 40,109 | $ | 18,142 | $ | 25,511 | $ | 43,653 | $ | 16,642 | $ | 26,433 | $ | 43,075 |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | 2021 | | 2020 | | 2019 | |||||||||||||||||||||
(in millions) |
|
| U.S. |
| Int’l |
| Total |
| U.S. |
| Int’l |
| Total |
| U.S. |
| Int’l |
| Total | |||||||||
Established Pharmaceutical Products — | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Key Emerging Markets | | | $ | — | | $ | 3,539 | | $ | 3,539 | | $ | — | | $ | 3,209 | | $ | 3,209 | | $ | — | | $ | 3,392 | | $ | 3,392 |
Other | | |
| — | |
| 1,179 | |
| 1,179 | |
| — | |
| 1,094 | |
| 1,094 | | | — | |
| 1,094 | |
| 1,094 |
Total | | |
| — | |
| 4,718 | |
| 4,718 | |
| — | |
| 4,303 | |
| 4,303 | | | — | |
| 4,486 | |
| 4,486 |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Nutritionals — | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Pediatric Nutritionals | | |
| 2,192 | |
| 2,106 | |
| 4,298 | |
| 1,987 | |
| 2,140 | |
| 4,127 | | | 1,879 | |
| 2,282 | |
| 4,161 |
Adult Nutritionals | | |
| 1,364 | |
| 2,632 | |
| 3,996 | |
| 1,292 | |
| 2,228 | |
| 3,520 | | | 1,231 | |
| 2,017 | |
| 3,248 |
Total | | |
| 3,556 | |
| 4,738 | |
| 8,294 | |
| 3,279 | |
| 4,368 | |
| 7,647 | | | 3,110 | |
| 4,299 | |
| 7,409 |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Diagnostics — | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Core Laboratory | | |
| 1,145 | |
| 3,983 | |
| 5,128 | |
| 1,166 | |
| 3,309 | |
| 4,475 | | | 1,086 | |
| 3,570 | |
| 4,656 |
Molecular | | |
| 566 | |
| 861 | |
| 1,427 | |
| 621 | |
| 817 | |
| 1,438 | | | 149 | |
| 293 | |
| 442 |
Point of Care | | |
| 384 | |
| 152 | |
| 536 | |
| 369 | |
| 147 | |
| 516 | | | 438 | |
| 123 | |
| 561 |
Rapid Diagnostics | | |
| 5,034 | |
| 3,519 | |
| 8,553 | |
| 2,618 | |
| 1,758 | |
| 4,376 | | | 1,214 | |
| 840 | |
| 2,054 |
Total | | |
| 7,129 | |
| 8,515 | |
| 15,644 | |
| 4,774 | |
| 6,031 | |
| 10,805 | | | 2,887 | |
| 4,826 | |
| 7,713 |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Medical Devices — | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Rhythm Management | | |
| 1,018 | |
| 1,180 | |
| 2,198 | |
| 903 | |
| 1,011 | |
| 1,914 | | | 1,057 | |
| 1,087 | |
| 2,144 |
Electrophysiology | | |
| 778 | |
| 1,129 | |
| 1,907 | |
| 660 | |
| 918 | |
| 1,578 | | | 742 | |
| 979 | |
| 1,721 |
Heart Failure | | |
| 654 | |
| 235 | |
| 889 | |
| 547 | |
| 193 | |
| 740 | | | 574 | |
| 195 | |
| 769 |
Vascular | | |
| 915 | |
| 1,739 | |
| 2,654 | |
| 853 | |
| 1,486 | |
| 2,339 | | | 1,047 | |
| 1,803 | |
| 2,850 |
Structural Heart | | |
| 730 | |
| 880 | |
| 1,610 | |
| 540 | |
| 707 | |
| 1,247 | | | 616 | |
| 784 | |
| 1,400 |
Neuromodulation | | |
| 616 | |
| 165 | |
| 781 | |
| 564 | |
| 138 | |
| 702 | | | 660 | |
| 171 | |
| 831 |
Diabetes Care | | | | 1,212 | | | 3,116 | | | 4,328 | | | 864 | | | 2,403 | | | 3,267 | | | 678 | | | 1,846 | | | 2,524 |
Total | | |
| 5,923 | |
| 8,444 | |
| 14,367 | |
| 4,931 | |
| 6,856 | |
| 11,787 | | | 5,374 | |
| 6,865 | |
| 12,239 |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Other | | |
| 34 | |
| 18 | |
| 52 | |
| 38 | |
| 28 | |
| 66 | | | 27 | |
| 30 | |
| 57 |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Total | | | $ | 16,642 | | $ | 26,433 | | $ | 43,075 | | $ | 13,022 | | $ | 21,586 | | $ | 34,608 | | $ | 11,398 | | $ | 20,506 | | $ | 31,904 |
50
Abbott Laboratories and Subsidiaries
Notes to Consolidated Financial Statements (Continued)
Note 3 — Revenue (Continued)
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.
51
Abbott Laboratories and Subsidiaries
Notes to Consolidated Financial Statements (Continued)
Note 3 — Revenue (Continued)
Contract liabilities primarily relate to payments received from customers in advance of performance under the contract. Abbott’s contract liabilities arise primarily in the Medical Devices 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 December 31, 2019 | | $ | 294 |
Unearned revenue from cash received during the period | |
| 505 |
Revenue recognized related to contract liability balance | |
| (394) |
Balance at December 31, 2020 | | | 405 |
Unearned revenue from cash received during the period | | | 615 |
Revenue recognized related to contract liability balance | | | (500) |
Balance at December 31, 2021 | | $ | 520 |
(in millions) | |||||
Contract Liabilities: | |||||
Balance at December 31, 2021 | $ | 520 | |||
Unearned revenue from cash received during the period | 578 | ||||
Revenue recognized related to contract liability balance | (598) | ||||
Balance at December 31, 2022 | 500 | ||||
Unearned revenue from cash received during the period | 469 | ||||
Revenue recognized related to contract liability balance | (424) | ||||
Balance at December 31, 2023 | $ | 545 |
| | | |
(in millions) |
| | |
Allowance for Doubtful Accounts: | | | |
Balance at December 31, 2019 | | $ | 228 |
Impact of adopting ASU 2016-13 | | | 7 |
Provisions/charges to income | |
| 88 |
Amounts charged off and other deductions | |
| (35) |
Balance at December 31, 2020 | | | 288 |
Provisions/charges to income | | | 51 |
Amounts charged off and other deductions | | | (26) |
Balance at December 31, 2021 | | $ | 313 |
(in millions) | |||||
Allowance for Doubtful Accounts: | |||||
Balance at December 31, 2021 | $ | 313 | |||
Provisions/charges to income | 6 | ||||
Amounts charged off and other deductions | (57) | ||||
Balance at December 31, 2022 | 262 | ||||
Provisions/charges to income | 26 | ||||
Amounts charged off and other deductions | (47) | ||||
Balance at December 31, 2023 | $ | 241 |
(in millions) | December 31, 2023 | December 31, 2022 | ||||||||||||
Long-term Investments: | ||||||||||||||
Equity securities | $ | 555 | $ | 558 | ||||||||||
Other | 244 | 208 | ||||||||||||
Total | $ | 799 | $ | 766 |
| | | | | | |
| | December 31, | | December 31, | ||
(in millions) |
| 2021 |
| 2020 | ||
Long-term Investments: | | | | | | |
Equity securities | | $ | 748 | | $ | 776 |
Other | |
| 68 | |
| 45 |
Total | | $ | 816 | | $ | 821 |
The decreaseincrease in Abbott’s long-term investments as of December 31, 20212023 versus the balance as of December 31, 20202022 is primarily relatesdue to the saleinvestments acquired as part of an equity method investmenta business acquisition and other additional investments, partially offset by the acquisitionimpact of additional investments.
equity method investment losses.
52
Abbott Laboratories and Subsidiaries
Notes to Consolidated Financial Statements (Continued)
Note 4 — Supplemental Financial Information (Continued)
Abbott’s equity securities as of December 31, 20212023 and December 31, 2020,2022, include $391$314 million and $366$298 million, respectively, of investments in mutual funds that are held in a rabbi trust 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.
(in millions) | December 31, 2023 | December 31, 2022 | ||||||||||||
Other Accrued Liabilities: | ||||||||||||||
Accrued rebates payable to government agencies | $ | 650 | $ | 638 | ||||||||||
Accrued other rebates (a) | 1,091 | 1,087 | ||||||||||||
All other | 3,681 | 4,120 | ||||||||||||
Total | $ | 5,422 | $ | 5,845 |
In September 2021, Abbott acquired 100 percent of Walk Vascular, LLC (Walk Vascular), a commercial-stage medical device company with a minimally invasive thrombectomy system designed to remove peripheral blood clots. Walk Vascular’s peripheral thrombectomy system will be incorporated into Abbott’s existing endovascular portfolio. The purchase price, the allocation of acquired assets and liabilities, and the revenue and net income contributed by Walk Vascular since the date of acquisition are not material to Abbott’s consolidated financial statements.
In 2019, in conjunction with the acquisition of Cephea Valve Technologies, Inc., Abbott acquired a research & development (R&D) asset valued at $102 million, which was immediately expensed. The $102 million of expense was recorded in the Research and development line of Abbott’s Consolidated Statement of Earnings.
| | | | | | |
| | December 31, | | December 31, | ||
(in millions) |
| 2021 |
| 2020 | ||
Other Accrued Liabilities: | | | | | | |
Accrued rebates payable to government agencies | | $ | 364 | | $ | 316 |
Accrued other rebates (a) | |
| 1,082 | |
| 805 |
All other | |
| 3,735 | |
| 4,044 |
Total | | $ | 5,181 | | $ | 5,165 |
(a) | Accrued wholesaler chargeback rebates of |
(in millions) | December 31, 2023 | December 31, 2022 | ||||||||||||
Post-employment Obligations and Other Long-term Liabilities: | ||||||||||||||
Defined benefit pension plans and post-employment medical and dental plans for significant plans | $ | 1,964 | $ | 1,784 | ||||||||||
Deferred income taxes | 568 | 991 | ||||||||||||
Operating lease liabilities | 949 | 943 | ||||||||||||
All other (b) | 3,466 | 3,804 | ||||||||||||
Total | $ | 6,947 | $ | 7,522 |
| | | | | | |
| | December 31, | | December 31, | ||
(in millions) |
| 2021 |
| 2020 | ||
Post-employment Obligations and Other Long-term Liabilities: | | | | | | |
Defined benefit pension plans and post-employment medical and dental plans for significant plans | | $ | 2,738 | | $ | 3,119 |
Deferred income taxes | |
| 1,392 | |
| 1,406 |
Operating lease liabilities | | | 956 | | | 902 |
All other (b) | |
| 3,685 | |
| 3,684 |
Total | | $ | 8,771 | | $ | 9,111 |
(b) | Includes approximately |
53
(in millions) | Cumulative Foreign Currency Translation Adjustments | Net Actuarial Gains (Losses) and Prior Service (Costs) and Credits | Cumulative Gains (Losses) on Derivative Instruments Designated as Cash Flow Hedges | Total | ||||||||||||||||||||||
Balance at December 31, 2021 | $ | (5,839) | $ | (2,670) | $ | 135 | $ | (8,374) | ||||||||||||||||||
Other comprehensive income (loss) before reclassifications | (894) | 1,007 | 199 | 312 | ||||||||||||||||||||||
(Income) loss amounts reclassified from accumulated other comprehensive income (a) | — | 170 | (159) | 11 | ||||||||||||||||||||||
Net current period other comprehensive income (loss) | (894) | 1,177 | 40 | 323 | ||||||||||||||||||||||
Balance at December 31, 2022 | (6,733) | (1,493) | 175 | (8,051) | ||||||||||||||||||||||
Other comprehensive income (loss) before reclassifications | 212 | 127 | 5 | 344 | ||||||||||||||||||||||
(Income) loss amounts reclassified from accumulated other comprehensive income (a) | 17 | (10) | (139) | (132) | ||||||||||||||||||||||
Net current period other comprehensive income (loss) | 229 | 117 | (134) | 212 | ||||||||||||||||||||||
Balance at December 31, 2023 | $ | (6,504) | $ | (1,376) | $ | 41 | $ | (7,839) |
| | | | | | | | | | | | |
| | | | | | Cumulative | | | | |||
| | | | | | | Gains (Losses) | | | | ||
| | Cumulative | | Net Actuarial | | on Derivative | | | | |||
| | Foreign | | (Losses) and | | Instruments | | | | |||
| | Currency | | Prior Service | | Designated as | | | | |||
| | Translation | | (Costs) and | | Cash Flow | | | | |||
(in millions) |
| Adjustments |
| Credits |
| Hedges |
| Total | ||||
Balance at December 31, 2019 | | $ | (4,924) | | $ | (3,540) | | $ | (1) | | $ | (8,465) |
Other comprehensive income (loss) before reclassifications | | | 65 | |
| (523) | |
| (140) | |
| (598) |
(Income) loss amounts reclassified from accumulated other comprehensive income (a) | | | — | |
| 192 | |
| (75) | |
| 117 |
Net current period other comprehensive income (loss) | | | 65 | |
| (331) | |
| (215) | |
| (481) |
Balance at December 31, 2020 | | | (4,859) | | | (3,871) | | | (216) | | | (8,946) |
Other comprehensive income (loss) before reclassifications | | | (980) | |
| 954 | |
| 137 | |
| 111 |
(Income) loss amounts reclassified from accumulated other comprehensive income (a) | | | — | |
| 247 | |
| 214 | |
| 461 |
Net current period other comprehensive income (loss) | | | (980) | | | 1,201 | | | 351 | | | 572 |
Balance at December 31, 2021 | | $ | (5,839) | | $ | (2,670) | | $ | 135 | | $ | (8,374) |
(a) | (Income) loss amounts reclassified from accumulated other comprehensive income related to cash flow hedges are recorded as Cost of products sold. Net actuarial losses and prior service cost is included as a component of net periodic benefit cost – see Note |
Indefinite-lived intangible assets, which relate to IPR&D acquired in a business combination, were approximately $919 million and $1.2 billion at December 31, 2021 and 2020, respectively. The decrease is due to IPR&D assets primarily related to the Medical Devices segment that became amortizable in 2021, partially offset by an increase of approximately $80 million related to a recent acquisition. In 2020, a $55 million impairment of an IPR&D intangible asset related to the Medical Devices segment was recorded in the Research and development line of Abbott’s Consolidated Statement of Earnings.
2022.
54
(in millions) | ||||||||
Restructuring charges in 2022 | $ | 234 | ||||||
Payments and other adjustments | (6) | |||||||
Accrued balance at December 31, 2022 | 228 | |||||||
Payments and other adjustments | (170) | |||||||
Accrued balance at December 31, 2023 | $ | 58 |
In the second half of 2021, as the Delta and Omicron variants of COVID-19 spread and the number of new COVID-19 cases increased significantly, particularly in the U.S., demand for rapid COVID-19 tests increased significantly. As a result, in the second half of 2021, Abbott sold approximately $181 million of inventory that was previously estimated to have no net realizable value under the second quarter restructuring action. In addition, the estimate of other exit costs was reduced by a net $58 million as Abbott fulfilled its purchase obligations under certain contracts for which a liability was recorded in the second quarter or Abbott settled with the counterparty in the second half of 2021.
| | | | | | | | | | | | |
| | Inventory- |
| | |
| | |
| | | |
| | Related | | Fixed Asset | | Other Exit | | | | |||
(in millions) |
| Charges |
| Write-Downs |
| Costs |
| Total | ||||
Restructuring charges recorded in 2021 | | $ | 248 | | $ | 80 | | $ | 113 | | $ | 441 |
Payments | |
| — | |
| — | |
| (90) | |
| (90) |
Other non-cash | |
| (248) | |
| (80) | |
| — | |
| (328) |
Accrued balance at December 31, 2021 | | $ | — | | $ | — | | $ | 23 | | $ | 23 |
From 2017 to 2021, Abbott management approved restructuring plans as part of the integration of the acquisitions of St. Jude Medical into the Medical Devices segment, and Alere Inc. (Alere) into the Diagnostic Products segment, in order to leverage economies of scale and reduce costs. As of December 31, 2018, the accrued balance associated with these actions was $41 million. From 2019 to 2021, Abbott recorded employee-related severance and other charges totaling approximately $95 million, comprised of $10 million in 2021, $13 million in 2020, and $72 million in 2019. Approximately $31 million was recorded in Cost of products sold, approximately $5 million was recorded in Research and development, and approximately $59 million was recorded in Selling, general and administrative expense over the last three years. As of December 31, 2021, the accrued liabilities remaining in the Consolidated Balance Sheet related to these actions total $9 million.
From 2017 to 2020, 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. As of December 31, 2018, the accrued balance associated with these actions was $70 million. From 2019 to 2020, Abbott recorded employee-related severance and other charges totaling approximately $102 million, comprised of $36 million in 2020 and $66 million in 2019. Approximately $22 million was recorded in Cost of products sold, approximately $30 million was recorded in Research and development, and approximately $50 million was recorded in Selling, general and administrative expense over the two years. As of December 31, 2021, the accrued liabilities remaining in the Consolidated Balance Sheet related to these actions total $24 million.
2023:
(in millions) | Inventory- Related Charges | Fixed Asset Write-Downs | Other Exit Costs | Total | ||||||||||||||||||||||
Restructuring charges recorded in 2021 | $ | 248 | $ | 80 | $ | 113 | $ | 441 | ||||||||||||||||||
Payments | — | — | (90) | (90) | ||||||||||||||||||||||
Other non-cash | (248) | (80) | — | (328) | ||||||||||||||||||||||
Accrued balance at December 31, 2021 | — | — | 23 | 23 | ||||||||||||||||||||||
Payments and other adjustments | — | — | (10) | (10) | ||||||||||||||||||||||
Accrued balance at December 31, 2022 | — | — | 13 | 13 | ||||||||||||||||||||||
Payments and other adjustments | — | — | (13) | (13) | ||||||||||||||||||||||
Accrued balance at December 31, 2023 | $ | — | $ | — | $ | — | $ | — |
55
Note 7 — Restructuring Plans (Continued)
The following summarizes the activity for these restructurings:
| | | |
(in millions) |
| | |
Restructuring charges in 2021 | | $ | 68 |
Payments and other adjustments | | | (7) |
Accrued balance at December 31, 2021 | | $ | 61 |
Note 89 — Incentive Stock Program
| | | | | | | | | | |
| | | | | | | Weighted | | | |
| | | | Weighted | | Average | | | ||
| | | | Average | | Remaining | | Aggregate | ||
(intrinsic values in millions) |
| Options |
| Exercise Price |
| Life (Years) |
| Intrinsic Value | ||
Outstanding at December 31, 2020 | | 28,919,886 | | $ | 55.65 |
| 6.0 |
| $ | 1,557 |
Granted |
| 2,865,115 | |
| 123.70 | | | | | |
Exercised |
| (4,495,454) | |
| 40.48 | | | | | |
Lapsed |
| (89,696) | |
| 106.80 | | | | | |
Outstanding at December 31, 2021 |
| 27,199,851 | | $ | 65.16 |
| 5.7 |
| $ | 2,056 |
Exercisable at December 31, 2021 | | 20,387,490 | | $ | 53.49 | | 4.9 | | $ | 1,779 |
56
(intrinsic values in millions) | Options | Weighted Average Exercise Price | Weighted Average Remaining Life (Years) | Aggregate Intrinsic Value | ||||||||||||||||||||||
Outstanding at December 31, 2022 | 28,288,046 | $ | 70.64 | 5.3 | $ | 1,167 | ||||||||||||||||||||
Granted | 2,027,255 | 106.03 | ||||||||||||||||||||||||
Exercised | (1,664,222) | 44.71 | ||||||||||||||||||||||||
Lapsed | (82,004) | 122.08 | ||||||||||||||||||||||||
Outstanding at December 31, 2023 | 28,569,075 | $ | 74.52 | 4.8 | $ | 1,073 | ||||||||||||||||||||
Exercisable at December 31, 2023 | 23,921,284 | $ | 66.90 | 4.1 | $ | 1,064 |
Abbott Laboratories and Subsidiaries
Notes to Consolidated Financial Statements (Continued)
Note 8 — Incentive Stock Program (Continued)
The following table summarizes restricted stock awards and units activity for the year ended December 31, 2021.
| | | | | |
| | |
| Weighted | |
| | | | Average | |
|
| | | Grant-Date | |
| | Share Units | | Fair Value | |
Outstanding at December 31, 2020 |
| 12,492,868 | | $ | 78.19 |
Granted |
| 5,219,069 | |
| 123.85 |
Vested |
| (6,507,761) | |
| 73.54 |
Forfeited |
| (645,651) | |
| 98.13 |
Outstanding at December 31, 2021 |
| 10,558,525 | | $ | 102.40 |
2023.
Share Units | Weighted Average Grant-Date Fair Value | ||||||||||
Outstanding at December 31, 2022 | 10,400,328 | $ | 114.59 | ||||||||
Granted | 5,455,600 | 106.11 | |||||||||
Vested | (5,069,639) | 109.81 | |||||||||
Forfeited | (508,003) | 113.48 | |||||||||
Outstanding at December 31, 2023 | 10,278,286 | $ | 112.51 |
| | | | | | | | | | |
|
| 2021 |
| 2020 |
| 2019 | | |||
Fair value | | $ | 24.17 | | $ | 14.39 | | $ | 14.50 | |
Risk-free interest rate |
| | 0.8 | % | | 1.3 | % | | 2.5 | % |
Average life of options (years) |
| | 6.0 | | | 6.0 | | | 6.0 | |
Volatility |
| | 23.8 | % | | 19.4 | % | | 19.8 | % |
Dividend yield |
| | 1.5 | % | | 1.6 | % | | 1.7 | % |
2023 | 2022 | 2021 | |||||||||||||||
Fair value | $ | 26.87 | $ | 25.26 | $ | 24.17 | |||||||||||
Risk-free interest rate | 4.0 | % | 1.9 | % | 0.8 | % | |||||||||||
Average life of options (years) | 6.0 | 6.0 | 6.0 | ||||||||||||||
Volatility | 24.4 | % | 23.8 | % | 23.8 | % | |||||||||||
Dividend yield | 1.9 | % | 1.6 | % | 1.5 | % |
57
| | | | | | |
(in millions) |
| 2021 |
| 2020 | ||
2.55% Notes, due 2022 | | $ | 750 | | $ | 750 |
0.875% Notes, due 2023 | | | 1,294 | | | 1,398 |
3.40% Notes, due 2023 | | | 1,050 | | | 1,050 |
5-year term loan due 2024 | | | 521 | | | 577 |
0.10% Notes, due 2024 | | | 670 | | | 724 |
3.875% Notes, due 2025 | | | 500 | | | 500 |
2.95% Notes, due 2025 | | | 1,000 | | | 1,000 |
1.50% Notes, due 2026 | | | 1,294 | | | 1,398 |
3.75% Notes, due 2026 | | | 1,700 | | | 1,700 |
0.375% Notes, due 2027 | | | 670 | | | 724 |
1.15% Notes, due 2028 | | | 650 | | | 650 |
1.40% Notes, due 2030 | | | 650 | | | 650 |
4.75% Notes, due 2036 | | | 1,650 | | | 1,650 |
6.15% Notes, due 2037 | |
| 547 | |
| 547 |
6.00% Notes, due 2039 | |
| 515 | |
| 515 |
5.30% Notes, due 2040 | |
| 694 | |
| 694 |
4.75% Notes, due 2043 | |
| 700 | |
| 700 |
4.90% Notes, due 2046 | | | 3,250 | | | 3,250 |
Unamortized debt issuance costs | | | (78) | | | (87) |
Other, including fair value adjustments relating to interest rate hedge contracts designated as fair value hedges | |
| 23 | |
| 144 |
Total carrying amount of long-term debt | |
| 18,050 | |
| 18,534 |
Less: Current portion | |
| 754 | |
| 7 |
Total long-term portion | | $ | 17,296 | | $ | 18,527 |
(in millions) | 2023 | 2022 | |||||||||
0.875% Notes, due 2023 | $ | — | $ | 1,215 | |||||||
3.40% Notes, due 2023 | — | 1,050 | |||||||||
5-year term loan due 2024 | 419 | 446 | |||||||||
0.10% Notes, due 2024 | 655 | 629 | |||||||||
2.95% Notes, due 2025 | 1,000 | 1,000 | |||||||||
3.875% Notes, due 2025 | 500 | 500 | |||||||||
1.50% Notes, due 2026 | 1,266 | 1,215 | |||||||||
3.75% Notes, due 2026 | 1,700 | 1,700 | |||||||||
0.375% Notes, due 2027 | 655 | 629 | |||||||||
1.15% Notes, due 2028 | 650 | 650 | |||||||||
1.40% Notes, due 2030 | 650 | 650 | |||||||||
4.75% Notes, due 2036 | 1,650 | 1,650 | |||||||||
6.15% Notes, due 2037 | 547 | 547 | |||||||||
6.00% Notes, due 2039 | 515 | 515 | |||||||||
5.30% Notes, due 2040 | 694 | 694 | |||||||||
4.75% Notes, due 2043 | 700 | 700 | |||||||||
4.90% Notes, due 2046 | 3,250 | 3,250 | |||||||||
Unamortized debt issuance costs | (56) | (71) | |||||||||
Other, including fair value adjustments relating to interest rate hedge contracts designated as fair value hedges | (116) | (196) | |||||||||
Total carrying amount of long-term debt | 14,679 | 16,773 | |||||||||
Less: Current portion | 1,080 | 2,251 | |||||||||
Total long-term portion | $ | 13,599 | $ | 14,522 | |||||||
On September 28, 2020,November 30, 2023, Abbott repaid the €1.140$1.05 billion outstanding principal amount of its 0.00%3.40% Notes due 2020upon maturity. On September 27, 2023, Abbott repaid the €1.14 billion outstanding principal amount of its 0.875% Notes upon maturity. The repayment equated to approximately $1.3$1.2 billion.
In September 2023, Abbott repaid approximately $197 million of debt assumed as part of a recent business acquisition. On March 15, 2022, Abbott repaid the $750 million outstanding principal amount of its 2.55% Notes upon maturity.
In 2019, Abbott’s long-term borrowings and debt issuance included the following:
58
Note 910 — Debt and Lines of Credit (Continued)
In 2019, Abbott’s repayment of long-term debt included the following:
The 2.80% Notes were redeemed under a bond redemption authorization approved by the board of directors in 2018. The 2.9% Notes were redeemed under a bond redemption authorization approved by the board of directors in September 2019 for the early redemption of up to $5 billion of outstanding long-term notes. The 2019 bond redemption authorization superseded the board’s 2018 authorization. Of the $5 billion authorization, $2.15 billion remains available as of December 31, 2021.
Principal payments required on long-term debt outstanding at December 31, 20212023 are $754 million in 2022, $2.3 billion in 2023, $1.2$1.1 billion in 2024, $1.5 billion in 2025, $3.0 billion in 2026, $656 million in 2027, $651 million in 2028 and $9.3$8.0 billion in 20272029 and thereafter.
In December 2021,Moody’s Investors Service. Abbott repaid a short-term facility for approximately $195 million. After the repayment, Abbott has 0 short-term borrowings. Abbott’s weighted-average interest rate on short-term borrowings was 0.4% at December 31, 2020 and 2019.
expects to maintain an investment grade rating.
59
Abbott Laboratories and Subsidiaries
Notes to Consolidated Financial Statements (Continued)
Note 10 — Leases (Continued)
The following table provides information related to Abbott’s operating leases:
(in millions, except weighted averages) | 2023 | 2022 | 2021 | |||||||||||||||||
Operating lease cost (a) | $ | 356 | $ | 355 | $ | 359 | ||||||||||||||
Cash paid for amounts included in the measurement of operating lease liabilities | 276 | 274 | 287 | |||||||||||||||||
ROU assets arising from entering into new operating lease obligations | 253 | 263 | 343 | |||||||||||||||||
Weighted average remaining lease term at December 31 (in years) | 7 | 8 | 8 | |||||||||||||||||
Weighted average discount rate at December 31 | 3.4 | % | 2.9 | % | 2.7 | % |
| | | | | | | | | | |
(in millions, except weighted averages) |
| 2021 |
| 2020 | | 2019 | | |||
Operating lease cost (a) | | $ | 359 | | $ | 329 | | $ | 314 | |
Cash paid for amounts included in the measurement of operating lease liabilities | | | 287 | | | 264 | | | 253 | |
ROU assets arising from entering into new operating lease obligations | | | 343 | | | 396 | | | 310 | |
Weighted average remaining lease term at December 31 (in years) | | | 8 | | | 8 | | | 8 | |
Weighted average discount rate at December 31 | | | 2.7 | % | | 3.2 | % | | 3.9 | % |
(a) | Includes short-term lease expense and variable lease costs, which were immaterial in the years ended December 31, |
Future minimum lease payments under non-cancellable operating leases as of December 31, 20212023 were as follows:
(in millions) | ||||||||
2024 | $ | 278 | ||||||
2025 | 246 | |||||||
2026 | 206 | |||||||
2027 | 146 | |||||||
2028 | 110 | |||||||
Thereafter | 376 | |||||||
Total future minimum lease payments – undiscounted | 1,362 | |||||||
Less: imputed interest | (168) | |||||||
Present value of lease liabilities | $ | 1,194 |
| | | |
(in millions) |
| | |
2022 | | $ | 272 |
2023 | |
| 234 |
2024 | |
| 178 |
2025 | |
| 142 |
2026 | |
| 118 |
Thereafter | |
| 407 |
Total future minimum lease payments – undiscounted | |
| 1,351 |
Less: imputed interest | |
| (150) |
Present value of lease liabilities | | $ | 1,201 |
| | | | | | | | |
(in millions) |
| December 31, 2021 |
| December 31, 2020 |
| Balance Sheet Caption | ||
| | | | | | | | |
Operating Lease - ROU Asset | | $ | 1,153 | | $ | 1,101 | | Deferred income taxes and other assets |
| | | | | | | | |
Operating Lease Liability: | |
| | | | | |
|
Current | | $ | 245 | | $ | 241 | | Other accrued liabilities |
Non-current | |
| 956 | | | 902 | | Post-employment obligations and other long-term liabilities |
Total Liability | | $ | 1,201 | | $ | 1,143 | |
|
60
(in millions) | December 31, 2023 | December 31, 2022 | Balance Sheet Caption | |||||||||||||||||
Operating Lease - ROU Asset | $ | 1,122 | $ | 1,116 | Deferred income taxes and other assets | |||||||||||||||
Operating Lease Liability: | ||||||||||||||||||||
Current | $ | 245 | $ | 230 | Other accrued liabilities | |||||||||||||||
Non-current | 949 | 943 | Post-employment obligations and other long-term liabilities | |||||||||||||||||
Total Liability | $ | 1,194 | $ | 1,173 |
Abbott Laboratories and Subsidiaries
Notes to Consolidated Financial Statements (Continued)
Note 10 — Leases (Continued)
Leases where Abbott is the Lessor
2021.
2022.
In November 2019,
61
Abbott Laboratories and Subsidiaries
Notes to Consolidated Financial Statements (Continued)
Note 11 — Financial Instruments, Derivatives and Fair Value Measures (Continued)
Abbott is a party to interest rate hedge contracts totaling approximately $2.9 billion at December 31, 2021 and 2020, 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.
Abbott had interest rate contracts totaling approximately $2.2 billion at December 31, 2023 and
| | | | | | | | | | | | | | | | |
| | Fair Value — Assets | | Fair Value — Liabilities | ||||||||||||
(in millions) |
| 2021 |
| 2020 |
| Balance Sheet Caption |
| 2021 |
| 2020 |
| Balance Sheet Caption | ||||
Interest rate swaps designated as fair value hedges | | $ | 87 | | $ | 210 |
| Deferred income taxes and other assets | | $ | — | | $ | — |
| Post-employment obligations and other long-term liabilities |
Foreign currency forward exchange contracts: | | | | | | | | | | | | | | | | |
Hedging instruments | |
| 222 | |
| 30 |
| Other prepaid expenses and receivables | |
| 65 | |
| 433 |
| Other accrued liabilities |
Others not designated as hedges | |
| 70 | |
| 60 | | Other prepaid expenses and receivables | |
| 32 | |
| 65 | | Other accrued liabilities |
Debt designated as a hedge of net investment in a foreign subsidiary | | | — | | | — | | n/a | | | 521 | | | 577 | | Long-term debt |
| | $ | 379 | | $ | 300 | | | | $ | 618 | | $ | 1,075 | | |
Fair Value — Assets | Fair Value — Liabilities | |||||||||||||||||||||||||||||||||||||
(in millions) | 2023 | 2022 | Balance Sheet Caption | 2023 | 2022 | Balance Sheet Caption | ||||||||||||||||||||||||||||||||
Interest rate swaps designated as fair value hedges: | ||||||||||||||||||||||||||||||||||||||
Non-current | $ | — | $ | — | Deferred income taxes and other assets | $ | 95 | $ | 136 | Post-employment obligations and other long-term liabilities | ||||||||||||||||||||||||||||
Current | — | — | Other prepaid expenses and receivables | — | 20 | Other accrued liabilities | ||||||||||||||||||||||||||||||||
Foreign currency forward exchange contracts: | ||||||||||||||||||||||||||||||||||||||
Hedging instruments | 88 | 304 | Other prepaid expenses and receivables | 134 | 96 | Other accrued liabilities | ||||||||||||||||||||||||||||||||
Others not designated as hedges | 81 | 108 | Other prepaid expenses and receivables | 97 | 130 | Other accrued liabilities | ||||||||||||||||||||||||||||||||
Debt designated as a hedge of net investment in a foreign subsidiary | — | — | n/a | 419 | 446 | Current portion of long-term debt (Long-term debt in 2022) | ||||||||||||||||||||||||||||||||
$ | 169 | $ | 412 | $ | 745 | $ | 828 |
| | | | | | | | | | | | | | | | | | | | |
| | Gain (loss) Recognized in | | Income (expense) and | | | ||||||||||||||
| | Other Comprehensive | | Gain (loss) Reclassified | | | ||||||||||||||
| | Income (loss) | | into Income | | | ||||||||||||||
(in millions) |
| 2021 |
| 2020 |
| 2019 |
| 2021 |
| 2020 |
| 2019 |
| Income Statement Caption | ||||||
Foreign currency forward exchange contracts designated as cash flow hedges | | $ | 164 | | $ | (207) | | $ | 9 | | $ | (252) | | $ | 102 | | $ | 79 | | Cost of products sold |
Debt designated as a hedge of net investment in a foreign subsidiary | |
| 56 | |
| (31) | |
| 4 | |
| n/a | |
| n/a | |
| n/a |
| n/a |
Interest rate swaps designated as fair value hedges | |
| n/a | |
| n/a | |
| n/a | |
| (123) | |
| 162 | |
| 148 |
| Interest expense |
Gain (loss) Recognized in Other Comprehensive Income (loss) | Income (expense) and Gain (loss) Reclassified into Income | |||||||||||||||||||||||||||||||||||||||||||
(in millions) | 2023 | 2022 | 2021 | 2023 | 2022 | 2021 | Income Statement Caption | |||||||||||||||||||||||||||||||||||||
Foreign currency forward exchange contracts designated as cash flow hedges | $ | (22) | $ | 281 | $ | 164 | $ | 187 | $ | 234 | $ | (252) | Cost of products sold | |||||||||||||||||||||||||||||||
Debt designated as a hedge of net investment in a foreign subsidiary | 27 | 75 | 56 | n/a | n/a | n/a | n/a | |||||||||||||||||||||||||||||||||||||
Interest rate swaps designated as fair value hedges | n/a | n/a | n/a | 61 | (243) | (123) | Interest expense |
62
Abbott Laboratories and Subsidiaries
Notes to Consolidated Financial Statements (Continued)
Note 11 — Financial Instruments, Derivatives and Fair Value Measures (Continued)
The carrying values and fair values of certain financial instruments as of December 31 are shown in the table below. The carrying values of all other financial instruments approximate their estimated fair values. The counterparties to
| | | | | | | | | | | | |
| | 2021 | | 2020 | ||||||||
| | Carrying | | Fair | | Carrying | | Fair | ||||
(in millions) |
| Value |
| Value |
| Value |
| Value | ||||
Long-term Investment Securities: | | | | | | | | | | | | |
Equity securities | | $ | 748 | | $ | 748 | | $ | 776 | | $ | 776 |
Other | |
| 68 | |
| 68 | |
| 45 | |
| 45 |
Total long-term debt | |
| (18,050) | |
| (21,152) | |
| (18,534) | |
| (22,809) |
Foreign Currency Forward Exchange Contracts: | | | | | | | | | | | | |
Receivable position | |
| 292 | |
| 292 | |
| 90 | |
| 90 |
(Payable) position | |
| (97) | |
| (97) | |
| (498) | |
| (498) |
Interest Rate Hedge Contracts: | | | | | | | | | | | | |
Receivable position | |
| 87 | |
| 87 | |
| 210 | |
| 210 |
(Payable) position | | | — | | | — | | | — | | | — |
2023 | 2022 | |||||||||||||||||||||||||
(in millions) | Carrying Value | Fair Value | Carrying Value | Fair Value | ||||||||||||||||||||||
Long-term Investment Securities: | ||||||||||||||||||||||||||
Equity securities | $ | 555 | $ | 555 | $ | 558 | $ | 558 | ||||||||||||||||||
Other | 244 | 244 | 208 | 208 | ||||||||||||||||||||||
Total long-term debt | (14,679) | (14,769) | (16,773) | (16,313) | ||||||||||||||||||||||
Foreign Currency Forward Exchange Contracts: | ||||||||||||||||||||||||||
Receivable position | 169 | 169 | 412 | 412 | ||||||||||||||||||||||
(Payable) position | (231) | (231) | (226) | (226) | ||||||||||||||||||||||
Interest Rate Hedge Contracts: | ||||||||||||||||||||||||||
(Payable) position | (95) | (95) | (156) | (156) |
���
| | | | | | | | | | | | |
| | | | | | | | | | | | |
| | | | | Basis of Fair Value Measurement | |||||||
| | | | | Quoted | | Significant | | | |||
| | | | | Prices in | | Other | | Significant | |||
| | Outstanding | | Active | | Observable | | Unobservable | ||||
(in millions) |
| Balances |
| Markets |
| Inputs |
| Inputs | ||||
December 31, 2021: | | | | | | | | | | | | |
Equity securities | | $ | 402 | | $ | 402 | | $ | — | | $ | — |
Interest rate swap derivative financial instruments | |
| 87 | |
| — | |
| 87 | |
| — |
Foreign currency forward exchange contracts | |
| 292 | |
| — | |
| 292 | |
| — |
Total Assets | | $ | 781 | | $ | 402 | | $ | 379 | | $ | — |
| | | | | | | | | | | | |
Fair value of hedged long-term debt | | $ | 2,926 | | $ | — | | $ | 2,926 | | $ | — |
Foreign currency forward exchange contracts | |
| 97 | |
| — | |
| 97 | |
| — |
Contingent consideration related to business combinations | |
| 130 | |
| — | |
| — | |
| 130 |
Total Liabilities | | $ | 3,153 | | $ | — | | $ | 3,023 | | $ | 130 |
| | | | | | | | | | | | |
December 31, 2020: | | | | | | | | | | | | |
Equity securities | | $ | 386 | | $ | 386 | | $ | — | | $ | — |
Interest rate swap derivative financial instruments | | | 210 | | | — | | | 210 | | | — |
Foreign currency forward exchange contracts | |
| 90 | |
| — | |
| 90 | |
| — |
Total Assets | | $ | 686 | | $ | 386 | | $ | 300 | | $ | — |
| | | | | | | | | | | | |
Fair value of hedged long-term debt | | $ | 3,049 | | $ | — | | $ | 3,049 | | $ | — |
Foreign currency forward exchange contracts | |
| 498 | |
| — | |
| 498 | |
| — |
Contingent consideration related to business combinations | |
| 68 | |
| — | |
| — | |
| 68 |
Total Liabilities | | $ | 3,615 | | $ | — | | $ | 3,547 | | $ | 68 |
63
Basis of Fair Value Measurement | ||||||||||||||||||||||||||
(in millions) | Outstanding Balances | Quoted Prices in Active Markets | Significant Other Observable Inputs | Significant Unobservable Inputs | ||||||||||||||||||||||
December 31, 2023: | ||||||||||||||||||||||||||
Equity securities | $ | 326 | $ | 326 | $ | — | $ | — | ||||||||||||||||||
Foreign currency forward exchange contracts | 169 | — | 169 | — | ||||||||||||||||||||||
Total Assets | $ | 495 | $ | 326 | $ | 169 | $ | — | ||||||||||||||||||
Fair value of hedged long-term debt | $ | 2,052 | $ | — | $ | 2,052 | $ | — | ||||||||||||||||||
Interest rate swap derivative financial instruments | 95 | — | 95 | — | ||||||||||||||||||||||
Foreign currency forward exchange contracts | 231 | — | 231 | — | ||||||||||||||||||||||
Contingent consideration related to business combinations | 112 | — | — | 112 | ||||||||||||||||||||||
Total Liabilities | $ | 2,490 | $ | — | $ | 2,378 | $ | 112 | ||||||||||||||||||
December 31, 2022: | ||||||||||||||||||||||||||
Equity securities | $ | 307 | $ | 307 | $ | — | $ | — | ||||||||||||||||||
Foreign currency forward exchange contracts | 412 | — | 412 | — | ||||||||||||||||||||||
Total Assets | $ | 719 | $ | 307 | $ | 412 | $ | — | ||||||||||||||||||
Fair value of hedged long-term debt | $ | 2,691 | $ | — | $ | 2,691 | $ | — | ||||||||||||||||||
Interest rate swap derivative financial instruments | 156 | — | 156 | — | ||||||||||||||||||||||
Foreign currency forward exchange contracts | 226 | — | 226 | — | ||||||||||||||||||||||
Contingent consideration related to business combinations | 130 | — | — | 130 | ||||||||||||||||||||||
Total Liabilities | $ | 3,203 | $ | — | $ | 3,073 | $ | 130 |
Note 1112 — Financial Instruments, Derivatives and Fair Value Measures (Continued)
64
Abbott Laboratories and Subsidiaries
| | | | | | | | | | | | |
| | | | | | | | Medical and Dental | ||||
| | Defined Benefit Plans | | Plans | ||||||||
(in millions) |
| 2021 |
| 2020 |
| 2021 |
| 2020 | ||||
Projected benefit obligations, January 1 | | $ | 13,129 | | $ | 11,238 | | $ | 1,567 | | $ | 1,556 |
Service cost — benefits earned during the year | |
| 391 | |
| 336 | |
| 56 | |
| 46 |
Interest cost on projected benefit obligations | |
| 248 | |
| 300 | |
| 33 | |
| 42 |
(Gains) losses, primarily changes in discount rates, plan design changes, law changes and differences between actual and estimated health care costs | |
| (463) | |
| 1,305 | |
| (16) | |
| (5) |
Benefits paid | |
| (340) | |
| (327) | |
| (74) | |
| (73) |
Other, including foreign currency translation | |
| (192) | |
| 277 | |
| — | |
| 1 |
Projected benefit obligations, December 31 | | $ | 12,773 | | $ | 13,129 | | $ | 1,566 | | $ | 1,567 |
Plan assets at fair value, January 1 | | $ | 12,018 | | $ | 10,277 | | $ | 353 | | $ | 360 |
Actual return (loss) on plan assets | |
| 1,521 | |
| 1,463 | |
| 56 | |
| 46 |
Company contributions | |
| 418 | |
| 400 | |
| 35 | |
| 20 |
Benefits paid | |
| (340) | |
| (327) | |
| (74) | |
| (73) |
Other, including foreign currency translation | |
| (149) | |
| 205 | |
| — | |
| — |
Plan assets at fair value, December 31 | | $ | 13,468 | | $ | 12,018 | | $ | 370 | | $ | 353 |
Projected benefit obligations less (greater) than plan assets, December 31 | | $ | 695 | | $ | (1,111) | | $ | (1,196) | | $ | (1,214) |
Long-term assets | | $ | 2,270 | | $ | 824 | | $ | — | | $ | — |
Short-term liabilities | |
| (31) | |
| (29) | |
| (2) | |
| (1) |
Long-term liabilities | |
| (1,544) | |
| (1,906) | |
| (1,194) | |
| (1,213) |
Net asset (liability) | | $ | 695 | | $ | (1,111) | | $ | (1,196) | | $ | (1,214) |
Amounts Recognized in Accumulated Other Comprehensive Income (loss): | | | | | | | | | | | | |
Actuarial losses, net | | $ | 3,062 | | $ | 4,559 | | $ | 412 | | $ | 486 |
Prior service cost (credits) | |
| (5) | |
| (5) | |
| (39) | |
| (67) |
Total | | $ | 3,057 | | $ | 4,554 | | $ | 373 | | $ | 419 |
Defined Benefit Plans | Medical and Dental Plans | |||||||||||||||||||||||||
(in millions) | 2023 | 2022 | 2023 | 2022 | ||||||||||||||||||||||
Projected benefit obligations, January 1 | $ | 9,167 | $ | 12,773 | $ | 1,126 | $ | 1,566 | ||||||||||||||||||
Service cost — benefits earned during the year | 230 | 374 | 38 | 50 | ||||||||||||||||||||||
Interest cost on projected benefit obligations | 455 | 300 | 59 | 36 | ||||||||||||||||||||||
(Gains) losses, primarily changes in discount rates, plan design changes, law changes and differences between actual and estimated health care costs | 458 | (3,645) | 35 | (437) | ||||||||||||||||||||||
Benefits paid | (377) | (368) | (77) | (70) | ||||||||||||||||||||||
Other, including foreign currency translation | 97 | (267) | — | (19) | ||||||||||||||||||||||
Projected benefit obligations, December 31 | $ | 10,030 | $ | 9,167 | $ | 1,181 | $ | 1,126 | ||||||||||||||||||
Plan assets at fair value, January 1 | $ | 11,373 | $ | 13,468 | $ | 302 | $ | 370 | ||||||||||||||||||
Actual return (loss) on plan assets | 1,611 | (1,856) | 26 | (33) | ||||||||||||||||||||||
Company contributions | 349 | 413 | 37 | 35 | ||||||||||||||||||||||
Benefits paid | (377) | (368) | (77) | (70) | ||||||||||||||||||||||
Other, including foreign currency translation | 129 | (284) | — | — | ||||||||||||||||||||||
Plan assets at fair value, December 31 | $ | 13,085 | $ | 11,373 | $ | 288 | $ | 302 | ||||||||||||||||||
Projected benefit obligations less (greater) than plan assets, December 31 | $ | 3,055 | $ | 2,206 | $ | (893) | $ | (824) | ||||||||||||||||||
Long-term assets | $ | 4,164 | $ | 3,200 | $ | — | $ | — | ||||||||||||||||||
Short-term liabilities | (36) | (32) | (2) | (2) | ||||||||||||||||||||||
Long-term liabilities | (1,073) | (962) | (891) | (822) | ||||||||||||||||||||||
Net asset (liability) | $ | 3,055 | $ | 2,206 | $ | (893) | $ | (824) | ||||||||||||||||||
Amounts Recognized in Accumulated Other Comprehensive Income (loss): | ||||||||||||||||||||||||||
Actuarial losses, net | $ | 1,751 | $ | 1,960 | $ | 62 | $ | 27 | ||||||||||||||||||
Prior service costs (credits) | 6 | (6) | (22) | (33) | ||||||||||||||||||||||
Total | $ | 1,757 | $ | 1,954 | $ | 40 | $ | (6) |
| | | | | | |
(in millions) |
| 2021 |
| 2020 | ||
Projected benefit obligation | | $ | 2,632 | | $ | 8,946 |
Fair value of plan assets | |
| 1,057 | |
| 7,010 |
65
(in millions) | 2023 | 2022 | ||||||||||||
Projected benefit obligation | $ | 1,314 | $ | 1,270 | ||||||||||
Fair value of plan assets | 205 | 276 |
| | | | | | |
(in millions) |
| 2021 |
| 2020 | ||
Accumulated benefit obligation | | $ | 1,406 | | $ | 2,459 |
Projected benefit obligation | |
| 1,554 | |
| 2,773 |
Fair value of plan assets | |
| 136 | |
| 965 |
(in millions) | 2023 | 2022 | ||||||||||||
Accumulated benefit obligation | $ | 1,175 | $ | 1,044 | ||||||||||
Projected benefit obligation | 1,248 | 1,134 | ||||||||||||
Fair value of plan assets | 144 | 141 |
Defined Benefit Plans | Medical and Dental Plans | |||||||||||||||||||||||||||||||||||||
(in millions) | 2023 | 2022 | 2021 | 2023 | 2022 | 2021 | ||||||||||||||||||||||||||||||||
Service cost — benefits earned during the year | $ | 230 | $ | 374 | $ | 391 | $ | 38 | $ | 50 | $ | 56 | ||||||||||||||||||||||||||
Interest cost on projected benefit obligations | 455 | 300 | 248 | 59 | 36 | 33 | ||||||||||||||||||||||||||||||||
Expected return on plans’ assets | (971) | (931) | (843) | (23) | (30) | (27) | ||||||||||||||||||||||||||||||||
Amortization of actuarial losses (gains) | 11 | 231 | 317 | (2) | 11 | 29 | ||||||||||||||||||||||||||||||||
Amortization of prior service costs (credits) | 1 | 1 | 1 | (13) | (24) | (28) | ||||||||||||||||||||||||||||||||
Total net cost (income) | $ | (274) | $ | (25) | $ | 114 | $ | 59 | $ | 43 | $ | 63 |
| | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | Medical and | |||||||
| | Defined Benefit Plans | | Dental Plans | ||||||||||||||
(in millions) |
| 2021 |
| 2020 |
| 2019 | | 2021 |
| 2020 |
| 2019 | ||||||
Service cost — benefits earned during the year | | $ | 391 | | $ | 336 | | $ | 250 | | $ | 56 | | $ | 46 | | $ | 23 |
Interest cost on projected benefit obligations | |
| 248 | |
| 300 | |
| 337 | |
| 33 | |
| 42 | |
| 52 |
Expected return on plans’ assets | |
| (843) | |
| (770) | |
| (710) | |
| (27) | |
| (28) | |
| (27) |
Amortization of actuarial losses | |
| 317 | |
| 255 | | | 132 | | | 29 | | | 21 | | | 22 |
Amortization of prior service cost (credits) | | | 1 | | | 1 | | | 1 | | | (28) | | | (28) | | | (32) |
Total net cost | | $ | 114 | | $ | 122 | | $ | 10 | | $ | 63 | | $ | 53 | | $ | 38 |
Other comprehensive income (loss) for each respective year includes the amortization of actuarial losses and prior service costs (credits) as noted in the previous table. Other comprehensive income (loss) for each respective year also includes: net actuarial gains of $1.141$182 million for defined benefit plans and a loss of $33 million for medical and dental plans in 2023; net actuarial gains of $858 million for defined benefit plans and a gain of $374 million for medical and dental plans in 2022, and net actuarial gains of $1.14 billion for defined benefit plans and a gain of $45 million for medical and dental plans in 2021; net actuarial losses of $611 million for defined benefit plans and a gain of $23 million for medical and dental plans in 2020, and net actuarial losses of $944 million for defined benefit plans and a loss of $190 million for medical and dental plans in 2019.2021. The net actuarial gains in 20212023 related to defined benefit plans are primarily due to the favorable impact of actual asset returns in excess of expected returns, andpartially offset by the year-over-year increasedecrease in discount rates. The net actuarial losses in 20202023 related to medical and dental plans are primarily due to the year-over-year declinedecrease in discount rates. The net actuarial gains in 2022 were primarily due to the year-over-year increase in discount rates, partially offset by the impact of 2022 actual asset returns being less than expected returns.The net actuarial gains in 2021 are primarily due to the favorable impact of actual 2021 asset returns in excess of expected returns.
returns and the year-over-year increase in discount rates.
| | | | | | | |
|
| 2021 |
| 2020 |
| 2019 |
|
Discount rate |
| 2.7 | % | 2.3 | % | 3.0 | % |
Expected aggregate average long-term change in compensation |
| 4.3 | % | 4.3 | % | 4.3 | % |
2023 | 2022 | 2021 | |||||||||||||||
Discount rate | 4.8 | % | 5.0 | % | 2.7 | % | |||||||||||
Expected aggregate average long-term change in compensation | 4.6 | % | 4.5 | % | 4.3 | % |
2023 | 2022 | 2021 | |||||||||||||||
Discount rate | 5.0 | % | 2.7 | % | 2.3 | % | |||||||||||
Expected return on plan assets | 7.6 | % | 7.5 | % | 7.5 | % | |||||||||||
Expected aggregate average long-term change in compensation | 4.5 | % | 4.4 | % | 4.3 | % |
| | | | | | | |
|
| 2021 |
| 2020 |
| 2019 |
|
Discount rate |
| 2.3 | % | 3.0 | % | 4.0 | % |
Expected return on plan assets |
| 7.5 | % | 7.5 | % | 7.5 | % |
Expected aggregate average long-term change in compensation |
| 4.3 | % | 4.3 | % | 4.3 | % |
| | | | | | | |
|
| 2021 |
| 2020 |
| 2019 |
|
Health care cost trend rate assumed for the next year |
| 7 | % | 8 | % | 9 | % |
Rate that the cost trend rate gradually declines to |
| 5 | % | 5 | % | 5 | % |
Year that rate reaches the assumed ultimate rate |
| 2026 | | 2025 | | 2025 | |
66
2023 | 2022 | 2021 | |||||||||||||||
Health care cost trend rate assumed for the next year | 8 | % | 7 | % | 7 | % | |||||||||||
Rate that the cost trend rate gradually declines to | 5 | % | 5 | % | 5 | % | |||||||||||
Year that rate reaches the assumed ultimate rate | 2029 | 2027 | 2026 |
Abbott Laboratories and Subsidiaries
Notes to Consolidated Financial Statements (Continued)
Note 13 — Post-Employment Benefits (Continued)
The discount rates used to measure liabilities were determined based on high-quality fixed income securities that match the duration of the expected retiree benefits. The health care cost trend rates represent Abbott’s expected annual rates of change in the cost of health care benefits and are forward projections of health care costs as of the measurement date.
| | | | | | | | | | | | | | | |
| | | | | Basis of Fair Value Measurement | ||||||||||
| | | | | Quoted | | Significant | | | | | | | ||
| | | | | Prices in | | Other | | Significant | | | | |||
| | Outstanding | | Active | | Observable | | Unobservable | | Measured at | |||||
(in millions) |
| Balances |
| Markets |
| Inputs |
| Inputs |
| NAV (j) | |||||
December 31, 2021: | | | | | | | | | | | | | | | |
Equities: | | | | | | | | | | | | | | | |
U.S. large cap (a) | | $ | 3,664 | | $ | 2,403 | | $ | — | | $ | — | | $ | 1,261 |
U.S. mid and small cap (b) | | | 936 | | | 876 | | | — | | | 4 | | | 56 |
International (c) | | | 2,902 | | | 591 | | | — | | | — | | | 2,311 |
Fixed income securities: | | | | | | | | | | | | | | | |
U.S. government securities (d) | | | 366 | | | 21 | | | 325 | | | — | | | 20 |
Corporate debt instruments (e) | | | 1,709 | | | 434 | | | 1,260 | | | — | | | 15 |
Non-U.S. government securities (f) | | | 626 | | | 33 | | | 1 | | | — | | | 592 |
Other (g) | | | 510 | | | 87 | | | 111 | | | — | | | 312 |
Absolute return funds (h) | | | 1,934 | | | 476 | | | — | | | — | | | 1,458 |
Cash and Cash Equivalents | | | 266 | | | 35 | | | — | | | — | | | 231 |
Other (i) | | | 925 | | | 2 | | | — | | | — | | | 923 |
| | $ | 13,838 | | $ | 4,958 | | $ | 1,697 | | $ | 4 | | $ | 7,179 |
December 31, 2020: | | | | | | | | | | | | | | | |
Equities: | | | | | | | | | | | | | | | |
U.S. large cap (a) | | $ | 3,410 | | $ | 2,202 | | $ | — | | $ | — | | $ | 1,208 |
U.S. mid and small cap (b) | |
| 775 | | | 721 | | | — | | | 3 | | | 51 |
International (c) | |
| 2,654 | | | 542 | | | — | | | — | | | 2,112 |
Fixed income securities: | | | | | | | | | | | | | | | |
U.S. government securities (d) | |
| 475 | | | 23 | | | 289 | | | — | | | 163 |
Corporate debt instruments (e) | |
| 1,408 | | | 425 | | | 908 | | | — | | | 75 |
Non-U.S. government securities (f) | |
| 523 | | | 16 | | | — | | | — | | | 507 |
Other (g) | |
| 503 | | | 159 | | | 72 | | | — | | | 272 |
Absolute return funds (h) | |
| 1,618 | | | 462 | | | — | | | — | | | 1,156 |
Cash and Cash Equivalents | | | 281 | | | 19 | | | — | | | — | | | 262 |
Other (i) | |
| 724 | | | 9 | | | — | | | — | | | 715 |
| | $ | 12,371 | | $ | 4,578 | | $ | 1,269 | | $ | 3 | | $ | 6,521 |
67
Basis of Fair Value Measurement | ||||||||||||||||||||||||||||||||
(in millions) | Outstanding Balances | Quoted Prices in Active Markets | Significant Other Observable Inputs | Significant Unobservable Inputs | Measured at NAV (j) | |||||||||||||||||||||||||||
December 31, 2023 | ||||||||||||||||||||||||||||||||
Equities: | ||||||||||||||||||||||||||||||||
U.S. large cap (a) | $ | 3,425 | $ | 2,305 | $ | — | $ | — | $ | 1,120 | ||||||||||||||||||||||
U.S. mid and small cap (b) | 814 | 807 | — | 1 | 6 | |||||||||||||||||||||||||||
International (c) | 2,725 | 493 | — | — | 2,232 | |||||||||||||||||||||||||||
Fixed income securities: | ||||||||||||||||||||||||||||||||
U.S. government securities (d) | 391 | 5 | 371 | — | 15 | |||||||||||||||||||||||||||
Corporate debt instruments (e) | 1,519 | 125 | 1,055 | — | 339 | |||||||||||||||||||||||||||
Non-U.S. government securities (f) | 586 | 36 | 3 | — | 547 | |||||||||||||||||||||||||||
Other (g) | 863 | 322 | 106 | — | 435 | |||||||||||||||||||||||||||
Absolute return funds (h) | 1,669 | 270 | — | — | 1,399 | |||||||||||||||||||||||||||
Cash and Cash Equivalents | 276 | 16 | — | — | 260 | |||||||||||||||||||||||||||
Other (i) | 1,105 | 5 | — | — | 1,100 | |||||||||||||||||||||||||||
$ | 13,373 | $ | 4,384 | $ | 1,535 | $ | 1 | $ | 7,453 | |||||||||||||||||||||||
December 31, 2022 | ||||||||||||||||||||||||||||||||
Equities: | ||||||||||||||||||||||||||||||||
U.S. large cap (a) | $ | 2,866 | $ | 1,840 | $ | — | $ | — | $ | 1,026 | ||||||||||||||||||||||
U.S. mid and small cap (b) | 693 | 684 | — | 1 | 8 | |||||||||||||||||||||||||||
International (c) | 2,401 | 454 | — | — | 1,947 | |||||||||||||||||||||||||||
Fixed income securities: | ||||||||||||||||||||||||||||||||
U.S. government securities (d) | 362 | 5 | 341 | — | 16 | |||||||||||||||||||||||||||
Corporate debt instruments (e) | 1,318 | 123 | 890 | — | 305 | |||||||||||||||||||||||||||
Non-U.S. government securities (f) | 419 | 16 | — | — | 403 | |||||||||||||||||||||||||||
Other (g) | 775 | 297 | 75 | — | 403 | |||||||||||||||||||||||||||
Absolute return funds (h) | 1,678 | 304 | — | — | 1,374 | |||||||||||||||||||||||||||
Cash and Cash Equivalents | 154 | 20 | — | — | 134 | |||||||||||||||||||||||||||
Other (i) | 1,009 | 7 | — | — | 1,002 | |||||||||||||||||||||||||||
$ | 11,675 | $ | 3,750 | $ | 1,306 | $ | 1 | $ | 6,618 |
Note 1314 — Post-Employment Benefits (Continued)
68
Abbott Laboratories and Subsidiaries
Notes to Consolidated Financial Statements (Continued)
Note 13 — Post-Employment Benefits (Continued)
Total benefit payments expected to be paid to participants, which includes payments funded from company assets, as well as paid from the plans, are as follows:
| | | | | | |
| | Defined | | Medical and | ||
(in millions) |
| Benefit Plans |
| Dental Plans | ||
2022 | | $ | 350 | | $ | 75 |
2023 | | | 365 | | | 75 |
2024 | | | 387 | | | 77 |
2025 | | | 408 | | | 78 |
2026 | | | 429 | | | 79 |
2027 to 2031 | | | 2,485 | | | 410 |
(in millions) | Defined Benefit Plans | Medical and Dental Plans | ||||||||||||
2024 | $ | 395 | $ | 65 | ||||||||||
2025 | 414 | 67 | ||||||||||||
2026 | 434 | 70 | ||||||||||||
2027 | 457 | 73 | ||||||||||||
2028 | 479 | 77 | ||||||||||||
2029 to 2033 | 2,757 | 425 |
2021.
In 2021, taxes
In 2020, taxes on earnings from continuing operations include the recognition of approximately $170 million of tax benefits associated with the impairment of certain assets, approximately $140 million of net tax benefits as2021, respectively. As a result of the resolution of various tax positions related to prior years, and approximately $100 million in excess tax benefits associated with share-based compensation. In 2020, taxes on earnings from continuing operationsin 2023, 2022 and 2021 also include a $26approximately $80 million increase to the transition tax liability associated with the 2017 TCJA. The $26and $20 million increase to the transition tax liability was the result of the resolution of various tax positions related to prior years. This adjustment increased the cumulative net tax expense related to theand $55 million of net tax benefits, respectively.
Undistributed foreign earnings remain indefinitely reinvested in foreign operations. Determining the amount of unrecognized deferred tax liability related to any remaining undistributed foreign earnings not subject to the transition tax and additional outside basis difference in its foreign entities is not practicable.
69
The Organization for Economic Cooperation & Development (OECD) has proposed a two-pillared plan for a revised international tax system. Pillar 1 proposes to reallocate taxing rights among the jurisdictions in which in-scope multinational corporations operate. Abbott Laboratoriesis continuing to analyze the Pillar 1 proposal. Pillar 2 proposes to assess a 15 percent minimum tax on the earnings of in-scope multinational corporations on a country-by-country basis. Numerous countries have enacted legislation to adopt the Pillar 2 model rules with a subset of the rules becoming effective January 1, 2024, and Subsidiaries
Notesthe remaining rules becoming effective January 1, 2025, or in later periods. Abbott is also continuing to analyze the Pillar 2 model rules. Implementation of the OECD proposal may have a material impact on Abbott’s Consolidated Financial Statements (Continued)
Note 14 — Taxes on Earnings from Continuing Operations (Continued)
Earnings from continuing operations before taxes, and the related provisions for taxes on earnings, from continuing operations, were as follows:
(in millions) | 2023 | 2022 | 2021 | |||||||||||||||||
Earnings Before Taxes: | ||||||||||||||||||||
Domestic | $ | 1,192 | $ | 3,732 | $ | 3,264 | ||||||||||||||
Foreign | 5,472 | 4,574 | 4,947 | |||||||||||||||||
Total | $ | 6,664 | $ | 8,306 | $ | 8,211 |
| | | | | | | | | |
(in millions) |
| 2021 |
| 2020 |
| 2019 | |||
Earnings From Continuing Operations Before Taxes: | | | | | | | | | |
Domestic | | $ | 3,264 | | $ | 1,588 | | $ | 889 |
Foreign | |
| 4,947 | |
| 3,380 | | | 3,188 |
Total | | $ | 8,211 | | $ | 4,968 | | $ | 4,077 |
| | | | | | | | | |
(in millions) |
| 2021 |
| 2020 |
| 2019 | |||
Taxes on Earnings From Continuing Operations: |
| | |
| | | | | |
Current: | | | | | | | | | |
Domestic | | $ | 859 | | $ | 39 | | $ | 291 |
Foreign | |
| 790 | |
| 566 | | | 590 |
Total current | |
| 1,649 | |
| 605 | | | 881 |
Deferred: | | | | | | | | | |
Domestic | |
| (355) | |
| (18) | | | (305) |
Foreign | |
| (154) | |
| (90) | | | (186) |
Total deferred | |
| (509) | |
| (108) | | | (491) |
Total | | $ | 1,140 | | $ | 497 | | $ | 390 |
(in millions) | 2023 | 2022 | 2021 | |||||||||||||||||
Taxes on Earnings: | ||||||||||||||||||||
Current: | ||||||||||||||||||||
Domestic | $ | 528 | $ | 1,309 | $ | 859 | ||||||||||||||
Foreign | 874 | 723 | 790 | |||||||||||||||||
Total current | 1,402 | 2,032 | 1,649 | |||||||||||||||||
Deferred: | ||||||||||||||||||||
Domestic | (382) | (610) | (355) | |||||||||||||||||
Foreign | (79) | (49) | (154) | |||||||||||||||||
Total deferred | (461) | (659) | (509) | |||||||||||||||||
Total | $ | 941 | $ | 1,373 | $ | 1,140 |
2023 | 2022 | 2021 | |||||||||||||||
Statutory tax rate on earnings | 21.0 | % | 21.0 | % | 21.0 | % | |||||||||||
Impact of foreign operations | (3.6) | (2.5) | (3.9) | ||||||||||||||
Foreign-derived intangible income benefit | (2.2) | (2.0) | (1.1) | ||||||||||||||
Domestic impairment loss | — | — | (0.1) | ||||||||||||||
Excess tax benefits related to stock compensation | (0.3) | (0.5) | (1.7) | ||||||||||||||
Research tax credit | (1.1) | (0.9) | (0.6) | ||||||||||||||
Resolution of certain tax positions pertaining to prior years | 1.2 | 0.2 | (0.7) | ||||||||||||||
Intercompany restructurings and integration | (1.4) | — | 0.1 | ||||||||||||||
State taxes, net of federal benefit | 0.5 | 0.7 | 0.4 | ||||||||||||||
All other, net | — | 0.5 | 0.5 | ||||||||||||||
Effective tax rate on earnings | 14.1 | % | 16.5 | % | 13.9 | % |
| | | | | | | |
|
| 2021 |
| 2020 |
| 2019 |
|
Statutory tax rate on earnings from continuing operations |
| 21.0 | % | 21.0 | % | 21.0 | % |
Impact of foreign operations |
| (3.9) | | (3.3) | | (5.0) | |
Impact of TCJA and other related items | | — | | 0.5 | | (2.1) | |
Foreign-derived intangible income benefit | | (1.1) | | (1.0) | | (2.0) | |
Domestic impairment loss | | (0.1) | | (2.7) | | — | |
Excess tax benefits related to stock compensation | | (1.7) | | (1.9) | | (2.5) | |
Research tax credit | | (0.6) | | (1.0) | | (1.2) | |
Resolution of certain tax positions pertaining to prior years |
| (0.7) | | (2.8) | | — | |
Intercompany restructurings and integration | | 0.1 | | 0.5 | | — | |
State taxes, net of federal benefit |
| 0.4 | | 0.5 | | 0.8 | |
All other, net |
| 0.5 | | 0.2 | | 0.6 | |
Effective tax rate on earnings from continuing operations |
| 13.9 | % | 10.0 | % | 9.6 | % |
70
Abbott Laboratories and Subsidiaries
Notes to Consolidated Financial Statements (Continued)
Note 14 — Taxes on Earnings from Continuing Operations (Continued)
The tax effect of the differences that give rise to deferred tax assets and liabilities were as follows:
| | | | | | |
(in millions) |
| 2021 |
| 2020 | ||
Deferred tax assets: | | | | | | |
Compensation and employee benefits |
| $ | 618 | | $ | 1,003 |
Other, primarily reserves not currently deductible, and NOL’s and credit carryforwards | | | 2,425 | | | 2,483 |
Trade receivable reserves | | | 206 | | | 196 |
Inventory reserves | | | 169 | | | 146 |
Lease liabilities | | | 273 | | | 259 |
Deferred intercompany profit | | | 261 | | | 254 |
Total deferred tax assets before valuation allowance | | | 3,952 | | | 4,341 |
Valuation allowance | | | (1,180) | | | (1,160) |
Total deferred tax assets | | | 2,772 | | | 3,181 |
Deferred tax liabilities: | | | | | | |
Depreciation | | | (330) | | | (297) |
Right of Use lease assets | | | (264) | | | (251) |
Other, primarily the excess of book basis over tax basis of intangible assets | | | (2,364) | | | (2,876) |
Total deferred tax liabilities | | | (2,958) | | | (3,424) |
Total net deferred tax assets (liabilities) |
| $ | (186) | | $ | (243) |
(in millions) | 2023 | 2022 | ||||||||||||
Deferred tax assets: | ||||||||||||||
Compensation and employee benefits | $ | 89 | $ | 230 | ||||||||||
Trade receivable reserves | 221 | 227 | ||||||||||||
Research and development costs | 568 | 319 | ||||||||||||
Inventory reserves | 198 | 187 | ||||||||||||
Lease liabilities | 272 | 263 | ||||||||||||
Deferred intercompany profit | 283 | 260 | ||||||||||||
NOLs, reserves not currently deductible, credit carryforwards and other | 9,922 | 2,402 | ||||||||||||
Total deferred tax assets before valuation allowance | 11,553 | 3,888 | ||||||||||||
Valuation allowance | (8,690) | (1,169) | ||||||||||||
Total deferred tax assets | 2,863 | 2,719 | ||||||||||||
Deferred tax liabilities: | ||||||||||||||
Depreciation | (414) | (376) | ||||||||||||
Right of Use lease assets | (258) | (252) | ||||||||||||
Other, primarily the excess of book basis over tax basis of intangible assets | (1,777) | (2,038) | ||||||||||||
Total deferred tax liabilities | (2,449) | (2,666) | ||||||||||||
Total net deferred tax assets (liabilities) | $ | 414 | $ | 53 |
In 2023, Abbott concluded that the future economic benefit of the incurred losses is no longer remote and therefore, a deferred tax asset was recognized. Abbott also concluded that it is not more likely than not that the tax benefit associated with the deferred tax asset will be realized; therefore, an offsetting valuation allowance was recognized.
| | | | | | |
(in millions) |
| 2021 |
| 2020 | ||
January 1 | | $ | 1,210 | | $ | 1,175 |
Increase due to current year tax positions | |
| 143 | | | 190 |
Increase due to prior year tax positions | |
| 748 | | | 97 |
Decrease due to prior year tax positions | |
| (119) | | | (144) |
Settlements | |
| (35) | | | (27) |
Lapse of statute | | | (39) | | | (81) |
December 31 | | $ | 1,908 | | $ | 1,210 |
The 2021 increase due
(in millions) | 2023 | 2022 | ||||||||||||
January 1 | $ | 2,036 | $ | 1,908 | ||||||||||
Increase due to current year tax positions | 225 | 154 | ||||||||||||
Increase due to prior year tax positions | 1,338 | 108 | ||||||||||||
Decrease due to prior year tax positions | (89) | (115) | ||||||||||||
Settlements | (144) | 3 | ||||||||||||
Lapse of statute | (43) | (22) | ||||||||||||
December 31 | $ | 3,323 | $ | 2,036 |
In 2023, Abbott's unrecognized tax benefits increased by $1.3 billion to $3.32 billion, which includes $2.06 billion attributable to tax positions that, if recognized, would result in a deferred tax asset and a related valuation allowance.
71
Net Sales to External Customers (a) | Operating Earnings (a) | |||||||||||||||||||||||||||||||||||||
(in millions) | 2023 | 2022 | 2021 | 2023 | 2022 | 2021 | ||||||||||||||||||||||||||||||||
Established Pharmaceutical Products | $ | 5,066 | $ | 4,912 | $ | 4,718 | $ | 1,206 | $ | 1,049 | $ | 889 | ||||||||||||||||||||||||||
Nutritional Products | 8,154 | 7,459 | 8,294 | 1,333 | 706 | 1,763 | ||||||||||||||||||||||||||||||||
Diagnostic Products (b) | 9,988 | 16,469 | 15,526 | 2,433 | 6,640 | 6,237 | ||||||||||||||||||||||||||||||||
Medical Devices (b) | 16,887 | 14,802 | 14,485 | 5,306 | 4,436 | 4,533 | ||||||||||||||||||||||||||||||||
Total Reportable Segments | 40,095 | 43,642 | 43,023 | $ | 10,278 | $ | 12,831 | $ | 13,422 | |||||||||||||||||||||||||||||
Other | 14 | 11 | 52 | |||||||||||||||||||||||||||||||||||
Total | $ | 40,109 | $ | 43,653 | $ | 43,075 |
| | | | | | | | | | | | | | | | | | |
| | Net Sales to External Customers (a) | | Operating Earnings (a) | ||||||||||||||
(in millions) |
| 2021 |
| 2020 |
| 2019 |
| 2021 |
| 2020 |
| 2019 | ||||||
Established Pharmaceutical Products | | $ | 4,718 | | $ | 4,303 | | $ | 4,486 | | $ | 889 | | $ | 794 | | $ | 904 |
Nutritional Products | |
| 8,294 | |
| 7,647 | |
| 7,409 | |
| 1,763 | |
| 1,751 | |
| 1,705 |
Diagnostic Products | |
| 15,644 | |
| 10,805 | |
| 7,713 | |
| 6,256 | |
| 3,725 | |
| 1,912 |
Medical Devices | |
| 14,367 | |
| 11,787 | |
| 12,239 | |
| 4,514 | |
| 3,038 | |
| 3,769 |
Total Reportable Segments | |
| 43,023 | |
| 34,542 | |
| 31,487 | | $ | 13,422 | | $ | 9,308 | | $ | 8,290 |
Other | |
| 52 | |
| 66 | |
| 57 | | | | | | | | | |
Total | | $ | 43,075 | | $ | 34,608 | | $ | 31,904 | | | | | | | | | |
(a) | In 2023 and 2022, foreign exchange unfavorably impacted net sales and operating earnings. In 2021, | ||||
(b) | 2022 and |
72
Note 1516 — Segment and Geographic Area Information (Continued)
| | | | | | | | | |
(in millions) |
| 2021 |
| 2020 |
| 2019 | |||
Total Reportable Segment Operating Earnings | | $ | 13,422 | | $ | 9,308 | | $ | 8,290 |
Corporate functions and benefit plan costs | | | (801) | |
| (518) | |
| (468) |
Net interest expense | | | (490) | |
| (500) | |
| (576) |
Loss on extinguishment of debt | | | — | | | — | | | (63) |
Share-based compensation | | | (640) | |
| (546) | |
| (519) |
Amortization of intangible assets | | | (2,047) | |
| (2,132) | |
| (1,936) |
Other, net (b) | | | (1,233) | |
| (644) | |
| (651) |
Earnings from Continuing Operations Before Taxes | | $ | 8,211 | | $ | 4,968 | | $ | 4,077 |
(in millions) | 2023 | 2022 | 2021 | |||||||||||||||||
Total Reportable Segment Operating Earnings | $ | 10,278 | $ | 12,831 | $ | 13,422 | ||||||||||||||
Corporate functions and benefit plan costs | (308) | (509) | (801) | |||||||||||||||||
Net interest expense | (252) | (375) | (490) | |||||||||||||||||
Share-based compensation | (644) | (685) | (640) | |||||||||||||||||
Amortization of intangible assets | (1,966) | (2,013) | (2,047) | |||||||||||||||||
Other, net (c) | (444) | (943) | (1,233) | |||||||||||||||||
Earnings before Taxes | $ | 6,664 | $ | 8,306 | $ | 8,211 |
(c) | Other, net includes |
Depreciation | Additions to Property and Equipment (d) | Total Assets | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
(in millions) | 2023 | 2022 | 2021 | 2023 | 2022 | 2021 | 2023 | 2022 | 2021 | |||||||||||||||||||||||||||||||||||||||||||||||
Established Pharmaceuticals | $ | 104 | $ | 97 | $ | 94 | $ | 185 | $ | 175 | $ | 169 | $ | 3,118 | $ | 2,883 | $ | 2,789 | ||||||||||||||||||||||||||||||||||||||
Nutritionals | 155 | 155 | 151 | 457 | 251 | 174 | 4,270 | 3,625 | 3,425 | |||||||||||||||||||||||||||||||||||||||||||||||
Diagnostics | 499 | 494 | 760 | 750 | 832 | 980 | 7,767 | 7,985 | 7,699 | |||||||||||||||||||||||||||||||||||||||||||||||
Medical Devices | 315 | 311 | 285 | 604 | 335 | 348 | 9,029 | 7,844 | 7,261 | |||||||||||||||||||||||||||||||||||||||||||||||
Total Reportable Segments | 1,073 | 1,057 | 1,290 | 1,996 | 1,593 | 1,671 | $ | 24,184 | $ | 22,337 | $ | 21,174 | ||||||||||||||||||||||||||||||||||||||||||||
Other | 204 | 197 | 201 | 213 | 182 | 201 | ||||||||||||||||||||||||||||||||||||||||||||||||||
Total | $ | 1,277 | $ | 1,254 | $ | 1,491 | $ | 2,209 | $ | 1,775 | $ | 1,872 |
(in millions) | 2023 | 2022 | ||||||||||||
Total Reportable Segment Assets | $ | 24,184 | $ | 22,337 | ||||||||||
Cash and investments | 8,078 | 10,936 | ||||||||||||
Goodwill and intangible assets | 32,494 | 33,253 | ||||||||||||
All other (e) | 8,458 | 7,912 | ||||||||||||
Total Assets | $ | 73,214 | $ | 74,438 |
(d) | Amounts exclude property, plant and |
| | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | Additions to | | | | | | | | | | |||||||
| | Depreciation | | Property and Equipment | | Total Assets | |||||||||||||||||||||
(in millions) |
| 2021 |
| 2020 |
| 2019 |
| 2021 |
| 2020 |
| 2019 |
| 2021 |
| 2020 |
| 2019 | |||||||||
Established Pharmaceuticals | | $ | 94 | | $ | 88 | | $ | 98 | | $ | 169 | | $ | 109 | | $ | 109 | | $ | 2,789 | | $ | 2,888 | | $ | 2,858 |
Nutritionals | | | 151 | |
| 143 | |
| 139 | |
| 174 | |
| 201 | |
| 141 | |
| 3,425 | |
| 3,478 | |
| 3,274 |
Diagnostics | | | 760 | |
| 488 | |
| 403 | |
| 980 | |
| 1,263 | |
| 726 | |
| 7,699 | |
| 7,696 | |
| 5,235 |
Medical Devices | | | 285 | |
| 281 | |
| 266 | |
| 348 | |
| 402 | |
| 532 | |
| 7,261 | |
| 6,893 | |
| 6,640 |
Total Reportable Segments | | | 1,290 | |
| 1,000 | |
| 906 | |
| 1,671 | |
| 1,975 | |
| 1,508 | | $ | 21,174 | | $ | 20,955 | | $ | 18,007 |
Other | | | 201 | |
| 195 | |
| 172 | |
| 201 | |
| 218 | |
| 160 | | | | | | | | | |
Total | | $ | 1,491 | | $ | 1,195 | | $ | 1,078 | | $ | 1,872 | | $ | 2,193 | | $ | 1,668 | | | | | | | | | |
| | | | | | |
(in millions) |
| 2021 |
| 2020 | ||
Total Reportable Segment Assets | | $ | 21,174 | | $ | 20,955 |
Cash and investments | |
| 11,065 | |
| 7,969 |
Goodwill and intangible assets | |
| 35,970 | |
| 38,528 |
All other (c) | |
| 6,987 | |
| 5,096 |
Total Assets | | $ | 75,196 | | $ | 72,548 |
All other includes the long-term assets associated with the defined benefit plans of |
73
Note 1516 — Segment and Geographic Area Information (Continued)
| | | | | | | | | |
| | Net Sales to External | |||||||
| | Customers (d) | |||||||
(in millions) |
| 2021 |
| 2020 |
| 2019 | |||
United States | | $ | 16,642 | | $ | 13,022 | | $ | 11,398 |
Germany | | | 2,572 | | | 2,108 | | | 1,751 |
China | |
| 2,392 | |
| 1,965 | |
| 2,346 |
Japan | |
| 1,695 | |
| 1,386 | |
| 1,435 |
India | | | 1,561 | | | 1,323 | | | 1,397 |
Canada | | | 1,385 | | | 841 | | | 573 |
Switzerland | | | 1,313 | | | 1,140 | | | 1,068 |
All Other Countries | |
| 15,515 | |
| 12,823 | |
| 11,936 |
Consolidated | | $ | 43,075 | | $ | 34,608 | | $ | 31,904 |
Net Sales to External Customers (f) | ||||||||||||||||||||
(in millions) | 2023 | 2022 | 2021 | |||||||||||||||||
United States | $ | 15,452 | $ | 18,142 | $ | 16,642 | ||||||||||||||
Germany | 2,345 | 2,340 | 2,572 | |||||||||||||||||
China | 2,253 | 2,133 | 2,392 | |||||||||||||||||
India | 1,750 | 1,649 | 1,561 | |||||||||||||||||
Switzerland | 1,638 | 1,336 | 1,313 | |||||||||||||||||
Japan | 1,513 | 1,932 | 1,695 | |||||||||||||||||
Netherlands | 1,074 | 1,111 | 1,174 | |||||||||||||||||
All Other Countries | 14,084 | 15,010 | 15,726 | |||||||||||||||||
Consolidated | $ | 40,109 | $ | 43,653 | $ | 43,075 |
(d)Sales by country are based on the country that sold the product.
(f) | Sales by country are based on the country that sold the product. |
74
79.
Robert E. Funck, Jr.
Executive
Philip P. Boudreau
75
76
Critical Audit Matter
| Income taxes – Unrecognized tax benefits | ||||||
Description of the Matter |
| As described in Note | |||||
How We Addressed the Matter in our Audit |
| We obtained an understanding, evaluated the design and tested the operating effectiveness of controls over the Company’s identification and measurement of unrecognized tax benefits, as well as its process for the assessment of events that may indicate a change in unrecognized tax benefits is warranted. For example, we tested controls over management’s review of the completeness of identified unrecognized tax benefits, as well as controls over management’s review of significant assumptions used within the measurement of unrecognized tax benefits. | |||||
With the support of our tax professionals, among other audit procedures performed, we evaluated the reasonableness of management’s |
77
78
79
15, 2024.
Plan Category | (a) Number of securities to be issued upon exercise of outstanding options, warrants and rights | (b) Weighted average exercise price of outstanding options, warrants and rights | (c) Number of securities remaining available for future issuance under equity compensation plans (excluding securities reflected in column (a)) | |||||||||||||||||
Equity compensation plans approved by security holders (1) | 28,569,075 | $ | 74.52 | 82,923,001 | ||||||||||||||||
Equity compensation plans not approved by security holders | — | — | — | |||||||||||||||||
Total (1) | 28,569,075 | $ | 74.52 | 82,923,001 |
| | | | | | | |
|
| |
| | |
| (c) |
| | | | | | | Number of |
| | (a) | | | | | securities remaining |
| | Number of | | | | | available for |
| | securities to be | | | (b) | | future issuance |
| | issued upon | | Weighted average | | under equity | |
| | exercise of | | exercise price | | compensation | |
| | outstanding | | of outstanding | | plans (excluding | |
| | options, warrants | | options, warrants |
| securities reflected | |
Plan Category | | and rights | | and rights |
| in column (a)) | |
Equity compensation plans approved by security holders (1) |
| 26,609,935 | | $ | 65.93 |
| 90,958,732 |
Equity compensation plans not approved by security holders |
| 0 | |
| — |
| 0 |
Total (1)(2) |
| 26,609,935 | | $ | 65.93 |
| 90,958,732 |
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If there is a lapse, expiration, termination, forfeiture or cancellation of any benefit granted under the 2017 Program without the issuance of shares or payment of cash thereunder, the shares subject to or reserved for that benefit, or so reacquired, may again be used for new stock options, rights, or awards of any type authorized under the 2017 Program. If shares are issued under any benefit under the 2017 Program and thereafter are reacquired by Abbott pursuant to rights reserved upon their issuance, or pursuant to the payment of the purchase price of shares under stock options by delivery of other common shares of Abbott, the shares subject to or reserved for that benefit, or so reacquired, may not again be used for new stock options, rights, or awards of any type authorized under the 2017 Program.
Abbott Laboratories Employee Stock Purchase Plan for Non-U.S. Employees. Eligible employees of participating non-U.S. affiliates of Abbott may participate in this plan. An eligible employee may authorize payroll deductions at the rate of 1% to 10% of eligible compensation (in multiples of one percent) subject to a limit of US $12,500 during any purchase cycle.
15, 2024.
81
Abbott Laboratories Financial Statement Schedules | Page No. | ||||||||
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Schedules I, III, IV, and V are not submitted because they are not applicable or not required | |||||||||
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Individual Financial Statements of businesses acquired by the registrant have been omitted pursuant to Rule |
(3)Exhibits Required by Item 601 of Regulation S-K: The information called for by this paragraph is set forth in Item 15(b) below.
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| Other debt instruments are omitted in accordance with Item 601(b)(4)(iii)(A) of Regulation S-K. Copies of such agreements will be furnished to the Securities and Exchange Commission upon request. |
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10.1 | * | Supplemental Plan Abbott Laboratories Extended Disability Plan, filed as an exhibit (pages 50-51) to the 1992 Abbott Laboratories Annual Report on Form 10-K.** |
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10.2 | * |
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10.7 | * |
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10-K Exhibit Table Item No. | |||||||||
10.8 | * |
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10.9 |
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10.10 | * |
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10.12 | * |
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86
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10.14 | * |
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10.15 | * |
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87
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10.22 | * |
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10-K Exhibit Table Item No. | |||||||||
10.27 | * |
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88
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10.35 | * |
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10-K Exhibit Table Item No. | |||||||||
10.42 | * |
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89
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10.47 | * |
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90
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21 |
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| Consent of Independent Registered Public Accounting |
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31.1 | Certification of Chief Executive Officer Required by Rule 13a-14(a) (17 CFR 240.13a-14(a)). |
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31.2 | Certification of Chief Financial Officer Required by Rule 13a-14(a) (17 CFR 240.13a-14(a)). |
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Exhibits 32.1 and 32.2 are furnished herewith and should not be deemed to be “filed” under the Securities Exchange Act of 1934. |
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32.1 |
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32.2 |
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97 | |||||||||
101 | The following financial statements and notes from the Abbott Laboratories Annual Report on Form 10-K for the year ended December 31, |
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10-K Exhibit Table Item No. | |||||||||
Cover Page Interactive Data File (the cover page XBRL tags are embedded in the Inline XBRL document and included in Exhibit 101). |
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None.
92
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| /s/ ROBERT B. FORD | ||||||||
Robert B. Ford | ||||||||||
Chairman of the Board and Chief Executive Officer | ||||||||||
| February |
/s/ ROBERT B. FORD | /s/ | ||||||||
Robert B. Ford |
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Chairman of the Board and Chief Executive Officer, |
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Vice President, Finance and Controller | |||||||||
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/s/ ROBERT J. ALPERN | /s/ | ||||||||
Robert J. Alpern, M.D. |
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Director of Abbott Laboratories | Director of Abbott Laboratories | ||||||||
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/s/ SALLY E. BLOUNT | /s/ PAOLA GONZALEZ | ||||||||
Sally E. Blount, Ph.D. | Paola Gonzalez | ||||||||
Director of Abbott Laboratories | Director of Abbott Laboratories | ||||||||
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/s/ MICHELLE A. KUMBIER | /s/ DARREN W. MCDEW | ||||||||
Michelle A. Kumbier | Darren W. McDew | ||||||||
Director of Abbott Laboratories |
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/s/ NANCY MCKINSTRY | /s/ | ||||||||
Nancy McKinstry |
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Director of Abbott Laboratories | Director of Abbott Laboratories | ||||||||
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/s/ MICHAEL F. ROMAN | /s/ DANIEL J. STARKS | ||||||||
Michael F. Roman | Daniel J. Starks | ||||||||
Director of Abbott Laboratories | Director of Abbott Laboratories | ||||||||
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/s/ JOHN G. STRATTON | |||||||||
John G. Stratton | |||||||||
Director of Abbott Laboratories |
93
2021
| | | | | | | | | | | | |
|
| | |
| | |
| Amounts |
| | | |
| | Balance | | Provisions/ | | Charged Off | | | | |||
Allowances for Doubtful | | at Beginning | | Charges | | and Other | | Balance at | ||||
Accounts and Product Returns | | of Year | | to Income | | Deductions | | End of Year | ||||
2021 | | $ | 460 | | $ | 145 | | $ | (86) | | $ | 519 |
2020 | | | 384 | | | 187 | | | (111) | | | 460 |
2019 | |
| 314 | | | 137 | | | (68) | | | 384 |
94
Allowances for Doubtful Accounts and Product Returns | Balance at Beginning of Year | Provisions/ Charges to Income | Amounts Charged Off and Other Deductions | Balance at End of Year | ||||||||||||||||||||||
2023 | $ | 500 | $ | 60 | $ | (116) | $ | 444 | ||||||||||||||||||
2022 | 519 | 122 | (141) | 500 | ||||||||||||||||||||||
2021 | 460 | 145 | (86) | 519 |
Opinion on the Financial Statement Schedule
95